Why was the white Australia policy abolished?

The white Australia policy originally developed during the 1800s because many Australians came from English stock and as a result felt that they were superior. They didn't even officially recognise the existence of aboriginals. They felt that by allowing other races into the country that their position would be swamped by ensuring cheap labour market and that they would become an unemployed minority in their own country.

Some Australians wanted a "White Australia" policy and they believed Federation would enable the development and maintenance of a "White Australia", by toughening Immigration laws. There was lingering resentment over the Chinese who had come during the gold rush, made their fortune (as they were far more industrious than Australians) and then returned to their own country, taking their fortune with them. Some stayed and set up businesses in towns, but they were always looked down upon. It was hoped by some (not all) that a White Australia policy would ensure employment for Australians. Some colonies were opposed to this policy as they used foreign labour, which was often much cheaper than local labour. An example of this is Queensland, which employed Kanakas (people from the Cook Islands). Under the new constitution, not only the Kanakas, but also the much-feared Chinese, who came to Australia during the gold rush, would not be allowed into Australia. Thus Federation would eliminate unwanted foreigners, providing more employment for Australians.