Along with the Immigration Restriction Act 1901, enacted six days later, it formed an important part of the White Australia policy.

Many of these people had been forcibly removed from their homes, in a process called "blackbirding", by which Islanders were either kidnapped or deceived into traveling to Australia.

By 1880, Queensland legislation prevented Pacific Islanders from working in higher paid jobs in sugar mills and other industrial areas, and limited them to manual agricultural labour.

It provided that any Pacific Islander found in Australia after 31 December 1906 could be deported immediately by order of the Minister for External Affairs, and any Islander found in Australia before that date, who had not been employed under an indentured labour agreement at any time in the preceding month, could be deported immediately by order of a Magistrate in summary proceedings.

The practical effect of the legislation was that by this date, Pacific Islanders were legally barred from undertaking labour contracts in Australia and ultimately compelled to return to their country of origin.