Amendments to the way in which the village settlements were administered were proposed in late 1895 and a Parliamentary Committee of Enquiry was established to investigate the condition of the settlements. The Committee travelled to all of the village settlements and took evidence from the settlers. It found that the settlements were in great need of expert advice in matters of irrigation. Village settlement expert, Samuel McIntosh, was appointed in February 1896 to advise the settlers.
However, in 1899, government money was still being spent on the River Murray village settlements, as none had become self-supporting. A Royal Commission was established to investigate the conditions of the settlements. Its report was tabled in 1900 and by this time, there had been a change of government and Gillen, New Era, New Residence and Murtho had already folded. The Royal Commission's report included the following recommendations:
Implicit in the Royal Commission's findings was that the communal system had failed and should come to an end. In December 1901 the South Australian government passed the Village Settlement Act 1901, repealing all past legislation relating to village settlements and putting into effect the recommendations of the 1899 Royal Commission. The new act came into effect on 1 January 1902. Over the next few years, the communal system was abandoned in the remaining village settlements. Lyrup alone retained its village association, but in an altered form.