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Sydney Call me Isaacs.
Introduction The seat of Government of the Commonwealth ….. shall be in the State of New South Wales, and be distant not less than one hundred miles from Sydney.
This article makes some observations on possible Australian Constitutional change from the perspective of Sydney; to provide a feel for some challenges of proposed changes.
It first points to somewhat neglected aspects of Sydney to argue for a worthy aim. Then it looks at some mechanics to suggest a need for debate about responsibility.
Some aspects of Sydney transport are next considered as a case study for change to the national government’s responsibilities. From these a few conclusions are drawn and challenges laid down.
I suffer from experience limited to economic and transport questions. Not having embarked on the journey of experts in Constitutional change; forgive my questions.
Leviathan Have you heard of the books Leviathan? The most recent, by John Birmingham, is entertaining. You should read it. See some of the currents of the Sydney I know. And that you should know. Nowhere else draws the views, the opinions.
Deride it; a cesspit filled with traffic, enclaves and spivs. Where retirement gifts can be presented in brown paper bags. To others; not camping out, a place of action.
Sydney; home of the bearpit parliament and the Opera House. Host of the ‘best ever’ Olympics, whose sporting crowds heckle referees and jeer Prime Ministers. Where Australian federation was proclaimed by Lord Hopetoun, 1 January 1901.
The inhabitants, looking out the window on the way back from Paris might wonder about life elsewhere, in: ‘the second city’; ‘ruralandregionalaustralia’; even ‘toy town’.
In the 1890s Premier Reid did a deal for the seat of federal government to be in New South Wales. Payback; it had to be more than 100 miles from Sydney. A telling sign, when marvellous Melbourne had more people and outshone sin-city.
To some extent colonial settlement was about getting away from Sydney. Blaxland et al. Van Diemans Land 1825; Western Australia 1829; South Australia 1836, Victoria 1851, Queensland 1859.
Was later ‘unification’ emotionally hard because of the harbour hordes?
Do motives for national change or ‘northern Australia’ echo attempts to avoid Sydney? Nostalgia for decentralisation via the sheeps back, instead of global opportunity from 21st century cities? Fear that sinney is so big or unruly that it needs to be chained or carved up. Retreat to national adolescence?
Lets hope not. We’ve had enough of punishers and straighteners looking inward and backward, ambitions limited to relaxation and comfort. And born to rule belt tighteners telling us the cost of everything and the value of nothing. As a great Sydney Prime Minister lamented; galling from those with fewer excuses than small shopkeepers in troubled regional towns.
My Sydney is not like theirs. It won’t buy stunted aims, the building of barriers or money grubbing cost shifting. Or transactions limited to the political class.
Que? Factoids. Sydney extends one hour, give or take a bit. Roughly 60km each direction from the CBD; except to a limited east.
Demographic centre; Ermington 20km west. Nearer Rosehill than Randwick. More people than New Zealand. Demographic importance; like London to the UK or Paris to France. In the United States a New York of 65 million.
Or around 9 times the population of Tasmania, yet not begrudging their more senators.
Home to Howard’s battlers? More like Mark Latham’s ladder climbers with their lesser need for, and lower interest in, government.
No ambition less than improving all Australia, future Australians too, is worthy of Sydney. Or to make constitutional change acceptable to Sydney. Three tests: a noble purpose; obvious and visible; withstanding its cynical scrutiny.
Mechanics and money [D1] The Constitution has been criticized, wrongly, for being boring and written by morons in Melbourne. Lofty aspirations are one thing, but constitutional change redefines power. Setting boundaries; geographical and power. 
Supposing it is changed: what then? What are the political motives?
Worship of mammon: national government raises money, gives it to another (new) tier to spend without obligation? To supposedly effect principles like ‘subsidiarity’?
Twomey argues the original national scheme was like this. It had revenue ‘surpluses’, over Commonwealth spending needs, being given to the states. This hasn’t happened; in the post Keynes world it raises problems, states or not.
Will every aspect of a new scheme be honoured? Any constitution, old or new, will be vigorously contested. Who referees disputes? The High Court; lawyers. Tedious legal ideas.
Recent High Court decisions on Commonwealth spending powers deserve attention. As Commonwealth legislative power is limited so are the subjects on which it might spend public funds, a point forcefully made in the Chaplains cases. More significantly, spending was challenged. Revising assumptions about Commonwealth gift giving.
Constitution s.96 offers wriggle room; the Commonwealth may provide grants to states with any conditions attached. Conditions set by Parliament, not just executive Government.
Surely any such conditions ought to seek worthy, national, aims? Beyond project branding and honouring departments via billboards.
One worthy aim of federation is to eliminate barriers between regions. To effect this Commonwealth powers cover trade and commerce with other countries and among the states; across borders. The famous s.92 is related to this, as is s.102.
The economic issue: while the public benefits from access to services, merchants don’t want competition in their territory. They sometimes ask governments to restrict competition. Did the colonies adopt different railway gauges by accident? Does the Constitution mention railways, not roads, by mistake? Port of Eden?
Constitutional change motivated by redistributing riches, to take from one to give to another or to preclude competition in a local area, faces thorny issues. Erecting more borders may give greater scope to trade and commerce doctrines. It won’t solve regional problems; Sydney is not draining national, regional, or your, wealth. Pitting parts of our country against each other is ignoble.
Change shouldn’t be just about money, so lets talk functions.
Functions and responsibility Coase’s big idea: transaction costs. Information may be free but hard to find. The optimum functional scope of an organisation depends on internal costs compared with those of external transacting. Coordination or competition?
Railways refer to certain transactions as ‘interface’; the important thing is that critical functions are done. Duplication is a lesser evil.
For government, faced with many calls, functions are tricky. A first governance issue: boundary between market and government?
Many dodge this and jump to a second issue: matching functions and tiers. The chants against Commonwealth intrusion into functions eg. health, education often claim duplication or excessive bureaucracy, quoting money costs of Canberra etc.
A problem: variation in transaction costs imply difference in economically optimal functional boundaries. Example: Sydney’s water catchment.
Figure 1: Sydney catchment
Source: Sydney Catchment Authority http://www.sca.nsw.gov.au/water/supply/system; 16 July 2014
Goulburn? Catchments reflect where the rivers run, not population or transport patterns.
Analysis of today’s functional optimality throws up too many difficulties, let alone those arising from the impact of technological change on transaction costs.
In my view the functional debate misses the mark. Constitutional change should be about who should be in charge of what, who the community relies on and calls to account. Responsibility.
‘Who does what’ should be a later, administrative, issue. Heeding a warning from railways: the vital task is to avoid duty failure not financial cost. As economists say: opportunity cost not just money.
Perhaps hospitals should be provided by states. But who should be responsible for and therefore control their use? Fees, funding, services available to who? Again, s.92? s.102?
Not a problem for big town. Plenty of hospitals there.
Another example. In 2012 UNESCO called Australia on the future of the Great Barrier Reef. While there was some interest in what Queensland was doing, to UNESCO the buck stops with the Commonwealth. The international community has expectations about responsibility. Definition of Commonwealth responsibility is a precondition to considering responsibilities of others.
Withers and Twomey pointed to mechanisms to differentiate functions among tiers; clean lines and cooperation, but without a worked example. So let me try for Sydney transport[D2] .
Sydney’s transport It looks a mess. Crowded trains, traffic jams, tolls, late buses. A litany of woes. Yet Sydney-siders live on. How to make life better by improving transport?
To purposefully improve transport it is necessary to understand its layers of tasks. Most cities, Sydney too, are focal points of trade routes. Various tasks are conducted; line haul, distribution, for freight and passengers.
Sydney, as elsewhere, has a hierarchy of routes, the top with the most traffic. Obvious, but….
Figure 2: National land transport network
Source: Department of Infrastructure and Regional Development, http://investment.infrastructure.gov.au/whatis/network/images/ National_Land_Transport_Network_Road_Corridors_NSW_Urban.pdf, 16 July 2014.
Why not the harbour bridge? you ask.
As transport is about places it is also about ‘planning’. More accurately; past planning of things difficult to relocate. Sydney has had some good planning but while it is claimed other cities owe much to masterful planning; Sydney? Well, no.
Stepping back from the latest exciting idea, the big questions for Sydney concern things that can’t easily be moved; CBDs, airports, terminals, ports, channels. Not just in Sydney.
Example: a port’s channel determines which ships can ‘call’, affecting the prosperity of its hinterland. While said to be a matter for individual locations, that’s not the claim when dredging approval is sought. Channel depths in Sydney and Fremantle are related.
The big issues revolve around line haul freight because terminals for ships, trucks and trains are hard to move and do not enhance local amenity or environment. Yet which Australian city has a credible, stable, plan for these places for freight?
Transport policies for most places affect Sydney. Example: years of studies overlooked the possibility that highways like the Hume may have been improved at a cost to local roads, railways, and urban transport. What hope for road ‘reform’ if this turns out to be true and Sydney road users face bills for backlogs that allowed highway improvements far afield? Easily solved, once recognised.
More prosaically: a better Hume Highway means more trucks in Sydney. And less traffic on rail and inland routes.
Any durable answer to Sydney transport starts with national, not local, matters. A Sydney transport plan only has meaning in a national context. The real merit of Port Botany refinancing; the coming of national and international pressure for a credible, stable Sydney transport plan.
The Commonwealth should have greater land transport responsibility. To carve out a properly defined transport network joining Australia’s ports and industrial areas. Like responsibility for flight path approaches to Kingsford Smith airport.
Or for its Australian Rail Track Corporation. Among the reasons: a necessary foundation to stabilise responsibility of other tiers, and therefore functionality however organised.
Commonwealth responsibility should lead to more knitting than the alleged tradition of road funding. And better than Figure 2. The community understands aims like national rail standardisation even if officials don’t anymore.
Responsibility by Parliament including, not merely, options for executive Government.
Does this idea pass the Sydney tests?
First, noble purpose? Foundation layers of transport to be nationally assured; yes!
Second: obvious and visible? Mapped with documented target standards; yes!
Third: survives cynicism? See figure 2. Yes!
Should this be enshrined by constitutional change? Probably, if national achievements of 114 years of federation are captured in Figure 2 and note 25. Yet the Chaplains rulings hint of alternatives related to s.96 and the idea of public money.
Whatever the case, in my view two things are needed; both can be tried now.
One is a statement in Commonwealth legislation of its responsibility and therefore its intended displacement of power, not activities, of states. Including relevant ‘planning’ controls.
The other is a much closer involvement of the Parliament, Senate, in specific purpose and s.96 grants. Advice on grants to a state or subnational government should come from a statutory authority rather than a public service department.
What about ‘governance’ of the rest of Sydney transport? My view: neither a first order issue nor amenable to national level resolution. Subject to one possibility mentioned later.
Exciting new ideas, the general mess etc? Constitutional change might influence these things only very gradually, if at all.
The wisdom of the poor always being with us applies to things many see as transport problems. No matter what bureaucrats and politicians promise or build, the one hour Sydney, and potholes, may remain.
Summary and conclusion Love it or loathe it Sydney is important and connected. To Australia.
My Sydney expects any proposal for fundamental change to: pursue worthy goals; be obvious and visible; survive searching questions.
Dog whistling exclusionism in various forms: xenophobia; protectionism; shell games with public money; signify ignoble causes. The famous Sydney cynicism might put such proposals to the sword.
My Sydney would ask for a focus on responsibility. And for Parliament to take more responsibility and to be responsible for more.
In transport Commonwealth responsibilities should include a national network. A real network partly in Sydney. A start is possible now via involvement of the Senate, advice from statutory authorities, and legislation by Parliament.
Other areas of contestable responsibility I will leave to others.
This article implies that responsibility should be owed to the electorate. This reflects my view that responsibility, duty, should be owed to the parties that confer power. In this case, ultimately, the Australian people.
Subsidiarity? Like ‘cooperative federalism’, or ‘minister for (whatever)’, often a cynical political slogan. Too easily masking: ‘ask what my country can do for me’, or promises of gifts to be given if enough pork is in the barrel. My preference: subsidiarity; a function delegated to the tier, or party, most likely to be efficient in its conduct.
Further assignment of power to a subnational level should carry some responsibility to all Australians, not just locals. Were there to be more ‘states’, reassignment of power via fewer or no states, or just ‘recognition’ of other tiers, there should be some concordant responsibility through the Australian Parliament in addition to local accountability.
Financial incentives to accompany functional delegation aren’t enough; as Zines argued, they may contain seeds of power to destroy. An incentive: subnational elections remain periodic? Maybe more on that later.
Otherwise, ‘reform’ may lead Sydney and its nicer eastern sisters to dominate rather than serve Australia.
But where is my vision for Sydney?
Sydney at 10 million, expecting more. Big talk for big town. Inevitable maybe, desirable definitely, detail planned; optional. All welcome. The big melting pot, not little pans.
Other cities big too; Darwin for example. Adding to, not taking from, the common weal.
A national transport network helping to spread their prosperity across Australia.
Premier Carr might have been right; his Sydney may have been small and full. But who cares about yesterday or east of Anzac Parade? Real Sydneysiders look for a future of flying over it to get to the Paris of the south!
Yes, a more squeezy sinney. Using whatever is there. As at present, city commuters using public transport. Hopefully, ‘the poor’ less reliant on cars. Sydney will get by irrespective of governments and ‘reforms’. Don’t cry for it.
Heres the rub. Australia does not lack potential. Sydney does not make its other places poor; trying to chain or divide Sydney won’t help other places.
Lack elsewhere is a symptom, not a cause. Free money does not make the bad good. More likely culprits for ‘lack’: localism; failure to engage markets; self-entitlement culture.
And too few beneficiaries beyond bankers, bureaucracy and builders? A real conversation is about population. Sydney shows this. Cities drive prosperity. Urbanisation is a worldwide phenomenon. Decentralisation needs national growth, not an expectation of exodus from big town. But this is the valdemort of Australian policy, conjuring the best and worst of our natures.
Thinking of this I find myself growing grim about the mouth. Whenever it is a damp, drizzly May in my soul; whenever I find myself involuntarily pausing before departmental offices, and bringing up the rear of every strategy I meet; and especially whenever my hypos get such an upper hand of me, that it requires a strong moral principle to prevent me from deliberately stepping into the street, and methodically calling it pus - then, I account it high time to get to that sea of people as soon as I can. This is my substitute for pistol and ball.
I quietly take to the southwest suburbs. There is nothing surprising in this. If they but knew it, almost all in their degree, some time or other, cherish very nearly the same feelings towards Sydney with me.
Sydney, leviathan indeed.
J Austen February 2014
The opinions in this article are the authors alone.
The author is a retired public servant, who worked for the Commonwealth over 18 years, 16 years for New South Wales. In departments and statutory authorities. Specialising in transport since the early 1990s. He lives in western Sydney.
 Australian Constitution s.125.
 John Birmingham, Leviathan the unauthorised biography of Sydney, Vintage books, 2000.
 Melbourne, the seat of government at: http://www.victoria.org.au/The%20Australian%20Capital.htm
 National adolescence described 20 years ago by Hugh Mackay, Reinventing Australia, Collins Angus & Robertson 1993.
 Paul Keating, Political values in the age if distraction, Manning Clark oration 2002 http://www.keating.org.au/shop/item/a-time-for-reflection-political-values-in-the-age-of-distraction---3-march-2002
 Marchetti’s posited a constant that influenced a city’s size; an hour journey to work. Marchetti, C., 1994: Anthropological Invariants in Travel Behavior, Technological Forecasting and Social Change , 47 :75--88, Internal Publication, International Institute for Applied Systems Analysis, Laxenburg, Austria http://www.cesaremarchetti.org/archive/electronic/basic_instincts.pdf
 Identified in: Mark Latham, Why Anthony Albanese shouldn’t lead Labor, Australian Financial Review, 26 September 2013.
 Melbourne; Australia 2020 Summit Final Report, 2008 at p319 http://www.australia2020.gov.au. Drafting of the Constitution took place on a trip from Sydney to its edge on the Hawkesbury River. Monash University Fifth Lucinda Lecture 1997, The Australian Constitution - A Centenary Assessment The Hon Justice Michael Kirby AC CMG http://www.michaelkirby.com.au/images/stories/speeches/1990s/vol39/1997
Paraphrasing Field Marshall Montgomery to Prime Minister Eden, Recounted in Goldberg, The meaning of Suez, Air University Review, March-April 1971 http://www.airpower.maxwell.af.mil/airchronicles/aureview/1971/mar-apr/Goldberg.html
 For this plan to work, the Commonwealth needs to levy sufficient taxes. Political ideology and fashion, not just economics, properly influences this. See: http://johnmenadue.com/blog/?p=1663. Subsidiarity is inconsistently defined eg: task at http://www.thefreedictionary.com/subsidiarity; power and task at http://www.ncoa.gov.au/report/phase-one/part-b/6-1-roles-responsibilities-and-duplication.html; power at http://europa.eu/legislation_summaries/institutional_affairs/treaties/lisbon_treaty/ai0017_en.htm.
 Anne Twomey, Public Money Federal-State Financial Relations and the Constitutional Limits on Spending Public Money, Report No 4, 2014, Constitutional Reform Unit Sydney Law School. The Constitution was drafted prior to the Great Depression and the advent of Keynesian counter cyclical fiscal policy. These policies relate to the idea of a boom and bust national economic business cycle and argue for deficits at times of recession; and (possibly) structural surpluses at boom times.
 See: Williams v Commonwealth of Australia  HCA 23 at: http://www.austlii.edu.au/au/cases/cth/HCA/2014/23.html. And commentary such as at: http://blogs.usyd.edu.au/cru/, http://blogs.unimelb.edu.au/opinionsonhigh/2014/06/25/saunders-williams/, http://constitutionday.wordpress.com/george-williams-ao-anthony-mason-professor-gilbert-tobin-centre-of-public-law-unsw/
 The drafters of s.96 may not have considered any condition to be as wide as subsequently interpreted. Sir Owen Dixon had doubts. Nonetheless this is generally regarded as settled. See Twomey (note 11).
 The matter of ‘branding’ is amusingly captured in the ABC television series Utopia. http://www.abc.net.au/tv/programs/utopia/
 The Trade and commerce power s.51(i) is related to other s.51 powers. Recent interpretations have s.92 aimed at reducing protection; Cole v Whitfield (1988) 165 CLR 360. S.102 allows Parliament to overrule certain schemes of state preferences to internal businesses.
 An instructive story of merchant inspired political interference to stifle development of one of Australia’s great natural harbours, Eden, is told in Jeff Toghill, Ghost ports of Australia, MacMillan, South Melbourne, 1984.
 The trade and commerce powers operate across borders’. More sub-national governments would create more borders and seem to increase the potential application of the powers.
 Coase; see http://www.econlib.org/library/Enc/bios/Coase.html. Coordination or competition is a recurrent theme in transport. A supply chain example is Hunter Valley Coal Chain Coordinator see: https://www.hvccc.com.au/AboutUs/Pages/History.aspx. Urban transport examples include Transport for NSW see: http://www.transport.nsw.gov.au/about-us.
 Example: http://www.artc.com.au/library/copvol1.pdf . The interface risk is illustrated by a function assigned to two parties; each may presume that the other will undertake it. The result is not duplication but the activity may not be undertaken at all.
 Governance here defined by the author as the effective exercise of legal control. For example: Robert I. Rotberg, On Improving Nation-State Governance, Daedalus,Vol. 136, No. 1, On Nonviolence & Violence (Winter, 2007). A transport example: Thredbo conference series, http://www.thredbo-conference-series.org/.
 Acts Interpretation Act 1901 s.33 refers to functions or powers being conferred, but duties being imposed. Does this suggests that the exercise of functions may contribute to fulfilment of duties, but unlike duties, their exercise is not mandatory?
 See http://whc.unesco.org/en/list/154. An expectation similar to the cascade model of safety regulation. In this model the principal is licenced, on condition that it appoint people etc. with suitable skills and capacity to conduct functions. Sometime contractors are also licenced. An infringement is a breach by the principal. The duty is owed by the principal to the regulator.
 Anne Twomey and Glen Withers, Australia’s Federal Future, A Report for the Council of Australia’s Federation, April 2007 http://www.caf.gov.au/Documents/AustraliasFederalFuture.pdf
 Infrastructure Australia, National Ports Strategy, National Land Freight Strategy Discussion and Update papers, National Urban Transport Strategy http://www.infrastructureaustralia.gov.au/publications/
 A Bill before Parliament proposes, among other things, repeal of the definition of National Land Transport Plan. See: http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5173
 Bradfield is regarded as par excellence of Sydney transport planning. Yet much of his plan has not been implemented; other ideas prevailed. In comparison some of our ‘best planned’ cities throw up most contentious projects; the Productivity Commission recently used a Canberra project proposal to illustrate deficiencies in infrastructure planning. See: Productivity Commission, Public Infrastructure Report No 71, 27 May 2014, at p.95.
 Fremantle port authority argued that its channel deepening project was needed because: “’A study by transport economic specialists Meyrick and Associates showed that failure to deepen in line with other Australian capital city ports would have led to a loss of major direct shipping services, with larger ships bypassing Fremantle and travelling to the eastern seaboard.” http://www.fremantleports.com.au/Planning/Deepening/Pages/About-the-Project.aspx
 Possibility mentioned in: Infrastructure Australia, National Land Freight Strategy Update, June 2012, at p50.
 The Prime Minister is reported as saying ‘I think it's important that we stick to our knitting, and the Commonwealth's knitting when it comes to funding infrastructure is roads.’ http://www.theage.com.au/victoria/abbott-warns-victorian-libs-no-money-for-urban-rail-20130404-2h8uj.html. The Constitution mentions railways, but not roads, as among Commonwealth powers. By owning the Australian Rail Track Corporation, the Commonwealth has assumed responsibility, not merely functionality, for some railways. There is no similar responsibility for any road. Compare the idea that government should fund roads with: Bruce L Benson, Are roads public goods, club goods. Private goods or common pool, 2002, coss.fsu.edu/economics/sites/coss.fsu.edu.../bbenson/roads_public.pd
 The extent to which Parliament can delegate to executive may be an open question after the Chaplains cases. Some issues regarding the Commonwealth public service are canvassed in the record of the 2020 summit at p303. That discussion, prior to the Chaplains cases, did not consider conflicts faced by public servants in representing executive Government yet advising others. The author is writing separately on the desirability of statutory authority advisers for Commonwealth specific purpose transport grants.
Leslie Zines, The High Court and the Constitution, 5th edition, 2008 p483. The external governance financial ‘model’ has proven problematic for government trading enterprises. Among its problems are impotence of financial incentives. See: Productivity Commission, Financial Performance of Government Trading Enterprises (various) at http://www.pc.gov.au/research/commission/government-trading-enterprises.
 A recent article: Ross Gittins, City shoeboxes, not sweeping plains, power the economy, Sydney Morning Herald, 23 July 2014.
 Based on Herman Melville, Moby Dick, Chapter 1, Loomings.
[D1]abolition of the states
[D2]because cant do else. Leave that to others