This article looks at recent changes in political-administrative relationships in the intergovernmental arenas of the Australian federal political system. Some of the major structural tensions in these arenas of multi-level governance are identified, and some of the main problem areas for the conduct of effective problem solving are highlighted. Changes in some of these structural elements are considered to be a result of greater entanglement and closer collaboration between state and commonwealth governments, and three possible explanatory models for understanding the chaThis article argues that the discourse on public sector modernisation has recently been internationally dominated by new public management (NPM) and that the underlying Anglo-Saxon model and its implicit conceptual,if not epistemological, "Anglo-centricity" may lead to over-accentuate NPM-driven convergence, while disregarding developments in countries with different ("non-Anglo Saxon") state and societal traditions. Looking at Germany"s modernisation trajectory as a case in point, the article argues that Germany"s public sector,while finally falling ("convergently") in line with some of the NPM imperatives (since the early 1990s),continues to be ("path-dependently") shaped by traditional features, such as, in the intergovernmental setting,vertical division of functions, territorality and multi-purpose "unitary" local government,which make for persisting"divergence". Instead of merely reflecting country-specific (German) particularities and idiosycracies, this trajectory may represent a variant within a wider "continental European" pattern distinct from the Anglo-Saxon one