Bulletin n. 0/2004
December 2004
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
  • McLean, Iain
    Fiscal Federalism in Australia
    in Public Administration , March - Volume 82 Issue 1 ,  2004 ,  21-38
    Australia displays high vertical fiscal imbalance (VFI) for historical and constitutional reasons. It also attempts to achieve the highest degree of horizontal fiscal equalization (HFE) to be found in any democratic federation. The Commonwealth Grants Commission (CGC), a non-partisan body at arm's length from politicians, oversees the regime. A recent report claims that equity, efficiency and transparency would all improve if the regime were abolished. Such a change is politically unachievable, but it raises interesting issues in public finance and public administration, which carry over to other federations and union states. An economically efficient system would: minimize perverse incentives, especially incentives to seek rent; encourage states to grow; discourage suboptimal location decisions; minimize transaction costs. An equitable system would maximize equity between relevantly similar individuals. Aspects of the Australian system that should be copied include the non-partisan agency and the target of HFE between component parts of the country. Aspects that should be discussed and perhaps copied include the very extensive equalization, including the feature of equalizing away the effects of grants for special purposes. Aspects that should probably not be copied include the cumbersome formulae and some of the perverse methods of calculating for 'needs'. All abbreviations and acronyms are spelt out in the Appendix on page 37.
    ©2001 - 2020 - Centro Studi sul Federalismo - P. IVA 94067130016