Federal dynamics in times of economic and financial crisis

The global economic and financial crisis is a challenge for all governments, but particularly for federal states because divided and/or shared territorial powers make federations susceptible to coordination problems in fiscal policy making. This article explores the effects of the ongoing crisis on federal relations. Three kinds of problems that may become the cause of federal tensions and conflicts are evoked: opportunism of subgovernments, centralisation and erosion of solidarity among members of the federation. Our analysis of fiscal policies and federal conflicts of 11 federations between 2007 and the present reveals three kinds of coordination problems: shirking in the use of federal government grants, rent‐seeking in equalisation payments, and over‐borrowing and over‐spending. Our results show that shirking remained limited to few cases and occurred only in the first part of the crisis. However, rent‐seeking and over‐borrowing and over‐spending led to a reduction of solidarity among subgovernments and to increased regulation of the fiscal discretion of the members of the federation. Subsequently, tensions in federal relations increased – although only in one case did this challenged the federal order.     

An institutional explanation of party system congruence: Evidence from six federations

Abstract.  The allocation of resources between the federal and state levels of government is a key institutional variable explaining the congruence or similarity of party systems. It affects the incentives voters and parties face, and opportunities for cleavage mobilization. This article pioneers measures for comparing congruence across federations. Evidence from state and federal elections in six federations produces clear evidence that party systems are least congruent in decentralized federations and most congruent in centralized federations. Voter behaviour, indicated by the variation of electoral support for parties across units of the federation and the similarity of swings in support between the state and federal levels, is most responsive to the allocation of resources. Party system structure is less responsive to this variable.     

Interstate Tax Disharmony in India: A Comparative Perspective

Interstate tax disharmony arising from the states' attempt to"free-ride" on other states can cause distortions and inequityin a federal system. In this article, an attempt is made toanalyze interstate disharmony in the Indian tax system, providea quantitative measure of disharmony, examine its trend overtime, and compare the degree of disharmony in India with threeother important federations. The major conclusions are that(1) India has a higher degree of interstate tax disharmony thanAustralia, Canada, and the United States; (2) tax disharmonyin India has increased over lime unlike in the other three federations;and (3) tax disharmony in respect of individual state taxesis higher than the taxes taken in aggregate.     

The Party Systems of the Australian States: Patterns of Partisan Competition, 1945-1986

There has been a longstanding interest in the relationship betweenthe party system in reflecting regional diversity and maintainingthe dispersal of power in federations. Given the relative scarcityof information on this question in the Australian federation,this article examines the extent to which the party systemsof the Australian states differ by looking at a number of indicatorssummarizing patterns of partisan support in elections and legislaturesover a period of forty years. Its findings demonstrate persistentdifferences in the structure and dynamics of the state partysystems. In particular, the study shows that, in spite of thedichotomizing tendencies of a parliamentary system, electoralcompetition in the A ustralian states is characterized by astrong tendency to dispersed multi-partyism rather than simplebipartyism, although the individual states occupy varying positionswithin this range. The charting of this partisan diversity isimportant in questioning some of the presumptions of regionaluniformity that have been applied to the study of the Australianfederal system.     

Institutional dynamics in loosely coupled federal systems: The cases of Argentina and Venezuela

This article takes up recent work on path dependence and dynamism in federal systems. It argues that historical institutionalist suppositions derived from tightly coupled federations cannot be extended to loosely coupled federal systems, as are found in Latin America. Loose coupling means that interaction between actors and state levels is contentious and informal. Loosely coupled federations are less prone to path dependence and exhibit a strong propensity to institutional dynamics, especially after decentralization. In this article, the focus is on the relationship between party system and federal structure to show how the interaction between both components in the context of loose coupling can lead to swift shifts towards centralization or decentralization. By examining two cases, Argentina and Venezuela, the relevant mechanisms of institutional interaction are carved out and the resulting dynamics are reconstructed.     

Federalism and the Strong-State/Weak-State Conundrum: Canadian Economic Policymaking in Comparative Perspective

The areal dispersion of power and constitutional division ofresponsibilities in federal arrangements are generally feltto limit the ability of federal systems to improve economicperformance. Examining Canada within a comparative framework,we assess "the federations as weak states" hypothesis as wellas the utility of the "strong-state/weak-state" model itself.Although some aspects of the Canadian federal system—namelythe combination of federal with parliamentary traditions andthe resulting adverse policy styles—inhibit the adoptionof effective economic adjustment policies, these features arenot necessarily found in other federal arrangements. Comparisonswith Switzerland, Austria, and West Germany suggest that, undercertain circumstances, federal power sharing may be conduciveto bringing about broad agreement on both goals and policiesamong national, regional, and local governments and major economicactors.     

Constitutional Arrangements of Federal Systems

Constitutions alone do not make or break federations. In anyevent, they are not static, and evolve over time through judicialreview and political understandings, even in the absence ofconstitutional change. Nevertheless, institutions, principles,and procedures for which constitutions provide are significantinfluences on federations. This article examines some key featuresof federal constitutional arrangements in different federalsystems: the status of the constituent instrument; the divisionof powers between the orders of government; the scope of economicunion; regional disparity; and the relationship of federalismto the rest of the system of government. Today, there is a wideand widening variety of federal structures in systems aroundthe world. Borrowing is tempting, but should be done with care;federalist elements are closely linked with other aspects ofa system of government and with the historical, political, andeconomic setting in which it has been developed.     

Costing Constitutional Change: Estimating the Cost of Five Variations on Australia's Federal System

Australia's system of government is by far the most centralised of the four 'classic' federations, hosting extremely centralised states, exceptionally weak local governments, and little of the substantive decentralisation and subsidiarity often presumed to derive from a federal structure. Five variations on the present structure are examined to estimate the costs of improved decentralisation, including New States models as traditionally advocated, Regional States models based on the ACT combined state–local prototype, and a National–Local model comprising a strengthened national government and local governments in essentially their present form. 1 Results indicate that the Regional States or National–Local models could deliver greater decentralisation while saving over $20 billion per annum compared to the present system. Generally, the analysis suggests that coherent modelling of alternative government structures may be more feasible than previously thought.     

How do fiscally decentralized federations fare in times of crisis? Insights from Switzerland

This article examines federal dynamics during times of crisis in fiscally decentralized federations using Switzerland as an example. Based on qualitative research, we analyse how the relationship between the federal government and the cantons evolved during the recent ‘Great Recession’ and ensuing financial crisis. We contend that fiscally decentralized structures, as well as the consensus-oriented institutions of the political system, protect the federal balance of power. Our results show that Switzerland indeed adapted well to the crisis of the 2009 economic recession. However, the deficit crisis has revealed challenging coordination problems, notably in the areas of fiscal equalization and corporate taxation, which have the potential to put federal stability under stress. So far, the system has adapted well and safeguarded the federal order. Due to its combination of fiscally decentralized institutions and a strong consensus culture, Switzerland has proven to be a particularly robust federation.     

THE MANAGEMENT AND ADMINISTRATION OF GOVERNMENT RESEARCH AND DEVELOPMENT

One of the minor curiosities of public sector analysis in Australia is that rather little attention has been paid to the tools and instruments that could provide a more effective management of government research and development. Once government R & D is mentioned, we immediately think of the large statutory bodies such as CSIRO or the Atomic Energy Commission, but the subject extends widely beyond these two bodies. The Australian Government, federal and states, provides 70% of all the funds for Australian R & D, and the government itself performs, in its own laboratories and statutory authorities, 54% of the total R & D carried out in Australia Of OECD countries, these percentages of government activity are exceeded only by Iceland, New Zealand, Portugal and Turkey. Virtually every federal department and every department of each state government performs R&D. Apart from the "big two" of CSIRO and Atomic Energy, the Post Office, Defence, Health, Housing, and Minerals and Energy all have research laboratories, and the last major survey of Australian R & D in 1973 listed 22 federal departments and 130 organizations in the State Governments performing R & D. A recent article in this journal correctly noted a shift from "ends to means" in Australian science policy. The present article proposes a specific means of managing this almost unique public involvement in R & D in Australia.     

Economic and Monetary Union: Pillar of a Federal Polity

The Masastricht Treaty commitment to the economic and monetaryunion (Emu) follows a lengthy process of building up monetaryintegration, starting with the European Monetary System (1979),then, in the 1980s, the free movement of capital and integrationof financial markets. Emu, representing the final stage of thisprocess, is seen by most federalists as a pillar in the structureof the European Union, contributing to its development by stagesinto a federal polity. With the economic and monetary union,the European Union's economic and environmental powers are becomingcomparable to those of some federations, and with institutionsthat have over time acquired substantial federal elements, furtherreforms may well make the European Union into a federal system.This article identifies the forces, interests, and methods involvedin an incremental process that may be called a new federalism.     

Comparing federal institutions: Power and representation in six federations

The study of comparative federalism is often hampered by the diverse range of federal institutional arrangements in practice, as well as the ambiguity surrounding the concept of federalism. This article identifies three main conceptual approaches to federalism – sociological, constitutional, and governmental – then proposes a revised governmental approach that takes account of the institutional effects of federalism, for application in comparative politics research. Minimally defined, all federations are products of institutional rules that create separate territorial spheres of authority. This article compares Canada, the United States, Australia, Austria, Germany and Switzerland along two key institutional dimensions that structure politics in the federal state: resource allocation, and the representation of constituent units in federal-level decision-making.     

Government Responsibility and Electoral Accountability in Federations

Because federalism can be a threat to accountability, a modelof voting behavior in federations must accommodate voters' attributionsof responsibility to each order of government for policy outcomes.This study uses a panel survey of Canadians in both federaland provincial elections to ask whether voters are able to holdgovernments accountable in a federal context. Voters may ignoreissues where responsibility is unclear, they may reward or punishboth the federal and provincial governments to the same degree,or the confusion of jurisdiction may sour them on the governmentor even the political system. Canadians who blamed both governmentsfor problems in health care did not lake this judgment to theirvoting decision in either the 2000 federal election or the 2001elections in Alberta and British Columbia, while those who couldidentify primary responsibility did so. Federalism and intergovernmentalpolicymaking may reduce voters' ability to hold their governmentsaccountable.     

Implementation of Aged Care Policy in the Australian Federal System

In 1983–84 the Commonwealth and state governments trialled the introduction of the geriatric assessment team (GAT) program. Twenty years of Australian Health Ministers' Conference (AHMC)¹ minutes and records (1969–88), files within the Queensland and Commonwealth health departments (1983–88) and interviews with major stakeholders revealed that implementation can extend over many years and can require a confluence of factors for a policy idea to come to fruition. This article examines the dynamics involved in the implementation of the GAT policy and reveals that expert advisers played a central role in policy innovation and implementation and that the federal system could both obstruct and facilitate policy implementation. While there was evidence of delay and conflict, the Australian states through their expert advisers were significant contributors to the development and implementation of aged care policies. Many of the intergovernmental relations were often characterised by a high degree of cooperation at least at the officer to officer level. The 'coercive' nature of the federal system may need to be revisited.     

The Future of Renewable Energy in Australia: A Test for Cooperative Federalism?

In the context of the Australian federal system industry development will be influenced by the policies of each sphere of government. When announcing a set of policies in 1997 to develop the renewable energy industry the Australian federal government acknowledged the need for a cooperative approach between all governments and industry. The objective of this article is to analyse the government policies over the 1997–2007 period to promote the development of the renewable energy industry in Australia. The article highlights a number of factors that have served as barriers to the development of the industry. The research provides important insight into the difficulties associated with establishing cooperative national arrangements in areas of state government responsibility in the Australian federation. The lessons also inform the current debate on the policy initiatives needed to more effectively reduce greenhouse gas emissions from stationary energy from the increased availability of renewable energy .     

Federal Implications of Northern Territory Statehood

Just over a decade since the failed referendum of 1998, statehood for the Northern Territory (NT) is back on the political agenda. The achievement of statehood would be a first for Australian federalism, where no new state has been created or admitted since Federation. Following a discussion of the concept of statehood and how it might be achieved, it traces the political development of the NT. The article then examines the implications of NT statehood for the Australian federation and finds that statehood would facilitate constitutional change in the federation by lowering the threshold required for success in a national referendum. Statehood may also raise questions about the equal representation in the Senate of less populous states. However, statehood would have no effect upon financial arrangements with the Commonwealth, the standing of the Northern Territory at COAG meetings, or the legal standing of the other states.     

Interstate Cooperation and Territorial Representation in Intermestic Politics

Both the American and the German federal systems are actingunder the impact of increasing globalization and are involvedin processes of macro-regional integration. These developmentsare of vital interest for the constituent members of both federations.In such transformations, the nature of the representation ofsubnational units is a pivotal element. The crucial point iswhether the federation and/or the new transnational regimesprovide for the representation of subnational territorial unitsand give space for their horizontal cooperation.     

Asymmetric federalism and economic voting

Although federal arrangements adopt a multiplicity of forms across and within federations, this article suggests that some models of power division are better than others at enhancing clarity of responsibility and electoral accountability. This conclusion is the result of exploring responsibility attribution and economic voting in a state where decentralisation arrangements vary across regions: the Spanish State of Autonomies. Using electoral surveys and aggregated economic data for the 1982–2012 period, the empirical analysis shows that regional economic voting is most pronounced in regions where decentralisation design concentrated authority and resources at one level of government, whereas it is inexistent in regions where devolution followed a more intertwined model of power distribution. The implication of the empirical findings is that the specific design of intergovernmental arrangements is crucial to make electoral accountability work in federations.     

Federal-State Relations in Gun Control: The 1993 Brady Handgun Violence Prevention Act

The Brady Handgun Violence Prevention Act, which took effectin February 1994, sets minimum nationwide requirements for thesale of handguns and establishes a national criminal-backgroundinformation system. Each of these thrusts of Brady involvesfundamental issues of federalism. The first involves the traditionalgive-and-take between the states and the federal governmentin sorting out specific authority over the prohibition of firearmsales. The second thrust, establishing a national informationnetwork, requires cooperation of all the states and the federalgovernment. This article reviews Brady in the context of twenty-fiveyears of federal gun-control activity, examines its impact onfederal-state relations, and addresses the development of anational criminal-history information network linking the statesand the federal government.     

The Savings and Loan Debacle and Erosion of the Dual System of Bank Regulation

The crisis in the banking and thrift industries is catalyzinga shift in the traditional system of dual state-federal bankregulation toward the federal government and away from the states.Erosion in this system has been evident for the past decadedue to actions of the Congress, federal regulators, and thejudiciary. The dual system has two sets of flaws. One is regulatorycompetition that encourages weak monitoring of financial institutionsby states. The other is created by the "moral hazard" of thecurrent system of federal deposit insurance. There are two pathsto reform. One is continued erosion of the power of the states.The alternative is to provide incentives that reinforce thedual system of regulation and deter the sources of "moral hazard."