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Chapter 9: Federal decision-making

• Intergovernmental institutions
  • Canada and the United States of America
  • Germany, Belgium and the United Kingdom
  • European Union
• The role of intergovernmental relations in Australia
  • The need for intergovernmental relations in a highly concurrent federation
  • Federal decision-making
  • Intergovernmental relations and the virtues of federalism
  • Enduring and robust intergovernmental institutions
• Reforming the Council of Australian Governments
  • Mandated meetings of the Council of Australian Governments
  • A permanent intergovernmental secretariat
• Strengthening the role of the States in Australian intergovernmental relations
• Ministers for intergovernmental relations
• The role of the legislature
  • Reporting to Parliament
  • An inter-Parliamentary committee
• Diagram of intergovernmental relations in Australia
• Endnotes

9.0 The Committee’s Terms of Reference require the Committee to:

2. Identify areas of responsibility for which the State should have an enhanced role for the benefit of the Federation, with particular reference, but not necessarily limited to:

. . .

ii) examining the use and operation of federal decision-making institutions with a view to recommending improvements.

Intergovernmental institutions

9.2 The Committee found that intergovernmental institutions serve a common purpose in the federal systems that it visited. They provide a formal, if often non-constitutional, means of maintaining or reshaping the federal system, and they strengthen intergovernmental relations - an essential feature of any federal system¹ - by providing a stable framework for intergovernmental negotiation. Formal executive relationships enable an authoritative exchange of views, leading to effective decision making.

9.3 The constructive role played by formal institutions in supporting intergovernmental relations is facilitated in many federations by the maintenance of permanent administrative arrangements of an intergovernmental character.

9.4 All of the federations visited by the Committee evinced a significant degree of intergovernmental co-operation, whether Federal-State or inter-State. The Committee was struck by the high degree of development of the intergovernmental institutions in which this intergovernmental co-operation takes place. Although Australia’s intergovernmental bodies have developed a great deal over the past ten years,² they do not have the robust institutional character displayed by many of the institutions in the other federations visited by the Committee.

Canada and the United States of America

9.6 The system of intergovernmental relations in the United States is substantially different from that of Canada. Institutional intergovernmental relations exist between State Governments, and it is at this level that formal agreements and co-operation is to be found. At the Federal-State level, the focus is on lobbying by the States through States’ organisations (National Governors’ Association and the National Conference of State Legislatures). These organisations have regular access to the federal executive, but their purpose is to present the States’ views rather than to reach agreement between the Federal and State Governments on particular issues; each organisation maintains a permanent secretariat to provide administrative, research and policy support, and to ensure that effective communication is maintained between the organisation and each member state.⁴

Germany, Belgium and the United Kingdom

9.8 Germany fully incorporates intergovernmental relations into the federal legislative structure. The Bundesrat makes Land governments part of the federal legislature. This gives the Länder direct impact on federal legislation, and has also prompted a sophisticated network of permanent institutions, both to manage relations between the Länder and the Bund, and to provide effective support to the Länder in their dealings with one another and with the Bund.⁵

9.9 In Belgium, Community Councils appoint a number of their Members as Senators, thus ensuring a direct role for members of those Councils in the federal legislative process.⁶

9.10 The devolution arrangements in the United Kingdom make it possible to be both a Member of the Scottish Parliament, and a Member of the Parliament of the United Kingdom. In addition to this potential personal intergovernmental link, intergovernmental relations between the Government of the United Kingdom and the Scottish Parliament will be managed by the Secretary of State for Scotland, while intergovernmental relations between the Government of the United Kingdom and the Welsh Assembly will be managed by the Secretary of State for Wales.⁷

European Union

The role of intergovernmental relations in Australia

9.13 Effective intergovernmental relations are necessary to the smooth functioning of the Australian federation. They are necessary for federal decision-making to take place. They are also necessary if the virtues of federalism are to be realised in Australia.

The need for intergovernmental relations in a highly concurrent federation

Federal decision-making

9.16 The new intergovernmental bodies developed in Australia as part of the 1990s New Federalism have recognised the importance of the States to national policy

making, and have given State Governments a new voice in national decision-making.¹² It is in these bodies, or in bodies such as these, that federal decision-making ought to take place, and Recommendation 10 recognises the Council of Australian Governments and the Leaders’ Forum as ideal sites for the further development of Australian intergovernmental relations.

9.17 Development of the Leaders’ Forum is particularly important. Australia has a strong tradition of sovereign Westminster parliaments, with executives accountable only to their own parliament. However, it is becoming increasingly clear that this tradition of sovereignty is allowing federalism in Australia to be undermined. So long as the States do not co-operate, the Commonwealth is increasingly able to become dominant in national decision-making, regardless of the interests affected by that decision-making. The basis of the European Union is horizontal co-operation between governments which have much less in common - both historically and politically - than do the Australian States. Horizontal co-operation between the Länder is also a significant feature of the German federation. The Leaders’ Forum has the potential to develop into an institution in which the States are able to engage in federal decision-making concerning a wide range of areas in which there is no need for Commonwealth participation.

Recommendation 10:

The Committee recommends that intergovernmental institutions be the principal site of co-operation between the Commonwealth and the States. It is also in intergovernmental institutions that inter-State co-operation must take place.

The Victorian Government should therefore pursue the enhancement of Commonwealth-State Relations in Australia through the use and development of existing Australian intergovernmental bodies and institutions. The Council of Australian Governments should be developed as the principal site of Commonwealth-State co-operation. At the same time, the Leaders’ Forum should be developed as the principal site for inter-State co-operation.

Intergovernmental relations and the virtues of federalism

9.19 Further, as the circumstances of each State, and of Australia as a whole, change, so the demands on government change. New imperatives to national decision-making will come about, and others will pass. These political decisions cannot be made once and for all, but must be reviewed, and where necessary revised, on an ongoing basis.

9.20 The history of centralisation in the Australian federal system suggests that, if the allocation of responsibilities is left to be sorted out by governments in an ad hoc way, the role of the States will continue to diminish. This must therefore be a matter to be dealt with systematically and regularly, in enduring and robust intergovernmental institutions. In its Second Report, the Federal-State Relations Committee found that an ongoing commitment of Australian Heads of Government is essential if intergovernmental decision-making is to bring about changes to the Australia federal system.¹³ Recommendations 11 and 12 therefore recognise the need for the allocation of responsibilities to be decided by Heads of Government, meeting in enduring and robust intergovernmental institutions, in which both the States and the Commonwealth are able to fully participate.

Recommendation 11:

The Committee recommends that decisions concerning:

the need for and scope of national decision-making;

• the existence of distinct State and national interests;
  

• the process (either inter-State, Commonwealth or Commonwealth-State) of national decision-making in particular policy areas; and
  

• the implementation of national policy;
  

be made co-operatively by Commonwealth and State Heads of Government. Such decisions should take place in enduring and robust intergovernmental institutions, which permit both the States and the Commonwealth to fully participate, and which enable these decisions to be reviewed on an ongoing basis.

Recommendation 12:

The Committee recommends that the Victorian Government pursue the principles stated in Recommendations 1 to 9 in the Council of Australian Governments and the Leaders’ Forum.

Enduring and robust intergovernmental institutions

9.21 As has already been noted, the development of intergovernmental institutions in many of the federations visited by the Committee is considerably more sophisticated than is the case in Australia. The sections that follow recommend a number of measures drawn from the experience of these federal systems, adapted to the Australian political and constitutional context. While none of these measures, on its own, will bring about a fundamental change in Australian intergovernmental relations, the whole package, if implemented, would constitute a major enhancement of Australia’s intergovernmental bodies. It would give those bodies the institutional standing that they must have if effective federal decision-making is to take place in Australia. The Committee recognises that ultimately there can be no fundamental change unless the States take a political decision to work together, and with the Commonwealth, to bring about that change; but this political action becomes easier when there is a clear model to work towards.

9.22 The recommendations to follow in this chapter set out a new model to enhance intergovernmental relations and federal decision-making in Australia. This new model is represented diagrammatically at the end of the chapter.

Reforming the Council of Australian Governments

Mandated meetings of the Council of Australian Governments

9.25 The Melbourne Constitutional Convention recommended a mandate in the following terms:

[The Council of Australian Governments] should be constituted by co-operative Commonwealth, State and Territory legislation which:

a) states the guiding principles and objects of the Council (including those adopted by the Meeting of Premiers and Chief Ministers in November 1991);

b) requires the Council to meet at least twice per year and report after each meeting to the Commonwealth, State and Territory parliaments.¹⁴

9.27 A mandated requirement that the Council meet at least once per year, as was originally agreed when the Council was established, would probably be appropriate. However, the mandate should contain a mechanism to provide for more frequent meetings. If the Council of Australia Governments began to meet on a regular basis, and to function effectively, this mechanism could then be invoked to enable it to meet more frequently than once a year.

9.28 The Melbourne Convention recommended that the mandate for the Council of Australian Governments be established by a scheme of uniform legislation. An alternative to a legislative mandate would be a constitutional one, inserted into the Constitution by a referendum.

9.29 A constitutional mandate would be more secure than a legislative mandate; it would be impossible for any single government to destroy the arrangement by repealing its legislation. Concerns that a constitutional mandate would be too rigid and inflexible could be allayed by granting the Commonwealth Parliament power to legislate to vary the composition of the Council, and the frequency of meetings, if requested to do so by the Parliaments of all the States. However, a constitutional mandate would be expensive to implement, as a referendum would be required. Such a referendum would also create a political hurdle, although a referendum might be no more politically difficult to achieve than co-operative legislation passed by the Commonwealth and all the States.

9.30 Neither a legislative nor a constitutional mandate would give the Council of Australian Governments any legal powers. The purpose of such a mandate would not alter the way in which the Council works; it would merely ensure that meetings are held on a regular basis.

Recommendation 13:

The Committee recommends that meetings of the Council of Australian Governments be mandated. The mandate should take the following form:

• the Council of Australian Governments shall meet at least once in each year;
  

• in addition, the Council of Australian Governments shall meet if the Prime Minister requests a meeting; and
  

• in addition, the Council of Australia Governments shall meet if at least four Premiers or Chief Ministers request a meeting.

A permanent intergovernmental secretariat

9.32 An Intergovernmental Secretariat would not only enable an increased workload to be met; it would also reduce the political control exerted by the Commonwealth over the Australian intergovernmental process, and would enhance the institutional character of the Council of Australia Governments by creating a sense of continuity between meetings.

9.33 The institutional efficiency that would be generated by a permanent Intergovernmental Secretariat would reduce the intergovernmental relations workload of existing government departments. The additional cost of an Intergovernmental Secretariat would therefore be minimal.

Recommendation 14:

The Committee recommends the creation of a permanent Intergovernmental Secretariat to provide administrative and policy support to the Council of Australian Governments.

Strengthening the role of the States in Australian intergovernmental relations

9.35 The example of States-only intergovernmental bodies in the United States suggests that a States’ Secretariat, representing all the States and responsible to the Leaders’ Forum, could play a useful role in co-ordinating the intergovernmental activities of the Australian States. It could support the States in their joint dealings with the Commonwealth, and also facilitate inter-State co-operation by providing administrative and policy support to the Leaders’ Forum.

9.36 If based in Canberra, the States’ Secretariat could provide support to Members of State Governments and State Parliaments engaged in business in Canberra. It could also maintain links between the States and national institutions based in Canberra, including Commonwealth departments and agencies and the national press gallery. The ongoing participation of Members of State Governments and State Parliaments in the life of the Secretariat would ensure that a Secretariat based in Canberra did not become captured by Canberra.

9.37 Such a States’ Secretariat would be distinct from an Intergovernmental Secretariat, which would be concerned with the intergovernmental activities of the Commonwealth in co-operation with the States.

Recommendation 15:

The Committee recommends that Victoria, in co-operation with the other States, take steps to establish a States-based Intergovernmental Secretariat. Such a Secretariat would strengthen the position of the States in intergovernmental negotiations by:

• providing administrative and policy support for Leaders’ Forum meetings;
  

• facilitating the flow of information on intergovernmental issues to the community, to the media and to State Parliaments.
  

If such a Secretariat was located in Canberra, it would also:

• provide support to Members of State Governments and State Parliaments engaged in business in Canberra; and
  

• maintain links between the States and Commonwealth departments and agencies, the national press gallery and other national institutions based in Canberra.

9.38 Responsibility for leading the Secretariat, together with responsibility for chairing Leaders’ Forum meetings, could rotate on a regular basis among the State Heads of Government. The Presidency of the European Union rotates every six months, while the Presidency of the Bundesrat rotates annually. A six-monthly period of rotation would give responsibility for leading the Secretariat to each State Head of Government about once per term.¹⁷

Recommendation 16:

The Committee recommends that responsibility for leading the Secretariat, and for chairing the meetings of the Leaders’ Forum, rotate on a regular basis among the State Heads of Government.

9.39 The States would be jointly responsible for funding the States’ Secretariat. The details of funding arrangements would have to be decided by State Governments. As part of a re-invigoration of inter-State co-operation, a consideration of funding responsibilities might lead to a broader consideration of the weight of votes in inter-State institutions. In Germany, while voting in the Bundesrat is not strictly weighted according to population, it does favour the large Länder to a certain degree.

Ministers for intergovernmental relations

Recommendation 17:

The Committee recommends that, where an enhanced intergovernmental relations process necessitates additional political work, it is desirable that a Minister be given responsibility for intergovernmental relations.

The role of the legislature

9.42 Intergovernmental executive decision-making tends to occur in meetings whose proceedings are not recorded and the results of those meetings are typically not sent to the legislature for ratification or debate. The benefits of intergovernmental agreements needs to be weighed against the desirability of a transparent and accountable decision-making at all levels of government. By involving federal and state legislatures in the system of intergovernmental relations, efficient intergovernmental decision-making can be combined with transparency and accountability.

Recommendation 18:

The Committee recommends that intergovernmental relations in Australia involve both the Executive Governments, and the Parliaments, of the Commonwealth and the States.

Reporting to Parliament

9.44 Many of the policy decisions taken by Australian executive intergovernmental bodies have legislative implications.¹⁹ Decisions concerning the allocation of roles and responsibilities also have obvious implications for the scope of parliamentary law making. And all Australian Parliaments have a legitimate interest in the functioning of the Australian federation. Recommendation 19 therefore builds on the experience of the European Union, and seeks to improve the formal channels of communication between Australian Parliaments and the executive in the area of intergovernmental relations. Reporting to Australian Parliaments by executive intergovernmental bodies would enhance parliamentary scrutiny, particularly where legislative functions are being performed by executive intergovernmental bodies.

Recommendation 19:

The Committee recommends that, following each meeting of any executive intergovernmental body, a report of the meeting be transmitted to the Parliament of each State participating in the meeting, and to the Commonwealth Parliament if the Commonwealth participated in the meeting, to be tabled at the earliest opportunity.

9.45 Recommendation 20 further recognises the particular significance to parliaments of the law-making role of many executive intergovernmental bodies, and seeks to increase the accountability of these bodies for the decisions they make, without hindering their ability to make decisions.

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Recommendation 20:

Several schemes of uniform legislation operating in Australia give executive intergovernmental bodies the power to legislate and to regulate. The Committee recommends that, in those cases in which executive intergovernmental bodies have law-making powers, that law-making decisions be taken in an open meeting which the public may attend, and a record kept and transmitted with the report mentioned in Recommendation 19, so that Parliaments are kept informed of the laws that govern their jurisdiction.

An inter-Parliamentary committee

9.47 A committee that brought together Members of Parliament from all Australian Parliaments to discuss matters relating to federal decision-making would be able to play an important consultative role. It would provide a forum for ongoing debate on the allocation of roles and responsibilities within the federation, ensuring that federal decision-making was properly respecting both national and State interests, and providing advice on such matters as overlap and duplication. If such a committee had the power to call witnesses and to hear evidence throughout Australia, it would further enhance the scrutiny of intergovernmental decision-making by executive intergovernmental bodies. And such a committee would improve communication between parliaments and parliamentarians, informing each of the issues and challenges facing them as partners in the federation. The Committee has itself experienced the benefits of meeting on several occasions with members of the Commonwealth Joint Standing Committee on Treaties.

9.48 Any Australian inter-Parliamentary body must satisfy the following criteria:

• all Australian jurisdictions must be represented;
  

• the Committee must have an appropriate bipartisan approach; and
  

• no jurisdiction must dominate the work of the body.

The Committee recommends the creation of an Inter-Parliamentary Committee for Intergovernmental and Federal Affairs.

The Inter-Parliamentary Committee should be established by way of uniform legislation passed in each jurisdiction, so as to reflect the federal nature of the Committee, and to ensure the Committee the necessary standing in each jurisdiction to carry out its work.

To ensure bipartisan membership, membership of the Inter-Parliamentary Committee should consist of one Government and one Opposition Member from each Australian Parliament.

The role of the Committee would be to inquire into and report to all Australian Parliaments on any matter concerning relations between the Commonwealth and the States, and the distribution of legislative and administrative responsibilities between them, including any intergovernmental decision-making.

9.49 The details of the operation of such a Committee would need to be decided. The Committee makes the following suggestions:

• that responsibility for chairing meetings of the Inter-Parliamentary Committee should rotate on a regular basis among the Government Members from each jurisdiction;
  

• that the work of the Inter-Parliamentary Committee be funded by all participating jurisdictions in equal shares, ensuring that no jurisdiction dominates the functioning of the Committee, and that it is not financially dependent on any single jurisdiction; and
  

• that decision-making on the Inter-Parliamentary Committee should be by simple majority vote.

The Committee notes that the decision-making processes of many Australian intergovernmental bodies are weighted in favour of the Commonwealth. If it was felt appropriate for the Commonwealth to have additional voting power, one Commonwealth minor party or independent Senator or Member of the House of Representatives could also be given membership of the Committee.

Diagram of intergovernmental relations in Australia

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Endnotes

1Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, Finding 2.

2Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, Finding 13.

3See Observation 3 above.

4See Observations 7, 8 above.

5See Observations 11, 14, 15 above.

6See Observation 18, above.

7See Observations 20, 24 above.

8See Observation 25 above.

9Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, pp 15-17.

10Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, Finding 5.

11Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, Finding 2.

12Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, Finding 13.

13Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, Finding 15.

14Melbourne Convention, Final Communique, March 5^th 1998.

15In addition to the meetings indicated in Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, pp 55-60, a Special Premiers Conference took place in November 1998, and a Special Premiers Conference took place at the same time as the Financial Premiers Conference in April 1999.

16Basic Law for the Federal Republic of Germany, art 52 (2).

17Federal-State Relations Committee, Australian Federalism: The Role of the States, Second Report on The Inquiry into Overlap and Duplication, Parliament of Victoria, Melbourne, 1998, p 143.

18Federal-State Relations Committee Second Report, Finding 3.

19Federal-State Relations Committee Second Report, p 97.