One nation or 8? COVID fuels Australian power shift toward states

MELBOURNE -- Australian states' tough internal border policies to fight COVID-19 have, at times, arguably split the nation into multiple mini-countries.

They have blocked a fully vaccinated Sydney woman from visiting her cancer-ridden daughter in the state of Victoria. They stopped a New South Wales baby from entering Queensland for a crucial brain scan. Starting Monday, Australians will be able to fly to places like London and Singapore as international travel gradually resumes, but east coast residents still cannot enter their own westernmost state even on compassionate grounds.

The fragmentation of the country during the pandemic is leading many to ask a question that could linger long after such rules are lifted entirely: What does it mean to be Australian?

Without an enshrined bill of rights like the U.S. or Canada, Australia's six states and two territories have been able to implement unprecedented restrictions on their residents' civil liberties, with some of the toughest lockdowns and health measures in the democratic world. This has been no clearer than when they have, at various points in the pandemic, closed their internal borders to other states in response to rising coronavirus cases. Some political veterans believe this could have consequences for governance and the national identity.

Since federation in 1901, power has almost exclusively shifted toward the central government, not away from it. Australia's second prime minister, Alfred Deakin, once prophesized that the states would be "legally free, but financially bound to the chariot of the Commonwealth."

Sure enough, Australia has one of the highest rates of "vertical fiscal imbalance" of any federation in the world, with nearly half of states' funding coming from national grants. Until recently, the thinking was that although the states handled matters like health, education and law and order, the federal government could use its financial leverage to bend them to its will.

The pandemic has upended that notion.

This month, the premiers of the four most populous states -- New South Wales, Victoria, Queensland and Western Australia -- collectively topped The Australian Financial Review's Power List. This marked the first time in over 20 years that the prime minister was not perceived as the nation's most powerful figure by the influential newspaper.

"What the pandemic has taught us is that states have a lot more power than we probably realized," said Judith Brett, a political scientist at La Trobe University in Melbourne. "We have a [national] government that is weak and not very confident, and the states have stepped up."

Despite the inconvenience of strict rules and strain on families, and scattered protests, polling by the Australia Institute shows a yawning divide in perceptions of government performance. In July, 42% said their state was doing a better job handling the crisis, versus just 16% for the federal administration. A different survey last year found broad support for state border closures, with 77% backing them.

The rush to seal off states did not sit well with all premiers. Shortly before her resignation over a corruption probe at the beginning of October, former New South Wales Premier Gladys Berejiklian said, "I think every state has a responsibility to accept we are a nation, we're a federation. We are all part of that family of Australians, proudly."

Others have doubled down, however. The Western Australia government of Premier Mark McGowan currently deems Victoria and New South Wales "extreme risk" jurisdictions due to their large coronavirus case numbers, banning their residents from entering his state. McGowan is still pushing for a "COVID-zero" approach, while New South Wales and Victoria "learn to live" with the disease after reaching their 70% double vaccination targets.

"We'll get to a reunion with people in NSW and Victoria sometime in the first half of next year," McGowan said this week, according to local media. He also warned his state might enforce a hard border with others that reopen in time for Christmas, reports said. Western Australia had the biggest edge over the federal government in the poll on COVID-19 handling, at 61% to 11%.

Peter Beattie, a Labor Party veteran who was Queensland's premier from 1998 to 2007, criticizes Liberal Prime Minister Scott Morrison for allowing states to "run off and control the agenda" by offloading key responsibilities for virus containment and overseeing an initially sluggish vaccine rollout. The federal government, Beattie said, "has got the power of money, they could have taken charge here if they had the courage and strength to lead, but they didn't."

Beattie quit politics while lamenting that states had become the "hand maiden" of the federal government. Now he has a different perspective. "The states have picked up the power and have used this power excessively, we have now paid an economic price," he said. "When you are faced with a national crisis, you need a national response. The states have played crude politics that won over a lot of fearful and concerned Australians. Was it good for the federation? No."

The states of Victoria and New South Wales, home to Sydney, are currently considered "extreme-risk jurisdictions" by Western Australia.   © Reuters

Under Australia's constitution, the federal government can grant "financial assistance to any state on terms and conditions that it sees fit." But Morrison, according to Corinna Economic Advisory principal Saul Eslake, has taken a no-strings-attached approach.

"He could, today, make it a condition of grants to the states that they completely open up when the national vaccination rate reaches 80%," Eslake said. "He could do that, but he doesn't want to, because he doesn't stand for anything."

La Trobe University's Brett argued the roots of all this run deeper, dating back to the 1980s, when Australia began to privatize and outsource government services to boost economic growth and abandoned "nation-building policies."

"With neoliberalism," she said, "the federal government has stopped doing a lot of things it once did, so it has become a more hollowed-out level of government."

Beyond the coronavirus response, the states have asserted themselves on climate and energy policy. All adopted their own net-zero emissions targets before Morrison's government on Tuesday finally committed to carbon neutrality by 2050, albeit without legislating the goal.

Brett also noted that state-based loyalty is particularly strong in some regional parts of the country, including Western Australia and Tasmania, which have flirted with secessionist movements. Western Australia voted to leave the Commonwealth of Australia by a 2-to-1 margin in 1933, but the bid was rejected by the British parliament. The iron-ore-rich state has long harbored grievances against Canberra, arguing it contributes more to the federal coffers then it gets back and is ignored in favor of the larger population centers on the east coast.

Eslake said there are benefits to a multi-layered model of governance, with Australia's large geographic size making a truly centralized model undesirable. While the national government holds the purse strings, he noted there is far less inequality between states compared with other federations.

"To a much greater extent than Canada, the United States, Germany, Switzerland, the federal government doles money out among the states in a way that equalizes the capacity of state governments to provide the services that state governments do," he said. "That is an important reason why the gaps in living standards between our poorest and richest states is a lot less."

Now that states are gradually easing restrictions as vaccination rates rise, professor Brett speculated that the power shift might "seem like a temporary abrogation when we learn to live with coronavirus, it might fade into the background." Western Australia could end up a lonely outlier.

But some think states could use their elevated status in other ways. An Australia Institute paper in July suggested they could push for changes to federal-state financial arrangements, stronger climate change policies and other reforms. "The pandemic has highlighted that it is state and territory governments that are responsible for much of the infrastructure and services that Australians use day-to-day, and the evident popularity of state premiers and territory chief ministers may embolden them to take further action," it said.

Former Queensland Premier Beattie senses a shift that will not be reversed anytime soon. "It will take a long time for the Commonwealth to reassert itself," he said. "The real problem that worries me for my grandchildren is, how the heck do we rebuild the federation and the nation?"