So this argument will be based variously on history, on politics, and on the common law, given that we both reside in common law countries (the Commonwealth of Australia and the United States of America).
Civil law, inherited from Rome, is codified law, produced by a legislature as the Continental Congress during the American War of Independence or the Roman Senate during the period of the Roman Republic.
Free men can send delegates to negotiate on their behalf in an organizing body.
Under the British system, the Crown is Sovereign, and as subjects of the Crown, the people have no inherent rights other than those granted to them and recognized in written law (as the Magna Carta) because the Queen gets her power to rule from God. This is the Divine Right of Kings.
In the British system, the Crown, fearing her subjects, delegates a portion of the Sovereignty granted to her by Almighty God to her parliament, which is vested with its own parliamentary sovereignty from the Queen, the head of the state and the church, God’s representative on earth.
In America, we dispute this. We embrace the notion of popular sovereignty, the idea that the people themselves are sovereign, and that governments derive their right to govern through mutual consent, the social contract.
As nations (i.e., empires and nation-states) developed from cities (i.e., trade unions and city-states), international law developed between nations, which recognizes the right of individuals to self-determination and of the state to its own state sovereignty.
Free men are free to delegate their sovereignty to whomever they like, be it a parliament, a monarch, or a state government.
But that doesn't mean the state is a figment. The state does exist.
As the Western frontier was conquered, law enforcement was central to social function and cohesion. Sheriffs were elected by the locals, grand juries indicted criminals, and every citizen was free to arrest and apprehend lawbreakers.
This is still the system we live under in America.
As cities grew, states were formed by consent and the people elected representatives to state legislatures through their own free choice and association.
Whether the edicts of these bodies have merit is for judges to decide. But such an entity called the People of California exists in the local courts and prosecutes criminals on behalf of an entity called the State of California.
Not all individuals who exist within the territory administered by the State of California are members of the state or are citizens of the state or are subject to the government of the state. Indian reservations, for example, are autonomous and semi-independent nations.
The state has no rights.
The state is just a cartel. The government is a firm. A legal corporation. It is a trust of the state legislature. And the state legislature is simply a body of citizens, created by the people of the state. If the people really had a problem with the legislature, they are free in their sovereign capacity to construct an alternative legislative body or representative institution or another system entirely to overtake the administration of public goods as roads and air defense and naval defense.