This means that the Australian Parliament retains the right to legislate for the Territory, if it chooses to exercise it.

Under the law granting self-government to the Territory, the Federal Cabinet can advise the Governor-General of Australia to overturn any legislation passed by the Assembly.

This was a shock to both the Northern Territory and Commonwealth governments, for opinion polls showed most Territorians supported statehood.

However, under s. 121 of the Australian Constitution, the terms of admission of new states are decided by the Commonwealth Parliament.

Alongside what was cited as an arrogant approach adopted by then Chief Minister Shane Stone, it is thought that many Territorians were reluctant to accept statehood on the offered terms.