With Australia’s population set to triple in the twenty-first century, its federal government is investing in decentralization. This is because Australian states exhibit high urban primacy, where one city is dominantly large. Institutional perspectives of primacy suggest political factors are usually significant drivers. For example, strong localism and decentralized settlement patterns are usually concomitant whilst the same can be said of centralized governance and primacy. It is unclear how institutions might influence primacy in Australia’s large states. To better understand, we contextualize Australian federalism within the primacy debate. Using eighteen measures of intergovernmental power, we determined that the Australian federation is comprised of comparably strong federal and state tiers, underlaid by weak local and regional government. The results suggest primacy in Australian states is reinforced by institutions, contrasting the universality of environmental determinism and suggesting an opportunity to decentralize Australia’s growing population through the devolution of decision making powers.