<P> Federation in 1901 had granted only limited power to the federal government . For example, income taxes were collected by the State governments . Some argued that Australia's protectionist high tariffs worked to hurt the economy and that influential interest groups sought no change in this aspect of policy . Additionally, there was no significant banking reform or nationalisation of private businesses . </P> <P> The devaluation of the Australian pound, abandonment of the Gold Standard, recovery of major trading partners like the United Kingdom and public works projects instituted by State and local governments led to a slow recovery . Unemployment, which peaked at 32% in 1932, was 11% at the start of the Second World War compared to 17.2% in the United States . </P> <P> Following Lyons' death in 1939, Robert Menzies assumed the United Australia Party leadership and the prime ministership, however the 1940 federal election resulted in a hung parliament . A year later, Menzies' minority government was brought down in the House of Representatives when the two independents crossed the floor and switched their support to Labor, bringing John Curtin to power during World War II . At the 1943 federal election, Curtin led Labor to their greatest House of Representatives victory both in terms of proportion of seats and their strongest national two - party vote . Curtin died in 1945 however, and was succeeded as Labor leader and prime minister by Ben Chifley, who would lead Labor to their first successful federal re-election attempt at the 1946 federal election, before their defeat at the 1949 federal election by the Menzies - led Liberal Party of Australia in Coalition with the Country Party . The comprehensive economic and social reforms and reformist nature of the Chifley Labor government was such that between 1946 and 1949, the Australian Parliament passed 299 Acts, a record until then, well beyond Labor's Andrew Fisher's 113 Acts from 1910 to 1913 . </P> <P> Curtin and Chifley, who often used the spectre of another depression in their campaign rhetoric, utilised emergency wartime powers to introduce a command economy in Australia based on Keynesian principles . Unemployment was virtually eliminated in this period, being reduced to a record low of 1.1% . In 1942, income tax became federally controlled with the states conceding that the war effort needed a centrally controlled financial basis . </P>

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