Why did Australia establish a separate federal capital territory?

The establishment of a separate federal capital territory was a requirement mandated by the Australian Constitution, which was adopted in 1900.12

Section 125 of the constitution stipulated that the seat of the country’s government must be located within a federal territory rather than an existing state capital. This provision included specific geographical requirements: the territory had to be situated within the state of New South Wales and be located at least 100 miles (160 km) from Sydney.2

While a temporary national capital was initially established in Melbourne, the creation of a dedicated federal territory ensured that the national government would operate from a neutral, purpose-built site, independent of the influence or jurisdiction of any single state. Following these constitutional requirements, the Canberra-Yass district was selected in 1908, and the federal government began acquiring the land in 1911 to develop the new capital.12