Throughout the 1600s and 1700s Britain had a major problem with crime and criminals. Many people convicted of crimes (including petty crimes such as theft) were sentenced to be transported to America. In the 1770s the American colonies revolted against Britain. This meant that Britain had nowhere to send its convicts and turned towards Australia. The first convict colonies of Van Diemen's Land (now Tasmania) and New South Wales were set up in the 1780s.

It is difficult for us to imagine how hard life was for the early convicts. The greatest hardship was being torn away from their homes and families, almost certainly never to see them again. Australia was a harsh and unfamiliar environment, with its hot climate and weird animals. Then there was the brutal discipline of the convict colonies. The evidence suggests that Van Diemen's Land was run more harshly than New South Wales. This is partly because Van Diemen's Land received many of the prisoners considered troublesome, such as Irish and Canadian rebels who tried to overthrow British rule in the 1830s and 1840s. It was also due to the attitudes of the governors of each area. In New South Wales the convicts were generally in great demand because there was a tremendous shortage of labour. Once they had served their sentences they could apply for grants of land and become settlers. Most convicts did not return to Britain as life in Australia presented them with better possibilities.

Transportation to Australia ended in 1852, although convict labour was still used in Australia until 1867. Transportation ended for several reasons. One was a campaign against its cruelty (in Britain and Australia). Another was that the growing population of settlers began to see themselves as 'Australians' and began to resent Britain dumping its poorest and most troubled people in their country. A further reason was that as emigration of free people to Australia grew, there was less need for convict labour.

Free settlers began coming to Australia in the 1800s. However, the numbers were very small compared to the large numbers of emigrants going to Canada and the USA. The British empire gave these people opportunities for a new life. On the other hand, many of them felt that British rule at home had failed them and forced them to leave their homes and families.

Several factors increased the numbers of emigrants from the 1830s onwards. One key factor was hunger and misery in Ireland. Ireland was plagued by overpopulation and poverty, and then by a terrible famine in the 1840s. The government and local officials in Ireland put together a range of schemes to help poor Irish farmers emigrate to America and Australia. Throughout the 1840s emigration to Australia was running at about 15,000 per year. Not all of the arrivals were Irish. Large numbers of the English poor also emigrated, especially in the later 1800s.

Another key factor that brought emigrants to Australia was gold. It was first discovered in the 1850s. Once it was realised that the deposits were rich, there was a flood of emigrants keen to make their fortune. Few got rich from gold, but many did well from supplying tools, clothes, equipment etc.

Relations between the settlers and their British rulers were usually, but not always, good. Economic growth helped. Australia's economy grew rapidly in the later 1800s, fuelled by gold and the trade in wool. There were disputes between the wool farmers and the government over land ownership and taxes. There were also clashes between miners and the British. One clash ended in a shoot-out at Ballarat in 1854 that left 17 miners and 5 police dead. Generally, by the 1880s there was a definite sense among the settlers that they were 'Australian'.