I’ve been having a look at the PC’s recent draft Review of Australias Consumer Policy Framework which at least on the reading I’ve done has some good stuff in it.
One thing, which must have been planned well before the change of government is that the report makes it clear how bogged down our federation is when it needs to move in a unified way. If that might have been a clarion call to the previous government, a rejection of the ‘blame game’, its a salutary warning to the incoming government which harbours ambitions to harmonise regulation between states.
Harmonisation is all very well. But that gives eight, nine or ten governments – depending on how you do the counting – the right of veto over any and every detail.
The current government has brought the federation to centre stage as the ‘workhorse’ of governments working for people so it will be getting sweaty palms trying to deliver.
On harmonisation the feds like the demarcation offered by the idea that harmonising the payroll tax base offers the appropriate degree of regulatory harmonisation after which the rate should be an expression not of co-operative federalism, but of competitive federalism. That sounds fine to me and I expect, that given it’s prominence as an issue and the preparedness to disgorge some funds to buy co-operation the Commonwealth will be able to get its way. But even that won’t be that easy. There will be difficult questions of compensation in which the Commonwealth may be required to reward poor past policy and so on.
But as the table above illustrates an awful lot of issues going to ministerial councils just go on and on. A business I run is caught up in the nonsense, it being four years since the Ministerial Council on Consumer Affairs first decided to regulate, though it was many more years before it got to that point. We still don’t have the regulation, though most states have set up their own (inconsistent) regulatory regimes in the interim.
If the national regulatory agenda is going to go anywhere, my suspicion is that it won’t get there on harmonisation. There are too many veto powers. And to take one example, how would you decide who was right and who was wrong on any number of possible disputes about some complex area like occupational safety and health? The only way through this quagmire it seems to me is for the Commonwealth to set up parallel regulation for any firm operating interstate to opt into that doesn’t want to comply with eight separate regimes to use. Though the states could object, there’s very little grounds on which they can do so legitimately. Once there was national regulation available on an opt in basis, the states could continue about their business, but if the regulation is not unduly harsher on firms than state regulation, fairly soon standards of practice will coalesce around the national regime and the states’ systems will become progressively more irrelevant.
The states could retain the power to introduce supplementary regulation where they felt stroganoff (sorry- that should have read ‘strong enough’) for instance with industrial manslaughter, but apart from that, the standard would have become a national one. So many areas are now essentially ‘technocratic’ rather than based on values that might conceivably differ between states that this principle applies widely and not least to consumer regulation.
Nicholas Gruen:
Harmonization is something with which member countries of the European Union have had a lot of experience.
My guess is that most of the information available in Australia on EU harmonization is in English.
There are undoubtedly a lot of people in multicultural Australia who are well aware of the pitfalls and the advantages of harmonization as they affected their own old homelands …. and who can readily access lively discussions on the harmonization issues in their own native languages.
My suggestion is that the taxpayers spend some money having some of these discussions, debates and brawls summarized and translated into English for the benefit of policy makers and the general public alike. There is no sense whatsoever in us trying to “invent the wheel” when so much of the hard work on harmonization has been done already in Portuguese in Portugal, in Slovenian in Slovenia. in Dutch in the Netherlands. We can learn from the triumphs and the blunders others.
The cost of doing so? A tiny tiny tiny fraction of what the AWB shemozzle cost us.
Nicholas
There are other ways through this quagmire, but your suggestion for the Commonwealth to set up parallel regulation for any firm operating interstate to opt into has merit since the alternative of having to comply with eight separate regimes is extremely inefficient and costly.
Other ways out of the quagmire:
1) States may refer their powers to the Commonwealth, as Kennet did with Victoria’s Industrial Relations law.
2) The Commonwealth may creatively use its broad corporations power, international treaties power or other constitutional powers to over-ride inconsistent state laws, as The High Court recently upheld in relation to validity of national IR laws.
3) Holding a national convention where functions of the three tiers of government are critically examined with a view to simplification of inconsistent regulations under a new constitution.
The third option is the cleanest and most transparent. The potential annual productivity gains for taxpayers runs into the tens of billions (about $30B).
However, in a nation of political minnows, it will take Mandela like leadership to deliver a significant constitutional amendment in Australia.
A convention would ideally produce a new constitution where the responsibilities of the commonwealth and local communities are strengthened in the restructuring of government in Australia.
The cost of maintaining 8 parliaments and their civil services would be hard to justify when one law making body for all Australians can manage regulation better than 8.
Michael,
Thanks for your comments. Of course if you can achieve any of the three approaches you enumerate they vitiate the option I outlined. But I think there’s a lot of merit in doing things more subtly. Soft power is always preferable to hard power where one gets a reasonable choice between them. And I think giving firms the option of regimes creates some nice incentives all round (so long as they’re not ‘race to the bottom’ incentives). I see regulation on a bigger canvass than as the simple exercise of delegated government power. A lot of regulation is done privately and operates via essentially voluntary standards. Ie the regulation of how the internet or much of the telecommunications infrastructure works. Wherever governments can maximise the voluntary nature of regulation but still generate the outcomes they require, they’re going to do a better job.