Section 109 of the Commonwealth Constitution provides:
“Inconsistency of laws: When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.”
The purpose of this provision was to clarify that in situations where both the States and the Commonwealth can legislate regarding a certain subject, Commonwealth laws will prevail to the extent of any inconsistency.
This is an important point to initially note, as the provision cannot apply to the EXCLUSIVE legislative powers delegated to the Commonwealth, (as the States have no constitutional source of power to legislate in this area in order for an inconsistency to arise in the first place), nor can it apply to the RESIDUAL legislative powers retained by the States, (as the Commonwealth has no constitutional source of power to legislate in this area in order for an inconsistency to arise in the first place). In such situations, the laws would be ultra-vires, (beyond power) as opposed to inconsistent.
It can only apply to laws made under the CONCURRENT legislative powers, where both the States and the Commonwealth can legislate, and therefore an inconsistency may possibly arise.
“Section 109 deals with any conflicts between Commonwealth and State laws made in the exercise of concurrent legislative power by providing that, if a Commonwealth law and a State law are inconsistent, the former prevails and the latter is inoperative to the extent of any inconsistency.”
The authority of these Residual Powers creates a problem for those who attempt to apply a few different pseudo legal theories, that are inevitably overruled on this one point, and therefore never succeed in appeals. One example would be disregarding Local Government because they are not recognised in the Commonwealth Constitution, and another, claiming inconsistency under section 109 regarding State Roads and Traffic legislation, both of which are, in terms of the Constitution, among the Residual Powers of the state. The Commonwealth doesn’t even have the power to legislate in respect of these matters, it would be ultra vires.
As Robert Garran points out on page 933 of The annotated constitution of the Australian Commonwealth:
“The powers to be so withdrawn may be divided into two classes—“exclusive” and “concurrent.” Exclusive powers are those absolutely withdrawn from the State Parliaments and placed solely within the jurisdiction of the Federal Parliament. Concurrent powers are those which may be exercised by the State Parliaments simultaneously with the Federal Parliament, subject to the condition that, if there is any conflict or repugnancy between the Federal law and the State law relating to the subject, the Federal law prevails, and the State law to the extent of its inconsistency is invalid.”
“The words quoted must refer to concurrent powers. It would be illogical to contend that they refer to powers which have become exclusively vested in the Federal Parliament. The ability to alter or repeal must be based on concurrent power.”
“As regards laws of the States relating to matters in which the Federal Parliament is given concurrent powers, no difficulty arises. Such laws clearly remain in force except so far as they may be inconsistent with laws passed by the Federal Parliament in the exercise of its concurrent power. When a conflict arises, the federal law prevails ; but unless there is a conflict, the State law holds good.”
“The Constitution draws a line between the enumerated powers assigned to the Federal Government and the residue of powers reserved to the State Governments. Both sets of Governments are limited in their sphere of action, but within their several spheres they are supreme.”
“…that in the Constitution there is a division of that delegated sovereignty into two spheres or areas, one being assigned to the Federal Government, and the other to the State Governments ; that each Government is separate and distinct from the rest; that the Federal Government cannot encroach on the sphere or area of the State Governments, and that the State Governments cannot encroach on the sphere or area of the Federal Government; that the sphere or area of the Federal jurisdiction can only be modified, enlarged or diminished by an alteration of the Constitution ; that the sphere or area of the State jurisdictions can only be modified, enlarged, and diminished by a similar alteration. This dual system of government is said to be one of the essential features of a Federation.”
In Victoria v The Commonwealth  HCA 82 (at 630), Dixon J referred to two approaches which might be taken to the question whether an inconsistency might be said to arise between State and Commonwealth laws.
“The first approach has regard to when a State law would ‘alter, impair or detract from’ the operation of the Commonwealth law. This effect is often referred to as a direct inconsistency’. Notions of ‘altering’, impairing’ or ‘detracting from’ the operation of a Commonwealth law have in common the idea that a State law may be said to conflict with a Commonwealth law if the State law in its operation and effect would undermine the Commonwealth law.
The second approach is to consider whether a law of the Commonwealth is to be read as expressing an intention to say ‘completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed’. This is usually referred to as an ‘indirect inconsistency’. A Commonwealth law which expresses an intention of this kind is said to ‘cover the field’ or, perhaps more accurately, to ‘cover the subject matter’ with which it deals. A Commonwealth law of this kind leaves no room for the operation of a State or Territory law dealing with the same subject matter. There can be no question of those laws having a concurrent operation with the Commonwealth law.
The question whether a State or Territory law is inconsistent with a Commonwealth law is to be determined as a matter of construction. In a case where it is alleged that a State or Territory law is directly inconsistent with a Commonwealth law it will be necessary to have regard to both laws and their operation. Where an indirect inconsistency is said to arise, the primary focus will be on the Commonwealth law in order to determine whether it is intended to be exhaustive or exclusive with respect to an identified subject matter.”
The second proposition may apply in a given case where the first does not, yet, contrary to the approach taken in the Court of Appeal, if the first proposition applies, then s 109 of the Constitution operates even if, and without the occasion to consider whether, the second proposition applies.
As recognised in R v Winneke; Ex parte Gallagher  HCA 77; (at 216), the circumstance that federal and state legislation may confer upon different repositories, powers in respect of the same subject matter, will not of itself engage the operation of Section 109. In Winneke, the second qualification was expressed as follows:
The words of s. 109 make it plain that it deals only with inconsistency between laws. It does not deal with inconsistency between powers: O’Sullivan v. Noarlunga Meat Ltd. (1956) 95 CLR 177, at p 183 . It does not deal directly with inconsistency between executive or judicial acts done under a power conferred by a federal law, on the one hand, and acts of that kind done under a State law, on the other hand. If a federal law validly confers a power which is intended to be exclusive, so that no one else can do the same thing, s. 109 directly operates, with the result that a State law conferring a power to do that thing would be invalid. However the federal law may reveal an intention that although the power which it confers is not exclusive, an exercise of that power will be exclusive; in that event, s. 109 will give paramountcy to the law under which the power is exercised, with the result that State law cannot validly operate once the power has been exercised.
“Taxation, which is referred to in s 51(ii), is a non‑exclusive power, so that both State and Commonwealth Parliaments can pass laws dealing with taxation. However, because of the existence of s 109 of the Commonwealth Constitution, it is possible for the Commonwealth Parliament to give priority to its own taxation law, and/or to impose taxation at a rate such that the practical effect would be that it would not be politically possible for a State to tax the same subject matter. This was the effect achieved in relation to income tax in a case to which the appellants refer, South Australia v The Commonwealth (1942) 65 CLR 373. In other areas of taxation, where the Commonwealth has not legislated, it remains both politically and practically possible for the States to impose taxation; an example of such a tax would be land tax.”
“As I have pointed out, the taxation power is not one which is exclusive to the Commonwealth, but one which is concurrent, so that laws imposing taxation can be passed by both State and Federal Parliaments. Further, s 109 renders invalid or inoperative only State laws which are inconsistent with relevant Commonwealth law. There is no Commonwealth law relevant to local council rates, since the Commonwealth has not enacted legislation “covering the field” of rates on land.”
“In Australian Mutual Provident Society v Goulden (1986) 160 CLR 330 at 337, the Court stated: “In the words of Dixon J in Victoria v The Commonwealth (1937) 58 CLR 618 at 630, it ‘would alter, impair or detract from’ the Commonwealth scheme of regulation established by the [Life Insurance Act 1945 (Cth)] if a registered life insurance company was effectively precluded by the legislation of a State from classifying different risks differently, from setting different premiums for different risks or from refusing to insure risks which were outside the class of risk in respect of which it wished to offer insurance.” (emphasis added)
Against this background, the Commonwealth put a submission more narrowly expressed than that of Victoria and its supporters. The Commonwealth met the plaintiffs’ contention that s 109 is engaged if, in the light of the practical operation of the State law, there is anything more than a de minimis impairment of the enjoyment of a federal right by saying that the question is always one of fact and degree. This approach should be adopted. The starting point in the resolution of any assertion that Section 109 of the Constitution is engaged is the construction of the laws said to be inconsistent. It is only an inconsistency disclosed by the proper construction of each of those laws that will operate to invalidate the relevant State law.”
“Section 109 of the Constitution operates to render a State law inoperative only to the extent of its inconsistency with a law of the Commonwealth and only for so long as the inconsistency remains. (Western Australia v The Commonwealth (Native Title Act Case) (1995) 183 CLR 373 at 465 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ.) Although there may be “operational inconsistency” between the Mining Act and the Defence Regulations in the event and to the extent that authority is conferred pursuant to the former to enter upon or engage in activities on land in the perimeter area at a time when a defence operation or practice is authorised underreg 51(1) of the Defence Regulations, that situation has not yet arisen. Thus, at the present time, there is no inconsistency between the Mining Act and the Defence Regulations.“