Joseph Lyons - Federal Politics

Federal Politics

At the 1929 election, Lyons entered Federal politics, winning the seat of Wilmot in Labor's landslide victory under James Scullin. He was appointed Postmaster-General and Minister for Works and Railways.

When the Depression struck in 1930, the Scullin government split over its response. Lyons became the leading advocate within the government of orthodox finance and deflationary economic policies, and an opponent of the inflationary, proto-Keynesian policies of Treasurer Ted Theodore. Theodore was forced to resign over accusations of corruption in June 1930, and Scullin took over the Treasury portfolio in addition to the Prime Ministership. Lyons served as acting Treasurer from August 1930 to January 1931 while Scullin was in Britain for the Imperial Conference. In October 1930 Lyons announced his plan for recovery, insisting on the need to maintain a balanced budget and cut public spending and salaries, although also advising lower interest rates and the provision of greater credit for industry.

His conservative economic approach won him support among business, but angered many in the Labor caucus, who wanted to expand the deficit to stimulate the economy, and were horrified at the prospect of cuts in salaries and government spending. Alienated by their attacks, Lyons began to consider suggestions from a group of his new business supporters, including influential members of the Melbourne Establishment, that he leave the government to take over the leadership of the conservative opposition.