Intergovernmental fiscal relations in Australia

This chapter examines intergovernmental fiscal relations as it is practised in Australia. It discusses the level of vertical fiscal imbalance (VFI) and how that has increased over time, and the mechanisms through which VFI is overcome. It also shows how those mechanisms have reduced the autonomy of the states and how this has resulted largely from Commonwealth government actions and a single clause in the Australian Constitution. The system of achieving horizontal fiscal equality for the states is described, as are the changes to that system since the late 1970s. The administrative structures within which intergovernmental fiscal relations operates are outlined. In each of these discussions, areas where further change might be considered are identified. It is concluded, however, that major change is unlikely in the foreseeable future.