Introduction

The rhetoric of most leading politicians and the advice of many knowledgeable commentators on Australian economic affairs in the 1930s included promises and assertions about the need to balance the public budget or, at least, about the benefits of moving firmly in that direction. Where the rhetoric and advice were sometimes otherwise, as with Lang in New South Wales and Theodore at the Federal level, the verdict of the electorate or a scandal or the operation of the Federal constitution prevented the wholehearted transformation of words into deeds. It would seem that governments followed the counsel of Douglas Copland, leading economic adviser to governments, that ‘there is little justification for the restoration of public expenditures except through the restoration of national income… [B]udget economy, like currency and wage policy, though devised to meet the special needs of the crisis, must be maintained pending the recovery of export and protected income’ (Copland 1934, p. 190).

In all events, budgets were not balanced. Nonetheless, fiscal policy in Australia in the 1930s has to be judged as generally contractionary when gauged by changes in the deficit in absolute money terms or in relationship to actual or ‘fixed employment’ GDP, or when adjusted according to the Keynesian balanced-budget multiplier theorem.