To determine 'Which level of government should do what and why?' we should establish appropriate design criteria and take stock of our present systems of government, mindful of the ongoing
challenges we face as a country, and also of structures and systems employed in other countries.
Our system should address a number of criteria. Foremost, the system should be;
Governments in particular need to be;
- stable, yet flexible;
- socially, environmentally and economically sustainable.
Whilst ensuring they are;
- outcome effective, in functional areas such as the environment, health, education and justice;
- helpful to individuals and businesses [small and large];
- centralised and decentralised in an appropriate balance;
- close to and responsive to the diverse needs of individuals and communities across the country;
- responsive also to the needs of the country as a whole;
- responsive to global challenges and circumstances.
Taking stock of our present systems
In the year ending June 2001, Australian governments across all three levels took in a combined total of $257 billion in revenue from all sources, and spent a total of $275 billion including
The Commonwealth government has constitutional responsibilities in areas such as Defence, Foreign Affairs, Taxation, Immigration, Trade and Commerce, Post and Telecommunications, and Social
Security. These account for 55 per cent of all government spending in Australia, yet collects 82 per cent of all taxation revenue.
Powers and responsibilities not constitutionally assigned to the Commonwealth, default to state and territory governments. In practice however, many functions involve both Commonwealth and
state/territory governments – for example in education, health and transport. These are state responsibilities constitutionally, but largely financed by Commonwealth grants.
State and territory governments account for about 39 per cent of all Australian government spending, but raise just 15 per cent of all government tax revenues. These are heavily
dependent upon Commonwealth government grants, which give the Commonwealth considerable coercive bargaining power and somewhat centralised control over state and territory governments.
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