In Australia, it has become academic dogma that federalism is a problem rather than an asset. Nevertheless, federalism has significant advantages and is likely to remain an important model for systems of government worldwide. In the case of tourism, overlapping jurisdictions, multiple accountabilities and countervailing power are generally seen to impede effective tourism policy development. This paper goes beyond criticisms of federalism, to investigate the dynamics of federal-State relations in an effort to understand how cooperation in the tourism policy arena can be improved. Using a case study of New South Wales, this paper examines the effects of government personalities, political cycles, shifts in organisational structures and divergent interpretations of globalisation on governments' interest in cooperation.