<P> When the draft was put to referendum in New South Wales in 1899, Reid (Free Trade Premier from 1894 to 1899), adopted an equivocal position, earning him the nickname "Yes - No Reid ." The draft was rejected, mainly because New South Wales voters thought it gave the proposed Senate, which would be dominated by the smaller states, too much power . Reid was able to bargain with the other Premiers to modify the draft so that it suited New South Wales interests, and the draft was then approved . On 1 January 1901, following a proclamation by Queen Victoria, New South Wales ceased to be a self - governing colony and became a state of the Commonwealth of Australia . Although the new Governor - General and Prime Minister's swearing - in ceremonies were held in Sydney, Melbourne was to be the temporary seat of government until the permanent seat of government was established . This was to be in New South Wales, but at least 100 miles (160 km) from Sydney . The first Prime Minister (Barton) the first Opposition Leader (Reid) and the first Labor leader (Chris Watson) were all from New South Wales . </P> <P> At the time of federation the New South Wales economy was still heavily based on agriculture, particularly wool growing, although mining - coal from the Hunter Region and silver, lead and zinc from Broken Hill - was also important . Federation was followed by the imposition of protective tariffs just as the Sydney Free Traders had feared, and this boosted domestic manufacturing . Farmers, however, suffered from increased costs, as well as from the prolonged drought that afflicted the state at the turn of the century . A further boost to both manufacturing and farming came from the increased demand during World War I. By the 1920s New South Wales was overtaking Victoria as the centre of Australian heavy industry, symbolised by the Broken Hill Proprietary (BHP) steelworks at Newcastle, opened in 1915, and another steel mill at Port Kembla in 1928 . </P> <P> The growth of manufacturing and mining brought with it the growth of an industrial working class . Trade unions had been formed in New South Wales as early as the 1850s, but it was great labour struggles of the 1890s that led them to move into politics . The most important was the Australian Workers' Union (AWU), formed from earlier unions by William Spence and others in 1894 . The defeat of the great shearers' and maritime strikes in the 1890s led the AWU to reject direct action and to take the lead in forming the Labor Party . Labor had its first great success in 1891, when it won 35 seats in the Legislative Assembly, mainly in the pastoral and mining areas . This first parliamentary Labor Party, led by Joseph Cook, supported Reid's Free Trade government, but broke up over the issue of free trade versus protection, and also over the "pledge" which the unions required Labor members to take always to vote in accordance with majority decisions . After federation, Labor, led by James McGowen, soon recovered, and won its first majority in the Assembly in 1910, when McGowen became the state's first Labor Premier . </P> <P> This early experience of government, plus the social base of New South Wales party in the rural areas rather than in the militant industrial working class of the cities, made New South Wales Labor notably more moderate than its counterparts in other states, and this in turn made it more successful at winning elections . The growth of the coal, iron, steel and shipbuilding industries gave Labor new "safe" areas in Newcastle and Wollongong, while the mining towns of Broken Hill and the Hunter also became Labor strongholds . As a result of these factors, Labor has ruled New South Wales for 59 of the 96 years since 1910, and every leader of the New South Wales Labor Party except one has become Premier of the state . </P>

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