Transcript The Nature and Consequences of Intergovernmental Relations

Addressing Internal Market
Barriers and Integration:
The Australian Experience
Cliff Walsh
School of Economics
University of Adelaide
South Australia
Forum of Federations and CD Howe Institute
Conference, Toronto, 1 February 2010
AUSTRALIA
2
1. CONSTITUTIONAL CONTEXT
2. WHY COOPERATIVE ECONOMIC
REFORMS
3. WHAT REFORMS?
4. HOW ACHIEVED?
 LESSONS FOR CANADA?
3
CONSTITUTIONAL
CONTEXT
4
• COMMONWEALTH POWERS:
 FEW EXCLUSIVE
 MANY MORE CONCURRENT,
WITH FEDERAL PARAMOUNTCY
• STATES HAVE RESIDUAL POWERS
 COVER MOST ECON ACTIVITY
AND INFRA PROVISION
5
• “ECONOMIC UNION” PROVISIONS:
 CUSTOMS UNION: EXCLUSIVE
COMMONWEALTH POWER (s90)
OVER CUSTOMS AND EXCISE
DUTIES
 COMMON MARKET: s92
“… TRADE, COMMERCE AND
INTERCOURSE BETWEEN THE
STATES … SHALL BE
ABSOLUTELY FREE”
6
• s92 ONLY PRECLUDES
“DISCRIMINATORY BURDENS OF A
PROTECTIONIST KIND”
• CONSTRAINS REGULATORY
DIFFERENCES
 BUT DOESN’T NECESSITATE
HARMONISATION
7
• USE OF MOST CONCURRENT
POWERS UNCONTENTIOUS BUT NB
 EXTERNAL AFFAIRS POWER:
CAN OVERIDE STATE LEGN
 CORPORATIONS POWER: CAN
EVEN REGULATE MATTERS
INTERNAL TO CORPORATIONS
 GRANTS (SPENDING) POWER:
REWARD STATE REFORM
ACHIEVEMENTS
8
• CONSTITUTIONAL CHANGE UNLIKELY
• REFERRALS COOPERATIVE BUT
PRACTICAL AND POLITICAL LIMITS
• OTHER MEANS RELIED ON:
 TEMPLATE LEGISLATION
 MIRROR LEGISLATION
 FRAMEWORK LAWS
 SIMPLY IGAs
9
THE WHY, WHAT
AND HOW OF
AUSTRALIA’S COOPERATIVE
ECONOMIC REFORMS
10
WHY?
• ECON CRISIS: UNILATERAL TARIFF
REDUCTIONS
 INTENSE PRESSURE FOR
DOMESTIC ECON REFORMS
 STATES’ PARTICIPATION
BECOMES ESSENTIAL
• ECON AND POLITICAL BENEFITS
ALL-ROUND
• 2+ DECADES & STILL GOING
11
WHAT?
• DETERMINED SOLELY BY WHETHER
INCREASES COMPETITION ETC
 PRESUMPTION IN FAVOUR OF
COMPETITION BUT COULD BE
REBUTTED
 FOCUS CHANGES OVER TIME
12
PHASE 1: 1990s
• STARTS MODESTLY EARLY 90s:
INFLUENCED BY EU
 MUTUAL RECOGNITION
AGREEMENT ETC.
• BUT NB ALSO PERFORMANCE
MONITORING OF GBEs
13
• 1995-2005 COMPREHENSIVE
NATIONAL COMPETITION POLICY
(NCP). KEY ELEMENTS:
 REFORMS TO PREVIOUSLY
SHELTERED GBEs: ESPECIALLY
ELECTRICITY, GAS, WATER
 WIDE-RANGING LEGISLATION
REVIEWS : TO REMOVE ANTICOMPETITIVE LEGISLATION
14
• OTHER ELEMENTS INCLUDED:
 WIDENED COVERAGE OF TRADE
PRACTICES ACT
 COMPETITIVE NEUTRALITY
 SEPARATION OF REGULATORY
FROM COMMERCIAL FUNCTIONS
 VERTICAL SEPARATION
 THIRD-PARTY ACCESS REGIMES
15
• SOME INTERNAL MARKET REFORMS
BUT NOT HIGH PRIORITIES: E.G.
 MORE UNIFORM APPROACH TO
REGULATING TRUCKS
 NATIONAL INTEGRATION OF
INFRA PROVISION
16
PHASE 2: AGREED 2006
• NATIONAL REFORM AGENDA (NRA)
• REGULATORY REFORM STREAM
“TO DELIVER A SEAMLESS
NATIONAL ECONOMY”
 REDUCE FRAGMENTATION
 IMPROVE REGN-MAKING &
REVIEW
17
• INITIALLY 10 PRIORITY AREAS
 PRODUCTIVITY COMMISSION:
INCREASE GDP BY 1.33%?
• SOME ISSUES IN CANADA NOT IN
AUSTRALIA
• NOW 27: IN SUMMARY:-
 GREATER INTEGRATION OF
LABOUR MARKETS: PROMOTE
MOBILITY & SKILLS ACQUISITION
18
 REGULATION OF SAFETY &
OTHER STANDARDS
 CONSUMER INFORMATION AND
PROTECTION
 STREAMLINE GOVT APPROVAL
AND COMMUNICATIONS
PROCESSES FOR BUSINESSES
19
• BENEFITS > THAN +1.33% GDP
• REFORMS TO REGULATION-MAKING
AND REVIEW IMPORTANT
 FOR MOST BUSINESSES,
EXCESSIVE REGULATIONS
• OTHER NRA REFORMS INCLUDE
WORKFORCE PARTICIPATION &
PRODUCTIVITY
20
HOW? & LESSONS FOR CANADA?
1. VITAL: SEPARATE INTERGOVTL
FORUM – COAG
2. ALSO: DRIVEN & MONITORED BY
FIRST MINISTERS
3. REFORMS ARTICULATED AS ABOUT
COMPETITION  PRODUCTIVITY 
LIVING STANDARDS
21
4. BROAD-BASED PACKAGES
 MUTUALLY REINFORCING ITEMS
 REDUCING INTERNAL BARRIERS
ONLY IF HIGH BENEFITS
 TAILOR-MADE IGAs FOR EACH
PACKAGE & COMPONENT
22
5. STATE PREMIERS: SEEN AS
NATIONALLY SIGNIFICANT
 LITTLE OR NO FINGER-POINTING
AT PAST “PAROCHIALISM”
6. SENIOR OFFICIALS GROUP
STABILISED PROCESSES WHEN
POLITICAL TENSIONS
23
7. REFORM PRIORITIES ESPECIALLY
INFLUENCED BY
 BUSINESS COMMUNITY (BCA)
 PRODUCTIVITY COMMISSION
8. WHERE POSSIBLE, SET OUT
OBJECTIVES AND GENERAL
PRINCIPLES
 STATES LEFT TO IMPLEMENT
TO SUIT LOCAL PREFERENCES
24
9. COMMITMENT OF STATES
SUSTAINED BY REWARD PAYMENTS
 PROGRESS ASSESSED BY
INDEPENDENT AGENCY
 RESULTS DISPROPORTIONATE
TO REWARD $s AVAILABLE
25
10. TRANSPARENCY
 COMMUNIQUÉS FOLLOW ALL
COAG MEETINGS
 BACKGROUND PAPERS
RELEASED
 ASSESSMENTS OF PROGRESS
MADE PUBLIC
 PC PUBLIC INQUIRIES
26
OUTCOMES ACHIEVED
27
• PC REVIEW OF NCP (2005)
ESTIMATED +2.5% GDP FROM
INFRA REFORMS ALONE
• ALSO CONTRIBUTED TO
PRODUCTIVITY GROWTH SURGE:
OECD GDP PER CAPITA RANK
BACK TO 8TH (18TH LATE 1980s!)
TRADE/GDP RATIO TO OVER 45%
(20% EARLY 1980s)
28
• CURRENT REFORMS PROJECTED TO
INCREASE GDP BY
 1.33% REGULATORY REFORMS
AFTER 10 YRS (ONLY 10 OF 27)
 6% INCREASED WORKFORCE
PARTICIPATION. 3% INCREASED
WORKFORCE PRODUCTIVITY
− BUT N.B. AFTER 25+ YEARS,
AND POSSIBLY LARGE
IMPLEMENTATION COSTS
29
• SHOULDN’T OVERSTATE
 RAISED PRODUCTIVITY RELATIVE
TO U.S.A.’s
 HOWEVER, ONLY TO 76% AND
STILL BELOW 1950 LEVEL
• MUCH YET TO BE DONE!
30