The Report commenced, appropriately, by addressing the federal contract within which Australian agricultural policy is set. The Australian Constitution limits what can be done by the Commonwealth and State Governments and establishes procedures for settling arguments about where jurisdictions lie. There is a wider constitutional framework than the Constitution itself. It includes, for example, the Australian Agricultural Council which is the major means of co-ordinating powers and resolving conflicts between the Commonwealth and states in the field of agricultural policy. The federal contract also includes the wide range of co-operative approaches to policy, such as statutory marketing intitutions and the complementary legislation which supports them. The issue of federalism runs through the whole of the Report, but only in Chapter 2 was it addressed as a central issue. The Group viewed the Constitution itself as virtually immutable. The Australian Agricultural Council was criticised for acting only slowly and by consensus. Where there is a fundamental conflict of interest, the Commonwealth's financial strength may need to be used to encourage state co-operation. The emergence of the National Farmers' Federation was seen as hopeful, and there was a hint that a formal link between the Council and the Federation could facilitate consensus. But, on the whole, the tone of the Report regarding the federal contract was not enthusiastic. It was seen to constrain opportunities for change rather than to create them. Issues for the 1980s with respect to inter-governmental relations were expected to be similar to those of the past. In Chapter 2, the Group provided a brief synopsis of the respective roles of the Commonwealth and State Governments in areas covered in the rest of the Report, namely, assistance, marketing, international trade, transport, innovation and resource management. But having set the scene with an overview of the constitutional framework, the Group did not return to a federal overview of policy options. It is with that important task in view that I will address briefly three of the issues raised in Chapter 2, namely, assistance, marketing and international trade, and comment on Commonwealth grants to the states which are relevant to the remaining issues. My purpose is to highlight some policy dilemmas which need to be resolved within a federal context.