The action by the state and territory premiers and chief ministers to walk out of the council of leaders conference on Friday and not talk about gun control was childish. If it was born of frustration at the fiscal inquality between the state and the federal level of politics, it as been as much of the states’ making as the Commonwealth’s. Ultimately the second-tier leaders will have to return to the table.
The central concern of the second-tier leaders has been health funding. The five-year Medicare agreement is up for renewal, and only the ACT has signed up. Very simply, the states want more money. They will not raise it themselves because they fear political backlash. They want the Commonwealth do carry the burden of raising the money while they seek the glory of spending it.
At present, there is a gross vertical fiscal imbalance. The Commonwealth raises about 70 per cent of public revenue, but spends only 50 percentage points of it. The rest it passes on to the states to spend, particularly in health and education. It means the states have no electoral responsibility for raising much of their revenue.
Either the states must either get access to a broader base of tax, including income tax, to support their spending functions or the Commonwealth must rationalise its functions, perhaps taking over more of health and perhaps bowing out of non-tertiary education completely.
The states, of course, will not surrender power easily. Nor will the Commonwealth, especially health because the states have shown themselves particularly bad at it.
In any event, these are hard issues to deal with. Walk out of meetings will not help, nor will petulant petty rebellion over the national gun scheme.