A fine states of upheaval

Federal politics - with Mungo MacCallum

So much for co-operative federalism. Paul Keating’s famous dictum that you should never stand between a state premier and a bucket of money, and his other advice that you should always back self interest because you at least you knew it was always trying, has seldom been more dramatically confirmed.

The barney over last week’s COAG, culminating what appears to have been an immovable standoff, has made it abundantly clear that the only consensus in which the premiers are interested is that they all want the biggest share of the loot as possible. When Treasurer Joe Hockey suggested that they might be prepared to freeze the previous year’s grants in order to unlock the perceived reduction proposed for Western Australia, the idea lasted about a nano-second. Not only were the other premiers outraged at the notion that they might lose out for themselves but Tony Abbott promptly intervened. Our Prime Minister might not be very good at figures, but he could see, counting on his fingers if necessary, that five premiers add up to rather more than one. His suggestion that they could all sort it out for themselves in a mature and sensible discussion was about as likely as his desire to pass the last budget.

Everyone ganged up on the Western Australian premier Colin Barnett, especially when he unwisely mentioned that his state had contributed to the relief of floods and bushfires in the east, so that they might like to reciprocate. It was an idea uncomfortably reminiscent of Abbott’s own suggestion that because Australia had sent money to Indonesia after the tsunami, Joko Widodo might like to consider mercy for the convicted drug smugglers Andrew Chan and Myurun Sukumaran. Like the Indonesians, Barnett’s COAG colleagues (or rather antagonists) regarded it as deeply insulting: now not only was the Western Australian a reckless fiscal spendthrift and an arrogant and bumptious upstart to boot, he was now behaving like a moral blackmailer. And so Barnett sunk slowly into the west, complaining all the while. And let’s face it, the Western Australians have always been a grumpy lot. It probably has something to do with distance – after all Perth is a lot further from Sydney than Urumqi is to Beijing. That makes it one of the most isolated cities on the planet.
And it shows – even the nicknames given to the various states are a giveaway. Queenslanders are Banana Benders, New South Welsh are Corn Stalks, Victorians are Cabbage Patchers, Taswegians are Apple Polishers, cheerfully agricultural sobriquets. Moving further, South Australians are Crow Eaters – more than a touch feral. But in the far west, they are Sand Gropers, a bit like a more primitive life form. No wonder they sometimes feel paranoid. Western Australia was always reluctant to commit to the federation; in fact it did not sign up until the Commonwealth offered to fund the Kalgoorlie to Port Augusts railway link – a worthwhile piece of infrastructure, but a bribe nonetheless. And it was only the first of many. But it wasn’t enough, and in 1933 the state government put forward a referendum for Western Australia to secede and form a separate entity, although it was never entirely clear that it would become. The referendum was passed by a convincing 68 per cent, but the British government, which administers the act governing the Australian constitution, kyboshed it: the Sand Gropers had to stay put. And not entirely coincidentally, also in 1933 the independent Commonwealth Grants Commission was set up to allocate monies from Canberra to various states and territories.

The west was given what was rather demeaningly called mendicant status, which meant that it, along with all the smaller states and territories, got a bigger per capita handout than any the two powerhouses, New South Wales and Victoria. And it clung remained a mendicant for many years to come. But eventually the mining boom changed all that – undreamt of wealth flowed into the Perth Treasury, and, after a time, its federal grant was reduced as a result. Now there was more talk of secession, but this time in triumphalist terms: why should the golden West have to fund the rest of those bludgers in the East? Let’s go it alone. Perhaps fortunately the movement never really took off, and then, of course, the crash came. But there has always been a lag time around Grants Commission allocations, and that has what caught up with Colin Barnett and Mike Nahan. And perhaps unsurprisingly, there has been little or no sympathy from the other premiers and treasurers, already beleaguered by the cuts imposed by Tony Abbott and Joe Hockey. What goes around, comes around. Once the premiers were safely out of Canberra, Nahan revealed that Abbott had slipped him a $660 million backhander when the others weren’t looking, apparently as a pre-payment for infrastructure development; but even when that is confirmed, it remains the most temporary of fixes.

So what, if anything, is to be done? Abbott has flagged the possibility that the earlier cuts to commonwealth hospital funding might be reconsidered, which would give relief not only to Barnett, but to the premiers all around; that would likely produce some kind of temporary agreement, and in July there is to be some sort of retreat – although not, presumably, the sort Abbott habitually manages on policies like Medicare co-payments and paid parental leave. But a cosy gathering in the bush somewhere just might give some substance to Abbott’s rather optimistic claim that COAG has been a success. It did, admittedly, give rise to some sort of consensus in that everyone deplored both domestic violence and what Abbott somewhat hyperbolically called the ice epidemic.

So all was not lost. Sometimes the premiers can agree – as long as their own shares of Canberra’s money is not an issue. But the basic problem remains: the states want more money for the services they are expected to deliver, and the commonwealth is reluctant to give it to them. And unless and until that stalemate can be broken, we can still expect a perennial plaintive plea of penury from petulant premiers proclaiming from the periphery in perpetuity. Some things will never change.