Why does Australia have separate states?

To understand why Australia has states and territories, you need to look at the process of Federation.

Before 1901, Australia consisted of 6 British colonies which were partly self-governing but under the law-making power of the British Parliament. In the 1880s and 1890s, it was suggested the colonies might be stronger and more efficient if they worked together. Several conventions were held to draft a constitution for a new country Australia. In 1899, the draft was approved by a vote of the people in a series of referendums. On 1 January 1901, the Australian colonies united to become a nation and the colonies becoming Australia's 6 states. Through federation, the states transferred some of their law-making power to the Australian Parliament.