Dominic Perrottet's call for federation reform in post-COVID world has merit

Anyone who has heard murmuring about his being one of but 12 kids, himself in the process of adding a seventh to his own progeny and of his being regarded as a conservative Catholic will understand why he has been already judged and found wanting in some quarters.

But as a person who shares his eyebrow gene, I'm inclined to think that he should be given a chance before we defenestrate him, as we probably ultimately will.

I have probably about 600 cousins as closely related by blood as Dominic, and even if I stick only to Perrottets, there would probably be 300. My grandmother, Norma Perrottet, first cousin to Dominic's grandfather Frank, had 11 children, 76 grandchildren and well over 200 great-grandchildren at last (not-recent) count.

I don't know Dominic at all, though I knew his grandparents well enough, and they were fine people. From time to time Perrottet descendants gather, usually having to book the Dubbo showground, and having to wear various coloured ribbons to distinguish each of our lines of descent from Samuel Perrottet.

Sam was a bastard French-Swiss winemaker imported to Australia by Governor La Trobe of Victoria in 1848 and settled around Geelong with 50 other men (including a de Castella) with the intention of establishing a Victorian wine industry.

Samuel sold his winery soon after gold was found in the area, married an Irish woman, had a large family, and found gold by selling meat to miners. He ventured into western NSW, ending up around Narromine.

Upwards of Dominic's and my generation, I doubt that many Perrottets have ever voted Labor, though it is far from uncommon in our generation and below.

Indeed, Dominic Perrottet was only recently casting aspersions on the unsightliness of the Cahill Expressway at Circular Quay, named after a former Labor premier, Joe Cahill, also by way of being a (remote) cousin of mine, if not of Dominic. Dominic did not criticise Joe, probably as pious a Catholic as himself. Nor his judgment over the commissioning of an Opera House at Bennelong Point, but he did suggest, rightly enough, that the man would be more honoured by tearing down the unlovely expressway so that Circular Quay, as much as the Harbour Bridge and the Opera House could be made one of the loveliest creations of human civilization on earth. He's far from the first to say it but could do something about it, if he means what he says.

This week, Perrottet took advantage of the National Press Club and dull political weather to announce some ideas about reforming the Australian federal system, informed by lessons learnt from how the Commonwealth and the states managed through the pandemic.

A few weeks ago, I suggested that the Victorian Premier, Dan Andrews join with other state premiers (and chief ministers) in calling a royal commission into lessons to be learnt from pandemic management. This was particularly given the complete lack of interest in any such review or looking back by the Prime Minister, Scott Morrison.

The value of an inquiry could be better and more efficient ways of handling future pandemics (which are virtually inevitable), including better distributions of power and responsibility between central and state governments.

Only incidentally, if deliciously, would it also serve for some point-scoring between the players, and perhaps the allocation of credit or blame for some of the plans which, however well intentioned, did not turn out as expected.

Perrottet said the pandemic was a stress test for federation and had demonstrated the importance of strong states. Premiers now enjoyed unprecedented popularity. The Commonwealth had played a pivotal role - its JobKeeper program had saved the economy - and the vaccination program, if a bit of a disaster during its "not a race phase", had ultimately been successful.

"But the pandemic has been fundamentally a front-line crisis. And when it comes to front-line service delivery, the responsibility lies with the states," Perrottet said.

"So I believe federation reform in a post-COVID world should be state-led, not Commonwealth-led.

"Reform should be driven from the bottom up ... We need to move to an era of front-line federation."

The national cabinet, created early in the crisis, had been a successful innovation, certainly a lot more productive than anything which had come out of COAG - the Council of Australian Governments. But the treasurers' equivalent, the Council on Federal Financial Relations, had been completely dominated by the Commonwealth, to the detriment of genuine or serious policy discussion, largely because the states had not supported each other.

Perrottet said that his disappointment as treasurer with its workings had led him to organise informal meetings with state treasurers and the creation of a new body - the board of state and federal treasurers.

"We realised that the federal government could take a divide-and-conquer approach to these meetings - because we weren't working together. And while we didn't agree on everything, there were many areas where we had strong common interests," he said.

"The point ... is to get states working together across party political lines to develop good policies. Not just the treasurers - but treasuries too.

"The states have so much in common with one another, even despite their differences. So it makes sense to work together - to share information, test ideas, and collaborate - all while maintaining a dynamic competitive tension.

"On many issues, I have more in common with my Labor counterparts at a state level than a Coalition treasurer at a federal level. We might sledge each other every now and then, but within the board of treasurers politics doesn't really have a place - the focus is outcomes."

And there have been some very important outcomes. One example is the "no-worse-off clause" that eventually became part of the Western Australia GST changes.

"The board's work has made the states a more potent force in shaping federal financial relations again. Rather than picking states off, the Commonwealth government, on many issues, is now confronted with a strong unified voice," Perrottet said.

"In contrast, the CFFR model, like COAG was, has been characterised by low expectations and low energy. COAG might have been good for a headline, but it's actually where good ideas went to die.

"If that is the atmosphere states expect, they won't make the effort, our federation stagnates, and people of every state pay the price.

"Ultimately this is about the states accepting their share of responsibility for our nation's destiny. Federation reform must be driven from the bottom up - that is, from the front line."

Australia's strength during the pandemic had been in its ability to implement tailored responses at the state level, but within the context of the national interest and co-ordination through the national cabinet. From contact tracing and testing, hotel quarantine and the economic response, states had been able to try different approaches.

But the pandemic had also identified systemic weaknesses - all too-familiar ones such as a lack of clarity about who was responsible for what; buck passing, blame shifting, and, sometimes, hyper-parochialism.

Mixed responsibilities in health and education as key problems. They couldn't be solved by mere dollars and cents - where the argument all too often ended - but by providing better, more timely and more integrated care, he said.

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In education, he wants his state to take responsibility for childcare and early childhood education, as well as primary and secondary education. Interestingly, he implied, without directly saying so that this could include responsibility for private or non-government schools - which, he said, were, like skills and vocational training, a mish-mash of mixed responsibilities ... a "dog's breakfast'' that no one could understand.

The extra cost to his educational budget might be addressed by the Commonwealth taking full responsibility for the national disability insurance scheme, the problems of which were aggravated by joint Commonwealth-state administration.

Naturally, he called for more funding autonomy, and fewer conditional grants. State premiers always do. But, he suggested, it might be possible for each state or territory to negotiate its own different division of responsibility. Some states, for example, might not have any responsibility for childcare.

The Commonwealth would have the latitude to seek more constructive ways, perhaps with incentives, of supporting good policy outcomes without being tied to a one-size-fits-all approach.

"In NSW, our property tax proposal - to swap stamp duty with a broad-based property tax - is another example. By lifting productivity in Australia's biggest economy, it would boost Commonwealth revenue in the process," Perrottet said.

"By contrast, at the state level, it would cut something in the vicinity of $2-3 billion out of our budget each year.

"The short-term disincentive is on the state side - and the benefit is on the Commonwealth side - yet to date the Commonwealth hasn't expressed interest in this idea.

"Paul Keating famously said never get between a premier and a bucket of cash."

That single line has become the reflexive dismissal of so many premiers' ideas to make our federation better.

"Well I'm less interested in a bucket of cash, and more interested in a bucket of outcomes. If NSW has to take on a bigger burden to deliver better services, so be it," he said.

"We cannot achieve coherent reform if these services are divided between the states and the Commonwealth. This is not a problem for the Commonwealth to solve. The responsibility lies with the states."

Now the mere fact that some premier or chief minister says something thoughtful, displays some interest in national as well as local outcomes, or manifests some willingness to make sacrifices, including loss of personal power, for better outcomes does not mean that we should accept or adopt their ideas uncritically.

But there was never a better opportunity than now for some honest discussion of better outcomes in government, more efficient and effective divisions of power and responsibility, and perhaps some policy and program discussion not completely hidebound by partisan politics.

It's an opportunity that should be embraced, including by people who disagree with Perrottet's approaches or ideas.

Some might lament that this could happen at a time of Commonwealth negotiating weakness - a weakness that is not merely a function of the Prime Minister's lack of vision, or of any sort of agenda for government other than the belated application of Band-Aids to problems as they turn up.

The most serious weakness is the lack of intellectual firepower within the engine room of government, in the bureaucracy.

The public service has been deliberately run down, and not only by the recent Coalition governments.

It has much diminished capacity for policy discussion and review, and is seriously weaker than 15 years ago in its capacity to manage service delivery.

The attrition of the best minds and good leadership has been aggravated by the ideological use of often deeply compromised private sector consultants, by abuses of the ministerial adviser system, and by the virtual collapse, whether among ministers or senior civil servants of fundamental concepts of accountability, responsibility or transparency.

Central agencies have lost much of their old reputations for independence of advice, being a constantly renewed and developed academy of ideas interested in attracting the best minds, or for care and maintenance of the essential institutions and ideas of constitutional government, including honesty and integrity.

Perrottet, and a few other premiers, insist that these days the quality of state and territorial public administrations is superior to the Commonwealth's. That could not have been said a generation ago. They may be right - and probably are in terms of more effective program delivery, and for a generally more attentive eye, ear and nose for public feedback and accountability. That experience and capacity deserves a place at the negotiating table.

Not all of the diminished capacity and competence of the Commonwealth is a result of failures of public service leadership. Recent governments have had genuine enthusiasm in handing over power and responsibility for traditionally public sector functions. This has not been for genuine expectation of cheaper or better outcomes. It has been from a compact to share public loot with mates and cronies - and with only a skerrick of accountability. Treasurer Josh Frydenberg has gone to great lengths, as he gathered unimaginable quantities of fresh cash to make sure that it did not build up the size, the power or the capacity of the public sector. He instead doled out hundreds of millions, with few controls, to private companies, often without result.

It would be nice to ask, 10 years from now, whether the big four private consultants - who have received more than $1 billion in recent years for telling government, unaccountably, exactly what it wanted to hear - have come up with a single useful or lasting policy or program idea that deserves to endure. On pandemic matters, the answer would seem to be no.

Open as he appears to be to ideas, Perrottet is seriously infected with many of the heresies that have made both the Commonwealth, and constituent parts of the federation, weaker centres of good government or better service delivery.

Perrottet personally has a bad record on privatisation and sale of public assets - a reflection of the fact that his economic faith is unshaken by facts. While it is very easy to agree with him that preschool, primary and secondary education would be much improved by a more accountable division of responsibility, that gap cannot explain a serious diminishment in innovation and improvement in schools, in spite of extra funds.

One reason for some zeal for Commonwealth interference in education has been state ministerial negativity to what are, in Australia but not elsewhere, new ideas.

Nor has extra money done much to improve the quality and quantity of health services, including mental health services, going to chronically ill people. It is a continuing paradox of Australia that we have perhaps the healthiest population in the world, with generally excellent outcomes when ordinary citizens (as opposed to disadvantaged ones) are sick.

But we manage our resources, from either state or Commonwealth level, very badly indeed, with a productivity that could be increased by 30 per cent.

Lucky for us, most comparable countries manage even more badly, a reason why one should never shrink from ideas of reform, wherever they come from.