What is the capital of Australia?

Canberra is a compromise made concrete. When the Australian colonies federated in 1901, Sydney and Melbourne each insisted on being the capital, and the constitution resolved the deadlock by requiring a new federal city inside New South Wales but well away from Sydney, with Melbourne holding parliament temporarily. A site in the Southern Tablelands was selected, an international design competition was held, and the winning plan by Walter Burley Griffin and Marion Mahony Griffin arranged the city around geometric axes tied to the surrounding hills, with an artificial lake at its centre. Building was slow, interrupted by war and depression, and parliament only moved in 1927, with the permanent Parliament House opening much later, built into a hill so that the public can walk over the roof above the chamber. The city remains largely administrative, which is why it is far smaller than the rivals it was created to placate.

The Australian Capital Territory was carved out of New South Wales so the federal government would sit on its own land.