Front cover of the Flags Act 1953 (Cth).

 

As part of the British Empire Australia originally flew the Union Jack. According to the College of Heralds it is a Royal banner representing the monarchy which is used as the defacto flag of the United Kingdom by permission of Her Majesty Queen Elizabeth II.

In the 1920s there was debate over whether the blue ensign was reserved for Commonwealth buildings only, culminating in a 1924 agreement that the Union Jack should take precedence as the national flag. As the Union Jack was recognised as the national flag, it was considered disloyal to fly the blue ensign without the Union Jack alongside, and it was the Union Jack that covered the coffins of Australia's war dead.

In 1940 the Victorian government passed legislation allowing schools to purchase blue ensigns, which in turn allowed its use by private citizens. Prime Minister Robert Menzies then encouraged private citizens to use the blue ensign, issuing a statement the following year allowing Australians to use either ensign.

Prime Minister Ben Chifley issued a similar statement in 1947.

On 4 December 1950, the Australian cabinet proclaimed the blue ensign as the national flag and in 1951 King George VI approved the government's recommendation.

The blue ensign took precedence as the Australian National Flag over the Union Jack under the Flags Act 1953 (Cth), signed into law by Her Majesty Queen Elizabeth II on 14 February after opening the Commonwealth parliament during her 1954 Royal Tour. This was the first federal statute in Australian history enacted by a reigning Monarch. Upon introducing the Flags Bill, Prime Minister Robert Menzies said: "The bill is very largely a formal measure which puts into legislative form what has become almost the established practice in Australia."

The description of the flag in Schedule I of the Flags Act 1953 (No 1, 1954) contained an error, describing the outer diameter of the Commonwealth Star as three-eighths of the width of the flag. This was inconsistent with the pictures of the flags in Schedule II, which had the correct diameter of three tenths of the width of the flag. The mistake was corrected when the Act was amended by the Flags Act 1954 (No 58, 1954), which received Royal Assent on 6 November 1954, but stated its commencement date as 14 April 1954, the date that the original act came into operation.

The Act confers statutory powers on the Governor-General to appoint 'flags and ensigns of Australia' and authorise warrants and make rules as to use of flags. Section 8 ensures that the 'right or privilege' of a person to fly the Union Jack is not affected by the Act. South Australia chose to continue with the Union Jack until 1956, when schools were given the option of using the Australian National Flag.

The Union Jack was still regarded as the national flag by many Australians well into the 1970s, which inspired Arthur Smout's campaign from 1968 to 1982 to encourage Australians to give the Australian National Flag precedence.

By the mid-80s the Commonwealth Government no longer reminded Australians they had the right to fly the Union Jack alongside the Australian National Flag or provided illustrations of how to correctly display them together.

In 1998, the Flags Act was amended by stipulating rules for changing the national flag's design; to replace the flag entirely, the existing flag and one or more choices must be put to the electorate – assuming the act is not amended by parliament through the normal processes.