Back at the Moore settlement, Mr. Neal is reading a paper in his office. Mary is waiting outside. She is very pregnant at this point. Billy is beside her. The Matron enters and tells Mr. Neal that Mary is waiting to see him. Knowing her husband’s desire for Mary, she reminds him that Mary is pregnant and very ill. When Mary enters, Mr. Neal tells her that she will be assigned light tasks and will stay in the nurses’ quarters. When she refuses, Billy intervenes, reminding her that she is talking to the boss. He threatens her with his whip, but she is defiant. Billy throws her over some flour bags and raises the whip.

Mary limps into Long Pool camp, obviously in great pain. When they ask her what’s wrong, she shows them a series of huge red welts on her back from where Billy beat her. Jimmy vows to kill him. Mary says that she doesn’t want to go to a hospital to have the baby and asks Gran if she can do it. Gran agrees, reminding them that she was the one who delivered Joe. Just then, David and Cissie rush in with a letter from Joe, who is in prison. Joe gave the letter to an inmate just before the inmate was released, and he delivered it to the family. This means that the white authorities haven’t read it yet. The letter says that Joe is getting out in eight weeks and plans on marrying Mary, as long as the authorities will allow it.

Mr. Neal is reading when Sister Eileen comes into his office. She reports that the Indigenous children have been practicing the hymn “There is a Happy Land” to sing for Mr. Neville at the Australia Day ceremony. Mr. Neal approves, but then he asks her to discuss another piece of business. He has been hearing that she is encouraging the Indigenous children to read. Incredulous, she says that not only has she been encouraging them but that she wants to start a library. And because she can get donated books, there will be no cost. Mr. Neal says that the unofficial directive is that no one must encourage them to read, as increased knowledge could lead to “troublemaking.” Sister Eileen can’t believe what she is hearing. She also tells him that violence should not be used to force people to attend Sunday school. Before she leaves, she asks Mr. Neal how the Bible should be classified. The implied question is why, if Indigenous Australians are not allowed to read, they should be forced to attend Sunday School to better understand (and read) the Bible.

It is 1934. Australia Day has arrived. Sister Eileen delivers an address to the settlement. All the members of the Millimurra family are there except for Joe, who is still in prison. On a raised dais behind her sit Mr. Neal, Mr. Neville, and the Matron. Billy Kimberley and Bluey are dressed in poorly-fitting uniforms as they prepare to raise the flag. After Sister Eileen introduces Mr. Neville, the listeners applaud while the Aboriginal listeners stay silent. Mr. Neville makes a condescending speech in which he tells the Aboriginal listeners to always remember that they are in the settlement so they can learn to be more like the white population. If they can do so, they will finally be treated as equals. He bungles the order of the events and announces that the children will now sing the hymn “There is a Happy Land.” 

The Aboriginal adults begin singing a parody of the song over the top of the hymn. When Neville commands them to stop, they sing even louder. He then tells them that all of their privileges, including Christmas, are cancelled. Jimmy, who has been heckling him throughout, takes this opportunity to challenge him on their treatment, including the accusations of scabies, which were a flimsy pretense used to move the settlement for other reasons. 

Desperate to restore order, Sister Eileen begins to sing “God Save the King.” As the white listeners join in, the Aboriginal people leave. Only the Millimurra family is left. Jimmy suddenly begins clutching his chest, obviously in pain from his heart condition. The Matron kneels at his side and begins to examine him.