New South Wales constitutional crisis, 1932

The 1932 dismissal of Premier Jack Lang by New South Wales Governor Philip Game was the first real constitutional crisis in Australia. Lang remains the only Australian Premier to be removed from office by his Governor, using the Reserve Powers of the Crown.

Early in 1931 Jack Lang released his own plan to combat the Depression; this became known as "the Lang Plan". This was in contrast to the "Melbourne Agreement" which all other State Governments and the Federal Government had agreed to in 1930. Lang believed that the Depression was essentially caused by overseas bankers who were greedy for even more money and that this deflationary plan would only secure their wealth.

Key points of the Lang Plan included the reduction of interest owed by Australian Governments on debts within Australia to 3%, the cancellation of interest payments to overseas bondholders and financiers on government borrowings, the injection of more funds into the nation's money supply as central bank credit for the revitalisation of industry and commerce, and the abolition of the Gold Standard, to be replaced by a "Goods Standard," whereby the amount of currency in circulation would be fixed to the amount of goods produced within the Australian economy. The banks had indicated that if he paid the interest they would advance him an additional amount which was greater than the interest, thus giving him a positive cash flow.

Lang was totally opposed to the Premiers' Plan agreed to by the federal Labor government of James Scullin and all the other premiers, which called for even more stringent cuts to government spending to balance the budget. In October 1931 Lang's followers in the Australian House of Representatives crossed the floor to vote with the conservative United Australia Party (UAP) and bring down the Scullin government. This action split the NSW Labor Party in two - Lang's followers became known as Lang Labor, while Scullin's supporters, led by Chifley, became known in NSW as Federal Labor. Most of the party's branches and affiliated trade unions supported Lang.

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