1. Constitutional Provision: The Constitution of Australia, enacted in 1901, designated a federal territory, within which a new capital city would be established. This territory became the Australian Capital Territory (ACT).
2. Competing Proposals: Several sites were suggest for the capital, reflecting regional interests and geographical preferences. Sydney and Melbourne, the dominant cities at the time, were prominent candidates.
3. Political Compromise: There was strong rivalry and disagreement between the supporters of Sydney and those who favored Melbourne. To overcome this Impasse, politician Edmund Barton proposed a compromise solution.
4. Creation of the ACT: Barton's proposal involved the creation of a separate federal territory, free from the Influence of any existing states. This territory would host the capital city and ensure it remained neutral and independent.
5. Selection of Canberra: After negotiations and considerations, the Yass-Canberra region was chosen as the site of the capital. The name "Canberra" was derived from local indigenous language and had historical and cultural significance.
6. Design Competition: In 1911, a design competition was held to determine a suitable plan for the capital city. The winning entry, designed by Walter Burley Griffin, envisioned Canberra as a unique, planned city with a distinct aesthetic and layout.
7. Transfer of land and Construction: The New South Wales government agreed to transfer land to the Commonwealth for the establishment of the ACT and construction began in the early 1920s.
8. Official Inauguration: Canberra was officially designated and inaugurated as Australia's national capital on 9th May 1927. The development and growth of the city continued alongside the nation's growth and evolution.
Thus, the location of Australia's federal capital was determined through compromises, negotiations, and the desire to establish a neutral and purpose-built capital city free from state influences. Canberra's unique design and geographical setting have allowed it to become an iconic and functional political and cultural center of the country.