New South Wales

New South Wales is a founder colony that seeded half a continent, then spent a century shedding territory while retaining dominance. When the First Fleet arrived at Port Jackson on 26 January 1788 with 736 convicts and a few hundred guards, the new colony of New South Wales nominally claimed everything from Queensland to Victoria, west to South Australia, even briefly New Zealand. Britain had drawn borders on empty maps. Reality would subdivide them.

The subdivisions came fast once free settlers arrived and gold was discovered in 1851. Victoria separated that same year, taking the Port Phillip District and its sudden wealth. Queensland split in 1859 after northern pastoralists tired of being governed from Sydney. The Northern Territory was handed to South Australia in 1863. By 1911, even the federal capital was excised—2,360 square kilometres carved out to create the Australian Capital Territory. The mother colony had shrunk to its current borders, losing four-fifths of its claimed territory in 60 years.

But losing land didn't mean losing dominance. NSW retained the Sydney basin—the finest deepwater harbor in the South Pacific, the first settlement, the merchant infrastructure. Wool built the early economy, then coal from the Hunter Valley, discovered in the earliest years of settlement. By the 1890s, wool, gold, and coal were the colony's main exports. Federation in 1901 made Sydney's commercial networks the skeleton of national finance. When Melbourne briefly hosted parliament (1901-1927), Sydney kept the banks, the shipping lines, the import-export houses.

By 2025, NSW's 8.3 million people—concentrated two-thirds in Greater Sydney—generate 30.8% of Australia's GDP. Service industries contribute 80% of economic activity, 90% of employment. Financial and business services account for nearly a third of the state economy; NSW records 51% of Australia's total services exports. Coal remains the state's biggest merchandise export at $5 billion annually (19% of total), but that share shrinks as Queensland's open-pit mines expand and global demand shifts to renewables. The Hunter Valley now produces wine and thoroughbred horses alongside its thermal coal, hedging the transition.

The pattern is clear: NSW shed physical territory but captured the metabolic center. Sydney's financial district processes capital flows for the entire continent. When businesses list on the ASX, when mining companies in WA need project finance, when tech startups in Melbourne seek venture funding—the transactions route through Sydney. The state lost Queensland's sugar, Victoria's gold, the Northern Territory's uranium. It kept the harbor where everything gets priced. By 2026, NSW faces the opposite challenge from its colonial fragmentation: how to remain dominant when the coal that partly built that dominance faces terminal decline. The Hunter Valley coal exports that seemed permanent in the 1980s now compete with solar farms in Queensland and wind in SA. But NSW has done this before—shed what can't scale, retain what compounds. It lost territory and kept the trade routes. Now it's losing coal and keeping the capital markets. Founder colonies don't die; they just stop budding daughters and focus on themselves.