Why workers and the left fought Fraser

Mark Gillespie recalls Malcolm Fraser’s years as Prime Minister and his role in toppling Whitlam to explain why he earned the hatred of the working class

Those who are young enough will remember Malcolm Fraser mainly as the supporter of refugees, Aboriginal rights and multiculturalism of the last 15 years.

But anyone who lived through his government has a quite different memory of Fraser—as a ruthless warrior for the ruling class, determined to drive down wages and smash the unions.

Fraser grabbed power in a constitutional coup in 1975, backed by Australia’s media and corporate elites. He symbolised the Liberals’ born to rule mentality, coming from a wealthy family with a history in establishment politics.

Fraser blocked supply in the Senate amidst an atmosphere of hysterical opposition on the right to Gough Whitlam’s government. This triggered a political crisis that saw Governor General John Kerr sack Whitlam as Prime Minister, the only dismissal of its kind in Australian history.

Business had lost faith in Whitlam’s ability to rein in the unions and social movements. The country was in the grip of the first major recession for 30 years and business was in a panic.

They wanted Fraser to urgently restore profits by taking an axe to wages, pensions, services and welfare.

In the end they were disappointed. A recent editorial in the Australian Financial Review criticised Fraser’s period in office as “wasted years” and urged Tony Abbott to learn the lessons. Our side needs to learn the lessons too.

Some commentators have painted Fraser as a closet Keynesian who lacked the drive for radical neo-liberal “reform”. This just wasn’t the case. “Fighting inflation first”, at the cost of driving up unemployment, was his priority. He established a budget razor gang to slash spending in welfare and services.

Fraser enacted anti-union laws and did his best to hold down wages. Where he failed was not because of any lack of drive, but because of the stiff resistance he faced from the workers’ movement.

Fraser came to power at a high point in Australian class struggle, with both the level of strikes and unionisation at record highs. Hundreds of thousands had been radicalised by the struggle against the Vietnam War.

While Fraser scored victories against the movements he was never able to deliver a knock out blow.

Fraser’s coup

His removal of Whitlam stirred a level of bitterness amongst the working class that frightened many in the establishment.

There was an enormous protest in Canberra within hours of the sacking. As labour historian Phil Griffiths put it, “The sacking was at about 11 in the morning, and there was a mass rally by 1 o’clock. The same thing happened in Melbourne”.

“The level of emotion …was beyond measure”, said Bob Hawke, then the leader of the ACTU, “pressure was being exerted on me by many to call a national strike in protest”.

“There was spontaneous hostility and amazement”, recalled Mike Jackson, the secretary of the Combine Unions Committee at the Garden Island dockyard, “the call when up straight away for a nation-wide stoppage. It was not whether…but how quickly”.

But Hawke and the ACTU didn’t call a national strike. Together with Labor they urged workers not to strike but to “maintain your rage…until polling day”.

This handed the initiative to Fraser. Backed by the media, he hammered the need for responsible economic management and won a landslide election victory.

But these events left a legacy. In the eyes of an angry politicised minority Fraser was illegitimate. He would be hounded with large, militant demonstrations whenever he appeared in public. Mass movements opposed Fraser and his conservative allies on land rights, uranium mining and civil liberties.

While the majority accepted Fraser’s argument about the need for sound economic management, it was a grudging acceptance.

The number of strikes did drop significantly in the first couple of years of Fraser’s rule. This was because of a combination of the recession and the removal of Whitlam. But the unions remained intact, and there was an enormous preparedness to fight defensive struggles.

This was demonstrated in 1976 when Fraser broke an election promise and began gutting Medibank (the precursor of Medicare). Forty thousand workers on NSW’s industrialised south coast struck and marched to the local showgrounds to vote for more action. In Victoria delegates overturned an official motion calling for a four hour stoppage to vote for a 24 hour strike.

Under enormous pressure from below the ACTU eventually called a national general strike and 1.6 million stopped work.

But Bob Hawke refused to call demonstrations on the day and showed he wasn’t serious about leading a struggle when he appeared on the evening news that night enjoying a round of golf.

Without serious leadership the movement soon petered out.

The defeat of the well-organised Latrobe Valley power maintenance workers in Victoria was another significant win for Fraser.

This was a challenge to wage cuts under his centralised wage fixing system, and again there was no lack of fight by the rank-and-file. They struck for 11 weeks, demanding a $40 wage rise and a 35 hour week like their NSW counterparts.

In spite of disrupting power supplies they had enormous public support, with donations pouring in. But the union leadership never turned that support into solidarity action. The power workers were eventually worn down and convinced to go to arbitration, where they got next to nothing.

On other fronts Fraser was much less successful. His attempts to shackle the unions with new anti-union laws never got off the ground.

He created a new union watchdog, the Industrial Relations Bureau (IRB), which was designed to break the closed union shop and drag unions before the industrial court where they could be fined, de-registered or have their funds seized. This gave confidence to a handful of right-wing workers to claim they were conscientious objectors and refuse to join unions.

But the IRB became a toothless tiger, because in every case workers on the job refused to work with the scabs and the closed shop remained.

Fraser’s attempt to stamp out secondary boycotts (solidarity strikes) also failed. He inserted new provisions into the Trade Practices Act threatening unions with heavy fines and damages against them for engaging in such action.

But the employers avoided using the new provisions for fear of provoking a massive fightback.

Fighting back Fraser

Between 1975 and 1979 Fraser managed to shift the share of GDP going to wages from close to 63 per cent to just over 57 per cent.

This was done using a centralised wage fixing system (known as indexation) that kept wage increases at below the rate of inflation. This meant larger and larger real wage cuts over time. But Fraser failed to break the unions, so as soon as the economy began to turn upwards in 1979 there was no holding back the push for wages.

Under the indexation system it had always been possible to get wage increases higher than the centralised determinations via “work-value” cases, but very few groups of workers managed to exploit this loophole in the early years.

By 1979, however, as the economy picked up, workers began to drive a truck through the loophole, starting with wharfies, power worker, transport workers and then storemen and packers. A “wages push” was on.

In April 1981 the Arbitration Commission accepted a submission from the government to close the “work-value” loophole. But this couldn’t hold back the movement. Telecom and transport workers soon won big pay rises outside the system and indexation was officially abandoned not long after.

Unions began a push for the 35 hour week. The metal workers’ unions initiated a campaign but became half-hearted when they hit stiff resistance from the employers.

But in a number of workshops rank-and-file workers took up the call and staged long strikes that broke through.

Following the abandonment of indexation, Fraser attempted to allow the market to determine wage rates and isolate the strong sections of the working class able to win higher wages from any flow-on to the less well organised.

But in December 1981 the metal workers, seen as setting the pace for everyone, won big increases and shorter hours. This quickly flowed on to the building industry and became a general standard.

The number of strikes jumped dramatically in 1979 to over four million working days “lost” and stayed high for the next couple of years. By 1983 workers’ share of GDP had been pushed up over 61 per cent again, and the 38 hour week was becoming the standard.

Another recession hit Australia in 1982 and unemployment climbed rapidly to over 10 per cent while inflation remained high.

Fraser had used the need for sound economic management as the chief justification for his constitutional coup. The collapsing economy in 1982 was his death knell.

Fraser’s last budget (implemented by Treasurer John Howard) was a massive expansionary budget that attempted to create jobs through government spending.

To fund this, however, he tried to imposed a wage freeze aimed particularly at public sector employees. It became clear he wasn’t going to be able to hold the line when powerful oil industry workers, who had a strong case for an increase, defied the freeze.

An election was called and it was Bob Hawke, now the leader of the Labor Party, who convinced the oil industry workers to lift their bans. Hawke won the election and the employers, who had been gung-ho for Fraser’s confrontational approach, now embraced Hawke’s plan for “national reconciliation” with the unions.

Workers’ resistance made Fraser a lame duck prime minister. Doing the same thing to Abbott requires the kind of strikes and mass movements that faced down Fraser. We can’t let Labor and the union officials hold back that struggle.


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