Recent censuses have documented a quite extraordinary growth in the Indigenous population, largely in southeastern Australia, driven by growing self-identification and rising numbers of mixed Indigenous and non-Indigenous relationships. As a result, the national profile of the Indigenous population is changing, accompanied by even greater levels of income inequality. Very high levels of income inequality exist within the Indigenous community, levels that are greater than those that exist within the non-Indigenous community.

Alongside these shifts has been a growth in the diversity of political perspectives among leading Indigenous figures. The contrasting views of Indigenous No campaigners Jacinta Nampijinpa Price and Nyunggai Warren Mundine, on the one hand, and Lidia Thorpe and author/lawyer Michael Mansell, on the other, are just one example.

The geographical, social and linguistic heterogeneity of Indigenous Australians has long been recognised by policymakers yet only sometimes taken account of. The regionally organised Aboriginal and Torres Strait Islander Commission (1990–2005) was a rare example of a positive recognition of heterogeneity; in other cases — tighter conditions on social security in remote Australia, for instance — the recognition has come with a punitive veneer.

This diversity has increasingly been overlaid (though not replaced) by a pan-Indigenous focus on identity and identity politics that has begun to permeate the national imagination. The emphasis on a single identity — rather than on layered identities, as Noel Pearson advocates — has created a unity with its own fragility.

These strands have created social, economic and political complexities that undercut the possibility of building an enduring consensus among First Nations on virtually any issue. If substantial Indigenous consensus on policy aspirations is just as elusive as it is among the non-Indigenous population, then all-encompassing Indigenous representation is inherently elusive, particularly nationally.

The referendum result alone won’t drive this complexity; it has been emerging for at least two decades. But the vote will inevitably be perceived as a political and societal inflection point. The notion that governments should seek to discern an overarching and representative Indigenous perspective is likely to give way increasingly to multiple Indigenous interest groups, themselves engaged in the cut and thrust of interest-group politics both within the Indigenous domain and between the Indigenous domain and the wider political domain.

Virtually all recent public commentary has been on the politics of the Voice: the campaign, the tactics of the Yes and No camps, the effectiveness of the most prominent advocates, the implications for social cohesion and reconciliation, and the implications for Australia’s international reputation. The shape of the post-referendum policy framework has received almost no attention. Yet it will determine the opportunities available to First Nations citizens and inevitably shape the nation’s future in ways that are difficult to predict but nevertheless consequential and far-reaching.

In a hyper-rational world, the obvious response to the referendum loss would be to press ahead with legislation to create a Voice. After all, if it is important enough to be constitutionally entrenched, why wouldn’t the government seek to establish it legislatively?

We don’t live in an entirely rational world. Prime minister Anthony Albanese explicitly ruled out a legislated Voice before the vote, primarily on the basis that the process of legislating a Voice would become hyper-politicised. Opponents would argue that the referendum result made crystal clear that Australians don’t want a Voice, thus depriving any such proposal of an electoral mandate. Its design would become deeply contentious both in wider political circles and among Indigenous interests. Without constitutional enshrinement, a legislated Voice’s views and policy perspectives would arguably carry less weight and be more susceptible to being ignored by governments.

One alternative path would be to create an appointed Voice, though the prime minister appears to have implicitly ruled this out too. Governments often appoint specialist groups to provide advice; in fact, the previous government appointed a prime minister’s Indigenous Advisory Council in September 2013 with Warren Mundine as its first chair. It was silently abandoned in 2019 when its advice on how best to progress the Uluru Statement and the proposed Voice became politically inconvenient.

Since then, reflecting the triumph of political considerations over rationality, the Coalition government (and now Labor) operated without a formal Indigenous advisory mechanism while simultaneously funding elaborate bureaucratic and legal processes to design and implement a proposed Voice.

The government’s most likely move will be to embrace the role of the Coalition of Peaks, the alliance of eighty-plus Indigenous peak bodies that emerged in early 2019 from discussions between representatives of fourteen Aboriginal community-controlled organisations and prime minister Scott Morrison. Those discussions ultimately led to the National Agreement on Closing the Gap. According to its latest annual report, the Coalition of Peaks directly and indirectly represents more than 800 organisations and at least 550,000 Indigenous people across numerous sectors.

Announcing a greater reliance on the Coalition of Peaks — or, more probably, gradually lifting engagement — has several political advantages. The coalition encompasses a wide swathe of Indigenous policy, it was established and funded by a Coalition government, and it is capably led by its convenor, the experienced former bureaucrat Pat Turner. Perhaps even more importantly, building on the coalition requires no legislation and can accurately be characterised as a continuation of the status quo.

If it pursues this option, Labor will presumably take the opportunity to signal its increased commitment by allocating new Indigenous funding in the coming 2024 budget. One obvious spending opportunity championed by Turner and the Coalition of Peaks is housing, a policy domain with implications for health, education, criminal justice and domestic violence. As the government develops its new National Housing and Homelessness Plan, which will encompass new intergovernmental funding arrangements, it could earmark increased funding to Indigenous communities.

The Coalition of Peaks is, of course, quite different from the proposed Voice. Unlike previous Indigenous representative bodies, it seeks to represent the interests of “community-controlled” organisations rather than the entire Indigenous constituency. Its members cover a broad range of Indigenous interests, but obvious gaps include the educational and economic development sectors. Implicit in any greater engagement would be a shift to engaging with coalition’s constituent peak bodies.

At the core of the Coalition of Peaks is NACCHO, the National Aboriginal Community Controlled Health Organisation, which represents 145 Aboriginal community-controlled health organisations across the country employing around 6000 staff. NACCHO’s members service more than 550 primary care sites delivering more than 3.1 million episodes of care to more than 400,000 people.

Apart from their sheer breadth of activity, NACCHO members have the advantage of receiving mainstream healthcare funding for their services, thus ensuring a substantial level of political independence. That advantage does not extend to most of the Coalition of Peaks’s other members, which rely to a greater or lesser extent on discretionary government funding. So too does the Coalition of Peaks’s policy secretariat, creating a major risk to its continued independence.

As a member of the council overseeing the National Agreement on Closing the Gap, the Coalition of Peaks has guaranteed cabinet-level access to every jurisdiction in the Australian federation. This is unprecedented in modern Australian history, though the reality is that it is outnumbered and outgunned by the sheer institutional heft of the states and the federal government, and particularly by the size and intellectual capital of their bureaucracies.

Of course, governments will continue to engage with Indigenous interest groups outside the Coalition of Peaks, and will draw on specialist advisory bodies where necessary, as already occurs in the mainstream policy domain. When both Indigenous and non-Indigenous interests are involved, governments will continue to appoint Indigenous members to relevant advisory committees.

The advantages of using the Coalition of Peaks to underpin the future framework of Indigenous policy are significant, but there are also significant challenges.

Foremost is the fact that the extraordinarily complex policy architecture of Closing the Gap is unfit for purpose and requires serious attention. Its bureaucratic complexity ties the Coalition of Peaks down in never-ending process, across eight jurisdictions, virtually guaranteeing it cannot focus consistently on strategic policy opportunities. Complicating its work is the fact that the Coalition government shifted political responsibility for most targets to the states and territories and stepped back from any overt leadership role, a move not reversed so far by Labor.

These problems should have been tackled head-on in the Productivity Commission’s recent draft report on the National Agreement on Closing the Gap. Although the report is critical of progress, its strategically underwhelming analysis is a lost opportunity to take stock and shift course to ensure governments take their commitments seriously. The machinery of Closing the Gap will not collapse in the short term, but neither will it survive into the medium term without focused attention.

Governments are inherently conflicted on this issue: reform of the policy architecture and a stronger Coalition of Peaks will inevitably make life harder for them. Visionary political leadership within government, always in scarce supply, will be required to crack this nut.

A second implication of the referendum defeat is that governments and First Nations will be forced to reconsider the preparedness of the Australian electorate (and the nation’s underlying political settlement) to accept treaties as a mechanism for advancing Indigenous aspirations. While many First Nations leaders and their supporters will intensify their calls for treaties, the risk of devoting decades of work to inchoate policy reforms, and the challenges of agreement-making with reluctant governments could fracture Indigenous views on the benefits of such a strategy. Pragmatic leaders could well see better and more immediate uses for scarce advocacy resources.

It is also worth mentioning that while a successful referendum would have paved the way for a vote on an Australian republic, the defeat is likely to dampen enthusiasm in the current decade. Perhaps paradoxically, it may also increase the likelihood of an Indigenous person being appointed as Australia’s head of state in the interim.

Progress on Indigenous constitutional recognition, meanwhile, appears more remote than ever. Short-sighted self-interest has triumphed over visionary reform. The 1967 referendum gave the Commonwealth an implicit mandate to lead on Indigenous policy, one it has progressively walked away from over the past decade. The Indigenous leadership, encouraged by progressive Liberals, decided to shift away from the recommendations of the 2012 report of the expert panel on constitutional recognition and replace it with the Voice proposal, a move that now seems a well-intentioned error of judgement.

Led by Pat Dodson and Mark Leibler, the expert panel recommended the repeal of section 51(xxvi) of the Constitution, which allows the federal government to enact adverse and discriminatory laws based on race, and called for a new provision prohibiting racial discrimination.

The nation’s Indigenous policy framework over the coming decades will inevitably focus on particular Indigenous interests rather than a notional general interest, tempered by more of the same: more rhetoric over substance, more evasion of responsibility, more blame shifting, less transparency and ministerial accountability, and continued policymaking aimed merely at giving the appearance of action.

If they are to force their way into the dominant bloc of interests that controls Australia’s institutions, Indigenous interests will need to look beyond governments for support and as the sole locus of political action. To be effective, they must build alliances, institutionalise the independence of their advocacy capabilities, and create their own policy institutions. They will need to span their diverse aspirations, and build and sustain the intellectual capital necessary to achieve inclusionary policy reforms in the face of opposition from mainstream interests concerned to protect the status quo. Inevitably, this will be a multigenerational struggle. •

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WITH attention focused elsewhere, summer is always a good time for politically important developments to slip under the radar. Two decisions with important implications for federal–state relations have slipped through this summer, and they suggest that the Gillard government could have another fight on its hands.

The first development came in mid-December when Liberal premiers Barry O’Farrell and Ted Baillieu announced that they were forming an Interstate Reform Partnership to bypass the Council of Australian Governments, or COAG, and accelerate reforms in areas such as energy efficiency and skills. Both premiers were careful not to badge their partnership as a rival to COAG, but the move was clearly born out of frustration with both the pace of reform through COAG and the Commonwealth’s control of the process.

The decision by New South Wales and Victoria to go it alone on some economic reforms is hugely significant when we consider that, together, the two states account for 57 per cent of Australia’s population and 54 per cent of its GDP. Their partnership could soon have a new member, too, with the Queensland opposition hinting that it might join up should it win government this year. A grouping of the three most populous states could not help but threaten the cohesion and stability of the COAG process.

The second spanner in the works came last week, in response to a threat by the prime minister that she would revoke $450 million in reward payments to the states and territories if they stalled on introducing agreed productivity reforms. O’Farrell, rather than stay silent, decided to call Julia Gillard’s bluff. He declared that his priority was pursuing reforms in the best interests of New South Wales, even if it meant forgoing $177 million in reward payments from the Commonwealth.

Both developments are signs of a growing bullishness among the states. After years of complaining about Commonwealth interference in their affairs they are showing a willingness to take the fight up to Canberra. This poses a potential headache for the federal government, and how it responds could affect the health of the federation for years to come.

The fact that we have got to this point shows how much federal–state relations have deteriorated since the heady days of 2008 when Kevin Rudd declared the dawn of a new era of “cooperative federalism.” Rudd’s pledge to “fix the federation” was never feasible but, with Labor premiers in every state, he set in train some genuinely ambitious reforms.

On the policy front, he expanded COAG’s relatively modest reform agenda to include a wide range of areas essential to national prosperity, including education and training, health care, disability, housing, Indigenous disadvantage, water and climate change. The slate also encompassed sweeping reforms of business regulation and competition, including commitments to uniform regulation in areas such as trades licensing, electronic conveyancing and workplace safety.

To support this larger agenda, Rudd introduced new funding arrangements. Rather than micromanage the states through prescriptive grants, as it had done in the past, the Commonwealth agreed to give state governments more flexibility as to how they spent federal money. In return, the premiers and chief ministers consented to having their performance in delivering services evaluated by the independent COAG Reform Council. Where they fell behind in certain areas, the Commonwealth would be entitled to penalise them by withholding their “reward payments.”

These reforms were widely praised for striking a balance between flexibility and public accountability. They were also seen as a strong foundation for improving the relationship between Canberra and the states. But looking back from our current vantage point, the high hopes of 2008 seem overblown, if not naive.

For one thing, the push for uniformity in so many policy areas was always overly ambitious. Even if the idea of national regulation is supported in theory, some states – often following a change of government – have baulked at it in practice. The continuing debates about workplace safety laws are a case in point, while New South Wales continues to hold out over the introduction of a national school curriculum. These differences serve as a reminder that one of the features of a federation is policy diversity and that uniform approaches are not always achievable, or desirable.

The 2008 rhetoric of flexibility has also faded as the Commonwealth has reverted to old habits. This is most apparent in its increasing use of national partnership payments, which permit the Commonwealth to place strict conditions on how states deliver on their programs. It is old-style micromanagement in a different guise. At last count there were fifty-three such agreements, including on subjects as specific as noise insulation in a Sydney high school. And the states complain that the new financial regime imposes crippling reporting burdens, with the Commonwealth asking for more and more information on the progress of reforms, often to the point of fine detail.

The reform process has also been hampered by a general breakdown in trust between the Commonwealth and the states. The main causes of this were the Rudd government’s unilateral approach to its health and hospital reforms (which would have seen the states surrender one-third of their GST revenue to the Commonwealth) and its failure to consult the states over the proposed resource super-profits tax. These developments sapped much of the goodwill that is essential to the COAG process.

Against this background, it is not surprising that we have reached a point where states are choosing to bypass COAG processes and publicly spar with the Commonwealth. It would be an overstatement to say that cooperative federalism has reached its nadir. But there is no doubt that the spirit of cooperation that existed four years ago has been eroded, and could deteriorate further still. What can be done to halt this trend and build a more harmonious federation?

The first point to make is that some measure of conflict in a federation is not a bad thing. Federal systems work best where there is a good balance between cooperation and competition. While cooperation is crucial for addressing the nation’s most difficult policy problems, competition helps to bring energy and new ideas to the process. The latest tensions in federal–state relations are partly a matter of course correction, as states reassert their sovereignty and unique identities in response to what is seen as excessive uniformity and central control.

With this in mind, the Commonwealth should work with the states to deal with some of their concerns. Improving consultation, alleviating the reporting burden and making more judicious use of national partnership payments would go a long way towards strengthening relations. For their part, the Liberal-led states should resist the temptation to artificially inflame tensions with the Gillard government for the purpose of delivering political advantage to the federal Coalition.

More fundamentally, the Commonwealth and the states should revisit the COAG reform agenda with an eye to simplifying it. There is a growing feeling that the agenda is overloaded and that implementation deadlines are unrealistic. The Business Council of Australia has suggested that COAG prioritise the reforms with the greatest impact on productivity, including workplace safety, transport, energy markets and infrastructure regulation. This and other approaches to streamlining the reform agenda should be discussed as a matter of priority at the next COAG meeting.

It is also time to implement long-overdue reforms to COAG itself. Despite being a crucial institution of federal governance, it remains an ad hoc body in the tight grip of the Commonwealth. The prime minister determines if and when COAG meets and controls the meeting agenda, and it operates out of a secretariat housed in the Department of the Prime Minister and Cabinet. These arrangements put the Commonwealth in the driver’s seat and disadvantage the states.

If COAG is to be a truly cooperative federal institution, changes must be made. It should be funded by all participants and have its own independent secretariat. And, as O’Farrell himself has suggested, it should have a regular schedule of meetings and allow states to raise issues for discussion and debate. These reforms could be implemented by agreement or, even better, enshrined in statute.

These reforms are essential if we are to manage effectively this newly fractious period in federal–state relations. They will require strong leadership from both levels of government, as well as all major political parties. Handled correctly, the current tensions in the federation could be the impetus for rebuilding our federal processes and institutions so that they better serve the national interest. •

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WHATEVER its shortcomings in concrete achievements, the current round of health reforms has set new records for hyperbole. Launching “the biggest health reform since Medicare” last year, Kevin Rudd declared that “the days of incremental reform are over.” Julia Gillard’s version, signed off by the assembled premiers and chief ministers at the Council of Australian Governments meeting on Sunday, was pared-down and more limited, but the rhetorical claims remained high: “We are sweeping away those eight separate bureaucracies for one national funding body,” the prime minister announced. And although the broad details were still a mystery, the leader of the opposition, Tony Abbott, denounced “an historic capitulation on what the government was proposing. This is the biggest surrender since Singapore.”

The reality is more prosaic. The latest deal is a recognition that federal arrangements are deeply embedded in the organisation of public health services, and an acknowledgement of the new balance of power emerging with Coalition governments in charge in Western Australia, Victoria and, almost certainly, New South Wales. The new COAG heads of agreement confirm the existing division of roles: the states and territories are assured of their position as “system managers for public hospital services” with a “lead role in public health,” while the Commonwealth, through Medicare, keeps a “lead role” in primary care – a set of divisions at the heart of many critiques of Australian health funding.

Most commentary has concentrated on the adjustments agreed by COAG. Abandoning the planned 60:40 per cent Commonwealth funding of hospitals – which would largely have been achieved by clawing back existing GST revenues from the states – the Commonwealth will now guarantee to meet 45 per cent, with a 50:50 split on new expenditures. Moves towards more transparent and efficient funding methods have been retained or even made more transparent, with a national funding body managing pooled state and federal funding. The significance of these changes will emerge more clearly as the details are negotiated over the next few months.

The changes focus on hospital reform – and it is important to remember that this made up only one part of Labor’s reform agenda. The Rudd government launched ambitious reviews of virtually every area of health policy. Reform was seen as system-wide, but the commissions were overlapping, often announced with little consultation or coordination. Although the ambition seemed to be to reform the whole system, there was never a sense of common architecture binding policy approaches together. The National Health and Hospital Reform Commission had the sweeping task of overseeing the health system as a whole, supplemented by overlapping taskforces in primary care, maternal health services and prevention. By early 2010, the government had received proposals for reform in virtually every area. Each of these bodies has continued to put forward policy reforms, adding up to a series of sweeping proposals that could profoundly change our healthcare. And many of these reforms are proceeding – with the most politically difficult, aged care, still with the Productivity Commission.

Incrementalism has its virtues. While Rudd compared his agenda with the radical funding reforms of Medibank and Medicare, the current context is quite different – and more challenging. The two previous great waves of national health reform in Australia – the movement of the Commonwealth into funding a public-private system built on subsidised private health insurance (1938–53) and the introduction and consolidation of Medicare (1972–84) – focused on improving access to medical care through financial reform. They were both radical – changes came through centralised shifts in funding responsibilities – and deeply conservative, with little desire to alter the content of health services.

However heated the battles with the medical profession, the conflict focused on forms of government or insurance-fund payment for services. The general pattern of hospital and primary (largely general practice) services received little criticism – the demand was for more of the same. Australia was not alone; the postwar wave of health reform in developed countries concentrated mainly on these questions of access and equity. Medicare (largely crafted in the 1960s) offered a solution to the health problems of the 1940s and 50s – acute illness, treated first by local GPs and then by lengthy stays in hospital, where either it was cured or the patient died. Broader attempts at service reform, such as Whitlam’s abortive community health centres, were marginal and abandoned in the face of medical opposition.

The Rudd/Gillard project has made gestures to the new problems of the health system. Many Australians still face barriers in gaining access to existing services – in remote areas and Indigenous communities and because of the growing burden of out-of-pocket costs – but policy challenges have shifted to more intractable questions of the content and coordination of health services. The growing burden of chronic illness – including mental illness – has exposed the limitations of a health care system built around the problems of earlier generations. The new pattern of illness involves long-term conditions, largely incurable, such as diabetes, many cancers, and respiratory and heart conditions. The general practitioners at the heart of Medicare, working with fee-for-service in splendid isolation from hospitals, are ill-equipped to coordinate patient care. Hospitals, still geared to short episodes of acute illness, have little ability to connect with patient care in the community.

There has been some recognition of these pressures in the reform drive. Rudd’s speeches were peppered with references to the need for coordination and the problems of an ageing society and chronic care. The new COAG heads of agreement propose that funds from efficiency savings should go towards chronic disease management and other programs designed to shift demand away from the hospital system. But the bulk of attention still addresses the headline issues of hospital waiting lists and elective surgery. System reforms, designed to force more localised “hospital networks” on the states, were more a reaction to the unpopularity of the centralised NSW and Queensland models than an attempt to think through why the more regionalised, but certainly not community controlled, Victorian models appeared more resilient in the face of tabloid assaults on real or “beat up” hospital crises.

Where do the new COAG agreements leave us? There are four, somewhat contradictory points:

Federalism has been reasserted. After a long decline during the Howard years, marked by successful cost- and blame-shifting via which cash-strapped state governments were made responsible for the faults of the system, the turn of the political cycle is opening some real political interchange. The states control and understand the public hospital system, and Tony Abbott’s disastrous attempt to assert direct control of Tasmania’s Mersey Hospital during the dying days of the Howard government served to underline the lack of local knowledge and administrative capacities at federal level. Rhetorical threats of federal “takeovers” were never serious. Increased Commonwealth funding can push the states towards some reforms, such as efficient pricing. Hospital reform will depend – as in the past – on state and territory governments, not on a magic wand of centralised single-payer Commonwealth funding

Is primary care more than enhanced general practice? Medicare Locals – the larger primary care organisations to be formed from mid 2011 – reflect the limits of a vision focused on expenditure flows from Canberra. Although hailed as the framework for a fundamental reshaping of primary care, much of the system is left out, with these new bodies looking more like revamped divisions of general practice, excluding many of the areas of primary practice most used by the general public: community pharmacy and healthcare services such as physiotherapy. The new COAG agreements offer the interesting suggestions that Medicare Locals will be funded to provide services and focus coordination. We still need to see hard money following these worthy declarations.

The reforms recognise but skirt the difficult task of building effective links to coordinate a fractured system. Funding reforms may facilitate this, but are only part of the solution to a problem built on archaic organisational structures and patterns of professional practice that will only change slowly and require careful local action rather than grand national gestures. The Medicare Locals have different boundaries from hospital networks and could perpetuate current divisions. The key problem for the next generation of health policy-makers is how to align new forms of demand for services with limited resources – a long way from the shrieking tabloid politics of hospital waiting lists.

The growth of the private sector remains outside policy. The long battle to win bipartisan support for Medicare ended in 1996 but still haunts public discourse. Some observers still treat the relatively small subsidies to private health insurance (admittedly poorly targeted and uncapped) as a problem well beyond their real significance. In the meantime, a large private sector – spanning innovative day surgeries, hospitals, community-based specialists and allied health providers with limited access to Medicare rebates – remains largely outside policy debate. Debates around primary care – even just at the general practice end – ignore the complexity of business models, ownership structures and incentives that have resulted from new corporate structures. The private sector still has no representatives at COAG.

The American political scientist Jacob Hacker has described recent government attempts to intervene in Western health systems as “reform without change and change without reform.” He argues that deep institutional rigidities mean that the policy levers available to governments have less purchase, while funding reforms focused on the public sector have diminishing influence on the emerging policy problems. At the same time, massive changes driven by markets and patterns of population demand are transforming the system, well outside any government’s control. If the COAG reforms are to cross these divides and begin to solve the new problems of healthcare, they need an agile leadership not yet seen in this (or any other) Australian government. •

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