The Howard government, regulatory federalism and the transformation of Commonwealth-State relations

Various initiatives enhancing Commonwealth power relative to the States have been a feature of the Howard government that has surprised many observers. These developments need to be understood in the context of longer-term political, financial and regulatory changes that are challenging established features of Commonwealth-State relations. The Howard government's allocation of Goods and Services Tax (GST) revenue has offered the prospect of greater State-level financial and policy autonomy. But the Howard government has also inherited, and in some policy domains has significantly enhanced, the further development of a Commonwealth-State regime best described as 'regulatory federalism'. Its effect, in contrast to the effect of the GST initiative, is to constrain the States' scope for policy autonomy. A similar impact is emerging from the Commonwealth's efforts to ensure that its conditional grants to the States better serve Commonwealth policy goals and priorities. And a raft of Commonwealth initiatives is bypassing the States altogether. Although the Howard government has clearly enhanced the role of the Commonwealth, it remains constrained by aspects of the federal system that are structurally entrenched and that continue to make intergovernmental collaboration, rather than confrontation, a sensible strategy.