Thursday, February 25, 2010

COAG Reform Council

I only saw a report in the AFR on the COAG response to the COAG Reform Council report National Partnership Agreement to Deliver a Seamless National Economy: Report on Performance 2008-09 .

The general feling from the reports was great disappointment on the speed all round on these reforms, which unfortunately get carried by the Government under the rubric of "de-regulation". It doesn't help that the COAG Reform Council itself is an odd beast. It seems to have been created initially by the Howard Government to report on how to reform COAG, whereas it is now operating merely to report on the progress of "reform".

In many ways the whole exercise reflects the paucity of institutional arrangements to really manage inter-governmental co-operation, and in particular the structural impediments to moving anything from a State regulatory structure to a National one. Even once harmonisation is agreed it always remains possible for one State to fracture that agreement by simply having new legislative provisions.

The creation of the Australian Consumer Law currently going through Parliament is a cse in point. This is the second time this law will be harmonised. The last time the States all enacted the same provisions in their Fair Trading Laws as appeared in Part IV of the rade Practices Act. But all of them were individually amended.

The model of the Australian Consumer Law is harder to do this to, but it can happen.

These proposals to create a "seamless national economy" really are part of the ongoing project of Federation. Federation was about two things, a free trade agreement betwee the states and a unified external affairs policy. It is just that as the means of production change, and transport and communications advance, the "boundary" conditions for what is logically a State issue in economic regulation change.

The last time we addressed issues such as this was the mid 90s with the national competition policy. The mechanism for introducing that was the National Competition Commission and a financial arrangement that notionally compensated States for economic value foregone (dividends of SOEs and more generally the rents extracted from monopoly licences) but became a system of payments for reform.

It is perhaps time to recreate the constitutional device of an Interstate Commission that should be charged with the permanent responsibility for developing a seamless national economy. Rather than a qango whose only job is reviewing progress, create a qango whose job it is to drive the process.

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