Balance of Power - Federalism Australia

Federalism

Federalism

A system of govt in which sovereignty is geographically divided between one central govt & two or more regional govts, each sovereign within their own sphere.

Cooperative Federalism

A federal system in which two levels of government work together to achieve outcomes. It requires strong institutions of federalism where the two levels of government come together.

Coercive Federalism

A federal system in which the central level of govt possesses & excesses significantly more power than the regional governments. This occurs in Australia when the CW uses its legislative & financial powers to make policy in areas of residual power.

Coordinate Federalism

A federal system in which the two levels of govt work independently within their own spheres. It requires weak institutions of federalism.

Vertical Fiscal Imbalance

Disparity in taxing power & spending obligations of the two levels of government within a federation. In Australia the CW govt collects more revenue than it needs, & the states much less than they need. As a result States rely on grants to meet their spending obligations.

Horizontal Fiscal Equalisation

The requirement that the CW Parliament uses it financial powers to equalise the standard pf public service delivery in each State. It requires that some poorer States receive high grants per capita grants from the CW than other wealthier states.

Referral of power

Allows individual States to pass residual powers to the CW. The effect of this change is on the federal balance of power. It only affects the States who pass it on.

Unchallenged legislation

Unconstitutional law that are not challenged in the High Court. Until struck down by the High Court they remain active law.

Fiscal Federalism

A federal system in which the central level of govt possesses & exercises significant financial power that it uses to coerce the regional govts. Australia is often believed to have this because of the strong financial powers of the CW which may be used to direct State policy in areas of residual power.

Uniform tax case 1942

During WW2 Australia come close Australia. Desperately needing to improve its capacity to fight the war the CW govt passed an act that allowed it to take over income tax. The states challenged the act & lost, the HC declared that during a declared war the defence powers of the CW were much greater than during peace time. Income tax is one of the most critical taxes, contributing 57% of all tax collected in 2013-2014. Before WW2, it was collected by the states, providing them with a great deal of financial independence. At that time the VFI was smaller & the states less reliant on S96 grants from the CW.

HA & Hammond v NSW case 1997

State govts had levied fees on the sale of tobacco & business franchise fees on some types of businesses. In the HA & Hammond cases, the HC found these fees to be ‘excise’ which are exclusive to the CW under S90. This case undermined State financial independence & reduced State tax powers, increasing VFI & CW financial powers.

Exclusive power

Powers granted by the constitution to the CW Parliament alone. They may be legislative or financial powers & are specified & enumerated in the Constitution. An example is customs & excise tax & coining money.

Concurrent power

Power that belongs to the CW & the states. They are specified & enumerated in the Constitution. These include powers listed in S51.

S51 (ii)

taxation power - concurrent power that allows both levels of govt to raise revenue by various taxes

Uniform tax case 1957

Victoria v CW, the states attempted to challenge the tax laws that the CW used to seize income tax during WW2. They argued since the war had ended, there was a change of powers involved. However, the HC upheld most of its 1942 decisions in the Uniform Tax Case (1942).

Vanderstock & Anor v Victoria 2021

Chris & Kath Vanderstock own an hybrid electric vehicle, Victoria passed an act - Zero + low emission vehicle based charge act (ZLEV) In 2021 - requiring ppl to maintain a log of uses of vehicle and pay an annual charge to Vic Govt.

Went to HC arguing Victoria lacks constitutional authority to pass such an act S90 only CW can raise excise

-October 2023 - HC found it constitutional

-Developed from HA v NSW precedent, increase VFI

Specific purpose payments

Grants made from the CW to the States. Conditions may be attached ‘as the Parliament thinks fit’ to how the money is spent, allowing the CW to interfere in State residual power.

Braddon Blot

A concession by the Tasmanian Premier which saw S87 included into the Constitution. The section requires the CW to grant 75% of all revenues it collected from excise to the States during the first 10yrs following Federation.

National Cabinet

An example of Federation reform, 2020. National Federation Reform Council (NFRC) to replace Council of Au govts (COAG) meeting, with National Cabinet to remain at the centre of the NFRC.

S92

No state can impose on customs, bounties, excise or other cost barriers on good & services crossing its border, mean trade between states are absolutely free.

S109

Where a CW & State law conflict the CW law will prevail but only ‘‘to the extent of its inconsistency’’

S96

A mechanism to allow for the transfer of CW surplus revenue to the States.

S90

The power to collect Custom duties & excise shall be exclusive to the CW.

S52

Administering public service - CW powers

S69 & S114/115

defence, coining money

Parliament

Parliament is a representative body that has responsiblities that includes the initiation & passage of legislation representing the people & providing a place where govt is formed.