This article is absolutely spot on! Our so-called federal system is just a collection of centralist unitary states with a centralising national government. The state governments will take over local government’s responsibilities if they can see political mileage in it, and the feds do the same with state functions. At the moment, the principle of subsidiarity – that government functions should be exercised by the lowest level that is feasible and efficient – is operating in reverse in this country!

The authors advocate a power of citizen initiative to amend the constitution, and this power should also be applied to the State constitutions. A federal referendum probably can’t abolish the States, but it CAN give the people of the States this democratic power.

In the previous feedback, however, I couldn’t understand Gadget’s accusation that Labor is “dismantling the old regional government system”. I’ve been around for more than half a century, and unfortunately I’ve never seen any sign of a regional government system in this country!

Rhian, on lst May, comments that I am flat wrong on the 1999 findings in the Inquiry into National Competition Policy (Friend or Foe?). The Report (August, 1999) on page 79 refers to the findings of the Productivity Commission specifically relating to Regional and Rural Australia. This is not favourable, with some exceptions. In particular, the quality of service delivery in relation to electricity supply and telecommunications "was raised frequently" in submissions.In the submission by Professor John Quiggin (6.44), decline of especially rural towns is highlighted. The whole of Chapter 3 is one long list of concerns expressed about Competition Policy generally. I have serious doubts about the rationale of Competition Policy which is that competition is good and more competition is better. Furthermore, Public Services have to comply with the public interest test. Essentially that means that it must show that it can perform a service better than the private sector. Private sectors operators are not subject to such a test. Apparently that is taken for granted. This is sheer sophistry which finds its origin in the neo liberal ideas of Fred Hilmer & associates. The philosophy that certain services are better tackled by governments than by private enterprises has been rubbished by its supporters. Regional and Rural Australia have suffered as a consequence although obviously not just for that reason.

I agree with you, Klaas, on Competition Policy at least. Indeed, the big limitation of that policy is that the public benefit test was essentially an "urban benefit test". It was never extended to consider all forms of competition or all methods of delivering government services.

It seems that urban services (like new bridges, motorways etc) can be delivered without any serious consideration of value for money while investment in regional services face serious economic performance threshholds.

An interesting example was the kind of moronic tripe deliverd by Fred Argy in his advice to the Qld government that any infrastructure investment outside the SE corner could not be justified on economic grounds because the regions did not have the same population growth rates of SEQ. This lower growth rate automatically leads to a lower rate of return on funds with the implied obligation to always opt for the highest return.

Clearly, he did not consider any of the diseconomies of scale that are now apparent to every SEQ resident. But more importantly, he appears to believe that there is no obligation to ensure that the major portion of state revenue, the refunded GST money from the Feds, was subsequently redistributed fairly to all Queenslanders.

This mindset, that the legitimate entitlements of regional Queenslanders to their proper share of their own GST payments, is subject to some sort of self proclaimed higher economic good, is widespread in the urban bureaucracy. It is undemocratic, unAustralian and ultimately unsustainable

It seems to me that many of the people that have posted comments regarding this article hold the false belief that somehow federalism will bring us closer to decentralization. I simply disagree, the situation that states create is not decentralization but rather duplicated centralization.