In the decades since Federation, white settlement of the Northern Territory was felt to be lacklustre due to Commonwealth inefficiency and indifference.

The Commission aided the development of North Australia to a fair degree, but was seen by critics as an extravagance and interested in the pastoral industry over local whites.

By 1922, Commonwealth management of the area, combined with the complexities introduced by lingering South Australian law, was felt to provide an unsatisfactory basis for the development of its rural industries.

Pearce, who had also been the Minister for Defence, was also concerned with the underpopulated North being a target for foreign invasion and agreed to Trower's ideas.

On the opposite end of the spectrum, local parliamentarian Harold Nelson objected to its hindrance of Commonwealth control of lands.

This controversy led to the provisions' being delayed to 1924; as finally enacted, they removed control of leasing from the local Administrator and placed it directly in the hands of the interior minister.

The Commonwealth government, as well as those of Queensland and Western Australia, would maintain control of the commission and be responsible for its costs; Pearce also intended to recruit the United Kingdom for help in its development, reasoning that the territory would serve well to accommodate the surplus population and economic growth of the British Empire.

Cabinet accepted the proposal with significant modifications – Queensland and Western Australia would be omitted from the commission's remit with the possibility of their future joining, while a report on the state of the territory's development would be developed by George Buchanan, who had done similar work in South Africa, despite Pearce's preference of forming the commission before doing any reports.

Choosing the former, the government introduced the Northern Australia Commission Bill in February 1926 to create the commission; the Bill, intending to rectify the neglect and disorganisation of the previous two decades of Commonwealth policy on the territory, divided it into two regions by the 20th parallel, with separate Government Residents and administrations.

The eponymous commission created by the act was to operate within the territory north of the 20th parallel, preparing plans for infrastructure and making recommendations to Parliament.

In the meantime, white attitudes towards aborigines were paternalistic, torn between the desire to help them in times of hunger and the fear of "pauperizing" them and reducing their incentives to work.

[3] In the 1928 Coniston massacre, punitive expeditions were carried out by white colonists led by Northern Territory Police constable William George Murray in response to the murder of a dingo hunter, resulting in the deaths of dozens to hundreds of people of the Warlpiri, Anmatyerre, and Kaytetye groups.

[4] The North Australia Commission cost £27,500[b] a year to function; devoted largely to the interests of the pastoral industry, it lacked legitimacy in the eyes of the wider public, and was the target of criticism from leaseholders as an extravagance.

Blakeley asserted that such a move would potentially save Australians £8,000-£9,000 per annum, but representative Nelson claimed that the abolition of the Commission and the reversion to Canberra administration over the Northern Territory would negatively impact progress in the area.