The Act altered section 105 of the Constitution to extend this power so that the Commonwealth could take over any debts incurred by a state at any time.

By the end of the Commonwealth's first decade it was clear that Chapter IV had serious flaws, and in 1910 attempts were made to amend sections 87 and 105.

Impetus had built in recent years for changes to state-federal financial relations, and Deakin made several important administrative decisions on this matter.

[3] The state debts amendment was carried by a 'yes' vote of approximately 55 per cent, with only New South Wales in opposition.

According to a historian of the Loan Council, this indicated that the nation had "decisively favoured a scheme on the basis of s. 105 to relieve the States of some of their financial burden".