The Whitlam myth

February 26, 1997
Issue 

Title

By Allen Myers

ABC managing director Brian Johns has put himself in deep trouble with the Howard government by agreeing to the telecast of Gough Whitlam's inaugural "Whitlam Lecture" to the Trade Union Education Foundation on February 9 — although it's not clear why the ABC should not broadcast a speech by a former prime minister.

The ALP has apparently decided that Whitlam can be useful in promoting the party. Labor clubs on university campuses have begun calling themselves Whitlam clubs.

Why is the ALP now looking back on the Whitlam government with nostalgia, as though it were some sort of Labor Party golden age?

Most of this nostalgia is of very recent vintage: before the defeat of the Keating government, the ALP tended to ignore Whitlam as an embarrassing reminder of days when it seemed to have a more radical approach to politics. That attitude, along with Whitlam's undemocratic sacking by Governor-General John Kerr in November 1975, has helped to create an image of Whitlam as a left-winger of sorts, at least in relation to his ALP successors.

In reality, not much has changed about the character of the parliamentary Labor Party or its leaders. What has changed is the political environment.

Whitlam was always on the right wing of the ALP; in 1970, he carried through federal intervention in the Victorian ALP to overthrow its elected left leadership.

Whitlam's election as leader in 1967 (replacing Arthur Calwell) was seen as a repudiation of the party's previously more left-wing stance, especially its strong stand against the Vietnam War, which was believed responsible for the party's debacle in the 1966 federal elections.

Whitlam then forced a change in the party's policy of favouring the withdrawal of Australian troops from Vietnam to a position of "withdraw to holding areas" — a demand that the Liberal government had more than matched a year before Labor's 1972 victory.

Whitlam was clearly not interested in annoying the United States government. Indeed, in April 1973, he threatened to resign as prime minister if the parliamentary ALP overruled his support for the continuation of US bases in Australia.

Twilight of reformism

Economically, the quarter century of "postwar boom" that preceded the election of the Whitlam Labor government in December 1972 was quite different from the quarter century since.

Although society today is far wealthier in an absolute sense, the postwar period was one of far more rapid growth. Recessions occurred, but they were relatively brief interludes between longer periods of sustained growth. In the years 1948-73, the capitalist world as a whole averaged an annual growth rate of 5%. (By comparison, world GNP even in the "recovery" year of 1995 increased only 3%, after figures of 0.8, 0.6 and 1.8% in 1992-94.)

This kind of economic climate was ideal for the flourishing of reformist illusions like those that dominated in the ALP. With a continually rising GDP and tax base, governments could afford to make small but continual improvements in social welfare. Employers, with a prospect of sales to expanding markets, often found it easier to compromise on wage demands than to endure a prolonged industrial struggle.

Working people in the developed countries became accustomed to gradual but regular improvements in their living standards: this was a major source of the conservatism that we think of as characteristic of the '50s.

By 1972, the earlier conservatism had been swamped by the rise of the antiwar and other social movements of the '60s, but it still appeared possible for a reformist party to promise social peace through offering gradual improvements in social and economic conditions. Ironically, the ALP came to government just as the conditions necessary for its whole project were about to disappear.

International recession

In 1973-74, recession swept through virtually the entire capitalist world. This was the first time since the 1930s that recession hit all the major capitalist countries simultaneously. The postwar boom was over; world capitalism had entered a period of stagnation, which is still with us.

Suddenly, the accepted economic nostrums no longer worked. When recessions began, governments were supposed to increase deficit spending a bit to overcome them; now, even large deficits produced rapid inflation without overcoming the downturn. Australia's exports fell by 8% in the year to June 1974; in 1972-73, new foreign investment was less than a third the level of the previous year.

In Australia, it had been a political truism for decades that a federal government could not survive an unemployment rate above 2%. After two years of the Whitlam government, unemployment was over 5%. While the fundamental causes of this rise were changes in the world economy, the ALP government made matters worse with an ill-timed credit squeeze in 1973-74, in a vain attempt to control inflation.

What disappointed and demoralised Labor members and supporters was not so much hard times economically, as the government's intention to make working people bear the cost. The Whitlam government did carry out its promise to institute a system of universal health care — Medibank — but other reforms, especially if they were to cost money, were put off indefinitely.

Wages policy

Workers had responded to the election of Labor and the onset of high inflation by fighting for and winning big improvements in wages. The number of strike days in 1974 was three times the figure for 1972; the Australian working class in 1974 spent as many days on strike as the Japanese working class, which was eight times as numerous.

According to official figures, inflation in 1973 was 13.2%, while adult male wages rose more than 21%. The following year, the respective figures were 16.3% and 28%. Women did even better in 1973, increasing their average minimum wage by 27.5%. Even allowing for some government "lying with statistics", it's clear that workers won significant improvements in real wages.

In 1975, however, wage increases fell behind the rate of inflation. This was a conscious goal of government policy. However, business was by now convinced that the ALP was not able to restrain wages sufficiently, and it came behind the Liberals' plans to force an early election.

In December 1973, Whitlam tried, through a constitutional referendum, to obtain the power to regulate wages and prices. The Liberals, for their own political reasons, joined the unions in opposing the referendum, and it failed. How the power would have been used is indicated by Whitlam's subsequent policy, which tried to restrain wages without any restrictions on prices.

During a two-day meeting in January 1975, the cabinet reversed a host of promised economic reforms: scrapping a proposed capital gains tax, reconsidering abolition of the superphosphate bounty benefiting rich farmers, increasing tariffs and other forms of import protection. "Full Speed Astern" proclaimed the headline in the Age.

Whitlam described dropping the capital gains tax as "an important measure to provide a further boost to business confidence and to stimulate private investment". He added: "The big cause of unemployment in Australia now is that a very great increase has occurred in the percentage of company earnings absorbed by wages and salaries".

The Whitlam government's method for returning money from workers to employers was the "indexation" scheme. This was to be sold to workers as a means of keeping their wages in line with inflation, in exchange for which they would give up any other wage claims.

In reality, various restrictions and limitations would ensure that wages lagged well behind inflation; thus the Sydney Morning Herald economics editor estimated that the plan would transfer $1.8 billion to employers over two years.

Because of unions' reluctance or inability to commit their members, and then the sacking of the government, the scheme didn't get a proper run under Labor, but it was taken over by the Fraser Liberal government and used for years to reduce real wages.

Loyalties

Readers who lived through the Hawke-Keating government will recognise in Whitlam's "indexation" an early version of the infamous ALP-ACTU Accord. Both schemes had the same goal and strategy: using ALP control of the unions to ensure the transfer of money from workers to bosses. The Accord took up where Whitlam had been forced to leave off.

Treacherously sacked by the "queen's representative" whom he had appointed, Whitlam proved his loyalty to the system by staying within the rigged rules of the parliamentary game.

There was widespread sentiment for a general strike against the sacking, but Whitlam, aided by Bob Hawke, then leader of the ACTU, insisted that everything be focused on the election called by the governor-general. Labor's loss in the December 1975 election was even greater than in 1966.

Rather untypically, Bob Hawke had told the blunt truth at a rally in Sydney shortly before Whitlam was sacked. In times of crisis, he said — the '30s, World War II, the '70s — "We [the ALP] came to power to save the system".

That's probably more evident today than in Whitlam's time, but it was just as true then.

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