Thank you to John Stone
and The Samuel Griffith Society for the opportunity to present
this paper. As someone who attended the first meeting of the Society
in Melbourne in July, 1992 I welcome the opportunity to reflect
upon what has occurred since that first meeting---even if such
a reflection provides little cause for joy.
It
is entirely appropriate that this topic be considered, given that
at a previous meeting of the Society the subject of "Federalism
and the Australian Labor Party" was examined (although some
might argue that such a juxtaposition of "Federalism"
and the "ALP" is as bizarre as the conjunction of the
words "economic management" and "Gough Whitlam").
It
is not the
purpose of this paper to examine what has happened to federalism in Australia. This has been
well-documented and it has been an important theme in the work
of the Society.
Instead
I will ask the question why federalism has been weakened by successive
Liberal governments. I will argue that there are three key reasons
for this:
1. The
Liberal Party is above all pragmatic, and at times it has been
willing to compromise its philosophical principles.
2. The
Liberal Party defines itself, and its success, primarily around
its policies on economic management and foreign affairs. Both
economic management and foreign affairs require "national"
approaches, and this attitude has been translated into other areas
of policy that would not normally be regarded as "national".
3. The
Australian business community, which is a source of policy influence
on the Liberal Party, is more likely to favour centralist rather
than federalist models of governance.
(Throughout
this paper, whenever the Liberal Party is referred to it will
usually be taken to mean the party as it operates at the federal
level.)
The pragmatism of the Liberal Party
Let
me begin by providing two quotations:
"Now, I am a Federalist myself. I believe,
as I am sure most of you do, that in the division of power, in
the demarcation of powers between a Central Government and the
State governments, there resides one of the true protections of
individual freedom".
And:
"...how true it is that as the world grows,
as the world becomes more complex, as international affairs engage
our attention more and more, and affect our lives more and more,
it is frequently ludicrous that the National Parliament, the National
Government, should be without power to do things which are really
needed for the national security and advancement".1
The
import of each sentence is quite different. However, in fact,
both sentences are from the same paragraph, and the second sentence
follows directly from the first. These are the comments of Robert
Menzies, in one of a series of speeches delivered in 1966 after
his retirement at the University of Virginia and subsequently
published as Central Power in the Australian Commonwealth.
Menzies'
remarks demonstrate his ability to pay lip-service to the idea
of federalism while purporting to acknowledge the reality that
federalism might run counter to the requirements of a national
government.
From
its very beginnings, the Liberal Party's rhetorical commitment
to federalism was strong. But once the party had achieved government,
that commitment in practice was weak.
The
Liberal Party's policy for the 1949 federal election had a very
explicit view of federalism:
"As we believe in the division of power,
so we believe that the States must be preserved as real governing
bodies and not as the mere dependants of the Commonwealth. We
shall therefore take an early opportunity of convening a special
conference with the State Premiers to reconsider the problem of
the financial relations between the Commonwealth and the States".2
Of
course the "reconsideration" that was promised never
occurred. After winning government in December, 1949 other matters
took priority for Menzies and debate about uniform tax was deferred.
By 1958 he was acknowledging the frustration that many in his
party felt about the lack of progress towards reversing the process
of centralisation of the war years under Labor:
"There
are, naturally, complaints about Uniform Tax. The sound general
principle is that each Government should raise its own taxes.
This principle cannot be strictly applied to Australia".3
The
idea that this "sound principle" and, more broadly,
that federalism might not be able to operate in Australia was
a point often made by Menzies as he cited the need for national
coordination to fully develop the country's natural assets.
Menzies'
pragmatism is easily demonstrated in his approach to federalism.
It must be noted however that, notwithstanding his reluctance
to disturb traditional arrangements, he was always careful to
at least acknowledge the theory of federalism. A different
Liberal leader, John Gorton, who spoke the truth when in 1968
he talked about the need to face the reality that Australia was
hardly "federal", and who suggested that more powers
could be centralised, incurred the wrath of his own party and
Liberal State Premiers.4
The
pragmatism of the Australian people (which implicitly the Liberal
Party reflects) was recognised in a significant speech the Prime
Minister, John Howard delivered in 2005 to The Menzies Research
Centre. He said:
"Australians
are a non-ideological, pragmatic and empirical people. They want
governments to deliver outcomes and not make excuses. They want
governments that take responsibility, not states of denial".5
In
that speech the Prime Minister enunciated what he believed were
the weaknesses of Australia's federal system. In contrast to Menzies,
who stressed that action by central government was required for
the purposes of national development, John Howard put forward
the case that federalism, by allowing State governments to obstruct
"reform", was unsuited to the needs of modern Australia.
He argued that the best custodian of individual rights was the
federal government, not State governments. The Prime Minister
used the case of industrial relations as an example:
"The desire to have a more national system
of industrial relations is driven by our wish that as many businesses
and employees as possible have the freedom, the flexibility and
the individual choice which is characteristic of the Government's
philosophy in the area of workplace relations. And this can only
be achieved at present by removing the dead weight of Labor's
highly-regulated State industrial relations systems. In this
area the goal is to free the individual, not trample on the States". [emphasis added]
Like
Menzies forty years before him, the Prime Minister considered
the benefits of federalism but at the same discounted their practical
application:
"Like other Liberals, I am a strong constitutionalist.
The dispersal of power that a federal system promotes, together
with its potential, and I stress potential, to deliver services
closer to peoples' need, are threads of our political inheritance
that I have always valued and greatly respected".
But
at the same time as he said this, John Howard also commented that:
"I am, first and last, an Australian nationalist.
When I think about all this country is and everything it can become,
I have very little time for vestiges of State parochialism".
The Liberal Party and "national"
issues
Ever
since its formation in 1944 the Liberal Party has regarded itself
as the custodian of the principles of responsible economic management
and as the guarantor of a foreign policy that promoted Australia's
status as a liberal democracy in alliance with the United States.
These
two positions have a prominence above all else, and they are the
province of the national government. This phenomenon has had a
significant impact on the party's attitude to federalism. Social
policy, for example in the areas of health or education, have
traditionally been thought of as policies which provide a political
advantage for the Labor Party, with the Liberals, at best, being
able to neutralise this advantage. However, it is in areas of
social policy that some of the benefits of a federal system are
the most obvious, in that such a system allows for differentiation
and experimentation.
A
feature of the debate in the Liberal Party about federalism has
been the clear division between the parliamentary party and the
party's own membership. There have been few occasions when federal
Liberal MPs have resisted the urge to centralise (the offer of
Malcolm Fraser to the States for them to collect their own income
tax being a rare exception).
The
Liberal Party was deliberately established by Menzies in such
a way that the parliamentary party would determine policy. The
party organisation could determine the "platform" but
the parliamentary party determined "policy".
In
the 1950s, after some years of the experience of government, Liberal
Party members began to be frustrated by what they felt was the
slow pace of change to federal arrangements under Menzies. So,
for example, at the party's Federal Council in 1956 the following
motion was passed:
"That this Federal Council re-affirms
its unswerving belief in the Federal system of Government. In
so doing it stressed that the Federal system, which is based on
the sovereignty of the individual States, is incompatible with
uniform taxation.
"Accordingly, this Council asks the Federal
Government to take the initiative to ensure the earliest possible
termination of uniform taxation, and in the interim, to resist
all actions conducive to further unification".6
This
was a direct challenge to the Menzies Government---but in response
Menzies did nothing.
But
while some of the party's membership were railing against uniform
taxation, there were larger issues at stake, which dwarfed any
concerns about federalism. In 1956 the Federal Council passed
another motion which neatly captures the feelings of the time:
"That this meeting, representative of
the great Liberal organisation in all States, congratulates the
Australian Government on its immediate and spirited support of
the Hungarian people.
"It affirms its admiration for the undying
heroism of the Hungarian patriots, who were actuated by a deathless
courage, by hatred of tyranny and devotion to the great Human
Rights. It recognises that the USSR has been exposed as a ruthless
Imperialist aggressor, and the Communist 'peace' sham has been
destroyed. The Hungarian massacre is the admission of Russia's
failure.
"This Council sees in the Hungarian struggle,
not a matter for bleak and hopeless despair, but the start of
a great spiritual drive for the democratic liberation throughout
Europe".7
A
year later the Federal Council again urged the government to remove
the burden of uniform taxation. By the end of the 1950s, after
years of attempting to have Liberal MP's change their position,
the party membership resigned itself to what appeared to be an
inevitable future.
The
next bout of rebellion on federalism from the Liberals' membership
came in the 1960s in the wake of John Gorton's various pronouncements
on the need to centralise the activities of the Australian federal
and State governments. This prompted many angry responses, including
this one from the State Executive of the Victorian Division of
the Party in 1969:
"The philosophy, approach and policies
expressed by the State Parliamentary wing of the Party are at
variance with the philosophy, approach and policies expressed
by the Federal Parliamentary wing of the Party".
It said that the longer the issue remains unresolved
the worse it gets---how can the Federal Government retain the
support of the Victorian membership?
"The ordinary Party member is being asked
to support opposing viewpoints---as if he is above or incapable
of the schizophrenic results of endeavouring to reconcile opposites".8
Liberals
in Victoria feared that the party could split over the issue of
federalism in the same way that the Labor Party split in the 1950s
over Communism. The attitude in Victoria was shared around the
country, with many State divisions coming to the conclusion that
the only way to resolve the question of federalism was to return
to the States direct income taxing powers, and have the Commonwealth
abandon section 96 grants. It was these pressures, prompted by
the actions of Gorton, that later encouraged the Fraser Government
in some of its tentative and ill-fated moves to restore a degree
of federalist balance.
As
questions of economic and foreign policy are mainly determined
by the actions of the Executive, another consequence of the Liberals'
attention to these issues has been to neglect political institutions
other than the Executive. Liberals have been quick to criticise
the centralising tendencies of High Court judges, and more broadly
the desire of judges to accrue to themselves more power at the
expense of a democratically-elected Parliament, but Liberals have
done little to reverse this trend. Similarly, a decade of Coalition
government has had little impact on the prevailing bias of the
nation's cultural institutions.
Business and federalism
The
links between the business community and the Liberal Party are
nowhere near as close as is commonly represented, or as critics
of the two would claim. However, it is true that the views of
business are influential upon the Liberal Party, and to a certain
extent the Liberal Party believes itself to represent the interests
of employers.
Generally
speaking, business leaders have little time for notions of federalism.
To them different State and federal regimes are a cost burden
that they must bear (and which is then passed on to the consumer).
The
attitude of business to federalism and diversity within a country
such as Australia is in stark contrast to its calls for "international
competitiveness". Diversity of laws is apparently acceptable
between countries, but not within countries.
The
rush to endorse the federal government's takeover of industrial
relations has been endorsed by much of the business community.
However, what few have paused to ask is, what will the situation
be when (not if) Labor eventually returns to power? One of the
points of federalism is that it disperses power---it is a sort
of "insurance policy". The complications of differing
State regimes on some issues are a small price to pay for such
an insurance policy.
Conclusion
In
his Menzies Research Centre speech the Prime Minister explained
that his own attitude to federalism has changed over the years.
Chief among the things driving his shift in approach were the
forces of globalisation, and what he called the "nationalisation
of both our economy and our society".
As
an example of change, he cited the example of Menzies' defence
on centralised wage fixation and arbitration---a position which
he acknowledged few Liberals would hold today. He went on to say
that issues in health, education, water, and indigenous policy
might lend themselves to further Commonwealth interventions. In
this regard the future for federalism under a Liberal government
is not bright.
In
defence of his policies, the Prime Minister cited the example
of State governments many of which are hardly "decentralist":
"At various times, State governments of
both persuasions have found occasion to trample over local government
decision-making. Without passing judgement on particular cases,
it does expose the selective indignation of the States when it
comes to the virtues of decentralisation. And a State education
bureaucracy can appear pretty remote if you are a parent in Mount
Isa or Kununurra struggling to make sense of your child's unintelligible
report card".
This
might be true. A bureaucracy in Brisbane or Perth certainly is
remote from parents in Mount Isa or Kununurra. But imagine how
much more remote parents in those places are from the bureaucracy
in Canberra.
1.
Robert
Menzies, Central Power in the Australian Commonwealth: An examination
of the growth of Commonwealth power in the Australian Federation,
Cassell, London, 1967, p. 24.
2.
Joint Opposition Policy, 1949. Speech delivered by Robert Menzies, 10 November, 1949.
3.
Joint Policy 1958.
Speech delivered by Robert Menzies, 29 October, 1958.
4.
Speech, John Gorton, Mornington, 14 October, 1968.
5.
Reflections
on Australian Federalism, Speech delivered
by John Howard, 11 April, 2005.
6.
Liberal Party, Minutes of Federal Council Meeting, 1956.
7.
Ibid..
8.
Liberal Party (Victorian Division), State Executive Minutes,
7 February, 1969.