The End of Petrol Rationing
A 1949 ration ticket, from the Powerhouse Museum in Sydney.
On this day, 8 February 1950, Robert Menzies announces the end of petrol rationing, fulfilling a key election promise that had helped to sweep the Coalition into power at the December 1949 poll. This was a watershed moment in Australia’s post-war recovery, which helped to open up the economy, facilitate suburban expansion, and allowed individuals and families to enjoy the freedom and utility of their motorcars, a freedom which would come to define the culture of the decade.
When war broke out in September of 1939 Australia, a nation entirely reliant on imported petrol, was put in a precarious position. The country had, it was estimated, only enough fuel for 3months of normal consumption if supply chains were interrupted. As a result, discussions and planning for petrol rationing began almost immediately. Initially, the Menzies Government stopped short of implementing rationing, and instead relied on a propaganda campaign encouraging people to reduce their petrol consumption and promoting conversion to gas powered vehicles as a ‘patriotic act’.
As rumours of possible rationing led to hoarding which exacerbated the petrol shortage, the Government explored the possibility of increasing the duty on petrol to increase its price and thus discourage consumption. There were even plans to have a two-tiered system of petrol sales that kept petrol at its current price for commercial uses but increased the costs for private vehicles which were deemed less necessary. This all provoked much backlash, as the Prime Minister’s Office was swamped with angry telegrams and the Labor Party voiced its opposition to any form of restrictions that would depress the motor trade (which was an important economic, and therefore ‘commercial’, interest in its own right).
As the Australian public had not yet accepted the seriousness of the War situation and the sacrifices it required, Menzies erred, not wanting to jeopardise his popularity before the election of September 1940. With the conflict escalating, more and more tankers were being diverted from Australian shores and petrol reserves were dwindling. When France fell to the Nazis the direness of the situation forced the Government to bite the bullet, and on 6 June 1940 Cabinet made the decision that rationing should be introduced to reduce consumption by 50 per cent, a goal which after further hesitation was instead set at one third. Even with the Government’s backing, the rationing exercise was a logistical nightmare, involving inadequate statistics, complex Federal and State cooperation, and the introduction of ration tickets.
The rationing issue contributed greatly to Menzies’s near defeat at the 1940 poll. He had to deal with the twin critiques of those who opposed the restrictions, and those who attacked the Government’s indecisiveness in taking so long to introduce them. Menzies was left reliant on the votes of two independent members, and as circumstances required that the rationing be escalated further and further, the issue contributed to the circumstances that led to Menzies losing his position as Prime Minister in August 1941.
Since the introduction of petrol rationing had been such a political nightmare even during the War, it was inevitable that after the conflict was over the population expected it to be lifted as soon as was possible. Restrictions took a huge toll, dampening economic activity, restricting the movement of individuals and families who were forced to make do without a car, and all-round forcing people into far more manual labour than would otherwise have been necessary.
However, the end of the War did not automatically lead to the end of restrictions in the way that many people hoped. Australia bought the majority of its petrol using US Dollars, and with Britain massively indebted and economically depressed, these were in extremely short supply in the sterling currency group to which Australia belonged. Australia could have theoretically gone it alone in trying to purchase petrol, but this would have been devastating for Britain, a country that Australia relied upon to consume our exports and who we remained deeply sentimentally attached to. The Chifley Government committed itself to protecting the interests of the sterling group as a matter of high priority.
Since the petrol restrictions had been introduced under the justification of the War, and the defence power in the Constitution gave the Government tremendous scope to do things that they would not be able to do in peacetime, a group of frustrated businessmen decided to challenge the validity of the restrictions in court. The High Court’s judgement in Wagner v Gall, handed down in June of 1949, held that the restrictions were now invalid. This led to chaos, as sales increased even though there had been no tangible increase in the actual supply of petrol.
While the Federal Government did not have the Constitutional power to ration petrol in peacetime, the States did, and after some tense negotiations an agreement between the Federal Government and the States saw the reintroduction of rationing in November 1949. This allowed Country Party Leader Arthur Fadden to make what he later claimed was an election-winning promise to end the rationing, one which his Coalition partner Robert Menzies then backed.
The obvious issue was how to secure the supplies of petrol required to end rationing without the chaos that followed the High Court’s decision and without abandoning Britain. Menzies’s answer was to free up private enterprise, allowing Australia to increase its production and improve its terms of trade, bringing in more US dollars with which to purchase fuel.
Whether this plan would have worked we will never know. When Menzies came to power the British Government privately rebuked him, saying that his policy would wreck the sterling economic group. For a moment Anglo-Australian relations reached a crisis point, one which is frequently overlooked in attempts to paint Menzies as a sycophantic Anglophile. However, a major rupture was avoided by a fortuitous change in American policy. The United States generously offered British Commonwealth countries the option of paying for petrol with sterling currency. Australia was thus able to secure the supplies necessary to successfully end all restrictions, allowing Menzies to achieve what Chifley could not.
Further Reading:
Lorna Froude, ‘Petrol rationing in Australia during the Second World War, Journal of the Australian War Memorial, Issue 36, May 2002.
David Lee, ‘The 1949 federal election: A reinterpretation’, Australian Journal of Political Science, Volume 29, 1994.