It is ceremonial so long as Parliamentarians behave themselves and offer responsible government. However on a couple of occasions, the duly elected Members of Parliament have been unable to agree on who the Prime Minister and cabinet should be, and the archaic powers of the GG suddenly become very real (in Canada as well as Australia).
It happened just over a year ago - our Prime Minister earned his government with such tenuous public support that the other parties combined can out-vote him on any issue. Given that circumstance he is obliged to seek out if not consensus then at least something with sufficient support from one opposing party to keep Parliament working and keep his government alive. But compromise is not in his nature; he's truly more of a Newt Gingrich type; perhaps quiet by demeanour but still somehow shrill and strident.
So back in the winter of 2008, he pushed a little too far, and the other parties decided that not only would they vote against him on the budget, but they would make a clean sweep and install their own Prime Minister and Cabinet. In a move of outright cowardice, he went to the Governor General to request termination of the Parliamentary session for a few months so he would not have to face the vote. Granting his request would mean that the Opposition would be prevented from formally voting down his government. The Opposition leaders made it clear that regardless of a vote being held, they had lost confidence and expected the opportunity to propose their own government, and that the Governor General should refuse the request to terminate the Parliamentary session and allow the vote. By custom she would never refuse the Prime Minister's request, however the request has never before been accompanied by a signed demand from the Opposition demonstrating non-confidence in the man making the request.
She ruled in favour of the Prime Minister, in what I view for partisan reasons as a tragedy, but also as a setback for Parliamentary precedent. Vote or no, he had no standing to make the request, and I think the GG made a mistake.
As it happens the Opposition politicians lost their nerve, and the whole thing was deeply unsatisfactory on all sides. Parliament failed to impose their will. The Prime Minister engaged every underhanded slimy tactic to avoid responsibility, and the Governor General engaged her powers without due regard for the substance behind the formalities of the Prime Minister's request.
In other news, Britain used to use the position to supervise Canadian law, instructing the GG regarding which bills to veto, etc. That is no longer possible. In theory the Queen could still instruct the Governor General to refuse to sign a law or something like that, but she would be required reach that judgement independently of the British government, and act only within her role as Queen of Canada. In practise this would be impossible for every imaginable situation except maybe Nazis winning a Canadian election or something essentially approaching civil war.
