Published Date

October 1, 1944

Resource Type

GI Roundtable Series, Primary Source

From GI Roundtable 44: Australia: Our Neighbor Down Under (1944)

Beaten in its conflicts with capital, labor turned to the ballot box. In 1891—within less than a year of the failure of the “Great Strike” of 1890—a Labor party had been formed in New South Wales and had won 36 out of 45 seats for which it put up candidates. Within ten years there was a Labor group in every parliament, state or federal. The first Labor majority was won in New South Wales in 1910 and by 1915 Labor controlled every government in Australia but one.

Labor’s success has been the result of a strong appeal and a strong organization. The first appeal was to wage earners, for the party’s primary aim was to safeguard and improve working conditions by political action. All through the years this aim has been uppermost in the program. It had been fairly well realized even before World War I, and only minor additions have been made since then.

Some enthusiasts would have the party go further and adopt a socialist program and philosophy. The philosophy has always found supporters, including zealots who are eager to win converts to the teachings of Marx and Lenin. But the converts have been few and the results meager; the Australian worker does not take easily to long-worded abstractions.


Socialism and state enterprise

The socialist program, with its plan for the public ownership of the means of production, distribution, and exchange, was another matter, however. To the Australian there is nothing sacred about private enterprise and nothing sacrilegious about state enterprise. He argues that if you need something which private enterprise will not supply because there is no profit in it, let the state do the job. Better still, he says, why bother to wait and see what private enterprise will do?

Australia had to build almost all its railroads by state action, because early private efforts broke down. The telegraph and telephone are natural parts of the postal system. When a corporation began to construct a huge hydroelectric plant in Tasmania and then quit, the state had to finish the job. When Victoria’s expanding industries suffered from lack of cheap coal and electricity, the state tapped the large brown-coal deposits it owned, used part for generating electricity, and turned the rest into briquettes.

State enterprise is thus an old tale in Australia, and men who would have been violently angry if they were called socialists wrote some important chapters of it. But Labor wanted the state to do still more, especially where capitalistic services seemed to be bleeding employees or the consumer. Eventually in 1921 the party adopted as its ultimate objective “the socialization of industry, production, distribution, and exchange.”

Yet the list of enterprises which Labor has socialized when it has been in power is very small. In 1912 a Labor government set up the Commonwealth Bank, to handle the government’s account and to compete with the existing banks. Perhaps it has served as a check on them, but it certainly did not destroy them. Soon it became the country’s “central bank,” discharging the functions of our Federal Reserve System. But it has not been either the slayer of its rivals or the slave of its creator, and any socialists who thought it would provide them with money to rattle in their pockets whenever they wanted some have been terribly disappointed. A Commonwealth fleet of steamships started in 1916 lost so much money that the government was glad to get rid of it in 1928.

The rest of the list of ventures looking to the socialization objective seems to be one of failures. Experience has evidently shown the Australians that public enterprise is no magic panacea.

The labor platform

The chief economic achievement of the Labor Party has therefore been the regulation of private enterprise in the interests of the wage earner. But Labor has had to make a wider appeal if it hoped to ruin elections. It must obtain the support of that middle class—or middle-of-the-road class—which is not bound to any union or political party, and which judges between Liberal and Labor on the basis of their platforms or performance.

That middle class favored some of Labor’s labor aims. It also liked the democratic and progressive proposals for electoral reform, improved education, general social betterment, help to farmers, attacks on monopolies, and so on. Beyond that, it approved the party’s championing of Australian nationalism, for Labor was more wholehearted in its advocacy of White Australia, federation, a navy, and a citizen army than were the anti-Labor parties.

Thus Labor won some middle-class support because it was for labor, some because it was for healthy social progress, and some because it was for Australia. On the other hand it lost that support when its appeal was to narrow class interests rather than to the wider welfare.

The labor machine

The success of any party must depend in some measure on the strength of the machine it builds up. Labor was quick to learn this lesson and did a thorough job. In each state there is a party organization, with branches which anyone can join. Most unions affiliate with the party, and supply the greater part of the membership, funds, and leadership, though some nonunionists have managed to rise to the top. The party shapes its platform at annual conferences, and candidates who are chosen to fight the next election swear complete loyalty to the platform.

They do snore: They pledge themselves, if elected, to vote in the house as a majority of the Parliamentary party decides at its weekly secret meeting, or “caucus” as it is called. The caucus chooses the men who are to be ministers when the party wins a majority of seats. Thus solidarity and unity are maintained in face of the opposition. Finally, the party executive keeps its eyes on the members of Parliament to see that they do their job and honor their pledges.

This machinery produced the desired disciplined solidarity and gave the party the maximum fire power in its attacks on the old parties. But when Labor got into power, difficulties might arise. Ministers found that it was not always easy to translate the platform into laws and they might be attacked by the executive or con­ference for faintheartedness or heresy. Or some unexpected development might face the party with problems for which it had no ready-made solution. If this happened, all the discipline and pledges in the world could not preserve unity, and the party might be torn asunder.

In 1916 the party split over conscription and wandered in the wilderness for over a decade. Then in 1929, just when it had reached the promised land of office again, the depression came, and it split once more over methods of dealing with the disaster. For another ten years it roamed the wastelands of opposition, returning to power once more in 1941. Faced with the dire danger of invasion, the party has readily accepted policies which probably would have torn it apart ten, twenty, or thirty years ago.

Regulating wages

Of all Australian experiments, the governmental regulation of wages is the most famous. The practice is now forty years old, and is taken for granted by employer and employee alike.

Like most living things, it had two parents. One was the desire to stamp out “sweating.” In the early 1890’s Australians were shocked to learn that some men, women, and children were working excessively long hours in unhealthy homes or workshops for miserably low pay. Vigorous agitations burst out to demand that such people be paid a living wage. The second parent was the desire to preserve industrial peace. The strikes of 1890 disturbed Australians. “There ought to be a law,” they cried, to prevent this young country from being torn by such strife. If employers and employees could not settle their differences peacefully, let them be compelled to submit their disputes to some court of arbitration and be bound to abide peacefully by its decision.

From this double agitation emerged the machinery for the regulation of wages. It is of two kinds. The first is the wages board, consisting of equal numbers of employers and employees in an industry, with an independent chairman. It fixes wages for the industry and these rates are enforced by the state. The first boards were set up in Victoria in 1896; there were over 500 in the various states by 1913; and nearly 700 by 1939.

The second kind of machinery is the court of industrial arbitration. The first one was set up in New South Wales in 1901 and in three other states later on. In 1904 the Commonwealth Court of Conciliation and Arbitration was established to settle disputes which extended beyond the limits of one state. To such a court either side, organized in an employers’ or employees’ union, may submit notice of a dispute. The matter is argued before a special high-ranking judge or judges. Then the court gives its award, which is binding. If either side rejects it and resorts to lockout or strike, punitive action can be taken.

The basic wage

Since most disputes concern wages, the courts and the boards have been chiefly engaged in determining rates of pay. A “basic wage” is fixed for the least skilled type of work. To this figure additions are then made for skill, degree of responsibility, regularity of employment, overtime, etc. In fixing the basic wage the judges were told to decide what was “fair and reasonable.”

In 1907 Mr. Justice Higgins said that a fair and reasonable wage must be large enough to meet the “normal needs of the average employee regarded as a human being living in a civilized community.” He decided that $1.75 was a fair and reasonable basic daily wage, and this amount became the accepted figure on which other rates were fixed. It was regarded as the bare minimum needed to keep a family of four or possibly five persons; and hence the basic wage for women was fixed much lower, on the ground that a woman had to maintain only herself. Then the practice was gradually established of periodically raising or lowering the basic rate, and therefore the higher rates, in accordance with changes in the cost of living as revealed by an index number compiled by the commonwealth statistician.

In this way the pay of most wage earners has been regulated for the last thirty years, as has the salary of journalists, bank clerks, public employees, and other white-collar workers for about twenty years. Like every other method of determining wages or settling labor questions, it has been the subject of constant criticism. Labor has insisted that the base is too narrow and low; that no married man can keep a wife and two or three children at a decent standard on the figure fixed; that many women have dependents to maintain; and that the index number is not sufficiently accurate to measure changes in the cost of living. Many of these criticisms have been met by broadening the base, by adding to the basic rate, by increasing the margin for skill, and by schemes of child endowment when a family contains more children than are supposed to be covered by the wage.

Employers and some observers have pointed out that since many men are unmarried or have no children, industry is paying for the support of a lot of nonexistent people. They used to complain that no thought was given to what industry could afford to pay.

But this criticism has been met in lean times by reducing wages on account of “absence of prosperity.” When prices and living costs began to fall in 1929, the federal court cut wages in proportion each quarter, thus reducing employers’ labor costs but leaving the purchasing power of the wages untouched. In January 1931, however, the court said that the loss in national income caused by the depression must be shared by wage earners and it therefore reduced wages by 10 per cent in purchasing power. This cut, combined with those made because of falling prices, brought money wages down by nearly 30 per cent and thus lowered production costs substantially. When better times came the wages were raised again. The whole matter was handled fairly smoothly and was accepted peacefully.

Next section: Australia and the Outside World