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Home , Ben Chifley, Curtin Government, Joseph Lyons

When Labor stood for full employment

Victor Quirk1 CofFEE

Abstract: The establishment of post-war full employment (2 per cent unemployment) in Australia was a deliberate policy by the Curtin and Chifley ALP governments of 1941-1949, anticipated in speeches in and at the 1942 Constitutional Convention. Even during 23 years in opposition, throughout the 1950s and 1960s, the ALP kept the government true to its 1949 pledge of maintaining full employment. From the mid 1970s, despite claiming to uphold the values of Curtin and Chifley, the ALP has preserved labour underutilisation to cower working people and drive productivity. This is precisely what Labor’s 1940s leadership most categorically opposed.

1. Introduction Every day, Australians demand that we answer the most important question they can ask of any government: What do you stand for? They are right to ask. It is their Government, not ours. And we should welcome the question, because our answer is clear. Opportunity for all, not as a theoretical concept but as a call to arms, to be expressed every day in making sure men and women have jobs... (Gillard, 2011). The polling organisations, advertising agencies and media space that politicians use to engineer their electoral support are substantially paid for by wealthy individual and corporate donors. The donors know what they want in return for this expenditure, just as the political parties who take their money know what they must do to keep the funds rolling in. Herein lies the fundamental source of tension in the modern : it must somehow preserve the electoral support of people who live by earning wages, while raising ever- increasing campaign funds from people who want a cheap and compliant labour force. It is this tension that leaves the dwindling ALP rank and file wondering why they bother supporting it, and party luminaries constantly attempting to convince wage earners that Labor is still their best alternative. Abstract symbolism is useful in these situations, which explains the ubiquitous references by modern Labor figures to Chifley’s declaration (at a June 1949 ALP conference) of the labour movement’s ‘great objective – – which we aim to reach by working for the betterment of mankind’(Chifley, 1949a:65). The current Labor Prime Minister referred to ‘the light on the hill’, for example, in her recent speech (16 September 2011) at the (quoted above), although in relation to the provision of jobs her intentions could not be further from those of . Chifley himself referred to ‘the light on the hill’ several times in 1949, notably in his November national election broadcast in which he stated ‘the Labor government has shaped all its financial and economic measures towards maintaining full employment and it will continue to shape them so’, having by 1949 kept unemployment below 2 per cent for six years. This was despite, he added, loud and vociferous opposition: You cannot have discipline and efficiency – so critics say – unless you have a degree of unemployment. Not too much unemployment of course – that would be bad for business. Just a nice six or eight per cent of unemployment, just a quarter million or so out of work to keep the fear of the sack in the hearts of all the rest.

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The Labor government rejects this barbarous and intolerant view and dismisses as absurd the arguments used to support it. It is utter nonsense to say that unemployment would cure shortages – produce more goods, that is, by having fewer people at work (Chifley, 1949b:75)

When Chifley made this speech to a nation of 8 million people, barely 2000 of them were in receipt of unemployment benefit. By contrast, when Ms Gillard made hers (above), 560,000 Australians were officially unemployed, another 950,000 were without work, wanting to work, but not counted as ‘unemployed’, and 1.2 million of the ‘employed’ (because they have at least one hour of work per week) needed more hours of work (ABS, 2010, 2011). Australia’s ‘flexible’ labour market, in which workers endure deepening economic insecurity, is often claimed to be great modernising Labor reform. This use of labour under-utilisation as a productivity-driver was precisely what Chifley condemned in his speech, and what earlier Labor governments had sought to end since the days of E.G. Theodore’s 1919 Unemployed Workers Bill in Queensland (Quirk, 2009). Beginning with the in which Chifley served as Treasurer, between 1944 and 1974, Labor and Liberal governments directed the Commonwealth bureaucracy to keep the rate of unemployment below two percent by managing aggregate demand with high levels of public sector employment. The bargaining power that plentiful work gave to working people decasualised the labour market, making permanent, full time work the norm. Housing ownership grew and wealth disparities reduced (Berry, 1999). A conscious policy of obliging the public sector to train more apprentices and employ more graduate professionals than it required ensured that the expanding manufacturing, housing and engineering sectors were plentifully supplied with skilled workers (Cook, et al, 2008). People could have families in the expectation of being able to provide for them. To the generation that survived the grief of the First World War, the 1930’s depression and the Second World War, it was a holiday in the sun. To the leading strategists of the business class it was the realisation of their worst fears: without the threat of unemployment, workers were demanding a larger share of what their labour and the employer’s capital produced. What was worse, even with a Liberal government in power they could do nothing about it. By the time Menzies took office in , full employment had been the norm for six years, and the public were completely habituated to it. Menzies was forced to explicitly promise to maintain it during the 1949 election, and for the rest of his career even slight deviations of unemployment above 2 per cent provoked an electoral backlash, particularly with Labor and the unions opportunistically accusing him of abandoning full employment whenever public expenditure was even slightly trimmed. Its final abandonment, coinciding with the destruction of the , was consolidated with deft agenda management by the , a surge of anti ‘dole- bludger’ stories in the tabloid media, and a large scale US-designed ‘ economic education campaign’ throughout the late 1970s / early 1980s, critical of public sector employment (necessary to restore full employment) and government intervention in the economy (Carey, 1995; Windschuttle, 1980). The effective elimination of unemployment was a consciously political act, as was its restoration in the 1970s, as is the maintenance of labour-underutilisation as a productivity driver today. While studies abound on the roles of various economists who developed the legislation and technical strategy for post-war full employment, less consideration seems to be given to the role played by the politicians that ordered them to do it. This paper reviews

176 Quirk the strategy Curtin and Chifley pursued to establish full employment, in the face of conservative opposition, having taken their lead from Scullin’s Treasurer, the man Chifley considered ‘...the best financial brain this Parliament has ever known’, Edward Theodore (Chifley, 1950:361).

2. ’s leadership Both Curtin and Chifley were members of the Scullin Labor Government that took office in October 1929, at a time when monetary policy was controlled by the private interests represented on the board of the . Labor’s capacity to legislate was blocked by an obstructive Senate, and their strategies undermined by having an opposition informant () in their midst. They saw first-hand how Treasurer E.G. Theodore’s efforts to wrest control of the money supply from the banks, and use public sector job creation to reflate the economy were all blocked. The same London financial houses that had placed a four year financial blockade on Queensland during his Premiership of the early 1920s, largely to prevent his implementation of his 1919 full employment legislation, were driving Australia into depression. In 1930-31 they demanded Australia cut its living standards to lower production costs of its raw materials to British manufacturers, to offset the undermining of Britain’s trade competitiveness caused by the banker’s desire to preserve an over-valued, gold-standard pound (Quirk, 2009;2010). At the height of the depression, Labor capitulated to the banks, introduced the cuts, and waited in vain for them to reciprocate with a promised credit expansion. Having thus disillusioned their constituency, the government fell prey to the opportunism of their enemies who forced an election, sweeping Lyons and the conservatives to victory in (Quirk, 2010). Despite having publicly denounced Theodore’s capitulation to the bankers in 1931, in the immediate aftermath of their both losing their seats, John Curtin wrote to him, declaring his commitment to Theodore’s economic policy goals, urging him to re-enter parliament at the earliest opportunity and seek the leadership of the party. Theodore declined, jaded with the treachery and short-sightedness of politics, enunciating a policy of aggregate demand management to establish full employment in his reply letter to Curtin.

...it should be the first duty of our rulers (our rulers include those in charge of the monetary system as well as the government) to keep the population at work. If production of consumable goods increases beyond the market needs the redundant workers should not be sacked but should be employed upon capital works and improvements. When the time comes that there is not sufficient work for the employment of all the workers an all round reduction of working hours should take place (Theodore, 1932).

Curtin took on the job of championing the policy himself. He returned to journalism, writing articles and fostering debate within the Labor party and public as to what the ends of public policy should be. In August 1934, he stood for the federal seat of Freemantle, Western Australia, arguing for a ‘National Economic Plan in order to deal with unemployment, not only of labour, but of capital resources..’. He criticised the federal structure for tending to ‘separate responsibilities from resources’ arguing that

The same thing applies to the problem of unemployment. Without a nation-wide policy the prospect of improvement in this grievous matter is hopeless. Monetary policy is a

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vital factor in grappling with the new conditions emerging as the result of the vastly increased productive power of industry and the restricted purchasing power of consumers. I believe in the power of the nation. I believe that it can be used to adjust the balance between production and distribution, and will support constructive measures to this objective (Curtin, 1934).

Curtin won his seat at the September 15th, 1934 election, which also marked the start of ’ federal career. On October 1 1935, on Scullin’s retirement, Curtin was elected leader of the Federal Australian Labor Party over the then Deputy Leader, , to the surprise of many, including himself, having first given the party his word (via Ted Holloway) to abstain from alcohol (Dowsing, 1968:46-47; Forde, 1971). From early in his tenure as Labor Leader, Curtin pressed the question of wartime preparedness, urging the expansion of aircraft manufacture and development of other munitions industries, charging the Lyons administration with reckless neglect. As defence expenditures rose, Curtin pointed to the effect they were having on the economy, just as they have in wars generally, arguing that once the war preparations reached saturation level, the expenditure should be continued in the areas of housing and improving the social amenity of the country. Ben Chifley’s appointment to the Royal Commission on Monetary and Banking Systems (1935–1937), working closely with R.C. Mills, provided him an opportunity to survey the views of the economists and other financial analysts, and during 1936 heard several economists support Keynes’ ‘General Theory of Employment, Money and Interest’ as a valuable exposition of the feasibility of demand management. The Commission’s report supported the use of credit expansion to stimulate economic activity in depressions (Markwell, 2000), consistent with Curtin’s position, and, incidentally, that of Theodore. Curtin believed Parliamentary control over banking policy was an essential step toward full employment, and placed it at the forefront of Labor’s 1937 Federal election campaign,

Wealth production is limited by manpower. The non-employment of manpower means the reduction of the power to produce wealth. Doles and starvation rates of relief pay sap the moral and mental fibre of those who are forced by circumstances to accept them. Industrial armies engaged in the construction of homes, roads, schools and other permanent works are sustained, just as our military armies, by production and transport armies in the rear. They are fed with the energies of field workers; they are clothed, shod and equipped with the energies of workers in factories. No hocus pocus about banking and currency systems can alter these fundamental facts. The Labor Party therefore is determined that no group of private bankers, no coterie of vested interests and certainly no instrumentality set up originally by the people for the people shall stand in the way of bringing industrial emancipation to Australia's unemployed army (Curtin, 1937).

Tying it back to the need to prepare the nation for its defence:

We approached the unemployment problem from the national economic standpoint and our policy, with the nation's credit as backing, will not only remove this ugly blot on Australia's economic life but will so advance the nation that it will contribute substantially to the nation's defence programme (Curtin, 1937).

In 1939, in the gloom of impending war, the government was torn by division after Attorney General Robert Menzies resigned from cabinet over the shelving of a national contributory insurance scheme that the UAP had promised in its 1937 election

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campaign. A month later, Prime Minister Joseph Lyons died, for which Country Party Leader Dr Earl Page publicly held Menzies responsible. Though Menzies was Lyons’ obvious successor, Page denounced him in parliament as unfit to lead a Government on the verge of a war, due to his disloyalty to Lyons, and his avoidance of military service in the previous war. Menzies was already very unpopular with much of the electorate following his confrontation with Port Kembla waterside workers in 1938 when they sought to prevent shipment of ‘pigs’ of BHP iron to Japan following the December 1937 ‘rape of Nanking’, where 300,000 Chinese civilians were systematically raped, tortured and murdered by Japanese invasion forces (Chang, 1997). He was remembered as ‘pig-iron Bob’ for the rest of his career. Menzies nevertheless led the UAP government to the 1940 election, which left it clinging to government with two ‘independents’ holding the balance of power. His unpopularity grew throughout 1941, prompting his replacement by Arthur Faddon on August 29th. The two independents crossed the floor in October, preferring the country be led by Curtin, and the Curtin Labor Government was sworn in on the 7th of October 1941(Dowsing, 1968).

3. A Curtin Labor Government. Labor had returned to office almost exactly ten years after the fall of the Scullin Government, whose efforts to spare Australia from the worst of the depression were thwarted by the financiers of Melbourne and London, the bankers on the Commonwealth Bank Board, the conservative press, and their parliamentary opponents in the Senate. Now they had command of a war-time economy over which the Federal Government’s powers were practically limitless. The fiction that the country could not afford to employ the willing labour of its people was lying in tatters in the wake of the escalation of spending to prepare the country for war. Curtin did not hesitate to make full use of the opportunity with which he and his government were presented.

Curtin and Theodore’s mutual respect, despite Curtin’s open public dissent over the modified Premiers plan of 1931, would prove historically significant ten years on. Theodore, by then a wealthy mine and media owner (having co-founded Consolidated Press with Frank Packer, and launched the ‘Australian Women’s Weekly’), responded to Curtin’s call to lead the Allied Works Council, having refused an earlier call from Lyons, and after protests within cabinet forced Menzies to refuse a recommendation that Theodore be approached (Argus, 30/5/1940: 2). Theodore, refusing remuneration, organised a workforce of 40,000 to construct £82,000,000 of vital wartime infrastructure within 14 months, prompting Curtin to declare in July 1943: “It was the knowledge that this vast strategic plan of works had been virtually completed wholly within the term of office of the that enabled me, with knowledge of other factors, to say last month that Japan could not take this country” (SMH, 27/7/1943: 5-6). Herein lay the example for the and other major public undertakings of the post war, the logical development of the state enterprises developed and planned by T.J. Ryan and Theodore during their governments of 1915-1924 (Fitzgerald, 1994; Murphy, 1975). Australia rapidly approached full employment during 1942.

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4. The Right to Work is declared at the 1942 Constitutional Convention

With the lesson that it took a war to teach us, we can no longer assert that the problem of unemployment is insoluble, that men are out of work only because they are unfit for work or unwilling to work, that financial policy prevents their employment, that the task of maintaining full employment is not a responsibility of the national Government.

H.V. Evatt, Attorney General of Australia, 1942 Constitutional Convention.

In late November 1942, with an unprecedented mobilisation of Australia’s productive resources underway, driven by the threat of an imminent Japanese invasion, the Curtin Labor Government convened a constitutional convention, a meeting of Premiers and Leaders of Opposition of all State and Federal Parliaments, to seek agreement on constitutional amendments to extend its wartime controls over the economy for five years after the war. In a 187 page document prepared for participants and subsequently published, H.V. Evatt set out the Government’s case, arguing that whereas around 15% of national income had been directed to fighting the First World War, the figure in 1942 was around 50%, highlighting the greater magnitude of the task of post war re-organisation and reconstruction:

The promises of useful occupation made to the members of the fighting services will have to be honoured. As well, half a million war workers will have to be found new employment. About half the working population will be affected in varying degree (Evatt, 1942: 9).

The conference was reminded of the problems faced by First World War Prime Minister William Morris Hughes, following the loss of his wartime powers on Armistice Day 1918:

Australia faced a shortage of civilian commodities, a rapidly rising cost of living, a wave of profiteering, industrial unrest and grave uncertainty of adequate employment ...What happened? The Commonwealth Prices Regulations were repealed in January 1919; the War Precautions Act and most of the remaining Regulations under it were repealed in December, 1920, leaving only a few, though important Regulations that were expressly continued for a year or two (Evatt, 1942: 30) 2.

After surveying the plight of returned servicemen after the previous war he resolved:

Unemployment will remain a spectre unless national action is taken to plan for its removal. This can only be done by attacking the evil at its source. To do this requires national action and national planning (Evatt, 1942: 56).

Declaring that in order to fully prosecute the war, requiring huge sacrifices by the Australian public for an indeterminable period of time, they would need tangible evidence the promises of post-war reward for their war-time hardships would this time be honoured, frankly declaring that those given in the last war were not. He quoted Curtin’s explicit promise ‘We shall see today that there is no repetition of the failures and mistakes that marked the post-war order 25 years ago’ (Evatt, 1942: 48). A key ‘defect of past policy’ concerned public investment expenditure during the depression years, in that as private investment fell in 1930-1934 public spending was concurrently cut

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back. ‘It is now admitted that what was wanted at this time was not a reduction of public investment but a heavy increase’ (Evatt, 1942: 60-61).

There should be a national “public works” policy directed to improving the welfare of the community, and timed to correct deficiencies in private spending. When private enterprise fails to employ all available workers, the Government must step in and ensure their employment (Evatt, 1942: 58).

The Government’s case for establishing post-war full employment was not only that it was necessary to make good its promises to returning service personnel, but also because it went to the heart of the war aims of the ‘United Nations’, as the allies referred to themselves, reflecting the principles of the Atlantic Charter that Roosevelt and Churchill enunciated on 12th August 1941, to post-war reconstruction. This embraced the ‘four freedoms’ Roosevelt had declared to Congress on 6th January 19413, particularly ‘freedom from want’ (Evatt, 1942: 45). The challenge for those who saw full employment as a threat to their continuing social domination after the war, was to justify withholding the right to legislate in these areas from the Commonwealth parliament without implying an intention to renege on pledges to reward the workers for keeping Australia safe from invasion. Evatt sought to make this more difficult by reminding the convention of Menzies’ words as Prime Minister at the outset of the war, of it being ‘a people’s war... a war for the life and happiness and security of the common man’...where ‘the common people of this world who will have won it can enter into that kind of life for which they all long, that kind of life in which the plain man becomes king’ (Menzies quoted by Evatt, 1942: 49). In his address to the convention, John Curtin also quoted Menzies’ professed commitment to the Atlantic Charter, that ‘...the war must be regarded not merely as a great struggle in which evil things must be overthrown, but as something from which positively good things for men and women must emerge', and continued:

‘...that nearly every representative here to-day has made public statements of a similar character. If these noble objectives are to be pursued and not become a sham and a snare, they involve as a minimum the organization of the resources of the nation to achieve full employment and such economic planning as is calculated to achieve `social security' (Curtin, 1942).

The conservatives’ strategy was to declare support for post-war reconstruction while finding reasons for deferring action, insinuating that the Government had ulterior motives for acting precipitately, accusing them of attempting ‘socialism by stealth’, an enduring theme of their opposition4. This is exemplified in Menzies’ self-promoting pronouncements. Immediately prior to the convention he declared ‘the paradise which many people hoped for after the war’ would be a challenge requiring considerable time and effort to plan5, but within a week, as the conference was underway:

Mr. R.G. Menzies said that the period when war was actually waging was not the right time to consider a fundamental change in the structure of the government...Mr Menzies said the words in the 12 sub-sections were not words of limitation of power but of extension of power. The true issue was whether legislative power unrestricted, unconfined and uncontrolled should go to the Commonwealth ( Times, 26/11/1942:2).

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Opposition leader Faddon, having first argued for a popularly elected convention to recommend constitutional amendments, gave his support to the motion by Tasmanian Premier Cosgrove for the States to refer the powers (Canberra Times, 30/11/1942). The conference was reminded that when Hughes sought referral of powers to manage the chaos following the first war, the states agreed to only cede authority over the aviation industry to the Commonwealth without a referendum, but ‘One State and one State alone did just what all had agreed to do’(Evatt, 1942:35). Nevertheless, Hughes and the other conservatives expressed a preference for avoiding the distraction and divisiveness of conducting a referendum campaign in time of war, resolving to refer the required powers6. The Government took their word in good faith, but in the months that followed the conservatives in every state first delayed then reneged on their pledge.

5. Facing the electorate

In the August 1943 Federal election campaign, Labor reaffirmed their commitment to post- war full employment and their resolve to put the matter of post-war economic controls to a referendum. Curtin declared ‘in time of war, money was no bar to meet the demand of work for all...in peace all the money needed would be found to provide work for all who wanted it’ Following Labor’s landslide victory, Menzies was reinstalled as leader of the UAP, and led the opposition against the Post-War Reconstruction and Democratic Rights referendum held on August 19, 1944.

...we say that the most important of the new powers – those relating to employment and production, which would enable indefinite continuance of industrial conscription and general socialisation of industry – are really designed to enable the present Government to carry out post-war policies of a dictatorial and destructive kind, and to perpetuate a system in which centralised power is sustained upon a basis of executive action and the subordination of Parliament to officialdom (SMH, 17/6/1944:4).

Typical of Commonwealth referenda lacking bipartisan support, the ‘No’ vote won. Griffen- Foley notes how this victory was a turning point in Menzies’s career:

In 1944, the year Menzies campaigned against the government’s ambitious but disastrous ‘fourteen powers’ referendum, there was a concerted push [by and others] to bring into existence a new political party that would replace the ragbag of conservative organisations. Menzies’ referendum victory gave him the momentum he needed to spearhead the creation of a new political party. Business and press leaders, wanting a vital, viable opposition that could take on Labor at the polls, were willing to assist in its promotion. During this formative period, Murdoch joined Menzies at a small dinner in Melbourne organised by the influential financier W.S. Robinson at the home of James Fitzgerald, a senior mining executive, with other guests representing the Press – Eric Kennedy of Associated Newspapers, Rupert Henderson and Frank Packer (Griffen-Foley, 2003: 15-16).

The Liberal Party of Australia was thus born out of a sense of urgency among its business backers to confront a more egalitarian post-war society, one they had even helped foster in order to engender national unity and commitment in the early stages of the war. By 1944, however, with the tide turning against the Germans in Europe and the Japanese in the Pacific, they sensed the time approaching when the private sector could reassert its domination over

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the Australian economy. Full employment, in particular, would have to go. The difficulty was how to oppose full employment without provoking a terminal electoral backlash? Labor pressed on with its program. The publication in May 1945 of the White Paper ‘Full Employment in Australia’, setting out the strategy for post war labour market policy, including the building of 50,000 new houses in the first year after the war, provoked a ‘mixed response’ in the press, reflecting the basic problem of openly opposing full employment in a democracy. In order to secure the power to prevent it, politicians were forced to say they shared the goal, but denounced every method that its advocates proposed as unworkable. The usual line of attack, that full employment was a utopian pipe dream was, however, no longer tenable, because despite a century of claims that it was impossible to attain, Australia was operating at full employment (Argus, 31/5/1945). No longer able to argue that full employment was impossible, conservatives took the line that Beveridge-style full employment (more jobs than jobseekers) was undesirable, because it relied on governments having power over people’s lives that is necessary in time of war, but repugnant in peace.

Even if "full employment" in the sense of work guaranteed by the Government were economically feasible, it would certainly not be politically acceptable, and would most probably fail on constitutional grounds. Continuance indefinitely of emergency controls, by whatever means achieved, would be a complete breach of faith with an electorate which refused additional powers to the Commonwealth last year (Editorial - SMH, 16/5/1945:2).

Preparation and publication of the White Paper coincided with two strategically significant pieces of banking legislation, both prompted by memories of the depression years and the role played by the banks in thwarting Theodore’s efforts to reflate the economy, particularly through their control of the Commonwealth Bank Board. The Banking Act 1945 gave the central (Commonwealth) bank authority to direct the private banks to deposit funds with it in reserve accounts. This was for the purpose of draining liquidity from the economy, as required, to regulate their credit creation capacity (Coombs,1981:114). The Commonwealth Bank Act of the same year, removed the board structure of Bruce’s 1924 Act, placing the central bank firmly under the control of the government of the day even when the wartime powers ceased.

6. The Chifley Labor Government (1945-1949) and beyond. Following John Curtin’s death in 1945, Ben Chifley led the Labor Party as both Prime Minister and Treasurer. With fewer than 8500 people registered as unemployed in Australia by May 1946 (Mercury,1/5/1946:3), he pledged at the start of the September 1946 federal election campaign “The Labour Party’s policy is, first, to maintain full employment in Australia”(SMH, 26/9/1946:1):

"The Labour Party will fight hard to see that never again will Australia see a return to the depression days of 1930". ...He stressed that Labour's policy was for full employment and not one that will bring about the position of hundreds of thousands being dependent on a dole of 5/9 a day which was sufficient to buy the bare necessities of life (Canberra Times, 26/9/1946).

By contrast, the Liberal’s key campaign promise was a twenty per cent cut in taxation, and preference in employment for returned service personnel.7 Menzies pushed the line that higher productivity was needed to ensure economic security, characterising labour’s

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aggregate demand management as ‘socialist’ in its intent, and discouraging of private enterprise (SMH, 27/9/1946:2). Labor won an ‘emphatic mandate’ at the 28 September Poll (Canberra Times, 30/9/1946:1). Despite their vehement hostility to full employment, by the time Labor lost office to Menzies and the Liberal Party in 1949, it was too late for them to do anything about it. After six years the viability of full employment was well established in the public mind, so that any deviation above 2-3% unemployment was thereafter construed by the electorate as either deliberate or signifying gross administrative ineptitude – both with fatal re-election consequences for the party responsible. By the final year of the war, the Financial Editor of the Melbourne broadsheet ‘The Argus’ had to explicitly concede the point:

The experience of the war years has shown the Australian people that full employment can be attained. They are not likely to accept as inevitable the waste and soul- destroying bitterness of the large-scale unemployment of the depression years. ‘Full Employment Must not Fail’ (The Argus, 31/5/ 1945).

Even as the Korean War and the growth in non-bank credit companies in the early 1950s caused an inflationary spike higher than that which would follow the OPEC oil shock of the 1970s, unemployment was kept at around 2 per cent through Keynesian demand management techniques. When the 1961 credit squeeze pushed unemployment above 3 per cent, Menzies came within one seat of losing office. The battle for full employment had been won. The goal of 2 per cent unemployment had become bi-partisan policy, and Australian workers enjoyed the benefit of it for thirty years. It was the greatest thing Labor ever did for them

7. Conclusion The so called ‘Keynesian revolution’ had been the objective of Labor politicians long before the publication of Keynes’s General Theory (1936), beginning with Queensland Premier Edward Theodore’s 1919 legislation aimed at securing full employment in Queensland. The establishment of full employment was a primary policy objective of the 1930s ALP leadership, particularly of Theodore, Curtin, Chifley and Evatt, long before, during and after the Second World War. It is often overlooked in commentaries that focus of the economists and bureaucrats who refined the legislation and institutional arrangements, as embodied in the 1945 White Paper ‘Full Employment in Australia’, that they would not have been ordered to do so if Menzies and his colleagues had remained in power after 1941. The achievement of full employment was essentially a political act, just as its suppression is today. Modern Labor Party luminaries still assume the language of the fraternal order (of comrades), and on grand occasions invoke the memory of Chifley’s ‘light on the hill’ speech, to imply they are of the same mould as the Party that achieved the sustained elimination of unemployment after the Second World War. In reality, Labor’s leadership since have all stood opposed to this policy. They are the ideological descendents of those earlier champions of the banks and boardrooms, who argued for the preservation of unemployment as a systemic necessity, a notion that Chifley rightly considered ‘barbarous’. Having nearly bankrupted itself fighting four federal elections in five years (1972-1977), the need to obtain funds to fight increasingly expensive election campaigns drove the ALP to prostitute itself for money from property developers, foreign intelligence services and multinational corporations. The NSW Right, who had long been a conduit for such funds in their factional warfare against the left, consolidated their hold over the party by strategically

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and selectively dispensing the largesse of the ‘big end of town’ to their ideological kin. The early Hawke years even saw the adoption of policies (Graham Richardson later admitted) calculated to drive left-wing members out of the party in protest (Wilkinson, 1996). By the early 1990s, the party’s fund-raising success depended, among other things, on proving itself more ruthless than the Liberal-National coalition in sustaining and bullying a pool of unemployed to disempower and discipline the labour force. They removed industrial protections, intensified welfare conditionality, and induced the deepest recession since the depression to make Australia’s labour market the most casualised (40%) in the OECD. The perpetrators of this continuing assault on the living standards of working people may as well argue that 2 + 2 = 5 as to claim ideological lineage with the party that once stood for full employment (Orwell, 1954).

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ABS (2010) Persons Not in the Labour Force, Australia, Sep 2010 , Cat, 6220, Australian Bureau of Statistics, Canberra. ABS (2011) Australian Labour Market Statistics, Jan 2011, Cat. 6105.0, Australian Bureau of Statistics, Canberra. Ahamed, L.(2009) Lords of Finance: the bankers who broke the world, Penguin, New York. Berry, M. (1999) ‘Unravelling the "Australian Housing Solution": The Post-War Years’, Housing, Theory and Society, 16:3, 106-123 Carey, A. (1995) Taking the Risk out of democracy, UNSW, Sydney. Chang, I. (1997) The Rape of Nanking, Penguin, New York Chifley, B (1949a) ‘For the Betterment of mankind - anywhere’, Speech to the NSW ALP annual conference, 12 June 1949, in Stargardt, W.W. (ed) Things worth fighting for: Speeches by Joseph Benedict Chifley, Melbourne University Press, Carlton, Victoria. Chifley, B (1949b) ‘No glittering promises’, Prime Minsters policy speech broadcast 14 November 1949 prior to the General Election, in Stargardt, W.W. (ed) Things worth fighting for: Speeches by Joseph Benedict Chifley, Melbourne University Press, Carlton, Victoria. Chifley, B (1950) ‘We are opposed to handing the Commonwealth Bank to Private Interests’ Second reading debate on the Commonwealth Bank Bill, 5 October 1950, in Stargardt, W.W. (ed) Things worth fighting for: Speeches by Joseph Benedict Chifley, Melbourne University Press, Carlton, Victoria Cook, B.,Mitchell, W.F, Quirk, V., Watts, M (2008) Creating Effective local labour markets: a new framework for regional labour market policy, Jobs Australia / Centre of Full Employment and Equity, University of Newcastle, Callaghan, NSW. Coombes, H.C. (1981) Trial Balance, MacMillan, South Melbourne. Curtin, J. (1934) Candidature of Mr. John Curtin: A personal statement, Federal elections 1934. John Curtin Prime Ministerial Library, Perth. Curtin, J. (1937) John Curtin, 1937 Federal Election speech on national defence, employment & banking policy. Records of Helen Ralston, John Curtin Parliamentary Library, 00128/1/1. Curtin, J. (1942) Address to the 1942 Constitutional Convention, Records of the Commonwealth of Australia. Digest of Decisions and Announcements and Important Speeches by the Prime Minister. No. 46, 12 November - 6 December 1942. John Curtin Parliamentary Library, 00110/51 Dowsing, I. (1968) Curtin of Australia, Acacia Press, Blackburn, Victoria. Evatt, H.V. (1942) Post-War Reconstruction: A case for greater Commonwealth Powers, Australian Commonwealth Government Printer, Canberra. Fitzgerald, R. (1994) Red Ted: The Life of E.G. Theodore, University of Queensland Press, St Lucia, QLD Forde, F. (1971) Interview with Mel Pratt, National Library of Australia, Canberra.

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Gillard, J (2011) ‘Labor in Australia is a movement’, 16 September 2011 Address to the Chifley Research Centre, Old Parliament House, Canberra. Griffen-Foley, B. (2003) Party Games – Australian politics and the media from war to dismissal, Text Publishing, Melbourne. Keynes, J.M. (1936) The General Theory of Employment Interest and Money, MacMillan and Co., London. Markwell D.J.(2000) Keynes And Australia, A paper presented at a seminar at the Reserve Bank of Australia on 18 September 1985, Research Discussion Paper 2000-04, Research Department, Reserve Bank of Australia, and New College, Oxford Martin, A. (1993) Robert Menzies: A life, Melbourne University Press, Carlton Murphy, D.J. (1975) TJ Ryan, A Political Biography, University of Queensland Press, St Lucia, QLD. Orwell, G. (1954) Nineteen Eighty-Four: A novel, Penguin, Harmondsworth, England. Quirk, V (2009), ‘The Queensland Unemployed Workers Bill of 1919’, Labour Underutilisation, Unemployment and Underemployment incorporating the 11th Path to Full Employment Conference and 16th National Conference on Unemployment: Proceeedings Refereed Papers, Newcastle, NSW. Quirk, V. (2010) ‘London's silken cords and the depression we had to have’, The Aftermath of the Crisis: Incorporating the 12th Path to Full Employment Conference and 17th National Conference on Unemployment. Proceedings: Refereed Papers, Newcastle, NSW Rowse, T. (2000) ‘Full Employment and the Discipline of Labour’, The Drawing Board, vol 1, no1. July, School of Economics and Political Science, University of Sydney. Theodore, E.G. (1932) Letter to Curtin, October 14th 1932, Diary of a Labour Man, John Curtin Prime Ministerial Library, website: http://john.curtin.edu.au/diary/index.html Wilkinson, M. (1996) The Fixer: The untold story of Graham Richardson, William Heinemann Australia, Port Melbourne, Victoria. Windschuttle, K. (1980) Unemployment, Pelican, Ringwood, Vic.

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Endnotes

1 The author is a post-doctoral researcher with the Centre of Full Employment and Equity (CofFEE) at the University of Newcastle, NSW. 2 Hughes himself attended the convention as the United Australia Party Deputy Federal Opposition Leader, and while criticising the wording of the proposed referendum Bill, he declared ‘I am going to support anything and everything which gives effect to the widest and most far reaching possible policy of reconstruction’ (Canberra Times, 26/11/1942:2). 3 In the future days, which we seek to make secure, we look forward to a world founded on four essential human freedoms. The first is freedom of speech and expression - everywhere in the world. The second is the freedom of every person to worship God in his own way - everywhere in the world. The third is freedom from want – which translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life, for its inhabitants - everywhere in the world. The fourth is freedom from fear –which translated in world terms, means a worldwide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any other neighbour – anywhere

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in the world. That is no vision of a distant millennium. It is a definite basis for a kind of world attainable in our time and generation (Roosevelt, quoted in Evatt, 1942: 45). 4 For example: Martin (1993: 413). 5 ‘The paradise which many people hoped for after the war would have to be fought or worked for very hard, as we have never worked or fought before, declared Mr R.G. Menzies, who added that he distrusted the easy philosophy which was being preached in some quarters. He said that a good deal of time and thought would have to be given to see that the transfer from wartime to peace time industry was carried out so that the fullest use would be made of the extraordinary reservoir of skilled labour that was being developed during the war. Mr Menzies said he could see great difficulties associated with that problem, but he hoped that the best industrial brains of Australia would be got together to advise the best means of effecting the conversion’ (Canberra Times, 20/11/1942). 6 Canberra Times 3/12/1942:2: ‘Convention Adopts Draft Bill For States To Pass Law Within Three Months. The Constitutional Convention yesterday unanimously adopted without amendment the recommendations by the Drafting Committee of the Convention of the powers to be transferred by the States to the Commonwealth. A draft Bill containing 14 new powers to which Convention agreed, will be submitted to the State Parliaments within two months. Under the terms of the Bill, the States are asked surrender the powers named for five years after the end of the war’. 7 The question of preference had been useful to him both to claim the government was dishonouring the sacrifices of returned service personnel by allowing agencies such as the Commonwealth Employment Service to assist non-service personnel, and it created a wedge between the Labor party and the unions who unsuccessfully lobbied for preference in public employment over non-unionists (Rowse, 2000).

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