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Illustrating the Issues with Federalism: A Case Study of the Murray Darling Basin

According to A. J. Brown and J. A. Bellamy (2007:3), federalism is a system of government where entities including provinces and states share power along with the national government. Many governments in the world function according to the basic principles of federalism. James Madison, John Jay and Alexander Hamilton in their federalist papers between 1787 and 1788 won the hearts of many Americans in approving a federal constitution. With federalism, the national government usually controls the elections while every state has control over its voting procedures and routines. While Federalism in Australia took root in 1901, the principles and maxims of Australian federalism are closely knitted to those of the United States of America’s model.

Australian federalism has evolved since its beginnings over a century ago into a system where the Commonwealth government is engaged in a wide range of policy areas that were once the sole responsibility of the States W. Hudson, A. J. Brown, (2004:19). Cooperative federalism has actually prompted the efforts of establishing new and potentially more efficient and effective modes of intergovernmental coordination. Federalism in Australia has continuously evolved over the years. This evolution reached the near-apex last year when the Australian Parliament passed the Murray Darling Basin Plan that covers fives states as well as the territory governments.

Past Challenges and Responses to Development

The Murray Darling River Basin has a population of more than two million people. It contains a host of Australia’s finest environmental sites and agricultural resources. It faces the challenge of creating great economic prosperity while preserving the environmental health of a uniquely variable water system (A. Sennett, E Chastain, S Farrell, T Gole, J Randhawa & C Zhang, 2012:2). All the successive governments and policy makers in Australia since adoption of federalism have concentrated their efforts in trying to champion the use of agriculture in enhancing development around the river. However the overlapping basin lands in the territories of New South Wales, Queensland, South Australia and Victoria under the control of their States have continuously led to over-allocation of water resources following several institutional frameworks in the 20th century.

This overlap is attributed to by the challenges of interpreting and implementation of federal policies among States that share national resources. Just like in many other countries where individual States have their own laws, a challenge may arise where these laws are not consistent with those of other States thus resulting in conflicts and political rows. In Australia, for instance, the central government controls the resources used in development of the Murray Darling Basin. However, distribution of and use of these resources by the individual States has consistently proved to be a challenge because different States have overriding and sometimes contradicting goals along the Basin.

For more than 50,000 years the indigenous people of Australia have relied on the Murray Darling Basin to supply their water, food and other financial needs. However, absence of regulation over the years led to overexploitation of resources along the Basin. T.N. Srinivasan & J. Wallack, (2006:141). This problem was solved in 1863 by British settlers but it has culminated with the independent Federal Government of Australia. This was mainly as a result of the plenary legislative power held by States over management of water resources including management of the Basin (A. Sennett, E Chastain, S Farrell, T Gole, J Randhawa & C Zhang, 2012:3). While the commonwealth retains some of the influence over policy making through its power to offer conditional funding to the states and territories, it interferes with the rights of these States created through their independent governance systems. Australian legal experts thus advise that there should be joint consultations between all the States and the government in creation of laws, interpretation and implementation in order to avoid overlap and conflict.

Federalism has been seen as the perfect solution to the continued bureaucracies; particularly in unitary governments with a dictatorial regime. This has been the case in Australia where the Murray Darling Basin was a huge success up to the end of World War II. With an adequate allocation provided to each State, cash crops and cereals among the Basin thrived. Water entitlements were also free, directed by the intention of promoting development of the irrigated production. Have pollution and salinity problems escalated in the region in the 1960s. In response to these problems, the States jointly amended RMWA in order to allow the River Murray Commission to give consideration to the water management objectives. These included the water quality, planning and operation the work. This coordinated effort has proved to be quite a huge success along the Basin but only to a limited extent accentuated by different States’ varying water management schemes that could no longer tackle the water quality problem at hand.

However, the RMWA also had its side of challenges. Soon, critics were concerned that the process of decision making and implementation in the Basin not only moved too slowly but it also aggravated toward the common denominator of policy positions held by the Basin states D. Cornell (2007:27). After the bitter experience of the Millennium Drought from 1997 to 2010, critics said that Murray Darling Basin was unable to adapt to the quickly changing circumstances. These included both rural and urban water shortages. When the central government introduced a ten-year water security plan in 2007 involving the Murray Darling Basin, four of the five states along the basin agreed to it except Victoria. These disagreements resulted from Victoria’s demands of a bigger share of the allocation. Ideally, such a problem resulted because the central government hadn’t put in place legislation to govern the development, use of and management of resources that are shared by more than one State. Even though the territorial boundaries are well defined, a huge challenge posed by federalism is the gaps and hollows it leaves for conflicts and disagreements when a one-time project that involves all the territories arises.

Influence of Various Levels of the Federal Government on the Murray Darling Basin

The Murray Darling Basin is the centrepiece of environmental beauty and biodiversity that covers more than 30,000 wetlands. As the five states on the basin struggle to generate more revenue for their economies, much water has been diverted for irrigation purposes. This has threatened many environmental assets and put the wetland forests in the danger of losing their ability to sustain the region’s native wildlife. Wanna (2007:11) says that federalism works best when each level of government conducts itself in a way that respects others’ responsibilities. For instance, Germany applies this principle of federalism in totality as their constitution requires all governments to take into account the interests of all the other levels of government into decision making. They are required to negotiate in good faith and also engage in total cooperation. According to the German system, a great deal of decision making occurs at the national level while the individual States base greater input into the decision making as well as have a greater role in the implementation thereof.

If Australia was to copy partial elements of such a system, the Commonwealth government of Australia would have a legislative system that allows it to potentially make decisions involving all national resources and matters involving more than one State. The same problem exists even with the local governments within a single State. Entirely, all the States should have a say in the matter but the national government should have a controlling hand in the decision agreed upon.

About 200,000 people are employed along the Murray Darling Basin. This clears the doubts as to whether the Basin is the country’s largest employer and economic generator. The Basin is responsible for the success of retail, health, community services, defense, government administration and manufacturing companies. It contributes about 40 percent of the Gross National Product resulting from agriculture. It also generates 3 percent of the country’s hydro-electric power A.M. Chaundry-Shah, (2005:30). These successes have been registered as a result of institutional and administrative cooperation. According to Wanna, intergovernmental cooperation in Australia occurs both horizontally and vertically through a range of mechanisms. The signing of various agreements both vertically and horizontally has eliminated competition and bidding wars among the five states sharing the basin. This, of course, has led to large profits and other benefits to the country.

Australia has had its own bite of the bitter pie particularly in relation to fiscal federalism. It began in 1926 when the High Court was forced to interpret several sections of the constitution in a bid to allow more conditional grants on subjects that are unrelated to the Commonwealth’s legislative powers. In 1992, the Council of Australian Governments (COAG) was formed to help interpret policies and solve disputes between different governments in the country. COAG has helped to coordinate many projects in harmony. The Murray Darling Basin Plan has succeeded in promoting the use and management of the basin’s water resources in a way that optimises the economic, social and environmental outcomes at the national level. Through this federal principle, the government of Australia has managed to solve any disputes arising at the Murray Darling Basin. It is difficult to imagine how chaotic life would be without such organization in terms of fiscal federalism in Australia.

Organisational cultures present a couple of strengths and weaknesses in terms of management of the Murray Darling Basin. This, to a great extent, contributes to the reluctance of other States in cooperating with the policies of the national government. Australia is constantly working on reforms in an attempt of improving cooperate federalism among the three levels of government. According to Wanna (2007:23), improving on cooperate federalism requires a deep focus on commitment to the philosophies of policy making and delivery in order to improve the outcomes for the community at large. It also requires a constant reorganisation of the inherent responsibilities and the mutual interdependence heavily involved in achievement of the desired outcomes. Australia. Like any other federal country, faces unique challenges in making changes to some of its routines and tendencies. All the States should develop some preparedness to enable them step back from some of their indigenous old norms of public administration like the unilateral form of decision making, individual State claims of exclusive policy ownership and the “we know best kind of mindsets”. This will make the Murray Darling Basin a huge success.

Challenges of Federalism at the Murray Darling Basin

The Water Act governing the use of Murray Darling Basin now requires an inclusion of the long-term diversion limits of the basin’s waters. The Act says that the SDLs reflect an environmentally sustainable level of water take. (T.L. Anderson & P.J. Hill, (1997:222). However, it does not include the key ecosystem functions, key environmental outcomes and economic use limits. This is highly contributed to by the overlapping objectives and targets between the national and state governments over the Basin. These SDLs now face criticism from irrigators, farmers and the general environmental community in the Basin. Such problems arise because there is little or no consultation among all the parties that benefit from the basin. And the ultimate solution lies in the vision of the federal Australia as well as that of irrigated agriculture in the economic future of the country.

The Commonwealth government of Australia recently announced that it needed water for environmental projects. A debate ensued over the socio-economic considerations foregone against these environment needs. The major ones that were proposed are water buybacks through effective water trading as well as subsidized investment in water-saving infrastructure. While economists and environmentalists favour buybacks, the agricultural community backs the infrastructure investment approach F. Fenna & F. Knupling, (2012:11). Given the pitfalls of buybacks cited by the agricultural community, the national government is paralyzed in the way to go. The agricultural community heavily criticizes the buyback approach saying that it is an inefficient political transfer payment. This problem has been accentuated by the absence of a proper referral power that will educate both sections and draw the clear-cut advantages and disadvantages between the two approaches. Absence of a policy that gives the Commonwealth government the power to implement policies that are more benefit to more than one state also contributes to such conflicts.

Rebalancing the relations between the commonwealth government and the states is deemed to be a major problem at the Murray Darling Basin. As the commonwealth government works to develop a vision that will balance both environmental and economic interests, the question of balance between the national government and the states remains very open J. Wanna (2009:49).  While the overall Basin plan involves putting into effect the operation of four mechanisms, the division of control among the State and the Commonwealth government is still a problem. With regard to conservation, the state government has also come with some laws that sometimes prove inconsistent with those of the commonwealth government. Such problems have affected the implementation of significant economic and environmentally significant policies in the Basin. Proponents of the federal system of governance advise that joint consultations and necessary amendments need to be made in order to avoid friction.

Institutional management of the Basin’s environmental water is one of the major goals developed under the new MDB Plan. As disagreements over resource allocation between different states continue, many experts suggest that the creation of a powerful federal entity is the only feasible solution with a lasting effect to this problem. This is majorly because the basin’s implementation of the sustainable diversion limits as well as other policies actually requires a federal entity that is entirely separate from the state jurisdiction G. Appleby, N. Aroney & T. John (2012:94). The river basin’s ability to trade the environmental water on the irrigation water market is yet another concern. The problem is even aggravated as individual states maintain control over tributaries and other resources within their territories in the “we know best attitude”. The sole solution is for the Commonwealth government of Australia to develop a policy document to be used by all States that addresses such cultural phenomena. It should then echo on the importance of the national picture rather than the achievements of a single state.

Conclusion

Policy makers in Australia and particularly the Murray Darling have continuously struggled to ensure that the Basin is able to cope with its increasing problems of water scarcity in line with the economic, environmental and social needs of all the states involved. This culminates the water resources that overlap the four states, a territory government, a federal government, many catchment boards and hundreds of local governments involved. Even though the country has been acknowledged as the world leader in application of economic settlements in various sectors of the economy, the recent reforms that touched the Murray Darling Basin and other important economic indicators left Australia in a contentious position. Federalism has been put to test and it seems to fail more than succeed and the only way to achieve proper federal laws is to develop and vote in a new constitution that addresses all the challenges in all the sectors.

References:

A. J. Brown & J. A. Bellamy, (2007), Federalism and Regionalism in Australia: New Approaches, New Institutions? pp.11, ANU E Press, Canberra, Australia

A.M. Chaundry-Shah, (2005), Fiscal Federalism and Macroeconomic Governance: For Better or for Worse? , pp.30, Policy Research Dissemination Center, Sydney, Australia

D. Cornell, (2007), Water Politics in the Murray Darling Basin, 1st edn, The Federation Press, Canberra, Australia

F. Fenna & F. Knupling, (2012), Benchmarking in Federal Systems: Roundtable Proceedings, 2nd edn, Transaction Publishers, Melbourne, Australia

G. Appleby, N. Aroney & T. John (2012), The Future of Australian Federalism: Comparative and Interdisciplinary Perspectives, pp. 49, Cambridge University Press, United Kingdom

G. Gallop, (2011 July), How Healthy is Australian Federalism? www.aph.gov.au, Retrieved March 29, 2013, from http://www.aph.gov.au/About_Parliament/Senate/Research_and_Education/pops/pop56/c03

J Forster & J Wanna, (1990), Budgetary Management and Control: The Public Sector in Australia, pp. 202, The Macmillan Company of Australia Pty Ltd, South Melbourne, Australia

J. Wanna, (2009), Critical Reflections on Australian Public Policy: Selected Essays, pp.49, ANU E Press, Canberra, Australia

M. Brissedenden, (2008 March 26), Co-operative Federalism or Creeping Centralism, www.abc.net.au, Retrieved March 29, 2013, from http://www.abc.net.au/7.30/content/2007/s2200088.htm

T.L. Anderson & P.J. Hill, (1997), Environmental Federalism, pp.222, Rowman & Littlefield Publishers, Inc., Maryland, USA

T.N. Srinivasan & J. Wallack, (2006), Federalism and Economic Reform: International Perspectives, 1st edn, pp.141, Cambridge University Press, New York, USA

W.G McMinn, (1994), Nationalism and Federalism in Australia, pp.23, Oxford University Press, Sydney, Australia

W. Hudson, A. J. Brown, (2004), Restructuring Australia: Regionalism, Republicanism and Reform of the Nation, 1st edn, pp.19, The Federation Press, Sydney, Australia


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