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Tuesday, 14 August 2007
Page: 58


Mr McMULLAN (4:48 PM) —I rise to support the second reading amendment moved by the shadow minister, the member for Grayndler. This is an issue with a very long history and the Water Bill 2007 represents yet another second-best step along a rather sad and very long road. After all, the colonial governments of New South Wales, Victoria and South Australia met in Melbourne in 1863 to discuss a management plan for the Murray-Darling Basin—that was in 1863. There was no concrete agreement, just a conclusion that something should be done. After two major droughts, the River Murray Waters Agreement was signed in 1915. Then, as now, the catalyst for action was drought. The first meeting of the River Murray Commission was held in Melbourne in 1917. If you read the brief history of the Murray-Darling Basin Agreement on the Murray-Darling Basin Commission website, you will see that the Commonwealth and the states have been talking about the problem ever since. The states have been talking about it for nearly 150 years; the federal government and the states for at least 90 years.

In the 1980s it was recognised that, after more than 60 years, the River Murray Waters Agreement and the River Murray Commission were increasingly unable to meet the needs of the basin’s management and its growing resource and environmental problems. At that time important changes were taking place in water resources administration at both state and Commonwealth levels. Individual agencies within the separate states were finding themselves unable to tackle the developing problems of rising water salinity and land salinity, for example, for the very obvious reason that these issues, their management and any possible solution to them required actions which extended across state boundaries. Not surprisingly, we find that lots of reports were tabled during this period and many of them called for urgent action.

A new Murray-Darling Basin Agreement was signed in 1992 and the Murray-Darling Basin Act was passed in 1993. That was not an end to the matter; in fact, it was the catalyst for what was and should have been a serious beginning. No sooner had we begun than we stalled, because in 1994 another push for national water reform began. There are some very interesting contrasts between the way this water plan has been handled and that which was initiated in 1994. So long ago, it had the potential to achieve much, if not all, that this Water Bill is designed to do. In 1994 we had a historic, bipartisan, negotiated, agreed plan. It was led by the Keating Labor government and included the Fahey Liberal government in New South Wales, the Kennett government in Victoria, the Brown Liberal government in South Australia, the Goss Labor government in Queensland and the Follett Labor government here in the ACT. We found that governments across the political spectrum were able to cooperate, with nobody making unilateral announcements and demanding that everybody fell into line. There was leadership from the federal government, but it was leadership in pursuit of a cooperative agreement.

Contrast this cooperative approach with the current situation and the current rhetoric on federal-state relations, which from the Howard government’s perspective seems quite bizarrely to be predicated on the assumption that the Liberal Party will never win another state election. It is a bizarre set of circumstances—contrasting cooperative federalism and a centralising intention. For those who have a short-term view of history, it looks like a role reversal, with the Liberal coalition being the centralisers and the Labor opposition being for cooperative federalism. It is not about states’ rights. The only thing I heard the member for Barker say that I agreed with is that this is not about the rights of the states; it is about the outcomes for citizens of Australia. It is not about process; it is about results for people in Australia.

Look across the range of issues where federal-state relations are in conflict. It is not coincidental conflict; it is deliberate, planned confrontation for partisan political purposes by the Howard government—and I will come to that in a moment. We all know that the Howard government have been advised by Crosby Textor that one of the things they can do and hope to gain political benefit from is to pick fights with the states. That is what Crosby Textor has advised, and ever since that advice we have seen it being dutifully followed with initiative after initiative, confrontation after confrontation. We have, virtually, war declared on the states by the federal government—not about any grand alternative vision of the way the country should be governed but, rather, marginal seat by marginal seat, they go around the country trying to pick a fight with a state government here and a state government there in the hope that they might save a seat in this part of the country or that. It may be clever politics, but it is a hell of a way to run the country.

After all, there will be state and territory elections in 2008, 2009 and 2010. It is bizarre to believe that the strategy of the incumbent government is based on the assumption that they will not win any of them. I can say categorically that Labor’s strategy with regard to federal-state relations, as developed in opposition and as we intend to implement should we be successful at the election, does not rely upon the current coincidence of there being eight state and territory Labor governments. In personal terms that is a pleasure to me. I know those people and I enjoy working with them, but the whole structure is designed to be able to work irrespective of the political colour of the state governments.

The Council for the Australian Federation has been consciously set up by the states and territories to operate in a manner that will endure beyond the current coincidence of eight state and territory Labor governments, which is a temporary—from a Labor point of view very welcome—phenomenon. The Howard government’s position and their hostility to the states as a governing strategy can only operate on the assumption that they will never win another state election.

So we have a dramatic contrast. In 1994 we had a cooperative push for national water reform—Liberal and Labor state governments working with a federal Labor government. A report from the COAG working group on water resource policy had been commissioned in 1993, and this was presented to the 1994 meeting. That was 13 years ago. The report noted that, while progress was being made on reforming the water industry and minimising unsustainable natural resource use, there were other ongoing issues that needed to be addressed. The COAG communique from that meeting agreed that action needed to be taken to stop the widespread degradation of land and water systems and agreed that a package of measures was needed to address the economic, environmental and social implications of water reform. COAG endorsed a strategic framework that sounds remarkably like the framework that led to the Water Bill 2007: pricing reform based on the principles of consumption based pricing and full cost recovery; the reduction or elimination of cross-subsidies and at the very least the making of those subsidies transparent; a clarification of property rights; the allocation of water to the environment; the adoption of trading arrangements in water; and institutional reform and public consultation and participation.

That process across the political boundaries and across the federal and state boundaries was proceeding amicably until the Howard government came in and it stopped. For 13 years nothing has happened. The process was shut down until the eve of an election in which the Howard government’s advice from Crosby Textor is: ‘You need to be in conflict with the states. You cannot win the election on the merits of your propositions; you can only win by being seen to be battling the states.’ Crosby Textor’s advice makes that crystal clear. The advice says that the coalition needs to:

... emphasise that the Commonwealth is bailing out ineffective and inefficient states.

That is the political strategy. That is the advice from Crosby Textor and it is being followed to the letter.

So we had 13 years of no progress, and then suddenly there is a unilateral announcement demanding cooperation. Because of that unilateralism, because of that coercive federalism, because there was no prior discussion and because there was no attempt even to reach an agreement until after the announcement had been made, we have not got an agreement. We are falling back to another second-best solution. From the comments made by Ken Henry to Treasury staff in April this year, it is clear that this year’s decision with regard to the Murray-Darling Basin was purely a political exercise dreamt up by the Prime Minister in an attempt to restore his sagging political fortunes. The Prime Minister knew that global warming had become an issue and that, as Crosby Textor said, the environment issue was favouring the Labor opposition, so he decided on a diversionary tactic.

It is not that action was not needed; it is long overdue. The problem is that coercive and unilateral action is less likely to work than a cooperative model—and, once again, it is proving to be so. All history and the experience of other federations tell us that unilateral, coercive federalism is the least efficient way of getting good policy outcomes, and this is just another example. An announcement was made for maximum political effect, but it was made in a manner that virtually guarantees that agreement cannot be reached and will not be reached. There is no precedent by which agreement is reached after such unilateralism, and we will drift towards a second-best outcome. History will be the judge as to whether this is good politics. It is not for me to make a judgement about that. The voters will make a judgement about that soon enough. It may well be the case, but it is a hell of a way to run the country.

This is what Ken Henry said in a speech to his internal Treasury forum. He said:

The government, our ministers and other agencies are under no compulsion to rely on our advice. In respect of water, that point is all too obvious.

When talking about the coming election, he added:

At this time, there is a greater than usual risk of a development of policy proposals that are, frankly, bad.

The Labor opposition has consistently supported and supports now, and I support, the need for greater Commonwealth leadership in water policy—it has been needed for a long time, and better late than never—and the need for a water plan, which ensures healthy rivers and security for water users.

Unfortunately, this announcement in January was the first in a series of examples of world’s worst practice in the management of a federation. It undoubtedly flows from Crosby Textor’s advice—and they are very good pollsters; they may well be giving very good political advice—but, in effect, the advice has led to the Prime Minister giving up on governing and spending his time attacking the states. We found it reflected in question time when either the states or the opposition were responsible for every problem. We were responsible for inflation and they even found that we were responsible for the drought in south-east Queensland. We have a very powerful Leader of the Opposition! I think he is a very capable man, but to have done that was beyond my estimation of his capacities.

The PM is playing the blame game on a larger scale and with more mind-defying leaps of logic than we have seen hitherto. The government’s advice shows how cynical and short term it has become. We are looking at policy being made on the run, which is inevitably bad policy. We have the extraordinary situation where the Australian, not renowned as a great pro-Labor journal, in a recent editorial on these issues to do with federal-state relations and the character of the interventions of the federal government, stated:

But if we had to give Mr Howard a plain-English report card on his performance it would be A for politics and E for policy.

It further stated:

... there is nothing in the conservative pantheon ... that Mr Howard won’t ditch in his quest for electoral success.

It went on to state:

The need for the commonwealth and the states to reduce bureaucratic overlap is urgent.

I am not quoting it all. If anyone wants to go back and look at it, they will find that I am quoting it in a manner that is consistent with the intention of the editorial. I do not think I am twisting its meaning, but it is too long for me to read it all. The editorial further stated:

Year after year [Mr Howard] and the premiers have used the Council of Australian Governments as an occasion for backslapping and photo opportunities while everyone turned a blind eye to the need for far-reaching reform.

It stated:

Mr Howard has had 11 years to address these matters and has little if anything to show for it. His ad hoc interventions in the Murray-Darling ... are worthy of support but they bear all the hallmarks of policy made on the run and are not a framework for reform.

…       …            …

The Australian believes that streamlining the operations of state and federal governments is a critical economic imperative if Australia is to compete in a globalised economy.

‘A for politics, E for policy’—I think that sums up exactly what is going on in federal-state relations at the moment.

I am sure we could all dream up our favourite list of marginal seat pork barrels. I think, with the exception of the member for Herbert, all of us in the chamber at the moment need to apologise to our voters for not making our seats marginal enough so that they could have someone fly over, open the floodgates and allow the dollars to fall out. I do not really apologise; I am very pleased to have a big majority. I have worked very hard to get it. But I sort of feel guilty, otherwise they would be pork-barrelling my electorate.

They are putting one of the Australian technical colleges in my electorate, but they are pretending it is in Queanbeyan. It has a plaque in Queanbeyan; it has a college in my electorate. They have announced that it is in Eden-Monaro, but actually all the students and the buildings are in my electorate, which is not a marginal seat and so they announced it is going to be in Eden-Monaro. I am sure they will have a little office with a plaque on the door saying, ‘This is where the Australian technical college is,’ but if you want to study you have to get in your car and drive to my electorate. That is as close as I am going to get to any of this pork-barrelling. But, if you are in a marginal seat, you would be getting letters from the government asking you to send in requests. ‘Please get on the list. There is an airplane flying over with a hold full of money and the Prime Minister has his hand on the lever. He can open it and it will come out in an electorate near you.’ We will all be waiting with increasing interest for the next round of desperate announcements.

Last week the WA Premier, Alan Carpenter, said:

What is happening now is the complete destruction of the relationship between the federal government and state governments. He—

Mr Howard—

is addicted to the office and all that goes with it, and he’s demonstrating the classic failure of people who get into that position. He’s putting his own interest first, his own interest ahead of the national interest and he’s prepared to say and do anything to stay in government.

The problem, broadly, with regard to federal-state relations is that it is going to have long-term, adverse consequences for the governance of the country if it is allowed to continue. It is in the hands of the electors. We live in a democracy. They may choose for it to continue. If they do, we will all have to accept that decision. That is what happens in a democracy, but it will be a cause for great regret, long term, for the governance of the country.

With regard to this particular matter and the water, the problem here is that we are heading for a second-best solution on water. With $10 billion on the table, we should have been able to obtain a much better result. A cooperative approach could have led to an agreement, but a unilateral announcement demanding compliance was always headed for disaster. I suspect that the Prime Minister wanted confrontation, because agreement would not have got him the conflict he needed. Irrespective of that, we are, sadly, heading for a second-best solution in an area where the best solution was possible. I support the second reading amendment moved by my colleague the member for Grayndler.