The problems of federal-state financial relations have always been of considerable importance to the economy of South Australia. Some discussion of the issues involved will, therefore, I hope, provide a suitable subject for the Joseph Fisher Lecture, particularly as the issues are not merely local in character. Indeed they are of importance to every federal country, and with the creation since the War of new federations in countries such as Nigeria, Rhodesia and Nyasaland and the British West Indies, they have become the subject of much discussion throughout the British Commonwealth.

It would not be possible in the time available to survey systematically the whole range of federal-state financial problems, and I therefore propose to concentrate on the following three major issues, and to confine my attention to their economic, as distinct from their constitutional and political aspects:

1. 1) co-ordination of the public borrowing of federal and state governments, exemplified in Australia by the Loan Council system.

2. 2) the allocation of Special Grants from the federal government to those member states which experience difficulty in raising revenue and providing services on the same level as other states. In Australia such grants are made on the recommendation of the Commonwealth Grants Commission under section 96 of the Constitution.

3. 3) the allocation of general grants from the federal government to all states, such grants being necessary because the federal government has revenues in excess of its needs, whereas the states are in the opposite situation. The chief examples of these grants in Australia are the tax reimbursement grants payable under the uniform tax system.