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Earlier today, I posted the following comment to an article on whether we need the existing system of three levels of government in Australia (see http://www.businessspectator.com.au/article/2016/1/7/politics/case-reinventing-states?utm_source=exact&utm_medium=email&utm_content=1773946&utm_campaign=kgb&modapt=) …

The states of course came out of the colonies and worked well for quite a while. But these days, they aren’t necessary. Mark Drummond did a study for his PhD that was finalised in 2007 concluding that we’d save $50 billion a year getting rid of the states (I thought it was a 2007 figure rather than 2009; perhaps $70 billion in today’s dollars or 4-5% of GDP). It’s not hard to see why.

We have eight systems (six states and two territories) all basically doing the same thing. Very inefficient. And there’s the federal government too. There are endless overlaps, inefficiencies and fighting. If we got rid of the states, we’d be able to afford medical research, better roads and public transport, Gonski and NDIS, keep our tax concessions, not have to increase the GST, and not have to hit the sick, the poor, the old and the young as Joe Hockey tried to do in his first budget. Scott Morrison’s deficits and debt would be gone, and those of the states. Bob Hawke, John Howard, Tony Abbott and Peter Beattie have all got the right idea. Problem is there are too many vested interests for it to happen.

A free-for-all among the states (and people) where the rich get richer (i.e. those states that happen to have a larger population or more natural resources) and the poor get poorer wouldn’t work. The world used that approach throughout history until around early last century and it’s an important reason the world and individual countries struggled to go forward. Let’s use an example of suburbs. We’d end up with very rich suburbs and ghettoes, far more extreme than we have now. We’ve learnt that the much better way is to have more or less equal services across suburbs, towns and cities, such that people have similar health facilities, education opportunities, roads, etc (or at least aim for this), regardless of whether their suburb is rich, poor or in the middle. Decent wages come into it too. (And let the private sector compete within such an environment, which is what we now do.) In the end, it works out better for everyone from billionaires down. If nearly everyone was poor as per Industrial Revolution times, there isn’t much chance of a good number of people becoming wealthy, let alone billionaires, as there just aren’t enough people with money to buy the goods and services produced by the well-off.