Michael Pascoe's column on the Right wing's obsession with going back to the future regarding the Federal system in Australia sounds right to me. (And I say that as someone who grew up in Brisbane who can remember sewerage only being installed in the family home about 8 km from the city in the mid 1960's.) Here's the relevant section:
The idea is that, if the states are given more responsibility and control of their own revenue and expenditure without federal interference, they will compete to offer the best services most
efficiently, thereby achieving improved outcomes at a lower cost. Market forces to the rescue and, praise the Lord, smaller Federal Government.
The real world is different. There are some practical problems for a start. Peter Hartcher reports that, according the report itself, the proposed reform of federation would increase overall government spending and the tax burden by $5 billion a year. Tasmanian and Bank of America Merrill Lynch chief economist, Saul Eslake, has explained that the poorest states with the lowest incomes would have to have the highest rates of tax to deliver comparable services. Neither are desirable outcomes.
Worse is the reality of what happens when our states compete: it tends to be a race to the bottom.
If you're ideologically driven by a dislike of taxes and government, Joh Bjelke-Petersen could well be your hero. He abolished death duties in Australia by dropping them in Queensland and boasting about running the lowest-taxing state. That may have been an incentive for a temporary rise in the number of people who thought Queensland was a good place to die, but the other states soon copied the move.
And while Queensland claimed the "lowest taxing" title, it also provided the worst or near-worst services, especially in education. Queenslanders ended up getting what they paid for - a backward state with a diminished long-term future - until other premiers brought it up
to the national speed....
This is not just an Australian phenomenon. The United States, spiritual home of the ideologically-driven right, is the model of competitive federalism. The result is a sadly divergent society suffering growing inequality – and that's before getting into the issue of rising education costs and debts. To be born in Mississippi means, on average, that you're a loser in the American lottery. Competitive federalism tends to keep the poor poor and the rich richer.
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