In 1901, the Commonwealth of Australia was formed. Until this time, Australia used Britain's flag, the Union Jack. A competition was held to find the design for Australia's own flag. Five designers shared the prize because they came up with similar ideas for the Australian flag.
In the top left hand corner is the Union Jack. This shows that Australia is part of the British Commonwealth. Beneath the Union Jack is a large white star with seven points. The points represent the six states and the territories. Originally this star had six points. The seventh point, for the territories was added in 1908.
On the right hand side are the stars of the Southern Cross. The southern Cross was chosen because it can always be seen in the Australian sky at night.