THE former Prime Minister Mr Bob Hawke's suggestion that changes to the Australian Constitution should include abolition of the states reflects a common community view that we have too many politicians and unnecessary duplication, and that, if we were starting again, we would not have state governments, but a Federal Government and a series of regional governments. Implicit in this view, though not always stated, is that local governments would also be subsumed into new regional governments, perhaps totalling 20.
While such a development is unlikely, some facts may help us make judgments about the present situation.
The figures in the accompanying chart suggest that, as the Commonwealth spends not much more than the states, but employs far fewer people, it may be more efficient. However, the lower Commonwealth employment mainly reflects its responsibilities for social security benefits, whose payment requires fewer staff than do labor-intensive services such as health, education and police, which state governments deliver. Local government, however, accounts for a relatively small proportion of total government spending (six per cent) and its share of total government employment (nine per cent) is quite a bit higher.
There are marked differences between the three levels of government in the proportions of total spending absorbed by general administration (which includes the cost of politicians and parliaments as well as bureaucrats who are not providing specific services). Only 4.7 per cent of state spending goes on general administration, but it makes up 8.4 cent of Commonwealth spending and no less than 13.1 per cent of local government expenditure.
These figures are not conclusive, but they suggest that the economic case for trimming government by abolishing state governments is not strong.
They also suggest that, with 900 councils throughout Australia which have relatively limited responsibilities, we are considerably over-governed at the local government level.
My analysis of local government in Victoria shows that there is the potential to save ratepayers about $500-$600 million a year by halving the number of councils and introducing other reforms. Larger councils, of course, have the potential to provide stronger local government.
There are three key points to keep in mind in this debate. First, there is enormous scope within the existing government structure to reduce the burden of taxes by improving the efficiency with which existing services are delivered and by concentrating welfare assistance more on those in genuine need. My research showed scope to cut Commonwealth spending by $9 billion, for instance.
Second, the abolition of state governments would not get rid of the need to deliver education, health or other services at various regional centres. That would require regional administrations with provision for some form of elected political representation.
Replacing eight state governments with (say) 20 elected regional governments, would not save money unless existing local governments were largely eliminated. But that could be done now.
Third, a move to a two-tier system of government would not in itself remove the problem of duplication between the Commonwealth and whatever regional level of government existed. Exactly the same issues would arise as to which level of government should have the final say on matters such as the environment and Aboriginal affairs, not to mention education, health and other mainstream services.
The existing duplication between the Commonwealth and state governments is considerable, but it probably does not involve large additional expenditure on administration. It could be eliminated if agreement over appropriate responsibilities and national uniformity could be reached at the political level. That, however, illustrates the problem! There will always be those who think that government services can best be determined from Canberra and provided on a uniform basis around Australia. Equally, there will always be those who prefer to have the capacity to vary services according to assessed regional preferences and needs, and who fear having too much power concentrated in Canberra.
The solution is not to proceed down the dead-end path of debating the existing tiers of government, but to institute new methods of operation which allow services to be provided in a more competitive environment, as is now being done increasingly overseas. Whatever the level, the most urgent need is to change the government's focus from service delivery to an enabling function which provides funds for, and regulation of, such services.
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