Federation refers to the unity of several states to form one nation, but remain independent in internal affairs. The Australian Federation was proclaimed on the 1, January 1901. The following discussion will focus on the issues that lead to six separate British colonies forming one united Australia. .
The economic advantages to be gained by federation was one of the main issues in its support. There had been tariff policies when crossing colonies" borders. Taxes and custom barriers had to be paid when goods crossed the boundaries. This was a terrible inconvenience and expense to businessmen. Forming one nation would remove these tariffs. Free trade would cause production costs to reduce and open up new markets. Also, some politicians thought that federation would increase the chances of overseas countries investing and approving loans to a collective Australia rather than to separated colonies. .
In 1890 trade unionists had begun striking over conditions of work. These strikes spread from shipyards to sheep stations to mines. Non-union worker were being intimidated by trade unionists. With the price of wool falling, sheep farmers insisted on their right to employ whom they wished. But wharf workers refused to handle wool shorn by non-union members. Miners began to strike over conditions of their work, believing mine management to be greedy. Employers were finding the power of the trade unions to be very forceful. The non-union workers insisted on the principle "freedom of contract", that they also be allowed to work. Governments tried to keep order by bringing in police and the military. Australians were experiencing the division between employers and workers that had been occurring in other industrialised western societies. Throughout the world there was an economic recession, and the numbers of unemployed were increasing. In Melbourne aggressive building and spending suddenly stopped, as did overseas investment.