Premiers' Plan

The Great Depression in Australia saw huge levels of unemployment and economic suffering amid plummeting export income.

Niemeyer recommended a traditional deflationary response of balanced budgets to combat Australia's high levels of debt and insisted that interest on loans be met.

[4] Labor Treasurer Ted Theodore meanwhile supported the view of John Maynard Keynes that an inflationary policy of increased government spending was required.

[6] The policy contrasted with the approach put forward by the British economist John Maynard Keynes and which was pursued by the United States, which held that governments needed to spend their way out of the Depression.

The plan was signed by New South Wales Labor Premier Jack Lang, but he was a notable critic of its underlying philosophy and went on to pursue his own policy of defaulting on debt repayments, which led to confrontation with the Federal Scullin and Lyons governments, and ultimately resulted in Lang's dismissal from office in 1932.

[9] The Hogan government in Victoria fell in 1932 after a dispute with the Victorian Executive of the Labor Party about how to restore public service salaries that had been cut under the Plan, with the cabinet unanimously opposed to restoring salaries above 500 pounds, the Victorian Executive insisting on this under pressure from the Public Service Association.

According to author Anne Henderson of the Sydney Institute, Lyons held a steadfast belief in "the need to balance budgets, lower costs to business and restore confidence" and the Lyons period gave Australia "stability and eventual growth" between the drama of the Depression and the outbreak of the Second World War.