War is the health of the Commonwealth

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I’ve been reading a lot on Australian history and Federalism and all that.  One of the things that was quite useful indeed was from the “Yearbook Australia of 2008” by a chap called Colin Brett. He wrote about section 96 of the Australian Constitution, which was apparently an afterthought but has given the Commonwealth the whip hand when it comes to raising cash, and thereby dishing out the Law to the States.  This becomes a live issue because the Feds want a big mining tax and Queensland and Western Australia want to keep control of things ’emselves.  So, it was with smug recognition that I saw this below.

Australian Financial Review 23-8 December 2010

Treasurer has stick to keep states in line” by David Uren

Leading state tax expert Neil Warren said the commonwealth simply had to repeat the strategy it had used to seize income-taxing powers from the states in 1942, when it resolved to reduce grants to the states by one dollar for every dollar of income tax they raised.

“The states challenged that in the High Court in 1946 and lost. Section 96 of the Constitution says the commonwealth can do whatever it likes with its grants to the states at its discretion and there is nothing the states can do about it,” Professor Warren said.

The title is a reference, btw, to Randolph Bourne’s unfinished essay about the expansion of US State powers during World War 1 – “War is the Health of the State”

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