The Federation is the cornerstone of the Australian nation and at the very heart of our constitutional democracy, both historically and culturally. However, it is increasingly not working well and needs updating and modernising. The balance of power within the Federation has shifted increasingly to the centre, with an accompanying degree of resentment and distrust by the States and Territories.

The roles and responsibilities of the tiers of government have become confused and unclear, and the co-operation and collaboration of recent decades is badly faltering. Importantly, the delivery of policy outcomes to local communities is sadly lacking, and becoming increasingly characterised by duplication, confusion and ineffectiveness. Moreover, the States and local governments no longer have the wherewithal, especially revenue sources, to deliver on the tasks assigned to them. Out of all of this, the period of great economic reforms is now under serious threat of grounding to a halt, with a lack of political and community purpose to progress efficiency and productivity in order to enhance the wellbeing of all Australians.

This paper sets out to address these multiple, overlapping and interacting problems by proposing a complete restructuring of the Australian Federation to a new governance model, based on two tiers of government rather than three, and with clearly designated roles and responsibilities between these tiers.

• The Federal Government would concentrate on designing, negotiating and legislating strategic national policy and the overall financing frameworks of that policy.

• The cities and regional governments would concentrate on delivering the programs and services emanating from those national policies to citizens and communities at the local level, whilst also retaining full responsibility for their own policy and administration of urban, regional and local issues