The Australian regime for horizontal fiscal equalisation (HFE) is administered by the Commonwealth Grants Commission. OECD rates it as one of the most egalitarian in the world. I define HFE, introduce the Australian regime, discuss some current challenges to it, and assess how suitable it would be for other federations or quasi-federations such as the United Kingdom. The UK arrangements for distributing untied block grant to Scotland, Wales, and Northern Ireland are so bad that almost anything would be an improvement. Would a CGC be optimal?

Iain McLean is professor of politics, Oxford University and a fellow of Nuffield College. This is his fourth visit to ANU. His interests include fiscal federalism and its practical applications in a centrifugal UK. He is a fellow of the British Academy and the Royal Society of Edinburgh. In his spare time he drives steam trains and sings at Christ church (Oxford) Cathedral: not at the same time.