Australian PrehistoryHistory - AustralianAustralian CultureAustralian IdentityCultural Comparisons Between Australia and other Countries

Buckely's Chance

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Relations between Aborigines
and colonists

Aboriginal War
Friends or foes?

History Wars
Denying contestability

Black Woman and White Man
Rape or love?

Myall Creek Masscare
Causes and consequences of colonial violence

The Stolen Generations
It's not so black and white

Jimmy Govenor
Not a good fence builder

Mary Anne Bugg
Female Bushranger

Pelmuwuy
Justice or resistance?

1967 referendum
The myths

Racism
Contemporary racism against Indigenous People

Convicts and their legacy

Convict legacy
How the past shapes the present


Convict life
Regrets and floggings

Convict crimes
Power and morality

Convict punishments
What purpose?

Larrikin Convicts
Breaking rules

Escapes
Thinking different

Convict women
Moral diversity

 

 

Global Financial Crisis

The Depression in Australia

Parrallels and differences with modern Greece

During the 1930s Depression, Australia was facing the same kind of dilemma that Greece, Portugal, Spain and Italy are facing today. Should Australian governments promote austerity in order to make the savings necessary to repay loans to the Bank of England or hope that threats of default could usher in a post-capitalist utopia?

Just as is the case with Greece's membership of the European Union, the dilemma did not just concern which action would most benefit the Australian economy, it also concerned notions of identity as a member of the British Empire, class conflict, morality and historical obligations.

Much of the debt was the result of World War 1 prime minister Andrew Fischer vowing to defend Britain to the "to the last man and the last shilling." Good to his word, Fischer not only agreed to send Australian soldiers to die for England, but he also agreed to pay England for any costs incurred by training and managing Australian soldiers while they died for England.

As a consequence of Fischer's support for the mother land, Australia finished the war owing the Bank of England a great deal of money. When the Depression struck, the need to service interest repayments made the Depression much worse.

Worried about its loans, the Bank of England sent two representatives to Australia, Sir Otto Niemeyer and Professor T. Gregory, to give advice about what needed to be done to navigate the economic crisis. The two experts concluded that Australians had been living beyond their means for far too long and would need to tighten their belts. In more honest words, they wanted Australia to prioritise repaying its debts to the Bank of England.

While many Australian politicians agreed to do what was best for the Bank of England, NSW premier Jack Lang didn’t seem to have the same enthusiasm for the mother country. To the contrary, he proposed reducing the interest being paid on foreign loans so that the money could be redirected to helping poor Australians. For Lang, the question was not about putting Australia before Britain, but putting Australia's working class before the English capitalist class. In his own words,

"If we spent three and a half million pounds overseas to meet interest payments we would have to stop issuing dole tickets. It was simply a question of whether the unemployed would be left to starve or whether the bond holders went unpaid."

At the 1931 Premier's conference, Lang used some country-based patriotism to persuade other leaders to accept his vision. Specifically, Lang argued that if England was able to re-negotiate the loans that it owed to America, Australia should be able to negotiate its loans that it owed to England. Perhaps realising the difference in power status between England and America compared to Australia and England, the other Premiers were less than enthusiastic about Lang's plan. In Lang's own words,

'it was as though I had let a death adder loose in the room.'

It was a death adder that ultimately bit and killed Lang. Under Australia's political system, British interests in Australia were protected in each state by a Governor and federally by a Governor General. These representatives were expected to act in Britain's best interests, which was quite easy for them to do considering that they were British born and bred. In May 1932, the British Governor of NSW, Phillip Game, summoned Lang and subsequently dismissed him for defaulting on English loans.

Meanwhile, other Australian governments implemented what was known as the Premier’s Plan. This involved:

  • Governments meeting all debt repayments to overseas institutions
  • Increasing taxation
  • A reduction in bank interest rates
  • A reduction of 20 per cent on all adjustable government spending.

In short, the Premier's Plan proposed balanced budgets, lowering business costs and restoring confidence. After it was implemented, Australia soon commenced its recovery from the Depression.

The Premiers Plan ran contrary to Keynesian Economics, which proposed that when the private sector reduced spending, the government should compensate by increasing spending - even if this meant going deeply into debt. While Keynesian economics worked well in America during the Depression, America didn’t have the same government largess as did the socialist governments of 1930s Australia. In short Kenynesian theory was based on addressing economic shortfalls caused by private sector bankruptcy. It was not based on addressing economic shortfalls caused by public sector rorting, inefficient allocation of government resources and blown government budgets. Had Keynesian economics being applied in Australia at the time, it is possible that the necessary economic policies and government pruning necessary to improve efficiency may never have occurred.

In some ways, Australia’s action during the Depression could be likened to socialist Sweden which promoted austerity at the height of the 2007 Global Financial Crisis whereas other European countries promoted spending. After the crisis, Sweden emerged with a lower debt to GDP, higher per capita GDP and a stronger economy. On the other hand, the Keynesian European countries like England, Spain, Greece etc were mired in debt and recession. Just as it was for Australia during the Depression, austerity for Sweden was an opportunity to cut goverment waste and provide sunshine for the private sector to bloom.

Aside from helping pull Australia out of the Depression, the Premier's Plan perhaps strengthened relations with England in a way that was in Australia’s interest. In an act that may be related or unrelated, in 1933, Britain asserted sovereign rights over 42 % of Antarctica, which it then transferred to Australia under the Australian Antarctic Territory Acceptance Act 1933. Admittedly, the territory had originally been claimed by Australian Douglas Mawson; however, Britain essentially legitimised Australia’s claim in a way that was more in Australia’s interests than its own. Had Australia been rebelling against England at the time, this would not have happened and Australia would have a weaker claim to Antarctica today.

 

Leaf

Email

Rebellion

John Caesare
The first

Our Ned Kelly
A story heard and considered

Eureka Massacre
Dying for liberty

Post Convicts

Federation
Why is it not celebrated?

White Australia Policy
From Convicts to Chinese

Gallipoli
Baptism of Fire or Well of Tears

Simpson and his Donkey
A larrikin and a hero

Nancy Wake
A larrikin and a hero

The Depression
Australia's Greek Moment

World War 2
The eastern chapters

Cold War
The expression of transnational identities

Prime Ministers
Values and policies of Australian leaders

 

 

 

"Let no-one say the past is dead, the past is all about us and within"(Oodgeroo)