Gillard war front shifts to the states

FEUDING between federal Labor and the states is eclipsing the usual Gillard-Abbott contest.

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THE political debate in this country has long been dominated by Julia Gillard and Tony Abbott warring over the impact the carbon tax will have on the economy.

However, just as the tax is about to be implemented at the end of this month, the issue seems to have taken a back seat to disagreements between the federal government and the states.

It's difficult to determine whether the increasing profile of spats between the commonwealth and the states is emblematic of the importance of the issues or a deliberate up-scaling of tensions by a Labor Party searching for political capital.

While Abbott continues to call daily press conferences to spruik the ruin the carbon tax will cause, less attention is being paid to his message. Instead, the fights between conservative state governments and the federal Labor government are taking prominence.

It may be that raising concerns about approvals for projects involving Gina Rinehart and Clive Palmer helps return Labor to the war on billionaires it was mounting before immigration minister Chris Bowen approved the use of foreign labour at Rinehart's proposed iron ore mine in the Pilbara, upsetting unionists such as Australian Workers Union national secretary Paul Howes in the process. But that doesn't explain the multitude of disputes Canberra is having with the states.

From mining rights to so-called green tape to how the GST should be distributed between the states, there are significant tensions between the Gillard government and an increasing number of state governments.

There is also a fiscal stick the commonwealth has waved. Payments to states in the 2012-13 federal budget were $5.8 billion less than in 2011-12.

How Gillard and Abbott respond to the change in circumstances will be interesting.

This week Environment Minister Tony Burke and the newly elected Queensland LNP government have been trading blows about approval for the $6.4bn coalmine in the Galilee Basin in central Queensland.

Burke's rhetoric has been deliberately inflammatory, labelling the Queensland approvals process "hopeless" and falling "abysmally short" of what is expected under the bilateral agreement.

The Alpha Coal project, which is jointly owned by Rinehart's Hancock Coal and Indian company GVK, includes a planned 500km railway link to Abbot Point north of Mackay.

"A decision to go to war with a popular newly elected state premier can't be designed to win seats in his backyard," says Adelaide University political scientist Wayne Errington. "Especially not if the PM is taking the side of the environmental movement over blue-collar constituencies. It has to be about retaining support in inner-city Labor constituencies in other parts of the country."

It's reminiscent of the impact Bob Hawke's pledge to stop the building of the Franklin Dam had ahead of the 1983 federal election.

He won it by boosting Labor's vote right across the country, with some analysts crediting his stance on the Franklin Dam as contributing to that. But in Tasmania Labor didn't win so much as one of the five seats on offer.

In the aftermath of the Franklin River Dam controversy one newspaper headline read: "Canberra versus state on Franklin". It was the ultimate standoff, which went all the way to the High Court, which ruled 4-3 in favour of the commonwealth as having the right to intervene and stop the building of the dam.

Fast-forward 30 years and federal-state relations or a lack thereof are back in the headlines. This time, however, the issues are broader than the building of a dam in the nation's smallest and least populated state.

"The Gillard government's environmental credentials regarding the reef had collapsed in previous months," shadow environment spokesman Greg Hunt claims. He is referring to concerns surrounding the UNESCO report on the Great Barrier Reef and praise from the WWF for the Newman government's proposal to consolidate coal ports rather than spread them out. "These put a real challenge to the federal government. What's happened since has been an attempt to cover themselves against attack from their environmental base," Hunt argues.

Queensland Nationals Senator Barnaby Joyce puts it more bluntly: "If they think the man in the koala suit is going to get them votes in Queensland then Labor is going to be bitterly disappointed.

"Dig it up as quickly as you can, bang it on a boat and get paid for it," he adds.

But as Errington notes, Labor's intervention in Queensland may be less about winning seats in a state where it only holds 8 of 30 federal seats, and is more about what improved environmental credentials might do for it in other parts of the country.

The strategy is a risky one. Ahead of the 2004 election John Howard out-manoeuvred opposition leader Mark Latham by striking a logging deal that Tasmanian unions approved of, costing federal Labor seats in Tasmania because of Latham's attempts to use forestry conservation to garner green votes on the mainland.

West Australian Premier Colin Barnett sounded a warning to federal Labor last year when he publicly called on Treasurer Wayne Swan and the PM to "leave us alone", adding: "We actually know what we are doing, we're good at it and we're developing the state."

The WA government has been frustrated by falling GST revenue and what it sees as unwarranted federal intervention over states' rights to mining revenues with the introduction of the mining tax.

The political awkwardness of the federal government's battles with certain states at the same time that it seeks to claim credit for its management of the national economy was on display on Wednesday when better than expected GDP figures showed the economy has been growing at 4.3 per cent. The states the federal government is most at war with -- WA and Queensland -- have averaged growth of more than 10 per cent while the rest of the nation is struggling at just over two per cent.

However, it would be incorrect to view the rise in tensions between tiers of government as something new, or indeed as a partisan construct alone. Council of Australian Governments meetings have always been burdened by dysfunctional infighting, whatever the partisan complexion of the players around the table.

Another policy area of disagreement between the commonwealth and the states involves the Murray-Darling river system and water allocations. It has largely seen state and federal Labor governments arguing over what to do.

The ongoing dispute was a welcome opportunity for the new South Australian Premier Jay Weatherill to be seen to be standing up to Canberra soon after he took over the leadership, an approach Barnett has repeatedly used to ensure state parochialism keeps him popular.

Twin state-based Newspolls for SA and WA in 2012 put Weatherill and Barnett on positive net satisfaction ratings of 24 and 18 respectively.

Gillard's leadership (conversely languishing with a net satisfaction rating of minus-30) is again being dogged by speculation about a Kevin Rudd return. Poor national polling coupled with a recent poll in Queensland's Courier-Mail showing Labor's primary vote down to 23 per cent in the sunshine state suggests that the last thing the government needs right now is a fight with the new Queensland government.

Labor strategists tell The Australian that the aim of the public spat is to show how Liberal governments disregard environmental considerations. But how does that fit with the many other ongoing disputes between the commonwealth and the states during the lifecycle of the Rudd and Gillard governments?

Added to the list of issues is the funding dispute between the NSW government and the federal transport minister Anthony Albanese over the Pacific Highway. And of course the standoff over a second Sydney airport.

Perhaps the broader aim is to show that the federal government continues to stand up for what it regards as the national interest when confronted by sectional interests.

That seemed to be the message coming out of Gillard's speech to the Minerals Council of Australia last week when she claimed on behalf of the nation "we own the minerals", adding "Governments only sell you the right to mine the resource. A resource we hold in trust for a sovereign people. They own it and they deserve their share."

State leaders could be inclined to remind the PM that according to Section 91 of the Constitution minerals are the properties of the states, not the commonwealth: "Nothing in this Constitution prohibits a state from granting any aid to or bounty on mining for gold, silver, or other metals."

On July 1, 2008, at an event to mark the 25-year anniversary of the High Court decision that stopped the building of the Franklin River Dam, Hawke used the occasion to draw a more general divide between how Labor and conservative governments approach environmental matters.

"The conservatives, they never change, they never learn. What was their argument back then? You can't do this, it will cost jobs. It will cost economic growth. You can't do it, you mustn't do it."

Illustrating Hawke's point, Joyce told The Australian yesterday: "The word environment is no more powerful than the word economy or the word jobs."

This leads to the question of what are the implications of the escalating tensions between tiers of government for Abbott and the Coalition? Abbott doesn't want to become irrelevant in the short term during a battle between the commonwealth and the states. But some of his closest supporters note that now might not be a bad time for Abbott's negative public persona to take a break, even if the Opposition Leader himself doesn't see the value of fading from view.

More significant will be how Abbott manages federal-state relations on the back of such a volatile period, assuming he is successful at the next election. While Abbott would come to power with a majority of conservative colleagues running state governments, the issues that divide the commonwealth and the states don't entirely change with a change of federal government.

GST revenue distributions will continue to be a major issue, as will disputes over how to manage the Murray-Darling Basin. Funding dilemmas between tiers of government also won't go away. And while the tradition on the conservative side of politics has been to embrace the decentralised concept of federalism, a philosophical position supported by Liberal premiers and a number of senior Liberals in the federal parliament, Abbott is an avowed centralist.

In his book Battlelines, he nominated "fixing the federation" as the most important challenge a future Coalition government would face. True as that statement might be, Abbott's mechanism for doing so -- giving "the national government the authority to do so" -- is hardly likely to win support in the Coalition ranks of state divisions, especially in Queensland and Western Australia.