Australia

Lady Sarah Ashley (Nicole Kidman) travels from England to northern Australia to force her husband to sell a cattle station. Her husband is murdered shortly before she arrives, with suspicions that he was killed by an Aboriginal elder, "King George" (David Gulpilil). The actual murderer is a white man, Neil Fletcher (David Wenham), trying to gain control of Ashley's cattle station "Faraway Downs", so that Lesley 'King' Carney (Bryan Brown) can have a cattle monopoly in the Northern Territory, which will give him negotiating leverage with an Australian army officer, Captain Dutton (Ben Mendelsohn). The childless Lady Ashley is captivated by a young half-caste boy, Nullah (from an Aboriginal mother and a white father), and when she sees Fletcher mistreating the Aborigines, she fires him and decides to try and run the station herself. She persuades her husband's Drover (Hugh Jackman) to take the cattle to Darwin for sale, along with several other riders, including Drover's Aboriginal brother-in-law Magarri (David Ngoombujarra), the boy, and the station's accountant Kipling Flynn (Jack Thompson).

Their mission a success, Lady Sarah, Nullah, and Drover live happily for two years. Fletcher kills Carney and marries Carney's daughter Cath Carney, takes over his empire, and continues to menace Lady Sarah.

Nullah is drawn to perform a walkabout, but is captured by the authorities and sent to live with other half-caste children on Mission Island. Lady Sarah vows to rescue him, but first works as a radio operator during the escalating war. When the Japanese attack the island and Darwin, everyone assumes that everyone else has died, though each finds a way to survive the chaos of the war. The Drover rescues the children from the island, and when they sail back to Darwin, Nullah plays his harmonica with the tune of "Somewhere Over the Rainbow" from the film The Wizard of Oz. Lady Sarah hears the music, and their family is reunited. On the way back to Faraway Downs, King George calls for his grandson, who returns to the outback with his grandfather.

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