The last Queensland budget highlights a huge problem in Australian governance. About a quarter of Queensland’s budget is dictated by the Commonwealth Government through specific purpose payments.
It is a similar story in other states.
There can be no other way to describe these specific payments as political interference by the ruling federal party in the affairs of the states. It leads to ongoing political games, growth of bureaucracy at the expense of service delivery and stifles innovation. And most Australians would be sceptical about the ability of public servants based in Canberra to provide better services than those based in their own state.
This problem is driven primarily from the desire of federal politicians to earn browny-points every federal election. Specific payments are a great way of electioneering.
The best way to remove duplication between levels of government is to firstly remove ties to funding allocated to state and local governments. Then each level of government should adhere strictly to their roles and responsibilities.
Let’s take health for example. For months now there has been a stoush between the states and the Commonwealth over health funding. Yet under the Australian Constitution, it is the responsibility of the states to deliver this service. The Commonwealth should not even be involved in the provision of health services, yet it is directing how the states allocate funding in this area.
The Commonwealth’s job is to hand the states taxation revenue it collects on their behalf. It should not be spending taxes for them – it is up to the states individually to determine how they are best spent.
If roads are the priority, the states should have the flexibility to increase spending in this area. Or in education. Or health. The Commonwealth should not attach strings to revenue grants. Additionally, there is no need for the states and Commonwealth to double up on health and education departments, for instance.
After all, the states themselves are in the best place to identify their needs and address them. And voters then cast judgment on those decisions at state elections.
The current situation also stifles innovation. If the Commonwealth concentrated on its job of looking after external affairs and states were left truly free to compete with each other on internal service delivery, efficiency would improve.
Each state would be able to set budgetary settings to best meet local conditions and would be able to learn from the good (and bad) example set by the others. There could be true competition to attract industry, business and families. And if one state excelled in educational or health services, the others could look to follow suit.
Unfortunately, things are unlikely to change while federal politicians continue to incrementally assume power over state budgets – power that was never theirs in the first place.
This is not to say that there are some good arguments to make, on occasion, for increased Commonwealth control, or for the states to align their policies. However, these circumstances should be exceptional and have demonstrated merit. The recent national health reforms and revolutions in education have proven that, more often than not, Commonwealth plans are neither exceptional nor meritorious.