Federal system of government
The Australian Constitution of 1901 established a federal system of government. In a federal system powers are distributed between a national government (the Commonwealth) and the six states. The Constitution defines the boundaries of law-making powers between the Commonwealth and the states/territories.
In Australia there are three tiers of government:
The main responsibility of Federal government is to raise and distribute revenue which it raises mainly through Taxation. Money is then distributed to the States through the Premiers Meetings/Conference and this process is duplicated with a number of State and Commonwealth Departments. For example, there is a Commonwealth/State Housing Agreement where negotiations have been made to reach agreement on allocations for state housing. Money is also given for specific programs - Tied Grants.
The Federal government concerns itself with such things as defence, social security, telecommunications, foreign affairs and currency.
The States have powers in relation to the many matters not specifically granted to the Federal Parliament under S 51, for example domestic law and order (police), land management (roads, rail, water resources, National Parks etc). In other areas such as health, welfare, education and the environment, the Federal and State governments share responsibility.