In spite of the urgency of Reid’s warning and the Herald’s criticism, there was little awareness within the government that the election might be close. In mid-November, McMahon was writing to Menzies to tell him that he thought the government’s prospects were improving and that ‘another wonderful victory’ was in the offing.48
It was nothing of the sort. The swing against the government on 9 December was emphatic. Fifteen seats were lost to the Labor Party. Fred Osborne, who had broken into the ministry in 1956 and since become minister for repatriation, was swept away, as were two other ministers. Alan Hulme, the minister for supply, and Dr Donald Cameron, minister for health, both lost their seats. Earle Page, a candidate despite lying unconscious in a hospital with cancer, was defeated: he died without knowing he had lost.
In Lowe, McMahon was staggered to find that he had to go to preferences to hold on to his seat.49 For a few days, as the seat tallies showed the Coalition and the ALP neck and neck, a fresh election seemed possible.
It came down to Moreton — a Queensland seat held by Jim Killen. Initially written off as a Labor gain, Killen’s slim chances revived in the drawn-out process of tallying postal votes and preference flows. But he was in need of help. McMahon claimed to have offered the decisive assistance, telephoning Killen to say that he would ‘arrange for the best scrutineer in New South Wales to go to Queensland’.50 It was a false claim. John Carrick, the New South Wales general secretary of the Liberal Party, had already moved. Bill Wakeling was already on his way to Brisbane to scrutinise the count. Decades of experience and practice came with him. His motto? ‘There’s no such thing as a valid Labor ballot.’51
The count in Moreton took two weeks, but the preferences shook out narrowly in Killen’s favour. He was in, and the Menzies government was saved.
The close election was a shock, yet McMahon suggested later that it could have been worse. ‘Had the election been held two weeks later we may have been beaten,’ he told Packer journalist Dick Whitington. For McMahon, the result was an example of the importance of the press and powerful allies: ‘One of the means by which the strong trend against us was slowed was the sustained support of The Daily Telegraph. I believe this to have been the decisive influence.’52
MANY things looked different on the other side of the election. The government had said during the campaign that the ALP’s economic policies were a recipe for disaster; afterward, it co-opted those policies to stimulate the economy and demonstrate its sensitivity to public opinion. According to John Stone, the then-secretary to the Treasury, Sir Roland Wilson, was called down to Melbourne and told by Menzies that ‘Treasury views would have to be “bent” for a time in a more populist direction.’53 In cabinet, when McMahon realised what was happening, he protested the gall as much as the offence to Treasury orthodoxy. ‘Sir, we can’t keep on implementing Labor policies that we condemned at the elections,’ he said. Menzies was cutting: ‘If they were good enough for 50 per cent of the electorate, they should be good enough for you. Next item, please.’54 The prime minister’s authority saw these policies enacted, but there was resistance within the public service. ‘We spent a lot of time during the next two years fending off a series of “bright ideas” emanating from McEwen’s Department of Trade — on the whole successfully, but not wholly so,’ said Stone later.55 It resulted in a mini-budget in February 1962: unemployment benefits were increased, income tax was reduced, and sales taxes and import controls were lowered.
Menzies’ position also looked different after the election. The close result prompted a recognition that the day would surely come when the Grand Old Man was no longer prime minister. Who would lead the Liberal Party then? With Holt’s reputation damaged, some looked towards McEwen, whispering of his switching parties or merging them. McEwen later disavowed entertaining the idea at all: ‘I am sure that if the Country Party were to disappear, if its members were to join the Liberals, then another Country Party would crop up almost the next week,’ he said later.56 Nonetheless, the shock result caused a low-burning tension and suspicion between the two parties.
The worth of the marriage bar also resurfaced. Liberal Party senators Ivy Wedgwood, Nancy Buttfield, and Annabelle Rankin, and Country Party senator Agnes Robertson pressed for its removal; in March 1962, amid a separate campaign for equal pay for women, Harry Bland saw an opening. Could removal of the bar be used as a trade-off to defeat the push for equal pay?57 By May, Bland had succeeded in getting a submission prepared for cabinet. Again, however, McMahon was against the proposal. On a letter containing Bland’s suggestion that he had come around on the marriage bar, McMahon was emphatic: ‘No!’58 Cabinet offered the same answer when it considered the matter again in August. There were too many objections to its introduction, McMahon told Bland afterward.59 Unemployment was still high. The public service unions were against it. Bland was critical of his minister. On the removal of the marriage bar, he said later, there was ‘no support’ from McMahon.60
The changes that McMahon had made to the Stevedoring Industry Act also looked different after the election. Since the Bill had been passed, the WWF had been trying to draw McMahon’s attention to what it saw as the manifestly unjust penalties that could now be levied on waterfront workers. The suspension of attendance payments lay at the heart of their objections. At Bland’s urging, McMahon had turned a deaf ear to these efforts; now, with the government’s political mortality on show, he became sufficiently concerned to begin listening.
For, after months of getting nowhere, the WWF had embarked on a public campaign against the Act. Throughout the early months of 1962, the union publicised its grievances in pamphlets and letters, at rallies, and on television. They told stories about workers showing up a few minutes late, being suspended and then penalised for up to five days’ wages. They talked of arbitrarily applied penalties, unjust employers, and a government unwilling to listen.
By April, McMahon was concerned; by May, Bland shared that concern. After meetings with the new WWF general secretary, Charles Fitzgibbon, and Albert Monk of the ACTU, and liaising with employers, Bland understood the need for retreat. He counselled McMahon to do it artfully, to make it sound as though the changes rushed through the year before had always been subject to consultation. The wording of the eventual cabinet decision echoed this approach.
At the end of a lengthy list of amendments adopted by cabinet was the crucial one: that ‘the long service leave penalty in section 52A be removed’.61 Bland and McMahon believed this was a substantial concession, yet the WWF continued to object. McMahon grew frustrated. He believed that the government had earned the public’s admiration for how it had handled the waterfront, and was afraid that the dispute could spoil that. Telling Bland that the matter had gone on for far too long, he canvassed threatening to desist from the changes to long-service leave and demanded alternatives as well as further knowledge about strategy. Where, he wanted to know, was this all leading?62
The WWF was angry. It believed that the Stevedoring Industry Authority was biased against it, that waterside workers were more harshly dealt with than workers from other industries, that work opportunities were being squeezed by mechanisation, that employers were too quick to resort to expensive arbitration, and that they gained nothing from the constant demands for ever-greater efficiency. Its objections continued to the point that by the following year waterfront workers had been penalised more than £1m in attendance payments. Thanks to a provision that allowed those penalties to be levied against future earnings, workers were liable to pay them back. The sum was beyond repayment, to the point of meaninglessness, and its continued growth simply goaded the union movement to greater intransigence.63 Its anger was exacerbated again when, in May 1963, a ruling from the Conciliation and Arbitration Commission excluded waterfront workers in Sydney and Melbourne from an increase in the hourly margin. They would receive the increase only when ‘suitable assurances had been made about their future behaviour
,’ the commission decided.64 It was a ruling made at the urging of the department, and it was an outrage too far. Waterfront workers throughout the country walked off the job.
McMahon’s concern intensified. With Bland abroad, he convened a conference with the ACTU and WWF, and desperately looked for ways to pacify the waterfront without losing face. His department urged negotiation and compromise. Employers were resorting too quickly to sanctions, which ‘should be used sparingly’ and ‘only as a last resort’ after conciliation and arbitration had been exhausted, it noted. Providing for additional conciliators, to step in before arbitration, was canvassed as an option.65 The need to address concerns about pensions was observed. McMahon wrote to Halford Cook, the acting head of his department, to emphasise the importance of public opinion: ‘We must watch the public relations angle most carefully. We just cannot afford to be called appeasers or gullible.’ But there was more than a trace of fear and dread in his note: ‘I don’t want a repetition of the experience we had after the long service leave conference.’66
On 30 May, the WWF and ACTU accepted McMahon’s proposal for a working party comprising representatives of the union movement, shipping owners, and the various regulatory bodies. Chaired by Cook, the working party would explore ways to restore peace to the waterfront.
The working party delivered an agreement at the end of July to suspend the attendance-payment sanctions and all debts incurred under the sanctions. While this amounted to a complete about-face by the government, McMahon quickly came around. The increased productivity and favourable press that resulted from peace on the waterfront was worth the retreat.67 ‘The long service leave has been a major achievement,’ he said later. ‘It has had a stabilising influence, particularly since we removed the penalties which were often used to justify stoppages and in any case were, for the older men, like a red rag to a bull.’68 Along with the Conciliation and Arbitration Commission’s decision to award another increase in the margin and extend an extra week’s annual leave to wharfies, the lull in industrial hostilities was a welcome respite. By September, McMahon was writing to Menzies to say he was content and that the unrest had been dealt with:
So far as matters in and around my own bailiwick are concerned the outlook has considerably improved and is now reminiscent of Primary Industry during 1958. By this I mean matters such as Margins; Public Service Salaries; Industrial Peace; the Waterfront and Employment — are all in a pretty good condition.69
A similar statement could be made about the government by 1963. The economy had recovered, and unemployment was falling. Holt’s August budget had been warmly welcomed. A royal tour earlier in the year, to commemorate the fiftieth anniversary of the foundation of Canberra, had been capped by the Queen’s decision to confer a knighthood on the prime minister, which he accepted in full regalia during a July trip to Britain. The public’s hostility to the government had dissipated.
Moreover, the unity that Labor had forged in 1961 was dissolving. After the government’s announcement that an American naval communications base would be built at North-West Cape in Western Australia, the Western Australian branch of the ALP called on the federal executive of the party to oppose the construction of any military base that could host nuclear weapons. That was a spur for a special federal conference, held in Canberra in March 1963, to clarify defence and external affairs policy. The conference culminated in a debate that was long and went late into the Thursday night. As they were not members of the federal conference, Labor leader Arthur Calwell and his deputy, Gough Whitlam, were excluded: they could only urge delegates to reject the proposal from Western Australia. Their arguments won the day, internally, but came at a bitter cost when a photographer snapped both men standing under a street lamp outside the Hotel Kingston, where they were awaiting the decision of the conference. The unflattering photographs subsequently accompanied a highly charged story that Alan Reid wrote for the Friday edition of The Daily Telegraph. Noting that thirty-six ‘virtually unknown men’ had decided the ALP’s policy, Reid argued that Calwell and Whitlam had been ‘publicly humiliated’. ‘The conference,’ he wrote, ‘has demonstrated that it regards the federal parliamentary Labor leader, not as an alternative prime minister, a leader and an adviser, but as a lackey.’70
For the Coalition, it was a gift. Menzies made much of the thirty-six unelected ‘outsiders’ that he declared controlled Labor, and in doing so tarred the party for years to come. He made the most of the opportunity to divert attention from tensions within his own ranks — principally with McEwen.
Relations with McEwen had been fraught since the election, complicated by rumours about leadership and party supremacy. Moves to redistribute the electoral boundaries had been the first of it. McEwen lashed out at the initial proposal put forward by the minister for the interior, which would have seen the Country Party lose three seats. It was ‘crazy’ and ‘cock-eyed’, he declared, and made clear to Menzies that he would break the Coalition agreement to oppose the proposal should the prime minister give it the go-ahead.71 As proposals went back and forth, the tensions aroused spread into other issues. In July 1962, the minister for air and minister assisting the treasurer, Leslie Bury, was forced to resign at McEwen’s instigation after suggesting that the likely effects on Australia of British entry to the European Economic Community had been greatly exaggerated. Liberal MP C.R. ‘Bert’ Kelly was also criticising the government’s tariff policy, embittering McEwen, and an old debate on whether three-way contests — where both Liberal and Country Party candidates competed against Labor — were damaging to the non-Labor cause broke out anew. When McMahon wrote to Menzies on 22 August 1963 in another of his missives, he noted that ‘the appearance of unity is of major importance’, but that not standing up to McEwen could also be damaging: ‘If he keeps on getting his way he will remain insatiable.’72 By September, as he wrote to assure Menzies that all was well in his bailiwick, he had to caution that success at an early election was contingent on McEwen’s actions.73
In October, Menzies announced a snap House election, to be held on 30 November.74 It was a year early, but he was motivated, Menzies suggested, by the need for a stable majority in the House during a time of potential crisis, most notably in Indonesia and Malaysia, to which Australia was now sending military aid. In his policy speech on 12 November, the first to a television audience, Menzies announced that he would amend the legislation governing redistributions to ensure that any surplus fraction of a quota would result in the award of another seat, and that there would be allowance made ‘for some variation between compact metropolitan seats and very much larger rural areas’, taking into account economic, social, and regional factors. It was a sop to the Country Party, but it eased the tensions.
More important than this, however, were the promises in education. Funding for schools was a state responsibility, Menzies had always held — yet, over the past term, successive influences had swayed the prime minister to liberalise his attitude. The sustained population growth since World War II and growth in retention rates for high school students were increasing pressure on the education system. The private school system, which did not receive government aid, made representations for help. As a result of negotiations between Menzies and the Catholic archbishop of Canberra-Goulburn, Eris O’Brien, the government introduced small measures that allowed it to gauge initial reactions. According to McMahon, it was the 1956 introduction of financial assistance to independent schools in the ACT that gave the government confidence to proceed further: this, he said later, was ‘the real beginning and the critical breakthrough of aid to church and independent schools’.75 The decisive, and most public, shift came in July 1962. New South Wales state authorities had declared that the toilet facilities at Goulburn’s Our Lady of Mercy Preparatory School were inadequate and needed to be upgraded. Unable to afford to do so, Catholic schools in Goulburn opted to shut their doors and send their 2,200 students instead to the city’s government schools, whi
ch could not cope. The protest drew national coverage, called attention to the lack of resources afforded to private schools, and to the outsized role that they played in the education system.
McMahon, along with colleagues John Cramer, Jock Pagan, and John Carrick, sought to persuade the party to adopt a policy of state aid nation-wide. The efforts were unsuccessful throughout the parliamentary term, until a cabinet meeting was held on 15 October 1963 to discuss the impending election. According to McMahon, he urged colleagues to support the idea. He found little response until Barwick observed that Menzies was soon to open a science block at Waverley Christian Brothers Secondary College in Sydney. A group of businessmen called the Industrial Fund had paid for the block, Barwick pointed out, and he wondered if the government could assist with similar projects elsewhere. This received wider support from colleagues; following it up, there was McMahon: ‘All I say is make £5m available as scholarships for primary and secondary [school students],’ he said.76
That is exactly what Menzies did. In his election policy speech, Menzies announced scholarships for secondary and technical school students, and yearly £5m grants for technical schools and to improve the teaching of science. All these, he noted, were available for government and non-government schools without distinction.
The beginning of state aid to non-government schools struck at a schism in Australia’s culture that ran back to the days of Sir Henry Parkes. Politically, it was a masterstroke, one that delighted the DLP and Bob Santamaria.77 The ALP had taken for granted the allegiance of Catholic voters; now the Coalition was openly bidding for that allegiance. Labor did not recognise the danger: though it also offered scholarships, Calwell was not prepared to provide direct aid to non-government schools.
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