If a company is calling up candidates for interviewing & selection based on recommendations from other staff, then:
This hardly seems compliant with Legislation available from the Australian Human Rights Commision (see their website). Whereas discrimination is prohibited during all stages of employment, including the advertisement, interviewing & selection of candidates.
The basis being, the best person for the position may be discriminated against in the process, by not having the opportunity to be assessed for the position in favour of a person who is known by another employee.
If on the other hand, a company don't discriminate & do call in people based on the best candidate available for the position. Then why do they need a system which asks candidates if they know staff currently employed by the same business?
A reference on a resume should suffice & should be used at the tail end of the recruitment process.
First determine if the organisation considers that candidate as suitable, than after that process is complete do the reference checking. Not the other way round!
All organisations reserve the right to employ whomever they choose & whoever is the best candidate for the position, but they can't circumvent discrimantion laws in the process.
If you've been waiting on the call up for an interview with a company & are being bypassed by those who are getting called up because they know someone working for the same company, in plain terms your being discriminated against.