What happened during the Great Depression in Australia?
Answer
Severe economic crisis with mass unemployment and hardship in the 1930s
Explanation
The Great Depression hit Australia hard from 1929 to about 1934, producing the country's worst economic crisis. Unemployment peaked at about 32 per cent in mid-1932, the second-highest rate of any major industrial economy (after Germany). The crisis transformed Australian politics, economic policy, and society and set the basis for many of the post-war reforms.
Australia was particularly vulnerable because the economy depended heavily on agricultural exports (wool, wheat, meat) and on British capital. The 1929 Wall Street crash triggered a global collapse in commodity prices and the withdrawal of British capital. Australian export earnings fell by about 50 per cent between 1928 and 1932. The federal government had borrowed heavily during the 1920s, and as overseas credit dried up, the country faced default on its debts. State and federal governments cut spending, raised taxes, and reduced wages to balance budgets, deepening the economic contraction.
The Scullin Labor government (October 1929 to January 1932) was overwhelmed by the crisis. Sir Otto Niemeyer of the Bank of England visited Australia in 1930 and recommended drastic austerity measures known as the Niemeyer Plan, which produced major political opposition particularly from Labor's left wing. The Premiers' Plan adopted in June 1931 reduced wages and pensions by 10 per cent, raised taxes, and cut government spending. The plan split the Labor Party, with NSW Premier Jack Lang refusing to apply it and the federal Treasurer Edward Theodore breaking with Scullin. Scullin lost the December 1931 election to the Coalition's Joseph Lyons (himself a former Labor Treasurer who had crossed the floor).
Social impact was severe. Mass unemployment, mortgage defaults, evictions, homelessness, and food shortages affected hundreds of thousands of Australian families. Susso (sustenance payments) kept many alive but produced real hardship and humiliation. Shanty towns called humpies sprang up on the edges of major cities. Specific incidents including the Beasley Street eviction riots in Sydney in 1931 marked the social tension. Recovery began slowly from 1933 onwards, with the wool prices recovery, mining investment, and the Lyons government's tariff protection helping to restore employment. The Depression's longer-term consequences included the 1932 dismissal of NSW Premier Jack Lang by Governor Sir Philip Game (a constitutional precedent echoed in 1975), the rise of the United Australia Party and later the Liberal Party, and the post-war commitment to Keynesian economic policy, social security, and industrial development.
Why this matters for your test
The Great Depression hit Australia harder than most industrial countries and shaped politics and economic policy for decades, and recognising the 32 per cent unemployment plus the 1932 NSW dismissal helps new citizens see the era's depth.
Source: Australian Citizenship: Our Common Bond (2024)
