Thank you for your question, Meg. The short answer is that since 1901 Australia has been a federation of states, with three levels of government having responsibility for various areas of funding and expenditure. This federal arrangement is determined by the Australian Constitution.
Section 51 of the Constitution lists the areas in which the Australian Parliament can make laws. These national areas of responsibility include funding invalid and old-age pensions and, since a 1946 change to the Constitution, maternity allowances, child endowment and unemployment benefits. To pay for this expenditure, the Constitution also gives the Australian Parliament the power to impose taxes and to borrow money.
Sometimes both the Australian Parliament and the states have the power to make laws about the same issue. However, Section 109 of the Constitution says that a federal law overrides a state law if there is a conflict between the two. Also, Section 122 of the Constitution says the Australian Parliament can override a territory law at any time.