Modern Australia was founded in 1788 as a prison in the Pacific, far enough away from Britain for its inmates to be unable to escape (although a few did). Its long-term planners in London had rejected previous disastrous sites in Africa but were anxious to secure Britain's existing interests against the French in the Indian Ocean and the South Pacific (Christopher 2010; Atkinson 1997). This required a reserve of British settlers and defenders and a well-developed military base. The first-generation convicts were not normally locked away, as there were no custom-built prisons for them. Massive constructions such as Fremantle Gaol or Port Arthur came later. Prison stations outside Sydney, such as Port Macquarie, Moreton Bay, Macquarie Harbour, Norfolk Island and the Newcastle coalmines, were more stringent and feared than the relatively liberal arrangements in Cumberland County defended by historian John Hirst in Convict Society and Its Enemies (Hirst 1983, 1988). A much longer and quite different account of the system is that of Robert Hughes in The Fatal Shore (Hughes 1987). A statistical analysis by Stephen Nicholas and Peter Shergold (Nicholas 1988) argues that convicts to New South Wales were relatively skilled and literate and were a useful workforce. Van Diemen's Land (later Tasmania) was more rigorous than New South Wales and continued its convict system longer. Convicts were normally put to constructive work relevant to building a permanent society as part of the expanding British Empire. This followed a tradition of convict and indentured labour in other British colonies, but it did not use slavery as in the Caribbean or North America. Convicts and Aborigines were nominally British subjects, governed by British law. Australian origins lay in coercion but not formal conquest.

When necessary, convict discipline was maintained by floggings, transfer to stricter locations or chain gangs working on the roads and public works. Guarding and policing were often provided by other convicts. The British military saw their role as defence and preventing rebellion and (for its officers) making money. Convict numbers reached a peak of 27,831 in New South Wales in 1836, and 46.4 per cent of the recorded population in 1828. In Van Diemen's Land numbers peaked at 28,459 in 1848 and 47.1 per cent in 1819.

Convicts transported to Australia between 1788 and 1868 totalled 160,000 (Robson 1965).