Introduction
One of the essential issues in countries that implemented federal governmental system is the balance of power between the central and the regional/local governments. Federal system is characterized by a binding agreement between federal and sub-national levels of government concerning the powers and rights of each government. Another key issue is related to fiscal capacity gap amongst sub-national levels of government due to different ability and capacity of each government to raise revenue. This issues also faced by Australia. Therefore, this essay will explore the strengths and weaknesses of federalism, fiscal federalism, intergovernmental relations, and intergovernmental fiscal relations, with the specific case of Australia.
Federalism
“A …show more content…
The most frequently problems arise concerning coordinating the interests of multilevel governments that leads to overlapping regulatory systems. Federal governmental system involves two or three layers of government, thus, in some fields there is possibility the policies or services are duplicating. For example, the Commonwealth Governments announced that they will establish 24 Australian Technical Colleges that are belong to the States responsibility.
Another weakness of federalism is it creates multiple regulatory systems. Each government might have their own regulatory and legal systems in the same area. In Australia, for instance, there are eight different occupational health and safety regulation.
Federalism also leads to unfair competition. In terms of economic activity, to attract investor away from other states, governments might offer substantial financial incentives that in fact have a negative impact for business environment. The investor, especially international investors, might confuse with the competition between states which in turn lowering the level of confidence to invest in Australia.
Fiscal
One of the essential issues in countries that implemented federal governmental system is the balance of power between the central and the regional/local governments. Federal system is characterized by a binding agreement between federal and sub-national levels of government concerning the powers and rights of each government. Another key issue is related to fiscal capacity gap amongst sub-national levels of government due to different ability and capacity of each government to raise revenue. This issues also faced by Australia. Therefore, this essay will explore the strengths and weaknesses of federalism, fiscal federalism, intergovernmental relations, and intergovernmental fiscal relations, with the specific case of Australia.
Federalism
“A …show more content…
The most frequently problems arise concerning coordinating the interests of multilevel governments that leads to overlapping regulatory systems. Federal governmental system involves two or three layers of government, thus, in some fields there is possibility the policies or services are duplicating. For example, the Commonwealth Governments announced that they will establish 24 Australian Technical Colleges that are belong to the States responsibility.
Another weakness of federalism is it creates multiple regulatory systems. Each government might have their own regulatory and legal systems in the same area. In Australia, for instance, there are eight different occupational health and safety regulation.
Federalism also leads to unfair competition. In terms of economic activity, to attract investor away from other states, governments might offer substantial financial incentives that in fact have a negative impact for business environment. The investor, especially international investors, might confuse with the competition between states which in turn lowering the level of confidence to invest in Australia.
Fiscal