From Calgary to Canberra: Resource Taxation and Fiscal Federalism in Canada and Australia

Intergovernmental conflict over the allocation of resource revenue in federal systems is not uncommon. However, there is remarkably little scholarship on how such political tensions are managed in different federations and whether, over time, resource politics can reshape federal dynamics. This article assesses these questions through a strategic comparison of resource federalism in Canada and Australia since the 1970s. We argue that the political and institutional strategies employed within the Canadian federation, with its greater commitment to fiscal and political decentralization, has been more adept at managing short term political tensions associated with resource booms relative to the Australian model, with its creeping centrism and entrenched system of horizontal equalization. The study also finds that, over time, resource conflict has the potential to shape the practice of federalism in resource-rich jurisdictions by providing political incentives to decentralize nonrenewable resource revenue collection.