A hundred years after Federation, Australia has an increasingly centralised system of government. The recent High Court decision in the Work Choices case was further confirmation of this reality, but the movement towards the centre has been evident for a very long period of time. The extent of this movement would have surprised some of the founding fathers.

They created a federal system to devolve power and to anchor democracy in a country which, even by the start of the 20th century, exhibited growing political, economic and social diversity.

Given the strong drift towards centralism, it is perhaps not surprising that it has attracted frequent and increasingly vociferous criticism. Nor is it surprising that a long list of other ills are supposed to afflict the federal compact, including the vertical fiscal imbalance between the states and the Commonwealth.

Without embracing the complaints of every critic, I share the belief of many that there is now a need for us to look seriously at the dysfunctional aspects of federalism and to think creatively about the way that we might address them. I am convinced that, when we do so, we will not reach an adequate resolution of the problems unless there is a strong dose of devolution or greater regionalism within the policy mix.

Tonight I wish to argue briefly a case for a new regionalism.

When the six existing colonies formed one indissoluble federal Commonwealth of states in 1901, there was every expectation that new states would be admitted to the federation. Indeed, were the founding fathers to return today, they would be astonished to find that after 100 years this has not occurred. The last time there was any significant change to the political geography of the country was in 1911, when the Northern Territory was hived off from South Australia. Certainly, it was not expected that my own state of Queensland would remain unchanged. When it became a colony in 1859, it had a population of just 23,000 people.

By the time of Federation the numbers had grown substantially and there was considerable anticipation that a new state would be created in North Queensland. It was this prospect that encouraged many in the north of the state to vote so strongly in support of the Federation referendum.

The expectations of the founding fathers have not been fulfilled, and the reality is that there is a low correlation between Australia's real-life urban and rural regions and the levels of government designed to serve them. Put another way, the geopolitical boundaries that divide the nation-- whether we talk about local government boundaries, state borders, the lines that mark out area consultative committees or even the myriad divisions created for the delivery of health, education and other government services--are often poorly aligned to the communities of interest they are designed to serve.

There is no necessary virtue in comprehensive regionalism and no ideal level of devolution for good governance. However, there is the well-established principle of subsidiarity. This principle holds that decisions should be taken, and responsibilities exercised, as close as possible to the citizens at the lowest level of competent authority. We have long given rhetorical support to this proposition but equally long disregarded it in practice.

In these circumstances it is perhaps not surprising that Australia's existing political geography is coming under increasing criticism from a wide range of perspectives. Local government representatives routinely contend that they are closest to the people but deprived of the power and the resources and increasingly subject to the burden of cost-shifting from other levels of government.

The states and territories complain constantly about fiscal centralisation, overlapping and duplicated functional responsibilities and, increasingly, federal policy control.

Nor is the Commonwealth satisfied with current arrangements. The states rightly earn blame for delaying and frustrating sensible Commonwealth reforms, for delinquency in failing to cut taxes under GST reforms, for a failure to spend on infrastructure development and for their tolerance of numerous regulatory inconsistencies that add massively to the costs of business, both local and international.

Finally in this litany of federal woes, it is useful to point out that the complaints and frustrations with current arrangements of federalism are not just confined to the three levels of government. In October 2006, the Business Council of Australia released a report which contended that overlap, duplication and cost-shifting between the Commonwealth and the states, unnecessary taxes and overspending on programs because of a lack of oversight and accountability cost Australians at least $9 billion a year, and perhaps as much as $20 billion a year, through higher taxes and poorer quality services.

It is not a natural instinct among politicians, especially at the federal level, to consider that part of the solution to the problem of federalism is to seek greater devolution. More often, greater centralisation is seen as a better response. For some, to contemplate the idea of more states, and perhaps expanded regionalism, as a solution to federalism is as near to a nightmare scenario as is possible. This view fails to take account of the potentially productive power of the regions that could be released if serious reforms were achieved.

It fails to acknowledge how political restructuring can help promote innovation and ensure economic sustainability in a globalised economy.

It fails to appreciate that increasingly in Australia governance is a shared activity between local, state and federal authorities and that reform and the achievement of prosperity involve not so much competition as cooperation and collaboration between these different levels of government.

The idea that each of Australia's levels of government are separate fiefdoms--autonomous in their decision making, separate in the management of their financial affairs, independent in the exercise of their responsibilities and in every other way removed from one another--is an old and thoroughly outdated view of the modern developed state.

Of course, there need to be clear divisions of political authority and also comprehensive understandings of roles and responsibilities, but these must exist within a much more sophisticated model of contemporary intergovernmental relations.

The model of enhanced regionalism that will work best for Australia is a matter for debate. We could pursue more states created from existing ones, stronger regions with more widely devolved powers created within states or, of course, the even more radical idea of abolishing the states altogether and moving to a two-tier system of governance with many regions. All are possibilities.

We can debate these options in due course. For the moment, we have a far greater challenge--that is, to imagine a new federal future around a stronger, more sustainable regionalism. Perhaps we should be concerned that the Australian people have no interest in such things. On this matter, I draw the Senate's attention to the Constitutional Values Survey in Queensland and New South Wales undertaken by researchers at Griffith University. They showed a remarkably high knowledge of the problems of federalism among the public and a willingness to embrace reform.

What, then, might be the possible benefits of a reformed system?

First, there could be a more effective political system with better economic representation and accountability. Second, it would offer more efficient and responsive public administration. Finally, it would be possible to see communities with higher levels of social, economic and environmental sustainability. In Australia, arguments for greater devolution within federalism are often seen as arguments designed to benefit Australians in rural areas.

This is a narrow prism through which to consider the arguments for change. Certainly, regional Australia could hope to be empowered through reform, but the shortcomings of federalism affect those in urban areas and certainly those in the rapidly growing sea change communities around our coast.

Regionalism is a program of reform for the whole country. I would be surprised if reform was to take place quickly, but the reality is that to date our efforts at federalism reform have been half hearted and our interest in regionalism pursued without a serious commitment to the value of devolution.

In a globalised world, where the challenges of maintaining economic prosperity, the integrity of our liberal democracy and a high measure of social cohesion are constantly before us, we can do so much better.

More Reading on Regionalism

• Regionalism
• Federalism
• Russell Trood
• Hansard
• Trood's Regionalism
• Regional Populations and State Abolition