Every so often a country's purpose or raison d'être is reshaped and redefined in response to major internal and external changes. This chapter argues that Australia is in the throes of such historical transition. A number of key processes are at work such as Australia's engagement with Asia, multiculturalism and reconciliation, economic rationalism, globalization, and the republican initiative. Australia is one of the world's largest exporter of food, energy and mineral resources to Asia. It has a stable government and one of the few open and free societies in the wider region. The chapter addresses important questions about Australia's population size and distribution which are likely to dominate the country's politics in the twenty first century. It then focuses on the changing external milieux and Australia's engagement with Asia. This analysis provides an understanding of building pressures for Australia to accept more migrants as well as the desirability for migration to promote Australia's integration with its Asian neighbours.