Literally, the word referendum means “must be referred.” As a concept of Political Science it means the process by which the verdict of the people is sought on a proposed law or constitutional amendment on which the legislature has already expressed its opinion.
If it is ratified by the required majority of popular votes, it becomes law.
If it is rejected, the measure is given up; the underlying idea is that a law must be the manifestation of the will of the people, and every law passed by the representative assembly should be submitted to the people for their final approval.
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The referendum may be of two kinds: (1) facultative or optional, and (2) compulsory or obligatory.
When a law, after it has passed through the legislature, is submitted to the people for their acceptance or rejection on a petition from a specified number of citizens, it is known as the optional or facultative referendum.
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If the majority vote is in the affirmative, it becomes a law; otherwise the decision of the legislature stands reversed. In Switzerland a petition for facultative or optional referendum is required to be made by 50,000 citizens or the legislatures of eight Cantons for ordinary law unless the Federal Assembly declares the matter urgent.
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In the case of compulsory or obligatory referendum all laws of a specified type must necessarily be referred to the people for their acceptance or rejection before they can become laws. The obligatory form is obviously more democratic, for it requires expression of popular opinion on every law.
In Switzerland and Australia, all constitutional amendments are subject to compulsory or obligatory referendum. In some of the Swiss Cantons even ordinary laws are compulsorily referred to the people for their opinion.