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Working for the Dole: Commonwealth Relief during the Great Depression

4 The Policy of 'Prudent Finance'

Fears of runaway inflation and a new balance of payments crisis limited the amount of money that the Commonwealth Government was willing to raise for the provision of relief for the unemployed in 1933.

It was estimated that with around 480 000 Australians unemployed, some £50 000 000 would be required to provide full-time work for half the number of the jobless. However, the Government's adherence to a policy of 'prudent finance' meant that only £5 800 000 was spent on relief works. Since sustenance rates were considerably lower than the rates paid to relief workers, more people received the dole in the period 1932–34 than were given employment on relief works.18

Clearly, the funding of relief works was inadequate. To make matters worse, because relief works were required to be of a reproductive nature, delays in the distribution of funding for relief programs continued. In April 1933 Melbourne's Age newspaper reported that of £7 000 000 allocated to relief works in Victoria, some £4 600 000 remained to be claimed. In late June 1933 the Queensland Government reported on the relief work it had carried out, which was mostly road and drainage projects using only basic materials and – since it involved heavy manual labouring – the use of little skill or machinery.

It was difficult, however, to find suitable reproductive work in the urban areas where most unemployed workers were located. Governments had resorted to small-scale work relief projects such as land settlement and mineral prospecting by individuals and small groups of men. While ostensibly reproductive, these types of projects were of dubious value for the large numbers of urban unemployed.

Early in October 1933 unemployed workers in the Federal Capital Territory (FCT) complained that insufficient funds were being allocated for relief work. The Department of the Interior responded by noting that measures adopted in the FCT compared favourably with those of the States. On 25 October 1933, however, Prime Minister Lyons told Parliament that the Commonwealth Government was doubling the amount of money from revenue for relief works and was – for the first time in two years – providing money from loan funds.

According to the Prime Minister, a total of £2 500 000 was available and because most of it was earmarked for funding relief works, he called on State Governments to expedite their works programs. On 2 November 1933, the Commonwealth Government reminded the Premier of South Australia that his State's allocation of funds under the Federal Aid Roads Act 1926 had not been fully used. Western Australia was reminded in similar fashion on 8 November 1933.

By November 1933 a note of optimism began to appear in official pronouncements. On 8 November 1933, Melbourne's Sun Pictorial reported the Prime Minister's observation that economic conditions were generally better than at any time since the beginning of the Depression. The Argus newspaper reported him as saying that because business generally was much better than it had been, the outlook for Christmas 1933 was by far the brightest it had been for several years. On 7 November 1933, the Melbourne Herald reported the Prime Minister as saying that no special Commonwealth grant to alleviate unemployment prior to Christmas was needed. This would be the first 'employed Christmas' for several years, the

Prime Minister said, and Commonwealth officials had been instructed to 'push on' with all proposals for relief works; no doubt, he added, State Governments would accelerate their works programs. With a general revival in trade discernible at least in Melbourne, the Commonwealth Government anticipated that private enterprise would employ increasing numbers of people.

Lyons' political biographer has characterised the United Australia Party (UAP) Government as an 'administration of conservative orthodoxies' pursuing policies that could provide only limited amelioration of unemployment.19 In accordance with that orthodoxy the Prime Minister, in a broadcast address to the nation on 8 November 1933, referred to that section of opinion that advocated 'stupendous' programs of public works to stimulate the economy by injecting funds from the wages of workers employed by the programs. Such large scale public works, he observed, would entail borrowing on a level that must harm the Australian economy.

In his study of Australia's experience of the Great Depression, Schedvin was critical of the conflict between the Loan Council, the Commonwealth Bank and the private banks, which stymied efforts to reduce unemployment:

At the highest level the centre of the stage was occupied by a debate on the means rather than the end of financing relief works, and the urgent task of reducing unemployment was pushed into the background.20

The tenor of that debate is apparent in an article in the Argus, the voice of conservative orthodoxy, of 8 November 1933, which protested that the Loan Council could not be directed and would not be restrained. The Argus was of the opinion that the Commonwealth Bank's reluctance to make funds available for relief works indicated that more profitable uses could be found for those funds and that:

…there can be no doubt whatever that political influences are still at work; that the [Commonwealth Bank] board is asked to sanction loans so that Parliaments, to ease a political situation, may have the privilege of spending them; and that loans find their way into unemployment relief works that Ministries may be able to meet criticism of the measures that have been taken to relieve unemployment.

The newspaper complained that an 'unbusinesslike confusion' reigned in the selection of relief works that could, and could not, be considered reproductive. As for the 'vicious theory' that the circulation of money was good for the community, the Argus thought the Government would do better to leave it in the hands of those best able to make use of it. On 8 November 1933 the Melbourne Age also carried an article critical of taxpayer-funded schemes to provide work for the relief of the unemployed. Schemes such as these, the paper considered, had been necessary in a time of crisis but they had now served their purpose. Though preferable to an 'unearned charity dole', relief work was wasteful and no better than a hand-to-mouth expedient.


Chapter notes | All notes

18 Schedvin, op cit, pp. 335, 339 and statistical table, p. 340.

19 Hart, op cit, pp. 235 and 261.

20 Schedvin, op cit, p. 329.