The Changing Balance of power between Federal and State governments

1. The Changing Balance of power between Federal and State governments By Merna Girgis & Iden Rahbar

2. Contents • Reasons for the changing division of power • Commonwealth superiority • Intruding into state affairs • High court Federal balance • World War II • Financial Power • Continuing State power • Bibliography

3. Reasons for changing balance of power • Referendums • Financial relations • Unchallenged legislation • Informal structures • Judicial interpretation

4. Commonwealth superiority • Moving from co-ordinate to co-operative federalism. • Microeconomic liberalization, companies and securities, road transport regulations • s51 (xxix) and s109 of constitution • “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”

5. Intruding into State Affairs • Koowarta (1982) (pages 78,79,80) • Tasmanian Damns (1983) • Australian Capital television (1992) • Theophanous (1994)

6. Financial power • States are financially dependant on commonwealth • The commonwealths financial strength results from dominance in the areas of tax revenue, loan raising and grants to states. • ‘General’ and ‘specific’ purpose grants • Vertical fiscal imbalance. Commonwealth cannot afford to reduce funding because it might affect their electoral chances.

7. World War II • Monopolized income tax collection. Commonwealth gained a large source of revenue from wartime expenditure and could avoid inflationary consequences of the ‘unfunded’ spending of WWI • As a result, states never re-established their own income taxes.

8. High Court Federal Balance • James’ Case (1936)- the Privy Council held that s92 meant that the commonwealth could not restrict trade (just like the states) overturning the Macarthur Case (1948) • State Banking Case (1947) rejected commonwealth legislation to force state governments to bank commonwealth on the grounds that it discriminated against the states and Bank Nationalization Case (1948) rejected the ALP attempt to nationalize banks because it interfered with the absolute freedom of interstate trade.

9. How the balance changes • The government needs a majority support in both houses to pass a bill (mabo)80 • They can amend bills in any form to gain the votes of other members in parliament. • Reduced tax revenue 1993, 1995----native title bill. • Trying to gain votes of independents.(pg127)

10. Continuing State power • The political liberal party is a state-based organisation. • ‘Will of the people’(pg129) • This confusion makes clear danger of defining will of people as policy as result of democratic process. • The will of the people requires open, representative and accountable processes of democratic decision making. Gives voice to people • The Australian people have often viewed Canberra with distrust and have generally retained loyalty for the states. • People stay loyal to their political parties and tend to follow what do.

11. Bibliography • Process and participation: chapter 3 chapter 4 pages 127-129 • www.trinity.wa.edu.au/plduffyrc/ • http://www.nla.gov.au/oz/gov/oz.html • http://www.nla.gov.au/oz/gov/ • http://www.australian.aust.com • www.laymans.com