As has been noted, the choice by the Australian founders of a federal system of government involved the limitation of the law-making powers of the national legislature to matters prescribed by the Constitution. The subjects on which the Commonwealth Parliament may legislate are listed in section 51 of the Constitution, and other sections also empower the Parliament to make laws on particular matters. Some matters are exclusively within the legislative power of the Commonwealth, that is, the states may not make laws in respect of those matters. Examples are customs and excise duties and bounties (s. 90) and the issuing of money (s. 115). Most subjects on which the Commonwealth Parliament can legislate are concurrent with state powers, that is, the states can also legislate in relation to them; this includes most of the subjects listed in section 51. When a law of the Commonwealth in relation to any of these subjects is inconsistent with a law of the state, the Commonwealth law prevails (s. 109). The Commonwealth is positively forbidden to legislate in relation to some matters, such as any establishment of religion (s. 116). Some subjects are not prescribed by the Constitution as subjects on which the Commonwealth can legislate, and those subjects, such as education, are left to the states. The Commonwealth Parliament may, however, legislate indirectly in relation to such subjects, for example, through its power to grant financial assistance to the states (s. 96).
The Constitution confers the legislative power of the Commonwealth on the two Houses of the Parliament and the executive government acting together. The effect of this is that each of the two Houses must agree to a proposed law (a bill) before it can become a law.
The only distinction between the powers of the Houses in relation to proposed laws is contained in section 53 of the Constitution, and relates to the initiation and amendment of proposed financial legislation. Briefly, the Senate cannot originate a taxing bill or an appropriation bill; amend a taxing bill or a bill appropriating money for the ordinary annual services of the government; or amend any bill so as to increase any proposed charge or burden on the people. The Senate may, however, at any stage return to the House of Representatives any of the bills which it cannot amend, with a request for amendment, proposed by any senator, and can insist on its requests. The rationale of these provisions is related to the system of cabinet government; they confer on the executive government in the House of Representatives the initiative in respect of financial proposals.
Whether or not the Senate has the power to amend a proposed law does not affect the basic feature of the legislative procedures of the Commonwealth Parliament, namely that a bill can become law only if supported by both Houses, and neither House can be compelled to pass a bill.
The exercise by the Senate of its legislative powers is covered by Chapters 12 and 13 on Legislation and Financial Legislation.