4a317c29_lian_Broadcasting_Corporation___Definition
[Term] Vertical fiscal imbalance [Definition] 
This refers to the fact that the Commonwealth raises the vast bulk of tax revenue, but the states have a large part of the spending responsibility. There is currently a large shortfall in the amount of tax the states receive compared to the cost of providing the services required of them, such as healthcare and education. This current imbalance is overcome by the Federal Government distributing money raised by the GST to the states, but this makes the states reliant on federal grants and subject to greater federal control.
Budget 2014: Deficit tax may raise a lot less than Treasury forecasts says analyst - ABC News (Australian Broadcasting Corporation)
Definition