federalism in australia essay

Gilbert + Tobin Centre of Public Law

Federalism: Frequently Asked Questions

Answers to commonly asked questions about federalism and federal systems

Federalism Resources

A range of federalism resources available on the internet

Federalism in the News

News and current affairs relating to Australian federalism

Federalism Links

A collection of links to important organisations in the Australian federation

Federalism Project Research

Research produced as part of the ARC-funded Federalism Project at the Gilbert + Tobin Centre of Public Law

What is federalism?

Federalism is a system of government in which powers are divided between two or more constituent entities by a written Constitution. A constituent entity often comes in the form of a state, region or province. Many of the largest countries in the world are federations, including the United States, Canada, India, South Africa, Argentina, and Australia. Virtually every large democratic nation has a federal system of government.

Federal structures are capable of varying greatly. Some confer a large amount of power in a central government that regulates the country as a whole, while others grant more autonomy to their constituent entities. Some impose clear divisions in the law-making powers of their constituent entities, while others have overlapping powers. Additionally, they may be administered by parliamentary governments which are led by a Prime Minister, or by Congressional institutions which are led by a President.

However, federal systems also have a number of common characteristics. They all have a central government, a written Constitution and a procedure for resolving constitutional disputes. Also, each order of government possesses some genuine authority. They also have organisations and procedures for facilitating intergovernmental relations.

What are the strengths and weaknesses of federalism?

Flexibility: Federalism allows policy to be customised to meet the particular needs of certain areas and communities. It has the ability to embrace diverse populations in a single political system while also providing a space for cultural differences. As a concept, it can adapt to the unique circumstances of different countries.
Democratic participation: Federalism creates a system of dual citizenship. For example, in Australia, we are citizens of both the nation and a particular state. We may vote for different political parties at different levels of government. Smaller constituent entities allow citizens to engage with government more directly. Federations are able to do this while maintaining the strength of a larger nation.
Choice & Competition: Citizens and businesses in a federation have the freedom to move to another state if they are unhappy with the government or the conditions where they currently reside. This provides an incentive for states to improve their services so that they can compete with other jurisdictions.
Check on government power: The division of power between the constituent entities that make up a federation helps ensure that the national government will not become oppressive or authoritarian. It prevents power from becoming concentrated in a single governing body. Also, the need for cooperation between the levels of government provides greater scrutiny of policy.
Intergovernmental conflict: Finding a satisfactory compromise between coordinated policy and the individual needs and objectives of the constituent entities of a federation can be a fraught process. Some of the most significant intergovernmental conflicts in Australia have occurred where the federal government has intervened in areas traditionally belonging to the States. Such conflicts can create an impasse where very little can be achieved.
Too much bureaucracy: Multiple governments with overlapping responsibilities and powers can create duplication and inconsistency. This can lead to bureaucratisation and increasing costs to businesses. Additionally, it can result in an unproductive lack of coordination in key policy areas, particularly those concerning infrastructure.
Avoidance of responsibility: Where there are policy failings, the national government may blame its state counterparts and vice versa. This is particularly a problem where it is unclear which level of government is constitutionally responsible for a particular issue.

How did Australia become a federation?

The original penal colony of New South Wales was established in 1788. Over the next 70 years a number of colonies, each with their own responsible government, were created. It soon became apparent to the colonies that they shared some common problems, and that inter-colonial cooperation may be desirable with respect to issues such as customs tariffs and immigration. Consequently, the first inter-colonial conference was held in 1863. Later, in 1885, the Federal Council of Australasia was established. It possessed legislative authority over certain specified areas and met sporadically until 1899. New South Wales refused to join the Council.

Over the 1890’s the move towards federation began to gain momentum. The first federation conference was held in 1890. The following year, the National Australasian Convention produced a draft Constitution. The draft failed to gain popular support and was not ratified by the colonies. It was not until 1895 that the Premiers agreed to establish a new Convention created by popular vote. The Australasian Federal Convention met throughout 1897 and 1898, when a final draft Constitution was finally agreed upon after exhaustive negotiations.

The people of the Australian colonies approved the draft Constitution in referenda held from 1898-1900. Britain enacted this approved draft as the Commonwealth of Australia Constitution Act 1900 (Imp). It received the assent of Queen Victoria on 9 July 1900 and came into force on 1 January 1901. The Australian federation was born. It is among the oldest federations in the world.

Who does what in the Australian federal system?

The Constitution divides law-making powers between the State and federal governments. Most of the Commonwealth’s powers are set out in section 51 – this provision enumerates 39 areas in which the federal Parliament may make laws, including trade and commerce, taxation, immigration and emigration, and external affairs. These 39 law-making powers are held concurrently with the States, meaning that State parliaments can also make laws in these areas. In the event that a Commonwealth law is inconsistent with a State law, section 109 of the Constitution is triggered, and the Commonwealth law prevails to the extent of the inconsistency.

The Constitution also grants the Commonwealth Parliament a small number of exclusive legislative powers. For example, the Commonwealth has exclusive powers to make laws regarding federal departments and places acquired by the Commonwealth for a public purpose (section 52), as well as laws with respect to customs, excise and bounties (section 90).

In contrast to the powers of the Commonwealth, the powers of the States are not enumerated in the text of the Constitution. Instead, the States retain what is known as plenary power , meaning that they can legislate with respect to any matter other than those matters over which the Commonwealth has exclusive power. As noted above, however, State laws will yield to those of the Commonwealth where an inconsistency arises under section 109. In addition, the States’ law-making power is subject to any express or implied limitations within the Constitution – for example, the requirement that laws should not interfere with the freedom of interstate (section 92). Some of the main areas of State law-making power include health and hospitals, primary and secondary education, and roads and transport.

Over the last century, the scope of Commonwealth law-making power has gradually increased, due mainly to High Court decisions that have interpreted its section 51 powers in a broad way. As a result, the Commonwealth is now able to make laws in a whole range of areas that were not open to it at Federation.

What is ‘cooperative federalism’?

One consequence of the sharing of law-making powers between the Commonwealth and State governments is that, on some issues, both tiers of government have to work together to achieve good policy outcomes. This approach to governance is called ‘cooperative federalism’, and can be seen in a range of policy areas, including health, education and rivers management.

Two important mechanisms for fostering intergovernmental relations are the Council of Australian Governments, and the referrals power.

Council of Australian Governments

The Council of Australian Governments (‘COAG’) was established in May 1992. Its membership comprises the Prime Minister, State Premiers, Territory Chief Ministers and the President of the Australian Local Government Association (‘ALGA’). It is chaired by the Prime Minister. The role of COAG is to facilitate cooperation between all levels of government on policy areas that are of national significance. It initiates, develops and monitors the implementation of reform on shared issues that require collaboration and national agreement. COAG only meets as required rather than at regular intervals. It may also discuss or settle issues by correspondence while out-of-session.

Over the years, COAG has played a pivotal role in implementing policy reforms in a range of areas, including education and training, microeconomic reform, early childhood development and Indigenous reform. It has negotiated many important intergovernmental agreements, including those on Federal Financial Relations, the Murray-Darling Basin, and Gene Technology. At a two-day meeting held from 19-20 April 2010, COAG (with the exception of Western Australia) agreed to sign the National Health and Hospitals Network Agreement on health and hospital reform.

Referrals Power

The referrals power is contained in section 51(xxxvii) of the Constitution. It allows the federal Parliament to make laws with respect to matters referred to it by one or more State governments. The law-making power of the Commonwealth only extends to those States that have referred the matter concerned to the Commonwealth. It is the most important provision in the Constitution with respect to facilitating Commonwealth-State cooperation.

In recent years, the referrals power has been used to support reforms in several important policy areas. State referrals have been critical to the Commonwealth’s ability to implement legislative reforms in the fields of corporations law, industrial relations, terrorism and water management, among others.

What are some ideas for reforming Australia’s federal system?

A range of proposals have been put forward for the reform of Australia’s federal system.

Reallocate of roles and responsibilities

Some commentators argue that Australia’s federal system would operate more effectively if roles and responsibilities were allocated differently between the Commonwealth and the States. They point to the blurring of responsibilities that occurs in some policy areas, such as health care, where Commonwealth and State law-making powers overlap. They also argue that, more than one hundred years since our Constitution was written, it is time to revisit the question of which level of government is best placed to have responsibility for different policy areas.

Any review of Commonwealth and State roles and responsibilities would likely be guided by principles such as subsidiarity, national interest and cooperation. Subsidiarity is an important guiding principle in all federations – it refers to the idea that government functions should be allocated to the lowest level of government practicable unless there is a good reason for a higher level of government to assume them.

Enhance Commonwealth-State cooperation

A number of different reform ideas have been put forward with the aim of enhancing the ability of the national and State governments to work together. These include:

Giving formal legal status to the Council of Australian Governments (COAG), and requiring it to have regular meetings with an agenda that is determined cooperatively, rather than by the Commonwealth alone;
Amending the Constitution to remove barriers to cooperative legislative schemes, thus allowing the Commonwealth and State governments to enter into joint schemes with a single national regulator and a single body for dispute resolution;
Amending the Constitution to clarify the operation of the referrals power in section 51(xxxvii), including on whether a State can revoke a reference, and the impact of amending or repealing a Commonwealth law made pursuant to a referral of power;
Including a provision in the Constitution that supports the creation of intergovernmental agreements;
Enabling constitutional amendments to be put to referenda where they are supported by at least half of the State Parliaments, representing a majority of the total Australian population, or elected constitutional conventions, rather than only be the Commonwealth Parliament;
Allowing the States to play a role in appointing Justices of the High Court or establish a Judicial Commission to recommend High Court appointments.
Restructure Commonwealth-State financial relations

Many commentators have called for reforms aimed at altering the financial relationship between the Commonwealth and the States to achieve a greater fiscal balance. Currently, the Commonwealth raises far more tax revenue than it spends while, conversely, the States are only able to raise a relatively small proportion of revenue that is insufficient to meet its many spending responsibilities. As a result of this ‘vertical fiscal imbalance’ (or VFI), the States have to rely upon grants from the Commonwealth in order to meet their financial obligations. This helps to contribute to ‘blame-shifting’ between governments, where Commonwealth and State governments blame each other for problems in service delivery, with neither tier prepared to take responsibility. One proposal for reform is to give the States a guaranteed share of tax revenue, beyond the GST, to enable them to finance their own spending responsibilities. This could potentially involve restoring to the States the power to collect their own income tax.

Strengthen regional governance

Some commentators have proposed that the federal system be restructured to allow for stronger regional governance. This proposal is partly driven by a concern that Australia’s regions are marginalised from political processes and that service delivery in regional areas is inadequate. Proponents also argue that the existing State boundaries do not reflect the geographical, social and cultural diversity of Australia. A common suggestion is that the regions of north Queensland or western New South Wales become their own States, while other proposals suggest having a federal system with as many as 60 regional governments.

A move to institutionalise regional government in Australia’s federal system could occur in a variety of ways:

Abolish State and local governments and move to a two-tier federal system made up of Commonwealth and Regional governments;
Institutionalise regional government as part of a move to a four-tier federal system, incorporating Commonwealth, State, Regional and Local governments;
Retain the existing three-tier federal system, but use the existing constitutional mechanism to create several new States within existing State boundaries. For example, Queensland might be divided into South, Central and North Queensland, thus effectively entrenching a form of regional governance.

Another proposal that is sometimes put forward is to abolish the States altogether and move to a unitary system in which all legislative power is invested in the Commonwealth government.

General resources

Commonwealth of Australia, Reform of the Federation White Paper (2014)

Through focus on a number of issues relevant to the Federation, the White paper seeks to clarify roles and responsibilities to ensure that, as far as possible, the States and Territories are sovereign in their own sphere.

Secretary of PM&C Terry Moran delivers address at Eidos Institute on ‘The challenges of federalism’ (8 June 2011)

Anne Twomey and Glenn Withers, Australia's Federal Future: Delivering Growth and Prosperity , A Report for the Council for the Australian Federation (2007).

This report, commissioned by the Council for the Australian Federation, argues that Australia’s federal system offers many real and potential benefits, and offers suggestions for reform.

Scott Bennett and Richard Webb, Chronology of Australian Federalism , Parliamentary Library, Parliament of Australia, Canberra (2007).

A chronology of major events in the development of Australian federalism. Also contains a list of constitutional provisions relevant to federal-state relations, and a list of Parliamentary Library papers on federalism.

Scott Bennett, The Politics of the Australian Federal System , Research Brief No 4, Parliamentary Library, Parliament of Australia, Canberra (2006).

Gives an overview of Australian federalism, including its strengths and weaknesses, and canvasses some options for reform.

AJ Brown and Jennifer Bellamy (eds), Federalism and Regionalism in Australia: New Approaches, New Institutions? , Canberra: ANU E Press (2006).

A collection of articles from a symposium of the same name in 2006. Includes chapters on regionalism, local government, public attitudes to federalism and principles for progressing the debate on federal reform.

Greg Craven, ‘The New Centralism and the Collapse of the Conservative Constitution’ in Kay Walsh (ed), Papers on Parliament No. 44 , Department of the Senate, Canberra, 133-149 (2006).

Examines the relationship between conservatism and Australian federalism; responds to various criticisms of Australian federalism; and, argues that the Howard government’s approach to federalism was inconsistent with conservative philosophy.

Geoffrey de Q. Walker, ‘Ten Advantages of a Federal Constitution’ Policy , vol. 16, no. 4, 35-41 (2000).

Outlines ten advantages of federal systems.

COAG and cooperative federalism

Commonwealth of Australia, “ Issues Paper 1 - A Federation for Our Future ,” Reform of the Federation White Paper (2014).

NSW Parliamentary Research Service, ‘COAG’, Briefing Paper No 6/2013 , (July 2013).

Joint Committee of Public Accounts and Audit, Report 427: Inquiry into National Funding Agreements (24 November 2011).

Productivity Commission, Impacts and Benefits of COAG Reforms: Reporting Framework (Research Report, December 2010).

Gareth Griffith, ‘Managerial Federalism – COAG and the States’ (Briefing Paper No 10/09, Parliamentary Library Research Service, Parliament of NSW, 2009).

John Wanna et al, ‘Common Cause – Strengthening Australia’s Cooperative Federalism’ (Final Report to the Council for the Australian Federation, May 2009).

George Williams, Working Together – Inquiry into Options for a New National Industrial Relations System (Chapter 3; Final Report, November 2007).

Approaches to federal reform

Andrew Lynch and George Williams, ‘Beyond a Federal Structure: Is a Constitutional Commitment to a Federal Relationship Possible?’ , University of New South Wales Law Journal , vol. 31, no. 2, 395-434 (2008).

Considers the case for formal constitutional recognition of the federal relationship between Commonwealth and State governments.

Anne Twomey, ‘ Reforming Australia’s Federal System ’ (2008) 1 Federal Law Review 36, 57-81.

Argues for reform of Australian federalism in three areas: the reallocation of powers and responsibilities between the levels of government; the improvement of mechanisms for intergovernmental cooperation; and, the reform of Commonwealth-State financial relations.

Business Council of Australia, A Charter for a New Federalism (2007).

The BCA calls on the nation’s leaders to work cooperatively through the Council of Australian Governments (COAG) to deliver national reforms.

Business Council of Australia, Reshaping Australia’s Federation: A New Contract for Federal State Relations (2006).

The BCA proposes a 12-point plan to improve the effectiveness of Australian’s federal system.

Productivity Commission, ‘Productive Reform in a Federal System’ in Annual Report 2004-05 , Annual Report Series, Productivity Commission, Canberra (2005).

Gives an overview of the role of competition and cooperation in federal-state relations; emphasises the importance of intergovernmental cooperation in addressing national challenges, such as increasing globalization, environmental stability and an ageing population; and, suggests some directions for reform.

Fiscal federalism

Commonwealth of Australia, “Issues Paper 5 – COAG and Federal Financial Relations, ” Reform of the Federation White Paper (2014).

GST Review Panel, GST distribution Review Final Report to the States and Territories (30 November 2012).

Economy and Infrastructure References Committee, Legislative Council of Victoria, Report on Inquiry into Commonwealth Payments to Victoria (November 2012).

This report considers the adequacy of National Partnership Payments (NPPs) and Local Government Financial Assistance Grants (FAGs) made by the Commonwealth in the State of Victoria. It also examines Commonwealth Own Purpose Expenditure undertaken in Victoria. Amongst its findings, the Committee reports that National Partnership Agreements, which provide for NPPs, are often complex and can hinder the effective delivery of services in Victoria. It also notes that FAGs have not kept pace with local government expenditure and this is placing significant pressure on local councils.

Neil Warren, Benchmarking Australia’s Intergovernmental Fiscal Arrangements: Final Report , Prepared for New South Wales Treasury (2006).

This report, prepared for the NSW Treasury, examines how Australia’s intergovernmental fiscal arrangements perform against a range of ‘best practice’ benchmark criteria.

Richard Webb, Developments in Commonwealth-State Financial Relations Since 2000-01 , Research Brief no 11, Parliamentary Library, Parliament of Australia, Canberra (2006).

Examines developments in Commonwealth-State financial relations from the introduction of the GST to the beginning of 2006.

Richard Webb, Commonwealth General Purpose Financial Assistance to Local Government , Research Paper, no 1, Parliamentary Library, Parliament of Australia, Canberra (2003).

Examines how the Commonwealth determines the level and distribution of financial assistance it provides to local government, and looks at some key issues in relation to the provision of that assistance.

Denis James, Federal-State Financial Relations: The Deakin Prophecy , Research Paper, no 17, Parliamentary Library, Parliament of Australia, Canberra (2000).

Examines the process by which financial power has, since Federation, gradually become more concentrated in the hands of the Commonwealth, and considers the repercussions of this.

Current issues

Commonwealth of Australia, “Issues Paper 4 – Roles and Responsibilities in Education,” Reform of the Federation White Paper (2014).

Marilyn Harrington, ‘Australian Government Funding for Schools Explained’ (Background Note, Parliamentary Library, Parliament of Australia, 31 January 2011).

Council for the Australian Federation, The Future of Schooling in Australia (Federalist Paper No 2, September 2007).

Health and hospitals reform

Commonwealth of Australia, “Issues Paper 3 – Roles and Responsibilities in Health,” Reform of the Federation White Paper (2014.)

National Health and Hospitals Reform Commission, A Healthier Future for All Australians (Final Report, June 2009).

Sharon Scully, ‘Does the Commonwealth have Constitutional Power to Take Over the Administration of Public Hospitals?’ (Research Paper No 36, Parliamentary Library, Parliament of Australia, 30 June 2009).

House Standing Committee on Health and Ageing, The Blame Game: The Report on the Inquiry into Health Funding (Parliament of Australia, December 2006).

Gareth Griffith, ‘Commonwealth-State Responsibilities for Health – “Big Bang” or Incremental Reform?’ (Briefing Paper No 17/06, Parliamentary Library Research Service, Parliament of NSW, 2006).

Murray-Darling Basin Reform

COAG, “Intergovernmental Agreement on Implementing Water Reform in the Murray Darling Basin,” (11 June 2013.)

Paul Kildea and George Williams, ‘ The Constitution and the Management of Water in Australia’s Rivers ’ (2010) 32 Sydney Law Review 595-616.

Senate Rural Affairs and Transport References Committee, ‘The management of the Murray-Darling Basin:Interim report: the impact of mining coal seam gas on the management of the Murray Darling Basin’ ; (November 2011).

House Standing Committee on Regional Australia tables final report following inquiry into the Impact of the Murray-Darling Basin Plan in Regional Australia (2 June 2011.)

The Hon Justice Rachel Pepper, ‘The Constitutionalisation of Water Rights’ (Paper delivered at Constitutional Law Conference, Sydney, 18 February 2011).

Murray-Darling Basin Authority, Guide to the Proposed Basin Plan (October 2010).

Homelessness

Commonwealth of Australia, “Issues Paper 2 – Roles and Responsibilities in Housing and Homelessness,” Reform of the Federation White Paper (2014)

Federalism is a natural fit for Australia, but we need to make it work

Laureate Professor, Melbourne Law School, The University of Melbourne

Disclosure statement

Cheryl Saunders does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

University of Melbourne provides funding as a founding partner of The Conversation AU.

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The reform of Australia’s federation is under review. So far in our special series, leading Australian academics have discussed the future of the federation when it comes to taxation, education and health; today, we look at the broader issues of democracy.

The University of Melbourne’s Cheryl Saunders argues recalibrating federalism involves the creation of genuinely democratic institutions.

Talk about federalism reform is not new; it has been a perennial topic for decades. At different times, however, it means different things. Sometimes it is synonymous with greater integration of Commonwealth and state functions through complex mechanisms described as “co-operative” in character. Sometimes, as in this instance, it involves disentanglement of functions.

Neither complete integration nor complete disentanglement can or should be fully achieved. What is needed is a balance between the two. This should deliver the kind of government we want in a way that is responsive, accountable and transparent.

The matter of money

The entanglement of government functions has been driven largely, although not entirely, by money. On the face of the Constitution, both the Commonwealth and states can impose almost any form of tax, with the exception of taxes on goods, which are prohibited to the states. Since World War II, however, the Commonwealth has acquired a monopoly over the major tax sources, leaving the states with a range of minor taxes, which continues to shrink.

The Commonwealth thus has much more money than it needs for its own constitutional responsibilities to the public; the states have much less for theirs. Substantial transfers are needed from one to the other. Because the Constitution does not contemplate this degree of fiscal imbalance, it also does not clearly displace the assumption that the government that is responsible for raising money is also accountable for spending it (as occurs in some other federations, of which Germany is an example).

At least half the transfers from the Commonwealth to the states seek to control how state functions are exercised. Education, health and infrastructure are examples. The results include a massive duplication of bureaucracy, the emergence of what effectively is a third tier of government through the so-called “COAG Councils”; a concentration of power in executive government, sidelining parliaments; opaque and confused lines of accountability; and a growing homogeneity in policy that stifles innovation and difference.

In a more recent development, the Commonwealth has begun spending the money it raises directly in policy areas outside its constitutionally allocated functions, bypassing the states. Doubts about the constitutionality of this practice have caused further concentration of power in the executive, diminishing accountability through Parliament.

Money is not the only driver of integration: the other is an urge to secure uniformity in legislation and its implementation across a wide and increasing range of policy areas. The elaborate legislative schemes that result contribute to the complexity and blurred lines of accountability that characterise Australian federalism today.

Collaboration counters central control

The functions of the levels of government are interdependent in every federation. Co-operation is a necessary and valued practice. What differ in Australia are the extent of integration; the manner in which it occurs; and the absence of effective constitutional ground rules for it.

The potential benefits of federalism are wasted, including innovation, diversity and responsiveness. One of the relatively few checks and balances in the Australian system of government is weakened. And democracy itself is undermined, by erosion of the principal mechanism for democratic control of governments, through parliaments, by the people.

Recalibrating the way that federation works does not involve a return to 1901, claims to the contrary notwithstanding. It involves crafting a functional, federal democracy for 21st-century Australia, in a world in which multi-level government is the norm.

In the spirit of what sometimes is called subsidiarity it would accept that many decisions must be made nationally – indeed, internationally – but also values the possibility of decision-making at lower levels over which communities have more effective control. Ironically, the Australian federation is quite well designed for this purpose. The states are large enough for effective government, few enough for effective collaboration and their dispersal across a very large land mass positions them to respond to regional needs in a way that is not practicable for a single set of institutions based in Canberra.

Federalism’s triple challenge

Federalism reform must deal with at least three challenges. The first is the fallout of the fiscal imbalance. Two quite different approaches are possible here.

One is to restore state tax-raising capacity so as to limit transfers from the Commonwealth and maintain the nexus between responsibility for taxing and spending. The other is to accept that, for reasons of convenience, the Commonwealth imposes most taxes but that it does not “own” the proceeds. Instead, each level of government is entitled to a share in joint tax revenues commensurate with its expenditure responsibilities, and for the use of which it is directly accountable to the voters.

Each of these approaches is viable, but each also requires considerable working out, to resolve a problem that has dogged Australian federal democracy for decades.

A second challenge is to manage the urge to uniformity. Not all government action requires central co-ordination and not all co-ordination requires uniformity.

Decisions about whether and to what extent to co-ordinate government action need to be made more openly and justified on the basis of principles that also acknowledge the values of innovation and difference. And when co-ordination occurs, as undoubtedly it will continue to do, programs must be designed to maintain as much as possible of the democratic and legal accountability that we expect in other contexts.

The third challenge is to revive the state level of government as a capable and responsible player in an effective Australian federation. Decades of marginalisation have run down the states.

Revival of state politics has advantages for democracy too. State institutions are the most accessible democratic role models for most Australians. The states are responsible for the day-to-day public services on which most Australians depend and on which they are most likely to have a view: education, health, transport, roads and urban planning, among others.

State politics should be attractive to a diverse range of talented people seeking a career in public life who are unable or unwilling to commute to Canberra on a regular basis. In a sense, this is part of the project of revitalising democratic participation in Australia in the face of declining membership of political parties and growing cynicism about organised politics. Genuinely democratic institutions in the state sphere are critical to this end.

Tinkering at the edges won’t do

The danger is that we will do nothing except fiddle with reforming federalism at the edges. Substantial change must overcome entrenched preconceptions, vested interests and the pull of inertia.

Too often federalism reform has foundered on futile regrets over whether Australia should have a federal form of government at all. This calls for a reality check on at least two fronts.

The first is logistical. Federalism infuses every aspect of the Australian system of government. It would not be possible to abandon it without an upheaval involving a completely new constitution approved (ironically) by majorities in all states. This degree of consensus seems highly improbable.

Much more importantly, however, abandonment of federalism is not desirable either. It is impossible to imagine democracy without federalism in a country with Australia’s geographical size, history and characteristics. So-called regionalism is no alternative: it would maintain three levels of government in a country with even more boundaries in which all effective decisions are made centrally.

To make progress this time we need to avoid such diversions, so as to tackle the really hard questions in the interests of genuine, lasting, federal democratic reform.

Renewing Federalism is in partnership with the Australian National University’s Tax and Transfer Policy Institute at the Crawford School of Public Policy and with the University of Melbourne School of Government.

Our Renewing Federalism series will culminate in a symposium on October 2 at ANU. If you would like to attend the event, please see event details and RSVP here .

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Federalism in Australia, Canada and India

2021, BPSC-109 Political Processes and Institutions in Comparative Perspective

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Shivani Sharma

CHAPTER-II NATURE OF THE INDIAN FEDERAL SYSTEM

Mohammad Usman

Federal system cannot exist without a written constitution. UK does not have a written constitution and so it is not a federal country. The States in a federal setup, come together and enter into a treaty and the terms of the treaty are required to be reduced into writing in the form of a written constitution. There is no denying fact that a written Constitution rings stability in the overall governance of the country. If there were no written Constitution defining the scope of the powers of Centre and the States, there will be chaos, misunderstandings and conflicts between the Centre and the States who would seek to cross over each other’s line of authority.

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This study examines the proposal for a federal form of government in the Philippines. Firstly, the study discusses intentions of Federalism as per Filipino proponents and the experiences of federal nations Australia, Malaysia and India. The study then analyses the pros and cons of implementing the 2008 Senate Joint Resolution No. 10 which puts forward constitutional amendments towards a federal form of government. The study concludes that the implementing proposals for Federalism under the present administration will exacerbate current oligarchic chokeholds over developmental inequalities among the regions. The national government’s weaknesses in foreign policy and protection of human rights also weaken federalism’s promises of unity-in-diversity and democratic peace. The author concludes that Federalism is a goal to aim for only after provisions for devolution in the current constitution have been maximized, and safeguards for human rights and national sovereignty are restored.

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Luis Moreno , César Colino

With the recent emergence of large-scale transnational migrant workers, diversity has become a entral issue in domestic and international politics. Debates among academics, politicians, and the general public over the accommodation of diversity have revealed both challenges and opportunities for federal countries facing demands that minorities have equal rights, protection, and full participation in the public sphere. Not all federal countries have the same configuration of diversity and different institutional responses and strategies can be observed in the twelve federal countries considered: Australia, Belgium, Brazil, Canada, Ethiopia, Germany, India, Nigeria, Russia, Spain, Switzerland, and the United States of America.

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Australia’s Federal System Is in Need of Reform Essay

This paper seeks to analyze and discuss whether Australia’s federal system needs reform. A federal system presupposes the independence of each state while allowing the federal government to be the final ruler above certain state decisions. A change if any would seem to presuppose making the structure of government more centralist, hence giving more power to the central government. Viewed in this context, this paper will try to evaluate the situation of Australia if such is change is necessary.

If one will try to trace the history of Australia, one may find that it has been the federalism structure that has been the focus for reform. There have been referenda that have been conducted in the past and that from about forty-two (42) referenda about more than one-half have proposed a change to the structure of the Australian Constitution. One recorded evidence of strong desire to prove about moves for reform in the structure includes that Gough Whitlam making his famous criticism in 1957, that the Australian Labor Party (ALP) ‘has been handicapped… by a Constitution framed in such a way as to make it difficult to carry out Labor objectives.’ (‘Chifley Memorial Lecture’,1957)

As to what has caused Gough Whitlam to have made such comment must have a basis in fact and law. First, it would appear that one part of the Australian system that has been clamoring for constitutional change appears to be coming from the ALP. Such or attempts or moves for change from the ALP are not therefore surprising since the party has the interest to clamor for change as the party believes it.

To argue for a change of structure would however seem to change the foundations of the house under which the building was built and it could connote changing the very philosophy of the original framers of the Constitution and substituting what might have been felt as applicable to the present. The possibility of such must be viewed therefore on the practical side on whether there are compelling reasons to do so based on the activities of the present institution of the Australian present system of government. It could be observed that it is the federalism (Warhurst, 2004) structure that is the least rigid part of the Constitution. One factor that reinforces the present strength of the current constitution which has been there for a very long period already appear to be coming from Australia’s High Court interpretation which has made broad construction to a variety of federal powers such as external affairs, corporations, executive power (Byrnes, A. and Charleszvorth, H.,1985), and the appropriations power. This is believed to “have enabled Commonwealth Governments more easily to undertake the programs of national, social and economic reform for which they had earlier sought authority at referendums.” (Leslie Zines, n.d.)

The above means that the High Court reinforces what is old and what has been written. In any democratic form of government, the judiciary is the most conservative of the different departments as the court normally works under the principle of ruling based on precedents. If there are moves to change the constitution, the imitative will most probably come from the executive branch of government since it’s the executive who may feel limited by the constitution. The ALP to be at the helm therefore for constitutional change is expected since political parties see change as important for the growth of the nation from its past. Political parties are where alternative programs of government are made. Thus groups wanting reforms may have a basis to find fault for the judiciary. This reality in the judicial system seems to be best illustrated in a recent book by Neville Wran: ‘If you want real social change, let me appoint the judges.'(Fia Cumming, 1991). It may be argued however that appointing the judges may not affect the needed change because judges are program to interpret based on the rule of precedent, hence their view of the law is most probably conservative.

This bias against the court reinforcing the effectiveness of the present federal system in Australia is not without basis. This could be found in the cases of an intergovernmental agreement that Australian laws appear to allow. These agreements are noted to allow court cases to move freely between federal and state courts (Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). For observers, this has the effect of extending state jurisdiction in Australia’s coastal zone (Coastal Waters (State Powers) Act 1980 (Cth), and Coastal Waters (State Titles) Act 1980 (Cth)). These powers of the courts in making the ruling appear to disturb some in the context of the judiciary (O’Flynn, J.,2004) as the third branch of government trying to cause the establishment of a national corporations law (Corporations Act 1989 (Cth)).

It would seem there is the difficulty of changing the structure from federalism as seen in court decisions and a result of defeats of prior attempts to do so. This may indicate that the pressure for change to the federalism structure may have lessened, but observers say that the need for reform has not disappeared. Some of the issues that may merit a change in the constitution as indicated in the presence of general agreement on all sides and levels of politics that the taxing powers of state Parliaments needing clarification. This proposal is of course intended to prevent states from resorting to convoluted schemes to tax cigarettes and liquor. This would therefore define the boundaries of rights of states and have been a perceived benefit for the Federal Parliament, in the view of the clarified or extended its powers of the Parliament’s law-making power on issues like communications, family law, nuclear development, intellectual property, and industrial relations (Constitutional Commission Report, Chs 10 and 11). The proposed reform may not need a rewriting the federal system in any radically different way, by making it more centralist such reforms would confirmation of the existence of an existing federal arrangement that the Australians now have. The other side of the coin may however argue to just do it by ordinary legislation. As a counterargument, the Parliament may pass such a law but they may also abolish the same law under the present constitution, hence placing the necessary safeguard via the constitution may accomplish the purpose. This is based on the premise that from the many experience cases of federal constitutional difficulties were an aspect in costly conflicts under Australian experience. Such experience includes the settlement of de facto marital disputes, corporate regulation, integrated regulation of media, and many other things that could cause problems.

Although the proposed change may not touch on the structure of the constitution the same issues may be said to be addressing the concern of the present and future generations. On this basis, it may be argued that Australia, like any other nation, does not currently have a perfect Constitution. Its democracy may be stable; its Constitution may have survived the wars and even an economic depression. Such a test could not be conclusive proof that said fundamental law is already foolproof. There must be a basis therefore to take with care the statement of David Kemp, one of the perennial opponents constitutional change will not be ‘an irrelevant, time wasting and damaging distraction’ (Canberra Times, 14 April 1991). The drafters of the original constitution did not aim for an inflexible one, since there is a provision on the process for the change or amendment of the constitution. Such a process may be presumed to have been installed to prevent hasty actions of the Parliament or any of its political institutions to impose their will on other Australians when the idea for change would simply not work. There is also wisdom for change but there is also greater wisdom in putting a process to be followed in effecting constitutional change.

To conclude, Australian constitutional reform is important because the said constitution is a document that affects the lives of Australians. The fact that there have been attempts although there were unsuccessful is an indication that those who know that the Australians have a written constitution, the fact the many Australians do not know of its existence (Constitutional Commission Report, para 1.56.) is also a disturbing thing. This implies that if the people know it, they would be in a better position to say if they need to assert some of their powers. Australia may have managed very well with the present Constitution, but this does not hide the problems with its constitution. It may be argued that the Constitution is not only a document of the past and the present but also of the future. Hence since the old drafters may not have fully anticipated all the things that Australia could become, amending the same if possible would not be a crime. The present generation has more knowledge than those in the past and the present technology may be affording more chances to have more knowledge that may not be present then. To deny therefore the present generation to recast its vision of tomorrow would not be a dangerous thing for Australians considering the fact the present Constitution does provide a way where change or amendment could be had. The people then of present Australia, in their collective knowledge and wisdom may therefore change their Constitution if their basis to do so under the present set up. However, under present circumstances, Australia may just effect changes without changing its structure of federalism.

Byrnes, A. and Charleszvorth, H. (1985) Federalism and the International Legal Order: Recent Developments in Australia ; American Journal of International Law, Vol. 79.

Canberra Times, 14 April 1991, p 7.

‘Chifley Memorial Lecture’ (1957), reprinted in E G Whitlam, On Australia’s Constitution Widescope, 1977, p 16.

Coastal Waters (State Powers) Act 1980 (Cth), and Coastal Waters (State Titles).

Corporations Act 1989 (Cth), and the legislation in each state adopting the Commonwealth law, eg, Corporations (NSW) Act 1990 (NSW).

Fia Cumming, Mates; Five Champions of the Labor Right, Allen & Unwin, Sydney 1991.

Final Report of the Constitutional Commission, Australian Government Publishing Service, Canberra, 1988, , Chs 10 and 11.

Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth).

Leslie Zines (n.d.), ‘What the Courts have done to Australian Federalism’, also published in this volume of Papers on Parliament.

O’Flynn, J. (2004) Australian Capital Territory; The Australian Journal of Politics and History.

Warhurst, (2004) Patterns and Directions in Australian Politics over the Past Fifty Years; The Australian Journal of Politics and History, Vol. 50.

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Australian Federalism

This essay will outline the issues discussed during the ‘Policy Roundtable on Federalism’ hosted by the Academy of Social Sciences in Australia (ASSA) and the Institute of Public Administration Australia (IPAA) on the 17–18 May 2007 and will explore their impact on federalism and provide possible steps to overcome them. The Roundtable discussion made it apparent that Australian federalism is dysfunctional and needed shaping up. The reasons included a combination of external and internal factors and pressures. The pragmatic reform process could address these factors and pressures to improve Commonwealth-State relations.

This could achieve enhanced policy outcomes for the Australian community and provide a system of government that “delivers the Australian people the opportunities they deserve” (Brumby 2008). David Black (1998) describes federalism as ‘the process by which the Commonwealth of Australia was formed on 1 January 1901, was unusual then, and still is”. The federal system has provided a relatively stable cooperative form of government, however, changing demographics, global pressures and fiscal situations within government have meant that the system is now seen as being in a malaise and in need of repair (Wanna 2007).

The modernisation and globalisation of markets, media and communication has eroded regional identities in Australia. In the past the Australian states were protected from a centralised form of federalism but as modern technology reduced the physical distance institutional barriers were decreased. These global pressures mean that Australian states risk becoming agent providers for a central government (Wanna 2007: page). Increased activity has resulted in hyper-interaction involving all three levels of government.

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Additionally, lack of cultural regions in Australia unlike most other federations meant lack of regionally based governance system (Wanna 2007: 276). Australia retains a highly centralised fiscal system, holds a high amount of concurrent powers across all levels of government and lacks institutional barriers that prevent a centralised system. Fiscal imbalance between states and the Commonwealth impacts directly at a regional level even though policies are driven nationally.

Concurrent Commonwealth-State powers also impact at regional level due to lack of adequate attention given to real impacts while decisions are made at federal level. The reduced effectiveness of federalism has contributed towards these issues and has failed to keep pace with modern times. It is now in need of repair to make it more efficient and capable of providing support to the modern Australian public. Current federal arrangements are holding back necessary micro-economic reform while there is a continuous struggle to respond to global economic forces. (Podger 2008).

Although federalism can work it is not performing at the level expected. Participants at the Roundtable agreed that the process of reform can improve federalism but needs a different policy approach. Individual agreements on shared responsibilities will be needed to reshape policy areas. Increased cooperation and collaboration around national and state issues would need to be achieved. Participants started by looking at improving the generic architecture by enhancing the primary cooperation of levels of government through the Council of Australian Governments (COAG).

This could be the platform for any further detailed reform in order to avoid policy making failures around shared responsibility between governments. It is also important to note that the attendees agreed reform would need to start from the current position and not echoing any previous attempts. The Australian federal system is characterised by a significant level of vertical fiscal imbalance and this issue would need to be addressed to assist in reforming federalism.

The Commonwealth holds the monopoly on tax revenue from income and GST and much of this is paid back to the states by way of Specific Purpose Payments (SPPs). These SPPs allow the Commonwealth to grant funds to states with conditions in areas that are constitutionally the states’ domain. As SPPs make up 40 % of Commonwealth grants the streamlining of these with a focus on outcomes would allow increased efficiency. In addition, guaranteed revenue would allow states to fund their responsibilities without central pressures.

Whilst this imbalance could be reduced by assigning state expenditure responsibilities to the Commonwealth, it is an unrealistic expectation to reduce such a significant imbalance. (Carling, 2008: page/s) Clearly defined roles and responsibilities for the different levels of government is essential, as Carling (2008: page) states, “A federal system needs to be ?rmly anchored to a rational allocation of roles and responsibilities for the different levels of government" Lack of clearly defined roles can cause duplication of processes and conflict in policy making, giving states the opportunity to avoid accountability.

A review of roles and responsibilities is a logical starting point, with the functional roles of Commonwealth and the state’ clearly defined. This may require that the Commonwealth takes a leadership role to ensure states are able to effectively deliver services. It is important to understand that the distribution of responsibilities between the levels Government has evolved aver time, and will presumably continue to change as policy and political imperatives require. (Podger 2008)

Collaboration between governments to deliver long term sustainable national solutions is needed to face the significant social, economic and environmental challenges. Recently, all three levels of government have become receptive towards the idea of cooperative federalism. For effective federation architecture of cooperation consisting components such as principles to guide, supporting legal and institutional arrangements and appropriate cultural practices and attitudes are required.

Focus could be on formalisation of COAG through intergovernmental agreement, clarification of COAG and ministerial council relation, ongoing review of federal financial relations and development of cultural practices to support the best of federalism. The change offers opportunities to make lasting improvements and Australian governments should seize the opportunity towards delivering effective national responses and generating substantial benefits for Australians. (Wanna, J. May 2009)

Although the Australian federal system is perceived as declining and in need of reshaping, Australia is a prosperous nation. Federalism has seen Australia through times of significant stress including depression and war, and has led to the development of a welfare state. Rapid globalisation and modernisation demands that federalism adapt and adjust to meet competing demands. The options outlined in this essay provide the extending steps for already happening improvements by an ambitious government.

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Federalism is a legal concept that is centered around the concept that law is best handled as a two layered responsibility. Federalism is also built on a belief that sharing power with the local government is key to a successful governance. According to the text book, “the United States was the first nation to adopt federalism as its governing framework” (pg83). The following are a few examples of some advantages, as well as disadvantages of Federalism.

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Federalism in Australia is dying. Do you agree?

Understanding what Federalism is, is the key to understanding how the Australian government functions. Federalism in Australia was formedon 1 January 1901. Australia’s unique constitution is a blending of the Westminster system, the USA’s system of government (two spheres of government) and the Swiss system (referendum procedures).[1] ‘They constituted their new nation as a federal union by creating a new spear of national government, also called the ‘Commonwealth’ with bicameral federal parliament, responsible government executive, and a high court.’[2] Throughout the history of federalism in Australia reforms have been made when needed, however the basic structure of government has remained the same. Federal parliament is separated into two areas, Commonwealth government and State government. Legislative power is separated between the two, the Commonwealth government has legislative power over areas such as taxation, defence, foreign affairs, postal and telecommunications services.[3] ‘The state government has legislative power over all other matters that occurred within their borders, including: police, hospitals, education and public transport.’[4] During the course of this essay, issues with the federal system Australia is currently dealing with will be presented and how the Australian government is attempting to address problems within the system.

Public expenditure and federal arrangements for taxing is a major area of concern. State governments have varied capacities to deliver services and revenue raising within the federation, ‘the current mining boom and the global financial crisis have contributed to substantial changes in the distribution of the GST amongst the States and heightened scrutiny about the equalisation process and its outcomes.’[5]

A good example of the above can be found in The Commonwealth Grant’s Commission’s report on GST Revenue Sharing Relativities, Update 2012. This report shows how due to ‘Western Australia’s above average mining production, property transfers, payrolls, motor vehicle registrations and land values, Western Australia has the highest assessed fiscal capacity’[6]. This translates into Western Australia’s GST revenue falling from 7.5% to 5.8%. Then we have South Australia, due to the fact it has above average number of elderly and people of low socio-economic status, ‘below average population growth and below average investment and net lending requirements.[7] South Australia has below average revenue raising capacity across all state taxes’[8], especially payroll tax (due to lower wages, population and employment rate) and below average mining revenue. The above facts translate into above average revenue for South Australia from commonwealth payments. ‘South Australia has the third lowest assessed fiscal capacity’[9] and gets a GST revenue share of 9.3%.[10] Taking both states GST revenue share and productivity into consideration, some people feel the current system to be unfair and many concerns were heard in the lead up to the last Western Australian state election on 9 March 2014.

When federal government intervene in areas that usually belong to the state, intergovernmental conflict occur. A classic example of intergovernmental conflict is environmental protection, concerning issues such as the Great Barrier Reef protection, forestry, coal-seam gas production and the Murray-Darling Basin. In the case of the Murray-Darling Basin, in 2004 The National Water Initiative (NWI) was introduced, NWI allowed the federal government to attempt to resolve problems with upstream usage and management of down stream flows.[11] This demonstrates our system shifting more towards organic federalism and the federal factors political power.[12] In the past decade a more organic federalism has developed in many policy areas. Organic federalism is when the federal government plays a major role in public policy and the state governments and territories role is more in the administration and implementation of policy made at the federal level.[13] Education is a good example of organic federalism seen in commitments in national policy frame works and direct Commonwealth initiatives.[14]

Other issues federalism face, is too much bureaucracy, duplication and inconsistency. Overlapping responsibilities within multiple governments create problems of state and federal governments blaming each other when policies fail due to confusion of which government is constitutionally responsible.[15] Currently the Coalition has made a commitment to release a white paper on federalism. The federalism white paper could be a catalyst for federalism reform, it aims to address functional overlap, duplication and give opportunity for the public to vote on recommendations at the 2016 election.[16] The council of Australian Governments (COAG) is equally a focus of the Coalition, with intentions of streamlining COAG agenda to make it more effective.[17]

In an attempt to carry out a large number of major reforms the Council of Australian Governments (COAG) was formed. COAG reforms are aimed at collaboration between the commonwealth, state and territory governments being strengthened.[18] The council of COAG is made up in a way that all sides are guaranteed to be heard.

‘The members of COAG are the Prime Minister, State and Territory Premiers and Chief Ministers and the President of the Australian Local Government Association (ALGA). The Prime Minister chairs COAG. The role of COAG is to promote policy reforms that are of national significance, or which need co-ordinated action by all Australian governments.’[19]

Some good examples of COAG’s past achievements are; the National Health Reform Agreement in August 2011; reforms of laws that overlapped areas of activity within states consisting of unnecessary differences; a wide range of educational reforms; and working with ‘closing the gap’ concerning the disadvantages Australian indigenous.[20]

In conclusion, it would be fair to say there are many pressing issues with the federal system and some discontent does exist within the public and government, which have been highlighted during the last few elections both federal and state. However federalism in Australia is not on its way to the grave but is at point where major review and reform is needed. Considering Australia has had federal reform in the past and actions are in motion for federal reform at present in the forms of COAG, GST reform and the Federalism white paper. It seems more likely Australia may see more organic federalism in the future and federalism in Australia will evolve along with changing times and to meet the ever changing needs of a maturing country.

Bibliography.

Australian Government, australia.gov.au. Australia’s federation . (n.d.), accessed via on 18 April, 2014.

Australian Government, The Treasury, Submission to the GST Distribution Review, Canberra, October 2011, p.8 .

Collett, E. Federalism – Frequently Asked Questions. Gilbert + Tobin Centre of Public Law . (n.d.), accessed via on 20 April 2014.

Commonwealth Grants Commission, Report on GST Revenue Sharing Relativities — 2012 Update , Canberra, 2012, pp. 16-17.

Council of Australian Governments, About COAG. Council of Australian Governments , (n.d.), accessed via on 25 April 2014.

Dudley, J., Contemporary Politics in Australia, Theories, Practices and Issues, Cambridge University Press, New York, 2012, pp.356-361.

‘Federalism’ definition in The Oxford Companion To Australian Politics , eds, B. Galligan and W.Roberts, Oxford University Press, Sth Melbourne, 2007, p.202.

Haward, M., Contemporary Politics in Australia, Theories, Practices and Issues, Cambridge University Press, New York, 2012, pp.275-279.

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