19 February 2011

Forget What We Said Earlier: COAG, Still the Fourth Tier of Government

We have previously noted that some people such as WA Premier Colin Barnett have suggested that COAG is becoming another tier of government.

The content of the COAG communiqué of 13 February 2011 suggests the tendency is continuing.

The main event was the signing of the Heads of Agreement on National Health Reform

However, other matters were dealt with.

A National Vocational Education and Training Regulator is to be established to ‘drive better quality standards and regulation across the Australian VET sector'.

This new body will join the Australian Health Practitioners Regulatory Agency, the National Occupational Licensing Authority and the Australian Curriculum Assessment and Reporting Authority as brand new national bodies to drive and determine a single set of national standards.

Another decision was to speed up the Seamless National Economy from June 2013 to December 2012, with options to be developed for a further wave of regulatory and competition reforms.

This will undoubtedly lead to the development of more national regulation.

However, the most interesting development was the establishment of Standing Councils to operate under COAG, designed to:

undertake legislative and governance functions relevant to their scope, and provide an annual report to COAG which includes an overview of the decisions made by the Council. (our emphasis)

The idea is to:

….(provide) a clear role for Ministers from all jurisdictions to support COAG in tackling 21st century policy challenges. There will be sustained collaborative effort on the long-term reform agenda while allowing for the flexibility needed to address more urgent challenges.

However, this classic ‘executive federalism’ model of governance suffers from one significant deficiency – ‘democratic deficit’.

The somewhat murky structure of the proposed new ministerial council process makes it difficult to see how anyone interested in a policy matter (other than larger players with the capacity to maintain a Canberra presence) will have the capacity to adequately participate in the regulation development process.

More particularly, once a COAG Council has ‘undertaken a legislative function’ (which presumably means approving a draft national law to be passed by (usually) state parliaments) one fears the opportunity to amend what could be a bad law will be limited because as COAG (or, in this case, a National Council of COAG) said a law has to pass, and so it will.

We harbour sincere doubts that this manner of rule making will necessarily lead to better laws.

However, one thing illustrated by the COAG communiqué is that even though Council membership may no longer be wall to wall Labor, the introduction of non-Labor members has not changed the function of COAG as another tier of government determining the rules of the Australian federation without any parliamentary oversight.

Plus ca change, plus c'est la meme chose.

03 February 2011

2011 - The Year Ahead

The 2011 political year is now beginning. Here are some of the issues that will influence how it pans out.

The upcoming NSW Drubbing

It will not be an issue of whether NSW Labor will lose government on 26 March.
Rather, given that that the ALP primary vote is as low as 24% the question will be by how far.

The Hunter and the Illawarra no longer have the industrial bases of times of yore, making it more receptive to the very small ‘c’ conservatism of the Coalition, whilst the inner city is turning Green.

The glue that bound the labour movement – a wish to express solidarity with the working class – has lost its power to bind.

This reality, together with the poor condition of ‘brand Labor’ means that this could be a ‘transformational election’ – where tribal voters irrevocably change allegiance.

This could have federal ramifications as the NSW model has been the model of governance has been the template for Federal Labor.

Massively reject NSW Labor, the question of ‘what does Labor mean in the 21st century mean?’ will more broadly resonate.

Then there is the next challenge:

The Greens

The new Senate is sworn in on 1 July. From that date the dynamics of the chamber changes. All it needs is for the Government and Greens to vote together to enable matters to pass.

How will Labor handle this? Will it be like Tasmania or the ACT in which the parties act more like a coalition presenting to the chamber pre-agreed outcomes, or will there be an attempt of product differentiation between them?

Following the Queensland floods, the Prime Minister has announced the abolition, deferral or capping of a number of carbon abatement schemes, including the Green Car Innovation Fund, Cleaner Car Rebate Scheme, the Carbon Capture and Storage Flagships and Solar Flagships, the Solar Hot Water Rebate, Green Start Program, Solar Homes and Communities Plan and the Global Carbon Capture and Storage Institute – policy outcomes that will clearly rile the Greens.

However, at the same time she proposes retaining a price on carbon, something to the Prime Minister apparently akin to the floating of the dollar (as she told the National Press Club) or a driver of ‘another technological revolution like Information Technology did in the 1980s and 90s’ (as she told a recent CEDA luncheon).

Two lessons flowed from the Victorian election.

The first was that in deciding not to provide the Greens any preferences, the Victorian Libs proved that you can take on the Greens without being seen as anti-environmentalist and suffer an electoral backlash.

The second lesson was that suburbia is feeling the pinch of high utility prices.

This will be an increasing factor to take into account when ‘putting a price on carbon’ is ultimately unambiguously translated as being ‘increasing electricity costs’ as the carbon debate comes to a climax during 2011.

The Government’s attempts to balance its environmental credentials will be interesting.

Then there is:

Dealing with the States

We have commented before about the need for the Government to fund the social democratic project.

And so the Commonwealth is seeking to claw back some GST payments to the states to pay for hospital reform, whilst the current minerals resource rent tax will be used to (ultimately) increase superannuation payments to employees and ‘build essential infrastructure’.

The Commonwealth also wants to impose ‘pre-commitment’ technology on poker machines, in an endeavour to reduce problem gambing – and to give effect to a major policy concern of Andrew Wilkie, one of those on whom the Government is relying to maintain government.

However, the states are most unhappy.

Queensland’s Anna Bligh was reported as saying that ‘we are very clear here in Queensland that constitutionally as a sovereign state in our own right, we reserve the right to set appropriate royalties which are returned to Queenslanders for the minerals that are taken out of our state’.

The Victorian Coalition government's Resources Minister, Michael O'Brien, said he would not allow his state's taxpayers to "fill the federal Labor government's budget black hole", insisting royalties had always been a state right.

Finally, WA Premier Colin Barnett said his state would not hand over GST revenues.

Then there is the gambling issue, with some states concerned of (amongst other things) impact on gambling revenues – one of the few own source revenue streams left to the states,

Given that it appears the ‘tax summit’ to discuss the proposals contained in the Henry review is intended to be not much more than a talkfest, COAG will be a forum where the issue of dealing with vertical fiscal imbalance and the role of the states in the 21st century Australia will be a major issue – particularly as there are two (and very shortly, probably three) states with non-Labor governments this year.

This is before dealing with policy changes necessary to bring the budget back to surplus by 2013.

2011 will be one of the more interesting political years.