24 June 2006

Australia will face many challenges in the 21st century, from an ageing population to intensifying global competition. There will also be new opportunities, such as new markets opening up in the region.

No government can respond successfully to these challenges and opportunities alone. Our federal system means shared responsibility across three tiers of government for vital parts of the Australian economy, for critical policy development and for efficient service delivery.

However, there is already growing evidence that Australia’s federal system is under severe pressure and is struggling to cope. The trend through the 20th century towards the centralisation of power continues unabated. The line between Commonwealth and state responsibilities has become blurred and confused. In many ways, the old federal ‘contract’ between the Commonwealth and the states has broken down.

This paper has been designed to initiate discussion about how Australia’s federal system of government can be reformed in the short term to meet our current and future needs.

Modernising the Australian Federation: A Discussion Paper