We all believe Canberra was made the capital city of Australia because Melbourne and Sydney were, then as now, the two largest cities by far in Australia, and couldn’t agree which should be the capital. Remember, that in 1901 Australia didn’t really become independent (independence was a gradual process in Australia and there’s no one single date of independence, as well as 1901 you could say 1942 or 1986), but it became a federation, where previously there had been different colonies. So very much like the USA in that regard. And like with the USA, it would seem to be favouritism to make one state capital the national capital.
So it was agreed to form a federal territory for the capital. Canberra was chosen because it was already settled, and was good land for building a city on. Wikipedia says:
The need for a national territory was flagged by colonial delegates during the Federation conventions of the late 19th century. Section 125 of the Australian Constitution provided that, following Federation in 1901, the land would be ceded freely to the new Federal Government. The territory was transferred to the Commonwealth by the state of New South Wales in 1911, two years prior to the naming of Canberra as the national capital in 1913.
Melbourne, then larger than Sydney, was the acting capital fo the first two or three decades while Canberra was being built. This lucky fact some years ago gave us our first World Heritage site in Victoria (my theory is because we were jealous that all the other states and territories already had at least one World Heritage site). Canberra was, of course, a planned city, planned by American architect Walter Burley Griffin.
In that sense, Canberra is like Washington, D.C. or Brasilia. There are also heaps of other countries where the national capital is not the largest city (I think I counted ten off the top of my head a while back). There are probably good reasons for this – it can help spread growth to other parts of the country, helps prevent favouritism in a case like Australia where there is a few main cities, can often make the military defence of the capital easier (largest cities often tend to be by the water), etc.
I don’t know if any of those things were going through the heads of the bearded gentlemen at the federation conventions, or if they were following the model of the USA there too (our federal system is supposedly based in part on the USA), or if it was simply a compromise between the two most powerful states.
So there seems to be a mistaken assumption in your question. It was decided that a new capital should be built, not part of any state, long before it was actually created – i.e. before “Canberra” existed.
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