Home' Policy Magazine : Policy Vol 31 - No 2 Contents 19
POLICY • Vol. 31 No. 2 • Winter 2015
WOLFGANG KASPER & PAUL KELLY
of taxation and get most of their funding from
Canberra Centre by posturing, by lying at Premiers’
conferences, and then hindering economic
growth. It’s just undignified how these Premiers’
conferences are conducted.
We need a devolution of powers to where
a government function can be done best. The
technical word is ‘subsidiarity,’ which is the essence
of what is called competitive federalism, to end the
cartel we now have of high-taxing, big-spending
governments. The technical term again to throw
in here is ‘fiscal equivalence’: each government
is allotted or assigned certain tasks and raises the
taxes to fulfil these tasks as it sees fit. In doing so,
governments act in competition with each other.
Some states or councils may promise less and tax less,
others may try to provide gold-plated streetlights
and tax the local citizens a bit more. (The newly
minted Member of Parliament for Eden-Monaro,
Peter Hendy, has some very good ideas about this
reform as a basis for reshaping the federation.
I wholeheartedly agree.)
Once state and local governments are responsible
for raising their own funds from the taxpayers, they
will become interested in growing their own tax
base, in cultivating local economic growth. Just to
give you an example of how things could happen:
imagine that local governments got a share of the
mining revenue in their district, can you imagine
what would happen if a local government would
write to the electorate and say: ‘Should we allow
fracking in our district and you get a 20 percent
rate cut, or should we ban fracking forever and
your rates will increase this year by 7 percent and
likely double in ten years’ time?’ I bet you that
Lismore will get cracking on fracking. If the states
are responsible for raising their own resources,
I bet you they will find big savings that now, we
are told, are impossible to find.
But we know that the welfare state is broke.
We know that centrally-planned government
monopolies to deliver education, health care, public
housing, and so on—administered by cumbersome,
frequently by entrenched public sector unions—
have become unaffordable.
Ineffectual service provision is another factor,
I think an important one, in the disaffection with
democracy in this and in European countries.
I recommend a look at the Swedish experience of
reforms about ten years ago with charter schools
that had to start competing for school vouchers.
The quality of teaching went up enormously; good
teachers really started to like it. With hospital care,
I find inspiring material in the trust hospitals in
Spain and in the UK: great savings, great quality
improvements, the mobilisation of creativity,
diversity (different communities need different
types of service), and the mobilisation of local
voluntary resources. People like to volunteer, they
like to be engaged, and that’s good for democracy!
Finally, I want the government to be secular.
The atrocious European wars of religion have
taught us that the separation of church and state is
essential, absolutely essential, for social peace. And
we must expect all immigrants to commit to this,
otherwise they don’t fit in here.
The last point in a New Australian Settlement:
we have been and should be absolutely clear that
we want to continue to be part of Western
civilisation. Australia is exposed, we are an outrigger
in the Asia-Pacific region, a frontline state of the
West. Long-term investors need strategic clarity
on that. We should acknowledge that we are
becoming a multiracial country, that’s fine. That’s
probably a great potential growth asset. But we must
understand that this doesn’t mean that we become
a multicultural country. That leads to fractiousness
Of course, we need substantial immigration
to grow the labour force and much more. But we
should be selective about whom we admit here.
We should welcome those who fit in and who
appreciate our basic values. We can judge which
immigrant groups integrate by maybe assessing
their workforce participation, intermarriage rates,
and incarceration rates. Because if we ignore these
things, our skills base will suffer—and that’s bad
for economic growth. Welfare dependence will
If the states are responsible for raising
their own resources, I bet you they will
find big savings that now, we are told,
are impossible to find.
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