COVID-19 may bring back competition between the states

This sense of autonomy was heightened by the ad hoc "National Cabinet" where the premiers dictated to the prime minister, reversing the previous order.

How the Federal Structure Was Gradually Eroded

Originally, Australia had a functional federation comprised of six independent colonies, which each raised enough taxes and charges to support themselves.

To ensure a national economy, states surrendered the power to levy customs and excise to the federal government, along with the power of the pre-eminent right to make legislation in a number of areas listed under Section 51 of the Constitution.

The economies did continue as before with the state's levying income taxes, and also charging for services, transfers of assets, and taxing land.

It didn't take long for the financial strengths of the states, however, to migrate to the Commonwealth, along with the power to levy income tax.

Over the next century, this led to a gradual shuffling and reshuffling of taxes between levels of government and the complete abandonment of income tax by the states. The situation now sees half of a state's budget come from the Commonwealth.

Why the Current System Needs a Revamp

Federations work well, particularly in large, decentralised countries. They should work better than unitary systems for a number of reasons.

First, decisions are made closer to the people directly affected who also have access to the best on-the-ground information.

Second, those who raise the money are responsible for spending it, encouraging thrift and efficiency.

Third, they allow for experimentation and quick transfer of lessons learned.

And fourth, they provide redundancy so that a failure in a part of the country does not become a catastrophic failure by being a failure of the whole. (To understand this point, imagine if Daniel Andrews was responsible for the lockdown policy of Australia, instead of Victoria, during the pandemic.)

These are undoubtedly some of the secrets of success to the world's dominant economy-the United States of America.