Will We Ever Learn To Love Canberra?


Ever since Alfred Deakin cut a deal with George Reid to entice the prevaricating Reid over to the cause of Federation, we Australians have had a rather ambiguous relationship to our federal state, the Commonwealth.

While patriotism reliably swells in our hearts at sporting events and Anzac Day, many of us can't quite shake the conviction that we are really Western Australians or Queenslanders or Victorians at heart. State loyalties are about more than an annual three-match rugby league series; they lurk in surprising strength at the fringes of our national politics, a latent fire ever ready for stoking whenever a state premier needs a cheap line.

One of the strange consequences of the politicking surrounding Federation was the decision to establish a new capital for the new nation, which would resolve the thorny issue of whether the seat of government should reside in Melbourne or Sydney. The new capital, eventually surveyed on the Molonglo floodplain near the hamlet of Yass, would be not more than 100 miles from Sydney, conveniently allowing Sydney-based professionals such as Reid the chance to practice at the bar while fulfilling their service to the nation.

As it turned out, by the time Canberra was finally founded in 1913, Reid had left federal Parliament to become Australia's High-Commissioner in London. His lasting legacy remains Canberra, a city which would not exist today if not for his deal with Deakin. One suspects the free-trading conservative barrister from Sydney's eastern suburbs, famous for his back room deal-making, would feel right at home there today.    

In the hundred years since Canberra's foundation, the city has grown into a modern and extremely pleasant metropolis. It has also come to symbolise federal government itself, with all its messy compromises and blame games. Mention “Canberra” today in a certain context, and talk turns not to summer car festivals or a dearth of small bars, but rather a city of moochers, of indolent public servants and bickering politicians living high on the proceeds of the rest of the land. Like Washington or Brasilia – but not, for whatever reason, St Petersburg – Canberra's misfortune of enjoying a legislated origin has laid the basis for its disdain in the rest of the country.

In a way, it could even be said that the Canberra-bashing signifies a continuing struggle over the current meaning of Australia's federation. While “Canberra” – by which I mean, of course, the federal government – has grown steadily more powerful in recent decades, the slow eclipse of state powers and jurisdictions has not proceeded without a struggle.

The framers of Australia's constitution, as influenced by American ideals as British, envisaged a rather constrained set of powers for the Commonwealth which would concern itself most notably in external affairs. By the time Alfred Deakin set about constructing some of the institutions laid in the constitution, such as a federal army and navy, and the High Court, the former colonies were already complaining about the Commonwealth's over-weening ambitions. It has been that way ever since.

Tomorrow, we will no doubt see see another example of the seemingly endless mutual antipathy between the states and the Commonwealth. The setting will be the Council of Australian Governments meeting, held, most appropriately, in Canberra.

The main topic on the agenda will be the federal government’s schools funding reforms. The Gonski reforms, as they have become known, are about evening up the complex and dysfunctional patchwork quilt of school funding system across the states and the territories. But that means they inevitably tread heavily on state powers. Primary and secondary education has always been a primary responsibility of the states and territories – one they have discharged with little help from the Commonwealth for more than a century. Non-government schools, including the extensive Catholic system, have also generally operated under state laws and regulations. Federal governments that have sought to improve schools funding – such as Gough Whitlam's government in the 1970s – have thus had to negotiate every step of the way with the states to get anything done.

As usually happens when Canberra deals with the former colonies, the best weapon generally turns out to be bribery. This is because the states don't raise enough revenue. Ever since Canberra wrested control of income taxes away from the states during World War II, the states have had to deal with the dreaded “vertical fiscal imbalance”. This is the nerdy term given to Australia's rather rickety taxation system, under which the Commonwealth raises the bulk of the taxes, while the states deliver the bulk of the public services.

And when it comes to public services, schools are amongst the most expensive line items. Typically, education is the second biggest item of state expenditure after health. One of the reasons the state premiers are so prickly on the issue of Gonski reforms is that they are the ones who fund Australia’s public schools system. Commonwealth education funding, as the Gonski Review categorically established, goes mainly to universities and private schools.

In the light of these baseline facts, it's worth unpicking the details of the supposedly lucrative deal Peter Garrett is offering to state and territory education ministers. Like so many government announcements, it's not nearly as much money as it first appears. The figure most commonly reported, of an extra $14.5 billion over six years, is actually an aspirational figure that includes only around $9 billion from the Commonwealth, with the rest being asked of the states. Moreover, $2.34 billion of that figure is not “new money”, in the sense that is simply a continuation of existing National Partnerships Program funding that was due to run out next year.

If we cast our minds back to the recommendations of the Gonski Review, however, this figure is well short of what the review recommended. The number it came up with was around about $6.5 billion a year in extra funding, split 2:1 between the Commonwealth and the states. As Margaret Clark notes in a compelling blog post at Larvatus Prodeo today, the true figure to implement Gonski's funding recommendations would be around $39 billion across the six years of the government's current proposal.

You can see why states like Western Australia are fractious. Ideologies aside, the federal government is offering only modest top ups to state education budgets, even while it continues to shower private schools in money. The result is that the Commonwealth's huge distributions to non-government schools will stay, while the bottom-tier public schools will get only modest increases in funding. This has led some education policy experts, such as Monash University's David Zyngier, to argue that “despite being touted as 'school funding reform', the government’s announcement this week in fact merely maintained the status quo.

All of this shows how hard it can be for a reforming government in Canberra to bend the states and territories to its will. Ultimately, Julia Gillard has the biggest wallet. But in the current political environment, she has very little of that other political asset: time. Canny negotiators such as Barry O'Farrell have every incentive to wait her out, in the hope of securing even more money. 

Gillard's schools difficulties show the enduring tensions built into Australia’s federal system. The idea that the Commonwealth would end up supporting a multi-billion dollar network of private schools would have seemed far-fetched to Andrew Clark and his nineteenth century colleagues. But the horse-trading between obstreperous premiers would have struck him as entirely familiar. 

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