Federalism needs fixing
Federalism needs fixing
Our system of federalism has ended its shelf life.
Reform of Australia's federal structure is long overdue. The signs are there in areas such as health, education and industrial relations as well as in the parlous financial position of many of the states. Instead of a structure in which each tier of government exercises the powers most appropriate to it, we have a system riven with administrative overlap and buck-passing.
The Australian constitution is flexible enough for many problems to be overcome. It enables the states to transfer power to the commonwealth and co-operative arrangements can sometimes allow for the pooling of power and sharing of responsibility. However, such fixes do not address the underlying problems.
A central, and understandable, reason for the reluctance to tackle these structural problems is that the constitution is so hard to change. An amendment must be passed by an absolute majority of both houses of the federal parliament or by one house twice, and then, at a referendum, passed by a majority of the people as a whole and by a majority of the people in a majority of the states. This process has been invoked 44 times, with only eight proposals succeeding at a referendum. No referendum has been passed since 1977, meaning that a whole generation of Australians has grown up without seeing change.
Since the early 1990s, advocacy for constitutional change has focused on the idea of an Australian republic. While important, this symbolic shift should not obscure the need for substantive reform in other areas. One such area is our federal structure and whether it provides the best foundation for the economy.
The Australian constitution has played a significant role over the past 100 years in fostering economic development and growth. For example, section 92 of the constitution guarantees that trade, commerce and intercourse among the states shall be absolutely free. As a result of High Court interpretation, the constitution has also enabled the federal parliament to control and regulate the national economy. For example, the court's interpretation of the word excise in section 90 of the constitution has given the commonwealth almost total power over the indirect taxation of goods. Similarly, decisions of the High Court in 1942 and 1957 enabled the commonwealth to take over the collection of income tax.
These changes reflect the need for a national economy regulated by a central government. However, in other areas the constitution is still a product of its nineteenth-century drafting. One example is the inability to create a truly integrated national judicial system. Another is that, while the commonwealth is granted power over trading and financial corporations, it lacks a general commerce power. It has power over trade and commerce with other countries and among the states, but not trade and commerce within state boundaries. The artificial division between the two forms of commerce has been maintained by the High Court.
The idea of drawing a line based in law between interstate and intrastate commence made sense in 1901, but not today. Our economy does not now consist of discrete sectors of commerce within each state or even within Australia, but exists within a world of global markets in which there is competition and interdependence with the economies of other nations. In such a world, it makes far less sense for Australian businesses to have to comply with different, and possibly conflicting, standards across the nine Australian jurisdictions, let alone different laws according to whether they are engaging in a transaction within a state or across state borders.
Some of the urgent problems arising from our federal system, like who has control over health and education, can be resolved through political compromise and accommodated within the constitutional framework. However, few areas are satisfactorily resolved in this way. Attention on areas like health and education should also not mean that we neglect the reasons the problems have arisen in the first place. They are symptoms of a deeper problem.
The legal and political difficulties of reforming Australia's federal structure are formidable. They include making the referendum mechanism work for the first time since 1977. However, these are issues that in the long run must be addressed unless we are prepared to put up with fractured policymaking, further buck-passing and other inefficiencies in business and government. Reform does not mean that Australians should abandon federalism, but it does mean that we should examine whether the division of powers agreed to in 1901 is the best model for today.
This article was published in the Australian Financial Review 26 October 2004
More on this debate from George Williams:
Five Reasons to Rewrite the Constitution
This is adapted from: 'Five Reasons to Rewrite the Constitution' in Patmore, G (ed), The Big Makeover: A New Australian Constitution (Pluto Press, 2001), 35.
The Australian Constitution has never undergone a major revision. The eight changes that have been made (out of a possible 44 referendum proposals) have in general been of relatively minor significance. This paper assesses the reasons why we should take the task of constitutional change more seriously, and why it should be regarded as one of the more important political and legal challenges of the second century of our Federation.
Introduction
Over the course of a century, Australia has developed into a prosperous nation and one of the oldest continuous democracies in the world. The Australian Constitution has played an important role in this. Since 1901, it has withstood crises and the passage of time to produce an effective foundation for economic, social and cultural development and has fostered a stable democracy responsive to and representative of the people. The important role played by the Constitution is perhaps only apparent when our experience as a nation is compared to that of other nations, such as Fiji, where the lack of a stable legal system has led to social and economic discord.
A century is a remarkably long time for any framework of government to endure largely unchanged. This achievement actually says more about the character and cultural values of the Australian people than it does about the text of the Constitution itself. Despite a long standing distrust of and alienation from politicians and politics, Australians generally continue to demonstrate a high degree of respect for their public institutions, such as the High Court, and for the rule of law.
Public support for the constitutional structure should not be taken for granted. It requires an ongoing political commitment to ensuring that the Constitution enables and remains relevant to the realisation of national aspirations and goals. One hundred years ago, the drafters of the Constitution recognised this. They included in the Constitution a mechanism that would enable the Australian people, in partnership with the Federal Parliament, to reform and update the Constitution. The idea of constitutional reform is thus one that is entirely consistent with the original conception of the Constitution.
Under section 128 of the Constitution, an amendment to the Constitution must be:
- passed by an absolute majority of both Houses of the Federal Parliament, or by one House twice; and
- at a referendum, passed by a majority of the people as a whole, and by a majority of the people in a majority of the states.
This process has been invoked 44 times, with only eight proposals succeeding at a referendum (Blackshield & Williams 1998, pp. 1183-1188).
None of the eight changes was a major revision of the text of the Constitution. Some of the changes have, however, been of political importance. Two stand out. The 1928 referendum added a new section 105A to the Constitution, which is economically significant in enabling the Commonwealth to make agreements with the States to take over their debts. The 1967 referendum extended the federal Parliament¡¦s races power to Indigenous peoples and deleted the discriminatory section 127 (see below). None of the amendments since 1967 were of any great importance. In 1977, the Constitution amended to, amongst other things, set a retirement age of 70 years for High Court judges.
The Constitution has not been amended according to the vision of its founders to reflect contemporary needs. As a result, while the Constitution provided an effective framework for the political and legal resolution of the issues that would face Australia for the first hundred years of Federation, it does not provide as strong a framework for the second century. There are many reasons why the Constitution ought to be rewritten. In providing an introduction to constitutional reform, this article addresses five of the most important.
Reason One: The Constitution and political reality
Australians possess a disturbing lack of knowledge about their system of government. A 1987 survey conducted for the Constitutional Commission found that 47 per cent of Australians were unaware that Australia has a written Constitution (Constitutional Commission 1987). Similarly, the 1994 report on citizenship by the Civics Expert Group found that only 18 per cent of Australians have some understanding of what their Constitution contains, while more than a quarter of those surveyed nominated the Supreme Court, rather than the High Court, as the ¡
- top court in Australia. Significantly, only one in three people felt reasonably well informed about their rights and responsibilities as Australian citizens (Civics Expert Group 1994).
One reason for this is that the Australian Constitution was not written as a people¡¦s constitution. Instead, it was written as a compact between the Australian colonies designed to meet the needs of trade and commerce, amongst other things. According to Manning Clark (1977, p. 18), the drafters ¡
- wanted a constitution that would make capitalist society hum¡¦. Consequently, the Constitution says little about the relationship between Australians and their government and in this respect does not embody the fundamental rights or aspirations of the Australian people. Today, according to Lois O'Donoghue, former Chairperson of the Aboriginal and Torres Strait Islander Commission:
It says very little about what it is to be Australian. It says practically nothing about how we find ourselves here ƒ{ save being an amalgamation of former colonies. It says nothing of how we should behave towards each other as human beings and as Australians. (Brennan 1994, p. 18)
Another reason is that the Constitution does not match how our system of government actually works. It does not mention many of the most basic features of government, such as the office of Prime Minister or the Cabinet. The text suggests that ultimate political power is held by the Queen's representative, the Governor-General, who is named by section 68 of the Constitution as the commander in chief of our armed forces and is given the power by section 64 to appoint and dismiss Ministers of State. One might even get the impression that the Constitution appoints the Governor-General as a form of dictator, who is given the power to rule the nation according to the wishes of our overseas Monarch.
The text of the Constitution does not match political reality because it is premised upon an understanding of the Westminster system of government operating in the United Kingdom. As a result, the framers made many assumptions about how the Australian system would work without adequately explaining those workings in the text of the Constitution. It was understood that government is based not only upon the Constitution, but, perhaps even more importantly, upon the unwritten conventions that surround the Constitution, such as that the Governor-General acts upon the advice of the Prime Minister. An exception to this convention is where the Governor-General exercises a reserve power, such as to dismiss a Prime Minster where he or she has lost the confidence of the House of Representatives. There is no legal sanction should such conventions be breached. As a result, the greatest crisis to face Australia¡¦s constitutional system, the dismissal of the Whitlam Government in 1975, could only be solved by political means and not by a decision of the High Court.
The air of unreality that pervades our written Constitution is a barrier to any Australian wishing to understand how the system of government works. This is inconsistent with egalitarian conceptions of democracy. The Constitution should accurately set out how Australian government works. It should be rewritten in plain English, with the conventions of the Constitution codified, or written down. This would not only make the Constitution more accessible to the public, but would also enable constitutional crises such as that of 1975 to be resolved without the extra difficulty brought about by the uncertainty over the nature and scope of the powers conferred by the Constitution. Until the reserve powers of the Governor-General are clearly spelt out, the office will be accountable to the Australian people.
Reason Two: Indigenous peoples and reconciliation
The Constitution has failed Australia's Indigenous peoples (see Williams 2001). They played no meaningful role in the drafting of the Constitution (Brennan 1994, p. 6), and when it came into force in 1901 it explicitly discriminated against them. Section 51(26) provided that the Commonwealth Parliament could legislate with respect to -
- the people of any race, other than the aboriginal race in any State, for whom it is deemed necessary to make special laws¡¦. This was the so-called ¡
- races power¡¦, which according to Edmund Barton, later Australia's first Prime Minister and one of the first judges of the High Court, was necessary to enable the Commonwealth to ¡
- regulate the affairs of the people of coloured or inferior races who are in the Commonwealth¡¦ (Convention Debates (1898), pp. 228-29). Section 127 went further in providing: ¡
- In reckoning the numbers of the people of the Commonwealth, or of a State or other part of the Commonwealth, aboriginal natives shall not be counted¡¦. Significantly, neither provision spoke of Indigenous peoples as people, but in the latter case as ¡
- aboriginal natives¡¦.
The Constitution cast Indigenous peoples as outsiders to the Australian nation. It is not surprising that one of the first pieces of legislation passed by the new Federal Parliament, the Commonwealth Franchise Act 1902 (Cth), denied the right to vote to any ¡
- aboriginal native of Australia¡¦ (although at the same time it extended that right to vote to Australian women). It was not until 1962 that the Commonwealth Electoral Act 1918 (Cth) was amended to extend universal adult suffrage to Aboriginal people. Even then, unlike other Australians, it was not compulsory for Aborigines to enrol to vote. Full equality for Indigenous people at Commonwealth elections did not occur until 1983, when the Commonwealth Electoral Amendment Act 1983 (Cth) was passed.
Australia's Aboriginal peoples achieved their most significant political victory in the 1967 referendum, which deleted the discriminatory section 127 and removed the words ¡
- other than the Aboriginal race¡¦ from section 51(26). The pattern of discrimination brought about by the Constitution was apparently broken. Unfortunately, the referendum failed to establish a new pattern or vision of the place of Indigenous peoples within Australia¡¦s political and legal structure. Today, the Constitution remains silent as to the history and rights of Indigenous peoples, not even mentioning them in the historical introduction found in the preamble to the Constitution. This constitutional silence ignores the unique and important place of Indigenous peoples as part of the Australian nation.
The objective of the 1967 referendum was to remove discriminatory references to Aboriginal people from the Constitution and to allow the Commonwealth to take over responsibility for their welfare. However, the change may actually have enabled the Commonwealth to pass laws that impose a disadvantage upon them. The racially discriminatory underpinnings of the races power were extended to Aboriginal people without any textual indication that the power could be applied only for their benefit. If the referendum enabled the power to be used to legislate for the detriment of Aboriginal people, it would be a sad irony. It would undermine the powerful symbolism attached to the 1967 referendum.
The scope of the races power was considered by the High Court in the Hindmarsh Island Bridge Case (1998) 195 CLR 337, in which I appeared as counsel. The High Court was faced with an argument by the Commonwealth Solicitor-General that the races power continues to be ¡
- infused with a power of adverse operation¡¦. The Court did not resolve whether the races power can be used to enact detrimental laws in regard to Aboriginal people, splitting 2:2 (Justices Gummow and Hayne: Justices Gaudron and Kirby), with a further two other judges (Chief Justice Brennan and Justice McHugh) not deciding the issue. This result hardly provides a solid foundation from which to advance reconciliation. It is not surprising then that reconciliation requires the Constitution to be rewritten to recognise the status and history of Indigenous peoples and to provide that the races power can only be applied for the benefit of any particular race. This should be accompanied by a constitutional guarantee that all Australians possess a freedom from racial discrimination.
Reason Three: It's the economy, stupid
The Australian Constitution has played a significant role over the last one hundred years in fostering economic development and growth. For example, section 92 of the Constitution guarantees that trade, commerce, and intercourse among the States shall be absolutely free. As a result of High Court interpretation, the Constitution has also enabled the Federal Parliament to control and regulate the national economy. For example, the Court's interpretation of the word excise, in section 90 of the Constitution in a series of cases beginning with Parton v Milk Board (Vic) (1949) 80 CLR 229 and ending with Ha v New South Wales (1997) 189 CLR 465 has given the Commonwealth almost total power over the indirect taxation of goods. Similarly, the decisions in the First Uniform Tax Case (1942) 65 CLR 373 and Second Uniform Tax Case (1957) 99 CLR 575 have enabled the Commonwealth to take over the collection of income tax.
Unfortunately, the Federal vision contained in the Australian Constitution is now inconsistent with modern understandings of the Australian economy. Our economy does not consist of discreet and insular sectors of commerce within each State or even within Australia, but exists within a world of global markets that creates competition and interdependence with the economies of other nations. In order to compete effectively on a global scale given our small population and geographical location, Australia requires national laws on a issues ranging from industrial relations to consumer protection and trade practises. Australian businesses operating in different States are less likely to be competitive if they must comply with different, and possibly conflicting, standards across six or more Australian jurisdictions.
This has been recognised by State and Federal governments, who have co-operated to create national regulatory regimes in areas over which neither has complete power, such as the marketing of agricultural products and competition policy. Unfortunately, the High Court has found that the Constitution will not always allow the creation of seamless codes of national business regulation. The best example of this problem lies in the field of the Corporations Law, which regulates how corporations are created and operate and the relations between the corporation and its directors and shareholders. The Corporations Law is based upon interlocking legislation passed by the Commonwealth and the States under which they pool their respective powers to produce a unified, joint scheme. As a result of the decisions of the High Court in Re Wakim; Ex parte McNally (1999) 163 ALR 270 and R v Hughes (2000) 171 ALR 155, the integrity of this scheme has been compromised. The decisions mean that Corporations Law cases can no longer be heard in the Federal Court, which had built up a substantial expertise in the area. Non-federal issues raised by the Corporations Law must instead be heard in the several State courts. Moreover, it seems likely that important parts of the Corporations Law cannot be enforced by Federal authorities, potentially leaving breaches of the law unpunished unless State-based systems of enforcement is established.
The Federal and State Governments have been working on a solution for the Corporations law, and one is possible based upon a referral by the States of all of their power over the field of corporations to the Commonwealth under section 51(37) of the Constitution. However, this is unsatisfactory because it undermines the long-term position of the States as partners in the Australian Federation. They should not be required to refer, or transfer, large sections of their law-making powers to the Commonwealth in order to overcome the inability of the Constitution to give effect to co-operative arrangements.
In addition, a referral is a fix that does nothing to alleviate the underlying problem exposed by the High Court that makes other like co-operative schemes unworkable. The break-up of the Corporations Law is an example of a far larger problem. The High Court decisions affect any co-operative endeavour that might create a unified regulatory scheme for Australian business. The only complete solution to this problem is to amend the Constitution to enable co-operative schemes to be enacted and enforced. Unless this occurs, the Constitution will continue to hinder co-operative regulation of truly national concerns, including, for example, GST price monitoring and the regulation of genetic technology and genetically modified foods.
Reason Four: Social justice and human rights
The Australian Constitution was not drafted to include a Bill of Rights, and the rights that it does contain are scattered and offer little real protection to the Australian people (Williams 1999, pp. 47-50, 96-128). Instead of a Bill of Rights, the framers of the Constitution chose to rely upon the good sense of our elected representatives and upon the capacity of the courts to interpret and develop the common law to protect rights where needed (Williams 1999, pp. 39-40). Not only has faith in our elected representatives been misplaced on many occasions, but it has become apparent that there is great value in specifying and protecting human rights as a means of developing and improving Australian cultural and legal attitudes towards minorities and in developing a greater tolerance for difference.
While middle class Australia has little to fear from oppressive laws, this is not the appropriate measure. What matters is how we treat the vulnerable and weak in the community, such as the poor with little or no economic power, or people living in rural areas with dwindling access to basic services. Examined from this angle, our human rights record is poor and our legal structure inadequate. As Brian Burdekin (1994, p. v), a former Australian Human Rights Commissioner, commented in 1994: It is beyond question that our current legal system is seriously inadequate in protecting many of the rights of the most vulnerable and disadvantaged groups in our community.
I have argued elsewhere (Williams 2000) that the best first step to remedy this problem would be the enactment of an Australian Bill of Rights by the Federal, and perhaps also the State and Territory, Parliaments. This would be a non-constitutional response. After certain rights had operated effectively in a statutory Bill of Rights, it may be appropriate to insert certain of these rights into the Constitution itself so as to confer greater protection. Unfortunately, given the progress that has yet to be made in Australia in regard to the legal protection of human rights, there are few examples of rights that might now be inserted into the Constitution in a form that would be readily supported by the Australian people. One such right would be freedom from racial discrimination. This right has been protected for over a quarter of a century in the Racial Discrimination Act 1975 (Cth). In light of recent debates over issues such as mandatory sentencing and native title and given the rise of challenges to generally accepted understandings about issues of race in Australia, it would be appropriate to insert a freedom from racial discrimination into the Australian Constitution as a legal statement of the importance attached to this right by both the community and our Parliaments.
Reason Five: Symbolism and the republic
The text of the Australian Constitution suggests that Australia is not an independent nation. The Constitution establishes the Monarch of the United Kingdom as our Head of State, with the Governor-General as her representative in Australia. Section 2 of the Constitution provides: A Governor General appointed by the Queen shall be Her Majesty's representative in the Commonwealth, and shall have and may exercise in the Commonwealth during the Queen's pleasure, but subject to this Constitution, such powers and functions of the Queen as Her Majesty may be pleased to assign to him. The now obsolete section 59 even grants the Queen the power to disallow any law passed by the Federal Parliament. The Constitution is still reprinted as part of the United Kingdom Parliament's Commonwealth of Australia Constitution Act 1900, with the implication that this Parliament, and not the Australian people, is the source of the power and authority of our Constitution.
Of course, despite the failure of the 1999 referendum on the republic, Australia is now both politically and legally independent of the United Kingdom. The legal shift was achieved initially by the Statute of Westminster 1931 (UK) (as enacted in Australia by the Statute of Westminster Adoption Act 1942 (Cth)) and the Australia Acts 1986. The symbolic conflict between the text of the Constitution and Australian independence undermines our sense of identity and distorts perceptions of our nation both within and outside the country. If symbolism is an important value within the constitutional system, then the Australian Constitution ought to be amended to establish Australia as a republic with an Australian as our Head of State.
Change by the High Court or the people?
The arguments for constitutional change are compelling and irresistible. The Constitution must adapt to contemporary needs or the life of the nation and the well-being of its people will be threatened. How then has the Constitution survived a century in its present form? The answer is that, in the face of the few successful referendums, the work of updating the Constitution has been taken up by the High Court. Through interpretation of the Constitution, the Court's decisions have, for example, led to the transfer of significant legislative power from the States to the Federal Parliament, as well as control over billions of dollars of taxation revenue. Over the last decade the Court has also found that the Constitution contains implied rights, including a freedom of political discussion in Australian Capital Television Pty Ltd v. Commonwealth (1992) 177 CLR 106 and a right to due process under the law in cases such as Chu Kheng Lim v. Minister for Immigration, Local Government and Ethnic Affairs (1992) 176 CLR 1.
There are dangers in leaving constitutional reform only to the judicial system. Court-initiated change is a second-best solution. It distances Australians from their governance and legal structures, and contributes to the sense of alienation from their political system and leaders that many Australians experience. It also weakens our democratic system and undermines the vision of the framers for popular involvement in constitutional change. Constitutional reform by High Court interpretation may be inevitable, but it does not have the democratic legitimacy provided by a successful referendum.
Over-reliance upon the High Court to adapt the Constitution to contemporary times has, in recent times, made the community and our political leadership unresponsive to the need for broad-based change. It is easy to ignore good arguments for change when the High Court might be left to do the job, even when it is clear that many of the problems are beyond High Court interpretation and actually require textual amendment. The High Court, for example, could not insert a Bill of Rights into the Constitution. While the Court has often been able to accommodate social, economic and political pressure for change, it has proved unable to respond fully to any of the five reasons to rewrite the Constitution set out above. In some areas, the Court may have reached the workable limits of the text and the possibilities for easy adaptation. Judges of the Court may also have come to the limits of their own desire for reform. The outcome in any event is that the aspirations of the Australian people have become constrained by a century-old Constitution updated in an ad hoc fashion by the High Court.
Conclusion
Over the first century of Federation, the people's power of amendment under section 128 of the Constitution proved a frustrating disappointment. The proposals put to referendum usually did not pass, suggesting inadequate political leadership and a failure to capture the popular imagination and to engage Australians in the process by promoting reform that matches our goals and vision. In the second century of our Federation, making the section 128 process work will be an important policy challenge.
One way to start might be to debate whether the amendment mechanism itself is in need of change so as to foster greater public involvement. This might not involve a rewrite of section 128 itself, but of the basic referendum procedures as contained in the Referendum (Machinery Provisions) Act 1984 (Cth), which lies within the power of the Federal Parliament. Issues such as the effectiveness of the current Yes and No case procedures in providing information to the Australian people ought to be addressed. There should also be discussion on who ought to possess the power to initiate constitutional reform. One or more State Parliaments collectively might be given the same power as that of the Federal Parliament to bring about a referendum. The scope for holding popular Conventions to propose change, like those of the 1890s and that on the republic in 1998, ought also be examined.
Whatever proposals are examined for reinvigorating constitutional reform, it should be recognised that the task of rewriting the Constitution is, at least initially, the task of rewriting the Australian people back into process. We should not wait too long to begin this. The dangers of delay are obvious. As Gough Whitlam said in 1970 (1977, p. 143): Existing constitutional arrangements do not provide an adequate, far less an ideal, framework for the solution of contemporary problems. We are entering the future mounted on a penny-farthing bicycle.
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