The resolution and its rider created uproar from the Langite minority. Hughes told the conference that the war «is just a war of adventure and plunder in which we should have no concern». In a phrase that would come to symbolise the stance of the new leadership of the ALP he said: «Hands off Russia is the policy of the labour movement today as it has been in the past.» Amid interjections suggesting he was a not a Labor man, but a communist, Lloyd Ross predicted «within a few months we will be asked to stand side by side with Imperialist Britain in a war against the only real Social[ist] State in the world. We won't be there.» Ross was cheered for this comment and the «Hands Off Russia» resolution passed by 195 to 88.
For conservative Prime Minister Menzies, the Easter conference opened a vital chink in Labor's armour in the coming federal election in that it allowed the conservatives to link federal Labor with the taint of unpatriotic and anti-British feeling. Menzies argued that the resolution was treason and marked a stage in the disintegration of federal Labor's war policy and challenged its leaders to rebut it. Yet the Hands Off Russia resolution - or the assumptions on which it drew its support - was not so extreme or absurd as it might appear today. The labour movement and ALP had not forgotten the bloody cost of the «war to end wars» in 1914-18 and prior to September 1939, a significant strand of Labor opinion, including the parliamentary leader at the federal level, John Curtin, was passionately isolationist.
In Moscow the spirit of the resolution was in tune with the Comintern. In March 1940, Andre Marty dictated directives for Australia and New Zealand. In discussing work in the unions and the Labor Parties, Marty urged:
We must not forget for one moment, that the British Empire must disappear and that in this fight the social democratic parties also shall disappear. The question is how can we convince the honest members of the Labor Party and the trade unions to unify with the Communist Party, the revolutionary party and create in this manner the organisational foundation of the working class. Here is the way to destroy the rule of the reformists in the workers' movement.
But it was the communists not the reformists whose influence was to be destroyed. In 1994 Hughes concluded: «We followed the party's line with the war when it was so off beam and a denial of everything we had been fighting and struggling for, the defeat of fascism and all the rest of it. [Because of this] in one minute, virtually…. it went down the drain.»
As the war in Europe intensified the Hughes_Evans position became increasingly untenable. In April Germany invaded Norway and Denmark. In May the phoney war ended with the German blitzkreig invasion of the Netherlands and Belgium followed by the attack on France. The public desire to assist Britain with Australian troops overwhelmed the earlier reservations and hopes for peace on which the Hands Off Russia resolution was built. Within Australia forces grew calling for a government of national unity with the conservative United Australia Party. But the NSW executive of the Labor Party strongly opposed this and attacked other Labor forces who supported it.
A Special Federal ALP Conference in June 1940 opted for a more pro-war stance, agreeing to conditional participation in the European war. Shortly after this, another split developed between the left-controlled NSW branch and the federal leadership. The conservative federal government, with support from the Labor Opposition, had proposed to amend the National Security Act to give extra powers to require individuals to place «themselves, their services and their property at the disposal of the Commonwealth». This was bitterly opposed by the Hughes_Evans forces who publicly supported five Labor federal MPs who opposed the amendments.
On August 2 the federal executive of the ALP moved decisively and suspended the left-dominated NSW executive. It denounced the «inspired and unwarranted propaganda circulated in NSW about a proposed National Government» and reaffirmed its own rejection of a national government. Trying to avert a split, the executive offered a secret deal to Hughes. In exchange for his support to drop Evans, Hughes would become a junior minister in the next national Labor government. After consulting with the CPA leadership, the offer was rejected and with it died the intriguing possibility of a communist minister of the crown.
On August 17, the suspended Hughes_Evans leadership reconvened their forces with 18 members of the old executive. They decided to create a new party - the Australian Labor Party, State of NSW. This body became the vehicle of what remained of the alliance between the undercover CPA members and the non-CPA Left. It failed to win significant electoral support and in January 1944 it amalgamated with the Communist Party, with five of its leaders becoming members of the Central Committee of the CPA: J. Hughes, W. Gollan, H. Chandler, E. Ross and A. Wilson. At least four and possibly all five were already secret members of the CPA. So ended one of the most intriguing but little-known episodes in underground communist political work in an advanced democratic country.
What were the long term results of the CPA's penetration of the Australian Labor Party? The most significant result was their opposition to the creation of a National Government, that is, a non-party government of national unity. From the outbreak of war until August 1940 pressure grew to form a National Government which, for the communists, was absolute anathema because it meant class collaboration. In April the former leader of the rural-based Country Party, Sir Earle Page, publicly called for a national government, but was rebuffed by federal Labor Opposition leader, John Curtin. A government armed with sweeping defence powers and lacking an Opposition would be too powerful, Curtin argued.
Powerful forces within Labor urged a national government. In early June Curtin called a federal conference to discuss Labor's war policy and the Sydney Morning Herald noted: «It is believed that an influential section of the conference will advocate the formation of a National Government on the lines approved by the British Labour Party.» A Special Federal Conference in June 1940 revealed the key supporter of national government - Queensland Premier Forgan Smith, whose proposal for a national government the conference rejected. The conference opted for a more supportive, war-fighting role than previously, agreeing to reinforcement for the AIF and conditional participation in the European war. But the strength of the Left and of Labor tradition was also shown in declarations of an «excess war profits tax of 100 per cent». 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 «a new pack, a new shuffle, a new deal». A month later Menzies offered just such a «new deal», 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.
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.
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