27/11/2007 - 22:00

Federal v state the next test

27/11/2007 - 22:00


Save articles for future reference.

The government-versus-government blame game, one of the real blots on the Australian political and business landscape, has come to an end. Or has it?

The easy answer is yes, it really has, with the election of Kevin Rudd meaning wall-to-wall Labor administrations will bring to an end all those expensive, and time wasting, arguments between the states and Canberra over everything from education to daylight saving.

But Briefcase, in its customary contrary fashion, doubts that we have entered a new era of cooperation and uniform government that will make life easier for everyone.

In fact, there’s a very simple test to demonstrate that Labor governments across Australia will not produce the result widely tipped – ask yourself what’s the point of state governments when everyone is singing from the same song sheet?

Interesting, isn’t it. If federal Labor and state Labor are in complete accord on everything, then surely the state becomes nothing more than an arm of the national government, ensuring that there are enough workers behind counters to run departments.

In the case of state premiers, they become of no more consequence (and perhaps less) than the mayor of a local government authority.

It’s for this very reason – the belittling of state government to the level of administrator of federal labor policy – that Briefcase reckons not much will change in the area of government versus government.

Special pleading along the lines of ‘we’re different’ will come from every premier, when the truth is that they’re not.

Issues will be found to keep governments apart because, unless they are, an entire government apparatus ceases to have any purpose; and government, if nothing else, knows how to survive.


In Western Australia there are several pressure points that will test the relationship between state and federal government.

Allocation of funds will be one of the first, and unless Briefcase is totally off the mark we will soon be watching, with some amusement, a conga-line of state treasurers moaning about how they’ve been dudded by their federal colleague.

The test of this prediction is very simple – how Canberra sees the economy is always different to how state treasurers see it.

The last time the finance ministers met, WA’s position was that it had been short-changed by several billion dollars.

In fact, to quote WA Treasurer Eric Ripper from his statement of February 27 in relation to allocating proceeds of the goods and services tax: “The Commonwealth collects $28 billion from WA’s booming economy but only gives back $24 billion.”

Well Mr Ripper, now’s your chance to demonstrate how good it is for WA to have a Labor government in Canberra because it is reasonable to expect that your friends in the new Rudd-led administration will reward you with an extra $4 billion.

Briefcase is, obviously, joking.

Mr Ripper is as likely to get his missing $4 billion as Briefcase is of winning a Pulitzer prize.

But, joking aside, there is an important test in that government versus government relationship and it’s a fair bet that money will be the first sore point when it comes to how the Rudd government treats the states.


A second testing point, but one which is likely to be swept under the carpet, is the application of national Labor’s uranium mining policy on the states.

According to what Labor said before last weekend’s election, we now have a national pro-uranium mining government in Canberra – and an anti-uranium government in WA.

This issue is so difficult – because it calls for a clash of states’ rights over land policies, and federal rights over export matters – that it is reasonable to see the status quo remain.

The English translation of all the words tossed around about uranium mining is “no change”.

This is bad news for mining company promoters hoping for a quick switch in policy. But, this is why nothing will change – (a) it’s too hard, (b) there’s too much else to do and (c) Rudd will avoid picking fights with the states because he’s been trained as a diplomat in how to avoid fights.


Uranium, however, will not simply go away as an issue in the state/federal relationship because it is one of the world’s most interesting examples of a Briefcase favourite – the unintended consequence.

Green groups, despite decades of opposition to uranium, are slowly being forced to admit that they have played a key role in global warming by discouraging nuclear power, which has led to the astonishing global boom in coal mining.

For proof, look at the hottest sector on the Australian Securities Exchange today – coal.

In fact, it goes a step further; it’s Australian coal companies doing their work in Africa, where green politics plays second fiddle to economics and the daily grind of simply staying alive.

Over the past year, GVM Metals, run by ex-Bond Corporation executive, Simon Farrell, from an office in the old Swan Brewery, has rocketed up from 39 cents to $1.50 thanks to its South African coal-mining plans, which are being partly funded by a $100 million capital raising completed last week.

Another Australian coal miner with its feet in Africa has done even better. Sydney-based Riversdale Mining has just raised $235 million for its coal projects in Mozambique, and delivered to its supporters a share price that has soared from $2 to $10 over the past year.

The green-movement, which includes WA Premier Alan Carpenter as a keen supporter, has a lot to answer for when it comes to encouraging the coal-mining industry.


Unintended consequences are not the sole province of one side of politics. John Howard never really understood that his convoluted workplace relations laws would play a leading role in costing him government.

But, since Mr Howard has gone, it is worth contemplating some of the potential unintended consequences of the election of Mr Rudd.

The most obvious, and one which will come as a bitter blow to hard-line lefties, is that Mr Rudd is a most conservative Labor leader.

His mimicking of Mr Howard in the election campaign was not just a trick to dull the electorate into believing Australia would get a younger version of Mr Howard. In Mr Rudd we really have got a younger version of the outgoing PM.

While this is good news for people who like their governments conservative, it also means that anyone with genuine left-of-centre beliefs must now turn to the green movement for solace.


As a final, non-political thought for the week, there’s interesting news on the coffee front, where boutique coffee making is being taken to new heights in the US.

According to what Briefcase read recently, the Clover coffee machine is designed to handle speciality beans and produce individually made cups of coffee in a way reminiscent of the wine industry.

The catch in specifying your beans from Colombia, Kenya or Jamaica is that the cost per cup has risen to $6, with customers still queuing up for their fix, and providing economists with a fresh example of how far a price can be stretched, the so-called theory of price elasticity.


“A politician is an acrobat. He keeps his balance by saying the opposite of what he does.” Maurice Barres


Subscription Options