Federalism

Define federalism

a system of government where sovereignty is geographically divided between 1 central and 2+ regional governments. In Australia, there is a division of powers between Cwth and 6 state governments each sovereign over its own territory and population

Define what the constitutional powers of the Cwth and state parliaments imply

the constitution allocates a list of specific powers to the Cwth parl and reserves the rest to states.
The Const specifies the Cwth Parl’s exclusive and concurrent powers.

Define what exclusive powers are

powers specified in the const to only belong to the Cwth

-some powers are exclusive by nature s51 (xxix) external affairs power

give an example of an exclusive power

-s90 - financial power allowing Cwth alone to make laws to raising revenue through customs, duties and excise

define concurrent powers

specified powers that belong to both Cwth and states
-exist because ‘exclusive’ is not included in s51
→s019 states - when a state law is inconsistent a Cwth law, the federal law prevails and the state law is invalid to the extent of that inconsistency

provide an example of a concurrent power

s51 (ii) is the taxation power allowing both cwth and states to make laws to raise revenue

define residual powers

-residual powers belong to the state and are unspecified by the Constitution
-s107 establishes that power not vested in the Constitution to the Cwth Parl remain with the states

provide an example of residual powers

environment or secondary education in a particular state

define what financial powers are

financial power is the power to levy (impose) taxes to make money.
→it is a subset of legislative power as earning revenue requires the passing of appropiation bills

state all the Cwth Parliament’s financial powers

-Taxation power - s51 (ii)
-custom, duties and excise power -s90
-Grants power - s96
-The Brandon Blot -s87
-Interstate Trade - s92

define the taxation power

s51 (ii) is a concurrent power used by Cwth to raise taxes.
-states can constitutionally use this power except for customs

define the customs, duties and excise power

(excise are government charges on goods when they cross a border)
-s90 allows the Cwth alone to make laws to raise revenue through customs, duties and excise.
This limits state revenue, contributing to VFI and greater state dependence on Commonwealth funding.

define the ‘Brandon Blot’

s87 requires the Cwth to pay 75% of its revenue collected from s90 bounties, customs ad excise. This mechanism had a 10 year time limit to which the Cwth ended the grant when it needed

define interstate trade

s92 ensures no state can impose custom, bounties or other costs on goods crossing the border from another state.

define the grants power

s96 enables Cwth to grant the states money
-funded from Cwth’s surplus revenue and is administered by the CWth grants commission that monitors the grants program

identify and define the two typs of grants

the Cwth can make..
-general purpose payments (untied grants) -states can spend money to its own discretion
-specific purpose payments (tied grants) -CWth can attach conditions to grant dictating how the states spend their money

Explain Vertical Fiscal Imbalance

VFI is a term that describes the disproportionate taxing power and spending obligations of the Cwth and State.
- While Cwth has collected surplus revenues, the states sources of revenues are inefficient to cover their spendings

outline overall shift in the balance of power between the CWth and states

the federal balance of power has shifted in a way that has increased Cwth power on the states expense

Explain what causes VFI

VFI is caused by the states lack of revenue influenced by
→the exclusive CWth allocation of s90
→lack of income tax
=During World War II, the states transfered its income tax revenue to the CWth Parl for war effort, After the war, despite attempts to reclaim their income power through the Uniform Tax Cases (1942) (1957) , the state governments never got their powers back.

Provide an example of S96 grants being positive

• to reduce VFI, the Cwth Grants Commission introduced an untied grant, GST distributed using Horizontal Fiscal Equalisation.

• HFE means that states receive revenue based on the size of their economy to ensure all states can provide a similar standard of services.
  e.g Bc WA has a higher capacity to raise tax revenue bc of mining royalties, it’s GST distribution is below the average.
  =encourages coordinate federalism as it allows states to independently deliver govt services

provide an example of how s96 grants can be negative (coercive)

VFI positioned the states to rely on Cwth grants, allowing Cwth to attach conditions and overreach state residual powers.
-in 2018, through s96 under the Gonski-funding arrangement, the Cwth Parliament offered to increase funding only after the states meet the National Schooling standards.
= tied grants allow the Cwth to interfere in state matters

Explain how intergovernmental relations have influenced the federal balance of power

COAG is the Coucil of Australia governments consisting of the PM, state premiers, Chief ministers and President of the Local government association.

-meet to plan and monitor reforms jointly administered by govts (NRA)

explain how the National Cabinet influences the federal balance of power

The National Cabinet was established to deal with Covid and manage national matters that needed to be coordinated by all Aus govts .
=The NC met twice in March 2026 to discuss Australia’s national, coordinate response to address fuel insecurity because of the conflict in the Middle East.
=encourages cooperative federalism

define how ministerial councils influence the federal balance of power

Ministerial councils are intergovernmental meetings of Cwth and state territory ministers in areas of shared portfolios that support the National Cabinet
=the Agricultural MC include the ministers of Agriculture from each state to collaborate on national agriculture policies and report to the NC annually on work plans

Explain the referral of powers

s51 (xxxvii) allows states to voluntarily transfer their residual powers to the Cwth.
-By passing the Fair Work Act 2009 (Cwth), the states referred part of its industrial relations power
=allowed cwth and state govts to work together to create a national workplace relations system, showing cooperative federalism

define how High Court Constitutional interpretation has shifted the federal balance of power

Under s76 the Cwth Parliament vests legislative power to the HC to interpret the constitution
→constitutional interpretation has made the most significant impact on the federal balance of power

How has the Ha v Hammond v Cwth (1997) shifted the federal balance of power

In Ha and Hammond V NSW (1997), the HC interpreted the s90 excise broadly, declaring all these fees invalid as they were considered as excise duties.
=This reduced revenue received by state, making them more reliant on Cwth.

How has the Cwth v Tasmania (1983) (cth) shifted the federal balance of power

In Commonwealth v Tasmania (1983), the HC interpreted the s51 (xxix) external affairs power broadly, allowing Cwth to prevent the construction of a dam in Franklin River, to implement an international treaty
=. This allowed the Cwth to extend it’s lawmaking powers in environment, which was initially a residual power. 

How has the Melbourne V Cwth (1947) shifted the balance of power

In Melbourne Corporation V Cwth (1947), the HC held that the federal structure of the Const implies that the Cwth cannot substantially impair a State’s capacity to function as a government.
=This interpretation limits the centralisation of power, protecting the states autonomy to exercise their governmental powers.