Senator MARGETTS(5.22 p.m.) —It has been usual for some time for the federal government to come each year to the Premiers Conference and seek to reduce state grants as much as possible. The premiers come to try to argue both for more money and for a greater percentage of the pot to go to their state. The style is always somewhat gladiatorial. The situation arises from the fact that for historical reasons the states have given away much of their revenue making power. We learnt about a lot of that in school in relation to the powers that changed over during the war, but of course there are other issues historically as well. At the same time, there was never a formula devised to assure the states of a portion of the revenue or to clearly delineate their responsibilities to the people they administer.

Senator Murray noted this morning in the debate on state grants that the states have also given away some of their existing revenue powers—not just in the deep dark history, but some of their existing revenue powers—like stamp duties on speculation in the stock market. So it is somewhat ludicrous for them to come and whinge too loudly. They have encouraged speculation and then say, `We haven't got as much money. Give us some more.'

There are also valid reasons why most taxation should be uniform and why taxation that is imposed sub-nationally should relate to state, local or regional situations. A petrol tax on urban petrol, to go partially towards addressing the health problems and other problems caused by petrochemical smog and urban traffic, and to go partially towards reducing the cost to rural uses upon which cities depend, would be appropriately administered at a regional or state level.

There really is an issue of whether the states, as currently constituted, serve Australia. There is also the issue of why on rational, civil or ethical grounds Australians living in territories should be treated differently from those living in states. Perhaps the state-territory distinction is a colonial holdover that we could well do without. In many respects some of these issues are strongly related to the motion before us.

This government has specifically made deals to cut state funding in return for more autonomy and less accountability in how the money is being spent. The direct result of this policy is the sort of thing we see in Victoria—the boys club at the top playing fast and loose with revenue. In Western Australia we do not—oh, of course we do not—have those sorts of problems! Our Premier has quite responsibly invested his money—excuse me, state's money—in projects like Global Dance, set up by his father with his father's mate, or the Elle McPherson yachting venture!

But that pales into insignificance when you look at proposals to spend half a billion dollars on the Premier's brother's project at Oakagee in Geraldton for a port facility. When the original proponents wanted to go inland, the government said, `No, put it near the coast, will you, Ken. And here's half a billion dollars to help you get there. We'll provide the port facilities. And, by the way, we'll also give you subsidised gas for the whole project and you can sell it off at more expensive prices and put more money in your own pocket.'

Senator Neal —Very generous.

Senator MARGETTS —Very generous. This is, of course, a very good use of money in a state which has substantial waiting lines in public hospitals, which has overcrowded and under-resourced schools, which has a hard time providing adequate housing for the poor people in the state and whose public housing scheme, Key Start, is responsible for hundreds of aspiring home owners going into debt in spite of the lessons of the late 1980s!

But the Premier does have discretion on spending, given in return for taking on more responsibility for health and housing without getting a transfer of money to cover that. The deal was that any requirements, such as those this government supported in relation to such things as the housing bill, which required public housing provision to be tied to social and environmental outcomes, were wiped out and the money given untied. So health and housing go begging while money is poured into pet projects like the Northbridge tunnel, with its massive pumping requirements because it was built below the watertable and its heavy social cost in destroying the heart of the few thriving social centres in Perth. We have to wonder how much money is going to go into the government's new pet project of damming the Fitzroy River.

What this motion is really about is not a one-sided issue. The Commonwealth wants the economic reins, to be able to make economies by squeezing the states economically and saying that it is in the interest of forcing efficiency on those profligate wastrels. At the same time, it is quite content to eliminate any effective control on what public money it gives. So, if there are wastrels in state government, they can indeed be profligate and the federal government no longer has to take the responsibility. There is no longer a requirement that ties road funding to things like rural highways or black spots. Now it is poured into stupid plans that devastate the central city or simply encourage more road use with no apparent social or economic gain.

It is not a unique problem caused by this government. Paul Keating also had his problems with the premiers, but his solution was to cut money and then to promise to give it back only if the states signed competition policy. That is now, ironically, being used against state Auditor-Generals to eliminate accountability at the state level. Paul Keating promised to give them back some—guaranteed—as long as they met his competition policy objectives as quickly as he wanted them.

This is also an issue about local governments, an area which is so often left out of the debate on funding and tiers of government. Local government tends to get routed—I was going to use a ruder word—by state governments, who simply ignore local wishes when they want to build a road or facilitate the construction of a hotel or office block or help a mate from the big end of town. It also gets the raw prawn from federal government, who refuses to recognise its existence and who, in organising competition policy, has harmed local government more than any other level of government.

This is a central issue. This is the issue of the tiers of government, areas of responsibility, accountability and the ability to obtain a secure revenue base. It should not be the case that the states are given responsibility and then have their funding reduced—in part because the federal government decides to generously lower taxes! Likewise, it should not be the case that states lower their own revenue through creating tax stamp duty reductions for stock speculation and then come pleading poverty to the federal government.

The states, or whatever intermediate tier of government may be appropriate, should have clear responsibilities and there should be some standard and accountability in meeting those responsibilities. They should also be guaranteed a portion of revenue on an equitable basis with other states that is adequate to meet their responsibilities. For some states that will cost more per capita. That is just the way it is, and the responsibilities still need to be met. Avenues for state governments to raise revenue should be clear and the minimum portions of expenditures to be raised in such a way should also be clear.

Likewise, local governments should have constitutional recognition and a clear definition of powers, responsibilities and avenues for revenue. They should get a clear portion of the Commonwealth revenue base either directly or through the states. It is ridiculous that it has become almost impossible for the Commonwealth government to communicate directly with local governments. They should also be held accountable for the proper fulfilment of their responsibilities to certain standards through the use of this funding. It is not necessarily the case that the Commonwealth is the organisation that should hold the responsibility for the oversight or setting of standards.

We have suggested that, in many respects, it is the collection of members of the same level of government that can most effectively set standards. For example, local government knows more about waste management than federal government. I think that if you had a congress of representatives of local government bodies, you would see far more effective and innovative standards for national waste disposal problems than through any top-down process.

The resolution of powers, duties and responsibilities of the various tiers of government is a major issue in Australia. It is something that, ultimately, should be decided directly and democratically—from the bottom up. It is one of those issues that is crying out for wider community facilitation of the debate and it should be part of the entire debate in relation to the proposal for constitutional change in relation to the republic. There is no point in constitutional change of a minimalist nature without looking at the appropriate levels of government for such things as revenue raising and responsibilities, as well as the wider issues that the community wants looked at now within any debate on constitutional change.