Hasluck’s appointment received an uneasy reception.94 That a contemporary politician was being appointed was some part of it. The greater part of that unease was that while Hasluck may have been Gorton’s only possible choice, he was also one of the last of the Menzies-era men, a bulwark of that stable, predictable, and prosperous era — and was now departing the political scene. Moreover, for those concerned about Gorton’s instincts on defence and foreign relations, Hasluck’s appointment removed an obstacle to Gorton assuming greater control. For the DLP, this was another cause for concern.
Other rumours circulated and were soon to be brought into public view, aided only slightly by touches from McMahon.
On 10 February, the same day that Hasluck’s appointment was announced, Newton published a small note in his newsletter Insight stating that Ainsley Gotto — Gorton’s young private secretary, who was the object of disreputable rumours and disdain from some ministers — had been making ‘a valiant but unconvincing attempt to hide her dissatisfaction since an uncomfortable social occasion at the United States Embassy late last year’.95
That ‘social occasion’ had been a late-night visit to the American embassy in Canberra on 1 November 1968. At the invitation of the ambassador, who was seeking to assuage Gorton’s anger that he had not been forewarned or consulted about the American decision to cease the renewed campaign against North Vietnam, Gorton went to the embassy after the conclusion of the parliamentary Press Gallery’s annual dinner. It was after midnight, and he came with guests: Tony Eggleton and Geraldine Willesee, a journalist for Australian United Press, the daughter of Labor senator Don Willesee, and the only female member of the gallery. Little happened: Gorton spoke with Willesee, telling her that he had not been consulted about the cessation of the bombing campaign, and Eggleton spoke with the ambassador. By three o’clock in the morning, Gorton had returned to the Lodge and Willesee was at home. While perhaps unwise, there had been nothing egregious or wrong about the evening.
But rumours about what had happened were thick on the ground in Canberra within a day. Those rumours later prompted Australian United Press to sack Willesee on grounds that she was a liability, yet they intensified when Frank Browne — producer of the controversial newsletter Things I Hear — wrote repeatedly of an article, supposedly pending publication in the British magazine Private Eye, about the prime minister’s behaviour while meeting with American singer Liza Minnelli.96 Browne’s writings prompted Labor MP Bert James to raise them in an adjournment debate when Parliament returned in March 1969. He sought an explanation from Gorton. ‘I have no doubt that the Prime Minister could clear the air in regard to this shadow that has been cast on his integrity by this magazine,’ James said. ‘I have no doubt that the matter will soon be clarified to the satisfaction of all members of the House and those who had the unpleasant experience of reading this damaging article against our Prime Minister.’97
Government MPs Jim Killen and Tom Hughes gave an immediate reply. Killen called James’s speech an attempted smear, and Hughes argued that James was ‘giving wider publicity to the scurrilous emanations of this libeller Browne than they had otherwise obtained’. He called on someone from the Labor side to disown James’s comments.98 Having already spoken in the debate, Labor frontbencher Fred Daly sought leave to speak again so that he could reply to Hughes, but Dudley Erwin, the leader of the House, refused. Sensing an opportunity to divide the government, the ALP’s former leader, Arthur Calwell, moved a suspension of standing orders in order that Daly might speak. Chaos ensued: bereft of ideas of what to do, Erwin followed McMahon’s orders that he not back down, and, in the ensuing vote, fifteen government members crossed the floor to vote for the suspension, unwilling to gag Daly. The vote was tied at 42–42 and, in the absence of a majority, was declared defeated by the Speaker.99 McMahon then sought to cover up the chaos for which he was partly responsible by attacking the ALP’s leadership for not — in the twenty intervening minutes — disowning James’s speech.100 It was a clumsy attempt to regain the advantage, and the ALP’s deputy leader, Lance Barnard, had no trouble turning it back:
I have heard sufficient from the Treasurer tonight to convince me that what the Leader of the Country Party had to say about him some time ago is quite true. If these are the kind of tactics that the Treasurer adopts in this House and outside the House it clearly indicates what the Leader of the Country Party had to say about him about 12 months ago would not only be substantiated by all members of the Australian Country Party but by honourable members on this side of the House as well. It was a despicable attitude for the Treasurer to adopt. He knows that I was not in the House tonight and did not hear the debate.101
The next morning, responding to a motion to refer the matter to the House Privileges Committee, Gorton spoke shortly and sharply on the allegations raised by James. After declaring himself the ‘subject of a scurrilous whispering campaign’, Gorton dismissed them out of hand. Following speeches from Whitlam and McEwen, the government gagged debate and voted the motion down.102 That afternoon, Gorton convened a special party meeting and asked for a vote of confidence from his party. He received it: all the government members stood and applauded him.
Except one. Edward St John, who had proved already that deference to the office of the prime minister came second to his iconoclastic views and judgement, remained seated and silent while his colleagues stood and applauded.
St John had voted for Gorton in January 1968, but had been rethinking his support. By February 1969, he had resolved that Gorton was a ‘dangerous’ and ‘inadequate’ prime minister who should be removed from the leadership. His concern was largely personal: he did not believe that Gorton had the fit character to be prime minister, and felt he could not conduct himself in a way that was above reproach. St John had already spoken with Gorton, but left unsatisfied. Thus he compiled material to support his arguments, made no secret of his discontent, and spoke with colleagues and peers. At McMahon’s urging, St John read The Power Struggle.103
James’s speech, the government’s moves to gag debate, and the apparently senseless acclamation Gorton had received in the party room prompted St John to intervene. During the adjournment debate that night, speaking just after ten-thirty, St John raised his concerns about Gorton and his conduct in visiting the American embassy. Arguing that this conduct was intentionally calculated to ‘prejudice’ the Australian–US relationship, St John asked:
What would the American Ambassador and his wife think of a Prime Minister who being invited to a social or other occasion arrives at two-thirty in the morning or somewhere about that time with a young lady not his wife aged nineteen and stays for some hours?104
Gorton responded immediately, dismissing any suggestion of impropriety, and setting out what had happened in some (though erroneous) detail. With considerable support from the government benches, Gorton angrily bemoaned that a ‘perfectly reasonable and proper thing can be twisted, turned, and slimed over’.105 By the middle of the next week, following continued ructions and press conferences during which St John enlarged upon his grievances, Gorton’s supporters were moving to force any concerned Liberal MP to choose between Gorton and St John. In the party room, a motion was proposed. It deplored St John’s attacks, asked him to consider his place in the party, and expressed confidence in Gorton’s leadership. The option was open to him, but St John decided against forcing a secret ballot in the vote on the motion, in which those of a similar mind might express their support. He departed the party room, thereafter sitting as an independent.106
The controversy over Gorton’s actions at the American embassy marked a turning point. For while the prime minister’s public approval barely seemed to dip in this period, the press regard for him changed decisively. They were now attuned to his behaviour, willing to write about it and interrogate it, and unwilling to accept — as had been the case for years previously — an absolute distinction between the public official and
the private person. In many ways, this change was bound up in the generational shift then underway in the Press Gallery. Predominantly white, male veteran journalists were retiring, giving way to younger, tertiary-educated reporters, including women, who were less trusting of politicians, more open to new methods of reportage and to shifts in understanding, and attuned to public perception and moods.
None of it was to Gorton’s liking. During the subsequent months, he grew increasingly critical of journalists, to the point of preparing a ‘black list’ of reporters that he tried to tell Tony Eggleton to have nothing to do with. Eggleton successfully resisted this — but he could not evince any change in Gorton’s attitudes towards the press.107
Newton was one journalist who felt the force of this antipathy. Initially favourable to Gorton, Newton had turned on the prime minister with a dislike as marked as that which the prime minister’s office, in turn, responded.108 Tentative criticisms had become blunt and increasingly merciless. The note about Ainsley Gotto in the February issue of Insight was but one instalment. In December 1968, Newton published a verbatim transcript from a Gorton press conference, replete with statements that some material was off the record, not for use, and not for attribution.109 The following April, he published a largely accurate summation of a late-1967 cabinet decision on assistance to Singapore, and boasted that his business was to ‘penetrate the government’.110 In May, another of his publications, Management Newsletter, contained a summary of a confidential cable between the Department of External Affairs and the Australian embassy in Paris, which discussed Australian ambassador Alan Renouf’s meeting with the French foreign minister, Michel Debré.111 Confidential but hardly of national importance, the leak nonetheless prompted a furious response.112
Nine days later, on cabinet orders, ten police officers arrived at Newton’s home and office in Kent Street, Deakin, just after 12.30pm, to execute a search warrant to discover the source of the leak.113 McMahon’s former staff members, Peter Kelly and Pat Wheatley, were there. Kelly saw the police car turning into the driveway, and knew exactly why they were coming. He retrieved the copy of the cable, and hid it in the bottom of a large wastepaper bag. He then rang the parliamentary Press Gallery and invited reporters to come, witness, photograph, and report the search.
The police spent eleven hours going through everything from the filing cabinets to the toilet cisterns, the beds and cupboards, the washing machine and laundry. Newton’s children came home from school to see their home ransacked, the press documenting it all. ‘No words could describe the feeling of powerlessness,’ wrote Newton’s daughter, Sarah, later.114 Police seized thirty documents relating to the Renouf-Debré cable, and left open the possibility that Newton could be charged.
By this time, Kelly had been out of McMahon’s employ for almost a year. In that time, he had hardly exchanged a word with his former boss. If their paths crossed, McMahon would say hello — but otherwise McMahon kept to his promise to Holt, and steered clear of anything related to Newton. ‘We had virtually little or no contact with him,’ Kelly said.115
Nevertheless, some time after the raid, the phone in Newton’s offices rang. Pat Wheatley answered and heard a recognisable voice. As usual, there was no greeting, and no small talk. She heard just five words before the line went dead: ‘The warrants. Check the warrants.’116
She told Newton and Kelly, who followed up on the advice. Three months later, following an application by Newton, his wife, and three other associated companies, Justice Fox of the ACT Supreme Court ruled that the search warrants had not been properly executed and thus were invalid. The documents that had been seized had to be returned. Court action arising from the raids was halted.117
Small as it was, the phone call was a sign that McMahon was prepared to aid those whose work was destabilising Gorton. Aware that Gorton was suspicious of him, gauging that there was discontent within the party but uncertain about its extent and depth, and apprehensive about the security of his position, McMahon and his allies were working to ensure that his options remained open.118
MCMAHON handed down his fourth budget on 12 August 1969. Designed with clear knowledge of the election pencilled in for the second half of the year, it was a budget that could afford largesse. As the Treasury noted in its mid-year assessment, the previous year had been one of ‘exceptionally fast growth’. Rural production had recovered from the drought. Building and construction were high. Mining was expanding rapidly. Manufacturing was rising to meet domestic demand. Imports had risen, but exports were well up on the previous year. Australia was reaching the end of the 1960s with favourable prospects.119
‘Again,’ McMahon said, introducing the budget, ‘social welfare has an honoured place in the proposals I make. They take us much further along the road the government is determined to follow in accordance with the policy it initiated last year.’120 The references to continuity with the 1968–69 budget were deliberate — a signal to Gorton’s pronounced influence over the budget process and its basic purposes. Echoing Treasury concerns that the booming economy brought with it dangers of inflation fuelled by rises in disposable income and growth in employment (itself caused by the increasing number of women in the workforce and the growing migrant intake), McMahon had sought to contain government expenditure during the budget sessions. Gorton, however, resisted this, and, aided by ministers with expensive proposals, forced a budget that was expansionary in nature, with a 9.6 per cent rise in total outlays, versus a 7.6 per cent rise in 1968–69.121
The prime minister and deputy prime minister were well able to get their own ideas included. The most notable and expensive of Gorton’s was the introduction of a ‘tapered’ means test — another step in the long-running promise to liberalise it — which allowed 250,000 people to become eligible for the pension. Pensions and payments to widows without children were increased by $1 per week (just shy of $12 in 2018 values). There were increased benefits for people who became pensioners because of the increase in the basic rates, most notably in medical and hospital treatment. There were increases in allowances paid to aged persons living in aged-care homes; there were increases in unemployment and sickness allowances.
While spending on social services was the ‘largest single item’ in the budget, there was an obvious nod to Gorton’s past as minister for education in the spending on schools, universities, and colleges. A total of $265m was appropriated for spending on schools — an increase of 38 per cent on the previous year’s total. Funding for universities and colleges of advanced education was increased for the 1970–72 triennium. Places for Commonwealth scholarships would double, to 4,000 per year. Subsidies for independent-school students would be paid at $35 per primary-school student and $50 per secondary-school student. There was also money for teacher education and training.
McEwen, for his part, had forced the inclusion of a range of concessions to rural industries. The subsidy on superphosphate was increased for the second consecutive year. The subsidy on nitrogenous fertilisers was renewed. The government’s contribution to wool research and promotion was increased, and the levy on woolgrowers reduced. The allocation for research and development grants in manufacturing and mining was doubled.
On the whole, as McMahon explained, the budget was designed to share the prosperity of Australia’s economy with the less fortunate. ‘It will be seen that humane values are in the forefront of the purposes this budget is designed to achieve.’122
The budget received a more positive reception than the previous year’s. Much of the press echoed the lines about humanity and charity: ‘It might be called a budget for the little people, the sick, the old, the pensioners, the low-income families, the widows, and children — and the Aborigines,’ wrote The Daily Telegraph.123 Yet close observers noted that while there were no explicit tax rises in the budget, the government was nonetheless relying on a growth in income-tax receipts — a natural consequence of prosperity, rising incomes, and a prog
ressive tax scale that had not been revised in fifteen years.124
And yet, while quite plainly an election budget, it was hardly McMahon’s. In interviews with the press, and in discussions with his colleagues, he let slip that he did not agree with its measures. It was unsurprising, then, that the press leaped upon this point. The budget was an ‘act of vandalism’ that represented the ‘biggest single defeat’ of Treasury since the establishment of the Vernon Committee, Maxwell Newton wrote; it was a ‘heavy blow’ to a treasurer who, Max Walsh argued, had been ‘soundly defeated’ by Gorton and ‘humiliated’ by the concessions to McEwen.125 Such statements might have hurt, but they had the benefit of allowing McMahon to duck responsibility for the budget’s consequences. As The Australian editorialised: ‘There are two sets of judgments operating within the Government and, not unnaturally, the Prime Minister’s have prevailed. The direct result is that he alone bears primary responsibility for the results.’126
This responsibility was quickly felt. The 5 per cent reduction in defence expenditure had been glossed over in McMahon’s speech, dismissed with the quick note that it did not amount to a reduction in Australia’s defence effort, but it did not escape the wary eye of DLP senators. Their concern about the falling expenditure was compounded when, two days after McMahon handed down the budget, the new minister for external affairs rose in the House to present a statement on Australia’s foreign relations.
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