In July of 1990, the prime minister of Australia announced a program to achieve a closer partnership between the three levels of government. His concern was the degree of bureaucratic overlap in the Australian federation and the hindrances to mobility, portability, and uniformity which made the Australian economy more balkanized than Europe post-1992. The announcement capitalized on dissatisfaction with Australian federalism that had been growing in the 1970s and 1980s, and its timing coincided with a range of catalysts making the current climate favorable for change. The new federalism unleashed a process of review and reform across some forty program or subprogram areas over an eighteen-month period with a prime objective to attain role clarification for the three levels of government in shared functional areas, somewhat akin to the German horizontal model of federal role allocation. The process survived a political challenge that toppled the prime minister, aspects of the new federalism forming a key element of that challenge. Constitutional change is also part of the agenda and already the Australian experience holds a number of lessons for other federal systems.