1938: Australia

Political Situation; Legislation.

Although it continued to enjoy favorable economic conditions through much of the year. Australia, in 1938, had definitely passed the peak of prosperity and was facing the need for corrective measures if future difficulties were to be avoided. The downward movement had not, however, progressed sufficiently far to disturb the country's political equilibrium. State elections in the spring resulted in no very significant changes. In the national political arena the government of Prime Minister Joseph A. Lyons was able to beat off the attacks of the Labor opposition and a dissident group inside the cabinet without undue exertion. His most outstanding achievement was the passage of a Federal Health and Pensions Insurance Act which was scheduled to go into effect on Jan. 1, 1939. It is estimated that 52 per cent of the people of Australia — workers and their wives and children — will receive medical and disability benefits, and will be entitled to old-age pensions and aid to widows and orphans under this new, contributory scheme.

Britain's Foreign Policy.

During the entire year the shadow of world events fell like a pall over the Australian scene. On the one hand, Japan — momentarily victorious in China — was considered as an ever-increasing menace to the stability of the Southern Pacific. On the other hand, Britain more than once appeared to be on the verge of war in Europe. Australians wondered whether they could or should maintain their neutrality if Britain were involved in conflict. Above all, a vociferous faction condemned the Government for its apparent passive acquiescence in shifts in British policy without the prior consultation of the Dominions as demanded at the Imperial Conference in 1937. A wave of discontent over Premier Lyons' inactivity, led by John Curtin, leader of the Labor party, spread through the country when Anthony Eden resigned as British Foreign Secretary in February. In August, W. M. Hughes, Australian Minister of External Affairs, sharply criticized the Dominions Office at London as an impediment to direct consultative communication from the British Foreign Office or Prime Minister. After the Czechoslovak crisis, there was considerable dissatisfaction because the Canberra government had seemed disposed to follow blindly in the wake of the British without setting forth its own views.

As if in answer to these doubts and fears, which could not but threaten British imperial solidarity, the British Government, on Oct. 25, announced the appointment of the Duke of Kent as Governor-General of the Commonwealth. Australians regarded this selection of a member of the royal family as an indication that Britain, however pressed by war in Europe, would not abandon Australia to its own fate in the face of attack by Japan. Their own determination to defend their territory had already been made plain on Oct. 14, when it was announced that Australia would never return its mandated territory of New Guinea to Germany, its former ruler.

Defense Program.

Differences over foreign policy crystallized most sharply on the issue of defense. Here the old conflict between the Government — which advocates cooperation with Great Britain to maintain strong naval forces in Pacific water — and the Labor party — which wants the army and air force built up to implement an isolationist Australian defense policy — has in part been resolved. Criticism of the unpreparedness of Australia's fighting forces, revealed during the Czechoslovak crisis, led to a reorganization of the Lyons Cabinet on Nov. 7. This was followed by intensive planning for a balanced defense program involving increases for the navy, army and air force alike. The three-year program scheduled for completion by mid-1941 has now been greatly expanded; its total cost has been raised from 43,000,000 to 63,000,000 Australian pounds (almost $250,000,000). New destroyers are to be built in Australia; harbors are to be protected against attack; and facilities will be prepared for a capital ship, to be obtained in 1943. To meet the danger of invasion, the Government will attempt to increase the strength of the volunteer militia from 35,000 to 70,000 — with the threat of conscription if, as seems likely, the effort is unsuccessful. First-line air strength will be set at 212 rather than 198 planes, and 50 bombers have been ordered from the United States.

The Australian Government has also determined that the pace of industrialization in the Commonwealth must be speeded up, not only in order to lay the foundation for meeting defense requirements, but also to decrease the Commonwealth's dependence on imports of manufactures. One phase of the program envisages standardization of the various railway gauges in the country — a matter long recognized as vitally important for efficiency in defense and industrial communications. This project is likely to be undertaken within the next few years. Another step in the program was the imposition of an embargo on the export of Australia's dwindling supply of iron ore, imposed on July 1. Proof that this embargo, which affects Japan, was imposed for domestic and not international reasons is furnished by the fact that the Australian government almost simultaneously persuaded Australian dock workers to resume the loading of scrap iron and other cargo for Japan, which had been held up for several months by labor organizations.

But in the larger sense the Australian Government has not yet been successful in securing full cooperation for the defense program from the states. At a session of the Loan Council (which allocates money raised by borrowing) in October, the prime ministers of all the states rejected Mr. Lyons' proposal for unified control over public works expenditures in order to give priority to defense projects. The states regard such control as an infringement on states' rights which might rob some areas of their normal share of public funds. Thus, as in previous years, the states have once again hindered the development of a strong and integrated central government in Australia. Thereupon, on Nov. 22, the Federal Government announced that it would call a special session of Parliament early in 1939 to formulate amendments to the Commonwealth's constitution. If enacted, these will undoubtedly result in an increase in Federal Authority.

Population Policy.

On another front both national and state governments have cooperated to strengthen Australia. Realizing that the population of 7,000,000 will begin to decline in twenty years unless it is supplemented by immigration, the Government declared in April that it would lend financial assistance to immigrants from Great Britain. Since prosperous Britain is also faced with a potential decrease in population, however, there is little hope of resuming large-scale settlement of British stock in the Commonwealth, which was halted after 1929. At the Evian conference on refugees, in July 1938, Australia was outspokenly reluctant to reduce the British proportion of its population below the present figure of 98 per cent. But the need for a larger population for adequate defense purposes, for an additional industrial and agricultural labor supply, and for technical specialists in new industries, has led to a modification of this policy. On Dec. 1, the Government announced that it would admit 15,000 European refugees within the next three years; and despite opposition from labor sources, it appears probable that new currents of immigration from Italy, Greece, Jugoslavia and Poland will be permitted. This marks a modification of the original 'White Australia' policy, but one which will enhance the security and prosperity of the Commonwealth.