He was referring to the states' reluctance to implement some of the international conventions that the Commonwealth had agreed to, on the basis that they cut into the states' sphere of influence. The states have clashed with the Commonwealth on foreign policy, when the Commonwealth has used its external affairs' power to interfere in state policy areas, such as the Franklin Dam. However, the federal government has not exploited this power to the extent it could, because it would be electorally dangerous for the Commonwealth to be seen to be over-riding the states on issues where there was little consensus that it should do so. To remind you about Australia's system of government - Australia has a system of collective responsible government. There is a line of authority from the electorate to the parliament.
Voters elect members to parliament.
In our system of party government, these members usually represent one of the major political parties. The party with the majority in the House of Representatives forms the government and selects a cabinet or ministry to make decisions on government policy. The cabinet in turn is responsible to the parliament for its decisions. The parliament is accountable to the electorate. So, we might expect under this sytem that foreign policy decisions would be made by the cabinet.