Tension and fractures within the “Federation”

2009-08-13T03:58:00.001-07:00

According to NSW Treasurer Eric Roozendaal, economic powerhouses Queensland and Western Australia are working together to “gang up” on NSW and Victoria in order to gain a larger portion of revenue from Canberra if (and most likely when) proposed changes by the Commonwealth Grants Commission (CGC) are implemented.

The proposition by the CGC is to “carve up GST revenue to compensate fast growing states for infrastructure needed to support increasing populations” and appears to be at the expense of the nation’s two most populous states. Treasurer Roozendaal has gone so far as to accuse the two mining states of being an “axis of evil.”

Possible evidence of the so-called axis was assumed in a joint statement, by both Queensland Treasurer Andrew Fraser and WA Treasurer Troy Buswell, who said their states are the “economic engine rooms” of Australia and that they are the best bet to “lead the nation out of the economic downturn.”

Could this cause fractures to appear in the Federation? Let’s examine the facts:

Western Australia’s population is a bit over 2 million (containing 10 per cent of the national population).
While contributing 13 per cent to Australia’s gross domestic product (GDP), Canberra allocates only 6 per cent of funding collected nationally under the guise of the goods and services tax (GST).
As Western Australia (as well as Queensland) looks set to receive a larger slice of the GST pie from Canberra, New South Wales looks set to lose nearly $2 billion in GST funding as part of the CGC’s redistribution of GST-related revenue.
NSW has the nation’s largest gross state product (GSP) and is estimated at over $350 billion (approximately a third of total national GDP, itself valued at approximately $1.1 trillion).
A $2 billion drop in NSW’s revenue stream (in addition to a $10 billion drop due as a result of the global recession) would have serious implications on the NSW Government’s ability to fund infrastructure projects and provide services across the state.
Billions of dollars worth of taxes from NSW flow north across the border to subsidize taxes paid by Queenslanders.

Western Australia would be financially better off to secede from the Federation and declare independence. This option is theoretically possible too. WA’s gross state product per capita was in 2007 estimated at $60,845 (significantly above the national average of $47,610), winning it the title as the most productive state in the country.

Going back to the beginning of the 20th century, Western Australia was reluctant to join the Federation and only did so after being pressured by the other colonies. Despite being part of “one indissoluble Federation under the Crown”, certain technicalities and loopholes opened by various pieces of legislation over the years could technically allow any state to secede from the Federation.

Western Australia is not mentioned in the Preamble to the Commonwealth of Australia Constitution Act (1900). The Act also states that “if Her Majesty is satisfied that the people of Western Australia have agreed thereto, of Western Australia, shall be united in a Federal Commonwealth…” but at a referendum in 1933 West Australians voted 68 per cent in favor of leaving the Federation and declaring independence; although when brought to the attention of Queen Victoria, was given the cold shoulder and had their democratic voices ignored. The reason: the other states were not in favor of sharing a continent with an independent republic and one could only assume the trade relations between Australia and the United Kingdom played a part in Western Australia’s request for independence being denied.
The Australia Act (1986) was ratified by both the parliaments of Australia and the United Kingdom that severed the last remaining ties between the two countries’ legislatures and judiciaries. The pieces of legislation essentially made Australia an independent republic upon proclamation.
As a result of the Australia Act, behemoth-like legislation such as the Commonwealth of Australia Constitution Act becomes null and void due to it being legislation passed by the Parliament of the United Kingdom due to Australia’s sovereignty and severed ties between Australia and the United Kingdom.
The Australia Act was implemented to establish a “form of independence to the states”.
The Statute of Westminster (1931) gave Australia various forms of nationhood and independence, but did not apply to the states.
The states were technically still colonies of the United Kingdom until the Australia Act was enacted in 1986.

In summary

If the foundations of the federal government are null and void, Australia is either still a group of British colonies, or a group of independent states controlled and financially manipulated by a pseudo-nation operating way beyond its means.

Political Pasta

Tension and fractures within the “Federation”