Federalism in Australia Essay

Kerry Maloney

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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.


Australian Government, australia.gov.au.Australia’s federation. (n.d.), accessed via< http://australia.gov.au/about-australia/our-government/australias-federation> 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.