On Federalism: How do Australia, Canada, the UK and the US stack up?
By Karl Salgo
August 6, 2025
Australia, Canada the United Kingdom, and the United States all have links to the Westminster system. The United Kingdom, traditionally a unitary state, is the original Westminster parliamentary democracy, and directly established both the Canadian and Australian federal systems in its own image through legislation that united several of its colonies into a single national entity under the British Crown. By contrast, the United States, though also a union of former British colonies, was born in direct rebellion against British rule, adopting a separation of powers system that in important ways was differently conceived than British parliamentarian government.
Canada
Canada entered “Confederation” in 1867 as an act both of union and separation. Its first four provinces agreed to unite under a strong national government, but a key motivation in the case of Ontario and Quebec was to dissolve their unsatisfactory legislative union of 1841, thereby according Quebec autonomy to preserve its distinct linguistic, religious, and legal heritage. The evolution of Canadian federalism since that time has been one of coexistent nation building and province building.
The Canadian system was originally conceived in direct rejection of US federalism, whose relative decentralization was believed to have contributed to the recent Civil War. The federal government was given direct authority over all matters for the “peace, order and good government” (POGG) of Canada, with provinces having jurisdiction only in an enumerated list of matters considered largely local in nature. There is a supposedly non-exhaustive list of examples of federal powers, as well as identified areas of concurrent jurisdiction. The federal government retained the power to disallow provincial legislation and in the early years of Confederation was quite prepared to use it.
However, the original vision of a dominant central government soon began to fray. Provinces increased in number and self-assertion, successive judicial decisions interpreted provincial enumerated powers broadly and the federal POGG power narrowly, and areas of provincial jurisdiction such as health, education, and social services grew exponentially in importance and cost. Provincial revenue raising capacity was increasingly inadequate to support these responsibilities, eventually giving rise to a system of federal transfer payments – both to support provincial revenues generally and to provide a measure of equalization among provinces with differing financial capacities.
Over the twentieth century, federal disallowance of provincial laws ceased to be considered acceptable, and a significant range of both formal and informal mechanisms were adopted to help manage federal-provincial relations, including First Ministers Meetings and the establishment of an interprovincial “Council of the Federation”. This was in addition to successive confrontations with an increasingly nationalistic Quebec whose upshot was to expand the extent of effective jurisdictional asymmetry. Canada is now considered a relatively decentralized federation, although the federal government retains significant though frequently controversial influence through the use of its spending powers.
United States
The US federation – the first among the countries considered here to adopt a federal system – was established as 13 diverse and sometimes fiercely independent British colonies united in rebellion against British rule in the late 18th century. They eventually adopted a carefully negotiated, comprehensive written constitution – the world’s first such document – which has been amended 27 times. The first ten amendments were adopted together in 1791 and are known collectively as the Bill of Rights, but the political environment for amendments has become increasingly contentious and there has been only one minor amendment in the past 55 years.
The US federation was initially conceived as decentralized union of largely independent states. The federal government was accorded an enumerated list of powers that included war and defense, monetary policy and currency, tax collection and national debt management, the regulation of international trade and interstate commerce, and the creation of a post office. All non-enumerated powers were reserved to the states or “the people”, a matter further clarified by the Tenth Amendment. Examples of reserved powers include education (primary and secondary), intrastate commerce, criminal law and policing, and the management of elections. The character of the US Senate further reinforced individual state authority, as each state was accorded two senators regardless of its population, and until the early 20th century, senators were state appointees.
Yet the role of the US federal government expanded over time to meet evolving national needs that states had limited capacity to address. Following the Civil War – still touted by many defenders as having been principally a struggle for states’ rights – there was a virtual second “progressivist” founding, with a significant increase in the social role of government and the emergence of a federal role as defender of multiple rights-related amendments and related legislation. There was also a significant increase in presidential stature as the US assumed a position of global leadership, especially following the Second World War.
As in Canada, the twentieth century saw a significant expansion of federal transfers to help states meet there many obligations, notably in the social sphere. These included Grants-in-Aid, both for specific purposes such as Medicaid and education, and more flexible block grants. Medicaid transfers included matched funding based on state income levels. While infrastructure and education funds supported such initiatives as highways and special education. The federal government also transfers funds to local governments, sometimes directly though usually through state governments, for such purposes as education, policing, housing and disaster relief.
Australia
Like Canada’s, Australian’s federation was a coming together of separate British colonies under UK legislation. Following a series of conferences and referenda through the 1890s, the new nation was born at the outset of the 20th century under the Westminster system. It has become wholly independent since, though like Canada it retains the British sovereign as its head of state.
As in the case of Canada and the US, Australia’s division of powers is set out in its written constitution, primarily Section 51, which lists the areas where the national government (or Commonwealth) can legislate while powers not explicitly given to the Commonwealth are generally reserved for the states. In enumerating Commonwealth powers and granting residual powers to the states, the Australian constitution resembles that of the US rather than Canada, although to some extent the distinction has become theoretical as Canadian federalism has evolved. Australia also resembles the US in according an equal number of senators to each state regardless of population.
Exclusive powers of the Commonwealth include the typical areas of defence, currency and monetary policy, and trade and customs. There are also numerous areas of concurrent Commonwealth and state jurisdiction, such as taxation, corporations, and industrial relations. Further, there is a strong element of cooperation between the Commonwealth and state governments, especially in areas of concurrent responsibility.
As in Canada and the US, Australia has a complex system of transfers from the federal to state and local governments under a range of programs. These include General Revenue Assistance, which is also intended to help achieve horizontal fiscal equalization, Specific Purpose Payments (for national priority areas like health and education), and National Partnership Payments, which are tied to initiatives like reforms and infrastructure and include performance targets. The Commonwealth also makes transfers to local governments, some through the states and some directly, such as Financial Assistance Grants, which are general purpose but with a roads component.
United Kingdom of Great Britain and Northern Ireland
Although it is in many respects the parent of the federal states we have reviewed here, the United Kingdom (UK) is in principle a unitary state, without a fully constitutional document to hardwire federalism into its DNA. Yet in practice, the national government of the UK has devolved substantial authority to other levels of government. This has been done both for reasons of functional effectiveness (or subsidiarity as we have termed it) in the case of local governments in England, and in recognition of the need for autonomy in places that have historically been nations in their own right. In formal terms, this has been achieved through various devolutions of power by the UK government
Devolution in the UK refers to the transfer of powers from the UK Parliament to the devolved administrations in Scotland, Wales, and Northern Ireland. This means these nations have their own legislatures and executives with varying degrees of autonomy in areas such as healthcare, education, and local government. Devolution aims to bring decision-making closer to the people and tailor policies to the specific needs of each nation and to respect distinct national identities.
There is some asymmetry in these national devolutions, but they are broadly similar. Thus, the Scottish Parliament and its government have significant powers over areas like education, health, and local government. The Welsh Parliament (Senedd) and government has similar powers, although some areas are reserved for the UK Parliament. The Northern Ireland Assembly and Executive have powers over a wide range of devolved matters, although again some areas are reserved or subject to specific arrangements.
Devolution in England has been more varied, with the creation of combined authorities and metro mayors in some regions, but not a comprehensive devolution settlement for the entire country.
This extensive devolution has a number of goals. These include the accommodation of distinct national identities, as well as policies that better reflect the specific needs, economies, and priorities of particular populations. It also allows for greater policy innovation and experimentation as individual legislatures or local governments adopt policies that others may learn from or adopt later on. More broadly, devolution reflects a “democratic shift” that brings decision making close to the people, allowing for great local control and participation. At the same time, devolution has also spurred debate and discussion about the future of the UK’s constitutional arrangements.
As in the other jurisdictions, the UK makes extensive use of transfers from the central government to devolved authorities. These include block grants for devolved functions like health, education and transport, which are adjusted for population and to achieve comparability. There are also adjustments for devolved tax powers and capital grants for economic development purposes. The central government of England retains strong control over local revenue but transfers funds through various formula-based and competitive grants for social care, housing and “levelling up” (akin to equalization, among other transfer programs. Additionally, Scotland, Wales and Northern Ireland have their own grant systems and policies.
Conclusion
Sub-national governance in Canada, the US, Australia, and the UK reflects distinct constitutional models but arguably has experienced convergence in several respects. In Canada, strong central government has become decentralized partly due to cultural pressures but also as areas of provincial responsibility have become increasingly important over time – and something similar could be said about the unitary government of the UK. Meanwhile, a relatively weak federal government in the US has grown powerful in response to the practical pressures facing modern governments, as well as the US’s own distinctive international role. In all cases, there has been significant reliance on financial transfers from the federal government as local authorities cope with the gap between relatively constrained revenue generating capacity and the pressures of modern service delivery, as well as a desire for greater equality across regions. In all cases this has entailed a need for significant federal-regional cooperation, although the mechanisms for this vary and remain works in progress.
A looming issue, only hinted at here is the enormous gap between the significance of local governments, particularly large cities, and both their revenue capacities and subordinate constitutional status.