Rebuilding Fiscal Federalism in Australia: Reforming the Financial Relationship between the Commonwealth and the States

The financial relationship between the Commonwealth and the States, in particular the lop-sided division of taxing powers, has yielded a significant vertical fiscal imbalance. This imbalance is likely to become an increasingly serious structural problem constraining the development of social policies needed to meet Australia's future challenges. This project will identify and assess potential reforms to allow the States to gain access to income tax revenue as a secure source of funding. The project will assess the reform alternatives based on Australia's historical experience, comparative practice (eg, in the US, Canada and EU) and their viability given the political economy of Australian federalism.