Federalism

The Australian political system can only be understood in the context of its federal structure.

A federal system is one in which:

  1. There is a central or national government
  2. There are sovereign state or regional governments
  3. There is a division of powers between the national and state governments

Hence, Federalism is the name given to the form of government that unites separate political entities/states within a single national system, but which allows each political entity/state to retain its independence.

In Australia, this was achieved in 1901 through the creation of the Federal (also known as Commonwealth) Parliament and Government, with the six States giving up some of their powers, but remaining independent.

Federalism In Australia

Federalism can be seen in a number of ways:

  1. Separate State Constitutions. Each of the six States retains its own Constitution, Parliament and Government.

  2. The Federal-State division of powers. The Australian Constitution establishes the Commonwealth of Australia in which “the legislative power of the Commonwealth shall be vested in a Federal Parliament”. The Constitution also details a range of powers and responsibilities of the Federal Parliament, most of which are outlined in Section 51. Powers not enumerated in this section are known as residual powers because they reside with the States. This division of powers between the central and State governments is the core of the federal idea.

  3. The structure of the Senate. This chamber comprises an equal number of senators from each State, regardless of population. Hence, Tasmania has 12 Senators, as does New South Wales, even though there is a huge difference in population between the two. The Senate has to approve all legislation passed by the House of Representatives.

In practice, there is much over-lap between the Federal and State governments. The history of the Australian federation is also largely the history of competition between these two levels of government. The Federal Government has become the dominant influence in the political system, because of its control of taxation collection. The States now depend to a large extent on the financial largesse of the Federal Government.

The Federal Government now collects between 70-80% of all taxation revenue, but the expenditure of this money is divided more equally between the Federal and State governments. Hence, federal-state financial relations are a crucial aspect of the Australian political system. Throughout the 20th century, negotiations and haggling between the States and Canberra were a regular feature of the political climate, particularly at the annual Premiers’ Conferences where the dispersal of federal money was decided.

The advent of the Goods and Services Tax in July 2000 ushered in a fundamental change in federal-state relations, the proceeds of the GST being reserved for the States. The old-style Premiers’ Conferences were discontinued. The Federal Government retained its dominant position, however, through its collection of personal income taxes.

The hegemony of the Commonwealth Government has been assisted by a number of factors:

  1. The Commonwealth’s dominance of taxation collections.

  2. The Commonwealth’s use of Section 96 of the Constitution which allows it to make grants to the States on such terms and conditions as it thinks fit. These are known as tied grants.

  3. Decisions of the High Court extending and consolidating Commonwealth power. Through decisions such as those in the Engineers Case in 1920, the Tasmanian Dams Case of 1983, and others, there has been a steady transfer of power to the central government.

  4. The need to establish national priorities and directions in important areas of public policy, such as education and health.

Advantages of Federalism

  • It ensures that government remains close to the people. The State governments argue that they are more in tune with the daily needs and aspirations of the people. This is especially relevant to small and isolated States, such as Tasmania.

  • It encourages development of the nation in a decentralised and regional manner and allows for unique and innovative methods for tackling social, economic and political problems. This can been seen:

    – in Queensland, which introduced a unique method of funding and controlling the public hospital system.

    – in Victoria, the first state to introduce compulsory wearing of seat belts in cars.

    – in South Australia, the first state to introduce land rights for Aborigines and a host of other social reforms.

    – in Western Australia, through the use of mandatory sentencing laws.

  • It provides a barrier to the dominance of the majority. This could be seen in 2002 with a conservative coalition government in Canberra facing 7 out of 8 state and territory Labor governments.

Disadvantages of Federalism

  • It can lead to duplication of government and inefficient, over-lapping or contradictory policies in different parts of the country. The most famous example of this was the different railway gauges in the States that was an issue during the Federation debates of the 1890s. In more recent times, each State has its own education system with differing curriculums and assessment methods.

  • It can lead to inequality between the States and lead to unhealthy competition and rivalry between them. This has been seen in recent years with States “stealing” major sporting events from each other, and in differences in the availability and cost of electricity between the States.

  • It can lead to neglect in important areas of public policy. This can be seen in the decline of the Murrary River system, particularly the problem of salinity. A solution depends on co-operation between the governments of South Australia, Victoria, New South Wales and the Commonwealth. Probems with public transport are often cited as an area of neglect.

  • It can lead to over-government. It is often argued that a nation of 19 million people cannot afford to have 15 houses of parliament, plus hundreds of local governments.

Recent Issues

An understanding of federalism is the key to understanding the Australian political system. A number of issues demonstrate this:

  • Hospital Takeovers – in 2007 the Howard government announced that it would take over the Mersey Hospital in Tasmania, accusing State governments of mishandling their responsibilities for hospitals.

  • Water Policy – in 2007 the Howard government announced a plan to take over responsibility for water policy in the Murray-Darling basin area. Negotiations between Canberra and the States continued throughout 2007.

  • National School Curriculum – attempts by the Howard government, especially since 2004, to shape the general curriculum of the State education systems illustrates the tensions inherent in the Australian federal system. In particular, the Howard government has sought to introduce Values Education for Australian Schooling and conducted a History Summit in August 2006.

  • National Gun Laws – following the Port Arthur massacre in 1996, the Prime Minister, John Howard, announced his intention to introduce tighter gun laws. His government had no power to introduce these laws in the Federal Parliament. Instead, Howard had to persuade the State governments to introduce gun control legislation.

  • Public Liability Insurance – following the collapse of the HIH insurance company and in the aftermath of the terrorist attacks on the United States in 2001, a major insurance crisis developed, with massive increases in public liability insurance premiums threatening the future of of many community organisations and activities. There have been calls for a national summit or forum of the State and Federal governments to devise a solution to this problem.

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