The constitution of Australia delineates the powers and responsibilities of the federal government, including trade and foreign relations, defence, immigration, taxation, postal services, and so on. All areas not so assigned fall to the states and territories, but in instances of conflict, the law of the Commonwealth (federal state), needless to say, prevails. The constitution can only be changed by a national referendum, the conditions of which are difficult of realisation. Since Australia became a country, only eight proposals have been accepted out of the more than 40 submitted to referendum.

The organisation of state governments parallels that of the Commonwealth (the Federal Government), but with jurisdiction over matters such as transport, health, police services, utilities, education, housing – and local government. The states (and the Northern Territory) thus have complete power and discretion when it comes to creating all forms of local government and determining the nature and degree of the powers conferred on them.

 

More: http://www.citymayors.com/government/aus_locgov.html

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