The Whitlam government: Labor’s golden age?

Whitlam is remembered as a glorious reformer with radical policies. But when it came to the crunch he caved in to the demands of big business and the ruling class, writes Jean Parker

In 1975 the “constitutional crisis”, and Prime Minister Gough Whitlam’s sacking, thrust the country into turmoil and exposed the class conflict at the heart of Australian society.

Whitlam’s dismissal was met with spontaneous strikes in cities across the country as thousands gathered in places like Federation Square in Melbourne and outside Parliament House in Canberra.

In the election weeks that followed wherever Whitlam went thousands turned up to chant “we want Gough”. Meanwhile every single newspaper campaigned viciously against the re-election of Labor.

For many in the Labor Left and the unions Whitlam is a martyr and icon of true Labor, a man dangerous enough to provoke a coup by the powers-that-be. But in society more widely the raw class passions of the Whitlam years are usually seen as a quirk of the 1970s.

The 2012 Gough Whitlam Oration presented a common view of Whitlam’s government as forward-thinking on race relations and social programs, but irresponsible in managing the economy.

The oration was given by the man who master-minded Whitlam’s removal and then replaced him—Malcolm Fraser.

Rising struggle

Whitlam was elected in 1972 after 23 consecutive years of Liberal rule, including 16 years under arch-conservative Robert Menzies. But Whitlam’s reforms were not a product of the man himself. Whitlam was pushed to the left by the growing social movements and mounting union militancy of the early 1970s.

Whitlam himself was from the right of the Labor Party. One of his first acts upon taking the Labor leadership in 1967 was to drop the call for immediate withdrawal of Australian troops from Vietnam.

But the anti-Vietnam War movement reached its highpoint in 1970 with 120,000 workers striking to attend “Moratorium” marches. Students hid Vietnam draft-dodgers on the roof of Sydney University.

The Aboriginal Land Rights movement had emerged with Aboriginal activists holding their almost year-long Tent Embassy protest directly in front of then Parliament House in 1972. Three young women organised the first women’s liberation protest in Australia in 1969, chaining themselves to the Commonwealth Building to demand equal pay.

Most importantly the job security created by the long boom was beginning to flow into an upsurge of strikes and industrial action. In early 1969 Communist Party of Australia Secretary Laurie Aarons sensed that, “the time has come for a determined, militant confrontation with the employer-arbitration-Government class structure”.

When judge John Kerr jailed Victorian tramways union leader Clarrie O’Shea for failure to pay fines for breaching the Penal Powers, the confrontation arrived.

In the week following O’Shea’s jailing a group of break-away left unions led two 24-hour strikes that crippled Victoria, and the general strike of Friday May 16, 1969 involved 500,000 workers across the country. The unions won, with O’Shea released from jail.

Across the world the straight-jacket of the Cold War was being shattered, with mass protests against the US war in Vietnam and a range of anti-colonial struggles gathering momentum. From Algeria to Vietnam to France, to Prague to the US to Brisbane and back, radical ideas and tactics blossomed.

But Whitlam also had the support of the business class, which was getting sick of the increasingly incoherent conservative leadership in parliament. The support that Rupert Murdoch gave Whitlam’s 1972 campaign in The Australian is a symbol of the trust many corporate leaders had in Labor. Business hoped that Labor would be able to restrain strikes through its links with the unions. Many sections of corporate Australia were won over by Whitlam’s plans to modernise and advance the interests of Australian capitalism.

Whitlam was to cut tariffs by 25 per cent across all industries in 1973, in an effort to encourage the market to work more efficiently, not to replace it. He also saw all Labor’s social spending program, the social wage, as an alternative to unions striking for wages.

In the first year of Whitlam’s Prime Ministership Labor did implement bold reforms.

They freed draft-dodgers from jail and ended conscription; formally ended White Australia; abolished university and TAFE fees and doubled school funding; opened an embassy in Beijing and formally recognised “Communist” China; quadrupled funding for housing; tripled urban development expenditure; drafted the Racial Discrimination Act; increased health spending by 20 per cent and introduced Medibank; and handed Wattie Creek back to the striking Gurindji stockmen.

Wage rises for the federal public service were used as a pacesetter for the private sector, with an extra week of annual holidays, paid parental leave and a 17.5 per cent holiday leave loading.

Whitlam also initiated arts programs like The Australia Council, bilingual education for Aboriginal Communities in the NT and migrant English programs.

But this reform program consciously rested on the incredible 30-year boom that Australia had enjoyed since the end of WWII. The frantic economic growth created increased tax revenue, which the government channelled into its social programs. Despite the 40 per cent increase in overall government spending, the 1973 budget had a $211 million surplus.

As Whitlam admitted at the time: “Our program, particularly in education, welfare, hospitals and cities, can only work successfully within a framework of strong uninterrupted growth… This is the real answer to the parrot-cry ‘Where’s the money coming from?’. Even at the present low rate of growth, Commonwealth income has nearly doubled in the past six years.”

Return of economic crisis

But the boom that Whitlam’s program was built on faltered in 1974. A global economic crisis saw growth shudder to a halt. At the same time inflation ballooned, reaching a staggering 22 per cent in Australia. Profits fell from 14 per cent of GDP to 9 per cent in 1974 alone. For the first time in 30 years there were thousands more workers than jobs, as plants and offices started to lay-off workers or close down.

Whitlam had subscribed whole-heartedly to the Keynesian idea that government spending could end recessions and restore growth. This approach was attempted with a mildly expansionary budget in 1974. But instead of restoring growth, the spending only seemed to edge up inflation.

This was a problem that no government had had to deal with since the Great Depression in the 1930s. Since then every student of economics had learnt that Keynesian economics could solve the problem of capitalist crisis. Both Labor and Liberal supported Keynesianism in the same way that they both now adhere unquestioningly to neoliberalism. But in the mid-1970s Keynesian spending didn’t work—the crisis deepened.

Suddenly the Labor government faced a choice—either cut social spending or increase corporate taxes. Instead of pushing ahead with spending to boost working class living standards the government chose to side with big business and help restore their profits. Treasurer Bill Hayden handed down an economic rationalist “horror budget” in 1975 that slashed social programs and would be almost entirely continued by the Liberals under Fraser.

From having been one of the most reformist Labor governments in history, Whitlam’s Labor dropped its program in the face of the crisis. By the 1975 Labor Conference, the talk was all about promising corporations “reasonable returns on investment”. Now even lefties like Jim Cairns argued that the Labor government had to ensure that private sector growth was fixed before there could be any return to Labor’s reform program:

“We live in a society where the determinants, the things that happen in society as a whole are taking place in the private sector. Now if we’re going to get activity going, if we’re to get production up if we’re to keep people in work or get them back to work, we have to work on the private sector”.

In other words Labor would set out to manage capitalism on behalf of business, even if it meant attacking workers’ living standards and accepting a rise in unemployment.

Whitlam also set about addressing the bosses’ main obstacle in restoring profitability—strikes. Having dropped slightly after Whitlam’s election, strike days soared as workers fought to keep up with the 20 per cent inflation in their costs of living. In 1974 strike days hit 6 million, the highest since 1919.

In 1975 Whitlam introduced wage-fixing which moved wage decisions from the struggle at work to the Arbitration Commission—where they were negotiated between senior union officials and the bosses.

Ruling class turns against Labor

Rather than satisfying business, every back down by Labor gave the Liberals confidence. In particular the ruling class began to demand a serious assault on the unions to help restore profitability. Labor’s relationship with the union movement made it impossible for it to do this with the ruthlessness the employers were demanding.

Business leaders increasingly used the mainstream press to build a campaign of destabilisation of the Labor government that verged on hysteria. One Illawarra Mercury front page bemoaned “Our Dying Land”, wrecked by “industrial anarchy” and “irresponsible militant union leaders”.

Unemployment hit 5 per cent for the first time since WWII, demolishing bi-partisan support for “full employment” and scaring workers. The Liberals moved to embrace “monetarism” and the aim of attacking inflation through slashing government spending and allowing unemployment to rise.

Meanwhile the Liberals in the Senate dug in and refused to pass not only legislation, but also “supply”—the bills that allow the government to access funds. When one Labor Senator died and another resigned, the Liberal state governments broke with convention and appointed MPs they knew would vote with the Liberals against Whitlam. The parliament was completely deadlocked.

A coup in Canberra

On the morning of November 11, 1975 Whitlam drove to meet Governor General Kerr to ask for a Senate election to break the deadlock. Instead Kerr handed him a document signed by Malcolm Fraser announcing that both houses of parliament had been dismissed and a “double dissolution” election called for December 13. In the meantime Fraser would be the caretaker Prime Minister.

All over the country people stopped work and surged towards the centre of town. Then came Whitlam’s famous speech:

“Well may we say ‘God save the Queen’, because nothing will save the Governor-General! The Proclamation which you have just heard read by the Governor-General’s Official Secretary was countersigned Malcolm Fraser, who will undoubtedly go down in Australian history from Remembrance Day 1975 as Kerr’s cur. They won’t silence the outskirts of Parliament House, even if the inside has been silenced for a few weeks … Maintain your rage and enthusiasm for the campaign for the election now to be held and until polling day.”

The sentiment of Whitlam’s last line was to be repeated again and again over the course of the four week election campaign. It would become the line of the ACTU headed by Bob Hawke, and of the entire Labor apparatus. Don’t strike, don’t protest, maintain your rage for the polls.

But this doomed Whitlam. It paralysed the one force that Labor had on its side—the class instincts of organised workers. Even though the unions had become disillusioned by Whitlam’s wage restraint and consistent back-downs in the face of the Liberals’ attacks, they knew what the coup against Whitlam represented.

The Left had followed with horror as the military coup against the Allende government in Chile only two years earlier had lead to a dictatorship and the murder of thousands of left-wing activists. Tens of thousands of workers suddenly saw what lengths the bosses would go to—even breaking their own parliamentary rules—to suppress the workers’ movement.

Whitlam’s team led Labor supporters from a militant fight against an illegitimate coup into a regular election campaign. Since Whitlam had ditched his reform program, the content of the election was not about how Labor would protect workers against unemployment.

Instead the focus was on managing the economic crisis. Both Labor and Liberal agreed that workers needed to be disciplined. But the Liberals were prepared to go further and take a more drastic approach to respond to the recession.

Whitlam addressed crowds of supporters with long-winded accounts of the “unconstitutionality” of Fraser’s actions and procedural attacks on the Liberals’ lack of fair play in the Senate.

The result was demobilisation. Why vote Labor when their solution to the rising unemployment and sense of social crisis was merely a weaker version of what Fraser proposed? What’s more Whitlam had nothing to counter the hyperventilation of the papers that day after day blamed him for the ruination of the economy. No longer in mass meetings and rallies, workers at home were bombarded with fear-mongering from the press.

Fraser soundly defeated Whitlam in the election. But it didn’t have to be this way. When Labor and the ACTU mobilised on the streets, Whitlam’s support rose.

Yet rather than do this, Whitlam was desperate to win the support of the business community and the media. Strikes were the last thing he wanted as he tried to do this.

There is an important continuity between Whitlam and the Labor Party today, despite the party’s drift so far to the right since. Whitlam’s efforts at reform relied on the capitalist economy providing the space for increases to government spending. But, like all Labor governments, Whitlam’s also set out to faithfully manage capitalism.

When economic crisis hit and business demanded cuts and attacks on the unions, the Whitlam government delivered them. Despite their support amongst unions and the working class, Labor governments set out to get control of government and run the system.

Ultimately, that means doing the bidding of big business and the rich and attacking their own supporters. That approach is one that continues in the Labor government of today.



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