The emphasis in the white paper's terms of references, however, is on pursuing a top-down reform effort that will clarify who does what, to whom and how, with all "national interest" considerations (including "Closing the Gap", immigration and settlement services, and generating regional employment opportunities) following a "a national approach ... in preference to diversity across jurisdictions" (Issue Paper 1, vi). Further, it highlights the Commonwealth's overarching concern for "performance" and "reporting" whereby subnational governments and regional councils will supply for example, "indigenous school attendance data as part of the next Closing the Gap report ... which should also include data on work program participation and data on communities without a police presence" (Abbott, Statement to the House of Representatives February 12, 2014), yet these de facto "administrative units" are provided almost no local flexibility in managing the policies and public programs they deliver within their "sovereign sphere" because they relate to "national interest considerations". It would seem to an outside observer that the Commonwealth government wants to have its cake, and eat it too.
Regarding the term of "subsidiarity", the paper uses this principle to indicate that the lowest level of organisation capable of performing a function is the family, then clubs, and social associations - using a trivial example of a cake stall, the reader is then assured the Commonwealth won't regulate "the nature of the cakes being sold". It then states, "local governments are best placed to maintain local parks and organise waste collections. States and territories are more likely than the Commonwealth to understand their communities' needs in a wide range of social services". Therefore, as I read it, cities aren't well placed to promote inclusive growth? In the OECD's 2014 report, however, which the paper claims is consistent with its views, it clearly states that "cities" matter for inclusive growth. It argues that local governments are the best positioned to support growth in a particular place that requires an understanding of local conditions.
Urban areas like Sydney, Melbourne, Brisbane, Adelaide, and Perth, where 64 per cent of Australian citizens live, require public services with a distinct spatial component. Known as a "place-based approach" it is not just the "delivery of services" that needs to be localised - it is also their design. Again, this would require a decentralisation of decision-making to the subnational levels. The complete absence of "cities" and "local government" within the terms of reference bypasses altogether the idea that cities and municipalities are the interface between citizens and higher levels of government.
In particular when it comes to the supply-side inputs of an active welfare state in the areas of health, education, and employment; flexibility and a place-based approach to public services are fundamental to success. Thus while the Commonwealth appears increasingly interested in using conditionality to induce behavioural change (the carrots and sticks approach), local service providers could use conditionality as a mechanism to zoom in on what the demand-side impediments are to genuine social inclusion. Why can't people find a job? What skills are missing in certain areas and what are the barriers to obtaining those skills in that area? Why don't Aboriginal children want to go to school?
Therefore, in asking which level of government is to be responsible for a stronger regime and a better use of the conditions that are increasingly an integral part of an active welfare state, we need to ask if the decentralisation of certain government functions could empower the states, territories, and capital cities to better meet the needs of Australians. It is not "the elimination of multiple levels of government involved in ... public programs that needs to be resolved", rather, it is how to operationalise a "whole-of-government approach" in a federal system whereby various levels of government have sovereignty in their own spheres.
According to the proposal to reform the federation, the intention is to transform Australia from "marble cake federalism", whereby governing responsibilities are shared and levels of government co-operate to achieve common objectives, to "layer cake federalism", where each level of government has clean lines of responsibility with no overlap. The Commonwealth, however, cannot have its cake and eat it too. If the states and territories are to have "clean lines" of responsibility where there is no "overlap", then it will have to relinquish some of its power in Section 51, xiiia of the constitution.
Another more remote option is to transform local governments and municipalities into the prime agents of the federal government in key social areas, which makes them responsible for both promoting and monitoring the conditions that are attached to national policy objectives. Such a three-level strategy has real potential in allocating roles and responsibilities; however, it does require local government recognition, along with increasing their authority in certain areas - an agenda that is clearly absent in the reform of the federation's current terms of reference.
The bottom line is that the states and local governments need more autonomous discretion over the supply-side inputs of an active welfare state. This would allow directly elected subnational executives to autonomously confront the demand-side impediments to achieving greater social inclusion using a place-based approach. Thus it is decentralisation and the distribution of power downwards within a federal system that leads to greater innovation in policy design and service delivery, not subsidiarity per se. The principle of subsidiarity is being used as a justification for offloading some of the Commonwealth's functions through a political-judicial debate over "roles and responsibilities" rather than invigorating a real debate over the relative powers of citizens, local governments, states and territories, and Commonwealth institutions. It is not "subsidiarity" that will reduce the Commonwealth's benefits powers and result in increasing the accountability of premiers and mayors to their voters - not to the Commonwealth.
Tracy Beck Fenwick is the incoming director (2015) of the Australian Centre for Federalism at the Australian National University's School of Politics and IR. These are her personal views.