an В«excess war profits tax of 100 per centВ». Instead of national government it plumped for the establishment of a cross-party Advisory War Council. Almost immediately Forgan Smith recommenced agitation for a National Government, calling for a В«a new pack, a new shuffle, a new dealВ». A month later Menzies offered just such a В«new dealВ», promising Labor five or six cabinet posts and finally even offering to stand down as Prime Minister, if necessary.
In the federal election campaign of September 21, 1940, Menzies campaigned on the policy of a National Government among other things. The election saw an equally divided federal House of Representatives with the fate of Menzies 'government depending on two Independent MPs. Labor continued to resist any move toward a National Government and Menzies finally agreed to form an Advisory War Council (which included Labor appointees) a position he had previously rejected. In August 1941 he again appealed to Labor to form a National Government, was rejected and resigned as Prime Minister. His party held office until the two Independents finally withdrew their support on October 3, 1941. A period of eight years of Labor government then commenced. It was the first significant period of Labor control of federal government and saw many social reforms.
The significance of Labor's rejection of a National Government can be seen in comparison with the British Labour Party. Labor in Australia governed a country at war in its own right from October 1941 until August 1945. This period saw state regulation of manpower, commodities and industrial development. Unions were consulted widely, federal powers were permanently centralised and post-war planning began in 1943 with Labor ideals firmly in mind. By comparison, British Labour was the junior partner in Churchill's war cabinet and only began its reforming drive after it began to govern in its own right after the 1945 elections.
The influence of the CPA-ALP dual members played a significant although not decisive role in avoiding the conservative path of a National Government. Throughout the period in which Menzies enticed Labor to join him, Labor's leader John Curtin never wavered in his opposition to National Government. While in modern times such a stance by a leader would carry enormous weight, in this period this was less so. Curtin's opposition to National Government may have also been a response to the opposition to it within the party, a tone set by the NSW branch, which warned early and often about such a proposal.
Another influence on Labor's policy and hence government policy from 1941 to 1949 was the CPA's unwavering socialist commitment. This was translated to the ALP through the NSW branch and later by its influence in the trade union movement. Combined with the indigenous (but weaker) socialist tradition this led to a commitment in post-war reconstruction to a strong public sector, a welfare program and an unparalleled degree of regulation of private enterprise which lasted long after the post-war reconstruction period and after Labor's loss of federal government in 1949.
Against these factors consideration must be given to the counter-productive actions of the CPA dual members for most of the period of the Hitler-Stalin pact from October 1939 to June 1941. Most significantly, the CPA's strategy led to a period of electorally damaging public conflict. It began with the Hands Off Russia resolution, which led to a renewed split by Lang, then to defiance of the federal party on the National Security Bill, then to expulsion of the CPA-led Labor faction. Labor went to the September 1940 poll split into three groups. Predictably, Labor lost. p> Historians have previously found it difficult to describe what actually occurred within Labor between 1936 (the beginning of the revolt which unseated Lang) and 1940 (the split) because of the secrecy of the CPA's undertaking. This has led to a lack of understanding of the internal dynamics of the NSW ALP's confrontation with the rest of the ALP, which began with the Easter conference in March 1940. Superficially, the 1940 split resembled previous Labor splits, but the crucial element was in fact a highly ideological grouping of undercover members of the Communist Party, who came to lead a mass reformist party following the strategy of the Communist International.
