On 19 November 1990, the Premier, Hon. Carmen Lawrence MLA, announced the intention of her Government to appoint a Royal Commission to inquire into certain matters. On 8 January 1991 His Excellency the Governor approved the issue of the Royal Commission (commonly known as the Royal Commission into WA Inc.) to:

"To Inquire whether there has been-
(a) corruption;
(b) illegal conduct; or
(c) improper conduct,
by any person or corporation in the affairs, investment decisions and business dealings of the Government of Western Australia or its agencies, instrumentalities and corporations in respect of the matters referred to in Schedule 1, and to report whether-
(d) any matter should be referred to an appropriate authority with a view to the institution of criminal proceedings; or
(e) changes in the law of the State, or in administrative or decision making procedures, are necessary or desirable in the public interest..."

The full terms of reference can be found in the Government Gazette dated 8 January 1991 (No. 4 Special).

On 16 June 1992, the Royal Commission into Commercial Activities of Government Act 1992 came into effect, amending the terms of reference in the original commission dated 8 January 1992 to read:

"To Inquire AND REPORT whether there has been-
(a) corruption;
(b) illegal conduct; or
(c) improper conduct,
by any person or corporation in the affairs, investment decisions and business dealings of the Government of Western Australia or its agencies, instrumentalities and corporations in respect of the matters referred to in Schedule 1, and to FURTHER report whether-
(d) any matter should be referred to an appropriate authority with a view to the institution of criminal proceedings; or
(e) changes in the law of the State, or in administrative or decision making procedures, are necessary or desirable in the public interest..."

(The amendments are in capital letters. Essentially, the original terms of reference had been insufficient. Originally, the Commission was to enquire into matters (a), (b) and (c) but report only on (d) and (e). The 1992 Act was required to correct this anomoly).