By Nigel D'Souza
The recent storm in a teacup caused by the remarks of minister for the environment Ros Kelly were the first publicly fired shots in the internal debate within the parliamentary ALP about "new federalism".
Although this process, which has every area of federal and state government under hasty review, will have serious and long-term consequences, it has proceeded to date with very little public discussion.
Early on, discussion in the media was restricted to the question of "micro-economic reform". The last special premiers' conference reached agreement on road and rail freight and electricity generation.
These have been the public side of "new federalism". A parallel review of the community services area is also occurring which calls into question the nature of "new federalism" and who exactly will benefit from it.
The Hawke government has defined this notion as one which seeks make Australia an efficient international economic competitor. To achieve this, it says, it is necessary to get rid of obstacles to the smooth operation of internal markets.
The colonial legacy of state government powers is a considerable hindrance to business, each state having regulations that businesses have to take account of. Neither is the infrastructure of a sufficiently "national" scale to allow the efficient operation of the market from business's point of view.
In order to achieve these changes, the Hawke government needs concessions from the states, which see this as an encroachment on their powers. To appease them, Hawke is offering something in return. That is where the problem comes in.
As a trade-off, the Hawke government has agreed to review community services (children's services, Aboriginal affairs, housing, disabilities, aged care, health) with a view to releasing special purpose payments to allow state governments greater flexibility with their budgets.
The Commonwealth raises 80% of all public funds but spends only 60%. The other 40% is spent by the states, which raise only 20% of all state and federal funds.
The federal government redistributes some of the money it raises by making two basic forms of payments to the states. These are known as financial assistance grants (FAGs) and special purpose payments (SPPs). FAGs can be spent by the states according to their own priorities, while SPPs are "tied grants".
Disadvantaged (read oppressed) groups have, over the years, demanded services from the Commonwealth government which the states have either been unwilling or unable to provide. This has resulted in a growth of ortant for women, migrants, Aborigines, children and disabled people.
SPPs fund areas such as home and community care, women's health screenings, housing assistance for Aborigines, environmental restoration and children's services.
SPPs have always been an irritation to state governments. Many come with conditions attached — for instance, in order to receive some SPPs the states have to match Commonwealth government expenditure, as in the Family Support Program or the Supported Accommodation Assistance Program.
The federal government has also been cutting back on untied financial assistance. This has declined in real terms, contributing to the development of the deficits in state budgets.
This is explained by the Australian Council of Social Services:
"Since 86/87 the real value of the FAGs has declined by 27%. They have been reduced from 47% of all state revenue in 86/87 to 28% in 90/91. A good deal of the Commonwealth's transformation of its deficit to a surplus has been at the expense of state government revenue: Commonwealth payments to the states has been cut at about twice the rate of cuts to its own programs since the mid eighties."
The Hawke offer is: Give us the means to enable capitalism to make profits efficiently and we will give you what is important for the needy, the disadvantaged and the most oppressed, and for those services which are useful for the day-to-day lives of most people, without strings attached.
The conservation groups which publicly revealed internal divisions within the Hawke government about this fairly secretive process have done us a favour by creating an opening for some public discussion and protest. Unfortunately, the media cannot see in this issue any further than the Hawke-Keating leadership tussle.
A number of deals have already been "stitched up" in the "new federalism" in Aboriginal affairs and disabilities care.
The Australian Aboriginal Affairs Council, which consists of all state ministers and the Commonwealth minister for Aboriginal affairs, met in Alice Springs and approved a plan that will shift the balance of power towards the states again. Given the political struggles that both Aboriginal and non-Aboriginal people have been through to give the Commonwealth the constitutional and moral power to ensure there are nationally consistent standards for the attainment of Aboriginal rights, this move can only be viewed as a political setback.
Apart from the issue of national standards for protection of the environment, what is being created is eight different systems for provision of welfare, social services, housing, health, children's services, women's services etc. It doesn't require great imagination to see what this would mean, especially when state governments are strapped for cash and when we see the logical conclusion of Hawke's brand of monetarism in the NSW Greiner government.