State governments will get a major say in plans to reapportion Commonwealth-state responsibilities as the federal government's long-promised white paper gets under way.
Prime Minister Tony Abbott will unveil the terms of reference for the ''Reform of the Federation'' white paper process today as the centrepiece of his keynote address to the Liberal Party's supreme policymaking body, its Federal Council.
Along with another white paper into taxation, the federation white paper will inevitably examine the issue considered to be electoral ''kryptonite'' in Australia - the goods and services tax - as part of the critical structural problem of ''vertical fiscal imbalance''.
This is the problem that arises because states do nearly all of the costly service delivery, but do not possess the revenue-raising powers and thus are beholden to the Commonwealth for grants.
The white paper will be jointly co-ordinated by a steering committee led by the top public servants from the Prime Minister's department, and from the respective state and territory first ministers' departments. It will deliver its final work by the end of next year.
Speaking to the Federal Council, an organisational structure itself reflecting the Liberal's preference for quasi-sovereign state divisions, Mr Abbott will emphasise the need for a clearer delineation of responsibilities between Canberra and the state parliaments.
''We need to reduce and if possible end duplication and make interacting with government simpler,'' he will say.
''The federation has stood for 114 years, but Australia today is a very different nation, facing new challenges.
''We need to clarify roles and responsibilities for states and territories so that they are as far as possible, sovereign in their own sphere.''
He will reassure conservatives that the Abbott government is determined to live up to its rhetoric of delivering smaller government overall and reversing any creeping overlap into state areas that had accelerated under Labor's co-operative federalism approach.
This tendency had seen the Commonwealth becoming increasingly involved in a direct sense in policies and the direction of programs in school education, and particularly in hospitals.
''The Commonwealth will continue to take a leadership role on issues of genuine national and strategic importance, but there should be less Commonwealth intervention in areas where states have primary responsibility,'' he will say.
The speech, being delivered at lunchtime on Saturday in Melbourne, comes as the best and worst fortunes of politics are experienced by the Liberal Party.
In Canberra, federal MPs have been buoyed by their imminent success in finally getting rid of the carbon tax after securing the support in the Senate of Clive Palmer's Palmer United Party bloc.
A recent Fairfax-Nielsen poll showed that the Coalition appears to be recovering from the sharp voter reaction to the Hockey budget.
In Victoria, however, the state government is in serious trouble in an election year with vicious infighting.