Following the Federation of Australia on 1 January 1901, Smith successfully contested the newly created federal Division of Parkes at the inaugural Australian federal election as a Free Trade Party representative. He campaigned strongly against the idea of restricting non-white immigration, believing it to be racial discrimination; in doing so, Smith was the only candidate to oppose all of what would become the White Australia Policy (Andrew Fisher argued that any Kanaka who had converted to Christianity and married should be allowed to remain in Australia).