Tuesday, 18 November 2014

G20

Well done to everybody for the G20 show. Tony Abbott did a good job showcasing Australia to the biggest gathering of world leaders most of us will ever see. I don't want to be a wet blanket, but while the G20 is important it's also a lot of huff and puff.

It won't win many votes in the next election. And it won't fix our budget problems.

The trade deal with China is altogether a different matter. It will create more jobs and investments. It will ensure Andrew Robb is credited as one of the best  trade ministers and put a damper on protectionist elements within the coalition.  And Tony Abbott deserves credit for giving the trade portfolio to an urban, economically literate Liberal.

More sales of cattle and dairy products will be a boost to rural Australia and the enhanced access for the service sector could end up as being a bonanza for our economy.  And the extra trade will be a shot in the arm economically just as the 2016 election comes onto the political horizon.

Meanwhile, back at home the prospects of securing significant expenditure restraint are gloomy. For various reasons, cutting expenditure was not John Howard's forte but nor was it for Margaret Thatcher or Ronald Reagan.  In all three cases they were at their best in making the economic cake bigger.

For the Commonwealth and the states, two areas of spending that can produce savings without too much political angst can be found in contracting out  services and removing duplication of government functions.

Contracting out is not new and readily available to federal and state governments acting unilaterally. The difference with removing duplication is that both levels of government need to work together. All you need is a minister who wants to get things done. I found one such minister last Friday at the launch of the Hawkesbury campaign for Dom Perrottet, the NSW Minister for Finance.

Perrottet spoke with commitment and conviction about his reform agenda in NSW. Aged 32, Dom has been a minister for only six months and already he is one MP to watch in the future. You only have to hear him speak to realise that he is clearly every bit as good as some of the better federal MPs.

The only difference is that federal MPs start their federal career certain that the federal parliament is superior to state politics. More often than not, candidates see the federal parliament as more exciting, more interesting and more important. And that attitude becomes a barrier to removing state and federal duplication because federal MPs are too inclined to hang on to state functions because federal MPs think they are better government managers than their state colleagues. The consequent  reluctance to give up  control is the reason I fear that the Abbott government's proposed White Paper will not lead to the cuts in duplication that are needed not just for efficiency but for savings.

Having first been a councillor in rural Victoria, I then stood for office in a state seat and would have been very happy if I'd won preselection. My experience is that state and federal governments are more different as a result of their differing functions as much as anything else. I was very involved in starting a private community school. Who is more important; the federal minister who helped fund the school or the state minister who gave us a spare class room? The answer is that it is nonsense to say one is more important than the other.

There is no question that the reform of federal state relations is well overdue. But if the Commonwealth Government is fair dinkum, rather than waiting for its white paper, it should start with some decisive action to demonstrate that it is determined to reform federal state relations. Why wait when there are some obvious reforms needed now? Two issues come to mind: cutting duplication and fixing the GST split.

The current GST arrangement rewards states that are doing poorly and punishes the more economically successful states. Instead, the GST should be split equally and if the Commonwealth wants to top up the mendicant states of Tasmania and South Australia then that should be a federal responsibility. This measure alone would galvanise federal/state relations.

The Commonwealth does not run any schools so the current bureaucracy in the federal education department should be closed  altogether. Additionally, the government should reconsider its position on the national curriculum which is a recent addition of Commonwealth meddling and duplicating. The states run education and the feds are cutting funds anyway so why have the federal minister calling the shots?

It has been a good week for Australia but the government needs to build its momentum with a lot more reform, including federal state relations.

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