Communist Party of Australia

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Issue #1590      April 24, 2013

Intrigue, connivance, the undermining of a gov’t

Part 2: Economic crisis

See Part 1

The path of reform during the Whitlam era was not smooth. The government was increasing spending at a rapid pace during a period of rampant inflation, a stagnating economy and rising unemployment. The financial sector responded with a credit squeeze and there was the usual hostile capitalist media response.

Internal divisions mounted as the economic crisis deepened. Treasurer Bill Hayden and Treasury wanted to maintain a budget surplus and pursue contractionary policy (drive up unemployment) with budgetary cuts to curb inflation. Whitlam eventually replaced him with Jim Cairns who supported a more expansionary, job creation approach, with tax cuts.

Full force of system

Cairns, also deputy PM, came undone in what became known as the Morosi affair, after appointing Juni Morosi as his private secretary at the same time as allegedly having an affair with her. She also played a role in the undoing of Lionel Murphy as Attorney General, another key Labor figure on the ruling class’s hit list. Leaks to the Liberal Party about Murphy’s alleged offer of a government flat, to which Morosi had no immediate entitlement and stories about Morosi and her husband’s financial affairs saw the end of Murphy as Attorney General. (US Cable dated 06-12-1974)

The media had a field day. The same cable released by WikiLeaks reveals that journalists were keeping US diplomats well informed and priming Opposition leaders with a list of questions for Senator Murphy to ascertain information which they had not been able to print fearing libel laws. The exact role of the US and ASIO is not spelled out.

It was payback time for the ASIO raid, a warning to future Attorney Generals not to touch the spy body.

Rats in the ranks

From the Wikileak cables, it seems Whitlam’s own adviser Peter Wilenski was keeping the US well informed of internal tensions and the mood of the government. In August 1974, he noted that Whitlam was “in a fatalistic mood, irritated by conflicting counsel, disposed to allow events to take their course and uncertain as to how to handle complex economic problems.”

Ministers and ministerial staff were leaking like sieves and senior public servants were undermining the government. Foreign Affairs secretary Alan Renouf reported to the US Embassy that he had called on ASIO to investigate the leaks by ministerial staff.

ACTU president Bob Hawke paid regular visits to the US Consulate in Melbourne. The right-wing, rabid Zionist had it in for Whitlam who pursued an “even-handed” Middle East policy and was willing to work with Arab countries.

According to the cables he described the PM as “politically crazy”, and his approach to Israel and Middle East issues as “beyond belief.” Hawke is quoted as referring to Whitlam’s “immoral, unethical and ungrateful” attitude towards Israel. Hawke claimed he could not approach the Jewish community for campaign funds because of “Whitlam’s ‘unprintable’ even-handed ‘unprintable’ Arab policy.” (US Cable dated 05-04-1974)

Whitlam’s policy was spelt out in the letter to the SPA quoted in part one of this article last week. The government supported the implementation of UN Security Council Resolution 242 of 1967, which calls for an Israeli withdrawal from the occupied territories. “It also supports the national rights and aspirations of the Palestinian people, including their right to establish a State alongside Israel if they so choose,” Whitlam said.

Hawke was also highly critical of the Whitlam government’s “economic mismanagement” and said he bitterly resented having to deal with the prime minister’s “political inadequacy”. He was talking to the representatives of a foreign power, the US, not within his ALP right-wing faction or a circle of friends.

As far back as 1972, the US was eyeing Hawke as a prospective Labor PM and preferred replacement for Whitlam. Plans for him to become ALP leader were discussed with the US diplomats following the 1975 elections, but he still needed a safe seat in Parliament – this he gained in the 1980 elections.

The cables reveal that Hawke had discussions with Whitlam over his succession to leadership and the question of finding a safe seat.

John Ducker, a Labor member of the NSW Legislative Council and later president of NSW ALP and vice-president of the ACTU, was another regular informant. He was a staunch anti-communist associated with Santamaria’s right-wing Catholic Action Group. Publicly he was seen as a staunch supporter of Whitlam in his battles with the Left.

When the new US Ambassador Green came to Australia in June 1973, three NSW ALP leaders – John Ducker, Peter Westerway and Geoffrey Cahill – met at the residence of a US diplomat where they fully briefed Green and gave their assessment of the forthcoming ALP national conference. (US Cable dated 28-06-1973)

Double dissolution

The government did not have a majority in the Senate and by early 1974 the Opposition parties had blocked close to 20 bills, seven of them on two occasions. This created the grounds for a double dissolution election in May 1974. Following the election the government still lacked a Senate majority and only succeeded in passing key bills with a joint sitting of both Houses.

These bills were for the establishment of Medibank, the Petroleum and Minerals Authority (PMA) and electoral reform.

The electoral reforms sought to establish one-vote-one-value electorates through establishing a maximum 10 percent variation in voter numbers between electorates in the House of Representatives – there was a discrepancy of up to 40 percent favouring rural electorates. It also introduced Senate representation for the Australian Capital Territory and the Northern Territory.

The Opposition denied Supply in October 1975. The media mounted a huge campaign with accusations of economic mismanagement and running with the Morosi scandals.

There was a concerted attack on Labor attempting to raise funds from Arab sources. The attack was not just political – “Arab” money was portrayed as dirty. There were strong racist overtones that gained traction with some sections of the population.


The nation was stunned when the Queen’s representative, the Governor General Sir John Kerr, sacked the PM on November 11, 1975. Whitlam responded, “Well may we say ‘God save the Queen’ because nothing will save the Governor General! … Maintain your rage and enthusiasm for the campaign for the election now to be held and until polling day.”

Whitlam could have made a strong political statement regarding the monarchy, bourgeois democracy and the role of the Opposition parties, in particular their leader Malcolm Fraser. But he did not.

Instead of rallying people onto the streets in protest and mounting a campaign against the coup and the monarchy, Whitlam chose to run a standard election campaign and rely on bourgeois democracy to be returned to office. This “leave it to the ballot box” approach was supported; by ACTU president Hawke. Labor copped a hammering, losing 30 seats in the Lower House.

Whitlam’s response, at a time of political crisis, revealed his serious social democratic limitations, being unwilling to risk rocking the capitalist system by bringing the people into mass actions. The mood was such that hundreds of thousands of trade union members would have been prepared to bring the nation to a halt and fill the streets. But mass struggle and the anger were replaced by a focus on the parliamentary system which was doomed to failure in the face of the mud the media was slinging.

Rupert Murdoch’s outlets ran with the “Iraqi money affair”, claims that the ALP had attempted to raise electoral campaign funds from the Baath Party in Iraq. The half million dollars had apparently been pocketed by an intermediary before reaching the ALP. Whitlam tried to distance himself from the accusations with little success. The Murdoch media appeared to operate hand in glove with US diplomats.

The US diplomatic cables are disturbing – not because of their assessments of the situation in Australia but for the role of senior Labor and trade union figures, and senior government department staff whose loyalty appears directed to a foreign power. The detail, the scheming, the leaks of information that not even all government members are privy to is beyond belief.

This lack of loyalty to the interests of the Australian people is seen strongly in neoliberal economic and social policies which have been pushed by successive governments since the mid-1980s and in Australia’s foreign policy.

Whitlam’s was the only Australian government since colonisation by the British to attempt to assert some semblance of independence and sovereignty in foreign affairs. Prior to Australia’s subservience to US imperialist interests, Australia was at the beck and call of “Mother England”, fighting British imperialism’s wars. No Australian PM has attempted to take such a stand since.

Struggle for real change

Whitlam’s policies are in strong contrast of those of Labor today in relation to foreign policy and foreign ownership of Australia’s resources and who might benefit from them.

It is clear that the internal divisions and disloyalty that was apparent in the 1970s within ALP and trade union leadership ranks continues to this day. As cables previously released by WikiLeaks revealed, the flow of informants in and out of the US embassy and consulates has not let up and the arm of the US “diplomacy” continues to wield its influence.

The Whitlam government’s attempts to implement a program of progressive reforms (by no means revolutionary in nature) and the strong opposition from ruling class circles and its agents to any challenge to their powers, demonstrate the importance of maintaining the struggle outside of Parliament.

Without a strong social base prepared to support a government on the ground it is bound to be defeated. Whitlam failed to place confidence in the people and call for mass actions and a struggle against the forces of reaction that sacked his government.

Only a government of a new type, supported by a broad movement of left and other progressive and democratic forces is capable of mounting the challenge inside and outside of Parliament that is required to defeat neo-liberalism and set about a program of pro-people reforms and an independent foreign policy.

The Communist Party of Australia sees such a step as capable of bringing improvements for the working people of Australia, albeit always temporary gains under capitalism. Its ultimate aim is for the defeat of the capitalist system and its replacement by socialism.   

Next article – Safe as houses?

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