Australian Federalism (Booklet 10)

Booklet 10

Define federalism

A system of government in which law-making power is divided between one national and two or more regional governments.

What is mean’t by the division powers?

The allocation of law-making powers to national and regional governments in a written constitution.

Define exlusive powers

Powers that can only be exercised by th Commonwealth Parliament

Define concurrent powers

Power that can be exercised by the Commonwealth and State parliaments

Define residual powers

Powers that can be exercised by the Stare parliaments

What is coordinate federalism?

National and State governments operate in independent spheres

What is cooperative federalism ?

National and State governments collaborate in developing policy, taking shared responsibility

What is coercive federalism?

National government uses financial/legislative powers to dictate policy to states

What is meant by the balance of power?

The distribution of constitutional and financial powers between State and Commonwealth governments.

What is meant by financial powers?

Authorise the States/Commonwealth to collect revenue (e.g. tax) and spend money

What is meant by constitutional powers?

Authorise the creation of laws in relation to a particular matter/subject (i.e. a head of power)

What is the Commonwealth Grants Commission?

(CGC), a statutory body that advises the Commonwealth on financial assistance provided to the States under s96 of the Constitution

What is Vertical Fiscal Imbalance (VFI)?

A fiscal imbalance where the States raise less revenue than needed for their expenditure, increasing their reliance on the Commonwealth government.

What is Horizontal Fiscal Equalisation (HFE)?

The redistribution of revenue across States to ensure each can provide comparable infrastructure and public services.

What is a intergovernmental forum?

A body of representatives from two or more levels of government that discuss, negotiate, and coordinate shared policies.

What is meant by referral of power?

A transfer of State law-making power to the Commonwealth Parliament under s51(xxxvii).

What is the Council of Australian Governments (COAG)?

the intergovernmental forum for the operation of cooperative federalism from 1992-2020.

What is National Cabinet?

created in 2020, the peak intergovernmental forum in Australia which consists of the heads of government (First Ministers) meeting and working collaboratively. Ministerial Councils report to National Cabinet along with expert advisory groups.

What chapter of the Constitution refers to State powers?

Chapter V

What are some examples of Exlusive Powers?

• s90 - excise/customs

• s51(vi) - defence

• s52(ii) - public service

What are some examples of Concurrent Powers?

• s51(i) - trade

• s51(ii) - taxation

What are some examples of Residual Powers?

• s107

  • health

  • urban planning

  • education

  • etc.

These are powers not outlined in the Constitution, essentially unless stated in the Constitution States would continue exercising power over pre-federation powers (ensuring they remain equal with the commonwealth.

Were the states intented to be of equal power to the Commonwealth at Federation?

Yes

What does s109 ensure?

“When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.”

Ensures concurrent powers do not become problematic.

How was the Marriage Equality (Same Sex) Act 2013 (ACT) stuck down?

It was inconsistent with a Commonwealth law, as per s109 it was struck down by the HCA . (marriage is a concurrent power)

Briefly outline s51 of the Constitution

Peace order and good government of the commonwealth in regard to 39 specific matters (most are concurrent powers) (i.e. s51(ii) taxation)

Briefly outline s52 of the Constitution

Exclusive powers

e.g.

s51(i) - seat of Commonwealth government

s52(ii) - Commonwealth public service

Briefly outline s90 of the Constitution

Exlusive powers - customs, excise (ways of raising revenue)

Briefly outline s107 of the Constitution

Saves/protects power of State Parliaments (residual powers)

Essentially, unless stated otherwise in the constitution, states assume pre-federation powers.

e.g. Health, education, etc.

Briefly outline s109 of the Constitution

Mechanism for removing inconsistencies between State and Commonwealth laws regarding concurrent powers.

e.g.

Mabo No. 1 (1988) HCA

QLD Coast Islands Declatory Act (1985) inconsistent with Commonwealth Raciall Discrimination Act (1975).

What are the three methods in the Constitution that address providing the States with financial assistance?

• s87 ‘Braddon Blot’ – Three-quarters of the excise revenue collected by the Commonwealth was to be paid to the States for ten years after the establishment of the Constitution

• s94 – All surplus revenue of the Commonwealth would be paid to the States.

• s96 – The Commonwealth could grant financial assistance to States,
  with specific terms and conditions attached

What were some causes/increases of VFI?

• s94 made redundant in (1908)

• s87 Bradden Blot expired in (1910)

• Income Tax Act gave Commonwealth power to raise Income Taxes (1942)

• UTC upheld “wartime” (1942)

• UTC uphed “peacetime” (1957)

• Ha case (1997)

How was s94 made redundant?

• Surplus Revenue Act redirected surplus into trust accounts, classifying this as ‘Commonwealth expenditure’ to prevent distribution to states

• uphelf in New South Wales v Commonwealth (Surplus Revenue case [1908])

Why did s87 expiring increase VFI?

• expired in 1910

• Commonwealth replaced s87 with per capita payments of 25 shillings per person, reducing payments to the states from $17 million (1909-1910) to $11.2 million (1910-1911)

How did the Uniform Tax Cases (UTC 1942 + 1957) increase VFI?

• 1942 Commonwealth passed series of statutes to levy income tax, require tax payers to pay Commonwealth taxes before state taxes, and offer grants to the States on the condition they stopped imposing their own income taxes

• upheld in HCA during wartime, in South Australia v Commonwealth [1942] and in peacetime in Victoria v Commonwealth [1957]

• increased states financial dependence on Commonwealth

How did Ha v New South Wales [1997] increase VFI?

• HCA struck down NSW tobacco-licence fees, finding they were an excise (Commonwealth power)

• Increased Commonwealth monopoly on tax regarding production, manufacturem sale and distribution of goods

• ruled State levies on alcohol, tobacco, petrol were invalid with States powers

• reduced States financial base, increased Commonwealth dominance

• narrowly defined s90 excise taxes

What are the financial powers stated in the constitution?

• s51(ii) - Commonwealth raise income tax 1942 → present

• s90 - customs/ excise (exclusive)

• s87 - Bradden Blot

• s94 - made redundant (surplus revenue redistribution)

• s92 - freedom of movement and trade

• tied grants

For every $1 contributed to GST for every State/Territory, how much is each getting back?

• TAS: $1.89

• SA: $1.35

• ACT: $1.16

• VIC: $1.06

• NSW: $0.82

• QLD: $0.87

• WA: $0.82

In 1971, how did the Commonwealth attempt to introduce HFE?

Tranferred its control over payroll tax to the States, but this in insufficient.

e.g. in 2023-2024 WA raised $5.4 billion through this

In 2010 how did the government try to increase HFE?

Howard introduced GST 10% flat rate, with proceeds distributed among states

How does the Commonwealth distribute GST?

Using the Commonwealth Grants Commission (CGC). They advise the Commonwealth on financial assistance provided to the States under s96 of the constitution. They measure each jurisdictions fiscal capacity and calulate GST grants to promote HFE. They ensure States recieve different levels of funding from GST because different States have differing abilities to provide comparable levels of public services. They attempt to level the field.

Who does the Commonwealth Grants Commission (CGC) act on the direction of?

Federal Treasurer.

What was the 2018 Treasury Laws Amendment (Making Sure Every State Gets Their Fair Share of GST) Act?

alterered purpose of HFE

• introuced GST floor, ensuring no State’s GST share could fall below 0.75 from 2024-2025

• this benefited WA

• ensured no State/Territory was financially devestated

• cost Commonwealth $39.2 billion

Since 2020, all federal federal funding agreements have been grouped into two categories:

• National Agreements – Tied grants (s96) that focus on outcomes, rather than specific programs – e.g. the National Health Reform Agreement (2020)

• Federation Funding Agreements – Lists of tied grants for specific projects within a sector
  (e.g. FFA – Health; FFA – Infrastructure).

 This approach minimised complexity and emphasised the autonomy of the States, giving them greater discretion in how they use Commonwealth funds.

What HCA doctorines sought to protect the independence of the States?

• reserved powers doctrine: Commonwealth powers were interpreted narrowly so that any power not explicitly given to the federal government remained with the States

• implied intergovernmental immunities: Neither the Commonwealth nor the States could be affected by the laws of the other

What model of federalism supported the original doctorines of the HCA?

Coordinate federalism

What was the Summary of Peterswald [1904] and the finding/significance?

• NSW taxing brewers

• HCA applied ‘reserved powers doctrine’

• found in favour of NSW, narrowly re-defined ‘excise’

What was the Summary of Railway Servants Case [1906] and the finding/significance?

• HCA narrowly defined Industrail Relation power (s51 (xxxv))

• applied ‘implied intergovernmental immunities doctorine ’

• found in favour of protecting State powers regarding State railway employees

• limited Commonwealth power

What was the Summary of Amalgamated Society of Engineers v Adelaide Steamship Co [1920] ‘Engineers Case’ and the finding/significance?

• HCA re-defined s51(xxxv), now read broadly

• interpreted constitutional provisions literally, abandoning the State protection doctorines

• workers wanted a minimum wage + working standards nationally standardised

• HCA expanded Commonwealth powers

• limited State powers

• turning point, shifted federal balance to Commonwealth

• first time since federation State Powers not protected (abolished doctorines)

What was the South Australia v Commonwealth [1942] ‘UTC 1942’ and the finding/significance?

• Commonwealth legislated, levy income tax, barred states from income tax (via tied grant agreements)

• HCA found in favour of Commonwealth during wartime

• increased VFI, increased States reliance on Commonwealth grants

What was the Summary of Melbourne Corporation v Commonwealth [1947] ‘State Banking Case’ and the finding/significance?

• Commonwealth legislated banning States use of private banks

• HCA found in favour of States, decreased VFI

• slight shift of federal balance towars States

• HCA said, Commonwealth could not impair/discriminate States ability to function

What was the Summary of Commonwealth v Tasmania [1983] ‘Tasmanian Dams’ and the finding/significance?

• Commonwealth legislated prohibiting certain activities in World Heritage areas

• authorised under s51(xxix), foreign powers

• TAS took Commonwealth to court

• HCA found in favour of Commonwealth

• increased Commonwealth power

• shifted federal balance towards to Commonwealth

• s51(xxix) allowed Commonwealth to make laws on range of areas if international agreement/treaty made

What was the Summary of New South Wales v Commonwealth [2006] ‘WorkChoices’ and the finding/significance?

• s51(xx), corporations power

• Commonwealth legislated, allows them to regulate some workplace relations, bypass States

• ONLY corporations engaged in trade

• HCA found in favour of Commonwealth

• Increased Commonwealth power

What was the Summary of Williams v Commonwealth No. 2 [2014] and the finding/significance?

• HCA narrowly defined s51(xxiiiA), welfare power

• Commonwealth was funding chaplaincy programs directly, bypassing States

• Williams, affected parent, took to case court

• HCA found in favour of Williams

• Decresed Commonwealth power

• welfare had to go directly to beneficiaries (students), therefore needed to be channeled through the States

What was the Summary of Spence v Queensland [2019] and the finding/significance?

• Spence took QLD to HCA

• QLD legislated banning political donations from property developers

• argued Commonwealth allows property developers to give political donatations, laws inconsistent

• HCA found in favour of QLD

• increased State power

• shifted federal balance to States

• protect State powers to make electoral laws

What was the Summary of Palmer v The State of WA [2021] and Gerner v Victoria [2020] and the finding/significance?

• HCA upheld States powers to impose border restrictions during the pandemic

• incresed States powers, HCA protects State powers in certain circumstances

What was the Summary of Yanderstock v Victoria [2023] and the finding/significance?

• preserved Commonwealth exclusvie power (reinforced Ha case 1997)

• prevented States raising revenue via ZLEV (excise)

• preserved VFI

What years was the HCA known for protecting State powers?

1901-1919

What years was the HCA known for protecting Commonwealth powers?

1920 → present

How can referall of powers be significant and insignifcant?

• can increase Commonwealth legislative powers but for only as long as States decide

e.g

• referral of counter-terrorism powers was significant

• referral of family courts (except WA), insignificant

Who was involved in COAGG?

PM, President of the Australian Local Government Association, First Minister of the Australian States and Territories (Permiers)

What was the point of COAGG? How often did they meet?

• iniated, developed, monitored policy reform of national significane, particularly those that required cooperation between Australian governments

• met twice a year, meeting agenda determined by PM

How was the NDIS formed?

• 2013 Gillard Government

• scheme funding for those with permanent or significant disabilities

• COAG’s Disability Reform Council negotiated arrangements and monitered the policy’s implementation

• co-funded by States and Commonwealth (Commonwealth funds 2/3)

• supported by 296 (specific purpose payments)

• allowed WA to trial state-based NDIS before transitioning to national system in 2017

What caused the death of COAG?

• 2020 PM Morriso described COAG a place where “good ideas went to die”

• commissioned a Review of COAG Councils and Ministerial Forums

  • found supported by unnecessary bureaucracy

What were the issues associated with COAG?

• COAG was too bureaucratic in its committee structure

• meetings were held too infrequently/irregularly

• participants were too willing to make it a play for media attention

• participants tended to be too partisan on particular policies

• meetings tried to deal with too many issues at a time and these all competed for priority

What was National Cabinet formed for?

• to coordinate a national response against COVID-19 pandemic

How often must National Cabinet meet?

At least 4 times per year

How often do the Ministerial Councils of National Cabinet meet?

At least twice a year

How does National Cabinet decise on its issues for the following year?

• Chair of each Ministerial Council sumbits a summary of their achievements to the National Cabinet, alone with 5 priorities for the upcoming year

• can escalate issues by writing to the PM,, but ultimately the escalation is subject to discretion of the First Ministers

What are some examples of Miniserial Councils of National Cabinet?

• Agriculture

• Health

• Education

• Community Services

• Enviroment

• Disability Reform

• Water

• etc.

What are some achievemenets of Natiional Cabinet?

• responding to the urgent health and economic impacts from the COVID-19 pandemic

• gender-based violence

• setting the minimum age for social media access to 16 and including an age assurance pilot program

• creation of a national database to track antisemitic crime

• national firearms register

• increases in funding for the NDIS by both Commonwealth and State/Territory governments

What are some criticims of National Cabinet?

• it now is only required to meet four times annually

• it continues to prioritise the centralisation of executive power in Australia

• it is not responsible to a (single) body e.g. Parliament

• National Cabinet decision-making is less transparent than its predecessor and seeks to circumvent both Commonwealth and State/Territory Freedom of Information requests.

What advice did the Australian Health Protection Principal Committee give National Cabinet?

• quarantine protocols

• social distancing rules

• additional $1 billion in health funding for States

How did the Commonwealth proposed reforming the NDIS in 2023?

• boost state GST payments by $3.5 billion a year in return for the Commonwealth and States splitting the cost of the NDIS evenly and narrowing the criteria for funding

What did National Cabinet do in response to Energy Relief in 2022?

• Gas and electicity prices reached up to $360 per megawatt hour (from $140 in 2021)

• Energy Price Relief Plan

  • Established $1.5 billion fund which households could reduce electricity bills