Arguments For and Against Federation.
People put forward a number of arguments for federation. A sense of nationhood was growing, with improvements in communication and better transport bringing people together, and with 70% of the population being Australian-born. Issues such as defense were causing concern, with growing German aggression close by in New Guinea, French presence in the New Hebrides, and American and Russian economic activities in the Pacific. Senior defense staff recognized that separate colonies could not defend their interests on there; a national approach was necessary.
Many people understood a federation would best serve economic interests. Tariffs between colonies and varying freight charges caused inefficient trade between colonies. New South Wales favored free trade while Victoria had a vested interest in protection. Such differences increased rivalry between colonies and federation could bring about a customs agreement which would serve all colonies.
Matters of common interest such as railway gauges and postal and telegraph services could also benefit from central government authority.
Immigration was another matter where cooperation was needed. Thousands of Chinese were coming to Australia in search for gold. Australians were afraid that cheap Chinese labor would lower Australian workers living standards and both governments and unions agreed that such immigration should be restricted. A common policy would achieve this.
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Against Federation - Colonial Interests.
Colonies, since achieving their own government had produced their own laws to meet their own problems and did not want to give up self-government to a central power. Colonies such as Western Australia and Tasmania had developed in isolation from the more populated New South Wales and Victoria and feared that federation meant domination by New South Wales.
Different states had different interests to serve.