However, that is a bit different from saying that there was direct CIA involvement.
In his Crikey account Rundle points out that in Kerr’s correspondence with the Palace he refers to the refusal of supply as a “deferral”, because supply until the end of November existed. There was no urgency to sack so early, except, as we shall see, supply was not the only story being played out. Continue reading Did Kerr sack Whitlam for the Americans?→
Forty years ago on 11 November 1975 John Kerr, the Governor-General, dismissed an elected government with a majority in the House of Representatives. In doing so he he collaborated with judges, senior members of the opposition in parliament and the media. Contact with the Palace was early and extensive.
The Whitlam years were certainly tempestuous years. There is a tendency, even by acolyte’s, to think that the economic turmoil of those years was made in Australia, by EGW, his treasurers and his ministers.
Who can forget the Khemlani loans affair, where Minister for Minerals and Energy, Rex Connor, was seeking to borrow US$4 billion, a lot of loot for the time, for resources projects without going through Treasury. My understanding is that the scheme was hatched by Connor, Whitlam and a small kitchen cabinet, perhaps including Lionel Murphy. After it became public and Cabinet put the kybosh on the scheme, Connor was still found to be liaising with the shadowy Tirath Khemlani. Whitlam dismissed Connor.
Khemlani, it is said, never made a loan in his life, and perhaps had contacts with the CIA.
Cairns was dismissed a few months later over a separate loans affair, where he (as claimed) unknowingly signed a letter and misled parliament by saying he hadn’t.
For these and other reasons, the Whitlam government at times looked highly shambolic.
Yet economic turmoil was not confined to Australia. That first Khemlani link reminds us that the price of oil quadrupled between 1973 and 1974. That’s why the Middle East was awash with petro dollars and a Khemlani figure could exist. Ian Verrender, the ABC’s busianess editor, now invites us to think again.
Verrender riffs off a piece in the AFR by John Stone, former treasury secretary and National Party senator, plus “outspoken critic of multiculturalism and a supporter of the Samuel Griffith Society, which he helped found”. Stone was also at one time John Howard’s finance spokesman in opposition. In his piece The economic policy madness of the Whitlam era Stone outlines a tale of woe. But:
As Stone rightly points out, Australia did not go into recession. What he fails to mention is that America did. So did the UK. And they were no ordinary recessions.
Both our northern hemisphere allies endured long and painful slumps, the chaotic fallout from which reverberated through the global economy, including Australia.
Not only that, inflation ran wild in both the northern hemisphere economic superpowers and throughout the developed world. It was a global recession that marked the dramatic end of the post-war boom.
This was the time of rampant stagflation, a rare phenomenon in economics where inflation and unemployment rise simultaneously. It’s a nightmare scenario for policymakers. Raise rates to dampen inflation and you exacerbate unemployment. Try to fix the jobs crisis and you fuel inflation.
There were a number of factors behind the global recession.
The Bretton-Woods financial system – instituted after the war that tied the US dollar to the price of gold – collapsed in the early ’70s, itself enough to engineer a significant slump in global activity. This followed attacks on the currency as the US ran up a constant series of balance of payments deficits.
The sudden collapse of the system and the immediate devaluation of the US dollar, which from then on became a fiat currency valued against other currencies, created havoc on trade and current account balances throughout the developed world.
Add to this that the Arab world had formed the Organisation of Petroleum Exporting Countries and in 1973 deliberately squeezed supplies.
The price of oil quadrupled between October 1973 and the following January. That’s correct, energy prices rose 400 per cent in four months, sending shockwaves through developed world economies, underscoring the dramatic price rises that, in turn, fed through to wage demands.
Between 1973 and 1975, the Whitlam era, inflation in the UK grew from 7.4 per cent to 24.89 per cent – vastly higher than anything experienced in Australia.
Great Britain was wracked by industrial disputes. Miners walked off the job, coal supplies dwindled. So dire was the energy situation, UK prime minister Edward Heath instituted the three day week as commercial electricity users were restricted. Food queues formed.
America, meanwhile, endured its worst recession since the Great Depression between November 1973 and March 1975. While the unemployment spike was relatively short-lived inflation soared from a relatively modest 3.65 per cent in early 1973 to a 12.34 per cent peak at the end of 1974 before tapering off during 1975.
Certainly under Jim Cairns stewardship the money flowed. Verrender says:
Gough Whitlam’s first two treasurers, Frank Crean and Jim Cairns, were widely criticised for their performances. Cairns, especially, appeared to be distracted by assets of another kind, and spending during his reign blew out spectacularly.
But Bill Hayden’s budget, delivered shortly before The Dismissal, had many in the Opposition worried. It was a responsible document designed to bring inflation and unemployment under control.
Personally I had a couple of long conversations with Bill Hayden when he was Treasurer and was impressed. The Whitlam Government had a further 18 months to run and things may have settled down.
It should be remembered that Malcolm Fraser only had the capacity to block supply courtesy of highly unorthodox senate replacements. First, in March 1975 the independent Cleaver Bunton was appointed by NSW Premier Tom Lewis to replace Lional Murphy who Whitlam had appointed to the High Court. Secondly Albert Patrick (Pat) Field was appointed by Queensland under Joh Bjelke-Petersen following the death on 30 June of Queensland ALP Senator Bert Milliner. Field had been an ALP member, but offered himself, promising never to support Gough Whitlam.
These were highly improper and undemocratic acts that were accepted by Malcolm Fraser.
Back to the economy, it could be that Cairns’ profligacy acted like a massive Keynesian stimulus package, saving Australia from recession.
More generally, figures like Immanuel Wallerstein see capitalism in its main centres doing it tough from the early 1970s. Capitalists sought to maintain their profits by beating down wages, by outsourcing, by financialisation, including increasing privatisation of human activities and experience. It’s well-known that American workers struggled to maintain real wages from the 1970s onwards. The modern manifestation of neoliberalism seems to date from about this time.
Thomas Piketty’s work on inequality is startling. This graph shows the rise in inequality in the US by charting the top decile’s share of income:
The 2012 data, too late for inclusion in the book, sees a new high of over 50%.
There’s a similar pattern if you look at the top 1% in the Anglo-Saxon economies:
Clearly something broader and deeper is going on that Whitlam’s whole program of social investment perhaps helped to protect us from. Certainly as Verrender says, Stone “still fails to grasp the impact the global economic upheaval had on Australia.”
“Gough Whitlam changed the way Australia thought about itself and gave the country a new destiny. A more inclusive and compassionate society at home – a more engaged and relevant country abroad.
“He snapped Australia out of the Menzian torpor – the orthodoxy that had rocked the country asleep, giving it new vitality and focus. But more than that, bringing Australia to terms with its geography and place in the region.
“Along his journey he also renovated the Labor Party, making it useful again as an instrument of reform to Australian society.
“He will be missed by all who identified with his values and determination to see Australia a better place. But no one will miss him more than his family.”
From the SMH, that was Paul Keating’s summary. That will do me. If you start listing how he changed Australia, you are bound to miss something important, no matter how long the list. He was like no other. Comparison’s are pointless.
This morning I woke to Gerard Henderson on local ABC being mean-spirited about Whitlam’s “incompetence” and a prime minister. The ABC’s idea of ‘balance’. Other than that comments have been universally positive. Certainly politics was always interesting when Whitlam was in power, and he had some wild men in his cabinet.
For my own experience, two things stand out.
Firstly, early in 1975 I was separated from my wife and about 20 months later we had an amicably arranged no-fault divorce. Before Whitlam that would not have been possible. What often happened was that one partner engaged a private eye to catch the other in a compromising situation. Someone had to be at fault. In our case there was nothing to see. The marriage had simply ceased to work.
Secondly, when Whitlam was elected I was the first ever Supervisor, School Library Service, for the Queensland Government. School libraries had been in a dreadful state, but some progress had been made with the Commonwealth funded Secondary Schools Libraries Program. For primary schools we were trying to improve things but there was a desperate lack of resources.
Come the Whitlam government and we soon had a primary schools library program, plus lots of special needs programs and massive general funds for schools generally. I remember visiting Catholic parish primary schools that were literally falling down. I remember talking to a private school headmaster who said that he had always assumed that private school facilities were better. Not now. Government schools were building facilities as good or better than anything the private schools had to offer.
Overall, I recall for the first time feeling proud to be an Australian. We no longer had to apologise on multiple fronts.
This morning I learned something new about Whitlam. Susan Mitchell, who has a biography of Margaret Whitlam coming out soon, said he was actually a very shy man. And absolutely hopeless at small talk. Margaret had to cover that department for him.
My favourite story about Gough was the time he took the press gallery down to Manly beach. Gough strode out upon the waters, turned around, waved to the gallery and strode back to land without getting his feet wet. The headlines next day?
GOUGH WHITLAM CAN’T SWIM!
May he rest in peace. We will never see his like again.
More than any other Australian political leader, and arguably more than any other political figure, Gough Whitlam embodied social democracy in its ascendancy after World War II, its high water mark around 1970 and its defeat by what became known as neoliberalism in the wake of the crises of the 1970s.
In all of this Whitlam is emblematic of the social democratic era of the mid-20th century. Despite the resurgence of financialised capitalism, which now saturates the thinking of all mainstream political parties, the achievements of social democracy remain central to our way of life, and politicians who attack those achievements risk disaster even now.
With the failure of the global financial system now evident to all, social democratic parties have found themselves largely unable to respond. We need a renewed movement for a fairer society and a more functional economy. We can only hope for a new Whitlam to lead that movement.