You have to explain both methods and come to a conclusion as to which one is better. I would argue that the referral of powers is more effective in theory, as it saves the need for a referendum in the first place. The referral of powers is essentially where the states pass an Act of Parliament which gives up control of their residual powers to the Commonwealth (becoming exclusive powers). However it can also work the other way as well. An example of this is the Murray-Darling Basin, whereby the states agreed to give up control of waterways/rivers to the Commonwealth. On the other hand, you could also say that referendums have had a low success rate in recent years (8 out of 44 have been successful) and further to this, they can be quite costly to hold; hence they are generally held at the same time as federal elections - this may cause problems in itself as this can lead to voter confusion. An example of a failed referendum was in 1999, where 54.87% of Australians voted against Australia becoming a republic. This is a rough outline as to how I would approach that question. Ask your teacher for clarification if you’re not sure why you lost the 2 marks.