Something that politicians all seem to like is to be able to concentrate power in their hands. Our current defence minister Joel Fitzgibbon is the latest to demand the end of state governments. He uses the old claim that state governments cost too much and that we would all be better off if only we could get rid of them and let Canberra run the show. Each of these arguments is bullshit of course. Removing the states would not be aby cheaper in the long run however we would lose a valuable brake on the power of central government. I am no great fan of state governments however they do to a certain extent act in the interests of their constituents, they really have no other choice. If they were abolished Canberra would have almost unlimited power to intervene in your life.
Every controlling despotic government has no viable opposition or balancing power, all true democratic government has diffused power structures and multi level government. It may not be cheap but a dilution of government power through multiple governments definitely restrains autocratic governments. I was dismayed when Howard used the corporations act to gain control of industrial relations. While his intentions may have been noble he has handed his successors (Rudd and Labor) a very powerful and blunt tool for the unions to use.