Australian parliaments's power to enact legislation comes from their constitutions. Both the States and the Commonwealth have constitutions. A constitution creates the parliament and defines its basic procedures. To achieve political stability a constitution is normally entrenched, which means that it is difficult to change, though this is not the case with some of the State constitutions such as the Tasmanian one. This can simply be changed by an Act.

Where the political system is a federal one, such as Australia's, a key function of a national constitution is to divide the power to make laws between the two levels of government. Before federation in 1901 Australia consisted of six separate self-governing colonies. Federation meant that these six colonies agreed to give up some of their powers to form a central government which would deal with certain specific issues affecting the new nation as a whole. Therefore the Commonwealth parliament can only make laws where it is specifically given power to do so by the Australian Constitution.

The subjects on which the Commonwealth can legislate are listed in section 51 of the Australian Constitution. These include such things as defence, currency, foreign (‘external’) relations, banking, corporate bodies, social security and industrial disputes affecting more than one state. Commonwealth powers to legislate in these areas are concurrent with the powers of the States. This means that State legislation will remain in effect until the Commonwealth exercises its power to legislate in a particular area. Once the Commonwealth does this, any State legislation which is inconsistent with Commonwealth legislation can be declared invalid. This must be done by challenging the legislation in the High Court.

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