The future of the Australian federation: intergovernmental financial relations amid growing fiscal pressures

This chapter provides an overview of the origins, evolution and structure of the Australian federation before describing the impact of the 2008–9 financial crisis on both the national economy and on intergovernmental relations. It argues that while Australia was not adversely affected by the crisis and its immediate aftermath owing to an effective stimulus program and the benefits of an unprecedented resources boom, mounting budget pressures are putting Australia’s highly centralized federal financial system under political pressure. The chapter suggests that in the absence of reform the Australian states are especially vulnerable to declining grants from the federal government. Despite these mounting fiscal pressures the federalism reform process launched in 2014 has been abandoned and there is little political enthusiasm for reform.