Numerous aircraft were inbound to Sydney, including a foreign Boeing 747 (B747) aircraft on a Rivet Three Standard Arrival Route (STAR) and a Fokker (FK50) aircraft on an Oakdale Two STAR. Both aircraft were at about the same distance from the airfield, with the FK50 sequenced to overfly to the east for a left circuit to runway 16L. The B747 was sequenced to remain to the west of the airfield for a right circuit to runway 16R. The FK50 was assigned 7,000 ft and the B747 assigned descent to 6,000 ft, with a requirement to reach that altitude by 14 DME. This was in order to achieve vertical separation before losing lateral separation between the two routes as the B747 was turned downwind, through the track of the FK50. At 18 DME the B747 was observed on radar by the Approach South controller to be passing through 6,900 ft, and to make an authorised left turn. The aircraft was then expected to track 049 degrees until given radar vectors, but the B747 took up a track of 030 degrees, towards the track of the FK50. An instruction was given to the B747 to turn right immediately onto 090 degrees, and traffic conflict information was passed on the FK50. Because the B747 was initially slow to execute the turn a further instruction to turn immediately was passed. As the B747 turned away from the FK50, the lateral separation had reduced to 2 NM, with a vertical separation of 800 ft. The minimum required separation standard was 3 NM laterally, or 1,000 ft vertically. The B747 crew were of the understanding that a clearance for a visual approach had been given, and hence turned the aircraft onto 030 degrees to position the aircraft for a left circuit for runway 16R. The pilot in command of the B747 had the FK50 in sight and assessed that there was sufficient separation.