The office of Prime Minister is in practice the most powerful political office in the Commonwealth of Australia.
By convention, the Prime Minister is the leader of the party or coalition which has the most seats in the lower house of the Federal Parliament, the House of Representatives. In times of constitutional crisis, however, this convention can be broken if necessary; this has occurred twice. At the time of Federation, no parliament had yet been established, so Edmund Barton was temporarily appointed as Prime Minister until elections were held. More controversially, during the Australian constitutional crisis of 1975, Malcolm Fraser was appointed to replace Gough Whitlam.
By convention, the Prime Minister is always a member of the lower house of parliament. The Prime Minister can remain in office for as long as he retains the majority support of the lower house of parliament and retains his own seat in Parliament. In the rare event that the Prime Minister's party wins an election but the Prime Minister loses his seat, it is possible for the Governor-General to appoint someone other than a member of Parliament a Minister (and hence Prime Minister) for up to three months. During this time a member of the Prime Minister's party with a safe seat would be forced to resign, and the Prime Minister would then be elected as member for that seat.
The constitutional crisis of 1975 shows that a Prime Minister may be removed if seriously opposed in the Senate, even though he may have the support of the majority of the House. This however only applies if the Senate refuses to pass essential Government legislation, like the Budget. (See Loss of Supply). The Senate in recent years has frequently refused to pass major (though non-essential) government legislation.
The formal holder of executive power in the Commonwealth is the Governor-General. However, by convention the Governor-General can only act with the Prime Minister's consent. The Governor-General appoints and can dismiss the Prime Minister and the other ministers, though his power to do so is heavily circumscribed by convention.
The Governor-General is appointed by the Queen; by convention she appoints the person recommended to her by the Prime Minister. The Queen can also sack the Governor-General, which by convention she would do if the Prime Minister requested it. Since the Governor-General can sack the Prime Minister, and the Prime Minister can (by advising the Queen to do so) sack the Governor-General, the possibility arises of a race between the two to see who can sack the other first. However, thus far this has been a largely theoretical possibility, though it might have happened during the constitutional crisis of the 1970s, had the events at the time played out differently.
The office of Prime Minister is nowhere mentioned in the Australian Constitution, although it does provide for the Governor-General to be advised by ministers. However, since the framers of the Australian constitution from the beginning intended it to largely follow the Westminster system, the office of Prime Minister has existed since the earliest days of the Commonwealth.
The Prime Minister chairs the Cabinet, a council of ministers where executive decision-making occurs, which can dictate its views on any aspect of government policy allowed by ministerial discretion. Like the Prime Minister, the Cabinet is nowhere explicitly provided for in the Australian Constitution. The intention nonetheless was for it always to exist, again following the Westminster model.
The Australian Constitution does explicitly provide for the Executive Council, which is composed of the Governor-General and the Ministers. (Former Ministers are also technically members, although only current members are permitted to attend its meetings.) The Executive Council makes no real decisions, serving mainly to rubber stamp decisions of Cabinet. This separation between the Executive Council and the Cabinet is similar to that existing between the Privy Council and Cabinet in the United Kingdom, or between the Canadian Privy Council and the Cabinet in Canada.
The power of the Prime Minister is subject to a number of limitations. If a Prime Minister acts against the interests of his parliamentary supporters he may be removed as leader of his party and thus lose the support of the lower house. If this occurs, he must resign the office or be dismissed by the Governor-General, in accordance with convention. The Prime Minister must receive the support of both houses of Parliament to pass any legislation (though secondary legislation, called Regulations, can be made by ministerial decree). While the Prime Minister normally will have a majority in the House of Representatives, attaining the support of the Senate can be more difficult, since there the Government will often be in a minority.
So, while the Prime Minister's formal powers are minimal, his practical powers as chief spokesperson for the government and leader of the strongest party in parliament in the relatively rigid Australian party system are very considerable.
The Prime Minister's official residence is The Lodge in Canberra.