Gorgeous George

The previous thread on Tuesday’s Newspoll result took a turn to matters constitutional. What’s it all about? Beats the hell out of me. The important thing is that esteemed constitutional authority George Williams has put his two cents in, and anything he has to say deserves a better fate than delayed moderation and position 484 in a thread that should have been put out of its misery days ago. So here it is:

In answer to Fulvio’s question re State taxing powers, the Constitution was meant to secure the States’ financial position and independence. At federation in 1901, it was the States and not the Commonwealth that levied income tax. However, the demands of two world wars and changes to the economy, as well as some canny manoeuvring by the Commonwealth, have left the States with no revenue from income taxation.

The High Court decisions in the Uniform Tax Cases of 1942 and 1957 upheld a Commonwealth takeover of the income tax system. Not only that, the decisions also gave a wide interpretation to the ability of the Commonwealth to attach conditions to money granted to the States. Section 96 of the Constitution allows the Commonwealth to make grants on “such terms and conditions” as it thinks fit.

The States today could levy income tax, but it would be in addition to federal tax and so it would mean taxing people twice. The Commonwealth could even insist that its share is collected first. As a result, the States have turned to new sources of taxation, such as on gambling. Hence the rise of casinos …

Author: William Bowe

William Bowe is a Perth-based election analyst and occasional teacher of political science. His blog, The Poll Bludger, has existed in one form or another since 2004, and is one of the most heavily trafficked websites on Australian politics.

9 comments on “Gorgeous George”

  1. To pull something else from the other thread:

    And to those mewling about federalism – I think the states should be abolished.

    Many people do think that. However, surely the way for it to be done, if it is to be done, is via amendment to the Constitution? Until then, it is arguably contrary to the rule of law to applaud the gradual erosion of the states by ever increasing aggression from the federal parliament and a meek acquiescence by a (hand-picked) High Court.

  2. I too see no benefit in Federalism, and I used to think that the States should be abolished. But I’ve changed my mind. Now I think the logical implication of anti-Federalism is that Federation was a mistake. So, don’t abolish the States, abolish the Commonwealth! De-Federation, that’s the ticket.

  3. Politicians can not be trusted with concentrated power and tend to get obsessed with it. Imagine how much further Howard would have gone if there were no States. The checks and balances that these leyers bring I think are a good thing even if at times an inefficiency.

    The danger, and particularly with Howard, is that vested interests would continually be favoured over others. The govt would simply administer ‘Sates’ to suit big business interests and not that of the population.

  4. Off topic, but I just want to add my dissapointment that George Williams wasn’t pre-selected for either the House of Reps or Senate. Hopefully Rudd is saving him for the high court. 😛

  5. I used to be a “nationalist” when I lived in WA and hated all the excessive Western Australian focus of our then conservative politicians. When I moved east I realised how eastern obsessive life is here in Sydney. Where else does a paper have a section about local news called “National”. The ignorance of the issues that affect people outside of the eastern metropolises was eye-opening and outstanding.

    Now I am a convinced Federalist that there are issues and ideas that arise locally and are locally important that require local solutions.

    Everyone who says get rid of the states and just bring about regions – are only asking for a bigger form of federalism as regions are just euphemisms for small local states or asking to make the regions eunuchs against the Federal government who are mere providers of Federal government money and programs.

    The irony is that our current uberFederalist government is doing now all the things the conservatives attacked Whitlam for in seeking to regionalise government and override the states.

  6. The full reach of Howard’s centralism is his apparently serious threat to use the ‘external affairs’ power to impose (part) of his Murray-Darling plan onto the states. This is a government made up of conservatives who pilloried Hawke for using the same power to preserve wilderness (and preserve votes). And has ditched the ILO, UN etc, etc.

    At least Labor has used the external affairs power to meaningfully (if selectively) implement treaties as they are intended.

    It makes nil sense to proclaim ‘abolish the states’, unless you have a sensible proposal for alternative regional mechanisms to replace them. Dr AJ Brown has a bucketload of such proposals. The Howard government – alone of recent governments – has had none. For that reason, Prof Craven – a true conservative – rightly depicts them as constitutional vandals. Truly, it makes the argument about what Republican model is superior to the creaking constitutional monarchy look like angels on the head of a pin.

    Think about it. Whitlam had plans for strong regional authorities. Fraser had co-ordinated federalism. Hawke had co-operative relations and the Bicentenary constitutional commission. Howard? Zilch. Rudd? I suspect he’ll try to play off the fact of 9 labor administrations, get frustrated when he doesn’t get his geeky way, and throw George Williams a blank page for a blueprint.

    If we still have Labor governments in all the states and nationally, then, maybe just, a constitutional rewrite is possible. Rudd is no legal mind, nor even a visionary thinker, but I suspect if he is ever elected, he will want to leave a lasting legacy.

  7. # J-D Says:
    July 27th, 2007 at 4:50 pm

    I too see no benefit in Federalism, and I used to think that the States should be abolished. But I’ve changed my mind. Now I think the logical implication of anti-Federalism is that Federation was a mistake. So, don’t abolish the States, abolish the Commonwealth! De-Federation, that’s the ticket.

    I’m not too happy with the way the federation has developed, either. Vertical fiscal imbalance is one example. What do you think of this suggestion about leveraging COAG?


  8. Amber Dekstris, I think your proposal is an interesting one. Its major defect is the same the major defect of my proposal for DeFederation, and also the major defect of the recurrent proposals for abolition of the States: none of them have any chance of actually happening. If we’re going to talk about fantasies, I think I’m still going to give preference to my own one.

    That said, you might be interested in what they do in Germany (also a federation). There, the approximate equivalent of an Upper House of Parliament is an institution called the Bundesrat (meaning, approximately, Federal Council). This consists of delegations from the Laender (equivalents of States) each consisting of the senior ministers of the Land government. I’m sure there’s more detailed information about this at various places on the Web if you’re interested. Obviously it doesn’t have the full range of powers that you’re proposing for COAG in your suggestion, but it does play a direct role in national/Federal politics in Germany.

  9. The problem with Australian Federation is that there are not enough States. The current State boundaries do not make any sense in terms of economic interest so it is no wonder that the States do not work in the economic sense. Each of NSW, Qld and WA could probably be broken into 3 States based on economic interests, for starters, to release their large regional areas from a faraway capital city. More States would result on each State concentrating on what it does best economically and encourage more competition between the States. Federations really only work when there are a large number of states.

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