Strengths and Weaknesses of Australian Federalism - Essay Example

Strengths and weaknesses of Australian Federalism Institution Name Introduction The Australian federal system has experienced fundamental alterations since its initiation in 1901. At present, ongoing debate on the future of federalism dominates the legal discourse, specifically after the High Court’s WorkChoices judgment in the case New South Wales v Commonwealth [2006]1. This is further compounded by a general consensus that the federal system does not work to expectations. The Australian Constitution established a federal system, which allows power sharing between the Australian states and the Commonwealth (national) government. Historically, the constitution markers were generally content with the creation of a federal system, which intended the six Australian states to be the major players. Critically, a range of factors have affected the effectiveness of the federal system2. These include the fact that government perspectives working to promote the power of the national government, the tendency of the national government to control the state governments, the increased dependence of the state governments on the Commonwealth government, the Australian citizens consistently looking up to the national government and tendency of the High Court to increase the powers of the Commonwealth3. This paper examines the key strengths and weaknesses of Australian Federalism in addition to are the likely reforms. It is argued that in the face of the inefficiencies of federalism, it still has a great potential to guarantee that the government remains close to the ordinary citizens, which is critical for ensuring democracy and the competing pressures emanating from globalisation. Weaknesses of federalism Dominance of Commonwealth in control of finance Several changes to the federal system have emanated from the inadequacy of the Finance clauses in Chapter IV of the Australian Constitution. In particular, the clauses have increased the control of finances by the Commonwealth government. Indeed, the Commonwealth found the financial structures tedious few years within initiation of Federation because of the desire to high expenditures by itself in the areas of public works, defence, and social services. Therefore, it soon worked to weaken the financial guarantees of the government. The states lacked the entitlement to resist4. Historical review shows that by 1902, the then federal government Attorney-General called Alfred Deakin asserted that while the states were ‘legally free,’ they were financially vulnerable to “Federal Government’s the chariot wheels.”5 By 1910, sections 87 and 94, which required payment of excise and customs to the state government, had been generally overlooked. This has remained so ever since as a series of patterns of dominance by the Federal Government followed. Subsequently, the state and Commonwealth and state governments witnessed the imminent failure of the constitutional financial arrangements. Section 96 provided that “… the Parliament may grant financial assistance to any state on such terms and conditions as the Parliament thinks fit.” This was an eleventh-hour addition to the Constitution. According to some law scholars such as Bellamy and Brown6, Section 96 was inserted specifically for application in the events of financial emergency.” However, section 96 had some adverse effects to the state governments as it propagated the issue of tied grants. In particular, section 96 is also applicable to any state depending on “what the parliament deems it necessary. This led to the advent of the term “general purpose payments” in 1923, after the Commonwealth Parliament passed a law allowing the states funds that are only to be used on infrastructural development -- mainly roads. However, when the states saw the hazards of acceptance of funds selectively given by the Federal Government, the states gave backing to Victoria in a High Court challenge, despite losing the bid to when the High Court declared the legislation invalid. Currently, the nearly 40 percent of the grants given to the states are tied to conditions, despite none of the conditions specified in the powers of the Commonwealth Government. Indeed, there is a general consensus if section 96 had not existed, the Commonwealth Government would not have gained financial control dominance of the state governments7. The High Court’s interpretations Additionally, the effects of the role of the High Court in interpretation of the power relationship between the state government and the Commonwealth government have facilitated the weakness of the federalism. In particular, many of the ongoing interpretations have seen the Commonwealth government encroach on the responsibilities reserved to the state governments8. However, when the courts get to encroach on the powers of others, the constitutional courts need to be summoned to arbitrate. This has not been the case. Indeed, the initial yeas of the High Court witnessed an effort by the courts to uphold the balance between the state and the Commonwealth powers. As Scott9 explains, Chief Justice, Sir Samuel Griffith proclaimed ‘vested interest’ in the ideology of federation during his reign in 1906.” He steered the Court established he referred as the “a doctrine of mutual non-interference between Commonwealth and states.” However, the courts had deviated from the ideology by 1920. As demonstrated in the case of Engineers in192010, the courts held the perspective that the Commonwealth powers were absolute and that the issues of balance of power between the two key levels of government were not relevant. From then on, the High Court’s rulings have been viewed to overlook the balance of power between the state and the national government. In the early years, the courts had initially held that Commonwealth law should not be applicable to States while the State law should not be applicable to the Commonwealth: D'Emden v Pedder (1904)11; Railway Servants case (1906)12. This later changed in 1920, when the high court abandoned the doctrine in the case Engineer's case of (1920)13. Indeed, the weakness of federalism has emanated from this point. An example includes the Strickland v Rocla Concrete Pipes Ltd (1971)14, where the courts allowed the national government to play a more proactive role in overseeing corporate activity. An additional example is the Ha v New South Wales (199715), which is just one among several cases that have progressively limited the options of the state government concerning creating taxes intended to offer them substantial sources of revenue. A recent WorkChoices judgment in 2006 in the case of New South Wales v Commonwealth [2006] 16is however largely argued to have triggered the ongoing debate on the weaknesses of federalism. The WorkChoices judgment provided an endorsement to a wide application and interpretation of the powers of corporations. Accordingly, the case made the federal interpretation of the powers of corporations more vulnerable. Indeed, former Prime Minister John Howard is said to have commented that it is not the Government’s objective to make interpretations of such a decision liked some form of carte blanche intended for expanding Commonwealth powers. Inequality In spite of the long-standing endeavours by the Commonwealth Grants Commission to guarantee equality in terms of service provision nationwide, the weakness of federalism has undermined such efforts. While the state government have retained significant power to make policies, delivery of uniform and equal services is impracticable17. A fundamental issue is that even as the Grants Commission has aimed to deliver equal capacities, the states have no obligations to use these. Indeed, by 2006, Queensland was the only state where Auslan, the language designed for the deaf community in Australia, was provided significantly. One major difficulty for indigenous people has been that it has not always been clear where governmental responsibility for particular services actually lies. Apart from areas of Commonwealth responsibility, many of the day-to-day living needs of communities are provided by such agencies as local governments or state departments dealing with social issues18. Federalism is significantly characterised by bureaucracy The current state of Australia’s federal system has been faulted for devolving bureaucracy. The existence of many governments, where each has some voice in certain policy issues increases ‘duplication of efforts as well as complexities regulations and initiatives’. The result is form of bureaucratisation that leads to pointless enlarging of public administration cost, as well as huge financial weight for companies that attempt to engage in businesses across the country. This is possibly an unavoidable outcome of having multiple law-making entities within a country. Still, it is a burden that needs to be handled addressed in the hope of eliminating it19. Such forms of bureaucratisation are specifically evident when it comes to government regulation. Indeed, attention can be drawn to nearly 1500 Commonwealth Acts of Parliament, in addition to an estimated 1000 statutory regulations currently in operation. At the same time, each state and territory oversees a large number of own legislations. In the state of Victoria, for instance, 69 business regulators oversee some 26,000 pages of regulations. While this is so, thousands of pages of advisory notes, explanatory memoranda and rulings exist. An indicator of the level of intricacy of regulation affecting business is that the both levels of governments oversee some 24,000 different licence types for enterprises and occupations20. Living on a border The difference in levels of administrations has led to difficulties for individuals of particular communities. Within the federal system, an apparent way showing how the regional governments are structured is within each other’s borders. As different states have different administrative structures and policies, still, the local residents find that contending with the varied regulations and legislations between the states is tedious. The multiple challenges have increased, among them including the issues of taxi licensing, operating local police regulations and fire services21. Most of these cases have been characterised by the creation of multiple administrative structures that are tedious, and so frustrating local citizen. In a range of other cases, the complexities have been far severe as was showed by a submission a citizen of Beechworth made to the 2005–06 Senate select committee on mental health: The persistent challenges of state cross-border incongruity is an on-going source of frustration that has called for the need to review federalism22. Overspending Federalism leads to over-expenditure. Because of duplication and overlap of efforts carrying out policy obligations, state and federal government expenditure add costs to government leading to higher taxation higher. The expenses are further increased by the inefficiencies on allocation of finances. Even though accurate estimate of such costs is challenge, Business Council of Australia estimates that the cost of inefficiency due to federalism was about $9 billion in the fiscal year 2004/200523. According to Business Council of Australia, the cost represented an approximation of expenditure from which Australian citizens got zero benefit, and therefore had to pay taxes to finance that expenditure24. Unhealthy governmental level competition Federalism can also be condemned for enhancing competition between the state and territories, including in the areas of giving financial incentives that draw investment away across various State or Territory governments. While this may bring benefits to the State or Territory, it in the end costs the national economy. This is specifically so in the areas of international affairs. While the multiple States and Territories race for international investments, it has the potential of leaving the prospective investors mystified and even hesitant to invest in Australia25. A case in point is the idea of ‘race to the bottom’ on mobile State and Territory tax basis, where the States and Territories contend for efficient tax bases such as having payroll tax in the hope of attracting investment. However, it may lead to a situation where the general gains to the Australian states and terrifies are marginal or eliminated. Strengths of Federalism Despite the inefficiencies that have characterised the Australian federalism, federalism is considered as the best systems for making sure that the government remains close to ordinary people, while at the same time addressing the competing pressures resulting from globalisation. Federalism has the underlying benefits of being more responsive to the whims of the voters since it brings democracy more proximate to the citizens. This allows them to influence the decisions affecting them most. Additionally, it ‘discourages an alienation that individuals may feel at a greater distance and apparently less controllable national government26. As a consequence, a federal system makes sure that regional governments remain ‘closer to the ordinary people’. Indeed, the state governments have been argued to be more in the proximate reach of the local communities compared to central governments. This makes sure that they are more responsive to the particular needs of the local communities, hence enabling customisation of services and policies. Federalism also checks on the governmental power by dividing and limiting absoluteness of power. In particular, it provides support to pluralist democracy as it rejects ‘majority rule’ in the entire federation. Federalism is hence able to contain the huge diversities across Australia as it allows policies tailoring of policies27. Since diverse policies may be suitable for different State or Territory government because of divergent geography, climate, and demographics. For instance, the transportation and educational needs in Western Australia in the period of minerals has a possibility of being far divergent from those of Tasmania. Even as a unitary system has the benefit of having a capacity to apply dependable standards in the country, consistency may lead to unfair results where it fails to take consideration of pertinent divergences and preferences. As a consequence, regional diversities such as the cultural and economic diversities are catered for. This cements Australia’s unity. Since it promotes competition between the difference governmental levels, federalism leads to policy innovation and better efficiency of services compared to centralism. The reason for this is since the individual states are allowed to practice customised economic, social, and political policies that may as well be tailored to other jurisdictions when efficient. It also enhances democracy as it augments involvement in democratic processes, since the citizens are provide with an opportunity to elect own representatives28. Indeed, before the industrial relations laws was centralised in Australia, innovation within the area of industrial relations was caused not by ideology as well as the desire to compete with other states. As explained by the Business Council of Australia, ‘Industrial relations reforms were initiated by Queensland, Western Australia, and New South Wales, earlier than national programmes”29As a result, the innovativeness through which the industrial standards were set out in one jurisdiction would be duplicated in other states. Discussion of reforms and challenges Despite the inefficiencies of federalism, it has various advantages due to its greater capacity to guarantee that that the government remains close to ordinary people, and focused on addressing the competing pressures resulting from globalisation. Hence, federalism is generally an lasting and unwavering model of governance, which also means that significant reform not really desirable or realistic30. In fact, it could be reasoned that reforms will address the deficiencies. Additionally, the complex fiscal states of affairs that face the government levels also mean that exploring each viable avenue to make the federal system more efficient and effectual is possible. Indeed, estimates by Commonwealth of Australia 31indicate that the federalism has ensured fiscal decentralisation, which delivers benefits of $2,426 per capita, compared to the average fiscal position of the unitary states. However, reforming the federal fiscal decentralisation structures is likely to increase the benefits by an additional annualised $2,925 per capita. At the same time, such an increase is likely to be $4,188 if the federal practices were effective. This indicates that Australia will realise nearly 10 percent benefits by having an effective federation. This would require integrating co-operative reforms that promote inter-governmental co-operation. Indeed, it can be agreed that federalism is not inherently inefficient as confirmed by calculation of economic benefits. Federalism will operate far more efficiently when cooperation and competition between the different levels of government are mixed, leading to integration of uniformity and mix of diversity. Hence, since the problems with Australian federalism emanated from poor financial relations between the state and federal government between 1901 and 1911, reforming federalisms should centre on reforming state and federal government financial relations32. Again, most concerns regarding how the federal system operates is concerned with duplication, excessive administrative burdens, unclear financial obligations and coordination, tied grants, and lack of accountability, it is reasoned that reforms should be in the area of state and federal government financial relations33. This may also include eliminating “duplication” of efforts within the levels of government. For instance, even as most critics agree that the Commonwealth government is more strategically positioned to raise taxes across Australia, it does qualify it to take charge of the spending. Hence, reforms for section 51(xxiii) that increased Commonwealth powers in 1946 will need to be reformed34. The government should be more accountable to member state representative Parliaments. The principle of subsidiarity should also be integrated in government service delivery. The principle argues that responsibility of service delivery is inherent in the lowest level of government. At the same time, intergovernmental decision-making processes should be placed on a more secure balance strengthened by law35. However, this kind of reforms is likely to face opposition as it is not widely used in Australia. Vertical fiscal balance poses challenges to reforms36. This, specifically, concerns the issue of addressing the matter of State governments increasing insufficient revenues from their own means to fund their expenditure responsibilities. Conclusion Despite the inefficiencies of federalism, it has various advantages that because of its greater capacity to guarantee that that the government remains close to ordinary people, while at the same time it remains focused on addressing the competing pressures resulting from globalisation. The weaknesses of federalism mainly involve tendency of the Commonwealth government to dominate in control of finance (Section 96). The High Court has also tended to interprete the constitution in a manner favouring the Commonwealth government. Federalism also leads to over-expenditure. The difference in levels of administrations has led to difficulties for individuals of particular communities. The current state of Australia’s federal system has also been faulted for devolving bureaucracy. This would require integrating co-operative reforms that promote inter-governmental co-operation. Indeed, it can be agreed that federalism is not inherently inefficient as confirmed by calculation of economic benefits. Federalism will operate far more efficiently when cooperation and competition between the different levels of government are mixed, leading to integration of uniformity and mix of diversity. References Articles, Books and Journals Alfred Deakin, Federated Australia, Selections from letters to the Morning Post 1900–1910, (Melbourne University Press, Melbourne, 1968) 97 (cited) Anne Twomey and Glenn Withers, Federalist Paper 1 Australia’s Federal l Future, (Council for the Australian Federation, 2007) 4-56 Brian Galligan, 'Processes For Reforming Australian Federalism,' (2008) 31(2) UNSW Law Journal 617-618 Business Council of Australia, Reshaping Australia’s Federation (Business Council of Australia, 2006) 25-40 Commonwealth of Australia, ‘A Federation for Our Future,’ (2014) 1 Federation White Paper 16-39 Jeniffer Bellamy and Brown, A. J., Federalism and Regionalism in Australia: New Approaches, New Institutions? (ANU E Press, 2007) 11-19 Miranda Stewart, 'Renewing Australian federalism," The Conversation (online), 9 April 2015 Miranda Stewart, 'Renewing Australian Federalism: What you think are the challenges,' The Conversation, (online) 10 April 2015, Scott Bennett, 'The politics of the Australian federal system' (Research Brief no. 4, 2006–07, Parliamentary Library, Parliament of Australia, 2007) Case laws D'Emden v Pedder (1904) 1 CLR 91 Engineer's case (1920) 28 CLR 129 Ha v New South Wales (1997) 189 CLR 465 Melbourne Corporation v The Commonwealth (1947) 74 CLR 31 New South Wales v Commonwealth [2006] HCA 52 Railway Servants case (1906) 4 CLR 488 Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 Read More