The Future of Our Federation: in safe hands?

"Never before have a group of self-governing, practically independent communities, without external pressure or foreign complications of any kind, deliberately chosen of their own free will to put aside their provincial jealousies and come together as one people, from a simple intellectual and sentimental conviction of the folly of disunion and the advantages of nationhood... the Australian Commonwealth, the fifth great Federation of the world, came into voluntary being through a deep conviction of national unity..."

Founding Fathers Sir John Quick and Sir Robert Garren.

"We need a new vision splendid," argued Australian Democrat Senator Andrew Murray recently. He said that our political and social contract is under serious strain, and not just because the Commonwealth has the money and the states want to spend it. He believes that some of this strain comes from our "creaking constitution and institutions" and the consequent need to modernise our governance. He also blamed the "centralising tendencies" of the Howard Government.

He was critical of any "mere managerial" solution, the principal example of which he says is the action plan recently proposed by the Business Council of Australia (BCA), (1) which has a focus on efficiency and which sees no need for radical changes to the powers of the states and the Commonwealth or for any major change to the constitution.

No reform of the Australian system will be successful, he believes, unless it accommodates revised checks and balances. "I'm talking political economy, a holistic approach," he writes. "You cannot fix the economic or the social effectively without fixing political governance. And that means reassessing the constitution, the separation of powers, a republic, whether the federation should stay, and, if it should, in what form, and the powers that state and the Commonwealth should each have."

He proposes another convention, but this time a standing convention for, say, 10 years, with a permanent secretariat and with a budget sufficient to allow for "full engagement and dialogue". This should be supplemented by a "university-based institute for constitutional change, producing discussion papers and fostering public awareness and debate".

These arguments are in the tradition of those who say our constitution is creaking under strain, shows its age and is in need of reform. What they really want is a constitution radically different from that which our founders chose. In political and media debates, "reform" does not necessarily mean improvement. In the Australian constitutional context, "reform" has long been shorthand for centralism and in recent years has been extended to a vastly increased political role for the judges as well as, of course, some sort of a republic. It often includes the removal of checks and balances, such as the states, the Senate and our oldest institution--and the one above politics--the Australian Crown. In addition, it usually depends on substituting judicial orthodoxy with a degree of adventurism, even where this is disguised in a genuflection towards literalism.

The age of our constitution is used as part of the armoury of the "reformers" who are wont to qualify it as coming from the "horse and buggy" era. They should be reminded that the American constitution is twice as old as Australia's and that few Americans would call for a drastic change. Indeed, constitutional longevity in a world where constitutional instability is the norm should be seen as a virtue and not a vice. As John Stone argues, ours is one of the finest--if not the finest--constitutions in the world. (2) The Australian people were more fully involved in the development and adoption of our constitution than any other people in the modern world. They determined the essence of the new nation in the constitution's covering clauses when, "humbly relying on the blessings of Almighty God", they agreed, in each of the colonies, "to unite in one indissoluble Federal Commonwealth under the Crown ... and under the Constitution ...". (3)

The intention of the founders and, most importantly, the people was very clear. Had the centralist politicians and the judges kept more to that intention, many, if not most, of the problems of overlap, centralisation and financial irresponsibility by the states would probably have been avoided. That intention was surely that the external affairs and spending powers of the federal government and parliament be limited to the list of powers which the people agreed should be of federal concern and that the states should be principally dependent on taxes they raised themselves. The intention was not that the states be reduced to their present mendicant status but that they should continue as they originally were: self-governing communities now united in a federation where the federal entity had limited enumerated powers.

The problem today is not so much in the constitution; it is in those who have effectively changed it without seeking the approval of the people, and in the knowledge, it should be noted that the people would have been most unlikely to agree. The answer is certainly not in the dissolution of the states, the substitution of regions even more dependent on the Commonwealth, the transfer of even more powers to the Commonwealth, in a vast increase in the power of the judges to govern us through a bill of rights, or in the grafting of some unspecified republic onto our constitution.

In the meantime, the consequences of the present unsatisfactory situation can be considerably mitigated by sensible working relationships between Canberra and the state capitals, such as those that seem to have been reached recently. But, above all, what is needed is a return to the principles of the constitution of our one indissoluble federal Commonwealth under the Crown--principles to which the Australian people have given their consent and which they have so regularly affirmed in a series of referenda.

THE FEDERATION IN CONTEXT

The Australian Federation is not some easily disposable appendage, some burden which good sense demands we quickly remove. It is not only part of our history; it remains one of the pillars of our nation. It flows from and is closely interrelated to each of the other pillars. Indeed, the federation and its institutions cannot be understood without placing them in the context of those other pillars, four of which came with the settlement in 1788. To say that is to denigrate neither the Aboriginal history of this continent nor the Aboriginal people. But modern Australia began with the settlement, which had both harsh and good consequences for the indigenous people. Some form of European settlement was inevitable, and the fact that the acquisition was British was, on all historical evidence and comparisons with other places, preferable.

The first pillar of our nation is English, which now is the world language and gives Australians particular advantages in all their international activity. The second pillar is the rule of law. Governor Philip was no dictator, and the penal colony was no gulag. Philip came with a charter of justice and governed under the law. We had the good fortune of inheriting the common law, probably the legal system most likely to provide simultaneously stability in government, the guarantee of freedom and the protection of life, liberty and property. With this came a belief and an assumption in the virtue of limited government--not as limited as the American colonies--but limited to the extent that it was understood that people should be left to run their own lives while the government concentrated on its core functions.

The third pillar is our oldest institution and one above politics, the Crown. This remains an important check and balance at the centre of our constitutional system. The consequence is that Republicans must propose a form of constitutional government that is at least as stable and as workable as the present system. They must persuade Australians that this change crosses the constitutional threshold--that it is "desirable, irresistible and inevitable". (4)

The fourth pillar the British brought is our Judeo-Christian values. This is not, and was not, a rejection of people of other faiths and, indeed, no faith. A glance at the very first sermon delivered in Australia demonstrated this when the Reverend Richard Johnson said: "I do not address you as Churchmen or Dissenters, as Roman Catholics or Protestants, as Jews or Gentiles, but I speak to you as mortals though yet immortals. The Gospel proposes a free and gracious pardon for the guilty, cleansing for the polluted, happiness for the miserable, and even life for the dead." (5) This eloquent and poetic theme has resounded through the history of our nation and is deep in the hearts of the people. It is there offering spiritual strength in times of trial and reinforcing our lives today. As Edmond Burke said: "We know, and what is better, we feel inward, that religion is the basis of civil society." (6)

These were the Judeo-Christian principles which, when mixed with the essentially Christian common law, guided Lord Mansfield in the celebrated case concerning the runaway slave, Somerset. Mansfield declared, probably apocryphally: "The air of England is too pure for a slave to breathe; let the black go free." (7)

These principles, seen through the religious revival that swept through Britain, gave birth to the great movement which led to the abolition of slavery, an institution which never tainted this land, alone among all of the continents. (8)

That theme that Richard Johnson enunciated is seen again at the time of the achievement of that last great pillar of our nation, our federation. In the meticulous drafting of and approval of our constitution, the Australian people were more involved than had ever occurred in the formation of any other nation. It is appropriate to recall that the theme that caught the greatest interest and strongest expression of public support was that the constitution should be adopted with a reference that what man does is done under God. This does not mean that Australians must belong to any particular religion or, indeed, any religion. But those values are at the basis of our legal, social and ethical system.

The fifth pillar was very much a gift from the British. They were the only colonial power that gave this to their colonies; indeed, most imperial powers did not even enjoy it at home. This was responsible government under the Westminster system. This brought self-government to each of the Australian colonies. The suggestion that self-government came because of Eureka is demonstrably false. The relevant bills were already prepared before that event. Even today, it is unlikely that Australians will move away from the Westminster system. The only realistic alternative is the American system, which, it should be noted, has never been successfully exported.

The final pillar of this nation is the federation, which, although first proposed by the British (9), was entirely our own decision. It depends on and is intimately interrelated with the other six pillars. Not only is federation a pillar, but the way it was achieved is also unique and is testimony to the political sophistication of the Australian people, the freedoms which they had inherited, and the wisdom of the colonial authorities.

Our nation was born without war, loss of blood or violence. That great founding father, Sir John Quick, who played a crucial role in achieving federation, wrote (with lawyer Robert Garran) that: "Never before have a group of self-governing, practically independent communities, without external pressure or foreign complications of any kind, deliberately chosen of their own free will to put aside their provincial jealousies and come together as one people, from a simple intellectual and sentimental conviction of the folly of disunion and the advantages of nationhood. The States of America, Switzerland, of Germany were drawn together under the shadows of war. Even the Canadian provinces were forced to unite by the neighbourhood of a great foreign power. But the Australian Commonwealth, the fifth great Federation of the world, came into voluntary being through a deep conviction of national unity. We may well be proud of the statesmen who constructed a Constitution which, whatever may be its faults and its shortcomings, has proved acceptable to a large majority of the people of five great communities scattered over a continent; and proud of a people who, without the compulsion of war or the fear of conquest, have succeeded in agreeing upon the terms of a binding and indissoluble Social Compact." (10)

The preamble to the Constitution Act that the British Parliament passed to give effect to our constitution--with some minor changes--expresses the nature of that compact and reminds us of the other pillars. It recites that the people of the several states, "humbly relying on the blessings of Almighty God, have agreed to unite in an indissoluble Federal Commonwealth under the Crown ... and under the Constitution hereby established".

Those words set out the essence of our federation, which was truly the success story of the 20th century. This is the context of our nation. Just as the United States was formed and still lives under its constitution, the Australian nation lives under and still operates under the pillars of our nation, which include our constitutional system.

The values that flow from the six pillars of our nation remain relevant today. They are the creeds that Australians have long held and should continue to hold today. Our federation can only be seen as a culmination of history and in the context of a strong desire and intention to retain the self-governing states as important entities in themselves. This desire to retain the autonomy of the states and their freedom from federal control explains the long delay until 1986 in removing the states from what was mistakenly thought to be only the nominal tutelage of the British ministers in relation to Crown matters. (11)

THE EXPANSION OF FEDERAL POWER.

Under our constitutional system, only two institutions straddle the Commonwealth-state divide. One is the Crown, the other is the High Court. Both are intended to be above politics. While the Crown remains unquestionably above politics, the High Court, or a majority of the court, has occasionally wandered beyond its role, never more so than in some of their more controversial decisions during the 1990s.

One policy which has dominated the court since 1920, and for which there is no constitutional authority, is centralism, once disguised as an objective exercise in literalist interpretation. This began as long ago as 1920 in the decision of the High Court in the Engineers' Case. (12)

According to Professor Geoffrey de Q. Walker, the case inaugurated a method of one-sided interpretation that contradicted the constitution's plain intention, ignoring the first principles of legal interpretation and violating the people's wishes as consistently expressed in constitutional referenda, as well as mocking their sovereign power. This, he says, denied the people the advantages of competitive federalism and increased the burden, cost and remoteness of government, more recently pushing the constitutional order to the brink of breakdown. (13)

The court has continued this trend in the recent decision in the WorkChoices case. (14) Whether or not we agree with the changes in the Howard Government's industrial legislation, it is difficult not to be concerned as to the consequences of this decision on the future of the federation. The court indicated, with Justice Michael Kirby and Justice Ian Callinan dissenting, that the Commonwealth's use of the corporations' power is almost without limits. The court had two decades ago come to a similar conclusion with respect to the external affairs power. (15)

No one could seriously say that this vast expansion of federal power was the intention of the founders or that it reflects the wishes of the Australian people. In fact, most of the failed referenda which involved giving more power to Canberra--some even rejected more than once--have been circumvented by High Court decisions which have favoured the Commonwealth. (16)

Professor Greg Craven observed that "the states should be in absolutely no doubt" that this latest decision "is a shipwreck of Titanic proportions. Not since the 1920s has the court struck such a devastating blow against Australian federalism ..."

"How," he asked, "a court can weigh every tiny word of a constitution without grasping the central premise that it was meant to create a genuine federation must baffle historians and psychoanalysts alike." This is, he said, "the greatest constitutional disaster" to befall the states in 80 years.

Reflecting the warning of Justice Kirby in his strong dissent, Professor Craven warned that the federal authorities now have an "open cheque to intervene in almost any area of state power that catches its eye, from higher and private education, through every aspect of health, to such matters as town planning and the environment". (17)

That this should worry conservative constitutionalists is well explained in the dissent of Justice Callinan. That this should also worry conservative politicians and their supporters was demonstrated when P.P. McGuinness warned that this decision could and probably would work both ways. A future government could attempt to regulate prices and incomes, re-regulate the labour market and, if socialism becomes fashionable again, effect the nationalisation of any sector of the economy. He wrote that the majority had "destroyed our federal system of government". They had effectively abolished any logical or sensible limitation of the federal powers. (18)

Professor Craven said there is not the "least chance that Canberra will use these powers comprehensively to take over such policy nightmares as our health and education systems". Instead, based on long practice, Canberra will employ its new capacity to "cherry-pick politically attractive items and to embarrass uncongenial state governments". In other words, the politicians will, thanks to the High Court, be allowed to behave like politicians.

In handing down its decision on November 14, 2006, the High Court majority said the fact the people may have indicated their objection to a specific change is of "no assistance" to them. That is, the fact the people may have refused to grant some power to the Commonwealth is to be completely ignored. The High Court has turned its back on--or, as Professor Walker says, mocked--the "quasi sovereignty" with which the founders specifically endowed the people. (19)

The result is that the High Court has abdicated much of its role as an important check and balance. As Professor Craven says, we no longer have "even a deeply biased constitutional umpire". The High Court "has given Canberra the key to the constitution". 

ADVANTAGES OF FEDERALISM

Professor Walker observes that for "a framework of government that has created a new nation and given it external security, internal peace, stability, progress and prosperity throughout the most violent, turbulent century in human history", our constitution has been subjected to an "inordinate" amount of negative comment. He says the chief obstacle to a balanced appraisal today is the failure of the critics to consider the advantages of federalism. He lists 10: the right of the citizen of choice and exit, the possibility of the experiment, the accommodation of regional preferences and diversity, participation in government and the countering of elitism, the better protection of liberty, the closer supervision of the government, stability, fail-safe design, competition and efficiency, and the resulting competitive edge for the nation. (20)

Professor Walker writes that the debate has hitherto focused exclusively on its disadvantages. More recently, there has been an increasing acceptance of the advantages of federalism. Those advantages were noted in the BCA report. (21) They were stressed in a major report in 2007 by Dr Anne Twomey and Professor Glenn Withers (22) to the newly formed Council for the Australian Federation, which brings together all of the Australian governments, with the exception of the federal government. They argue that by focusing too much on the problems in the operation of the federal system, we forget about the benefits of the federation, including checks on power, choice and diversity, customisation of policies, competition (although they do not mention it, unilateral action by the Queensland Government led to the abolition of that inequitable tax, death duties, in all states and at the federal level), creativity and co-operation.

The CFAF report drew attention to widespread media coverage of the BCA report, which suggested that the cost of inefficiencies in the federal system, or perhaps the federal system itself, cost $9 billion for 2004-2005, or $450 per Australian, a conclusion which was highly qualified in the report itself. The authors of the CFAF report preferred to measure the benefits of the federation from a comparative OECD study which found that, for the last half-century, federations had a 15.1 per cent advantage over unitary states. In addition, they measured the benefit of fiscal decentralisation, which ranges between an average of 6.79 per cent to "federal best-practice", exemplified by Canada, Germany and Switzerland, of 9.72 per cent.

Australia, they conclude, is the most fiscally centralised of the OECD federations, demonstrated by the fact that the states and territories raise only 19 per cent of taxes but are responsible for 40 per cent of public spending. As long ago as at the time of the creation of the United States, it had been realised that such vertical fiscal imbalance is inimical to good government. As a principle, governments should be responsible to the people who elect them for the money they spend. The CFAF report argues that the benefit to Australia from being a federation is already 10 per cent; and that this could be raised significantly by further decentralising our taxation system. The result would be to raise average incomes by $4,188 per annum.

WHAT CAN BE DONE?

Both the BCA and the CFF reports join in the premiers' call for a constitutional convention. But if one is held, it should not be about that "arid and irrelevant" issue, (23) a republic. Nor should it be distracted by the question of a constitutional bill of rights which bears no relation to the federal issue. The convention should be about the far more relevant issue: how to restore the federation.

Ideally, this convention could aim to propose amendments to:

• Ensure "vertical fiscal balance", so that the states would be responsible for collecting most of their income and answering to their electors as to how they spend it;.
• List those powers where state laws are to prevail. The absence of such a list allowed the High Court to launch, and maintain, its long adventure in forcing centralism on a reluctant nation;
• cap the extent of the external affairs and corporations' powers to the other shared powers;
• ensure that minimum bureaucratic overlap occurs in relation to powers, the exercise of which is effectively shared, and
• ensure the states are directly involved (and not just consulted) in determining the membership of the High Court. Why not, for example, allow each state chief justice or a nominee to join the bench as "ad hoc" justices in federal disputes?

The success of the constitutional conventions after 1893 was at least in part because they were mainly elected. Only one-half of the 1998 Constitutional Convention was elected, and that by a postal system too open to abuse. Many of the nominated members were effectively chosen as almost ex officio members, including the prime minister, the premiers and leading ministers. This process could be repeated for this convention, but with a higher proportion of elected members and a secure voting system. Prominent constitutional lawyers, political scientists and finance and business experts could be available to give advice, either to the convention as a whole or to individual members, both orally and in writing.

A wholly nominated convention would lack authority and would be open to manipulation and bias. It would have as much authority as the endless succession of "summits" which are called to settle some issue and too often to diffuse some debate. A recent example was the "history" summit to which Dr Keith Windschuttle, the leading and formidable critic of the current establishment--whose work resulted in a widespread loss of confidence in what is being taught in the schools and universities--was not invited to participate.

As to procedure, the governments should agree in advance that the principles of the Corowa Plan (24) should apply. This, proposed by Sir John Quick in 1893, ensured that the movement to federation was not bogged down in endless parliamentary debate. When the convention finalises its draft, say in 12 months. It should be made public and sent to all the parliaments for comment. After three months for comment (both parliamentary and public), the convention should have a period, say six months, to consider the comments and to finalise any subsequent changes. Following the Corowa Plan principles, the proposal would then be included in a bill for a referendum.

The obligation of the federal parliament to do this would be moral rather than legal, the same sort of obligation their predecessors in the states agreed to in the 19th century.

Adopting the Corowa Plan principles would ensure that the conclusions of the convention are put to the people for their decision and not just ignored or pigeonholed.

There is a clear need to restore the principles and essence of the federal Commonwealth, which the Australian people approved and have regularly affirmed. (25) Whether the states are to be restored or are to be even more emasculated, that decision should be made only by the people in a referendum and not by circumventing the constitution, which remains a splendid vision.

1. Business Council of Australia, Reshaping Australia's Federation: A New Contract for Federal-State Relations (2006).
2. ABC Radio National, 13 July 2006.
3. Preamble, Australian Constitution.
4. J. Quick and R. Garran, Annotated Constitution of the Australian Commonwealth (1901), p. 988.
5. An Address to the Inhabitants of the Colonies, established in New South Wales and Norfolk Island, by Richard Johnson (1753-1827); Ian H. Murray, Australian Christian Life from 1788 (Edinburgh: Banner of Truth, 1998).
6. Edmund Burke, Reflections on the Revolution in France (1790).
7. R. v. Knowles, ex parte Somersett (1772) 20 State Tr 1; (1772) Lofft 1.
8. Keith Windschuttle, "Australia and the abolition of slavery", Quadrant, April 2007.
9. David Flint, The Twilight of the Elites (Melbourne: Freedom Publishing, 2003), p.38.
10. Quick and Garran, op. cit., p. 225.
11. Anne Twomey, The Chameleon Crown: The Queen and her Australian Governors (Sydney: Federation Press, 2006).
12. Amalgamated Society of Engineers v. Adelaide Steamship Co. Ltd, (1920) 28 CLR 129.
13. "The Seven Pillars of Centralism: Federalism and the Engineers' Case", Proceedings of the Fourteenth Conference of The Samuel Griffith Society, 16 June 2002, vol. 14.
14. New South Wales v Commonwealth (WorkChoices Case) (2006) 231 ALR 1.
15. Commonwealth v Tasmania (Tasmanian Dams Case) (1983) 158 CLR 1.
16. David Flint, The Cane Toad Republic (1999), p. 160.
17. The Australian, 17 November 2006.
18. The Australian, 15 November 2006.
19. Quick and Garran, op. cit., p.988. Professor Walker prefers the term "sovereign power". See fn.13, supra.
20. "Ten Advantages of a Federal Constitution", Proceedings of the Tenth Conference of The Samuel Griffith Society, Brisbane, 7-9 August 1998, vol. 10, chapter 11; see also Greg Craven, "Federalism and the states of reality", Policy (Centre for Independent Studies), vol. 21, no. 2 (Winter 2005), pp. 3-9.
21. Fn 1, supra.
22. Anne Twomey and Glenn Withers, Federalist Paper I: Australia's Federal Future, a report for the Council for the Australian Federation (April 2007).
23. A term used by a Republican constitutional lawyer to refer to the Head of State debate: George Winterton, "Who is our Head of State?", Quadrant, September 2004, p. 60.
24. Quick and Garran, op. cit., p.153.
25. See Flint, Twilight of the Elites, op. cit., chapter 10, pp. 183-216: "Restoring the Federation".