War and Reconstruction in Australia, 1941 - 1959 Flashcards
(27 cards)
1
Q
What were the differences between WW1 and WW2 for Australia?
A
- Location - important for Australia, closer to home - could produce war commodities instead of borrowing to fund soldiers
- WW1 resulted in decline in trade - by end of WW11 surplus.
- WW2 - nearly full employment as jobs taken by women
- WW2 - Lend-Lease from USA for armament of ally (location important) - spurned economy greatly Make notes on Lend-Lease from book
- WW2 - public debt much lower - 8/9 at end of WW2 compared to x20 end of WW1
2
Q
What effects did WW2 have on Australian trade?
A
- US had already incorporated Australia in it’s Lend-Lease program
- By 1942 Lend-Lease reached US$26m per month
- Sterling reserves strengthened during the war as Australia exported more for the war effort than it imported
- Expectation of sterling inconvertibility led the government to redeem some debt before that could happen
- This helped reduce the size of the public debt outside Australia so that at the end of WWII nominal debt in 1945 was only 8/9 of that owed in 1939
- Trade surplus in the later years of the war
- Interest payments on foreign debt dropped each year - foreign currency in country increases
- Australia was able to satisfy its demand for war consumption at home since a proportion of the troops was stationed nearby rather than in Europe as in WWI
- Australian economy improved during second phase of WWII as physical location of the war moved into the pacific region
3
Q
What occurred in the Australian labour market during WW2?
A
- Vacancies filled with women
- 570 000 women employed at start of war, non-essential jobs
- 780 000 women employed in 1943-44, essential jobs
4
Q
What was the Women’s Employment Board?
A
- 1942
- Defined wages and conditions
- Aim to centralise women’s wages but to keep them below 100% of men’s wage
- Although wages were set at 54% of male, in some essential occupations women’s wages were as high as 90%
- Wage increases fed through to rest of the economy
5
Q
What effects did rationing have on the Australian economy during WW2?
A
- Kept prices low - prevent inflation
- Limits to consumer choice and manufacturing inputs - not enough capacity given war production
6
Q
Why was central bank status given to the CB and what effects did this have?
A
- Government had managed money(supply) previously
- Other banks required to make deposits with CB
- Reduces availability of credit in the economy (credit rationing), reduces investment, assists in keeping prices low- freed up labour/materials
- Turned out to be more efficient than each state bank, whose goals were not aligned.
7
Q
What effect did WW2 have on Australia’s finances?
A
- Federal government revenue from taxation and domestic borrowing
- Amount of domestic borrowing surged
- Reduced reliance on foreign debt
- Creditors would insist on large tax base for future security of government debt - public support
- Tax revenue increased during the war
- Federal parliament passed a law for national uniform tax, States unable to compete - Uniform Tax Agreement
- Importance of tariff as revenue declined as trade declined during the war
8
Q
What were the goals of Australian reconstruction post WW2?
A
- Full employment without inflaiton (required economic growth)
- Functioning peace-time welfare system
- Wartime to peactime production change
- Manufacturing self-sufficiency
9
Q
What were the overall plans and concerns about reconstruction for Australia post-WW2?
A
- Growth to be driven by consumer demand
- But need to move the economy from one producing for war to one producing for peace
- Armed forces demobilisation could lead to instablity
- War time savings and high money supply led to investment
- Concern that investment would be too slow, demand too high, this would lead to high inflation, eventual unemployment
- Rations and price controlled remained to keep down prices, investment controls to prevent speculative investment - Until able to meet demand in the economy
10
Q
What centralisation occurred in the Australian government post-WW2?
A
- 1942 centralisation of income tax collection
- High Court ruled against the State opposition
- Government reduced the level of minimum liability, increasing revenue
- In December 1942 government created the Department of Postwar Reconstruction
- Hired qualified public servants for the first time
11
Q
What did the Department of Postwar Reconstruction do?
A
Created: Commonwealth Housing Commission, Post-War Rural Reconstruction Commission, Secondary Industries Commission, Commonwealth Reconstruction Training Scheme
12
Q
What did the Commonwealth Housing Commission do?
A
- Every citizen had a right to a ‘dwelling of good standard and equipment’
- Assumed bulk of new housing would be owner-occupied, built rental housing for low income workers
- Provided low interest loans to companies to build homes
13
Q
What did the Post-War Rural Reconstruction Commission do?
A
- Bought up surpluses to maintain a steady price if exports fell
- Little immediate impact as exports did well in early post war period
- Recommended measures to remodel primary industry sector
- Did not have a clear mandate
- Ultimately in the face of international competition farming became more capital intensive
- Mining became the more profitable industry
14
Q
What did the Secondary Industries Commission do?
A
- Narrower view of mandate
- Looked for alternatives to manufacturing
- Concentrated on the conversion of munitions factories to peacetime factories
- Did not set long term goals
- Australia remained committed by default to protection
- Anxious to secure a local manufacturing industry which would generate employment
- Should have focused on labour intensive industries
15
Q
What did the Commonwealth Reconstruction Training Scheme do?
A
- Australians must be adequately educated
- Many member of the armed forces were found to be illiterate because they had to leave school during the Depression
- Creation of ANU etc.
16
Q
Why was there difficulty in increasing federal funding in the post ww2 period in Australia?
A
- Medial profession resistance to government attempt to subsidise medication
- High Court continuously prevented extension of Federal Powers in immediate post war period
- Concern that war time welfare such as child endowment, widow’s pensions, unemployment sickness and funeral benefits were liable to challenge
- Referendum to conserve theses powers resulted in a “yes’ vote
- Federal power grew piecemeal through High Court decisions, Stat consent, financial muscle
17
Q
What happened regarding Australia’s trade in the late 40s/early 50s?
A
- Price of Australia’s major export rose
- Export receipts four times as high as the end of the 30s
- Resulted in increase in terms of trade - driven by wool prices
- Allowed Australia to import machinery and inputs
- Australia forced to import from Britain due to dollar shortage
- Exchange controls restricted excessive levels of trade
18
Q
When was the Commonwealth Bank act and what did it do?
A
- 1945
- Takes over control of monetary policy
- All banks required to lodge monthly balance sheets with CB
- CB directed to give loans to housing finance, municipalities and public utilities
- Housing demand had grown, supply had stagnated, likely to lead to inflationary pressure
- Publicly owner lender, not required to make profit, might lend at more favourable rates
19
Q
What was the mandate of the Commonwealth Bank in 1945?
A
- Ensure stability of the currency of Australia
- Maintenance of full employment in Australia
- Economic prosperity and welfare of Australia
20
Q
What happened to the vehicle industry in Australia post-WW2?
A
- Vehicle industry became a driving force for growth
- Americans encouraged to make cars in Australia
- Pass through effects on iron and steel industry, general engineering, rubber, plastic
- Lead to an expansion of Australia manufacturing industry
21
Q
What was the Australian position concerning immigration post-ww2?
A
- Population growth had been low leading up to and during the war
- Australia understood that increasing population and hence demand could lead to sustainable economic growth
22
Q
What happened in Australia regarding immigration following WW2?
A
- In the post war period immigrants were recruited to the cities for factories and infrastructure
- Britain and Australia subsidised the journey, agreement from 1947-1982, UK Assisted Passage Scheme
- British preferred because of skills but also language and cultural similarities
- Only one third of new immigrants were British
- 182 000 refugees
- Non-British qualifications were not accepted in Australia: power of the trade unions (No Australian to lose a job to immigrants)
- Immigrants often had to work for two years tin unattractive jobs to pay back their pasage
- Led to living wages for immigrants, equality within the community, limited ethnic tension
- Importance of female labour in WWII led to increased bargaining strength
- Female wage rate amended to 75% of the male rate
- Higher wages led to higher female labour force participation and an increase in married women’s labour force participation
- Still committed to populating Australia with whites
23
Q
What were the international conditions concerning Australia post-WW2?
A
- Australia’s war time trade governed by international agreements, attempt to wind theses down gradually to avoid volatility
- Marketing board to protect Australian trade
- Boards bough output, set the domestic prices, guaranteed a minimum return for exports - communist
- Kept surplus earnings
- Used surplus to compensate growers when price fell below guaranteed price
- To take volatility out of market
- e.g. Australian Wheat Board
24
Q
What happened to Australian trade in the 50s and 60s?
A
- Trade in the ‘50s was slow as Europe took time to recover
- Britain remaining the major destination although share of exports dropped
- US market somewhat erratic and unreliable, sometimes caused inflationary behaviour in the Australian market
- Japanese imports of Australian products grew substantially
- Renewal of Ottawa Agreement in 1950 reduced the level of British tariff preference - i.e. higher tariffs for Commonwealth trade - Britain would rather be part of EU and American trade
- Australian exporters sought to strengthen trade ties to Japan
25
What were and what did the Australian government do in response to domestic complications in the 50s?
- Erratic US market led to balance of payments crisis
- As consumer demand grew because of full employment the government allowed in imports to prevent surge in inflation
- Led to another b.o.p crisis
- Government used the licensing system (Quotas) to try to encourage foreign manufacturers to locate within Australia
26
What was Australia's trade/poltical position after it's reconstruction following WW2?
- Import licensing (quota) gave way in 1960 to erratic tariff changes
- The small local market did not allow the exploitation of economies of scale in production
- Terms or trade declines throughout the 50s
- Australia struggled to find new markets for exports, neighbours were poor in the extended post war period
- The existence of a small number of protected firms in the Australian economy could lead to complacency or collusion
- However due to expensive start up costs concentration may not have been inefficient
- New coalition government maintained labour reconstruction programs but did no modify them
- Aimed more at middle class preferences
- Commonwealth Bank split up into a private banking firm and the Reserve Bank of Australia in 1959
- Marketing schemes and tariff protection remained
27
What was the labour paradox?
- All these measures by the labor government led to the formation out of the former working classes of a middle class
- Labour government just trying to protect voters from another recession, few people expect the long boom
- Other worries were the growing size of the public service, increased by 300% from ’39-‘51
