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The Expansion of Federal Power

The expansion of federal power has been achieved mainly against the wishes of the people who have generally refused extensions of Federal power. The expansion has been done principally through the interpretation of the Constitution, but by the Commonwealth controlling revenues, including income taxation. This has led to the Commonwealth funding the States to a level unknown in most other federations, as the graph below illustrates. This is sometimes referred to as “Vertical Fiscal Imbalance”.

Those who designed the first federation, the United States, stressed the importance of state governments obtaining their revenue from their electors.
This imbalance suits some state politicians in that they do not have to answer to their electors for the spending of taxes collected from them. The result is that the people are confused as to which government is responsible for which matters. State governments lose the incentive to perform well in their areas of responsibility [i]. 

Vertical Fiscal imbalance
 Own Source Revenue / Own Purpose Expenditure
 
Chart
[ Source: Department of Treasury and Finance, Government of Western Australia ]

Under our constitutional system, only two institutions straddle the Commonwealth-State divide. One is the Crown; the other is the High Court. Both are intended to be above politics. Neither should have a political agenda. While the Crown remains unquestionably above politics, the High Court, or a majority of the court, has occasionally wandered beyond its role, never more so than in some of their more controversial decisions during the 1990s.

One policy which has dominated the court since 1920, and for which there is no constitutional authority, is centralism, once disguised as an objective exercise in literalist interpretation. This began as long ago as 1920 in the decision of the High Court in the Engineers' Case [ii]. 

According to Professor Geoffrey de Quincy Walker, the case inaugurated a method of one-sided interpretation that contradicted the constitution's plain intention, ignoring the first principles of legal interpretation, and violating the people's wishes as consistently expressed in constitutional referenda, as well as mocking their sovereign power. This, he says, denied the people the advantages of competitive federalism and increased the burden, cost and remoteness of government, more recently pushing the constitutional order to the brink of breakdown [iii]. 

The court has continued this trend in the recent decision in 2006 in the WorkChoices case [iv]. Whether or not we agree with the changes in the Howard Government's industrial legislation, it is difficult not to be concerned as to the consequences of this decision on the future of the federation. The court indicated, with Justice Michael Kirby and Justice Ian Callinan dissenting, that the Commonwealth's use of the corporations power is almost without limits. The court had two decades ago come to a similar conclusion with respect to the external affairs power [v].  

It cannot be said that this vast expansion of federal power was the intention of the founders, or that it reflects the wishes of the Australian people. In fact, most of the failed referenda which involved giving more power to Canberra--some even rejected more than once--have been circumvented by High Court decisions which have favoured the Commonwealth[vi]. 

Professor Greg Craven observed that "the states should be in absolutely no doubt" that this latest decision "is a shipwreck of Titanic proportions. Not since the 1920s has the court struck such a devastating blow against Australian federalism ..."

"How," he asked, "a court can weigh every tiny word of a constitution without grasping the central premise that it was meant to create a genuine federation must baffle historians and psychoanalysts alike." This is, he said, "the greatest constitutional disaster" to befall the States in 80 years.

Reflecting the warning of Justice Kirby in his strong dissent, Professor Craven warned that the federal authorities now have an "open cheque to intervene in almost any area of state power that catches its eye, from higher and private education, through every aspect of health, to such matters as town planning and the environment" [vii].  

That this should worry conservative constitutionalists is well explained in the dissent of Justice Callinan. That this should also worry conservative politicians and their supporters was demonstrated when P.P. McGuinness warned that this decision could and probably would work both ways. A future government could attempt to regulate prices and incomes, re-regulate the labour market and, if socialism becomes fashionable again, effect the nationalisation of any sector of the economy. He wrote that the majority had "destroyed our federal system of government". They had effectively abolished any logical or sensible limitation of the federal powers [viii]. 

Professor Craven said there is not the "least chance that Canberra will use these powers comprehensively to take over such policy nightmares as our health and education systems". Instead, based on long practice, Canberra will employ its new capacity to "cherry-pick politically attractive items and to embarrass uncongenial state governments". In other words, the politicians will, thanks to the High Court, be allowed to behave like politicians.

In handing down its decision on November 14, 2006, the High Court majority said the fact the people may have indicated their objection to a specific change is of "no assistance" to them. That is, the fact the people may have refused to grant some power to the Commonwealth is to be completely ignored. The High Court has turned its back on--or, as Professor Walker says, mocked--the "quasi sovereignty" with which the founders specifically endowed the people [ix].  

The result is that the High Court has abdicated much of its role as an important check and balance. As Professor Craven says, we no longer have "even a deeply biased constitutional umpire". The High Court "has given Canberra the key to the constitution". 

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