The Money Men by Chris Bowen (i wanna iguana read aloud .TXT) 📗

of the Australian Labor Party (Anti-Communist)—again split the vote with federal Labor, winning 5 per cent. Lang was a much-reduced force, however, and the four Lang Labor federal MPs were soon subsumed into the mainstream Labor Party. The UAP – Country Party coalition lost eight seats and could no longer command a minority. The balance of power was held by two independents: Alex Wilson and Sir Arthur Coles (former Melbourne lord mayor and founder, with his brothers, of the Coles supermarket chain). In this, the last hung parliament in Australia until 2010, the independents chose to support the continuation of the coalition government, for the time being at least.

In Macquarie, meanwhile, a massive swing had seen Chifley turn a 2 per cent deficit into an 8 per cent buffer. He would not lose the seat again. Chifley immediately returned to Labor’s front bench. This was in the days before the allocation of specific portfolios to shadow ministers, and so he did not specialise in Treasury matters in opposition.

The Menzies government did not find stability in its re-election. Returning to Australia after a long stint in the United Kingdom as a visiting member of the Imperial War Cabinet, Menzies proposed that he permanently reside in London as prime minister of Australia. This was too much for his government colleagues, who were already questioning his judgement after his long absence. Menzies’ resignation was thus forced and, in the absence of a suitable replacement from the ranks of the majority UAP, Country Party leader (and treasurer) Arthur Fadden became prime minister.

This instability and lack of focus on the war effort led the two independents to waver in their support of the coalition government, and in October 1941 they voted against Fadden’s Budget, bringing down the government after only forty days in office. Before accepting governor-general Gowrie’s commission to form a new government, Curtin required an undertaking from the independents that they would support his government for the remainder of the term in order to bring about increased stability. Having received such an undertaking, Curtin accepted the enormous challenges of a wartime administration, his judgement in refusing all entreaties to enter into a government of national unity, and to wait until Labor was able to implement its program free of coalition partners, having been completely vindicated.

Chifley came second in the Caucus ballot for the first Labor ministry in ten years, making him fourth in Cabinet seniority after Curtin, deputy leader Frank Forde and the winner of the ballot, Jack Beasley. Chifley still had no expectations of the Treasury portfolio, expecting it to go to Forde. Curtin, however, was adamant that he wanted Chifley in the key economic role and told him that there were no other circumstances under which he would accept the prime ministership. Forde had to make do with the (still vitally important) Army portfolio.

From the outset, Chifley had three consistent priorities: putting the economy on a total war footing, doing so with maximum equity and preparing for a postwar economy that avoided a return to depression and built, to draw a phrase from an earlier generation, ‘a land fit for heroes’.

The first two objectives required an increased degree of government intervention in the economy and centralisation of that intervention in Canberra. Chifley was determined to keep as much of this increased federal government influence in place in order to make it easier to achieve his third objective.

Chifley consulted some of the nation’s best economists on the task at hand in his first weeks, including Douglas Copland, Lyndhurst Giblin and Leslie Melville. Another he consulted was Herbert ‘Nugget’ Coombs, who had won his Doctorate in Philosophy at the London School of Economics and was a leading young Keynesian economist. Chifley would promote Coombs into increasingly senior roles during his time as treasurer. He was determined to improve the quality of economists in the public service, keen to harness the ideas and talents of a growing generation of well-trained economists being produced by universities in Australia and Great Britain in particular. They, in turn, would praise Chifley’s willingness to seek out and accept expert advice as treasurer. Almost all of these freshly trained economists were Keynesian, and their influx changed the flavour of the advice received by the government from its traditional, classical taste.

Even though Fadden’s last Budget had technically been defeated in the House in order to bring down the government, there was little time for Chifley to make big changes between it and his first Budget. Chifley did, however, increase pay for the armed services, and he increased the age pension. To pay for these measures, he increased the marginal rate of tax for high-income earners (people earning more than £1500 a year) to 50 per cent, and for very-high-income earners (people earning more than £2500 a year) to a punishing 83 per cent. Company tax was increased from 10 per cent to 15 per cent. Chifley was unusually flowery, perhaps even Churchillian, in his budget speech to parliament, telling members that ‘the skies are dark with the clouds of evil portent’.

Perhaps the most important element of the 1940 Budget was the manner in which Curtin and Chifley dealt with a Caucus revolt. Upon being presented with the Budget, the Caucus resolved on the motion of Sol Rosevear (who had defeated treasurer Ted Theodore in the seat of Dalley in the 1931 election) that the increase in the pension should be greater. Curtin, Forde and Chifley decided that this was an important turning point for the government and reconvened the Caucus for a special meeting, where Curtin moved that the resolution be reversed in the interests of Cabinet solidarity. This was carried, and it was a key decision. The Scullin government had been brought down, in part, by a lack of such solidarity, and by the Cabinet not having the inclination to insist on its will in the Caucus. But Curtin, with the full support of Forde and Chifley, had decided to send the message that they would not be making