The Howard Government promoted its New Tax System (ANTS) with its Goods and Services Tax as a major reform of Australia's taxation system that would also enhance the financial capacity of Australia's States and Territories to provide community services. As such, these reforms would ostensibly arrest the erosion of the fiscal capacity of States and Territories that had occurred over the course of the twentieth century as the Commonwealth expanded its role in the social and economic affairs of the nation.
This thesis places the Howard tax reform agenda in its structural and institutional context and using the tools of historical institutionalist analysis. shows it to be yet another manifestation of the "creeping centralisation'" within the institutional design of the Australian federation and that this centralising dynamic continues to be the dominant force shaping the relationship between the Commonwealth and the States and Territories. Contrary to the claims of the Commonwealth, it reveals the New Tax System and the embedding of the GST at the core of the complex set of financial relations at the heart of Australian federalism has further diminished the fiscal autonomy of the States and Territories as they become increasingly reliant upon a revenue source over which they have no control.
This thesis also examines the process of institutional change through which the New Tax System and the Goods and Services Tax was developed and implemented. It highlights the importance of changing structural factors such as economic conditions and technology in shaping the strategic choices and decisions of political actors and the institutional environments they construct. It also examines the constraining and enabling role of institutions and how they interact with structural factors and institutionally situated interpretative actors whose willingness and ability to pursue change and innovation is critical to the institutional change process. In this context, it shows how these interactions and other exogenous factors may trigger the opening of windows of opportunity for actors to pursue change. It also shows how these interactions create new institutional environments in which new rounds of interaction take place.
In examining the process of institutional change within the Australian federation, reference is made to relevant provisions of Australia's Constitution and to other key intermediate-level institutions such as its political parties, Commonwealth, State and Territory governments, Premiers' Conferences and the Council of Australian Governments. Evidence of path dependency in the processes of institutional change is also identified, particularly with respect to the High Court and in the critical role it plays in both enabling and constraining political and bureaucratic actors and institutions as well as the capacities of State, Territory and Commonwealth governments.
As fiscal capability is a critical contributor to state capacity, this thesis looks at the conduct of federal-state relations in general and federal-state financial relations in particular in the period following the implementation of ANTS in order to understand its implications for the future of the Australian federation. It concludes that in the absence of fundamental change to its institutional framework, and in an environment in which the conduct of Australian federalism is characterised by coercion rather than iv Abstract co-operation, the increasing financial dependence of States and Territories on GST revenue is not only rendering them increasingly vulnerable to the dictates of the central government, but that creeping centralism is threatening the fundamental characteristics that distinguish Australia's system of government as a federation.