Federal spending power in three federations: Australia, Canada and the United States

Abstract

This article considers the extent to which the national government in three federal systems studied has, or should have, a spending power under the national constitution. The article refers to economic and political science literature on the optimal allocation of responsibilities within a federal system, and concludes that the federal government requires a broad spending power in order to carry out distributive and stabilisation functions that most economists believe must practically occur at the national rather than sub-national level. To the extent that the recent High Court of Australia decision in Pape denies the Commonwealth spending power independent of a specified head of power, it is submitted that this is not an ideal finding.