KEY POINTS:
To begin, let's start with a tale of the old federalism in Australian politics. It happened a decade ago when John Howard was seeking to introduce a goods and services tax. There was an impasse in federal/state relations and Queensland was refusing to agree to the introduction of a GST.
At the end of fruitless negotiations in Canberra, Howard invited the Premiers to dinner at The Lodge. The dinner was pleasant but no further progress was made. Anecdote has it that at the end of the night, as the guests were leaving, Howard said to Premier Peter Beattie of Queensland, on the threshold of The Lodge: "Tell me Mr Premier, what will it take to get you over the line on the GST?".
Beattie replied: "Prime Minister, give Queensland the GST revenue a year earlier and we will agree."
"Done," said Howard. A handshake and the deal was struck.
Now we turn to a new federalism which is an emerging possibility in Australia. For the first time in Australian politics, every state, territorial and federal government is a Labor construction.
In the history of the federation, this has never happened. Howard attempted to make much of this possibility during this year's election campaign, coining the phrase "wall-to-wall Labor Governments". Once, this was a powerful message, believed to be worth 1 to 1.5 per cent in the polls for the conservatives. No longer.
The checks and balances argument has long held that Australians are comfortable with different levels of government being controlled by parties of different colours. But this aspect of Australian political law appears to have been rewritten - like so much else - on November 24.
This federal reality brings great opportunities but also great consequences. The only comparable situation was for a few months in 1970 when all Australian Governments were conservative.
It was not, however, a time of harmony - powerful Liberal Premiers Bob Askin (New South Wales) and Henry Bolte (Victoria) took issue with the assertively nationalist agenda of fellow Liberal PM John Grey Gorton. Ultimately, the Premiers prevailed and Gorton fell from grace.
The history of Australian federalism is pockmarked by clashes between Premiers and Prime Ministers, ostensibly of the same persuasion, reflected in the kind of tensions which characterised relations between Paul Keating and Wayne Goss (Queensland).
This time, it may be different.
Kevin Rudd is possessed of a convincing mandate to revitalise the federation, especially in policy areas such as health, where a $2 billion federal sweetener is on offer to help states lift performance. Otherwise, the Labor Government will seek to assume direct responsibility for the nation's hospitals. And there is no doubt that revitalisation is needed, particularly in eliminating duplication, as the Business Council of Australia has argued persuasively, with potential savings to the taxpayer approaching $14 billion.
Among the Premiers, there is no one who fits the model of the classic political "Boss", of the Askin/Bolte/Sir Charles Court (Western Australia) kind.
Mostly they are of reasonable disposition and moderate in their political positions. The most experienced in federal/state politics is Victoria's John Brumby, who served in the House of Representatives in Canberra before transferring to Spring Street, Melbourne. And it is Victoria which has been leading the argument for reform at the Council of Australian Governments (COAG), and it is Victoria which presents Rudd with his first major policy challenge.
The issue is water. The long drought - the worst in Australia for a century - continues. The Howard Government pledged $10 billion, apparently with neither Treasury approval nor Cabinet endorsement, for restoration of the Murray-Darling basin, around which much Australian agriculture is based.
In part, this involved rationalising and buybacks of water licences hitherto managed by the states. Victoria, maintaining that its system was efficient and that its farmers would suffer as a consequence of waste by others, revolted and refused to sign.
For any federal programme to work in the Murray-Darling, all the relevant states must agree. If Rudd can persuade Brumby to endorse the proposal, even after Canberra has made concessions, it will be a useful start and a clear break with the past.
Perhaps dinner at The Lodge might do the trick?
If federalism is to change for the more efficient and logical, then COAG is the vehicle. There is reason for expectations to rise. Following the 1993 Hilmer report on competition policy, it was COAG which emerged as the body which pursued a successful agenda for competitive reform, with the Federal Government employing payments to the states as incentives to co-operate. The Australian Competition and Consumer Council is a child of such co-operation.
And the nature of power in the federation has shifted markedly since then, with the High Court finding that Canberra was within its rights under the corporations power in the Constitution, to establish a national system of industrial relations, during the Howard years. Canberra now holds more cards in shaping an agenda.
There is an additional element which suggests that further reform in federalism is possible. This is the simple fact that shifting liability between Canberra and the states is now far more difficult, as Labor is everywhere in power. The traditional buck-passing in a blame game is more increasingly an option. Herein lies opportunity for the Liberal and National parties to climb back into the game. The parlous state of the conservative parties is best underlined by the fact that their most senior representative in power is now the Lord Mayor of Brisbane.
But the regular cycle of state and territorial elections should bring early accountability on the success or failure of federal/state co-operation.
Moreover, the coalition in the Senate still has the numbers to make its presence felt on issues such as infrastructure, where Rudd Labor has proposed a new statutory authority.
But at the moment, Labor remains at the centre of events, with the party itself still exhibiting an occasional sense of amazement at its monopoly of power.
This monopoly brings with it the most dire consequences for failure. Such consequences are not exclusively electoral in nature. There's the determination of the new Prime Minister to consider.
Rudd contrasted Federal Labor with the Howard conservatives on a comparative handful of issues during the election. But some of these issues - health, education, climate change - involve extensive work with the states. And workplace changes will be considered carefully against the needs of resource states such as Queensland and Western Australia. It will be a very brave or very foolhardy politician or bureaucrat who earns Rudd's wrath for delaying or derailing his vision of seamless new federalism.
This may prove the sharpest spur to action and the most likely guarantor of success, whether modest or milestone.
* Stephen Loosley, a former federal president of the Labor Party and a Senator, chairs business advocacy group Committee for Sydney
