Wednesday, November 15, 2006

The death of Competitive Federalism

So you think the WorkChoices decision is bad news for workers? Think again.

What it does do is put beyond doubt the Commonwealth’s power to make laws regulating the behavior of corporations.

(And not only their behaviour regarding workers. Legal expert Dr Graeme Orr from Griffith University told me last night there would now be no legal impediment to the Commonwealth directing electricity corporations to source a certain proportion of their power from nuclear sources, or specifying what prices they could charge.)

State governments already had that power. But they were hamstrung about using it. If a state Industrial Relations Minister introduced a law that businesses didn’t like, they threaten to move interstate.

‘Competitive federalism’ has kept Australia’s state governments business-friendly, often more business-friendly than they would like. When in 1995 the Queensland government halved the rate of stamp duty on all Stock Exchange transactions, every other state fell into line.

There is no such competitive constraint on the Commonwealth Government. Until yesterday uncertainty about the meaning of the constitution imposed some sort of legal restraint.

That constraint has been lifted for this and all future Commonwealth governments.