Research project: Renewing Australian Federalism

Renewing Australian Federalism is an interdisciplinary research project involving leading Australian scholars and practitioners from the fields of political science, public policy, law and economics. Motivated by a desire to address the increasing neglect of Australian federalism over time, the project will highlight the role that a renewed commitment to federalism can play in improving fiscal sustainability, democracy and innovation in Australia.

Project themes

Fiscal federalism and taxation

This arm of the Renewing Australian Federalism project examines the functioning of the tax system at Commonwealth and State levels.

The first part of this effort, conducted by Professor Miranda Stewart and Professor John Freebairn, involves a comprehensive stocktake of the possible reform options at all levels of government that could help to generate the substantial revenue that governments require in order to meet the Australian public's expectations of government.

Secondly, we will be exploring selected tax reform proposals and examine how the overall national tax base can be reformed in a way that meets public expectations of fairness and efficiency. Dr Hielke Buddelmeyer will engage with concerns about an expansion of the GST by investigating the effects of a carefully designed earned income tax credit (EITC) and increased transfer payments to compensate low-income workers and families. This aspect of the research will involve the use of a comprehensive micro-simulation model to assess the impacts of such a reform proposal.

Intergovernmental decision-making

Federal governments have historically staked political capital on securing the agreement of the States for reform in areas such as education. This has been done through a range of intergovernmental financial agreements. A common criticism of these agreements is that they require States to cede control, while remaining responsible for improved service delivery and subject to bureaucratic performance accountability mechanisms.

This part of the project will examine the effectiveness of these arrangements and their consequences for political accountability. Professor Brian Galligan, Dr Scott Brenton and Professor Miranda Stewart and other researchers will investigate whether and how a new form of Australian federalism may be developing, and consider recent developments in intergovernmental decision-making. They will also analyse intergovernmental agreements in comparative perspective, using case studies in areas such as education to identify institutional and legal reforms that will increase effectiveness and accountability. The research will also consider citizen perceptions of State and federal accountability.

State innovation

This aspect of the project will explore one of the key arguments often made in favour of federalism: namely, that it can enhance innovation, by encouraging competition and cooperation between the States.

The research team will consider shared Commonwealth–State policy domains such as education and disaster management, analysing issues such as the effect of intergovernmental agreements on innovation, the extent to which innovations are spread from State to State, and the potential role of the Commonwealth in aiding innovation.

Federalism, democracy and citizenship

One of the core aims of the Renewing Australian Federalism project is to promote a more informed and sophisticated public debate about the Australian federation. Professor Michael Crommelin AO and Laureate Professor Cheryl Saunders AO, two of Australia’s leading constitutional law scholars, will contribute to the reinvigoration of that debate by leading a series of public seminars exploring the role of federalism in Australian democracy.

Seminars will cover a range of themes and issues, including:

  • Federalism and democracy. A session revisiting two of the founding concepts of the Australian constitutional system, how they have atrophied and how the revival of one might enhance the other
  • Fiscal federalism. An in-depth examination of how vertical fiscal imbalance has contributed to the current democratic malaise and how the problem might be resolved
  • State-level democracy. An exploration of the potential for democratic innovation at the State and local levels, under a more vibrant federal system in which governments are responsive to their voters
  • Regulation through spending. How limited power but access to all sources of taxation at the Commonwealth level has encouraged excessive reliance on regulation through spending
  • Education. A case study looking at both the current problems and their possible solutions
  • International insights. Presentations on the experiences of federal systems of government in Germany, Canada and elsewhere, in order to encourage lateral thinking about reforms to Australia’s own federation

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