• Intergovernmental Relations;
  • Policy Reforms;
  • Market-preserving federalism;
  • Australia

This article investigates Australia's economic success since the 1990s. As this was set in motion by fundamental political reforms, it asks to what extent Australian-type federalism has been an important factor in the reform process. By using two approaches - the market-preserving federalism approach of Weingast, which stresses the virtues of ‘limited government’, decentralisation and competition together with the intergovernmental coordination approach of Scharpf which argues for a ‘problem-solving’ orientation of territorial actors -, the structure of Australian federalism, changes in the working of the federal system in the 1990s, and effects on policy-making are scrutinised. The article demonstrates that a particular combination of a rather centralised federal structure and a particular type of intergovernmental coordination, i.e. collaboration, supplemented by the strong influence of new public management ideas, has been conducive to political reforms in Australia. This suggests that a decentralised and competitive version of federalism, as defended by Weingast, is not a necessary condition for embarking on a successful reform path in federal countries. In future research, both approaches or analytical dimensions should be used in order to better understand the relationship of intergovernmental relations and policy reforms.