They do and they don't.
Sure, the government of the day can bend or amend legislation to suit themselves, but they have to follow the procecdure as set out in the Act, presumably sell the land off (unless the Commonwealth's going to get into housing estates), the private buyer would then have to get local government approval for development etc. It's not North Korea (or Queensland in the 1980s
) where the government can do whatever the hell they like.
If there were a concerted push from Canberra to get rid of an airport it could probably happen, but it's not the sort of thing that can be done on a whim by the local MP next week, even if he's a tree hugger. What is important is for the local flying community to keep making a noise about how Essendon is vital, so Canberra doesn't get any funny ideas. That seems to be happening
.