1. The Constitution Division of Powers

2. Any FEDERAL constitution must deal with how the powers of government are divided between the central and the regional levels Any FEDERAL constitution must deal with how the powers of government are divided between the central and the regional levels The Australian Constitution follows the American example The Australian Constitution follows the American example

3. Division of Powers ENUMERATED powers – these are also known as SPECIFIED powers These are written in the Constitution These are written in the Constitution Eg. s 51 – a list of powers shared by the Commonwealth and the States s 52 – the power over the federal seat of government (Canberra) & the Commonwealth public service

4. Division of Powers RESIDUAL powers – are unstated (unspecified) RESIDUAL powers – are unstated (unspecified) Any power left unstated in the Constitution was intended to remain a state power Any power left unstated in the Constitution was intended to remain a state power Eg. Education, health etc Eg. Education, health etc

5. Division of Powers Powers are either… Exclusive Exclusive Concurrent Concurrent Residual Residual

6. Division of Powers EXCLUSIVE POWERS Belong to the Commonwealth only Belong to the Commonwealth only Are always enumerated Are always enumerated Are few in number Are few in number Scattered throughout the Constitution Scattered throughout the Constitution Eg. s 52 – seat of government & C’th public service s 92 – customs, duties & excise

7. Division of Powers CONCURRENT POWERS Are shared between the Commonwealth & the States Are shared between the Commonwealth & the States Are always enumerated Are always enumerated Are listed in the largest section of the Constitution – s 51 (it has 39 sub-sections) Are listed in the largest section of the Constitution – s 51 (it has 39 sub-sections) Eg. s 51 ix – Quarantine powers 51 xxix – External Affairs Eg. s 51 ix – Quarantine powers 51 xxix – External Affairs s 51 xx – Corporations powers 51 xxvi – The Race Power s 51 xii – Coining moneys 51 v – Post & telecom’s Note: some concurrent powers are exercised exclusively by the C’th because (a) other parts of the Constitution prevent the states using the power – eg. s 115 prohibits states from coining money (b) some of the powers are “by their nature” exclusive eg. the external affairs power

8. Division of Powers RESIDUAL POWERS Belong to the States only Belong to the States only Are not enumerated (unspecified) Are not enumerated (unspecified) Are large in number but ill-defined Are large in number but ill-defined Eg. Education, health, roads, local government, housing etc Eg. Education, health, roads, local government, housing etc

9. Division of Powers CONFLICT OVER LEGISLATIVE POWERS In CONCURRENT powers, where 2 levels of government have the same power, the Constitution resolves conflict in s 109, which states… “When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid” Arguably, this has the effect of making CONCURRENT powers virtual EXCLUSIVE powers

10. Division of Powers OTHER ASPECTS OF THE DIVISION OF POWERS s 106 – “Preserves” the Colonies’ constitutions, where they don’t conflict with the Aust. Constitution. They become State Constitutions s 107 – all colonial powers continue after federation except those given exclusively to the Commonwealth s 108 – existing colonial laws to continue after federation, where they don’t conflict with the Aust. Constitution

11. Division of Powers FINANCIAL POWERS s 87 – 75% of all Commonwealth customs & excise revenue to be returned to the States for 10 years (now spent) s 90 – The Commonwealth has the EXCLUSIVE power to impose customs & excise duties In several High Court cases the meaning of “excise” has been broadly defined to mean almost any tax. Thus the Commonwealth now collects most tax revenue whilst the States spend the most government expenditure

12. Division of Powers s 94 – Surplus Revenues of Commonwealth to be distributed to States This was intended to guarantee the States a source of income by accessing Commonwealth monies that were unspent. A High Court case (Surplus Revenue 1908) agreed that the Commonwealth could place unspent monies into “trust funds”, thereby leaving no surplus to distribute. This cut the guarantee of revenue to the States, making them dependent on the Commonwealth financially

13. Division of Powers s 96 – allows the Commonwealth to grant money to the States “as the parliament thinks fit” The Commonwealth parliament may grant money to the States with conditions attached as to how the money is to be spent. Thus the Commonwealth may grant money for education (a residual and hence state power) provided the money is spent on science laboratories – as Menzies did. s 96 permits the Commonwealth to become involved in areas of state power.

14. Division of Powers “FISCAL FEDERALISM” The imbalance of tax collection and government expenditure is called VERTICAL FISCAL IMBALANCE All federations have VFI but Australia’s is the largest. The States’ have large spending obligations but limited sources of revenue The Commonwealth must transfer money to the States either as grants, or as s 96 “tied grants” ie – with conditions attached

15. Vertical Fiscal Imbalance

16. Division of Powers “FISCAL FEDERALISM” s 99 – requires the Commonwealth to treat all states equally. Some states are wealthier than others (WA v TAS). Therefore the Commonwealth makes HORIZONTAL FISCAL EQUALISATION payments to keep living standards relatively equal across Australia