The Labor Government's penchant for state enterprise and public works infrastructure investment was a reflection of the labour movement's belief in promoting social welfare via state intervention within the economy. Labor's state interventionist policies presupposed a political commitment to social justice and amelioration for 'working men' and their families. Organised labour in New South Wales sought to stimulate and control the demand side of the labour market through state socialist sponsorship of the expansion of secondary industry; especially labour intensive heavy engineering, manufacturing and public infrastructure development (for example rail, sewerage, transport, and power). By creating demand for industrial employment, along with state regulation of working conditions and practices, a more secure economic base would be established on which labour's social progress would be ensured. That is, in order for labour to gain a larger and fairer share of the social product the sphere in which such product was generated had to expand. The socialist ideology shaping this strategy is clearly spelt out in both the rhetoric and action of organised labour who understood state intervention and labourist industrial developmentalism as being socialist programmes.1
Labor's unique strategy combined socialist experimentation with state support for the private sector. Industrialisation was understood as the economic key to labour's social progress, to be carried forward by both socialist and capitalist enterprise. This mixed economy of public and private enterprise reflected the temper of the limited and selective socialist objectives that the Labor Party followed during this period. The selectivity of Labor's socialist objectives was reflected in their mode of political action that only required the collective ownership of particular sectors of industrial production. Moreover, this collective ownership was limited to state control on behalf of its citizens, rather than direct worker ownership and control of the means of production.2
This ideology of political action can best be described as socialist labourism. There is some debate as to what the term labourism actually defines, and therefore its influence as a mode of political thought within the labour movement in New South Wales. Historians such as James Hagan, Ken Turner, and Raymond Markey, understand labourism, to varying degrees, as describing a mode of political action which represented the labour movement's general rejection of socialism. However, where Hagan and Turner see no socialist objectives within labourist ideology, Markey, identified a level of non-marxist socialism as initially informing labourist ideology. Certainly the great majority of the labour movement rejected revolutionary scientific socialism based on class warfare. Nevertheless, organised labour did not reject socialist redistributive objectives. Socialist assumptions are evident even after the Labor Party plank for the nationalisation of the whole means of production was replaced in 1905 by a more moderate one calling for the collective ownership of monopolies. It was selective socialism that informed labourist politics; a social-economic political agenda that combined specific socialist programmes in concert with a more regulated capitalist economy. The uniqueness of socialist labourism is that it was based on a ideological assumption of class reconciliation under the direction of a benign state committed to collectivist ownership of key industrial sectors. Moreover, labourist state welfarism was driven by the socialist assumption that state collectivist and interventionist policies have clear social goals that would benefit the working class.3
Historians Terry Irving and R. Neil Massey also identify socialist assumptions that informed labourist ideology and political action. Irving suggests that a close examination of the labourist 'colonial ideology' that Hagan empirically defines as non-socialist labourism, is indeed socialist inspired. Massey takes this analysis further, combining organised labour's statist model of 'colonial socialism' prominent by the late 1890's with the concept of modernity; that is, labour's desire to share in the material and social benefits of 'modern' industrial society. Due to the immaturity of New South Wales' industrial economy, public sector investment in infrastructure and enterprise development was necessary. Moreover, the social purpose of labourist industrial development was heavily influenced by the socialist notions of equity and social amelioration that informed the labour movement's political consciousness.4
The establishment of the Walsh Island Dockyard was a product of this reconciliatory socialist labourism and took place during a unique period of convergence between industrialisation and socialist ideology. This resulted in a political strategy of coexistence between state socialism and capitalist enterprise. Labor's industrial development programme reflected the state's special needs and circumstances as it was primarily a pastoral- based economy which was underdeveloped industrially. Labor's 1910 programme brought together a number of strategies such as: state enterprise, industrial legislation, industry decentralisation, public works, and import replacement, in order to foster economic growth, generate employment, and to attempt to control the labour market and cost of living. Indeed, it was with Labor's drive to establish public sector enterprise that all these strategies were first brought together.5
Thus Labor's socialist labourism had a trichotomy of purpose. Its aim was to create employment via direct state intervention in the form of state enterprises and public works which would fulfil the second purpose of expanding the state's industrial infrastructure to support the expansion of private secondary industries and therefore replace imports. Finally, labourism would promote the overall systematic industrialisation of the state's economy, in conjunction with its primary industries, in order to economically underpin Labor's broad social objectives, and galvanise political support for continued Labor government.
Industrial development ensured the growth in importance and power of industrial labour, both socially and politically, a point not lost on their political representatives. It was, after all, in the best interests politically for the Labor Government to broaden its supportive constituency base, and the industrialisation of New South Wales was one very effective strategy to accomplish this. Indeed, in 1910 Newcastle was not yet a solid Labor stronghold and the votes that had returned all four seats (Newcastle, Wickham, Waratah, and Kahibah) to Labor were not considered safe. With Labor only holding a two-seat majority in the Legislative Assembly, the politically unstable seats in and around Newcastle were of vital importance to the government's survival. The seats in Newcastle had been held by independents on a number of occasions since the Political Labour Leagues had entered the political sphere in the early 1890's. Labor had barely consolidated its electoral position in Newcastle by 1910 and its constituent base there was fragile. This fragility was due to the increasing migration of coal miners and associated workers (Labor's primary political constituency) from Newcastle to the new Maitland coalfields as the coastal pits closed after exhausting their reserves of easily winnable coal. Griffith, realising this would drain away political support from within the Newcastle electorates, directed a programme of public investment in Newcastle in an attempt to stem the flow and shore up Labor's political support and tenuous parliamentary majority. Griffith was well versed in the machinations of Novocastrian politics having been the Member for Waratah (in the west of Newcastle) from 1894 to 1903. Griffith demonstrated a clear policy to help industrialise Newcastle and, as Minister for Works, he had the power and resources to do something about it.6
Clearly, Griffith's decision to establish the new Dockyard at Newcastle had immediate political motivations. There was a proposal to establish a replacement facility for Cockatoo Island on the Parramatta River near Sydney; however, Griffith's desire to promote industrial development in Newcastle and the political importance of Newcastle's four nominally Labor electorates put paid to that proposal. Furthermore, it is a common misconception that Newcastle has been, from the mid-nineteenth century, an industrial city. Certainly Newcastle has always been a centre for coal production, and as a result, has experienced a measure of industrial activity, particularly in the iron trades and later in small scale manufacturing. However, Newcastle was primarily an important port of departure for the coal and primary produce from the Hunter and North West New South Wales. It was not until the establishment of the Walsh Island Dockyard, along with the Steelworks and associated industries, that Newcastle became a truly industrial city. The burst of industrial activity centred in Newcastle between 1910 and 1915 was due in large part to Griffith presiding over Labor's public works and industrial development programme, and in directing much of it to the benefit of Newcastle.7
The politics of state enterprise are well illustrated by the Labor Government's failure to establish a state iron and steel works in 1912, and the subsequent importance placed upon the development of the Dockyard by the Labor Government. Plank 6 of Labor's 1910 election platform called for the nationalisation of the iron and steel industry in New South Wales. Once in government, Attorney-General, William Holman; Minister for Works, Arthur Griffith; and Minister for Labour and Industry, George Beeby; were charged with the responsibility for implementing this key policy plank. The Sydney Labor Council (SLC) had pressured the Labor Party to adopt a policy plank in 1902 for the establishment of a state iron and steel industry. From 1907 the SLC had also called for the nationalisation of the Hoskins Lithgow Ironworks due to that company's appalling treatment of its workforce. As Minister for Works, Griffith became especially preoccupied with straightening out the sour contractual and labour relations then experienced between the government, unions and the Hoskins operation. For Griffith and the Labor Cabinet, the nationalisation of the iron and steel industry was to be the first major step towards securing their broad industrial and social agenda.8
To this end, Premier McGowen appointed F.W. Paul, Manager of the Steel Company of Scotland, as Commissioner to the Royal Commission into the Iron and Steel Industry in New South Wales in 1911. The Labor Government's agenda was clearly evident in the commission's three main terms of reference. Paul was instructed to investigate the government's contractual relations with the Hoskins Ironworks at Lithgow. This related to the government's desire to rectify Hoskins' rather brusque attitude toward the government as a customer, its poor quality product, irregularity of delivery, high prices, and bitter industrial relations record. The second objective was to examine the suitability of New South Wales as a host for an integrated iron and steel works. Thirdly, Paul was directed to assess the feasibility of establishing a state owned and operated iron and steel works. Together, these three terms of reference were aimed at giving the government a mandate to establish its own steelworks and to nationalise the existing small scale iron and steel industry.9
However, Paul's report, published late in October 1911, did not deliver the exact recommendations the Labor Government had hoped for. While the report tentatively supported Labor's nationalisation policy, as it was critical of the Hoskins operation, its precise recommendations by-passed nationalising the Lithgow Ironworks which was the labour movement's preferred option. Rather, Paul argued that as the government was the largest customer for iron manufactures it should therefore establish its own integrated iron and steel works. Paul's proposed integrated steelworks was, however, to be a much larger project than anything previously envisaged by the Labor Government. Paul proposed the establishment of a huge steelworks which he estimated would cost £1,500,000, a staggering sum at the time, and which represented half of Labor's initial £3,000,000 public works budget, thus presenting the government with a serious dilemma.10
The dilemma facing the government was threefold. Firstly, how was the government to reconcile the Hoskins workers at Lithgow, and their supporters, to the reality that the nationalisation of the Hoskins works had not been recommended? Moreover, how was the government to deal with the political backlash from within the labour movement after it was made clear that such a large steelworks was clearly beyond the government's political and financial means? Finally, and to further complicate matters, how was the government to receive BHP's forceful proposal for a privately owned steelworks which was so obviously in contradiction with Labor's central ideological tenets of the collective-ownership and anti-monopolistic ideals?11
It is clear the Labor Government could do very little to appease the embattled Lithgow workers aside from legislating for industrial relations reforms, which it did with the 'Industrial Arbitration Act' in 1912. However, the subsequent development of BHP's Steelworks in Newcastle clearly demonstrates the considerable administrative limitations placed upon Labor policy. These administrative constraints resulted from the financial limitations associated with securing loans from the private capital markets in London, and the political limitations the government faced at the hands of a hostile Legislative Council. The Legislative Council was dominated by conservative appointees who were vehemently opposed to socialist legislation. The Legislative Council had rejected much of the Labor Government's progressive social and industrial legislation such as the tenants' land improvement rights, shearers accommodation, reduced retail working hours, and miners' eight hour day bills. Nevertheless, in censuring the Labor Government for its perceived weakness of political determination to implement party industrial policy at the 1913 State Labor Conference, the rank and file of the party ignored the considerable administrative restrictions faced by the government.12
Regardless of these political limitations, and in the knowledge that the Labor Government could not secure finance for the state steelworks, Griffith, nevertheless, pressed ahead. In March 1912 he presented the State Iron and Steel Works Bill to Parliament. As expected, this Bill was soundly rejected by the Legislative Council who would have nothing to do with such 'socialistic legislation'. Griffith did all he could to pursue the establishment of a state steelworks; however, once it was clear that this goal was politically dead, he moved to secure the establishment of BHP's proposed steelworks in New South Wales. He made the government's position quite clear in June 1912 when he publicly acceded to BHP's proposal. Griffith claimed he 'deeply regret[ted that the] government was prevented from getting in first with their scheme'. However, he was not prepared to impede 'any large wholesome development of private enterprise'. Clearly, Griffith understood that an integrated iron and steel industry, albeit a private one, would provide the state with an important economic stimulus and be a vital step toward the industrialisation of New South Wales.13
Griffith's handling of the BHP Steelworks proposal demonstrates that his commitment to state enterprise was tempered by his equally pragmatic acceptance of political reality. To accommodate the BHP steelworks in Newcastle the government was required to resume land and relocate coal loading facilities to the site of the existing PWD dredge repair workshops at the Dyke End, Carrington. Griffith was quick to appreciate that this development offered the government a unique opportunity to expand state enterprise. The Carrington facility had already been earmarked for major extensions due to the Cockatoo Island Dockyard being almost entirely engaged in naval construction work for the Commonwealth Government by 1912. To this end Griffith announced that the site for the proposed dredge repair workshop extensions in Newcastle would have to be relocated to 'an island in the river'. The island Griffith referred to was Walsh Island and his statement marks a crucial point of historical intersection in the development of both the BHP Steelworks and the State Dockyard at Walsh Island.14
The establishment of a large state dockyard and associated engineering works in Newcastle was an ace up Griffith's sleeve throughout his tussle with BHP. A combination of several factors such as: having to relocate the Carrington dredge repair workshops, the government's agreement to dredge a new channel to service the Steelworks, and the impending sale of Cockatoo Island to the Commonwealth, provided Griffith with the means and opportunity to establish a large state owned engineering facility as consolation for the loss of the state steelworks. Griffith appreciated the convenience of locating a new dockyard directly opposite the Steelworks as it would share the new channel. Griffith seized the opportunity and planned a new dockyard of a sufficient scale to replace both the Carrington and Cockatoo Island facilities. Moreover, a new state dockyard would not only enhance the government's industrial procurement capabilities, especially in providing an alternative source to Hoskins for iron manufactures; but also it was a clear demonstration of Labor's commitment to state enterprise, decentralisation, and industrialisation, so soon in the wake of the Labor Government's failure to establish a state steelworks.15
Griffith knew, nevertheless, that to attempt to establish any large state socialist industrial undertaking was certain to meet strong resistance in the Legislative Council, therefore, Griffith had a number of options open to him. The first was to belatedly institute the enterprise via the provisions of the Industrial Undertakings Act of 1912. This Act provided for six state enterprises consisting of: a brickworks, lime-works, metal quarries, timber yards, clothing factory and the Cockatoo Island Dockyard. Section 2(g) of the Act also allowed for 'any other industrial undertaking that the Governor may specify'. However, to utilise section 2(g) the Labor Government would have to gain the approval of the Legislative Council for any further specific state enterprises. Griffith, with an eye on the sale of Cockatoo Island to the Commonwealth, may have included Cockatoo in the Act in order to allow him the option of transferring its industrial undertaking status to a replacement dockyard.16
However, Griffith did not pursue any of these options, instead, he simply transferred the Carrington workshops' status as a section of the PWD to the new dockyard at Walsh Island, and he did this for sound political reasons. As the Minister for Works, and therefore the effective political head of the PWD, Griffith could exercise near total control over Walsh Island's development and operations. Moreover, as an extension of the PWD, Griffith could establish the dockyard without having to seek approval from the Legislative Council. Griffith, as a long time critic of the conservative and undemocratic nature of the Legislative Council, would certainly have wanted to avoid dealing with it. So Walsh Island was unique among the state enterprises due to its status as a semi-autonomous enterprise operating within the PWD.17
Griffith's strategy reflected in practice the particular brand of socialist labourism that was predominant within the labour movement in New South Wales prior to the First World War. He asserted that the establishment of Walsh Island ‘might be socialism, but he knew that it was good, sound common-sense. He believed that it was a wise investment for the public money, and one which would save the general taxpayer a large sum of money.' By 1909 Labor had proposed an extensive list of state enterprises including: a state ironworks, farms and labour colonies, woollen mills, clothing factories, mines, milk depots, ferries, and gas and electricity utilities. Griffith claimed state enterprises, such as Walsh Island, were intended to function as competition to private firms, boost the government's industrial infrastructure capabilities, replace imports, and generate employment. The establishment of Walsh Island Dockyard, although not specifically considered in 1909, was a direct practical manifestation of this state enterprise ideal. There can be no doubt that Walsh Island made an important contribution to the industrial development of New South Wales and to the very capacity of the state to industrialise. The Dockyard was established by the Labor Government as an exercise in what it believed to be state socialism, through which the state gained a greater measure of control over its own programme of public works and general industrial and public infrastructure development. Moreover, the Dockyard also represented an early attempt a state manipulation of the labour market meant to further the material progress of organised labour. All of these objectives, regardless of their success or failure, reflected the ethos of socialist labourism; an ethos that elevated the collective welfare of the working class as the highest priority of the Labor Government.18
1.R. Markey, In Case of Oppression: The Life and Times of the Labor Council Of New South Wales, Sydney, Pluto Press, 1994, pp. 116 & 144.
2.Griffith, pp. 3-5, 10, 23 & 26.
3. See, Terry Irving, 'Labourism: A Political Genealogy', pp. 1-13; Tim Battin, 'Keynesianism, Socialism, & Labourism, & the Role of Ideas in Labor Ideology', pp. 33-44; & R. Neil Massey, 'A Century of Laborism, 1891-1993: An Historical Interpretation', pp. 45-55, Labour History, n.66, May 199; Hagan & Turner, 1991, pp. 98-99; J. Hagan, The History of the A.C.T.U., Melbourne, Longman Cheshire, 1981, pp. xi & 14.; & R. Markey, The Making of the Labor Party in New South Wales 1880-1900, Kensington, New South Wales University Press, 1988, pp. 3-6, 197, 230-233 & 260.
4. Irving, p. 7. & Massey, pp. 50-54.
5. Dyster & Meredith, pp. 58-59 & 62-63; Massey, pp. 53-54; & 'Walsh Island Official Opening', N.M.H.M.A., 28 November, 1914.
6. Docherty, p. 34.
7. 'Walsh Island Official Opening', N.M.H.M.A., 28 November, 1914; J.W. Turner, Manufacturing in Newcastle, 1801-1900, Newcastle, Newcastle Public Library, 1980, p. 20; & N.S.W.I.G., v.6, July-November 1914, pp. 1199 & 1201-1202. By 1913 there were 572 factories registered as operating in Newcastle, however, of these only one had over 400 employees (PWD dredge repair shops), and only five with between 150 and 300 employees. Of the 5983 men and women employed at these factories, only 1361 were involved with 'metal works and machinery'. Docherty, pp. 31-36.
8.Evatt, p. 229; Markey, In Case of Oppression, p. 144. & N.R. Wills, Economic Development of the Australian Iron & Steel Industry, Sydney, N.R. Wills, 1947, pp. 64-65.
9. Royal Commission on the Iron and Steel Industry in New South Wales, Report, 31 October, 1911, N.S.W.P.P., Session, 1911-12, n.78, v.4, pp. 565-567; Dyster & Meredith, p. 95; & H. Hughes, The Australian Iron & Steel Industry, 1848-1962, Melbourne, Melbourne University Press, 1964, p. 61.
10. A. Trengove, 'What's Good for Australia..!': The Story of B.H.P., Stanmore, Cassell Australia, 1975, p. 91; Hughes, p. 53; & Markey, pp. 91 & 144. & Royal Commission, Iron and Steel Industry, Report, pp. iii-xvi.
11. Markey, In Case of Oppression, p. 144. & Hughes, p. 55.
12. Massey, p. 54; Dyster & Meredith, p. 131; Hughes, p. 66; Markey, In Case of Oppression, pp. 161-162. & Trengove, p. 99.
13. Dyster & Meredith, p. 24; Hughes, p. 66. & ‘Proposed Steelworks', N.M.H.M.A., 27 June, 1912.
14. 'Walsh Island Works', N.M.H.M.A., 16 June, 1913; 'Walsh Island State Workshops', S.M.H., 28 November, 1914 & 'Proposed Steelworks', N.M.H.M.A., 27 June, 1912.
15. 'Walsh Island Works', N.M.H.M.A., 16 June, 1913; & G.E. Gould, 'A Dock for Newcastle: The Movement to Establish a Dock in the Port of Newcastle, 1888-1928', unpublished BA (Hons) thesis, University of Newcastle, 1977, p. 46. The final figure agreed to was £867,716-9-0, comprising £800,000 for the works and plant, and £67,716-9-0 for naval work completed to February 1913. ‘Walsh Island Works', N.M.H.M.A., 16 June, 1913.
16. Special Deposits (Industrial Undertakings) Act, No. XXII, 1912, The Statutes of New South Wales (Public and Private) Passed During the Session 1912, Sydney, 1913, pp. 15-17.
17. P. Mantle, 'A 'Conscientious Democrat': Aspects of Arthur Griffith's Early Political Career, 1894-1903', unpublished BA (Hons) Thesis, University of Newcastle, 1989, pp. 13-15.
18. 'Walsh Island Works State Workshops', S.M.H., November 28, 1914; Griffith, pp. 10-12 & 23.
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