Competition between political entities, whether they are countries, states or cities, has correctly been identified as one of the fundamental conditions for creating prosperity. But in Australia, we have abolished the possibility of such competition at both the federal and the local level. If we want to prepare Australia for future growth it is high time to reinstall the ‘killer app’ that once made the West – and Australia – rich. [...]
For Australia as a nation, population growth is an opportunity. Many other developed nations in Europe and Japan would love to swap their problems of population ageing and shrinking for our task of dealing with growth. But we need to ensure that our growth is properly managed. Fixing the relation between Canberra and the states is a necessary first step. [...]
In terms of its land mass, Australia is the sixth largest country on earth. The distances between the state capitals are enormous and travelling between places within the states by means other than air transport can take many hours. Given these spatial characteristics, perhaps the most surprising feature of Australia’s political culture is what could be called ‘the Canberra reflex’. No problem is too local, no issue too miniscule that one could not find a pundit to argue that they would best be handled by the national government. [...]
Local governments could provide better services, like schools and fast development approvals if they received a higher proportion of tax revenue and a formal definition in the Constitution. There is a need for a strong and proactive local government that has more control over its purse strings and is more connected to the people it serves.
A country the size of Australia could be better served if it tried to delegate more tasks to lower tiers of government. Federalism is one way of achieving this, and many have cogently argued that it should be strengthened. Yet the very same arguments in favour of federalism also apply to local government. [...]
Federalism fosters the traditionally Australian, but currently atrophying, qualities of responsibility and self-reliance. It is desirable in a small country and indispensable in a large one. [...]