Free association, or an associated state, is a nation that assumes responsibility for domestic affairs, but continues to depend on the colonial ruler for defence and foreign policy.
So, in Norfolk Islands case, it would mean that a newly formed Norfolk Island government, selected through a democratic electoral process, would be responsible for managing the local island affairs, while being a minor partner in a formal, free relationship with a larger nation, for instance, Australia.
An example is The Cook Islands: a self-governing island country in the South Pacific Ocean in free association with New Zealand.
Free Association means that:
laws are created locally, to suit local conditions while remaining relevant to life on island.
it addresses the weaknesses of our previous governance arrangements with regards to financial sustainability.
ensures Norfolk Island has the necessary powers required to govern effectively.
guarantees the fundamental right of the Norfolk Island People to determine their own future.
Allows Australia (for instance) to enjoy economic terms such as market access.
Enables both parties to form a mutually beneficial relationship that is economically feasible for both.