CCIWA calls for federalism revamp

Commonwealth and State governments should put their differences aside and co-operate for the benefit of the nation as a whole, according to the Chamber of Commerce and Industry of Western Australia.

The full text of a CCIWA announcement is pasted below

Western Australia's peak business organisation has called on the Commonwealth and the states to put their differences aside and cooperate in a desperately needed overhaul of the way Australia operates as a federation.

In a comprehensive discussion paper released today, the Chamber of Commerce and Industry of WA called for a special body, established at arms length from government, to review jurisdictional boundaries and redefine state and federal responsibilities.

The paper identified critical areas to be addressed and advocated the development of a new framework for taxing powers and rules for distributing revenue, which it said needed to give the states more financial autonomy.

It warned that political tensions and ideological conflicts between the states and Canberra were causing increasing stress on Australian constitutional theory and practice - a situation which was likely to get worse unless changes were made.

Launching the paper, CCI chief executive John Langoulant - the former WA Under-Treasurer - said federation had served Australia well for more than 100 years but society had changed drastically in that time.

"A system has evolved for delivering government across the country which is quite a way removed from what it started out as, and it is time there was a mature review," he said.

"If we mean Australia to continue as a federation, and that is a debate which needs to be had, then we have to take time out and look hard at the financial and administrative arrangements which are currently employed and are leading to increasingly centralised government."

The CCI discussion paper said the federal and state governments shared responsibilities in major policy areas such as health, education, environment, infrastructure and industrial relations, and attacks by the combined Premiers on changes to intergovernmental arrangements were adding to policy stress.

Too frequently, the question of what might be the best policy in the national interest was overwhelmed by jurisdictional disputes.

Mr Langoulant said Australia had major challenges before it, and how well they were managed would bear heavily on how the nation fared in coming decades.

"The discord and rivalry that we constantly witness between the Commonwealth and the states does not fill us with confidence that the best policy outcomes can always be achieved," he said. "We are not going to get optimal solutions to issues while turf wars prevail and everyone's focus is on the pursuit or defence of power".

The CCI paper said there was a need to review the allocation of federal-state responsibilities more systematically and rationally with a view to simplifying it, improving its efficiency and eliminating duplication and overlap.

This would require a genuine review and a commitment from all sides to withdraw from areas deemed to be better sited in another part of government.

It said the Commonwealth's fiscal powers had been a significant force shaping the evolution of the federation. Canberra had sole rights to rights to collect income tax and levy customs and excise taxes.

Federal-state financial reforms were needed to lessen the problem of vertical fiscal imbalance by allowing the states to increase their own-source revenue. If the states were less financially reliant on the Commonwealth, some of the tensions surrounding the concerns regarding horizontal fiscal equalisation might be eased.

It said the key weakness of the current equalisation process was that it led to wasteful or damaging spending and introduced incentives to maximise grant revenue.

The paper said the Commonwealth's increasing use of specific purpose payments allowed it to impose its policy agenda on the states, whereas there was a need to focus on common outcome-based objectives rather than prescriptive financial requirements.

It highlighted infrastructure provision as a key issue concerning federalism, saying the Commonwealth should carry a greater share of the responsibility for providing infrastructure for industrial development as it collected the main tax benefits from that.

Mr Langoulant said a review of the federation and inter-government arrangements was well overdue.

"It's time for our politicians to acknowledge the need and to start making it happen, in the national interest," he said. "Ideally, we would like to see a bipartisan position from the major parties supporting it and some action in earnest the minute the coming federal election is out of the way".