The Changing Federal Balance

The Federal Balance

  • ‘State’s righters’ are a group of people who wish to protect the powers and rights of the States and stop the Commonwealth on encroaching on residual powers
  • Centralists are those who wish to minimise the powers of the States, creating a unitary government.


Advantages Disadvantages
    • Allows the Commonwealth to expand into more areas of government
    • Government services can be duplicated, leading to waste and inefficiency. $9-20 billion according to the BCA
    • Allows the Commonwealth to meet the needs of an increasingly complex society
    • The different levels of government may cause confusion about which level is responsible for which area
    • The original benefits of having a federation (unified defence, immigration etc.)
    • Some people think that Australia is over governed and has too many members of Parliament.
    • Well-suited to a bicameral parliament – the senators represent the states
    • The Commonwealth and the States may have conflicts over division of powers, and the High Court has to adjudicate.
    • States retain the power to legislate in a large area
    • If different parties are in power, there is more potential for conflict
    • Provides a system of balances and checks
    • States may make it more difficult for Australia to meet its obligations as a global citizen
    • No single government or party can gain control over all of Australia
    • Vertical Fiscal Imbalance – the Commonwealth controls all the money and complex agreements need to be made
    • States are closer to the people, and have a better understanding of the issues
    • Ill-feeling may develop between States if one seems to be subsidising or getting less than another
    • State governments protect local interest
    • The role of the local government is ambiguous.
    • Each state has retained separate identities and characteristics, reflecting Australia’s diversity
    • States and Commonwealth can cooperate to benefit everyone
    • Two or more States can work together
    • Stronger sense of community – both state and national
    • Each state can act like social laboratories.


  • Exclusive powers are those that the Commonwealth, exclusively, may legislate in. Examples include Defence, Foreign Affairs, Trade, Immigration
  • Concurrent powers are those that both the States and the C’th may legislate in, e.g. taxation (51 ii). However, s 109 states that should State and Federal legislation conflict, the C’th law shall prevail
  • Residual powers, defined in ss 107-108, are those powers that are not specifically mentioned in the Constitution, and the States’ ability to legislate in these areas is assumed to continue. C’th may not legislate in these areas.


  • Historically, the Liberals are federalists (being conservatives) and the ALP are centralists.
  • This stems from the economic principles each party holds
    • The Libs, as economic liberals, do not really like gov’t intervention
    • The ALP, the socialists, love to nationalise/intervene
  • E.g. Whitlam wanted to do away with states altogether
  • However, the distinction is no longer very significant
  • E.g. Howard’s GST, Brenden Nelson’s education policies


  • A referendum needs to be passed by both houses, or one house twice, given Assent, passed by a double majority (s 128)
  • Only 8 referendums of 44 have passed
  • These have passed because of bipartisan support, and with the support of the State governments
  • They have not really had an impact on changing the Federal balance
  • States would campaign heavily against proposals that limit their power, so a referendum would have little chance of passing

Change through cooperation

Referral of powers (s 51 xxxvii)
  • State may refer powers to the Feds if it they cannot finance it
  • Can only be initiated by the States
  • C’th cannot refer powers back to the States (cross vesting) upheld in Re Wakim (1999)
  • States are hardly likely to refer powers that limit their own power, so they only refer powers that are too expensive or are not very important
  • Thus, little impact.
Unchallenged legislation
  • The States may work together with the Feds to create a national law
  • Mirror legislation is used (States introduce the exact same bill enacted by Federal Parliament)
  • See COAG notes

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