While soldiers from Australia were still fighting in South Africa the six Australian colonies formed a new Federation on 1 January 1901, and the responsibility for defence passed to the new Commonwealth Government, then temporarily established in Melbourne, on 1 March 1901. In defence terms the key matter at hand was taking the disparate colonial military establishments and creating a new national force. A profound development in Australian military history, rather than the mere developmental stepping-stone it is sometimes portrayed as being, the ensuing years were to be ones of major change. For the mounted branch this would mean a period of remarkable reform as the colonial units were brought together under the direction of an officer who had long held views on the form and role of modern mounted troops.

Australia was, literally, on the far side of the world and a military backwater, so the government of Sir Edmund Barton had some trouble finding someone to take on the job of commanding its forces, but it eventually announced in December 1901 that Sir Edward Hutton, the British officer who had commanded the New South Wales forces in 1893–95, then commanded Australians and other colonials in the Mounted Infantry Brigade in South Africa, had accepted the appointment of General Officer Commanding of the Military Forces of the Commonwealth of Australia. Hutton arrived in Australia in January 1902 and, moving quickly, presented his plans to the government the following April in his Minute Upon the Defence of Australia. In strategic terms he reiterated what British military men had largely been telling the colonies for decades; that is, that with the Royal Navy on side and being geographically remote there was not much chance of a major attack by a foreign power. Similarly Hutton also noted there was always the possibility that one of Britain's enemies might launch a raid or, if the Royal Navy was tied up somewhere else, might try something more serious with some warships and a landing force. Where he did differ from his predecessors was in advancing the ambitious idea that perhaps Australia should also prepare itself to defend its ‘interests’, even if they might be found outside Australia's waters.