FSRC Federalism Report

Appendix 1: Glossary
Australian Loan Council	An intergovernmental body established informally in 1923, and formally in 1927 under the Financial Agreement between the Commonwealth and the States. The members of the Loan Council are the Commonwealth and State Heads of Government, or their delegates (usually the Treasurers). The Loan Council typically meets at the same time as the Financial Premiers Conference. Its role is to consider the total levels, and the distribution, of government borrowing in Australia.
Centralisation	An increase in the power of the central government in a federation, at the expense of the regional governments.
Commonwealth Grants Commission	A Commonwealth statutory authority which makes annual recommendations for the distribution of Financial Assistance Grants among the States, with the intention of bringing about Horizontal Fiscal Equalisation.
Competitive federalism	Policy diversity across the various governments which make up a federation, which is dependent upon those governments being able to implement public policy independently of one another, and which often results in better public policy, as governments test new policy solutions, and are able to learn from the successful or unsuccessful implementation of policies by other governments.
Concurrent federation	A federation in which the two levels of government share jurisdiction and responsibility in many fiscal and policy areas
Co-ordinate federation	A federation in which the constitution institutes a strict division of responsibilities between the two levels of government.
Council of Australian Governments	An intergovernmental body established in May of 1992 as the successor to the Special Premiers Conferences of 1990 and 1991, to meet at least once a year. The Council consists of the Prime Minister, the six State Premiers, the Chief Ministers of the Northern Territory and the Australian Capital Territory and the President of the Australian Local Government Association.
Executive federalism	The tendency for intergovernmental relations in a parliamentary system of government to be dominated by the executive branch.
Federation	A nation in which sovereignty over the nation’s territory is shared between two levels of government: a central, national government and a number of regional governments. A constitution determines which powers are to be exercised by each level of government.
Financial Assistance Grants	The main component of Commonwealth General Revenue Assistance to the States.
Financial Premiers’ Conference	An annual meeting of Australian Heads of Government and Treasurers, usually held in Canberra in late March. Its main purpose is to discuss the amount of Financial Assistance Grants to be paid by the Commonwealth Government to the States, and the interstate distribution of these grants.
General Revenue Assistance	Commonwealth grants to the States which the States may spend as they see fit.
Head of Government	The leader of the executive branch of a government. The Prime Minister is the Head of the Commonwealth Government. The Premier of each State is the Head of that State’s Government. The Chief Minister of each Territory is the Head of that Territory’s Government.
Horizontal Fiscal Equalisation	Horizontal Fiscal Equalisation is a method of distributing funds among the States. It ensures an equal capacity of each State to provide State-type public services at an average level, provided that it makes the same effort to raise revenue as the States do on average, and operates at an average level of efficiency.
Intergovernmental relations	Relations between governments. This report is concerned with the relations between the two levels of government in a federation, which are necessary if governments are to deal with matters unforseen by the constitution, to determine the distribution of roles and responsibilities appropriate to the needs of the federation, and to collaborate on joint policy and common or complementary programs.
Inter-State Commission	A body established by the Australian Constitution that was intended to oversee the integration of the six federating Australian colonies into a single national market, but which has not existed for most of the period since federation.
Leaders’ Forum	An intergovernmental body established in July of 1994, consisting of State and Territory Heads of Government, at which State and Territory Heads of Government are able to discuss national issues without the Prime Minister present.
Microeconomic liberalisation	The reduction or elimination of specific barriers to the free movement of, and competition in, goods, services, labour and capital.
Ministerial Councils	Australia has 21 Ministerial Councils, each consisting of Ministers from the States, the Territories and the Commonwealth meeting to discuss their particular policy areas, with the principal objective of intergovernmental co-operation, including a co-ordinated approach to policy development and the resolution of common problems having regard to national concerns.
Mutual recognition	A regime of regulatory harmonisation under which each participating government recognises the regulations of all other participating governments as equivalent to its own. Under mutual recognition with respect to trade in goods, a company satisfying the regulatory requirements of one jurisdiction can trade in all jurisdictions, without being obliged to meet the individual regulatory requirements of each. Under mutual recognition with respect to the pursuit of professional occupations, a professional registered in one jurisdiction can practice in all jurisdictions, without having to be registered in each.
National Competition Policy	A policy adopted by the Council of Australian Governments at its April 1995 meeting, and implemented by a series of intergovernmental agreements as well as a scheme of uniform legislation, which is intended to increase the level of competition in the Australian economy.
New Federalism	The phrase ‘New Federalism’ has been used to describe three generations of Prime Ministerial initiatives in Commonwealth-State relations, under the Whitlam, Fraser and Hawke Governments. This report focuses principally on Prime Minister Hawke’s New Federalism, which it also describes as 1990s New Federalism.
Regulatory harmonisation	The harmonisation of Commonwealth and State regulation of the Australian economy, to enhance the operation of a single Australian market. Regulatory harmonisation is achieved by the implementation of national uniform standards, or by way of mutual recognition of standards.
Special Premiers Conference	A series of Heads of Government meetings initiated by Prime Minister Hawke and held in 1990 and 1991. The intention of the Special Premiers Conferences was to bring about microeconomic liberalisation and reform of Commonwealth and State roles and responsibilities, including reform to federal financial arrangements.
Specific Purpose Payments	Commonwealth grants to the States which must be spent in compliance with conditions laid down by the Commonwealth.
Treaties Council	An intergovernmental body established at the June 1996 meeting of the Council of Australian Governments, to meet at least once a year. The Council consists of the Prime Minister, the State Premiers and the Territory Chief Ministers, and has an advisory role on matters concerning treaties and other international instruments.
Uniform legislation	A legislative scheme which is designed to implement a national uniform policy solution, although no one Australian parliament has the power to implement such a solution. It depends upon legislation that implements the policy being passed in every State Parliament.
Vertical fiscal imbalance	A situation in which the central government in a federation raises more revenue than it expends, while the constituent governments raise less. A federation’s rate of vertical fiscal imbalance is calculated as the ratio of the federal government’s revenue (measured as a percentage of total government revenue) to its expenditure (measured as a percentage of total government expenditure). The imbalance is corrected by transfers from the central to the regional governments.

AUSTRALIAN FEDERALISM: THE ROLE OF THE STATES

Appendix 1: Glossary