Over sixty percent of WA's State budget is not determined by appropriations passed through the State Parliament. In fact one half of our States's budget comes from Canberra. This fiscal centralisation gives rise to a number of functional problems because it does not reflect our constitutional structure. The States are responsible of course, under our Constitution, for most of the basic tasks of running the country, such as health, police, education and resource management. However because most of the funding is raised by the Federal Government through income tax, the Commonwealth also seeks a major stake in setting funding priorities. Thus effectively we have six tiers of government. That is Federal government proper, federally determined State, State determined State, federally determined Local Government, State determined Local Government and locally determined Local Government. The result is massive duplication, inefficiency and very expensive service delivery. Some community health programmes cost about one third of their total budget in administrative costs.
Although the Commonwealth collects 80% of all Australia's tax revenue, it directly redistributes only one fifth of this back to the States. This gives rise to funding anomalies such as local shires having extravagant federally funded "streetscaping" programmes whilst the local budget cannot afford to fix the damaged footpaths. Or schools with ramshackle classrooms which house expensive state of the art literacy and numeracy testing.
The vertical fiscal inbalance between the tiers is a major problem for Australian governance. It is extraordinary how we have just celebrated our centenary of Federation without serious debate about these dysfunctional arrangements.
However the Garnaut Report has recently considered the related problem of horizontal fiscal inequity ie the sharing of the national budget across States. In the past twenty years WA has suffered a 20% decline in its Commonwealth funding. It is currently estimated that WA is paying $3 billion more each year to the national coffers than is reallocated back to the State because calculations are based on population numbers. However our massive land area is very costly to service.
For instance although WA has 70% of the nations salinity by area, that is currently some two million hectares, it is receiving only 12% of the National Action Plan funds.
There is an urgent need to redefine the structures, roles and relationships of government under the Australian Constitution in order to achieve ecological sustainability, community interest and the localisation of priority setting where appropriate. The WA Greens advocate the adoption of two-tiered government for Australia. That is central Commonwealth government with bio-regional structures to replace and merge State and Local Government.
The critical question for constitutional theory is what is the optimum size at which to set the bio-regions. My suggestion would be not too small, that is to base the boundaries on climatic zones which tend to reflect predominant land use and community of interest, with only boundary detail defined by water catchments.
My best wishes to you all this weekend from the heart of the Jarrah forests of WA.