Why doesn't the federal government control all funding?
Thank you for your question, Meg. The short answer is that since 1901 Australia has been a federation of states, with three levels of government having responsibility for various areas of funding and expenditure. This federal arrangement is determined by the Australian Constitution.
Sections 51 and 52 of the Constitution lists the areas in which the Australian Parliament can make laws. These national areas of responsibility include funding invalid and old-age pensions, defence, Medicare and immigration. To pay for this expenditure, the federal government raises money by collecting taxes on incomes, goods and services, and company profits.
The states and territories also provide services to Australians, including hospitals, schools, roads and public transport. State and territory governments receive more than half their money from the federal government, and also raise money through taxes.
Three levels of government in Australia.
Parliamentary Education Office (peo.gov.au)
This diagram illustrates the three levels of government—the law-making bodies in Australia with three maps of Australia: Local councils (located around Australia in each local council division); State/territory parliaments (located in the capital cities of each of the 6 states and 2 territories); and federal Parliament (located in Canberra, the nation's capital).
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