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Since World War II, however, the Commonwealth has acquired a monopoly over the major tax sources, leaving the states with a range of minor taxes, which continues to shrink.The Commonwealth thus has much more money than it needs for its own constitutional responsibilities to the public; the states have much less for theirs.Sometimes, as in this instance, it involves disentanglement of functions.
Cheryl Saunders does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
The reform of Australia’s federation is under review.
Ironically, the Australian federation is quite well designed for this purpose.
The states are large enough for effective government, few enough for effective collaboration and their dispersal across a very large land mass positions them to respond to regional needs in a way that is not practicable for a single set of institutions based in Canberra. One is to restore state tax-raising capacity so as to limit transfers from the Commonwealth and maintain the nexus between responsibility for taxing and spending.
Not all government action requires central co-ordination and not all co-ordination requires uniformity.
Decisions about whether and to what extent to co-ordinate government action need to be made more openly and justified on the basis of principles that also acknowledge the values of innovation and difference.
It involves crafting a functional, federal democracy for 21st-century Australia, in a world in which multi-level government is the norm.
In the spirit of what sometimes is called subsidiarity it would accept that many decisions must be made nationally – indeed, internationally – but also values the possibility of decision-making at lower levels over which communities have more effective control.
And democracy itself is undermined, by erosion of the principal mechanism for democratic control of governments, through parliaments, by the people.
Recalibrating the way that federation works does not involve a return to 1901, claims to the contrary notwithstanding.