Pape and Fiscal Federalism

Having the ability to do things is great if you have the money to do them.

And the States don’t have the dosh to do much.

As Bob Carr has observed, as a result of High Court decisions State Governments have lost the power to (effectively) tax petrol and alcohol – a lot of the capacity for states to raise ‘own source revenue’ has been lost.

The Australian reported a recent appearance of Queensland Treasurer Andrew Fraser at the Toowoomba Chamber of Commerce thusly:

"Without fiscal sovereignty, state sovereignty is illusory," Fraser said, in his unique style. "The sheer imbalance of the fiscal capacities of the states vis-a-vis the commonwealth invites a form of implicit fiscal bullying and tacit mendicancy. It is this dynamic that pervades commonwealth-state financial relations."
……………….

In his speech, Fraser pointed out that, with 45 per cent of all revenues across the states and territories coming from commonwealth grants, his own revenue streams were limited.

"The nature of the state revenue base - dominated as it is by transfer duty, payroll taxes and royalties - is narrow and sectoral," he said. "On the principles of tax design, this is undesirable. The effects of a sectoral decline can quickly tip a state budget in a manner disproportionate to the broader changes in the economic environment."

When all three sectors tip, as has occurred of late in the mining sector, property market, and in employment generally, a state such as Queensland finds itself in huge trouble, now contemplating a budget deficit of more than $3 billion.

The next pivotal part of the play will be the Henry Review of the tax system.

In a speech given on 26 March 2009 review chairman Ken Henry noted that improving the federal structure of the tax transfer system was an one of the important elements of the review.

He said there were three dimensions to this assignment exercise – the level of government responsible for the design of the tax; the level of government responsible for administration and collection of the tax; and the level of government that receives the revenue raised by the tax.

After noting that state and territory level governments should ‘avoid tax bases with high interjurisdictional mobility’ he said:

It is usually the case that whoever controls the policy and administration will also receive the revenue – and it is important that governments have some capacity to alter revenue consistent with their marginal expenditure choices.

But it is also usually the case in federal systems that there is an imbalance between the revenue that each level of government raises and its expenditure requirements. For some taxes, therefore, part or all of the revenue may be given to another level of government.

Then there is the question of how this revenue is distributed among governments at the same level and with what conditions.

There are trade-offs to be made in this three-dimensional assignment task. The more the policy and administration of the tax system is centralised at the national level, the greater the opportunity to develop a less complex and more efficient tax system.

However, centralisation obviously also means that sub-national governments have a greater reliance on revenue from the national government. And this may influence their spending decisions.

So the issue could ultimately boil down to:

1. Should taxes be levied by:

(a) the entity responsible for the expenditure; or

(b) the entity that can most conveniently and efficiently collect the revenue.

And, if the answer is (usually) the feds:

2. How much of a policy say should they have over the way in which the money they have collected is spent.

Following the High Court decision in Pape, the debate that will follow release of the Henry Review is probably the right time to realign who does what within the Australian federation, and then determine how those functions should be funded.

A win of sorts for Federalism - Pape v. Commissioner of Taxation

On 7 July the High Court handed down a decision called Pape v. Commissioner of Taxation.

In a narrow sense, it decided that the decision to pay the tax bonus to eligible Australians earlier in the year was constitutional.

However, it is a decision that could have significant ramifications on the federal structure.

The Australian Parliament has increasingly appropriated money to directly fund projects and schemes using the so-called executive power of the Commonwealth without regard to whether the thing being funded is relevant to one of the areas for which the Commonwealth has constitutional responsibility.

This proposition did not receive total High Court support.

The general direction of the Court is contained in this paragraph of the joint judgement of Justices Hayne and Kiefel:

In the end the Commonwealth's submissions about the executive and incidental powers came down to the proposition that the Commonwealth's power to spend is limited only by the need to obtain parliamentary approval for the proposed expenditure. That contention should be rejected. The matters of history
described earlier in these reasons do not require its acceptance. Its acceptance would not be consistent with what Mason J referred to as "the broad division of responsibilities between the Commonwealth and the States achieved by the distribution of legislative powers" and would, by "enabling the Commonwealth to carry out within Australia programmes standing outside the acknowledged heads of legislative power merely because these programmes can be conveniently formulated and administered by the national government", effect a radical transformation in what has hitherto been thought to be the constitutional structure of the nation. To hold that the Commonwealth power to spend does not extend so far is consistent with what was decided in the Pharmaceutical Benefits Case and, after the AAP Case, in Davis v The Commonwealth.

Sadly, it will require more litigation to work out with greater certainty what is ‘good’ direct Commonwealth expenditure and what is ‘bad’ direct expenditure, although it would appear that things that are clearly Commonwealth responsibilities will still be okay.

Leaving aside the mechanism of section 96 tied grants, the States could be liable to fund a greater range of activities. Could they even if they wanted to? This is discussed in the next article.

COAG Meets in Darwin and Paul Everingham scrubs the States

COAG met in Darwin on July 2.

The previous day – Territory Day - the NT News reported comments from the ‘father of Self Government’ Paul Everingham which said that states and territories were a waste of taxpayer money and that the Northern Territory should be run out of Canberra.

He was reported as saying that when self-government for the NT was granted 31 years ago:

‘Back then people were still getting telegrams…but communication has improved. It is the internet age. People can also fly everywhere on relatively cheap airlines'.

This is a more earthy way in expressing something we have mentioned in an earlier article:

Many will say the Seamless Economy Project is good idea - Australia is an integrated common market, with people and companies commonly undertaking activities across state borders.

Moreover, Australia exists in a globalised world, with the complication of different rules in different states a reason not
to come to Australia.Regulatory difference is nothing more than a mere compliance cost that distort allocative efficiency with no public benefit.

The majority of the COAG decisions appear to underline the Everingham view of the world.

Those decisions include:

1. the development of a national regulatory body for vocational education and training;
   
2. the development of a unified national system of child care licensing;
   
3. the Coordinator-General mechanisms set up by the Commonwealth to take responsibility for Nation Building programs and projects funded by the Commonwealth and delivered by the States under the Building Australia Fund, the Education Investment Fund and the Health and Hospitals Fund;
   
4. the creation of national regulation for maritime safety, rail safety and heavy vehicles, including the appointment of the Australian Maritime Safety Authority as the national safety regulator for all commercial shipping in Australian waters and a single national heavy vehicle regulator; and
   
5. the development of national performance measures for development applications (DA).
   

Quite a list really for one COAG, really.

And there are other Ministerial Councils working on uniform legislation.

For instance, the Standing Committee of Attorney-Generals (SCAG) is working on the issue of whether there should be a national regulator for the legal profession, as well as on uniform succession laws on administration of estates of deceased persons.

This followed a debate immediately before the Darwin COAG as to whether the Federal Government should take over the administration of the hospitals system.

The time is coming where an overt (rather than a covert) decision should be made as to whether Australia is to be a federation or a unitary nation.

A new Australian Consumer Law

On 24 June the Government introduced amendments to the Trade Practices Act 1974.

It is the first step towards bringing together 13 consumer (fair trading) laws that operate in Australia within the TPA.

The Bill is called the Trade Practices Amendment (Australian Consumer Law) Bill 2009.

Generally based on Victorian legislation, the most important aspect of the legislation is to create a mechanism to void ‘unfair’ standard form contracts involving ‘an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption’.

It was expected that the reach of this legislation would include business to business transactions.

However, as Consumer Affairs Minister Emerson said in his second reading speech:

The unfair contract terms law reforms were agreed by COAG in October 2008 and were based on the extensive consultation undertaken by the Productivity Commission.

These reforms are based on the extensive practical experience of the Victorian government in implementing and enforcing similar laws.

Since then the government has sought views on both the reforms more generally in February and on an exposure draft of the unfair contract terms provisions in May. In response to these consultations the Treasury received just under 200 submissions from many consumers, businesses and other stakeholders.

The government has also had numerous meetings with key stakeholders about these changes. And I understand that the Treasury has met and spoken with a wide range of people about these provisions.

We have consulted, and we have listened. And this is reflected in the provisions set out in this bill, which differ in key respects from those that the government exposed in May, particularly in respect of the exclusion of business-to-business transactions.

In relation to the question of whether business-to-business contracts—and particularly those involving small businesses—should be included under the unfair contract terms provisions, the government is currently reviewing both the unconscionable conduct provisions of the Trade Practices Act and also the
Franchising Code of Conduct.

It would appear that the Franchise Council of Australia, satisfied with the protection contained in its sector specific legislation (principally the Trade Practices (Industry Codes – Franchising) Regulations 1998, had an excellent lobbying win.

However, smaller businesses who perceive they face unequal bargaining power when seeking goods and services from larger suppliers could feel less sanguine.

Larger businesses will undoubtedly be happy that business to business transactions have been removed from the ambit of the legislation.

However, they could still be concerned that aggressive use of the legislation will remove the certainty that standard form contractual documentation offers the market place.

On 25 June the Senate referred the Bill to the Senate Economics Committee for report by 7 September.

The closing date for submissions is 31 July.

As the Minister said in his second reading speech:

The government has also indicated its intention that this bill should be referred to a senate committee, and this issue will—no doubt—be further considered as part of that process.

No doubt.


It is finally noted that COAG signed off on an Intergovermental Agreement to underpin a uniform Australian Consumer Law at its Darwin meeting on 2 July.

Harmonising Australia's OH&S law - the next step

On 10 June the new Safe Work Australia Council held its first meeting.

One of the first things it was charged with was to give effect to the decisions of the Workplace Relations Ministerial Council (the WMRC) made on 18 May 2009 as to how model occupational health and safety legislation should be framed, following consideration of the two volume National Review Into Model Occupational Health and Safety Laws prepared by a committee chaired by Robin Stewart-Compton.

It decided it would release the model occupational health and safety legislation (and accompanying regulatory impact statement) during September.

The legislation is broadly based on the Victorian model.

The general test for liability will be whether it is ‘reasonably practicable’ to avoid a hazard in a particular workplace.

However, there is no longer a concept of ‘employers’ having duties to ‘employees’.

Indeed, the objective is to move away from the traditional emphasis on the employment relationship when working out whether a duty of care is owed; rather, the intention is to provide greater health and safety protection for all persons involved in, or affected by, work activity.

Company officers will be have a duty to exercise ‘due diligence’ to ensure that workplace hazards are reduced or removed.

The new legislation will also capture independent contractors as well as people working from home.

One significant change is the expansion of the duty of care imposed by OHS legislation owed by a business to anyone who is ‘in or adjacent to’ a workplace.

Whilst the Ministerial Council did say in its consideration of the Stewart-Compton report:

Care needs to be taken during drafting to ensure that the scope of the duty is limited to matters of occupational health and safety and does not further extend into areas of public safety not related to the workplace activity

this will be a tricky drafting job.

Done poorly, it could impact broadly on the general law relating to occupiers liability and negligence.

It remains open how uniform OH&S legislation will be.

As we have remarked earlier, paragraph 5.1.8 of the COAG agreement on OHS reform says:

The adoption and implementation of model OHS legislation is not intended to prevent jurisdictions from enacting or otherwise giving effect to additional provisions, provided these do not materially affect the operation of the model legislation, for example, by providing for a consultative mechanism within a jurisdiction.

And as we remarked earlier:

And so in this case legislation will be uniform – unless it isn’t.

As part of the WMRC decision, unions will not be able to commence prosecutions, and prosecutors must prove OHS offences beyond reasonable doubt – the Council expressly voted down the current position in NSW – making union stakeholders quite cross.

WA declined to sign the communiqué as they were unhappy about the use of conciliation to resolve OHS issues, the low standard of proof for workplace discrimination claims, union right of entry to workplaces and the level of gaol terms.

It remains a question how much of the national model each jurisdiction takes into its own law, although it is noted that uniform OHS laws are one of those things for which states and territories receive ‘reward payments’ under the National Partnership to Deliver a Seamless Economy.

So money may ultimately speak in favour of uniformity.

National Registration of Health Professionals - the next step

In a previous article we noted that a national scheme for the regulation of health professionals was being developed.

We said:

An intergovernmental agreement (IGA) to establish a scheme of national registration for health professionals was signed on 26March 2008.It is designed to establish a single national registration and accreditation scheme for the nine currently regulated medical professions ranging from doctors to osteopaths.

We also noted:

To allow the national scheme to commence on time (1 July 2010), the Queensland Parliament has passed the Health Practitioner Regulation (Administrative Arrangements) National Law Act 2008,which establishes the a single registration board for each of the nine professions as well as an Australian Health Practitioner Regulation Agency as (effectively) a company under Queensland law, that will support the various boards.

However, the finer details of the scheme are still being developed.

Another piece of legislation now being developed will fill these in.

It is intended to introduce the relevant Bill into the Queensland Parliament before the end of the year.

However, there is concern as to what sort of parliamentary oversight the Agency will be subject to once it commences operation – it is nominally an entity created by the Queensland Parliament, but exercises legal powers in all Australian states and territories.

There is also concern that the Australian Health Ministers Council rather than specialist professional boards can make the standards that health practitioners must meet – instruments not subject to parliamentary disallowance by any legislature. (UPDATE: the new legislation (discussed below) vests the making of accreditation standards with national registration boards)

It would appear that this issue in particular will not be subject to change because it is a structure that has been decided by COAG.

That said, the Senate Community Affairs Committee has decided to inquire into the proposed national registration scheme.The timing is a bit odd – well after the IGA that set the ball rolling, but only just before a draft of the proposed Bill setting out the nuts and bolts of the national scheme is released.

However, it is nevertheless a review.

The exposure draft of the legislation designed to introduce a national scheme of registration for health information (called the Health Practitioner Regulation National Law) has now been released, with the Committee (thankfully) extending its report date 16 August, so comments on the legislation can be taken.

One of criticisms we have with the executive federalism model of developing regulations (encapsulated by the COAG process) is the absence of parliamentary oversight of subordinate regulatory instruments made under the scheme.

Unlike its interim predecessor, the proposed final law allows for parliamentary disallowance of regulations.

This is good, but disallowance is not extended to registration standards, accreditation standards and codes of practice that go to who can (or cannot) practise as a health professional as well the guts of the detail as to how the professions will be regulated.

The issue of the level parliamentary oversight in the COAG regulatory model still requires to be worked through – hopefully this is where the working through will happen.

Harmonised occupational regulations for specified occupations - the next step

On 30 April COAG signed the Intergovernmental Agreement for a National Licensing System for Specified Occupations.

The national system will regulate a mish-mash of occupational areas.

The nominated occupation areas are: air conditioning and refrigeration mechanics;, building and building related occupations; electrical; land transport (passenger vehicle and dangerous good drivers); maritime; plumbing and gasfitting; and property agents.

As expected, COAG followed the advice of the decision regulatory impact statement and adopted a ‘national delegated agency’ model of licensing.

A national licensing board will head a national licensing body charged to develop national licensing policy.

This will enable the body to develop rules in areas including licence eligibility and maintenance requirements, licence classes, compliance and enforcement standards, disciplinary arrangements and licence fees.

The body will be aided by specific occupational licence advisory committees, who will provide ‘the principal source of advice’ on licensing policy.

Existing jurisdictional regulators will be expected to continue performing current registration/enforcement functions.

Victoria is the host jurisdiction for the proposed legislation. Other states will pick up the Victorian law by reference.

It is proposed to expose a draft of the proposed legislation in October with a view of introducing legislation into the Victorian Parliament in the second quarter of 2010.

It is an interesting licensing model.

Decision makers framing the laws governing what a particular trade can or can't do should have some background in the area so what is done is both workable and appropriate.

The National Licensing Board (which presumably will make rules such as licence standards) will constitute an independent chairman and up to eight other people, including two ‘regulators’ appointed on a rotating basis.

It is difficult to see how such a board (or the bureaucracy that supports it) would have the capacity to have a genuine understanding of, and thus make optimal regulations for, sparkies and realos and some classes of truckies….and air conditioner mechanics (amongst others).

One imagines the specialist subcommittees will be the real decision makers.

That is probably why the IGA requires a representative of the committee to ‘attend the board meeting to discuss (the measure to be enacted)’.

The proposed national legislation will need close examination to see whether this structure is genuinely workable.

To that extent, now that a host jurisdiction has been identified (Victoria), it is hoped that the parliament of that state will establish some form of committee structure to test the quality of the policy – and not just assess something against how well the wishes of an unelected COAG council has been given effect.

This includes appropriate measures to allow parliamentary scrutiny of rules that will govern who can enter the various trades and professions, and how they will be subsequently regulated.

The Seamless Economy Regulatory Project - Some Reforms

This series of articles illustrate that the manner by which Australian legislation is made is changing.

The articles show that whilst some consultation is undertaken at the margins, in many circumstances once something forms part of an intergovernmental agreement (an IGA) or is contained in a COAG resolution, it is next to cast in stone.

This leads to an undesirable democracy deficit.

A parliamentary process allowing the review of decisions emanating from the COAG process should be formalised.

In June 2008 the House of Representatives Standing Committee on Legal and Constitutional Affairs published a paper discussing constitutional reform.

The sole recommendation contained in the paper is that intergovernmental agreements should be automatically referred to a parliamentary committee for scrutiny and report to the Parliament.

This idea should be adopted.

It should also apply to draft bills that flow from an IGA.

IGAs and draft bills should also be referred to relevant committees of state and territory parliaments such as the Western Australian Uniform Legislation and Statutes Review Committee.

There should also be some capacity to permit parliamentary review where some COAG recognised body such as a Ministerial Council can make rules and regulations having the full force of law, such as the capacity to make standards for the national scheme for health professionals referred to in an earlier article in this series.

Thus, if a parliament of a participating jurisdiction disallows a subordinate instrument made by a ministerial council within the period of time that state or territory law permits the disallowance of subordinate instruments, the instument should be taken not to be in force anywhere in Australia.

In this way, the interests of all stakeholders can be heard, better legislation developed and the protections of a federal system of government retained whilst allowing the development of harmonised regulations that are seen as necessary to allow the Seamless Economy to efficiently function.

Decision makers in companies and industry associations will have to establish strategies to ensure their interests are protected as the new regulations underpinning the Seamless Economy develop.

The Seamless Economy Regulatory Project and Democracy Deficit Part 2

There are some signs that state parliaments may be commencing to assert their sovereignty over rule by COAG.

The Queensland Scrutiny of Legislation Committee considered the Health Practitioner Regulation (Administrative Arrangements) National Law Bill 2008, which established the framework to allow for the national scheme of registration for health professionals to commence.

It said:

It is the committee’s practice to draw to the attention of the Parliament any provisions of a bill which are to give effect to national scheme legislation. The committee, in common with the legislative scrutiny committees of the Parliaments of other Australian States and the Commonwealth, has identified concerns that elements of intergovernmental legislative schemes might undermine the institution of Parliament. The committees’ concerns relate to the potential for the executive to formulate, manage and possibly alter such schemes to the exclusion of legislatures. The committee has also warned against a perception of a reduced need for legislative scrutiny of an intergovernmental agreement proposed for ratification.

……

In The Constitutional Systems of the Australian States and Territories, Professor Gerard Carney provides a summary of concerns regarding the legislative scrutiny of national scheme legislation:

A risk of many Commonwealth and State cooperative schemes is ‘executive federalism’; that is, the executive branches formulate and manage these schemes to the exclusion of the legislatures. While many schemes require legislative approval, the opportunity for adequate legislative scrutiny is often lacking, with considerable executive pressure to merely ratify the scheme without question.

Thereafter, in an extreme case, the power to amend the scheme may even rest entirely with a joint executive authority. Other instances of concern include,for example, where a government lacks the authority to respond to or the capacity to distance itself from the actions of a joint Commonwealth and State regulatory authority. Public scrutiny is also hampered when the details of such schemes are not made publicly available. For these reasons, a recurring criticism, at least since the Report of the Coombs Royal Commission in 1977, is the tendency of cooperative arrangements to undermine the principle of responsible government. A further concern is the availability of judicial review in respect of the decisions and actions of these joint authorities.

Certainly, political responsibility must still be taken by each government for both joining and remaining in the cooperative
scheme. Some blurring of accountability is an inevitable disadvantage of cooperation – a disadvantage usually outweighed by the advantages of entering this scheme. But greater scrutiny is possible by an enhanced and investigative
role for all Commonwealth, State and territory legislatures.

Drawing from some specific criticisms made by the Committee, the Queensland Opposition said this when debating the Bill:

From the outset, it is important to note that there is broad support for national registration for health practitioners. Again, I repeat that there is broad support for national registration for the health professions.

There is overwhelming consensus of the need for consistently high standards and portability of registration of health practitioners across Australia. However, the problem lies with the national law that will establish an unaccountable political institution that will not only control and influence what health practitioners are taught but also how to treat and help sick people while following orders from politicians and bureaucrats without reproach.

The bill before this House is a sugar-coated toxic blend of important and required reform for a national health practitioner registration scheme with an accreditation and training proposal that threatens Australia’s envied position as having one of the best and most comprehensive professional standards of training and practice for our medical practitioners.

There is a need for a greater capacity for public involvement in the development of the regulatory structure of the Seamless Economy evolves is required. This is dealt with in the final article of this series.

The Seamless Economy Regulatory Project and Democracy Deficit Part 1

As a general proposition, the ‘applied model’ of legislation – where one jurisdiction will develop and pass model legislation through its parliament with the remaining states or territories subsequently passing legislation that picks up the model legislation is the favoured way of introducing harmonised legislation when regulating areas previously the province of states and territories.

Whilst nominally capable to amend legislation, state parliaments – including those chambers without government majorities - have typically accepted the national legislation without batting an eyelid, on the grounds that ‘COAG decided’.

This system can give rise to what can be called a ‘democracy deficit’, as can be seen in this example.

During 2008 the Australian Parliaments considered the Australian Gas Law, which instituted a single law for the Australian natural gas market.

South Australia was the lead jurisdiction. The Greens wanted to move an amendment to the legislation in the Legislative Council.

However, as the Greens Member said:

We are going through the motions here. We are able to ask some questions; I guess there is a democratic exercise there but, in terms of amendments, the pressure is very much on legislators here not to propose or to accept any amendments. Really, if we were honest, we are not the lead legislative jurisdiction; we are not the lead legislator: we are the lead rubber stamp. I think that is an outrageous way to pass laws in this country. Having got that off that my chest, I will move my amendments when we get to them.

As an Opposition member (and former Minister) explained:

The only other point I would make is that I doubt very much whether minister Conlon and indeed probably all the other ministers at the moment actually understand the legislation that is going through the council. It is actually only being driven by hard-working and very competent officers who work on this
as their livelihood, and the point that the Hon. Mr Holloway made is almost entirely accurate.

It is certainly my experience that, in trying to debate some of these issues as they were, not in relation to national gas but national electricity, and have a debate with some ministers in the past, they had no comprehension at all of the details of the legislation. Ministers get a summary brief from their office which says 'here is what has been arrived at. These are the major issues.'

The Green member continued:

There were no meritorious reasons that these ought not be accepted. However, as the Hon. Rob Lucas says, we are all in a difficult position, because our various executives have got together and decided what our laws should be, and here we are effectively being invited to rubber-stamp them.

Whilst supportive of uniform national approaches, I for one am not prepared to be a rubber stamp to the extent that I turn my back on sensible amendments that incorporate into our legislation recognised environmental and social principles. It just makes sense that we do it, and I do not think that it undermines the uniform national legislation.

In the ACT Legislative Assembly, when discussing the same legislation, the Green member said:

The reform or harmonisation of the national electricity market, as agreed at COAG's Ministerial Council on Energy meetings, has been happening steadily in the background without much, if any, input by state and territory governments.

Especially now that Australia has Labor governments across all states and federally, an ever-increasing number of decisions are being made at COAG level, meaning that decisions are not subject to the usual scrutiny that parliaments would otherwise have.

This means that these decisions can be made by ministers and their advisers without any public or stakeholder input and without any community consultation; we should be satisfied if they take external views into account at all. It seems that COAG is the new government that counts. It is appointed by premiers and chief ministers, not elected by people.

She also said:

Given the process through which this legislation has been developed, it is a farce to even discuss the matter here in this chamber. The agreements have already been made at the ministerial council level; even though the states and territories are going through the motions of debating the bill in each place, in actual fact the bill that just passed in South Australia is the only one that counts.

A colleague in South Australia, Mark Parnell, put some amendments forward which would take social and environmental aspects into account. However, these were defeated by the two major parties as there was significant pressure there in South Australia not to make any changes at all. Mr Parnell is concerned that the South Australian government is not the lead legislator but the lead rubber stamp for the energy reforms.

She concluded:

Due to the ambulatory forces, whenever South Australia amends its schedules, our legislation is automatically updated. This puts a lot of pressure on our minister for energy, the Chief Minister, to be alert and fully engaged in the COAG processes, where ultimately all decisions about our energy markets are decided—not here in the Assembly. It also leaves the Chief Minister with the responsibility for informing the rest of the Assembly when there are significant updates, as the schedules are inbuilt and not disallowable or even notifiable.

Thus, up until now it has been the case that ‘COAG says’. However as the next article shows, this could be changing.

The Seamless Economy Project - Is it a Good Idea?

The previous four articles illustrate how the regulations are made in an Australia with a seamless economy.

Many will say the Seamless Economy Project is good idea - Australia is an integrated common market, with people and companies commonly undertaking activities across state borders.

Moreover, Australia exists in a globalised world, with the complication of different rules in different states a reason not to come to Australia.

Regulatory difference is nothing more than a mere compliance costs that distort allocative efficiency with no public benefit.

In this case, there to be only one set of rules (usually encapsulated in legislation), preferably made by one legislative body – in our case, the Australian Parliament.

The states would have the role of (effectively) an English county council, concentrating on service provision based on national standards.

However, there are alternative arguments.

The (few) supporters of a federal system argue that citizens benefit where there is genuine "competitive federalism" –the idea that different jurisdictions will make different rules and regulations and have different levels of taxation, with each jurisdiction ultimately picking up what is "best practice" or face the loss of people and investment.

A similar argument is one holding that States are "incubators of innovation" –a place where different ideas can be tried, with the good ones taken up in the bad ones discarded - and if an idea is really bad, the entire nation doesn’t have to face the consequences.

To that extent, it is noted that in February 2009 the Standing Committee of Officials on Consumer Affairs have developed a discussion paper An Australian Consumer Law – Confident Consumers to assist in the development of a single national consumer law that will generally replace state based fair trading legislation.

Part III of the paper is entitled Consumer Law Reforms Based on Best Practice in Existing State and Territory Laws.

The Paper identifies a number of areas where activities (such as door to door sales, or lay-bys) are regulated in different ways (or not at all) and then asks for comments on what is ‘best practice’.

By definition, a single Australian consumer law would preclude this capacity to trial different forms of legislation.

Another danger is the development of a ‘democracy deficit’. This is discussed in the next article.

The Seamless Economy Regulatory Project - an Australian Consumer Law

On 2 October 2008, COAG adopted a recommendation from the Australian Council of Consumer Affairs Ministers to implement a national consumer law, based on the consumer provisions of the Trade Practices Act 1974.

The proposal is for current state based fair trading legislation to be replaced by agreed amendments to the Trade Practices Act, which will be picked up by state legislatures through the applied law model.

State based fair trading law will largely be repealed, with significant responsibility for consumer protection vested in the ACCC.

A discussion paper has been released seeking a degree of input into the structure of the IGA.

However, the input sought is limited. As pages 1 and 2 of the Discussion Paper says:

The purpose of this information and discussion paper is to:

Explain how the national consumer law will be developed; and

Explain the nature and scope of COAG's agreed reforms to create the national consumer law, and, in some limited circumstances, seek views on specific aspects of those reforms.

For example, COAG has decided that the law will provide consumers relief from an ‘unfair contracts’ contained within standard form contracts such as hire purchase agreements.

The ‘unfair contract’ provision proposed to be used is drawn from the law currently in force in Victoria.

The Discussion Paper seeks comment on whether small businesses should also be able to get relief from ‘unfair’ standard form agreements. However, relief from other forms of ‘unfair contracts’ appear to be ruled out because COAG has so decided.

That would appear to (notionally, at least) close off consideration of some of the recommendations of the Senate Standing Committee on Economics relating to relief from ‘unfair contracts’.

At page 49 of a report dealing generally with the unconscionable conduct provisions contained in Part IVA of the Trade Practices Act, non-government senators said:

We (the non government Senators) believe that the current Victorian legislative framework for dealing with unfair contract terms in consumer transactions should be extended to cover business to business relationships involving small business.

It will be interesting to see if the COAG decision will mean that it will be argued that this recommendation can’t be considered – simply because COAG has considered the matter and has made a decision.

The question of whether uniform legislation through the COAG process is a good idea or not is discussed in the next few articles.

The Seamless Economy Regulatory Project - National Licensing for Specifed Occupations

COAG has decided to harmonise the regulation of a number of trades and professions.

So as to improve efficiency and labour mobility, it is proposed to remove overlapping and inconsistent occupational licensing regulations.

The list of affected trades and professions is an eclectic one, constituting air conditioning and refrigeration mechanics, building and building-related tradesmen, electricians, land transport passenger vehicle and dangerous goods drivers, participants in the maritime industry, plumbers and gasfitters and property agents.

A regulatory impact statement (RIS) was prepared seeking comment on a number of issues.

However, as page 15 of the RIS makes clear, irrespective of comments received from stakeholders, it is proposed that a single national body will be responsible for ‘setting licence policy and a framework for operations’.

As with the registration of health professionals, there is no indication as to:

1. which parliament would have specific oversight of the single national body; and

2. whether it is anticipated that there is any parliamentary involvement in the development of ‘licence policy’.

COAG will sign an Intergovernmental Agreement (IGA) which will reflect the agreement between jurisdictions as to how the various trades and professions will be regulated at the proposed meeting on 30 April.

The next article looks at the development of a single Australian consumer law.

The Seamless Economy Regulatory Project - Occupational Health and Safety

On 3 July 2008 an intergovernmental agreement (IGA) was signed, which records a COAG agreement to introduce harmonised occupational health and safety laws.

It is proposed to implement harmonised OHS laws through the model legislation method, where a model principal Act supported by model OHS regulations and model codes of practice will be prepared.

Each jurisdiction would then give effect to the laws in as uniform a manner possible after having regard to the drafting protocols in each jurisdiction.

Unlike other national schemes, this agreement anticipates a capacity for some differences between states and territories.

Paragraph 5.1.8 of the Agreement says:

The adoption and implementation of model OHS legislation is not intended to prevent jurisdictions from enacting or otherwise giving effect to additional provisions, provided these do not materially affect the operation of the model legislation, for example, by providing for a consultative mechanism within a jurisdiction.

And so, in this case legislation will be uniform….unless it isn’t.

The Workforce Ministers Ministerial Council have agreed to resolve outstanding policy issues by May 2009, prior to the publication of an exposure draft in August.

There is no particular indication as to what policy issues are ‘outstanding’ between the jurisdictions.

The next article looks at the proposed national licensing scheme for specified professions.

The Seamless Economy Regulatory Project - National Registration of Health Professionals

An intergovernmental agreement (IGA) to establish a scheme of national registration for health professionals was signed on 26 March 2008.

It is designed to establish a single national registration and accreditation scheme for the nine currently regulated medical professions ranging from doctors to osteopaths.

The intention is to establish a scheme of national registration so health professionals can practise across State and Territory borders without having to re-register.

The national registration and accreditation scheme has at its apex the Australian Health Minister’s Council, assisted by an independent Australian Health Workforce Advisory Council.

A national agency is to provide assistance and guidance to the nine profession-specific boards, who will (amongst other things) make decisions relating to the registration of health professionals.

The scheme is to be implemented using the applied law model.

Queensland is the lead jurisdiction.

To allow the national scheme to commence on time (1 July 2010), the Queensland Parliament has passed the Health Practitioner Regulation (Administrative Arrangements) National Law Act 2008,which establishes the a single registration board for each of the nine professions as well as an Australian Health Practitioner Regulation Agency as (effectively) a company under Queensland law, that will support the various boards.

However, the finer details of the scheme are still being developed. Another piece of legislation now being developed will fill these in. It is intended to introduce the relevant Bill into the Queensland Parliament before the end of the year.

There has been significant consultation about various elements of the scheme.

However, there is concern as to what sort of parliamentary oversight the Agency will be subject to once it commences operation – it is nominally an entity created by the Queensland Parliament, but exercises legal powers in all Australian states and territories.

There is also concern that the Australian Health Ministers Council rather than specialist professional boards can make the standards that health practitioners must meet – instruments not subject to parliamentary disallowance by any legislature.

It would appear that this issue in particular will not be subject to change because it is a structure that has been decided by COAG.

That said, the Senate Community Affairs Committee has decided to inquire into the proposed national registration scheme.

The timing is a bit odd – well after the IGA that set the ball rolling, but only just before a draft of the proposed Bill setting out the nuts and bolts of the national scheme is released.

However, it is nevertheless a review.

The next article discusses the proposed harmonisation of occupational health and safety legislation.

The Seamless Economy Regulatory Project - How Regulations are Developed

In 21st century Australia, regulations identified for reform as part of the Seamless Economy agenda are made in this way.

An area for reform is identified by either COAG or one of its working groups.

In most (although not all) circumstances, the most appropriate of the 31 ministerial councils and committees will develop an intergovernmental agreement, which forms in effect the drafting instructions for the national legislation.

The Agreement is then usually put to COAG for ratification.

A process is then put in place to develop the harmonised legislation identified in the agreement.

One of three legislative models is usually used to capture the policy agreed by the participants in the COAG process:

1. the 'applied law' model – where one jurisdiction passes a 'template law, and the others adopt that law as a law of the jurisdiction;

2. the'national model legislation' model - where legislation is essentially the same, but allows for some jurisdictional variation; or

3. the 'reference' model – giving the Commonwealth the power to legislate in the relevant area, with the States leaving the field. This was the option taken for non-bank deposit making institutions as part of the Seamless Economy process.

Varying levels of public participation are offered in the IGA/legislation formulation process.

Ultimately, harmonised legislation is produced, with the product going to the relevant legislature(s) for passage.

The next four articles discuss how the harmonised legislation process of some of the identified regulatory hot spots are developing.

The Seamless Economy Regulatory Project - the Commonwealth Buy In

A National Partnership Agreement to Deliver a Seamless National Economy has been signed to encourage the development of the seamless economy.

It is part of an Intergovernmental Agreement on Federal Financial Arrangements, which aims to:

reduc(e) the costs of regulation and enhancing productivity and workforce mobility in areas of shared Commonwealth, State and Territory responsibility

through:

deliver(ing) more consistent regulation across jurisdictions and address unnecessary or poorly designed regulation, to reduce excessive compliance costs on business, restrictions on competition and distortions in the allocation of resources in the economy.

The areas where harmonisation was regarded as being desirable are listed in paragraph 21 of the Agreement.

The paragraph also says:

The States and Territories will have responsibility to work together, and for many specific reforms to work jointly with the Commonwealth, to implement a coordinated national approach….

Paragraph 22 continues:

The states and territories will also have shared responsibility with the Commonwealth for regulatory reform.

Finally, the ultimate Commonwealth weapon: there are ‘reward components’ payable under the National Partnership Agreement by the Commonwealth to states and territories in two tranches from 2011-12, with paragraph 32 of the agreement providing:

The Commonwealth will provide reward payments to the States and Territories following CRC (COAG Reform Council) advice as to the achievement of key milestones, as set out in the Implementation Plan for the 27 deregulation priorities.

So there is a significant Commonwealth buy-in of areas of traditional state responsibility.

The article discusses how regulations develop in the seamless economy.

The Seamless Economy Regulatory Project - Overview

On 15 May 2008, Brendan Nelson made his one and only Address in Reply to the Budget as Opposition leader.

One issued raised was the condition of the Australian federation.

He said:

It is very important for every one of us to ask ourselves in this the 21st century: how can we make the Federation work more effectively for our country in the interest of Australians? It will require all of us, in a mature and sober way, to examine the constitutional arrangements and responsibilities of the three tiers of government—who is responsible for what, how the money is raised and then how it is distributed.

However, those who are interested in the debate will have to hurry, or it will be too late - Australia will effectively be a unitary state.

Writing in The Australian on 10 June 2008, the federal Minister for Finance and Deregulation Lindsay Tanner said:

Across Australia there is recognition that our federation is a mess. We have this system because of how we started: a collection of separate entities, joined together to form a federation. In the intervening period, technological change and an increasingly global economy have transformed Australia in ways our colonial forebears could not have imagined.

He went on to say:

I no longer think that abolition of the states is the most practical or desirable reform option. But I do want to create a much clearer delineation of the roles and responsibilities of the different levels of government.

This is the prevailing view amongst Australian public policy makers.

In March 2008, the Council of Australian Government (COAG)

identified 27 areas where there was need for regulatory reform.

It called for the Commonwealth to take responsibility for non-bank lending institutions.

Other areas where harmonisation was considered desirable include occupational health and safety, environmental assessment and approvals, payroll tax, electronic conveyancing, licensing of tradespeople, registration of health professionals, rail safety, consumer law, a national construction code to ensure consistency in on-site building and plumbing regulation, maritime safety regulation and wine labelling –areas largely the responsibility of states and territories.

Progress in implementing the Seamless Economy agenda is tracked by COAG’s Business Regulation and Competition Workgroup.

The Commonwealth now has an additional weapon to drive the process, as will be discussed in the next article.