The Commonwealth, States, and Territories: Constitutional Status, Powers, and Legal Relationships

The Commonwealth, States, and Territories: Constitutional Status, Powers, and Legal Relationships

Introduction

Australia is a federal constitutional system composed of the Commonwealth, six States and several territories. Although these jurisdictions form part of one sovereign country, they do not all possess the same constitutional status, legislative authority or relationship with the national government.

The Commonwealth is the national government established by the Commonwealth of Australia Constitution Act 1900 (UK), which came into operation on 1 January 1901. The six States are the former self-governing colonies that entered the federation. They retained their own constitutions, Parliaments, executive governments and judicial institutions, subject to the constitutional framework established at Federation.

The territories occupy a different legal position. Their governmental authority is principally derived from the Commonwealth Constitution and legislation enacted by the Commonwealth Parliament. Some territories have developed substantial self-government, including their own legislative assemblies and executive institutions, but their constitutional relationship with the Commonwealth is not identical to that of the States.

These distinctions are important because the Commonwealth does not exercise the same kind of authority over States as it does over territories. The States are constituent units of the federation, with constitutionally preserved institutions and legislative powers. Territories, by contrast, remain subject to a more direct constitutional legislative authority of the Commonwealth under section 122.

The relationships between these jurisdictions are governed by several constitutional provisions, including sections 51, 52, 96, 106, 107, 109, 111, 114, 121, 122, 123 and 128. Together, they regulate legislative authority, financial assistance, constitutional continuity, territorial administration, interstate relations and constitutional change.

Understanding the distinction between the Commonwealth, States and territories is essential to understanding Australian public law. It explains why a law may operate nationally, why State legislation may differ between jurisdictions, why territorial laws have a distinct constitutional foundation and how disputes concerning governmental authority are resolved.

Key Takeaways

• Australia consists of one Commonwealth government, six constitutionally recognised States and several territories.
• The Commonwealth was established in 1901 through the federation of the six former colonies.
• The States retain their own constitutions, Parliaments, executive governments and courts.
• Section 106 preserves State constitutions, subject to the Commonwealth Constitution.
• Section 107 generally preserves State legislative powers unless the Constitution has transferred or withdrawn the relevant authority.
• Section 109 gives priority to valid Commonwealth legislation where it is inconsistent with State legislation.
• Section 122 gives the Commonwealth Parliament broad legislative authority over territories.
• The Australian Capital Territory and Northern Territory have self-government arrangements, but they do not possess the same constitutional status as the States.
• Local government is principally established and regulated under State and Territory legislation.
• Financial grants, intergovernmental agreements and cooperative institutions connect the different levels of government.
• The High Court is the final judicial authority on constitutional disputes concerning the relationship between the Commonwealth, States and territories.

1. The Constitutional Structure of Australia

1.1 The Commonwealth as the national government

The Commonwealth of Australia was established on 1 January 1901, when the six British colonies united under the federal constitutional arrangements enacted through the Commonwealth of Australia Constitution Act 1900 (UK).

The Commonwealth is the national government of Australia. Its institutions exercise authority over matters assigned to it by the Constitution and other valid sources of law.

The Commonwealth Parliament consists of the King, represented by the Governor-General, the Senate and the House of Representatives. The Executive Government operates through the Prime Minister, Cabinet, ministers, departments and statutory authorities. The federal judicial system includes the High Court and other courts established or authorised under Chapter III of the Constitution.

The Commonwealth’s legislative authority is principally based on the powers enumerated in sections 51 and 52, together with other specific constitutional provisions.

It is important to distinguish the Commonwealth as a constitutional government from Australia as a sovereign country. The Commonwealth is the national governmental structure established by the Constitution; Australia is the country whose national and subnational institutions operate within that structure.

1.2 The six States

The six Australian States are:

1. New South Wales.
2. Victoria.
3. Queensland.
4. Western Australia.
5. South Australia.
6. Tasmania.

Before Federation, each was a separate British colony with its own legislative and executive institutions. Federation did not abolish those institutions. Instead, the former colonies entered a constitutional arrangement under which the Commonwealth received specified powers while the States retained broad legislative authority.

Each State has:

• Its own written constitution or constitutional legislation.
• A Parliament.
• An executive government led by a Premier.
• A Governor representing the Crown.
• A court system.
• Public administration and regulatory institutions.

The States are therefore not simply administrative divisions created by the Commonwealth. They are constitutionally recognised constituent units of the Australian federation.

Their continued existence and institutional capacity are protected by the constitutional framework, although State powers remain subject to relevant Commonwealth constitutional provisions.

1.3 The territories

Territories form part of Australia but do not possess the same constitutional position as the States.

The Constitution contains specific provisions concerning territories, particularly section 122, which gives the Commonwealth Parliament power to make laws for the government of territories.

The principal self-governing mainland territories are:

• The Australian Capital Territory (ACT).
• The Northern Territory (NT).

Both have their own legislative assemblies, executive governments and courts. However, their self-government arrangements are established through Commonwealth legislation, rather than through the same constitutional position retained by the States.

Australia also has external territories, including Christmas Island, the Cocos (Keeling) Islands and Norfolk Island. Their governmental arrangements differ according to the legislation applicable to each territory.

1.4 A constitutional distinction between the three categories

Jurisdiction	Constitutional position	Principal source of legislative authority
Commonwealth	National government established by the Constitution	Commonwealth Constitution
States	Constituent units of the federation	State constitutions, preserved subject to the Commonwealth Constitution
Territories	Territories governed under Commonwealth constitutional authority	Section 122 and Commonwealth legislation

The distinction is not merely administrative. It determines the source, scope and limits of legislative authority, the relationship with the Commonwealth Parliament and the constitutional mechanisms through which governmental powers may be exercised.

2. The Constitutional Status of the Six States

The States occupy a constitutionally protected position within the Australian federation. Their authority does not depend simply on permission granted by the Commonwealth Parliament. It is recognised and preserved by the Commonwealth Constitution itself.

2.1 Section 106: Preservation of State constitutions

Section 106 provides that the Constitution of each State continues after Federation, subject to the Commonwealth Constitution, until altered in accordance with the State’s own constitutional arrangements.

This provision ensured that Federation did not require the six colonies to abandon their existing constitutional institutions and replace them with administrative structures created by the Commonwealth.

Each State therefore retains its own constitutional framework. These arrangements determine the composition and operation of its Parliament, the formal structure of its Executive Government and various aspects of its public institutions.

State constitutions may be amended through State constitutional procedures, although the extent to which particular provisions are entrenched and protected from ordinary legislative alteration varies.

The Commonwealth Constitution remains superior where a State constitutional provision conflicts with an applicable Commonwealth constitutional requirement.

2.2 Section 107: Preservation of State legislative powers

Section 107 is one of the most important provisions defining the legal relationship between the Commonwealth and the States.

It provides that the legislative powers of the former colonies continue after Federation unless those powers have been exclusively vested in the Commonwealth Parliament or withdrawn from the State Parliaments by the Constitution.

The practical consequence is that the States retain broad legislative authority.

Unlike the Commonwealth Parliament, which must identify a constitutional basis for exercising legislative power, State Parliaments generally have plenary legislative authority within their constitutional jurisdictions, subject to applicable constitutional restrictions.

This distinction is fundamental to Australian federalism. The Commonwealth is a government of constitutionally conferred legislative powers, while the States retain the broad legislative authority inherited from their pre-Federation institutions.

2.3 Section 108: Continuity of pre-Federation laws

Section 108 provides for the continuation of laws that were in force in the colonies immediately before Federation.

These laws continued to operate in the States, subject to the Commonwealth Constitution and subsequent legislation.

The provision helped prevent a legal vacuum at Federation. The establishment of the Commonwealth did not automatically invalidate the existing colonial legal systems or require the immediate replacement of all colonial legislation.

Over time, State Parliaments and the Commonwealth Parliament developed new statutory frameworks, but the constitutional principle of legal continuity was essential to the orderly transition from colonial government to federation.

2.4 State legislative independence and constitutional limitations

The preservation of State legislative authority does not mean that State Parliaments possess unlimited power.

Their legislation must comply with the Commonwealth Constitution and relevant constitutional restrictions. They must also respect the operation of valid Commonwealth laws under section 109.

Other provisions impose specific limitations. For example:

• Section 114 restricts the Commonwealth and States from imposing certain forms of taxation on each other’s property and limits State military forces without Commonwealth consent.
• Section 117 protects residents of one State against specified discrimination in another State.
• Section 92 protects interstate trade, commerce and intercourse within the constitutional interpretation developed by the High Court.
• Section 109 resolves inconsistency between valid Commonwealth and State laws.

The States therefore enjoy substantial constitutional autonomy, but that autonomy operates within the national constitutional framework.

2.5 State Parliaments and their institutional structures

Each State has its own Parliament, although the composition of those Parliaments is not identical.

Five States have bicameral Parliaments consisting of a lower and an upper House. Queensland has a unicameral Parliament consisting of the Legislative Assembly.

The States also have their own electoral legislation, parliamentary procedures and constitutional arrangements.

The existence of different institutional structures illustrates an important feature of Australian federalism: the Constitution establishes a common national framework without requiring every State to organise its government in precisely the same way.

3. The Constitutional Relationship Between the Commonwealth and the States

The relationship between the Commonwealth and the States is governed by the principle that each level of government has its own constitutional authority.

The Commonwealth is not simply superior to the States in every area of government. Its authority is extensive in the fields assigned to it by the Constitution, but the States retain their own legislative and institutional powers.

3.1 The Commonwealth’s enumerated powers

Sections 51 and 52 establish much of the Commonwealth Parliament’s legislative authority.

Section 51 includes powers concerning:

• Trade and commerce with other countries and among the States.
• Taxation.
• Defence.
• Immigration and emigration.
• External affairs.
• Corporations.
• Banking and insurance.
• Marriage and divorce.
• Bankruptcy and insolvency.
• Copyrights, patents and trademarks.

Section 52 identifies certain matters over which the Commonwealth has exclusive legislative authority.

The Commonwealth may also exercise powers arising under other constitutional provisions, including those concerning territories, financial assistance to States and the establishment of federal institutions.

The precise scope of each power depends on its constitutional wording and judicial interpretation.

3.2 The States’ residual legislative authority

The States retain authority over matters not transferred to the Commonwealth or otherwise restricted by the Constitution.

In practice, State governments have major responsibilities in areas such as:

• Public education.
• Public hospitals and health services.
• State policing.
• Criminal justice.
• Property and land administration.
• Planning and development.
• Roads and public transport.
• State-based licensing and regulation.

These are not necessarily exclusive State subjects. Commonwealth legislation may affect particular aspects of some of these areas where a valid constitutional power exists.

The distinction is between the constitutional source of authority and the practical subject matter being regulated. A policy area may involve legislation from both levels of government.

3.3 The Commonwealth’s constitutional priority in cases of inconsistency

Section 109 provides that when a valid Commonwealth law is inconsistent with a State law, the Commonwealth law prevails and the State law is invalid to the extent of the inconsistency.

This gives Commonwealth legislation priority in cases of inconsistency, but it does not give the Commonwealth Parliament a general power to legislate on any subject.

The constitutional validity of the Commonwealth law must be established independently. A law that exceeds Commonwealth legislative authority cannot rely on section 109 to become valid.

This distinction is central to understanding the federal relationship: Commonwealth laws prevail where the Constitution gives them priority, but the Commonwealth must still act within its constitutional powers.

3.4 The Melbourne Corporation principle

The High Court has also recognised constitutional limitations protecting the capacity of the States to function as governments.

In Melbourne Corporation v Commonwealth (1947), the Court considered Commonwealth legislation that affected State governmental operations.

The decision established a principle that the Commonwealth cannot discriminate against the States in a manner that imposes a special burden on them or substantially impairs their capacity to function as independent governments.

This principle is not a general immunity for State institutions from Commonwealth legislation. It protects the essential constitutional position of the States within the federation.

3.5 Interstate relations and mutual recognition

The States are separate legal jurisdictions, but they operate within a single national federation.

The Constitution addresses certain aspects of their relationship. Section 118 requires full faith and credit to be given throughout the Commonwealth to the laws, public Acts and records, and judicial proceedings of every State.

This provision supports legal recognition across State borders.

For example, State court judgments and official records may have legal consequences beyond the jurisdiction in which they originated.

Section 118 does not mean that every State law automatically applies throughout Australia. Rather, it establishes a constitutional principle of recognition, subject to the relevant legal rules governing the particular matter.

Other forms of interstate cooperation are supported by legislation and agreements, including mutual recognition arrangements for occupational qualifications and certain goods and regulatory approvals.

4. The Constitutional Status of Territories

Territories occupy a distinct position within the Australian constitutional system.

Unlike the States, which possess constitutionally preserved legislative institutions, territories are governed under the Commonwealth’s constitutional authority in section 122.

4.1 Section 122: The government of territories

Section 122 empowers the Commonwealth Parliament to make laws for the government of territories surrendered by States and accepted by the Commonwealth, territories placed under Commonwealth authority and accepted by it, and territories otherwise acquired.

The provision gives the Commonwealth broad legislative authority over territories.

The constitutional text allows the Commonwealth Parliament to establish different forms of territorial government according to the circumstances of each territory.

The High Court has considered the scope and operation of section 122 in several cases. The relationship between the territories power and other constitutional provisions has generated significant judicial discussion, and it should not be assumed that every constitutional restriction applies to territories in precisely the same way as it applies to States.

4.2 Self-government does not create State status

The Australian Capital Territory and Northern Territory have extensive self-government arrangements.

However, self-government does not transform a territory into a State.

Their legislative assemblies exercise powers conferred by Commonwealth legislation. The Commonwealth retains constitutional authority under section 122 and may legislate for the territories.

The legal relationship is therefore different from the relationship between the Commonwealth and a State Parliament under sections 106 and 107.

This distinction is especially important when examining the validity of territorial legislation, the limits of territorial legislative authority and the ability of the Commonwealth Parliament to intervene.

4.3 Commonwealth supervision and intervention

The Commonwealth retains a degree of constitutional control over the territories.

The precise mechanisms and procedures differ according to the applicable self-government legislation. Commonwealth intervention is not identical to the ordinary section 109 process governing inconsistency between Commonwealth and State laws.

The distinction matters because the Commonwealth’s authority over territories arises from a different constitutional source.

In practice, the Commonwealth generally allows the self-governing territories to manage their internal affairs, while retaining responsibilities and powers established by the relevant legislation.

The Commonwealth department responsible for territories continues to manage residual Commonwealth responsibilities and provide policy advice concerning the ACT and Northern Territory. AGS+1

5. The Australian Capital Territory

The Australian Capital Territory occupies a distinctive position because it contains Canberra, the national capital and the principal seat of Commonwealth government.

5.1 Historical and constitutional background

The Constitution provided for the establishment of a federal capital separate from the territory of any existing State.

Section 125 addressed the location of the seat of government, providing the constitutional basis for the establishment of the Australian Capital Territory.

The territory was created from land transferred by New South Wales to the Commonwealth. It was initially administered directly by Commonwealth institutions.

The ACT later developed its own political and administrative institutions and received self-government under the Australian Capital Territory (Self-Government) Act 1988 (Cth).

5.2 The ACT Legislative Assembly

The ACT has a unicameral Legislative Assembly. It performs legislative functions for the territory within the authority conferred by the Self-Government Act.

The Assembly legislates on many matters affecting the daily lives of residents, including:

• Health services.
• Education.
• Planning and development.
• Transport.
• Public administration.
• Environmental regulation.
• Local community services.

Unlike the States, the ACT does not have a separate local government system. The Legislative Assembly combines functions that, elsewhere in Australia, may be divided between State and local institutions.

5.3 The ACT Executive Government

The ACT has an Executive Government led by the Chief Minister.

The Executive administers territory legislation and manages the territory’s public services and administrative institutions.

Its authority derives principally from the Self-Government Act and laws enacted under that framework.

The ACT also has a judicial system, including the Supreme Court of the Australian Capital Territory, which exercises jurisdiction under territorial law and applicable Commonwealth arrangements.

5.4 The Commonwealth’s continuing authority

The ACT’s self-government is statutory rather than equivalent to the constitutional position of a State.

The Commonwealth Parliament retains its legislative authority under section 122. Its relationship with the ACT is therefore constitutionally distinct from its relationship with New South Wales or any other State.

The official text of the Australian Capital Territory (Self-Government) Act 1988 sets out the Assembly’s legislative authority and the structure of its Executive Government. legislation.gov.au+1

6. The Northern Territory

The Northern Territory is the other principal self-governing mainland territory.

Its constitutional and historical development differs from that of the ACT, particularly because of its former relationship with South Australia.

6.1 Historical development

The Northern Territory was formerly administered as part of South Australia. It was transferred to Commonwealth control in 1911.

For much of its subsequent history, the Commonwealth retained substantial direct administrative responsibility.

Political and institutional development eventually led to self-government under the Northern Territory (Self-Government) Act 1978 (Cth), which commenced on 1 July 1978.

This legislation established the framework for the Northern Territory Legislative Assembly and its Executive Government.

6.2 The Northern Territory Legislative Assembly

The Northern Territory has a unicameral Legislative Assembly.

It legislates on matters within the authority granted by the Self-Government Act, including areas such as:

• Education.
• Health.
• Policing.
• Transport.
• Land administration.
• Planning.
• Local government.
• Public administration.

The Assembly’s legislative authority is subject to the Commonwealth Constitution and the limits imposed by the Self-Government Act.

6.3 The Northern Territory Executive

The Northern Territory Executive Government is led by the Chief Minister and ministers responsible for the administration of territorial law and public services.

The Executive manages the territory’s departments and agencies and implements policies within the powers conferred by Commonwealth and territorial legislation.

6.4 Continuing Commonwealth authority

The Northern Territory remains a Commonwealth territory despite its extensive self-government.

The Commonwealth retains authority under section 122, and the Northern Territory’s constitutional position therefore differs from that of a State.

The Northern Territory (Self-Government) Act 1978 is the principal statutory instrument establishing the territory’s political and administrative institutions. Federal Register of Legislation+2

7. Australia’s External Territories and Other Territorial Jurisdictions

In addition to the ACT and Northern Territory, Australia administers several external territories. Their legal and administrative arrangements differ according to their geographical circumstances, historical development and governing legislation.

7.1 Christmas Island

Christmas Island is an Australian external territory in the Indian Ocean.

It has a local administration and community institutions, but it does not possess the constitutional status of a State or the same form of self-government as the ACT and Northern Territory.

Its legal framework includes Commonwealth legislation and ordinances, together with arrangements applying selected Western Australian laws to the territory.

The Commonwealth retains responsibility for the territory’s constitutional and administrative framework.

7.2 The Cocos (Keeling) Islands

The Cocos (Keeling) Islands are another Australian external territory.

They are administered under Commonwealth legislation, with local government and community arrangements operating within the applicable statutory framework.

The islands’ geographical separation and small population have influenced the form of their administration. Their legal status remains that of an external territory, not a State.

7.3 Norfolk Island

Norfolk Island has a distinctive history and formerly enjoyed a separate system of self-government.

Its self-government arrangements were brought to an end in 2015, and the island was integrated more fully into the Commonwealth’s territorial administrative framework. It now operates under Commonwealth legislation and applicable arrangements for the provision of public services and local representation.

The history of Norfolk Island illustrates that territorial self-government may be altered through Commonwealth legislation in a way that would not apply to the constitutionally preserved institutions of a State.

7.4 Other external territories

Australia also administers territories with specialised legal and administrative arrangements, including:

• The Australian Antarctic Territory.
• Heard Island and McDonald Islands.
• The Coral Sea Islands Territory.
• The Territory of Ashmore and Cartier Islands.

These territories do not have the same governmental institutions as the ACT or Northern Territory. Their administration is largely conducted through Commonwealth departments and the applicable legislation.

The precise application of Australian law may depend on the territory, the relevant Commonwealth statutes and, where applicable, international law.

7.5 Why external territories matter constitutionally

External territories demonstrate the flexibility of section 122.

The Commonwealth Parliament may establish different administrative arrangements for different territories. A populated territory with a developed political community may receive extensive self-government, while an uninhabited or sparsely populated territory may be administered directly by Commonwealth institutions.

The constitutional framework therefore accommodates territorial diversity without treating all territories as equivalent to the States.

8. Local Government: Its Position Within the Australian System

Local government is commonly described as the third level of government in Australia. However, its constitutional position is different from that of the Commonwealth and the States.

8.1 The legal foundation of local councils

The Commonwealth Constitution does not establish local government as a separate constitutional tier.

Local councils are created under State and Territory legislation. Their powers, boundaries, functions and institutional structures are determined by the relevant legislation.

Depending on the jurisdiction, councils may be called councils, municipalities, shires or local government areas.

They exercise statutory powers rather than possessing the broad constitutional legislative authority of State Parliaments.

8.2 Functions of local government

Local councils perform a wide range of practical administrative functions, including:

• Local roads, footpaths and public spaces.
• Waste collection and recycling.
• Local planning and development assessment.
• Building regulation and certain permits.
• Community facilities and libraries.
• Parks, recreational areas and sporting facilities.
• Local environmental and public health functions.
• Community services and local cultural programmes.

The exact distribution of responsibilities differs between jurisdictions.

For example, some planning and development functions may be exercised directly by State agencies, while others are delegated to local councils.

8.3 Local government and State supervision

Because councils derive their authority from State and Territory legislation, the relevant Parliament may generally alter their powers and administrative arrangements through legislation.

State governments may establish requirements concerning council elections, financial management, planning procedures, accountability and the provision of public services.

This does not mean councils lack practical autonomy. They exercise important local responsibilities and may have elected representatives, independent budgets and statutory decision-making powers.

However, their legal authority is derived from the legislation that establishes and regulates them.

8.4 Local government and the Commonwealth

The Commonwealth may provide funding to local councils for particular purposes.

However, because local government is principally a State and Territory responsibility, Commonwealth funding arrangements must have an appropriate constitutional and statutory basis.

The Commonwealth may also work with councils through national programmes, grants and cooperative arrangements.

The constitutional distinction remains important: local councils are not equivalent to the States and do not possess an independent general legislative power under the Commonwealth Constitution.

9. Financial Relationships Between the Commonwealth, States and Territories

The constitutional distribution of governmental authority is accompanied by a distribution of financial responsibilities.

The Commonwealth raises substantial public revenue and provides funding to States and territories. This system has a major influence on the practical operation of Australian federalism.

9.1 Commonwealth taxation powers

Section 51(ii) gives the Commonwealth Parliament power to make laws with respect to taxation, subject to the constitutional prohibition on discrimination between States or parts of States.

The Commonwealth administers major national revenue systems, including personal income tax, company tax and goods and services tax arrangements.

The States also have taxation powers, including powers concerning payroll tax, land tax, stamp duties and other State revenue measures, subject to applicable constitutional restrictions.

Section 90 gives the Commonwealth exclusive authority over customs and excise duties.

9.2 Section 96 and financial assistance to States

Section 96 authorises the Commonwealth Parliament to grant financial assistance to any State on terms and conditions that Parliament considers appropriate.

This provision is a central element of Australian financial federalism.

The Commonwealth may provide general-purpose funding or grants linked to particular policy objectives. Some grants support State budgets more broadly, while others are tied to specified programmes or outcomes.

The arrangement allows the Commonwealth to influence national policy in areas where the States retain substantial administrative responsibility.

9.3 Financial assistance to territories

Territories also receive Commonwealth funding, although their financial relationship with the national government is not identical to the section 96 arrangements applying to States.

The Commonwealth’s constitutional and statutory responsibility for territories provides the basis for their funding and administration.

The ACT and Northern Territory have their own revenue systems and budgets, but their fiscal arrangements reflect their territorial status and the Commonwealth’s continuing responsibilities.

9.4 Horizontal fiscal equalisation

Horizontal fiscal equalisation is a principle used in distributing certain Commonwealth revenues among the States and territories.

Its purpose is to give each jurisdiction the capacity to provide public services at a reasonably comparable standard, assuming comparable levels of revenue-raising effort.

The distribution of goods and services tax revenue is an important part of this system.

The Commonwealth Grants Commission assesses the relative fiscal capacities and expenditure needs of jurisdictions and provides recommendations relevant to distribution arrangements.

Equalisation does not mean that all States and territories receive identical amounts. It recognises differences in population, geography, economic capacity, service-delivery costs and other relevant factors.

9.5 Financial dependence and constitutional autonomy

Financial dependence does not automatically remove the constitutional autonomy of the States.

A State may receive substantial Commonwealth funding while retaining its own Parliament and legislative authority.

However, the practical influence of financial grants can be significant. A State may accept funding subject to conditions that affect how a programme is implemented.

This creates an important distinction between formal constitutional authority and practical policy influence.

10. Judicial Relationships Between the Commonwealth, States and Territories

Australia’s judicial structure reflects the federal character of the Constitution, but it is not divided into completely separate national and State court systems.

The High Court, federal courts, State courts and Territory courts operate within an integrated legal framework.

10.1 The High Court as the final constitutional authority

The High Court is the highest court in Australia and has jurisdiction to determine constitutional disputes.

It may consider questions involving:

• The validity of Commonwealth legislation.
• The validity of State legislation.
• The operation of section 109.
• The constitutional powers of the Commonwealth.
• The constitutional status of States and territories.
• Disputes between governments.
• The interpretation of constitutional limitations.

Its decisions establish authoritative constitutional principles binding on lower courts.

10.2 State courts

Each State has its own court system, including a Supreme Court and other courts established under State law.

State courts exercise jurisdiction over matters arising under State legislation and common law. They may also exercise federal jurisdiction where it has been conferred under the Constitution and Commonwealth legislation.

This arrangement enables State courts to hear a wide range of disputes involving both State and Commonwealth law.

10.3 Territory courts

The ACT and Northern Territory have their own court systems established under their respective legislative arrangements.

Their courts determine disputes under territorial legislation and may exercise federal jurisdiction where authorised.

The constitutional position of Territory courts differs in certain respects from that of State courts. In particular, the constitutional provisions concerning federal judicial tenure under section 72 do not necessarily apply to Territory courts in the same way as they apply to Chapter III federal courts.

The High Court has considered the constitutional status of Territory courts in cases such as Spratt v Hermes (1965) and Eastman v The Queen (2000).

10.4 Federal jurisdiction in State and Territory courts

Section 77(iii) allows the Commonwealth Parliament to invest State courts with federal jurisdiction.

Commonwealth legislation also provides for the exercise of federal jurisdiction by courts in the territories.

Consequently, a State or Territory court may hear a dispute involving Commonwealth legislation without the matter necessarily being transferred to a federal court.

This arrangement is important for the administration of justice because it allows the existing court infrastructure across Australia to deal with disputes arising under national law.

10.5 Appeals and national judicial consistency

The High Court provides a final appellate authority across the Australian legal system, subject to the relevant jurisdictional requirements.

This helps maintain consistency in the interpretation of Commonwealth legislation, State law where relevant to federal jurisdiction, and the Constitution.

The judicial system therefore reflects a combination of institutional diversity and national legal unity.

11. Constitutional Change: Admission of New States and Alteration of State Boundaries

The Constitution provides mechanisms through which the territorial composition of the federation may change.

These provisions are significant because they demonstrate that the federation is not constitutionally incapable of expansion or territorial adjustment.

11.1 Section 121: Establishment or admission of new States

Section 121 authorises the Commonwealth Parliament to admit new States to the Commonwealth or establish new States.

It also permits Parliament to determine terms and conditions associated with admission or establishment, including representation in either House of Parliament.

No new State has been admitted or established under this provision since Federation.

The provision nevertheless remains an important part of the constitutional framework.

11.2 Section 123: Alteration of State boundaries

Section 123 regulates the alteration of State boundaries.

The Commonwealth Parliament may alter the limits of a State, but the constitutional procedure requires:

• The consent of the Parliament of the State concerned.
• Approval by a majority of electors of that State voting on the question.

This protects the constitutional position of States against unilateral alteration of their boundaries by the Commonwealth.

11.3 Section 124: Formation of new States from existing States

Section 124 addresses the formation of new States through the separation of territory from an existing State or the union of States or parts of States.

The provision requires the consent of the relevant State Parliaments.

It therefore recognises that changes to the territorial composition of the federation must respect the constitutional position of the States involved.

11.4 The significance of constitutional territorial arrangements

These provisions distinguish the creation of a new State from the establishment of a territory.

A new State becomes a constituent unit of the federation with a constitutional position comparable to that of the existing States, subject to the terms of admission or establishment.

A territory, by contrast, remains subject to the Commonwealth’s authority under section 122 unless its constitutional status is changed through an appropriate legal process.

The distinction has consequences for legislative authority, representation, governmental institutions and the long-term distribution of constitutional power.

12. Important Constitutional Cases Concerning States and Territories

The High Court has developed important principles concerning the constitutional position of the States and territories. Several decisions illustrate the legal differences between the two categories and the limits of Commonwealth authority.

12.1 Melbourne Corporation v Commonwealth (1947)

This decision is central to the constitutional protection of the States.

The High Court recognised that the Commonwealth cannot exercise its legislative powers in a manner that discriminates against the States or substantially impairs their capacity to function as governments.

The decision established an important limitation on Commonwealth legislative authority and confirmed that the States retain a constitutionally protected institutional position within the federation.

12.2 South Australia v Commonwealth (1942) — the First Uniform Tax Case

The First Uniform Tax Case concerned the Commonwealth’s taxation arrangements during the Second World War.

The High Court upheld important elements of the Commonwealth’s legislative scheme, which used taxation measures and financial arrangements to centralise income tax collection.

The decision contributed to the development of Australia’s financial federalism and strengthened the Commonwealth’s practical fiscal position relative to the States.

12.3 Capital Duplicators Pty Ltd v Australian Capital Territory (1992)

This case concerned the constitutional limits on the legislative authority of the ACT under the Commonwealth’s territories power.

The High Court considered whether the territory’s legislative authority could extend to imposing a tax that would conflict with constitutional restrictions applying to excise duties.

The decision is important because it demonstrates that the Commonwealth’s power to legislate for territories under section 122 does not necessarily permit every constitutional restriction to be avoided through the creation of territorial institutions.

It also illustrates the complexity of determining how constitutional provisions apply to territories that were formerly part of a State.

12.4 Spratt v Hermes (1965)

In this case, the High Court considered the constitutional position of courts exercising jurisdiction in the Australian Capital Territory.

The decision addressed the relationship between territorial courts and the constitutional provisions governing federal judicial power.

It is significant because it illustrates that Territory courts do not necessarily occupy the same constitutional position as federal courts established under Chapter III.

12.5 Eastman v The Queen (2000)

This case concerned the appointment of an acting judge to the Supreme Court of the Australian Capital Territory.

The High Court considered whether the constitutional requirements governing the tenure of federal judges under section 72 applied to the appointment.

The majority held that the particular appointment did not need to comply with section 72.

The case further illustrates the constitutional distinction between courts exercising federal judicial power under Chapter III and courts established under territorial legislation.

12.6 Kruger v Commonwealth (1997)

The case concerned the legal consequences of historical Commonwealth policies involving the removal of Aboriginal children from their families in the Northern Territory.

It raised important questions concerning the constitutional validity of Commonwealth legislation and the scope of constitutional protections.

The decision is relevant to the study of territories because it demonstrates that Commonwealth legislative authority under section 122 may raise complex questions concerning constitutional limitations, historical legislation and individual legal rights.

12.7 R v Hughes (2000)

This case concerned the constitutional validity of arrangements under which a State officer exercised functions connected with Commonwealth law.

The High Court considered the limits of Commonwealth executive authority and the constitutional relationship between Commonwealth and State institutions.

The decision is important to cooperative federalism because it demonstrates that Commonwealth and State governments cannot simply transfer governmental functions between themselves without an adequate legal basis.

12.8 Williams v Commonwealth (2012)

The first Williams decision concerned Commonwealth funding for a school chaplaincy programme.

The High Court held that the Commonwealth Executive lacked sufficient constitutional and statutory authority for the funding arrangements in question.

The decision established that Commonwealth spending must have an adequate legal foundation. An appropriation of money does not, by itself, provide every authority needed to implement a government programme.

Although not exclusively a dispute about State constitutional powers, the case is important for understanding the limits of Commonwealth authority and the legal requirements governing federal programmes.

13. Practical Importance of the Distinction Between Commonwealth, States and Territories

The constitutional differences between the Commonwealth, States and territories have practical consequences for individuals, businesses, public authorities and legal professionals.

13.1 For individuals

The relevant government depends on the legal subject involved.

A person dealing with immigration or Commonwealth social security will generally interact with national institutions. A person applying for a State driver’s licence, dealing with State police or registering land will generally interact with State institutions.

Residents of the ACT and Northern Territory deal with territorial institutions for many comparable services, although those institutions operate under a different constitutional framework.

Understanding which government has legal responsibility helps individuals identify the relevant legislation, administrative authority and available review procedures.

13.2 For businesses and investors

Businesses may be subject to legislation enacted by several levels of government.

For example, a company may be regulated by Commonwealth corporations and competition laws while also complying with State planning, property, licensing and environmental requirements.

A business operating in the ACT or Northern Territory must also consider the applicable territorial legislation and the relevant Commonwealth framework.

The legal source of a regulatory requirement is important because it determines which institution administers it, which court may review a decision and which legislative rules apply.

13.3 For property owners and developers

Property ownership and development are substantially regulated through State and Territory legal systems.

Land titles, planning permissions, building approvals and many environmental requirements are administered under jurisdiction-specific legislation.

However, Commonwealth law may affect development where a valid national power or statutory scheme applies.

A development project may therefore require approvals from a local council, a State or Territory authority and, in particular circumstances, a Commonwealth department.

13.4 For public authorities

Public authorities must identify the legal source of their powers.

A State department cannot assume that it possesses Commonwealth authority merely because a matter has national importance. Similarly, a Commonwealth agency cannot exercise a power that belongs to a State authority without an appropriate legal basis.

Territorial institutions must also operate within the powers conferred by their self-government legislation.

These distinctions are essential to administrative law, statutory interpretation and judicial review.

13.5 For legal research and education

A proper analysis of Australian law should begin by identifying the jurisdiction in which the relevant law operates.

A researcher should establish:

1. Whether the relevant law is Commonwealth, State or Territory legislation.
2. Which Parliament enacted it.
3. The constitutional or statutory source of legislative authority.
4. Whether another jurisdiction’s legislation also applies.
5. Whether a constitutional inconsistency or jurisdictional issue exists.
6. Which court or tribunal has authority to determine the dispute.

This method is particularly important for lawyers, students and researchers dealing with federalism, public administration, property, criminal law and commercial regulation.

Conclusion

The Commonwealth, States and territories occupy distinct constitutional positions within the Australian legal system.

The Commonwealth is the national government established by the Constitution. Its legislative authority is principally based on the powers granted by sections 51 and 52 and other specific constitutional provisions.

The six States are constitutionally recognised constituent units of the federation. Sections 106 and 107 preserve their constitutions and broad legislative authority, subject to the Commonwealth Constitution. Section 109 establishes the priority of valid Commonwealth legislation where it is inconsistent with State law, while other constitutional provisions protect important aspects of the federal relationship.

The territories occupy a different position. Section 122 gives the Commonwealth Parliament broad authority to legislate for their government. The Australian Capital Territory and Northern Territory exercise extensive self-government under Commonwealth legislation, but neither possesses the same constitutional status as a State. External territories operate under their own statutory and administrative arrangements.

Local government adds another dimension to Australia’s public administration. Councils perform important local functions, but their authority is principally derived from State and Territory legislation rather than directly from the Commonwealth Constitution.

Financial arrangements, judicial jurisdiction and intergovernmental cooperation connect these different institutions. The Commonwealth provides substantial funding to States and territories, while the High Court resolves disputes concerning the constitutional limits of governmental authority.

The essential distinction is therefore between constitutional status and practical governmental responsibility. States, territories and local councils may all provide public services and regulate matters affecting everyday life, but the legal source and extent of their authority differ. Understanding those differences is fundamental to understanding Australian constitutional law and the operation of the federation.

Frequently Asked Questions (FAQs)

1. What is the difference between the Commonwealth and Australia?

Australia is the sovereign country. The Commonwealth is the national governmental structure established by the Australian Constitution in 1901. The term Commonwealth is frequently used to describe the federal government and its institutions.

2. How many States does Australia have?

Australia has six States: New South Wales, Victoria, Queensland, Western Australia, South Australia and Tasmania. They are constitutionally recognised constituent units of the federation.

3. What is the constitutional difference between a State and a territory?

A State has a constitutionally preserved position within the federation, including its own constitution and broad legislative powers. A territory is governed under the Commonwealth’s constitutional authority in section 122, with its powers generally derived from Commonwealth legislation.

4. What does section 106 of the Constitution provide?

Section 106 preserves the constitutions of the States following Federation, subject to the Commonwealth Constitution. It ensures the continuity of State constitutional institutions while recognising the superior authority of the national constitutional framework.

5. What does section 107 provide?

Section 107 preserves the legislative powers of the former colonies that became States, except where those powers have been exclusively vested in the Commonwealth or withdrawn by the Constitution.

6. What is the significance of section 109?

Section 109 establishes that a valid Commonwealth law prevails where it is inconsistent with a State law. The State law is invalid to the extent of the inconsistency. The provision does not, however, validate a Commonwealth law that exceeds constitutional authority.

7. What does section 122 provide?

Section 122 authorises the Commonwealth Parliament to make laws for the government of territories surrendered to or acquired by the Commonwealth. It is the principal constitutional foundation for Commonwealth territorial administration and territorial self-government arrangements.

8. Are the ACT and Northern Territory States?

No. Both are self-governing territories. They have legislative assemblies, executive governments and courts, but their authority derives from Commonwealth legislation rather than the same constitutional provisions that preserve State institutions.

9. Can the Commonwealth Parliament override ACT or Northern Territory legislation?

The Commonwealth retains constitutional legislative authority over territories under section 122. The precise mechanisms and procedures for intervention depend on the relevant self-government legislation. This relationship differs from the section 109 process governing inconsistent Commonwealth and State laws.

10. What is the Australian Capital Territory’s constitutional purpose?

The ACT was established as the federal capital territory. Section 125 of the Constitution provides the constitutional foundation for the seat of Commonwealth government, and the territory contains Canberra, Australia’s national capital.

11. When did the Northern Territory receive self-government?

The Northern Territory received self-government on 1 July 1978 under the Northern Territory (Self-Government) Act 1978 (Cth). This established its Legislative Assembly and provided the basis for territorial executive government.

12. Does the Commonwealth have more power over territories than over States?

In important constitutional respects, yes. Section 122 gives the Commonwealth broad legislative authority over territories, whereas its legislative authority over States is principally limited to the powers conferred by the Constitution. However, the precise application of other constitutional provisions to territories can be complex.

13. What are Australia’s external territories?

Australia’s external territories include Christmas Island, the Cocos (Keeling) Islands, Norfolk Island, the Australian Antarctic Territory, Heard Island and McDonald Islands, the Coral Sea Islands Territory, and the Territory of Ashmore and Cartier Islands. Their administrative and legal arrangements differ.

14. Is local government constitutionally recognised in Australia?

The Commonwealth Constitution does not establish local government as a separate constitutional tier. Local councils are principally created and regulated under State and Territory legislation.

15. Can the Commonwealth create a new State?

Yes. Section 121 authorises the Commonwealth Parliament to admit or establish new States. Section 124 also provides for the formation of new States through the separation or union of territories, subject to the required State consent.

16. Can the Commonwealth change the boundaries of an existing State?

Section 123 permits alteration of State boundaries only with the consent of the Parliament of the affected State and approval by a majority of the electors of that State voting on the question.

17. What is the role of the High Court in disputes between the Commonwealth and the States?

The High Court interprets the Constitution and determines disputes concerning the division of governmental powers, the validity of legislation and constitutional limitations. Its decisions establish authoritative principles governing the federal relationship.

18. Are State courts independent of the Commonwealth?

State courts are institutions of their respective State judicial systems. They exercise State jurisdiction and may also exercise federal jurisdiction. Their independence is protected by constitutional principles, particularly because they may be required to exercise federal judicial power.

19. What is financial federalism?

Financial federalism concerns the distribution of public revenue and expenditure responsibilities between the Commonwealth, States and territories. It includes Commonwealth taxation, financial assistance under section 96 and arrangements for distributing revenue among jurisdictions.

20. Why is the Commonwealth financially influential in State affairs?

The Commonwealth raises substantial revenue and provides significant funding to the States. Grants may be made under section 96 on specified terms and conditions, allowing national governments to influence policy implementation in areas administered by the States.

21. Can State laws differ from one another?

Yes. Each State has its own Parliament and legislative system. State laws may therefore differ in areas such as criminal offences, property, planning, licensing and local government. Those laws remain subject to the Commonwealth Constitution and applicable Commonwealth legislation.

22. Does a Commonwealth law always override a State law?

No. A Commonwealth law must first be constitutionally valid. If it is valid and inconsistent with a State law, section 109 gives the Commonwealth law priority to the extent of the inconsistency. If the Commonwealth law is beyond constitutional power, section 109 does not make it valid.

23. Are the territories represented in the Commonwealth Parliament?

The ACT and Northern Territory each elect members to the House of Representatives and have representation in the Senate under Commonwealth electoral legislation. The constitutional and statutory arrangements governing territorial representation differ from the equal State representation principle in the Senate.

24. Why is it important to distinguish between Commonwealth, State and Territory law?

The distinction identifies the legal source of governmental authority, the applicable legislation, the institution responsible for administration and the court or tribunal that may review a decision. It is essential for accurate legal research and for understanding the constitutional distribution of power in Australia.

Primary and Authoritative Sources

The following sources provide the constitutional text, relevant legislation and institutional explanations of the legal relationships between the Commonwealth, States and territories.

1. The Australian Constitution — Federal Register of Legislation
The official constitutional text, including the provisions governing State constitutions, legislative powers, territories and constitutional change.

2. The Commonwealth Parliament’s Place in Australia’s Federal Structure — Parliament of Australia
A Parliamentary Library analysis of Commonwealth powers, State legislative authority, territories and the influence of Commonwealth financial grants.

3. Three Levels of Government: Governing Australia — Parliamentary Education Office
Explains the responsibilities and constitutional position of Commonwealth, State, Territory and local government institutions.

4. Australian Capital Territory (Self-Government) Act 1988 (Cth)
Primary legislation establishing the ACT’s self-government institutions and defining their powers.

5. Northern Territory (Self-Government) Act 1978 (Cth)
Primary legislation establishing the Northern Territory’s Legislative Assembly and Executive Government.

6. States and Territories — Australian Government Solicitor
Legal discussion of the constitutional relationship between States, territories and the Commonwealth, including the operation of section 122.

7. Introduction to Australia and Its System of Government — Department of Foreign Affairs and Trade
Institutional overview of Australia’s federation, government structure and self-governing territories.

8. Australian Government: Territories and Regions
Government information on the administration and constitutional position of Australia’s territories.

9. Council on Federal Financial Relations
Information on financial arrangements, Commonwealth grants and fiscal relationships between governments.

10. High Court of Australia
The official source for High Court judgments and constitutional decisions concerning the federal structure.

11. Federal Court of Australia
Institutional information about federal judicial jurisdiction and the operation of the national court system.

12. Parliament of Australia — The Australian Constitution
Parliamentary material relevant to constitutional and legal questions affecting the federation.