States rise up against Canberra's thumb

The states are filling the Canberra vacuum and are coming back as a major force in Australian strategic policy making.

And so, at last, the premiers of New South Wales, Victoria and Queensland are talking regularly together and out of those discussions is coming much better policy than the Canberra bureaucrats and ministers dream up.

We have seen two major initiatives and there are even more significant moves in the pipeline.

Victoria, Queensland and New South Wales are not letting their deep differences over GST revenue distribution and similar matters get in the way of good policy development.

In recent decades, while from time to time there has been the odd state premier who had significant influence, most of the national initiatives have come from Canberra.

Now Victoria Premier Ted Baillieu, New South Wales Premier Barry O'Farrell and Queensland Premier Campbell Newman are looking to do more things together.

At the recent COAG conference Ted Baillieu was speaking on behalf of most premiers when he said that the Commonwealth was making promises that saddled the states with outlays of $50 billion. The Commonwealth said the Baillieu figure was too high but there was no argument that the substance of what Baillieu said was correct. With the Commonwealth now dependent on the sates for money the game has changed.

Over in the west, Premier Colin Barnett is increasingly divorcing himself from what he regards as ‘strange' people in Canberra. He is positioning Western Australia to look north rather than look east. If Barnett wins the 2013 WA election my guess is he will look hard at what the eastern states are doing, because Western Australia would be a major beneficiary.

But there are higher long-term stakes in Western Australia. If Canberra continues to enact what the Western Australians see as bad policy (such as large tax burdens on miners via carbon and other mechanisms), the fires of secession will be once again be kindled.

Let's look at the first two areas where the co-operation is working.

Both New South Wales and Victoria have substantial infrastructure investment programs planned for 2014 and beyond. They have worked out that the Commonwealth's decision to abandon the Howard commercial building code to keep sweet with Labor's union mates has boosted their building costs between 20 and 25 per cent.

So not only is the Commonwealth demanding money from the states to support programs that the Commonwealth is initiating (without state consultation), but the Gillard government is also boosting the states' building costs for hospitals, bridges, railways, roads etc. This is intolerable.

That's why Ted Baillieu has introduced a building code for Victorian state projects and New South Wales is looking to follow. Neither wants to pay the Gillard building cost impost. Queensland will not be far behind but is first looking at other significant areas where Queenslanders can take the lead, with the other states following (States advance against a union fortress, December 7).

If the WA Coalition wins, Western Australia is likely to follow the other states and introduce the Victorian code to slash its building costs. This is very good news for Australia and is the first step toward cutting mining construction costs.

A year ago we saw very badly worded Commonwealth Occupational Heath and Safety laws being introduced as uniform proposal. The idea of uniform laws made sense but the Commonwealth proposal would have had industry in endless court battles – the nation faced a disaster. New South Wales adopted the Gillard plan because for all its faults it was a big improvement on existing New South Wales rules.

Sensibly, Victoria and Western Australia did not adopt the Commonwealth legislation. While under the ALP administration Queensland adopted the Gillard plan, Campbell Newman plans to reverse it and follow Victoria (Staving off an OHS catastrophe? January 17).

South Australia had an intense debate and adopted a hybrid between the Commonwealth and Victorian legislation.

Meanwhile, shadow treasurer Joe Hockey has done considerable work on a model that promotes co-operation between the Commonwealth and the states. It ends the game of the Commonwealth thinking it's a superior body – which in the current environment it certainly is not.