"Competitive federalism" was explicitly pushed by the Coalition's Commission of Audit, is implicit in Joe Hockey's first budget and is likely to underpin the looming federalism white paper. And the nation's big tax avoiders love it.

Competitive federalism is a conservative ideology which holds that the public sector should behave just like the private sector. The idea is that, if states are made responsible for their own tax revenue and spending, they will compete to provide the highest quality services at the lowest prices.

If the Commonwealth is prepared to ruthlessly use its purse strings' power, what the states want might be irrelevant. Credit:James Davies

Well, that's the theory. The reality is a race to the bottom that benefits tax dodgers, punishes taxpayers and disadvantages the general population.

Michael West's column on foreign bookmakers avoiding tax earlier this week contains a prime example of the "jurisdiction shopping" that is an inevitable consequence of competitive federalism: "There is increasing concern in government and racing-industry circles over the small contribution made by corporate bookmakers in taxes and levies in Australia," he wrote. "... a motion by National Party senator for Victoria, Bridget McKenzie, was carried at last weekend's party conference for online gambling to be regulated by the Commonwealth.