Paying the Price for a Tiered System

04 December 2006

The Courier-Mail

By Michael Chaney
Business Council of Australia

Inefficiencies cost governments $9 billion each year

The recent High Court decision validating the Federal Government's use of the corporations power for its workplace relations changes has sparked intense debate about the relevance of the states in our century-old Federation.

A point of agreement is that the decision is a dramatic illustration of how our Federation is failing to meet Australia's needs in the 21st century.

The Business Council of Australia supports the call by Premier Peter Beattie for a constitutional or national convention to discuss the future of our federal system. The BCA wants the current system to work, and the best way forward is for greater co-operation.

At the moment, there is far too much finger pointing and blame shifting between tiers of government, leading to chronic inefficiencies that are undermining business and community confidence in our current system.

Let us consider some examples of the inefficiencies in the current system. Why should businesses operating across Australia face eight payroll tax regimes, or eight different occupational health and safety systems? Why should there be five minimum school starting ages in Australia?

There are 22 rail radio networks in place on trains around the country but the trains still can't talk to each other. Then there's the often-used example of first aid kits – in Queensland they must have a quarter of a litre of eye wash, but 60ml in Victoria and none in South Australia; while dressing tape must be 2.5cm wide in NSW and 1.5cm in Western Australia.

Sounds unimportant? Try telling that to major businesses when they have to buy first aid kits for their operations throughout Australia.

The High Court decision makes clear the Commonwealth has sufficient legal power to involve itself in almost any area of policy or regulation putting us at a crossroads in our history of Federation. We can allow the system to continue to erode, transferring more power to Canberra, or we can come together and discuss how to revitalise our Federation.

The BCA's October discussion paper, Reshaping Australia's Federation: A New Contract for Federal–State Relations, proposed a 12-point plan to fix problems in our federal system.

We estimated that inefficiencies cost governments $9 billion each year, equivalent to an extra $1100 in taxes for every Australian household. We called for a federal convention, no later than 2008 and with participants drawn from the community, business and governments, to determine a framework for a 21st-century division of responsibilities.

A clear objective is the establishment of a true common market for business regulation to encourage the free flow of people, goods and services around the country.

The High Court decision may well exacerbate the costs to taxpayers we identified.

Despite what is said by any of our political leaders, successive Commonwealth governments will undoubtedly use this newly confirmed power, and the effect on the states will be dramatic. As the Premier rightly says, the alternative and preferred course is for a new public discussion about the roles Australians want to give their national and state governments.

The last two Council of Australian Governments meetings have indicated the states and Commonwealth are prepared to engage in more co-operative federalism. The BCA is keen to see this continue, but COAG must prove its effectiveness.

The most constructive response state governments can make to the High Court's decision is to show that, through co-operation, a true common market can be achieved in Australia.

But if there is no progress on this important issue, it is now clear there is no constitutional barrier to the Commonwealth simply taking over.




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