Tiberius with a Telephone

by Patrick Mullins

  An edge of their dispute was revealed to the public after McEwen made a speech at a convention of woolgrowers and graziers on 19 June. Responding to an earlier speaker who had criticised his approach to tariffs, McEwen defended himself and the policy he was pursuing. Then, he resurrected an old enemy, and argued that the criticisms he had heard were those of the Basic Industries Group (BIG):

  [This is] a group, unseen and unknown — its members faceless and nameless but very real indeed — very rich, indeed, and very reckless in misrepresentation. It has one publicly avowed intention … to destroy the Country Party in favour of the Liberal Party.39

  The reference to the Liberal Party was not an accident. The mentions of BIG were a feint. This was an attack on McMahon, one that McEwen renewed two days later while addressing the Country Party’s annual conference. The somewhat-beguiled BIG, gifted a notoriety far beyond its worth, held a press conference and announced that it would re-form.40

  McMahon saw instantly what was happening. He sent a note to Holt, who was abroad: ‘Just in case you get a question about this statement on your arrival. We in the Liberal Party have no association and never have had any with the Group.’41 Advised by his colleagues to keep quiet,42 he went to Sydney Airport on 22 June to meet the prime minister when he returned to the country. He denied having anything to do with BIG or knowing about them at all.43

  The denial did not stop the controversy. On 26 June, Sydney Morning Herald political correspondent Ian Fitchett published a story with a knotty, if hardly subtle, accusation:

  If Mr Holt raises with Mr McEwen the BIG question, Mr McEwen will be able to point out that while he himself has made no charge that a senior Liberal Minister was working with the group, everybody connected with politics had no doubt that such a Minister, even if he were not working with the BIG, was carrying out his own campaign against the Country Party.

  Moreover, despite himself not making any such accusation, McEwen was ‘bound’, the article continued, ‘to demand an assurance from Mr Holt that the senior Liberal Minister concerned clears himself and also gives an assurance that he will cease his alleged activities’.44 It took no great deductive powers to understand that the senior minister was McMahon, nor that the attack placed him in an impossible situation. He could hardly prove a negative, nor could he attack an accuser who did not exist.

  On 29 June, the spokesperson for BIG denied that they knew McMahon or that he had any connection to their efforts. Holt spoke on the same day. Trying to end the squabbling, he called criticism of the Country Party and McEwen’s approach on tariffs unfair, and stated that McMahon had given him assurances that he had nothing whatsoever to do with BIG. Restoring the Coalition’s unity was Holt’s ultimate objective: ‘The activity of any organisation which could be regarded as prejudicial to the harmonious working of the Coalition is certainly not in the interests of myself or any of my colleagues in the Coalition.’

  Luckily, events moved on swiftly. When Britain announced it would withdraw its military forces from Malaysia and Singapore by the mid-1970s, Australia’s defence policy was thrown into flux, prompting considerable dismay and anger. The British attitude, Holt told the British secretary of state for defence, Denis Healey, in a June meeting, appeared to be that ‘the world east of Suez could go to hell’.45 There were also Loan Council meetings to hold and the budget to prepare. Those meetings prompted more rows and more concern — particularly for Holt. On 26 July, over dinner at Government House, having heard the prime minister bemoaning the McMahon–McEwen feud, the governor-general, Richard Casey, offered to intervene. As he later explained, Casey believed that ensuring the stability of the government was ‘one of his responsibilities’ as governor-general.46 It was an extraordinary offer in many respects, verging on improper, but Holt demurred on taking him up on it immediately.47

  Casey’s offer was a signal of just how serious the problems were becoming — and how much Holt needed to get control of his government.

  AS treasurer, McMahon was always keen to reinforce perceptions that he had complete mastery of his portfolio. ‘He was always trying to impress people,’ recalled Alan Ramsey. ‘Always.’48 McMahon’s way of doing so — by ‘the numerical blitzkrieg’, as journalist Maximilian Walsh called it — had remained the same for years. He would confidently bombard audiences with figures and statistics on every economic measure, and they were never, ever wrong.49

  The reality was different, but it was hidden by the elaborate work of his office. While McMahon rained down numerical hell on the ALP in the House, a member of his staff would check his figures with Treasury officials. His office would then prepare copies of McMahon’s answers — with the correct figures — for distribution in the Press Gallery. Unable to wait until the publication of Hansard the next morning, journalists would use those answers for the reports they filed that night.50

  It would not have worked had journalists paid more attention. When he began work in the gallery, Robert Haupt observed that upon any question asked of McMahon, the pens in the gallery would go down. There seemed to be an unspoken consensus that it was time for a break. It took Haupt a little while, but soon enough he understood. Why would you bother recording answers when you were going to have the full text soon enough? Not quite so lazy himself, Haupt took notes and compared them to the daily and weekly Hansards. But he was boggled to find himself in the wrong. ‘They invariably told the same story,’ he wrote. ‘McMahon right; Haupt wrong.’51

  The reason for that lay again with McMahon’s office. When Hansard extracts were sent to it for proofing, the figures would be altered to be true, to align with the answers distributed the day before. ‘He [McMahon] was a devil with the way he used to alter Hansard,’ Peter Kelly recalled. ‘You’re not supposed to alter Hansard, but he’d make all sorts of alterations and corrections.’52

  There could be no such alterations to the budget speech. Because of its importance and high visibility, drafts of the speech were largely prepared within the Treasury. Stemming from Randall’s pen, the 1967–68 budget speech, delivered on 15 August, was clear, punchy, and notably devoid of statistical blizzards.

  It was a budget that again wrestled with defence expenditure. Despite the opposition of Allen Fairhall, Malcolm Fraser, and officials within the prime minister’s department, McMahon managed to prune a mooted 24 per cent increase in the defence vote to 18 per cent. This ‘dominant element’ was allocated $1,118m, and McMahon offered self-congratulations for accommodating the substantial rise without ‘distortion or disruption’ of the economy. Nonetheless, he noted that similar escalations of spending could not continue. The example of Britain, then attempting to reduce the resources that it devoted to defence, was salutary. ‘Seriously weaken the potential for growth,’ he told the House, ‘and the capacity to support an expanding defence effort is whittled away.’

  Despite the expenditure on defence, the budget was notable for its spending on social services. There were measures to provide hearing aids for pensioners, benefits for people with disabilities, and an increase in child-endowment assistance for large families. The lattermost measure prompted laughter from Labor MPs: ‘You are only looking after yourself,’ Jim Cope called. Even McMahon could laugh: ‘As I said at my Party meeting, it shows that I have other ambitions besides my political ones.’53

  Reception to the budget was far better than the previous year’s. The Daily Telegraph and The Age variously called it a ‘no-shock’ and ‘no worry’ budget that would aid the ‘family man’. Though The Australian was more critical (once its striking printers returned to work), it, too, gave McMahon some praise.54 Maxwell Newton, in an appearance in the pages of The Age, was also positive, arguing that McMahon’s achievement was restraining the growth of government spending.55

  The budget was a rare moment of good news and respite. Divisions within the government were never in abeyance for long,56 and missives about its faltering support in the electorate were
all too regular. The May referendum had been followed by a by-election in July to replace Liberal MP Hubert Opperman, who had resigned to become high commissioner to Malta. The loss of that seat prompted concern from many within the party;57 the subsequent death of Labor MP George Gray augured another by-election, this one in the Queensland seat of Capricornia. Despite suggestions that it be delayed to coincide with the Senate elections due in November, the date was fixed for 30 September. An established Labor seat, the government nevertheless campaigned energetically. Holt declared that he wanted to win it. McMahon did not go so far, but he put his foot in it when he attacked the Labor candidate’s atheism.58 The press, not unreasonably, took a dim view of the overly personal criticism; and when the by-election was held, the ALP candidate, Dr Doug Everingham, easily made it home. It was another blow to Holt and, according to Labor speechwriter Graham Freudenberg, the psychological effects were profound. The prime minister, he thought, had lost ‘something of himself in Capricornia’.59

  McMahon was not around to survey the damage. Accompanied by Sonia, he left Australia on 13 September to attend the Commonwealth finance ministers’ meeting in Trinidad, which discussed the position of British sterling, the British application to join the European Economic Community, and the economic problems of the developing Commonwealth countries. Then he flew to Rio de Janeiro for a meeting of the International Monetary Fund (IMF). There, he spoke on the need to study gold production and its place in the international money market. From there, McMahon and Sonia flew to New York, where they received a summons from US president Lyndon Johnson.

  Johnson apparently wanted advice on how to rid himself of US defence secretary Robert McNamara, whose differences over Vietnam War policy were growing. By chance, on the plane between Rio de Janeiro and New York, Sonia had been seated next to George Woods, the president of the World Bank, and he had informed Sonia that he intended to resign. ‘So I told Bill, who told Lyndon Johnson, who then appointed McNamara as the head of the World Bank,’ Sonia said later.60

  This was not the only topic of discussion. Aware that McMahon was concerned about the economic strains caused by the rapid growth of military expenditure, the US president pressed him for more support in Vietnam. Johnson, McMahon wrote to Holt, expressed himself ‘in strong and at times emotional language’ on the matter, to the point that the Australian ambassador to the United States, Keith Waller, told McMahon afterward he could not ‘remember stronger pressure being brought to bear’.61 The same pressure was applied again when McMahon met McNamara. McMahon had been directed by cabinet to meet with the defence secretary to discuss the F-111, a long-in-the-works tactical strike and bombing aircraft that the Australian government had agreed to purchase in 1963. Delays, technical problems, and budgetary excesses had plagued the plane, and, despite the initial intransigence of the US defence secretary, McMahon managed to renegotiate the spread of payments for the aircraft. This was a win — but also a sop, as McNamara proceeded to lambast McMahon about Australia’s contribution to Vietnam. None of America’s allies, McNamara told him, was ‘bearing their fair share of the load’.62

  Neither his success nor his absence from Australia had removed McMahon from criticism; if anything, in his absence, it spread and intensified — chiefly over news that Newton had accompanied McMahon on the trip. Rumours that Newton had gone at McMahon’s invitation, and as an advisor to him, caused great unrest. When a journalist rang Liberal Party director Bob Willoughby to ask whether the party was paying Newton’s fare, Willoughby ‘nearly had a seizure’.63 In the House, Labor Party frontbencher Frank Crean asked if Newton was now on McMahon’s staff or writing for a newspaper.64 The prime minister’s office was sufficiently concerned to look into the rumour.65 Supposedly at the deputy prime minister’s instigation, McEwen’s staff began gathering information on Newton and his relationship with McMahon:

  On being questioned as to why he thought NEWTON was dangerous, informant said that he was convinced that NEWTON was working to split the Liberal-Country Party coalition. In support of this view, he said that Mr McMAHON made great use of Maxwell NEWTON, and that he, Mr McMAHON, had arranged for Treasury to pay NEWTON’s fare when he accompanied the Minister on a recent trip abroad.66

  McEwen’s staff made contact with all sorts and would continue to do so. The printer of Newton’s newsletters was approached in March the following year, and his statements — that he had seen McMahon visit Newton’s home repeatedly in 1967; that McMahon had even rung him, the printer, at home one night looking for Newton — were placed on file. The printer had seen Newton boast of his friendship with the treasurer and how McMahon had helped him. Sonia McMahon had also called Newton at the printery, either late in October or early in November, the printer said, to discuss changes in one of the newsletters.67

  Ostensibly, McEwen’s concern stemmed from the information Newton was printing in his newsletters and uncertainty about how close McMahon was allowing Newton to get. Was Newton being given confidential information? Was he the beneficiary of favoured treatment? People throughout the government knew how close the two men were: ‘Everyone seemed aware of them!’ Tony Eggleton recalled.68 Much later, Clyde Packer would claim that Newton had been arrested in Trinidad for swiping ‘a British working paper’ and was only freed on McMahon’s intervention.69 John Stone, part of the delegation in Trinidad, recalled it first-hand. ‘Max turned up there,’ he said later, ‘to the dismay of Dick Randall and the Treasury team, but obviously by arrangement with McMahon, and in no time had been given copies of several documents to which he was not entitled and which could only have come from McMahon!’70

  Being seen to be close to Newton was no way for McMahon to build bridges with McEwen. Earlier in the year, during his attacks on BIG, McEwen had intimated that the link between McMahon and BIG ran through Newton, who was widely (and correctly) suspected of authoring BIG booklets like The Great Hoax, which attacked the Country Party’s advocacy and policies for the dairy industry.71 To link up with such an avowed critic was provocative, if not dangerous.

  The Press Gallery was apprehensive about the fierce dislike that McEwen had for Newton, but mindful that Newton was paying exorbitantly for a wide range of journalists to file reports for his newsletters.72 Alan Reid disapproved of Newton’s membership of the Press Gallery;73 Robert Macklin, then working for The Age, found the gallery divided about him. ‘It became a very vicious place to work,’ he said.74 Jonathan Gaul, the president of the gallery, agreed. ‘McMahon was being blackguarded all the time by McEwen’s people — as were we. We [those who worked for Newton] were put down as being in the pay of the Japanese, as though we were trying to undermine Australian manufacturing and jobs. It got pretty intense behind the scenes.’75

  But nothing appeared in the public sphere. No newspaper ran a story on the matter. Alan Reid later suggested it was because the truth — when checked — was rather plain: Newton was paying his own airfares and enjoying no special treatment beyond the ordinary courtesy of a member of the press while covering a minister.76

  McMahon arrived back in Australia on 22 October. The political landscape was tense, febrile, and shifting. Within the Liberal Party, MPs were suspicious and angry with McMahon.

  But, notably, they were also uncertain about Holt. In McMahon’s absence, the government’s fortunes had slipped — mostly thanks to its own mistakes in an affair that was rapidly drawing to a climax.

  IN November 1965, the Menzies government decided to overhaul the No. 34 Squadron of the RAAF, which transported government VIPs around the country.77 For an announced cost of $11.4m, the government re-equipped the fleet with seven new aircraft. Exploiting the hazy guidelines on use of the fleet, politicians were soon bickering with one another for the use of a particular aircraft. The minister responsible, Peter Howson, recorded one instance of this wrangling on 11 March 1966:

  VIP aircraft: G-G, PM, and Treasurer all want Viscounts on Tuesday morning. WMcM asked me to get G-G t
o give way. John MacNeil sounded out Murray Tyrell [official secretary to the governor-general] and found G-G was adamant. So I put my problem to Jack Bunting [secretary to the prime minister’s department]. He agreed that G-G should have preference. So rang PM, who agreed to give way, but asked me to inform WMcM. These VIP troubles take up a hell of a lot of time.78

  McMahon was only too happy to use the planes whenever he could. Upon receiving a request from McMahon for use of a VIP flight, David Fairbairn pointed out that there was a commercial flight leaving only half an hour earlier. Surely McMahon could take that? McMahon’s response was ridiculous: ‘But I’m playing squash!’79

  This kind of squabbling and largesse did not, initially, cause much alarm. What did cause embarrassment was the unconsidered cost of maintaining and running the fleet, which was eventually understood to be more than double than the announced expenditure. Holt decided on a strategy of obfuscation, and directed Howson to draft a list of rules to better govern use of the flights. Thus, in May, when questions about the fleet were raised by senator Vince Gair (DLP, Queensland) and the Labor member for Grayndler, Fred Daly, Holt and his department sought to deflect scrutiny by stating that little information about the fleet was available.80

  The answer was inaccurate. Manifests were maintained and, though difficult to work out, the costs of an individual flight could be calculated. Howson recognised that the answer was inaccurate, but he was unwilling to force the issue. Mixed with cracks of responsibility within the public service and Holt’s desire to deflect questions about the VIP fleet, the inaccurate answers stood.