Another means of coordinating laws across Australia is achieved by the States agreeing amongst themselves to recognise each other’s standards. This is termed 'mutual recognition'.
Mutual recognition overcomes unnecessary obstacles to trade in goods and the movement of people in registered occupations. It means a person registered to practice an occupation in one State is entitled to practice an equivalent occupation in another State without having to undergo further testing or examination. In relation to goods it overcomes differences in standards and other sale-related regulatory requirements. There are some exceptions and qualifications to these principles.
To implement the scheme some States referred power to the Commonwealth Constitution under section 51 (xxxvii) of the Commonwealth Constitution. Under this section the Commonwealth can ‘make laws for the peace, order, and good government of the Commonwealth’ with respect to any matter referred to it by a State Parliament. This Commonwealth legislation only operates in the State that referred the matter, or States that, after the referral by another State, adopt the legislation. Some States have directly referred power to the Commonwealth (for example New South Wales) and other States, like Western Australia, have passed their own legislation adopting the Commonwealth Act.