Communist Party of Australia  


The Guardian

Current Issue

PDF Archive

Web Archive

Pete's Corner


Press Fund


About Us

Why you should ...

CPA introduction

Contact Us

facebook, twitter

Major Issues





Climate Change



What's On






Books, T-shirts, CDs/DVDs, Badges, Misc


Issue #1640      May 28, 2014


Dismantling the Federation

Since the formation of the Commonwealth of Australia, federal-state relations have been a hotly fought issue. The process leading to federation was a difficult one, fraught with contradictions arising out of the recognition of the benefits of federation and the reluctance of vested interests to relinquish their considerable sovereign powers. When on January 1, 1901, six self-governing British colonies became states in the new Commonwealth of Australia, these differences were far from resolved.

The Constitution was a compromise, but an important and progressive step forward in the history of Australia and the beginning of a process which in the decades to come saw further consolidation and centralisation as a nation.

The commonwealth government was given specific legislative powers including taxation, defence, foreign affairs and postal and telecommunications services. The states retained their powers over matters within their borders such as policing, hospitals, education and public transport and any matter not controlled by the Commonwealth. Two parallel systems of industrial relations emerged, federal relating to disputes (union coverage) that crossed state borders and state where workers were not covered by the federal sphere.

Labor Prime Minister John Curtin promoted nationalism and introduced uniform tax bills in May 1942 (albeit in part to support the war effort). “Whatever be the character of the Australian political structure – a structure which consists of a Federal Government and six State Governments – the fact is that all these instrumentalities are the agencies of the one people. We must look at this matter not only in the light of immediate requirements but also in the light of the evolution of the federal system.”

In the post-World War II period, the sometimes bumpy process of centralisation and independence from British colonisation speeded up. The federal government took responsibility for the development of a welfare system which applied uniformly across the states and territories. This and many other gains were the result of hard won struggles by the trade union movement and other community forces.

The Whitlam Labor government replaced the British honours system with an Australian one. It attempted to gain federal control of wages and prices but was thwarted.

The Keating Labor government set up the Council of Australian Governments (COAG) in 1992. Its ministerial councils and the COAG Reform Council in particular, played an important role in the adoption of uniform regulations and laws across Australia, including recognition of qualifications, food standards, The process of centralisation and development of Australia as a nation state has largely been driven by necessity, even if many of the policies adopted have been anti-working class.

But now, the National Commission of Audit report calls for “competitive federalism”. In reality, it is a proposal to take Australia backwards, to break the nation up into competing “sovereign states” in a race to the bottom wooing global investors. It recommends giving state governments access to personal income tax revenues, for the federal government to lower income tax rates and “allow room for the states to levy their own income tax surcharge”.

States would be able to compete by offering different income tax rates, lower minimum wage rates and other concessions in a deregulated and decentralised environment. Federal spending on health, education and other government responsibilities and services would be handed over to the states (or private sector), to do as little or much as they like, but without the money from central taxation revenue.

This is the policy that Abbott has begun implementing. The budget contained $80 billion in cuts over coming years to states for education and health amongst other cuts. The Audit Commission recommends abolishing a large number of national agreements between the Commonwealth and states, including $14 billion worth of National Partnership Agreements with tied funding. It calls for the abolition of the COAG Reform Council and what remains of its functions to be handed over to the Productivity Commission! This would be a huge step in undermining state-federal co-operation and co-ordination.

It would drag Australia back to pre-1901, leaving people without a proper welfare system, living from hand to mouth, fearing sickness in a system where user pays applies to everything. Competing corporate states would be left to swim or mostly sink. The federal government would remain responsible for defence, border protection, immigration, ASIO and other intelligence outfits. The reintroduction of knights and dames is symbolic of where the Abbott government would like to take us.

Next article – No fines, no accountability on Gladstone Harbour disaster

Back to index page

Go to What's On Go to Shop at CPA Go to Australian Marxist Review Go to Join the CPA Go to Subscribe to the Guardian Go to the CPA Maritime Branch website Go to the Resources section of our web site Go to the PDF of the Hot Earth booklet go to the World Federation of Trade Unions web site go to the Solidnet  web site Go to Find out more about the CPA