The expanded use of the power under section 96 has added to Australia's vertical fiscal imbalance and enabled the Commonwealth to have a significant influence over matters that would otherwise be constitutionally State responsibilities.
In practice, section 96 has provided the Commonwealth parliament with the ability to influence policy matters that lie within the residual powers of the States (e.g. education, health, water, etc.).
The result is that states rely on Commonwealth grants to fund state-provided services such as schools and hospitals.
[2] This is largely due to the uniform federal system of income tax that was introduced in 1942 in accordance with s51(ii).
There was a second constitutional challenge, and the scheme was again upheld on the basis of section 96, in Victoria v Commonwealth (1957) 99 CLR 575 (the Second Uniform Tax case).