1976 Cabinet release: Events and issues in 1976.
Transcript of address by Dr Jim Stokes, given at the National Archives on 5 December 2006
Thanks very much Anne. The two things that immediately strike you about the 1976 Cabinet records is what a massive amount of work that they got through and how many of the issues in 1976 are still very much issues today. Commonwealth-state relations, East Timor, the future of the South-West Pacific States, uranium, drought, farm support, Medibank, land rights, concerns about increasing crime and decreasing literacy and birth rates and, of course, the ALP leadership. Some of these issues are the inevitable products of our history and geography or just part of the basic human condition. Others seem to be things that we never seem to quite manage to get sorted. Conversely they're also issues in 1976 that now seem to belong to a different age. For example, the almost constant industrial upheavals, the dominance of centralised wage fixing and the power of the major trade unions, the perceived Soviet threat, massive tariff protection for manufacturing industry and Reg Ansett's reported desire to buy 50 per cent of Qantas. In political background, Fraser's crushing defeat of Whitlam at the general election of 13 December 1975, had given Fraser a massive 91 to 36 seat majority in the House of Representatives and an 8 seat majority in the Senate.
The ALP showed little sign of early recovery. As Alan Reid wrote, 'the ALP cannot forever live off Kerr. Sooner or later it must face the question of [how it is going to] how he is going to live with the Australian community'. Gough Whitlam remained leader of the opposition, with Tom Uren as his deputy, but there was talk of generational change. The Bulletin referred to Bob Hawke's 'semi-declared intention to become Prime Minister himself at the earliest convenient date'. Neville Wran's defeat of the Willis coalition government in NSW was also a hint of an ALP revival. Sir Humphrey Appleby once observed that after about a year most Prime Ministers just grind to a standstill. I doubt whether Malcolm Fraser would have accepted this view.
Just as the Coalition dominated the Parliament, so Fraser dominated the Coalition. His energy, his determination (to achieve and) to manage and achieve so many things and his sheer physical presence made the government very much his own. However, John Edwards pointed out that, 'while [Fraser] dominates Cabinet and the party to the extent that he can force acceptance of some very bold decisions against the advice of the relevant minister, he's also prone to swift concessions and sudden changes if he estimates the opposition will be too strong.' Edwards attributed this to the fact that Fraser's strength in the party was not matched in the electorate at large 'where several powerful groups like the Trade Unions and the middle class left deny him legitimacy as a Prime Minister'. One of the underlying issues was the ongoing rage of those who felt strongly about the dismissal of Whitlam. Governor-General Kerr was the main target of demonstrators but Fraser and his ministers came in for their share. After a hostile reception at Monash University in August '76 Fraser asked ministers to consider more effective Commonwealth-state coordination to protect VIPs, a suggestion that would eventually lead to the formation of the Protective Services Coordination Centre. Cabinet also considered ejecting large protests, like the ride against uranium from Parliament House lawns, but decided against it. Even Fraser's own party could occasionally rebuff him, as in March when six Coalition senators crossed the floor to defeat the proposed axing of the $40 pensioners funeral allowance.
Paul Kelly believed that Fraser's ultimate instrument of power was always the Cabinet. So reluctant were ministers to act alone that Cabinet became weighed down with business. Ministers also became weighed down with papers in meetings. During 1976 Cabinet dealt with nearly a thousand submissions, totalling around fifty thousand pages, double the volume of 1975. Kelly quoted one minister as saying that anyone who claimed to read more than 10 per cent of submissions thoroughly was lying. While Fraser very much set his own agenda, he worked closely with a group of key ministers, including the National Country Party's Doug Anthony, Ian Sinclair and Peter Nixon and Liberals, Phillip Lynch, Senator Reg Withers and Senator John Carrick and for the first time since the thirty year Cabinet release began, we have in John Howard, someone who was a minister thirty years ago and is still a minister today.
There are at least three other examples of Commonwealth politicians whose ministerial careers span more than thirty years, that's Billy Hughes, Menzies and Earl Page, but none of them were still in office when the records released. Howard was Minister for Business and Consumer Affairs in 1976 and he brought a large number of submissions to Cabinet on the business and industry assistance and reform issues. Fraser emphasised his belief in the federalism in contrast to what he saw as Whitlam's unreasonably centralist tendencies. However, this didn't mean that the states always got their own way and they were expected to share in the financial pain and administrative reform. Relations with Sir Joh Bjelke-Petersen's government in Queensland were, at times, closer in style to foreign policy than federalism with major brawls over the Torres Strait boundary, Fraser Island, bauxite mining on the Arakune Aboriginal Reserve and sugar price support. Fraser guaranteed the states one third of personal income tax revenue but this was counterbalanced by reductions in specific purpose funding.
Fraser's election policy speech finished with the stirring exhortation, 'Australia has been sliding downhill for three dark years, on December 13 we can turn on the lights'. Inevitably, however, turning on all the lights proved a challenge, quite apart from the effect of a prolonged industrial campaign by electricity workers.
The government's principle concerns throughout '76 were the economy and the Budget. Inflation was still close to double figures, business investment was at a low level, and unemployment was around 4.5 per cent. Industry problems had been made worse by the oil shock and rapid cost and price increases of the mid-1970s. The budget problems were also complicated by the commitments inherited from Whitlam and by the cost of some of his own election promises, notably CPI indexation of personal income tax. Fraser, strongly encouraged by Treasury, waged almost constant war on Commonwealth spending. Within a fortnight of the election he'd asked all ministers to identify savings, with somewhat mixed results, and appointed Sir Henry Bland as head of an administrative review committee. Bland reported on most areas of Commonwealth activity during 1976, often in forceful terms. Foreign Affairs was told that the best safeguard against expansion of overseas missions is not to open them. The National Parks and Wildlife Service was described as a 'nonsense' since it had no parks and the Bureau of Meteorology was castigated for its 'coy reluctance' to demonstrate that a large increase in funding had improved the quality of weather forecasts. Not even politicians were immune. Their traditional Canberra residence at the Hotel Kurrajong was closed and Fred Daley expressed the fear that he'd be done out of a state funeral. Staff ceiling cuts became a new term in the public service language.
In May, Treasurer Lynch unveiled a mini-budget aiming to halve the projected '76-'77 deficit to 2.5 billion dollars. Urban development, transport and communications took the biggest cuts and Lynch also imposed a 2.5 per cent Medibank levy on personal income tax. Fraser also tried to wage increases which inevitably led to conflict with the Unions. As the Bulletin noted, the Coalition's domination of the Parliament had left a vacuum filled by a group of about some thirty left wing unions representing all three communist factions on the socialist left of the ALP, who by reason of their industrial muscle, represent the real opposition to Mr Fraser. The Arbitration Commission attempted to moderate wage claims by indexing them to the CPI. The government initially supported this approach but it was (so) so disturbed by a 5.6 per cent CPI increase in December '75 that it tried unsuccessfully to get the Commission to (half) to increase wages by only half that amount. For the March quarter the Commission granted full indexation to those on the average male wage or less but only a flat increase for those above. In the June quarter it gave around 60 per cent of the CPI increase but the Commission then restored full CPI indexation for the September quarter fearing that continued discounting would cause a wages breakout by the more powerful unions. Concern that this would increase inflation, together with a large capital outflow, induced Cabinet to devalue the dollar by 17.5 per cent on 28 November.
The government also had to contend with frequent industrial disputes during 1976, some involving its own employees. Many Commonwealth staff took part in a strike on 12 July to oppose changes to Medibank, while stand down provisions were approved to force an end to a strike by air traffic controllers. The postal workers clashed with the government over union retaliation against members who failed to join the Medibank strike. Union bans on the delivery of mail to John Fairfax newspapers and union involvement in circulating messages from the Fretlin Independence Movement in East Timor. The Defence Department clashed with the Ships Painters and Dockers Union in the Garden Island in Sydney. The union, insisting it should have the sole right to provide labour, regardless of its quality, and refused to allow members to be transferred from one job to another.
Industry assistance took up a lot of the Cabinet's time. Struggling industries wanted more assistance and import restrictions, profitable industries wanted less taxation and regulation. The textile, clothing and footwear industry was a particularly difficult problem because it employed around 130 000 people, many of them relatively unskilled workers in areas with little alternative employment. Even with tariffs with more than 35 per cent it struggled to compete with imports. As a temporary measure (volume imports had been) volume limits had been imposed on imports but this had led to trade tensions with Asia.
The motor vehicle industry faced a major shift in consumer preference from locally built six-cylinder cars to four-cylinder imports from Japan. Japanese imports had risen from 7 per cent of total sales in '72 to 33 per cent by the end of '74. Even when subject to a 45 per cent tariff they were still very competitive. In '75 the Whitlam government had restricted imports to 20 per cent of the estimated market to the annoyance of Japan. Cabinet agreed to extend Whitlam's 85 per cent local content (for the plan) for the car industry until 1984 and Toyota and Nissan joined it, thus defusing tensions with Japan. Fully imported cars were still subject to a 45 per cent tariff. The government tried to concentrate four-cylinder engine manufacture on the under-utilised Chrysler plant in Adelaide but ended up having to have four different manufacturing plants in Australia.
In agriculture, cost and overseas marketing problems were compounded by a major drought. The dairy and fruit industries were in acute difficulties, requiring both price support and adjustment funding. Forty thousand cattle had to be shot in Victoria because of drought and low butter fat prices. One farmer complained of the stupidity of tariff regimes that subsidised Japanese farmers nine hundred dollars to raise a cow and Australian manufacturers four thousand dollars to make a car. Agriculture supporters have often divided Cabinet, with primary industry championing the farmers and Treasury urging a greater emphasis on market realities and structural change.
In foreign policies Fraser strongly emphasised relations with East and South-East Asia for reasons of both trade and security. Post Vietnam, it was uncertain whether the United States would ever again become involved militarily on the South-East Asian mainland. Australia's defence must, therefore, become increasingly self-reliant although the ANZUS Treaty gave substantial hopes that (Australian) US military support would be forthcoming in the event of a major threat to Australia. One irritant in the US relationship had already been resolved in June when Cabinet agreed to the resumption of visits to Australian ports by nuclear-powered warships. Such visits had been suspended since 1971, but as the US now accepted unlimited liability for any accident, it was decided that they could resume, subject to a range of safeguards. A second theme underlying many of Fraser's foreign policy initiatives was his suspicion of the Soviet Union's ambitions in the region. At home, the accelerated completion of the Garden Island Naval Base in Perth, while ability pointed out the dangers of increased Soviet strategic and commercial influence. Aid to the South-West Pacific was expanded in light of Soviet overtures to Tonga and Western Samoa. Even the future of Norfolk Island may have been influenced by the perceived Soviet threat. The need to prevent some other power acquiring it was cited as one of the reasons for Cabinet deciding to retain it rather than abandon it.
Fraser made his first major overseas visit as Prime Minister to Japan and China in June '76, a change from the traditional first destinations of London and Washington. In Japan he signed the Basic Treaty of Friendship and Cooperation, originally known as the Nara Treaty. The treaty was set out in quite general terms but it had been under negotiation since 1973 to ensure that general principles were not worded in a way that might harm Australian trade investment or migration interests. Fraser wanted to strengthen the trade relationship with Japan and he stressed that Australia was a reliable supplier of commodities such as uranium, coal and iron.
In China, Fraser met the Premier and Foreign Minister. They agreed on the challenge of the Soviet military build-up and the importance of keeping South-East Asia free from dominance by any one power. So well did the visit go that the Australian press reported, erroneously, that Fraser sought to put together anti-Soviet alliance of China, Japan, the United States and Australia.
East Timor remained a very sensitive issue. Privately, the government accepted integration with Indonesia as a fait accompli and a better option than a radical and unstable independent state. A strategic defence review, in September, argued, 'As the alternative is an essentially weak state, open to outside interference, the defence interest is served by East Timor's incorporation in Indonesia.' In public the government opposed Indonesia's use of force and supported a genuine act of self-determination. Members of the Fretlin government-in-exile were refused entry visas to Australia.
Uranium was a major issue for Fraser, complicated by the situation inherited from Whitlam. Whitlam had faced conflicting pressures on uranium. On the one hand, big price rises and the discovery of major new deposits had encouraged Rex Connor to plan a major role for Australia in the export and enrichment of uranium. On the other hand, there had been a significant growth in public and trade union opposition to uranium mining on environmental and antiwar grounds and in 1975 the ACTU resolved to ban it other than for biomedical purposes. In 1975 Whitlam established an enquiry under Justice Russell Fox to investigate the environmental aspects of the proposed Ranger Mine in Arnhem Land. This became a review of the uranium issues, generally, and there was little that the Fraser government could do until Fox reported.
However, the government was forced to make immediate decisions about exports from the Mary Kathleen Mine in Queensland. Both Whitlam and Fraser had maintained that Mary Kathleen and uranium exported under pre-Whitlam contracts was not subject to the Fox Inquiry. But this had not been stated explicitly. The government feared that any apparent pre-emption of the Fox report would enrage the unions and environmental groups who might physically block exports. Conversely, withholding exports would create significant difficulties for the companies and countries concerned. The temporary solution was to fill Mary Kathleen's contracts with uranium borrowed from the United Kingdom and the Australian government stockpile.
Fox's first report was delivered in October '76. He found that the mining and use of uranium was not so hazardous that Australia should ban it. However, he wanted decisions about mining in the Northern Territory postponed until after the receipt of his second report on issues specific to Ranger with time for substantial public debate. The government supported the broad thrust of the report and promised stringent safeguards for exports both in Australia and the destination country.
The Fraser government continued many of the administrative law and social justice initiatives planned by its predecessor. During 1976, it approved the establishment of a Commonwealth Ombudsman, Human Rights Commission and Federal Court and approved the drafting of Freedom of Information and Archives legislation. Fraser also proceeded with land rights legislation for the Northern Territory. This gave Aboriginal communities freehold title to all existing Northern Territory Reserves, the Hermannsburg and Santa Teresa mission leases and the Kildurk, Willowra and Wave Hill Aboriginal pastoral properties. This encountered strong opposition from the elected members of the Northern Territory Legislative Assembly who wanted Commonwealth legislation to be confined to general principles leading individual states and territories to enact their own detailed legislation. They were also concerned about giving traditional owners freehold title as opposed to perpetual leases and the right of veto over mining exploration and development. These concerns were generally shared by the departments of the Northern Territory, National Resources and Treasury and the mining industry. Despite this opposition, the government held to the principle that the Commonwealth legislation should be paramount for the Northern Territory and that land should be granted freehold. It also endorsed the right of veto over mining, although this could be overridden by the government in the national interest. Existing mining leases were exempted from the legislation.
And finally, a reminder, that the persecution of smokers is nothing new. As the dangers of smoking became known more widely, Commonwealth governments have moved to discourage the advertising of tobacco products. Voluntary advertising codes and mandatory health warnings were introduced gradually from 1966, and in 1973 the Whitlam government agreed to phase out tobacco advertising on radio and TV over three years. Fraser's health minister, Ralph Hunt, recommended to Cabinet that the Whitlam policy be endorsed, however, the Minister for Post and Telecommunications, Eric Robertson, led a vigorous counterattack. Robertson cited a strongly-worded letter from the three major tobacco companies arguing that there should be no further restrictions on advertising until there had been discussions on the impact of the ban on their economy as a whole, doubts about the scientific evidence on which earlier decisions were based and the discriminatory nature of the ban. Robertson also expressed concern about the likely loss of advertising revenue to radio and TV stations, particularly in the country. He was supported by primary industry, which argued that the ban would hurt tobacco farmers in north Queensland and by the Industry and Commerce Department which argued that a ban would hurt the advertising industry without necessarily reducing smoking. But despite Robertson's arguments Cabinet decided that the total ban should come into effect on 1 September 1976.