Why the Liberals should be federalists again

Tony Abbott is an unrepentant conservative centralist. Giving some initial publicity to his forthcoming book Conservatism After Howard, he told journalists that he wanted the Constitution changed to give the federal government complete power to pass laws over-riding the states:

The electorate wants problems solved and they don’t want a treatise on why the relevant level of government can’t solve a problem because it lacks the power.

“The federal government is totally hamstrung by the legal authority that resides in the states. Where the federal government needs to take charge, it shouldn’t need to bribe the states to do so – and it only operates as long as the bribe is in place.”

Some new polling suggests that, with some regret, the electorate agrees with him. As a general principle, a slim majority supports the proprosition that

It is better for decisions to be made at the lowest level of government competent to deal with the decision.

But in practice nearly 80% agree that “where there is an important issue that state governments are not solving, the federal government should step in to resolve it.” Overall, 82% of respondents rated the federal government’s performance as quite good or very good, compared to 57% who gave that rating to the states.

Personally, I think this is a misjudgment (though that is perhaps easier for a Victorian to say than those living under the wretched Iemma government). The reason the feds look good is that giving money away, the main thing the Commonwealth does, is easy compared to running hospitals, schools, or public transport. The idea that a physically remote federal bureaucracy, with little experience in service delivery, would do a significantly better job than the states is, if not implausible, far from self-evident.

It’s also far from self-evident that it makes sense for a Liberal member of federal parliament to advocate more centralism. The more the federal government is seen as responsible for Labor-owned issues such as health and education, the less likely the electorate is to vote in a Liberal government. By contrast, issues which have a strong national component – the economy, immigration, defence, and taxation – are issues on which the Liberals have generally been the preferred party. The more federal elections can be about traditionally strong Liberal issues, the better the party’s chance of winning.

Federal encroachment on state issues has another negative consequence for the Liberals. It allows incompetent state governments to shift the blame for their own under-performance to the federal government, depriving Liberal state oppositions of the chance to hold state Labor clearly responsible for shortcomings in service delivery.

The Howard government’s centralism was both a policy and a political mistake. Conservatism after Howard should in this regard be more like conservatism before Howard: solidly federalist.

6 thoughts on “Why the Liberals should be federalists again

  1. “depriving Liberal state oppositions”

    Speaking of which, have any state Liberal leaders responded to Abbott’s plans to turn their putative governments into glorified local councils? I’ll bet they are thrilled.

    If you want to see a country that looks like what Abbott wants, look to England. Westminster runs everything from nuclear weapons to police to schools to the remants of the empire. And it’s pretty muched all stuffed and has been for ever.


  2. Perhaps the suggestion reflects a degree of frustration by Tony Abbott with the place of federal-state relationships in the media spin cycle ?

    An unashamedly very subjective view of the run-up to the last federal election was that, even when the states and territories dropped the ball – repeatedly – they pointed the finger at Canberra and squealed for more money.

    Canberra collects the taxes and takes the heat; states and territories flush it down the drain, cry poor and suggest aggrieved citizens protest to the Feds.

    Possible thought bubble by Messrs Howard and Abbott “holy cow – we’re damned if we do and damned if we don’t !” ?

    I am actually happy to entertain a debate on this subject and encourage Tony Abbott to chip in his two cents worth. As you say, it may ultimately be to the regret of the right-of-centre parties to take such an argument forward. But what the hey – the only certainty at the moment is the inevitability of change, so even political conservatives might as well try to ride the change wave.


  3. I absolutely agree with you Andrew. I’m increasingly thinking that the LDP should re-badge as primarily a federalist party.

    And more than just decentralising to the States… I think there is scope to decentralise various programs to a more local level (though I’m not exactly sure how as local governments also need reform).


  4. The best path forward for conservative politics is to return to basic and advocate the maximum decentralisation of decision-making. Whether it be enterprise bargaining shifting to a workplace or individual level rather than being industry-wide, the shifting of federal powers and responsibilities to the states or moving control of schools from state Education Departments to local communities through local school councils, decentralisation is a policy that both conservatives and libertarians can sympathise with.

    There is also the problem of vertical fiscal imbalance. Increasingly, I am starting to think that we should return to the originally intended situation with revenue and abolish federal income taxes and embrace tax competition between states a la Switzerland. As the death tax example shows with the Bjelke-Petersen Government, having taxes levied on a state basis would in effect create a market for residency, ensuring that the overall direction of income taxation is downward; why stay in SA and pay 50% income tax to subsidise the welfare state if you can move to, say, WA and only pay 20%? With that I would also move health and education completely back to the states and abolish those federal departments (with the possible exception of universities)

    It is disappointing to see conservatives such as Abbott and Stoner espousing centralist tendencies; it seems there are few in politics who are willing or able to clearly articulate the case for federalism. Certainly the prevailing view among the ordinary classes, at least anecdotally, runs along the lines of ‘we’re overgoverned so let’s abolish the states’.


  5. I remember Wolfgang once said “just follow the money”. The centralisation of revenue raising (at least the vast majority of it) is the key to the problem. Difficult to imagine it ever changing though.


  6. It should come as no surprise that a self confessed conservative and former Howard Minister like Abbott is attacking federalism. As you have pointed out previously, Howard was a big government conservative and big government means central planning. As Hayek has shown central planning requires an agreed hierarchy of goals that the plan is seeking to achieve. With a Federal system there are the competing goals and plans of the local, State and Commonwealth governments, so it isn’t surprising that a big government conservative like Abbott would wish to curb the powers of other governments to enable his own plan to be implemented.
    If the Liberal Party is to embrace Federalism again, it must first ditch its addiction to big government. This would require a historic shift as the Liberals have always presided over an expansion of government whenever they have been in power.
    Temujin – I think the LDP’s focus should be on the space left vacant by the Liberal Party – individual choice, personal responsibility, markets, limited government and lower taxes. Re-badging the LDP as a federalist party would require difficult decisions about allocating government’s functions to the various levels of government. Despite support for the principle of decisions being made at the lowest level of government competent to deal with the decision, there is no ‘science’ behind determining which level of government that should be. Pursuing this path would distract the LDP from its’ main task of convincing people that big government is bad for them and bad for Australia.


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