Federalism and the corporate governance analogy

(This is the third and last in a series of posts exploring Australian federalism (the first part is here and the second is here). I’ve been struck by the seeming popular lack of interest in Australian federalism, not only judging by the lack of public outrage at John Howard’s recent trashing of our federal system but also by the relative lack of comment box discussion on my two previous federalism posts. Maybe it’s partly because their focus has been historical rather than contemporary, with little to spark reader debate or disagreement.

But perhaps it’s also because it’s difficult in general to get passionate about either defending or attacking a federal system characterised by competent but uninspiring state governments, chronically under-funded and therefore seemingly incapable of effectively tackling major improvements to health and education or renewing crumbling transport and other public infrastructure. Instead, we’re subjected to continual blame-games designed to evade or confuse accountability, with state governments always crying poor, the federal government blaming the states for failing in their constitutional responsibilities, and media-savvy Premiers like Carr and Beattie elevating the strategic mea culpa to a performance art form. More recently, PM Howard’s cynical, selectively interventionist “aspirational federalism” stunts have made the picture even more depressing and seemingly hopeless.

Despite all that, my own view is that the problems of Australian federalism are vastly overstated and relatively easily fixed, at least if the political will to do so existed. Moreover, Australia will have a rare opportunity for constructive “root and branch” federalism reform if a Rudd Labor government can be persuaded by the 8 State and Territory Labor governments to implement some relatively simple but far-reaching fiscal and structural changes.

The formal model

As Curtin University academic Alan Fenna explains in this excellent article:

The American, Canadian and Australian approach to federal design was the approach of legislative, as distinct from administrative, federalism. That is to say, powers were divided by assigning full responsibility for specific policy areas to one level of government or another (though sometimes both). …

The correlate of following a legislative rather than administrative division of powers was that the American, Canadian and Australian federations were planned to operate on a predominately coordinate basis. That is, the two levels of government were envisaged as acting largely in their own policy spheres with little overlap and hence little cooperation required. … Like the American system on which it was closely modelled and which likewise does not grant a list of exclusive powers to the national government, Australian federalism was created on the presumption that the national government could be restricted to responsibilities of a specifically national character. Almost the full range of internal domestic responsibilities previously exercised by the constituent units would continue to be controlled at the sub-national level. National powers were essentially of two kinds: those concerning external affairs, and those concerning the integrity of the common market. Australias constitutional architects were still operating in a world where the limited role of government made it quite possible to envisage a division of powers where two levels of government could operate in their own discrete policy realms. Generally, the Commonwealth and the states were seen by many delegates as independent entities, each carrying out its governmental functions within its own territory. Accordingly they saw little need to build intergovernmental relations into the system. No formal machinery for co-operation or conflict between them was provided for in the Constitution (Zines 1986:81).

Our federal system is a good one

Yet despite this inauspicious formal constitutional model for achieving the sort of co-operative governance structures needed in a complex, inter-connected twenty-first century world, Australia’s federal system has evolved into a remarkably co-operative one. Indeed, despite the picture of conflict and stubborn State government obstruction and neglect that John Howard is currently trying desperately to create for his own cynical electoral purposes, only a year or so ago both he and the State Premiers were themselves hailing the healthy, co-operative state of federal relations. Any reasonably detached examination of the record confirms those protestations of federal health.

The Commonwealth and States have managed to co-operate to positive effect in areas as diverse as corporate law reform; national competition policy; national professional accreditation standards; defamation law reform; a national secondary schools curriculum (albeit a work in progress); literacy and numeracy testing at years 3, 5 and 7; and a variety of anti-terrorism laws. There has even been co-operation over solving the problems of the Murray-Darling basin (except for Victoria) despite a deliberately provocative attempt on Howard’s part to create a “wedge”; and in achieving environmental flows in the Snowy River. You see, Australian co-operative federalism actually has a pretty impressive record over the last decade, despite the fact that most State governments have been Labor ones dealing with a Coalition federal government. The Council of Australian Governments (COAG) system, with the various Ministerial Councils that operate under its auspices and its National Reform Agenda, is an impressive if imperfect structure. It makes sense for the levels of Australian government to co-operate to mutual advantage, especially given the complex international commercial and environmental situations we all face. It also makes sense in governance terms. As Michael Keating and John Wanna argue:

The evolution of Australian federalism has encouraged an administrative paradigm whereby the Commonwealth, in consultation with the states, accepts responsibility for consistent policy frameworks while the states are largely responsible for implementation.

The modern system of Australian co-operative federalism can in some ways be analogised to the functional division in corporate governance between a Board of Directors which exercises policy oversight and the company’s management which runs the day-to-day operations. The dividing line between policy and management is a blurry but very useful one, and readily transferrable to the public governance arena. It’s a dichotomy which also ties in neatly with notions of subsidiarity often associated with federalism (that matters ought generally to be handled by the competent authority which is smallest, lowest or closest to the people).

But not without its problems …

The major problem with Australian federalism, partly evident from its inception, ((“As the power of the purse in Great Britain established by degrees the authority of the Commons, it will ultimately establish in Australia the authority of the Commonwealth. The rights of self-government of the States have been fondly supposed to be safeguarded by the Constitution. It left them legally free, but financially bound to the chariot wheels of the Central Government. Their need will be its opportunity. The less populous will first succumb; those smitten by drought or similar misfortune will follow; and finally even the greatest and most prosperous will, however reluctantly, be brought to heel. Our Constitution may remain unaltered, but a vital change will have taken place in the relations between the States and the Commonwealth. The Commonwealth will have acquired a general control over the States, while every extension of political power will be made by its means and go to increase its relative superiority” ~ Alfred Deakin, April 1, 1902)) is the eye-glazingly titled phenomenon “vertical fiscal imbalance”. It and other related trends are explained in this SMH article by Steve Burrell:

Not only is a growing proportion of the funds going to the states now earmarked by the Commonwealth for purposes that fit its policy priorities, but its overall funding has effectively been shrunk, contrary to the Federal Government’s claims that its post-GST revenue-sharing arrangements have been a bonanza for the states.

Howard’s implementation of the GST as a supposedly “state tax” went some way towards repairing the shattered fiscal imbalance in one sense, but it remains completely under federal control and subject to alteration or removal at its whim. Although GST is a so-called “growth” tax, it isn’t growing anywhere near as fast as GDP, mostly because it doesn’t capture revenue from the export sector of the economy. Hence State budgets come under ever-increasing pressure and progressively fall further behind as a proportion of GDP, while the Commonwealth’s share of revenue (and therefore its ability to pressure the States into accepting tied grants under tight federally “micro-managed” terms and conditions) rises inexorably because of its control of corporate and personal income tax (taxes which capture export income as well as domestic encomic activity).

However, even vertical fiscal imbalance has its upside. It has facilitated the uniquely Australian institution of the Commonwealth Grants Commission, with its poorly understood, regionally egalitarian and nation-building mission. The Grants Commission helps to ensure that smaller States are able to deliver comparable service levels to the mega-states of NSW and Victoria, a highly desirable outcome that would be much more difficult to achieve in the absence of a predominant national revenue-raising authority. Moreover, in pure economic efficiency terms, it makes much more sense to have a single national income tax and GST system rather than separate ones for each of the 8 states and territories as well as the Commonwealth system. What is required is a system that restores vertical fiscal balance while maintaining predominantly unitary national tax collection.

A federal reform agenda

I said earlier that the election of a Rudd Labor government federally would provide a unique opportunity to reform Australian federalism in a fundamental way. Tackling vertical fiscal imbalance must certainly be a critical part of any such reform package, but in my view we also need to redesign and sharpen the functional policy/management division between Commonwealth and States. The SMH article by Steve Burrell mentioned earlier also reports a proposal by Glenn Withers for repairing vertical fiscal imbalance:

In a recent speech, Withers argued that tied SPPs 1 should be abolished and replaced with an equivalent share of income tax to be given to the states to spend as they see fit.

“A crucial first step would be folding all specific-purpose payments into a general-purpose payment and keeping them as a fixed share of GDP pending a constitutional convention which would review state tax powers,” he argued.

“My hope would be such a convention would come to the proposition that states should receive a proportion of income tax, initially at the current level of SPPs, but they are then free to vary that up or down (as a proportional state income tax surcharge or rebate).”

Even the first step is not small beer. At $22.4 billion in 2007-08, direct SPPs to the states alone represent about 19 per cent of the personal income tax take and 11 per cent of total income tax revenue, including company, superannuation and fringe benefits tax.

The only problem with solutions like this is the realpolitik of the situation: no Commonwealth government, not even a fresh and constructively-minded one under Kevin Rudd, is likely to surrender control of the federal purse-strings without receiving a compensating advantage from the States in return. At the moment, the Commonwealth mostly exercises policy oversight/control over the States through the use of tied grants or SPPs under Constitution section 96. Providing the States with a guaranteed untied share of revenue sufficient for their needs, as Withers proposes, would largely destroy the Commonwealth’s policy leverage over the States.

However, as I argued above, it actually makes sense in governance terms to have policy centrally co-ordinated via a co-operative federal structure like COAG, with actual management and operational control vested in States and local governments able to understand and respond to local circumstances, needs and wishes.

In order to persuade the Rudd federal government to agree to permanently restoring vertical fiscal balance (as Withers proposes), the States will need to agree to refer powers to the Commonwealth under Constitution section 51(xxxvii). The Commonwealth should logically have general power over the incorporation of companies (it controls them once they’re incorporated anyway); river flows in the Murray-Darling basin; and (perhaps subject to some safeguards) industrial relations. The States should also agree to refer policy but not operational control over health, education, transport activities directly affecting exports, and climate change.

The major advantage the States would gain by agreeing to make these sorts of wide-ranging referrals of their constitutional powers to the Commonwealth is that they could effectively entrench the reciprocal Commonwealth guarantee to restore vertical fiscal balance. The States would refer these powers only for so long as the Commonwealth keeps its promise of maintaining the States’ reasonable fiscal requirements as defined in the referral enactments, with that funding to be delivered in accordance with the recommendations of an independent and apolitical Commonwealth Grants Commission (to maintain equity in service provision between smaller and larger states).

Moreover, the States would refer policy oversight powers (in health, education etc) subject to a condition that all Coomonwealth policy proposals would be submitted to and approved by COAG or its appropriate Ministerial Council. Hence the States collectively would have a veto over overweening exercises of Commonwealth power. On the other hand, the Commonwealth would still possess the ultimate threat of pulling the pin on the entire arrangement and reverting to its current reliance on coercive section 96 grants if the States proved unduly obstructive in COAG. Commonwealth threats to the States’ grant funding under our existing federal arrangements have been critical to the successful achievement of consensus on several key instances of “co-operative” federalism, notably the gun buyback scheme in the wake of the Port Arthur massacre, and less overtly in achieving national numeracy and literacy testing and agreement-in-principle on a national secondary education curriculum. The existence of some such tension or ultimate threat/power residing in the Commonwealth may well be necessary to avoid permanent deadlock, inertia or tendency of the States to relegate critically important but locally politically contentious issues to the “too hard” basket. However, at least with this proposal the Commonwealth is constrained by the fact that the States have a countervailing power to threaten to withdraw their referrals of power. It may well be that such mutual political tensions are necessary to sustainable co-operative federalism.

Even more broadly, the States could refer all these powers for successive fixed periods of (say) 5 or 7 years, in addition to the conditions discussed above. The intention would be that a federal governance convention would be held at the end of each such period to review the federal division of powers. The States might agree to refer additional powers, or refuse to renew some referrals or subject them to additional restrictions as a condition of renewing the referral. Indeed, conditions could even include an explicit understanding that referrals would not be renewed if the Commonwealth utilised any of its own constitutional heads of power (especially corporations or external affairs) in a manner which intruded excessively and unilaterally into areas of traditional state responsibility.

It seems fairly clear that the States can refer power under section 51(xxxvii) subject to such conditions. Section 51(xxxvii) gives the Commonwealth power to make laws with respect to:

matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred, or which afterwards adopt the law.

In R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207, a relatively rare unanimous High Court decision and one of the few dealing with section 51(xxxvii), the Court observed:

There is no reason to suppose that the words “matters referred” cannot cover matters referred for a time which is specified or which may depend on a future event even if that event involves the will of the State Governor-in-Council and consists in the fixing of a date by proclamation.

The States have in fact adopted this suggestion, most notably in their referral to the Commonwealth of powers to enact anti-terrorism legislation including so-called “control orders”. For example, section 5 of the Terrorism (Commonwealth Powers) Act 2003 (Vic) provides an effectively open-ended ability for the Victorian government to withdraw its referral of power at any time:

(1) The Governor in Council may, at any time, by proclamation published in the Government Gazette, fix a day as the day on which the references under this Act are to terminate.

None of the Justices who considered the question in the recent High Court decision in (Jihad Jack) Thomas v Mowbray doubted that a referral in those terms was constitutionally valid (although a majority regarded the federal anti-terrorism law as supported by Commonwealth constitutional heads of power anyway, so there was strictly no need for any referral of state power to supplement the Commonwealth’s own power). A flexible system of federal division of powers, whereby the States make strategic use of the referral provisions of Constitution section 51(xxxvii), has significant advantages over any rigid constitutionalised system of division of powers.

The Commonwealth’s policy oversight of State activities under this new model of federalism would hopefully also include a requirement that the States devise, publish and report on their achievement of the sorts of McKinsey-like managerialist performance targets that Kevin Rudd’s existing federalism policy contemplates, albeit that those targets would be set by the States themselves not the Commonwealth. Permitting the Commonwealth actually to set operational targets breaches the policy/operational dichotomy discussed earlier. Moreover, the university sector’s experience of that sort of intrusive, rigid micro-management by federal DEST bureaucrats under the regime imposed by former Minister Brendon Nelson illustrates the real-world folly of confusing policy and operational management. So too does the Northern Territory’s experience of Commonwealth control discussed in my last federalism post.

Finally, although it’s probably too much to hope to achieve, Commonwealth policy oversight could and should require the States to implement the sort of “grassroots” Total Quality Management feedback systems about which Nicholas Gruen has been writing in recent times, for fine-tuning both regulatory design and quality of service delivery.

Probably these ideas will prove to be too utopian even to be considered seriously by our political practitioners. Nevertheless, I believe they’re eminently feasible and would truly make Australia a world’s best practice model of federal governance. It’s a worthwhile objective in a political environment mostly characterised at the moment by electorally driven, unadventurous “me-too-ism”.

  1. Special Purpose Payments[]

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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16 years ago

You want comments eh? I’ll give you a comment… Alan Fenna was the lecturer for one of my second-year politics subjects a decade or so ago. I’d love to read the article, but I’m having cookie-trouble after hitting the link. Could you check it please, Ken?

16 years ago

You solution isn’t federalism, it is nationalism with the states being reduced to bureaucratic outlets for federal policy rather than distinct political and policy entities. This is the process that Gorton kicked off in the 60s and has become popular since.

The problem with the Australian approach to federalism is that is always about who can provide the best services and the lowest cost. The main purpose of federalism is to stop a dominant central government from making the out-lying arms (states or provinces) submit to their will. The vertical separation of powers is supposed to ensure liberty and balance between nationalism and federalism in the same way that separation of powers between the branches does at the vertical level.

You never see Australian politicians or commenteriat discuss federalism in terms of liberty. Your previous article was about how a central government without constitutional checks tramples all over property rights. That is a danger of a national structures; liberties and rights get trammelled by arbitrary government from the central entity.

Co-operative federalism doesn’t solve that when you give all policy to the national government and the federal entities (states) are reduced to bureacratic outlets. We get one blanket central policy; and competition on policy, tax rates and development between states is reduced to one canberran mudpile of electoral whim.

A strong federal character protects liberty.

16 years ago

typo: “in the same way that separation of powers between the branches does at the horizontal level”

16 years ago

The States should also agree to refer policy but not operational control over health, education, transport activities directly affecting exports, and climate change

Well there’s the problem – how do you really separate policy from operational control?

How about the Commonwealth sets targets or outcomes, the States set the inputs?

By the way, as a Victorian who knows somewhat about water, I strongly support the Bracks/Brumby position on the Murray-Darling ‘takeover’. The sole and only thing going for Howard’s plan was that it had a great wad of cash attached. But the cash could have been far better spent, and recognition could have been given to Victoria’s painful reforms of the past decade.

Also, in reference to the Grants Commission, Vic and NSW have always accepted the need to subsidise poorer States such as Tassie and SA, but giving free money to QLD based on the fact that they’ve got lots of National party senators is complete bullshit. Time for reform of that.

Judith M. Melville
16 years ago

Lack of publicoutrage over Howard’s recent trashing of the federal system? Howard outrages on so many issues that it is possible many are experiencing overload and, will simply and anonymously express their outrage at the ballot box.

16 years ago

I think most people really just don’t care and have absolutely no clue about our Federal system. Howard is right in one sense, all they want are decent services delivered cost-effectively. Of course, the deal he offers doesn’t provide this, but nobody can make that judgement until well after the fact.

In my regular dealings with the Canberrra bureaucracy on a range of natural resource issues, they almost uniformly do not add any value whatsoever, they have no appreciation of local issues and conditions, and try to impose inappropriate one-size-fits-all prescriptions.

The best way forward with cooperative federalism is the States working together to share experience and harmonise practices where desirable. Imposed solutions are so often flawed, costly and doomed to failure.

David Coles
16 years ago

There seems to me to be an element missing from the discussion that would critical to the achievement of any reform that will be sustainable.

It really comes down to accountability, more precisely which level of government can reasonably be held accountable for particular policy and operational decisions.

Take the health system for instance. It would be impossible for a resident of my local community to try hold the Federal Government accountable for the operation of our local health centre – whether it be for the operational decisions made or the policies that dictate its method of operation. While my Federal rep might understand the issues of this community, there is little chance that the needs of a small NT community are going to get much of a run in a Federal bureaucracy. My local MLA on the other hand will feel the pain if he doesn’t pay attention and, while the Territory bureaucracy may not wish to listen, it will often have no choice.

The current system with the Grants Commission trying to maintain some level of horizontal fiscal equalisation and with mechanisms such as COAG and the MinCos providing a means of establishing some national policy directions generally works well. Not perfectly but there is a balance of sorts achieved I think.

The areas that I think would achieve real value if reformed – and I spent longer as a Territory public servant than a Commonwealth one – would be for a specific percentage of Federal revenue to be provided for distribution on the Grants Commission’s recommendations (let’s put the GST con job to one side) and for an agreement to be reached in COAG about the future use of SPPs.

Such an agreement might provide that no SPP would be provided where COAG had agreed on the policy that would direct service activity. It might be possible in this way to remove the constant Commonwealth ‘fiddling’ in operational delivery.

Dennis Cartledge
16 years ago

the election of a Rudd Labor government would surely be more likely to push further toward centralism. The ALP has historically been centralist.
Federalism is considered a conservative notion, and I guess I take on a conservative mantle by championing it. I see two major factors in the argument to retain a federalist model.
First is the diversity it offers. Any of the governments can screw up individually without hurting the country as a whole. Under centralism a major screw-up could be devastating and difficult to reverse.
The second is the integrity of the constitution. The document, which leans heavily on concepts of federalism and the States, is already of borderline relevance. If major changes are going to occur which undermine the intent of the document it is surely time for a new round of constitutional conventions.

16 years ago

Biggest problem with your analogy, Ken, is that the board sack management for not operating according to policy but the board also get sacked for management’s failures.

Hard to translate that into the federal context, I suspect. And Kevin Rudd might even combine the power of Presidents Hu with the charisma of Clinton, the spirit of Lincoln, the brains of Jefferson, and the foresight of Washington, I still doubt he could convince the States to sign up to such an essentially subservient relationship. So no opportunity, now or ever, for that kind of reform, in my view.

16 years ago

However, given that the States could not survive without the SPPs (because they lack the power to raise the revenue themselves), they are effectively powerless to do anything other than accept the SPPs and comply with the Commonwealths terms and conditions (usually very detailed).

Ken, how true is this really though? One of the (many) things that go into a CGC assessment is the amount of revenue the state has gained from SPPs. Since they consider the SPPs as contributing to the revenue of the state government, they offset the balance against the proposed equalisation payment. See here for the basics. The exact description of what is/isn’t included is here.

State Governments don’t seem to lose as much as they seem to think by refusing unquarantined SPPs (meaning, assessed by the CGC). As can be seen by figure 3.3 in the first report, Victoria seems to be doing so in many areas with little noticeable effect – but then they’ve been fairly strong critics of the CGC in recent years.

I’d like to hear yours and Nick’s thoughts on the CGC though?

Nicholas Gruen
16 years ago

Thanks for the post Ken,

A couple of things.

1. I haven’t checked it out but I think GST revenue is not growing as a result of the excision of health and education from the base, rather than the excision of exports. Exports have not been growing. And in any event over the long term they grow in line with imports which have GST imposed on them at the consumption stage.

2. As you point out, our attitude to vertical fiscal imbalance is a bit schizo. I recall when in government in the 1990s lots of people saying ‘VHS is a big problem, we’ve got to fix VFI’ and ‘We’ve got to have a broad based consumption tax’ almost always envisaged as a federal tax – which would worsen VFI. The Industry/Productivity Commission got itself into this bind arguing both positions. Ultimately there are stong benefits from federal revenue raising many of which you’ve identified.

3. This is now not ‘a couple of points’ but no-one expects the Spanish Inquisition. In any event you’re dead right about the regulation review aspects. The Feds should resource regulation review around the Commonwealth, including a fairly substantial central capability with national agreed principles – the latter is pretty much what we have now – though the principles need quite a bit further development. The whole agenda could be developed quite a bit.

4. The policy delivery distinction ‘fuzzy’ though it inevitably is, is in my opinion definitely the right distinction – again from the regulatory point of view. Policy and regulation is something which has a similar status to ‘informational goods’ – often costing next to nothing to develop compared with the extent of its influence. That means it has economies of scale in production, but there are also probably much stronger economies in ‘consumption’ ie in the adherence to regulations. As I’ve argued in Lateral Economics reports and on this blog, if you think of regulation as standard setting, this captures the importance of not fragmenting it by state jurisdictions.

5. On standard setting, if you think about the dynamics of referral of powers to the Feds, once the Feds get the power and regulate that will generally create such a strong standard that the states won’t be able to re-regulate in their own way. They might in a fit of pique – justified or not – resume the power and make certain high profile deviations from the national standard (a more extensive ‘no disadvantage’ test for instance). But this won’t challenge the bulk of existing Federal/National regulation as the standard. It will just introduce a few local variations which are what you’d want in a Federation in any event – so long as the transactions costs don’t swamp the democratic and possibly economic efficiency benefits (broadly considered) of local variation.

So it’s all good, as they say these days. Actually they seem to be cutting down on that little saying – and ‘moving on’ and ‘building a bridge’. Summer Heights High was good last night. Like Totally. My first episode. But I digress . . .

frank  luff
frank luff
16 years ago

Really great reading!! The effort really is about
re defining the constituion. With in it though is great thought
Using what is available. Great also to see the author involve
himself with the great unwashed, like me.
more please!!

Mr. G. H. Schorel-Hlavka

At times when trying to post it is not allowed and so a post is not proceeding. hence, you may not get the comment or the post is not allowed and is by the webmanager withheld from publication!

In my view, as a CONSTITUTIONALIST we have a very good Constitution of 1900 just that it is being manipulated wrongly by political and judicial powers, such as the application of Section 96.
We should restore the division of surplus as all along was intended by the Framers of the Constitution.
The design of the Constitution is not at fault but the for ever unconstitutional grab of legislative powers from the States is where duplication and problems are arising from.
Re your comment about R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207 as a CONSTITUTIONALIST I happen to be more alert to what really is applicable and as the Framers of the Constitution stated (see below) and reality is that any reference of legislative powers within Subsection 51(xxvii) requires a Section 123 State Referendum of every State that refers such powers and it cannot be changed afterwards once the commonwealth has legislated, regardless if the High Court of Australia pretend otherwise.

Hansard 27-1-1898 Constitution Convention Debates
Mr. DEAKIN (Victoria).-
Any other matter of general Australasian interest with respect to which the Legislatures of the several colonies can legislate within their own limits, and as to which it is deemed desirable that there should be a law of general application.
Another difficulty of the sub-section is the question whether, even when a state has referred a matter to the federal authority, and federal legislation takes place on it, it has any-and if any, what-power of amending or repealing the law by which it referred the question? I should be inclined to think it had no such power, but the question has been raised, and should be settled. I should say that, having appealed to Caesar, it must be bound by the judgment of Caesar, and that it would not be possible for it afterwards to revoke its reference.
Dr. QUICK (Victoria).-
But this matter has struck me also from another point of view, and it seems to me that the provision affords an easy method of amending the Federal Constitution, without referring such amendments to the people of the various states for their assent. Now, either when the state Parliaments have referred these matters to the Federal Parliament, and the Federal Parliament has dealt with such matters, that becomes a federal law, and cannot afterwards be repealed or revoked by the State Parliaments-that is one position, and in that case, of course, the reference once made [start page 218] is a reference for all time, and cannot be revoked, so that to that extent it becomes an amendment of the states’ Constitution, incorporated in and engrafted on the Federal Constitution without the consent of the people of the various states. On the other hand, if that be not so, and the states can, after making such reference, repeal such reference, what is the result?