CEDA national president and chairman Ivan Deveson is today calling for Australia's federal and state governments to improve relations as they tackle new areas of economic reform.
Mr Deveson says state and federal governments must come to a new understanding on how to handle responsibilities in areas such as health, education, water resources, infrastructure and industrial relations.
Mr Deveson's comments come as CEDA launches its 2005 Economic and Political Overview, which reports to CEDA's more than 800 member organisations on the year past and the year ahead.
The Overview stresses the growing overlap between state government responsibilities and national reform needs in health, education, water resources, infrastructure, industrial relations and other policy areas. (CEDA has identified these new national reform needs as the targets for a "third wave of reform". The first wave was the internationalising of the economy under the Labor Government in the 1980s; the second wave was the tax reforms of the Coalition.)
Authored by Professor Ken Wiltshire, the political section of the Overview says the Liberal Party has been transformed in recent years: it has become far more willing to centralise power in the hands of the federal government. The Overview notes that in recent months the Federal Government has signaled its willingness to intervene more aggressively in both industrial relations and several areas of education.
The Overview warns that this transformation within the Federal Government raises the risk of long and unproductive disputes between the federal and state governments as they tackle the new generation of policy challenges.
The Overview also contains forecasts for the Australian economy by Dr Chris Caton. His section of the Overview paints 2005 as a battle between slowing residential construction and consumer spending on the one hand, and an improving export sector on the other.
The 2005 Economic and Political Overview was released this morning at CEDA's Brisbane Economic and Political Overview conference, the first of six conferences taking place over the next ten days in each of Australia's state capitals.
Comments and extracts are below; a zipped PDF-format copy of CEDA's 2005 Economic and Political Overview is attached to this release.
Comments from Ivan Deveson
On relations between state and federal governments:
"The third wave of Australian economic reform needs to target health, education, water, infrastructure and industrial relations.
"To a significant degree, these policy areas have traditionally been run by the states. But they also must have national leadership.
"CEDA understands that it is sometimes difficult for state and federal governments to put aside their political differences and work together on issues.
"But the third wave of public policy reform needs a new level of teamwork. State and federal governments need to agree how the policy responsibilities should most sensibly be carved up in the national interest.
"We need a level of trust and respect between these governments that allows the third wave of reform to take place.
"Some past and present political leaders have shown teamwork can happen. For example, federal and state ministers from both major parties hammered out an agreement on national corporate law at the start of the 1990s."
On the recent performance of government and business leaders:
"The picture of the nation painted by CEDA's 2005 Economic and Political Overview is a tribute to Australia's recent leadership in government as well as business.
"Australia's economy is far from perfect. But we are reaping the rewards of tough decisions made over the past 20 years by a succession of leaders who were prepared to risk their own political interests in pursuit of the national interest.
"At a time when people consistently mock the political process, these achievements are worthy of recognition. Australia's leaders have helped make the country a better place in many ways than it was two decades ago."
Extract from CEDA's 2005 Political Overview (authored by Professor Ken Wiltshire)
"During the Howard governments we have witnessed one of the most profound transformations in Australian political history. The Liberal Party, once the champion of states' rights and decentralisation of government, has become centralist in its philosophy and policy. In federal-state finance, the Commonwealth's provision of GST takings to the states seems to have assumed a pre-eminent role. Surrounding the GST funds flow are conditional funding mechanisms that outdo even Gough Whitlam's efforts. And as prime minister, John Howard has frequently depicted the states as 'service delivery' entities with little role in policy.
"Now, remarkably, John Howard seeks to bypass the state governments in Commonwealth initiatives. His campaign launch focused enthusiastically on the swag of initiatives that would see the Commonwealth dealing directly with recipients of services and bypassing the states: school funding; Commonwealth technical colleges (which bypass the TAFE system); and the abolition of the Australian National Training Authority, until now the vehicle which gave the states and territories leverage in vocational education and training. When the Commonwealth unilaterally announced that it would henceforth cease payment to the states for National Competition Policy and divert those funds to new water initiatives, the states howled in outrage ...
"... Meanwhile, the Commonwealth seems largely content to watch the state and territory governments grapple with each other over the reform of the Horizontal Fiscal Equalisation scheme which carves up federal funding among them, and which New South Wales and Victoria and, to a lesser extent, Western Australia, have challenged to the anger of the other state and territories. The results of the review will become available in 2005.
"... Australia was already the most fiscally centralised federation in the world. Now all the major national political parties in Australia are of a centralist persuasion. A profound change is occurring in the way Australia is governed. The central dynamic of 2005 politics may be not the Coalition's battle with Labor, but Canberra's battle with the states."
Extract from CEDA's 2005 Economic Overview (authored by Dr Chris Caton)
"It is possible that 2005 will be the weakest year for Australian economic growth since 2001, when output was buffeted by the aftermath of the introduction of the GST. At any one time, what will happen next to overall growth will generally be determined by the outcome of conflicting forces. Some parts of the economy will be getting stronger, while others will fade. In 2005, the potential weak links appear to be residential construction and consumer spending, while growth should be supported, in a rather odd sense, by the trade sector. Exports are likely to grow more rapidly as some of the capacity constraints ease. The growth in imports is likely to slow, in part because of the slowdown in consumer spending, as discussed below. As a result, trade will be less of a brake on overall growth."
For further information please contact:
John Harris
Corporate Relations Director
Phone 03 9652 8415
Email info@ceda.com.au
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