The New Australia Co-operative Settlement Association, known in short as the New Australia Movement, was founded by William Lane in 1892. Lane was a prominent figure in the Australian labour movement, and had founded Australia's first labour newspaper - the Queensland Worker in 1890. A split in the Australian labour movement between those who went on to form the Australian Labor Party spurred Lane's intent to found a socialist utopia outside Australia. Lane's ideal was to build a society based on a brotherhood:
"Come and work as free men for each other, to labour on the common land for the common good, and not for the self alone, or for the selfish greed of another! One man by himself is powerless, but men in a body are strong!
Lane's was not the only influence urging Australians at the time towards a socialist community; utopian Edward Bellamy's Looking Backward was also popular with socialists and led many urban followers of Lane to expect that they would live in luxury in a socialist commune like that of Bellamy's fiction.
Paraguay was chosen as the site of the settlement. Lane recruited many and the first ship left Sydney in July 1893 for Paraguay, where the government was keen to get white settlers and had offered the group a large area of good land. There were some able settlers, but New Australia has been described as a Cave of Adullam to misfits, failures, and malcontents of the left wing of Australian democracy. Notable Australian individuals who joined the colony included Mary Gilmore, Rose Summerfield, and Gilbert Stephen Casey.
The founding of the settlement was of interest to left wing thinkers worldwide; of the settlement Peter Kropotkin said,
"The fact that men and women, who have made Australia what it is, are compelled to migrate from it, speaks volumes in itself. 'Make the land, be the dung which renders it productive, build the centres of civilisation which render it valuable - and go away!' That is the true picture of modern capitalist management. The same here, the same at the antipodes - always the same!
There was conflict amongst the settlers from the beginning over prohibition of alcohol, relations with the locals and Lane's leadership, "I can’t help feeling that the movement cannot result in success if that incompetent man Lane continues to mismanage so utterly as he has done up to the present," wrote colonist Tom Westwood. Problems intensified after a second group of colonists arrived in 1894. Dissention caused a rift in the colony and in May 1894, Lane and 58 others left New Australia to found Cosme, a new colony 72 kilometres farther south. Eventually New Australia was dissolved as a cooperative by the government of Paraguay, and each settler was given their own piece of land.
Some colonists founded communes elsewhere in Paraguay, others went home to Australia or on to England; some descendants of the New Australia colonists still live in Paraguay.
The 1997 book Paradise Mislaid - in Search of the Australian Tribe of Paraguay (ISBN 0-7022-2651-3) by Anne Whitehead is about the colony. There is also a retelling of the story by Michael Wilding, called "The Paraguayan Experiment", which uses "contemporary documents, Foreign Office reports and the memoirs of pioneers and supporters", to create a documentary novel.
Paraguayan comic book writer Robin Wood was born there.