Section 51 (xxxvii) gives states the ability to give up residual powers by referring them to the Commonwealth. The states can refer their powers generally or specifically to the Commonwealth.1
States have to pass a bill referring a certain power, and in turn the Commonwealth has to pass a bill accepting this power. States often do this when they see that the law will be formulated, executed, and applied best by the Commonwealth. Referral of powers allows for consistency across the states. For example, the Fair Work Act (2009) referred some of its industrial relations power to the Commonwealth.2 This allowed more Victorian workers to be covered by Fair Work. State parliaments have also referred the issue of ex-nuptial children to the Commonwealth, so that matters involving these children can be dealt with by the Family Court (which is a federal court).
If a state refers its powers to the Commonwealth, it does not have to be permanent. It can impose a sunset clause, which dates when the referral expires and the power reverts back to the state.
However, states are generally reluctant to relinquish their power, particularly since successful referenda and High Court interpretation has usually decreased state power. States relinquish their power rarely and with care, but referral has still had a large impact.
Commonwealth of Australia Constitution Act 1900 (UK), http://www.austlii.edu.au/au/legis/cth/consol_act/coaca430/ ↩
Fair Work Act 2009 (Clth), http://www.austlii.edu.au/au/legis/cth/num_act/fwa2009114/ ↩
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