The Degree of Centralization in the Constitutional Division of Powers

The question of how centralized Australia is in its constitutional division of powers does not have a simple answer. Williams and Macintyre see that the

Commonwealth “has come to dominate the federal landscape”, especially as it has added

new responsibilities for economic regulation and the welfare state.203 Watts seems to

agree with this assessment, finding Australia to be “relatively centralized”, more so than Canada, Germany, Switzerland and the United States, though much of this categorization

stems from Australia’s high degree of financial centralization.204

In contrast, Saunders argues that “it is difficult to characterize the Australian federation as either centralized or

decentralized” as it is not intrinsically “inclined toward either unity or diversity.”205

What is less controversial are the intentions of the framers of the Australian Constitution and their desire to build a federation that left a great deal of autonomy to the states. While the six colonies saw advantages in closer ties, notably a common market

202

Elazar, Federal Systems of the World, 21-22.

203 _{Williams and MacIntyre, "Commonwealth of Australia," 13-14.} 204 _{Watts, Comparing Federal Systems, 177.}

205 _{Cheryl Saunders, "Commonwealth of Australia," in Constitutional Origins, Structure, and Change in} Federal Countries, ed. John Kincaid and G. Alan Tarr, (Montreal & Kingston: McGill-Queen's University Press, 2005), 21.

and defence policy, all were used to a significant degree of autonomy as self-governing

parliamentary democracies.206 Moreover, as was discussed in the last section, the

Australians were keenly aware of the experience of other federations, Canada,

Switzerland and the United States. The American idea that a federation was formed by independent states coming together for common purposes and delegating powers to a central government proved to be persuasive to early Australian politicians. This was in direct contrast to what Australians perceived as the Canadian model of federalism - a

powerful central government with weak provinces.207 These sentiments led Australia to

adopt an American model of the division of powers: only the federal powers are enumerated, with the remainder reserved to the states. The logic behind this

constitutional division of powers was that it would confine the federal government to narrow areas of responsibility, while leaving much broader and flexible authority to the governments of the constituent units.

A constitution, however, tends to be a dynamic document in both its environment and how it is interpreted. A number of developments have taken place since 1901 which have moved Australia from its original, decentralized vision to a federation with a stronger central government. The first, and potentially most centralizing factor, has been the financial power of the Commonwealth government. While the growth of the

Commonwealth’s spending power will be discussed in detail later in this chapter, the centralizing effect of federal financial resources must be acknowledged here. World War II was a turning point, as the Commonwealth gained full control over income tax and

206

Elazar, Federal Systems of the World, 19.

thus, the bulk of government revenues. 208 Even before this watershed event, the national

government exercised substantial financial power through significant tariff revenue. 209

Constitutionally, much of this centralizing authority can be traced to the enumerated powers over trade and commerce (S. 51, i), taxation (ii), borrowing (iv) and the ability of the federal Parliament to provide grants to states in any ways it sees fit (S. 96), the

relevance of which has increased over time.210 Occupying a hegemonic position in

Australian public finances, the Commonwealth government was able to expand the scope of its jurisdiction.

Moving beyond the financial pressures contributing to centralization, a shift in judicial interpretation had an important role to play. For the first twenty years following the creation of the federation, the state governments, supported by the courts, took a restrictive view of Commonwealth powers akin to the views held during the constitutional

debates of the 1890s.211 That is, they felt that federal powers should be restrained within

only their explicitly enumerated jurisdictions while state powers should be interpreted broadly. This was not to last as the High Court began to shift its interpretation towards a

broader reading of federal powers notably in the 1920 case of Amalgamated Society of

Engineers v. Adelaide Steamship Co. Ltd. This change in the jurisprudence established the High Court’s opinion that Commonwealth’s powers could be read more broadly,

“unconstrained by assumptions about the nature of the federation.”212

In addition to the oft-discussed financial powers, this interpretation also enhanced the centralizing ability of

208 _{Alan Morris, "Commonwealth of Australia," in The Practice of Fiscal Federalism: Comparative} Perspectives, ed. Anwar Shah and John Kincaid, (Montreal & Kingston: McGill-Queen's University Press, 2007), 48-49.

209 _{Elazar, Federal Systems of the World, 19.}

210 _{Williams and MacIntyre, "Commonwealth of Australia," 13-14.} 211

Aroney, The Constitution of a Federal Commonwealth, 274-277.

the Commonwealth’s authority over corporations and external affairs. Specifically, the

case of Commonwealth v. Tasmania found that the national government’s power over

corporations (S.51, xx) and foreign affairs (S. 51, xxix) may allow it to make laws beyond

its explicit jurisdiction, in order to implement treaties or international policies.213 This

also invoked Section 109 - which declares that when laws of the states and the Commonwealth are inconsistent, the Commonwealth law is valid - a potent and centralizing, if seldom invoked, clause in the Constitution. While the degree to which Commonwealth competencies can extend has waxed and waned (and continues to be debated), the interpretation that the Commonwealth is restricted to narrow policy areas

has not recovered.214

Given this, it is clear that Australia has not maintained the decentralized model on which it was founded as the Commonwealth has increased the scope of their powers. However, this does not demonstrate that the Australian division of powers is particularly centralized compared to other federations, especially if we postpone questions of financial centralization. Turning back to Watts' comparison of competencies in federations

(Appendix H), the federal government possesses exclusive jurisdiction in only 6 policy areas (13%) while the states have sole jurisdiction in 8 (17%). Out of seven federations in this study, Australia has the fewest areas of exclusive federal jurisdiction, as

overlapping authority is the norm for most policy fields. This reading of the Australian division of powers is consistent with the record of agreement formation. With an overlapping, and even "cooperative" system of federalism, the Commonwealth is not in the position to provide an overriding central authority that might stymie agreement

213_{Commonwealth v. Tasmania, (1983), HCA 21.} 214

James A. Gillespie, "New Federalisms," in Developments in Australian Politics, ed. Judith Brett, James Gillespie and Murray Goot, (Melbourne: MacMillan Ltd., 1994), 62-64.

formation.215 If the Commonwealth’s powers had become predominant, we would expect to see fewer agreements in lieu of broad, federal legislation that could pre-empt state jurisdiction utilizing the legislative supremacy clause of Section 109. Instead,

Commonwealth authority has broadened to exist concurrently with the already expansive state authority. Thus, while Commonwealth powers have surely increased, they are still subject to clear limitations, as Painter argues:

It must be pointed out, however, that this growth in Commonwealth jurisdiction and powers has not resulted in as dramatic a degree of centralisation as a literal reading might suggest. The political and administrative restraints on

Commonwealth power consequent upon the existence of effective, active,

democratically elected state governments remain significant.216

As these two sections have indicated, the Constitution of Australia has promoted a system of overlapping jurisdiction, where governments must coordinate in order to make

effective policy – an environment that has suitably produced a large number of national, intergovernmental agreements.