When the commonwealth took over the responsibility and power to control the taxation and collection, the states were left with no responsibility in the area, therefore it was all in the hand of the commonwealth, and they have to ensure standards are kept equal across all states, meaning, there has to be the transfer of funds from wealthier states to poorer states.
Larger states complain that their taxpayer's money is subsidizing smaller states. .
Another issue that causes great conflict between state and federal government is the ideology of the states interests and that at a federal level, which is escalated by the fact that at times, a different party to that at a commonwealth level represents the states. .
Policy formation can become painfully slow or prevented due to the differing opinions in state and federal levels of govt. For example gun control policy was left stranded when Queensland and Tasmania refused to conform to proposed national standards following the Hoddle and Queen St. murders.
As a result the Port Arthur massacre in Tasmania occurred, one, which could have been prevented, had the Howard government been able to implement national gun control.
Bi-party representation can cause disagreements in relation to proposed legislation or policy causing the process to become slow and tedious. .
Also, the ideology of the federal government can clash with the ideas of the states, provoking tension amongst the two. .
An example of this problem occurred under the Labour Government from 1972 - 75, when the government proposed to enlarge the role of local government in seeking financial assistance. Before the proposed reform, local government had always dealt with the states rather than the commonwealth. .
The Whitlam government proposed a constitutional amendment, proposing commonwealth made direct grants to local authorities. .
This caused tension amongst the state governments as they didn't want to be bypassed, the proposal was denied, and the event caused further tension amongst state and federal relations.
