Constitutionally, it is easier to pursue a third model – that of creating new states rather than abolishing old states. Under the Australian Constitution, Chapter VI (sections 121-124) deals with new states and territories. Section 124 is the operative section – it reads: ‘A new State may be formed by separation of territory from a State, but only with the consent of the Parliament thereof, and a new state may be formed by the union of two or more states or parts of states, but only with the consent of the Parliaments of the States affected’. In formal terms it is the State Parliament which would decide, but a referendum would be most likely. Given the centralism trends in Australian federalism described earlier, it is important that under section 123 of the Constitution, it could also be the Commonwealth Government who initiates this referendum. Once a region is recognised by popular vote as having been separated from the existing State (to form in effect a New State), the Commonwealth Parliament then simply votes to admit that region as a new entity in the existing federal system. The Senate would also have to be reconfigured under this model but only to the extent of accommodating more states. Essentially this model involves gaining the consent of a majority of citizens in the region where the new state is to be formed, and the consent of the citizens in the State from which the new state is to be withdrawn. A virtue of using the existing constitutional provisions is that even if a referendum is used, citizens are being asked to vote directly on the substantive question – the creation of new regional governments – rather than changes to the rules in the existing Constitution.
In fact, the creation of at least some new states will in all likelihood happen naturally throughout the 21st century. Likely candidates which have already identified themselves previously through Australian history include New England, the Riverina and North and Central Queensland. The two mainland Territories are already quasi-new states, and it is almost inevitable that the Northern Territory will be converted to full statehood, having only narrowly declined this opportunity in a referendum in 1998. Other potential regions as new states for the longer term include North-Western Australia, and much of Central Australia also embracing remote areas of New South Wales and Queensland.
Under this scenario the new states and/or territories effectively become the primary regions in the federal system, perhaps swallowing the local governments within their boundaries or, more likely, creating a different institutional form of local service delivery and civic involvement. This model therefore revives the original logic of federalism, with all its potential advantages.