Events and issues that made the news in 1974

The following paper has been prepared by Ian Hancock, Visiting Fellow, Dictionary of Biography, Research School of Social Sciences, Australian National University and the National Archives historical consultant for the 1974 Cabinet records release.

Introduction

Working Australians earned more and spent more in 1974 but probably thought they lived in what the historian Frank Crowley branded as ‘tough times’. Rising prices and increasing unemployment at home, and escalating oil prices and retracting Western economies abroad, all created a feeling of insecurity that had supplanted the general optimism of the long postwar boom. An unsettled political environment, stirred by confected and genuine indignation, and increasing challenges to traditional practices and values, contributed to the uncertainty.

Parts of the world beyond Australia looked to be even more unstable. The United States of America continued to be burnt by Watergate and Vietnam, although President’s Nixon’s departure from office proffered some relief. Edward Heath, the British Prime Minister, lost an election he did not need to hold, fought on terms he could have avoided. Northern Ireland once more hovered on the edge, and former Army officers in London, believing that another Labour government posed a threat to good order, discussed the possibility of a military coup. The Greek Colonels, who had tried that option, were dispatched in 1974. So, too, was the government in Portugal, an event which profoundly shifted the balance of power in southern Africa, leading to the installation of two Marxist regimes in the former Portuguese territories of Angola and Mozambique.

Whether or not Australians noticed, President Pompidou of France and former President Peron of Argentina were among the notables who left this vale of tears. So, too, did the otherwise immortal ‘Duke’ Ellington. The former British Labour Cabinet Minister, John Stonehouse, was arrested in Melbourne, having ‘disappeared’ in Miami and entered Australia masquerading as ‘AJ Markham’. This brief moment of amusement disappeared on Christmas morning when Cyclone Tracy devastated Darwin and killed 65 people. At least the social columns provided solace: Henry Kissinger married Nancy Maginnes, Richard Burton and Elizabeth Taylor were divorced for the first time, and Prince Charles did not marry Lady Jane Wellesley.

Domestic politics

Persuaded by the beginning of 1974 that the ‘It’s Time’ theme had run its course, and that the Whitlam Government was bent on turning Australia into a socialist republic – or, at best, on undermining its social framework and economic stability – the Opposition parties were keen to force an early election. A half-Senate election was set down for 11 May and, to improve its chances, the Government sought to create a sixth vacancy in Queensland by persuading Senator Gair of the Democratic Labor Party to resign his seat for a diplomatic post. Diverted – supposedly – by copious quantities of alcohol and prawns, Gair delayed submitting his resignation, while the Bjelke-Petersen Government obtained writs for the Senate election. Gair’s seat thus became a casual vacancy to be filled by the Queensland Government’s nomination after the Senate election. Declaring outrage over ‘the Gair affair’, the Opposition voted against Supply in the Senate and Whitlam secured a double dissolution election for 18 May.

The Government’s majority in the lower House was reduced from nine to five, and it failed to win the Senate. But a joint sitting of both Houses did pass the stalled legislation, including the Bills introducing Medibank (although not, ultimately, in its desired form). Perhaps if Billy Snedden, the Liberal Party leader, had held off for two or three months, he might have become Prime Minister in a rapidly deteriorating economic situation. Instead, summoning his gift for self-parody, he announced, ‘We were not defeated. But we did not win enough seats to form a government.’

If, in the first half of 1974, the Whitlam Government looked to be in control of itself, and – more or less – of the economy, it failed on both counts in the second. A wilful Prime Minister and equally headstrong Ministers, and a restless Caucus, did not make for a happy or steady band of pilgrims. Jim Cairns, who defeated the ever-loyal Lance Barnard for the deputy leadership after the May election, became Cabinet’s economic guru, and eventually supplanted the dependable if lacklustre Frank Crean as Treasurer on 11 December. He shone brightly in the aftermath of Cyclone Tracy when standing in for a Prime Minister who had only a few days to spare from a six-week overseas trip. But Cairns seemed to hover between ideological certainty and confusion and could not provide the consistent and restraining hand the Government needed. By the end of the year, although its hitherto – often chaotic – administration of policy was being addressed, Labor appeared to be in deep trouble, especially after being trounced in the Queensland State election on 7 December.

The saving grace was the leadership of the Opposition. Snedden told a business lunch on 16 November that, if he asked his colleagues ‘to walk through the Valley of Death on hot coals, they’d do it … Everyone recognises my political judgment and, if I say something must be this, it will be. That’s why I’m leader.’ Ten days later, somewhere between 10 and 25 Liberal Party retired firewalkers voted against Snedden in a party room no-confidence motion. Despite condemnation of the challenge within the Liberal Party, and his own horrified response at suggestions of his involvement, the widespread assumption was that Malcolm Fraser would soon strike down his second party leader.

The economy

The politics of 1974 were conducted against a background of an economy in strife. Critically, the economists, politicians, soothsayers and jeremiahs who contributed to a confusing debate were operating in unfamiliar territory. They were confronted with the supposedly unthinkable: a simultaneous increase in the rates of inflation and of unemployment. In December 1972 the annual rate of inflation stood at 4.5 per cent. Within ten months it had reached 10 per cent. By June 1974 it had blown out to 14.4 per cent. At the same time, the numbers of unemployed had risen from 71,000 in June to 111,000 in August. Believing that a state of full employment was both desirable and achievable, no Labor government or Labor caucus in 1974 could easily accept Treasury’s proposal to fight inflation first. After all, the severe monetary measures of 1973 had already reduced demand inflation and had pushed up the rate of unemployment. Senior members of Cabinet protested when Treasury sought to impose additional fiscal measures and cuts in government spending, in part to deal with the unprecedented wage demands that were promoting ‘cost-push’ inflation. The result was a stand-off between Treasury and the Government which, in the short term and to its own cost, the latter won.

It was an intriguing power struggle. Frank Crean, Treasury’s nominal spear carrier for most of the year, told Cabinet in February that, while inflation remained ‘rife’, there was no need for any further curbs on demand, little change was expected in the number of registered unemployed and the employment rate was expected to rise. In July Crean told his colleagues that there was ‘no shirking the fact’: Australia was in the midst of ‘an inflationary crisis’ where ‘wages have gone through the roof’, average weekly earnings would rise by 25 per cent in 1974–75, and the rate of inflation could reach 20 per cent. At this stage the Prime Minister was firmly on Treasury’s side. He had already told the premiers they would have to rein in expenditure and in Cabinet on 22 July, following Treasury’s line, he strongly supported a range of measures to increase taxes and reduce government expenditure (including his own 1974 election promise of a full scale pre-school and child care program). Crean proved to be ineffectual and Whitlam was left to defend the measures against an assault led by Jim Cairns and Clyde Cameron. The key objection to Treasury’s deflationary policies was the assumption that, to fight ‘cost-push’ inflation, a certain level of unemployment was necessary and acceptable. A figure of 4 to 5 per cent had been cited. Caucus, it was believed, would not entertain a rate above two per cent. Eventually, Cabinet approved a package, virtually stripped of its harsh elements, and from this meeting Treasury would be repeatedly rebuffed as Whitlam turned against it.

There were two important outcomes of Treasury’s defeat. First, whereas the Department wanted to hold the increase in Budget outlays from 1973–74 to 27 per cent, Cabinet accepted a figure of nearly 33 per cent, which it justified in terms of taking up the slack in the private sector. It generally overrode demands for restraint and approved increases in areas where the human resources and infrastructure simply did not exist to spend the money efficiently. Some new taxes, such as one on capital gains, and tax cuts of $400 million directed mainly at lower incomes, were designed to promote equity. Treasury responded to the Budget by pointing out the effect it would have: ‘… a vicious circle of spiralling inflation and depressed employment and activity – the classic 'stagflation' situation coupled with a situation in the balance of payments that only severe action will redress’. Whitlam himself partly endorsed this argument when he delivered a mini-Budget in November that sought to restore investor confidence. Bill Hayden almost wholly endorsed Treasury’s line when he brought down the ill-fated 1975–76 Budget. It was, after all, one thing to claim that Australia was the victim of a phenomenon affecting all Western industrialised economies. It was another to compound the difficulty with an irresponsible spending Budget, to be followed by a succession of measures in late 1974 that, even when sensible, simply reinforced the conviction that the Government was floundering between options. For the most part, unable to adopt what was becoming the new economic orthodoxy, the Government remained defiantly Keynesian in an increasingly post-Keynesian environment, and strenuously asserted a pivotal role for governments in the market place.

As a second outcome, Treasury was by-passed, and then its protestations and warnings were ignored, over the ‘Loans Affair’. On 13 and 14 December 1974 Prime Minister Whitlam and three Ministers – Jim Cairns (Treasury), Rex Connor (Minerals and Energy) and Lionel Murphy (Attorney-General) – agreed to borrow $4 billion ‘for temporary purposes’. The mid-1974 fall-out between Treasury and the Government and continuing suspicions between the two, as well as bureaucratic and personal rivalries, were important components in a bizarre, secretive enterprise, an excursion into the world of ‘funny money’ and unconventional contacts, whose complications would eventually help to bring down the Whitlam Government in 1975. If the Government had trusted Treasury and had not wanted to bypass the troublesome States on the Loan Council, it might not have saddled itself with an enduring embarrassment, and the leaks from Treasury about its methods of economic management might not have been so damaging. As it turned out, the ‘Loans Affair’ was just one of the Whitlam Government’s many actions in the second half of 1974 that led to its own demise.

Other domestic matters

The Government went through 1974 determined so far as possible to implement its reform program; hence some of the big winners in the 1974–75 Budget were Aboriginal affairs, education and urban and regional development. The intentions were no doubt admirable. For example, the Whitlam Government placed a high priority on Aboriginal advancement by funding programs in education, health and housing; increasing consultation with Aboriginal people; developing representative bodies; and promoting land rights. In the process, however, it sought to assume control over functions hitherto the preserve of the States, a policy that led to major – and self-destructive – clashes with the Bjelke-Petersen Government in Queensland.

Despite continued opposition from the health funds, the Coalition and from within the medical profession, Bill Hayden proceeded to negotiate for the introduction of Medibank in 1975. Thwarted at times by the States, and by the Senate’s refusal to accept the principle of a levy, sufficient progress had nonetheless been achieved by the end of 1974 to be confident of a new beginning in the provision and funding of health services. Meanwhile, Lionel Murphy proceeded with two landmark pieces of legislation. The new Trade Practices Act extended the existing law to cover new areas – exclusive dealing and mergers – and imposed effective sanctions for breaches of existing and new areas of prohibition, as well as providing for tougher consumer protection to tackle unfair or dishonest advertising. The Family Law Bill, described by the Anglican Archbishop of Sydney as reflecting ‘a non-Christian philosophy’, introduced a single no-fault ground for divorce – namely, the irretrievable breakdown of a marriage – and recognised the non-financial contribution of women to the home in making a property settlement. Although enactment was delayed until 1975, because many Labor members joined with the Coalition in forcing a postponement, it was clear that some longstanding values and practices in relation to the family were to be set aside.

Foreign affairs and defence

Leftist critics of the Whitlam Government still complained about the presence of American bases on Australian soil, but the rhetoric and substance of Australian foreign policy became even more detached from the solid pro-American, pro-Western stance of the previous Coalition governments. This independent stand was not, however, matched by any corresponding improvement in Australia’s defence capacity. Nor did it necessarily make the country more influential. Despite protests, the French launched another nuclear program in the Pacific, and Australia’s new best friend – China – conducted a test the following day. On the other hand, the Government was probably noticed abroad: the Prime Minister did a lot of overseas travelling. In one initiative, he reportedly told President Suharto of Indonesia that the Australian Government favoured the absorption of East Timor into Indonesia, provided the Timorese themselves agreed, and he certainly told the Australian press that ‘an independent Timor would be an unviable state’. At the cost of support among immigrants from the ‘captive nations’, the Government on 4 August recognised the incorporation of the Baltic States into the United Soviet Socialist Republics. The Government probably won more plaudits for its anti-racist stance over South Africa and Rhodesia. It voted at the United Nations with the Second and Third World in attempts to expel Pretoria from the General Assembly.

1974 was also the year when …

  • Eastern Suburbs won the Rugby League Grand Final, Richmond won the Victorian Football League Grand Final for the second successive year and ‘Think Big’ won the first of two Melbourne Cups;
  • Denis Lillee and Jeff Thomson in Brisbane set Ian Chappell’s team on the path to cricket domination, and several Australians won gold at the Commonwealth Games held in Christchurch, New Zealand, including Raelene Boyle, Don Wagstaff, Steven Holland and Mike Wenden;
  • broadcasting and television licence fees and tertiary education fees were abolished, and the public lending right scheme was introduced;
  • Blue Poles arrived in Australia, Sam Fullbrook won the Archibald with Jockey Norman Stephens, Margot Fonteyn made her sixth Australian tour, and Peter Weir’s first feature film opened in Melbourne;
  • Skyhooks released Living in the Seventies, the Australian Broadcasting Commission launched Countdown (and Molly Meldrum), Olivia Newton-John won two Grammy awards and was declared Country Music Female Vocalist of the Year for I Honestly Love You, and a Sister of Mercy recorded The Lord’s Prayer , which sold over two million copies, the highest sales for an Australian-recorded single;
  • six school children and their teacher were kidnapped from Farraday School, Victoria, and the Moffitt Royal Commission reported on organised crime in New South Wales;
  • Frank Sinatra, at war with the Australian media, described ‘the broads who work in the Press’ as ‘the hookers of the Press’, and said ‘I might offer them a buck and a half’;
  • Ray Meagher, Victorian Transport Minister and anti-pornography campaigner and then aged 65, said his ambition after retiring was ‘to be shot by a jealous lover at the age of 120’, while a self-confessed streaker told a Melbourne court he did it ‘to impress my missus. She’s left home’;
  • Margaret Whitlam couldn’t understand all ‘the hoo-ha’ about inflation: if the press did not announce the rate ‘nobody would notice it’, while a prominent trade unionist thought Mrs Whitlam was living in a land of ‘dreamtime and cherry blossoms’; and
  • Kep Enderby announced that ‘traditionally, Australia obtains its imports from overseas’, and Vince Gair reportedly claimed that Billy Snedden ‘couldn’t go two rounds with a revolving door’.

It was a year for appropriately clothing the national identity …

  • Alan Renouf, the new Secretary of Foreign Affairs, wanted his diplomats to wear a distinctively Australian (possibly gender neutral) ceremonial uniform consisting of a single-breasted Nehru or Mao jacket, a high choker collar and a sprig of wattle embroidered in gold; and
  • Al Grassby, then Minister for Immigration, paraded his ‘Riverina Rig’, a (possibly gender neutral but summer only) national Australian costume consisting of an all-white gabardine shirt, crepe sleeves and matching gabardine trousers.

And, the year when …

  • Justice Elizabeth Evatt chaired the Royal Commission into Human Relationships, Mary Gaudron was appointed Deputy President of the Conciliation and Arbitration Commission, and Joan Child won the federal seat of Henty;
  • a Town Clerk explained that if women stood in local government elections, the Randwick Council could not meet on Mondays because that was when they did the washing;
  • Alan McGilvray said that he simplified his cricket commentaries on Mondays and Tuesdays because the housewives were listening while they did the laundry;
  • the Attorney-General’s Department chose a cartoon to advertise the amended Trade Practices Act ‘so that every housewife could understand it’; and
  • Alan Renouf warned that anyone ‘stuck with the wife of an Australian diplomat overseas’ would find she had nothing interesting to say other than to discuss children and holidays.
Copyright National Archives of Australia 2014