Tiberius with a Telephone
Page 62
But industrial relations could certainly be an election loser. Nowhere was this better demonstrated than in a protracted series of oil strikes in the winter of 1972. In June, hoping to emulate the success of workers in the coal and shipping industries, oil-refinery workers in Victoria renewed longstanding calls for a thirty-five hour workweek and increases in their benefits. When employers, at the government’s urging, refused to enter into discussions on the matter, the oil workers went on strike. Breakdowns in negotiations resulted in further stoppages that rippled throughout the industry and the country.
By 14 June, some 14,000 oil refinery workers and 1,500 tanker drivers and aircraft refuellers were striking.43 By 21 June, crude-oil production in Bass Strait had dropped from 300,000 barrels per day to 10,000, sparking talk of petrol rationing.44 On the same day, the deputy president of the Conciliation and Arbitration Commission, Justice Moore, agreed to requests from the oil companies to insert a clause in the award covering oil-refinery workers that would ban strike action.45 That ban failed to compel the workers to back down, and by July the strikes had become serious. Newspapers led with stories about schools without heating and hospitals without power, about petrol rationing and the prioritising of essential services.
It was a perfect opportunity for Bob Hawke. Simultaneously swatting suggestions that the thirty-five-hour workweek would spread beyond the oil industry while elevating his profile as a dealmaker and advocate, the ACTU president seized the initiative and sought talks with the oil companies, positioning himself as a moderate between left-wing unions and the employers. Others made moves to lower the temperature. Justice Moore began hearing the strikers’ claims on 14 July, but made this conditional on striking workers returning to work.46 In return for them doing so, he promised to give an interim decision on their main wage claims within two hours.47 The workers narrowly voted to return to break the strike, but divisions within the unions about observing the vote provoked sharp criticism from Moore, who nonetheless gave his decision on the wage claims and backdated it to 5 June. But both sides were unhappy, and, amid tit-for-tat claims and counterclaims, the strikes continued.
The government did little to intervene. It was occupied with preparations for the budget, the planned retirement of Reg Swartz, consternation over the Aboriginal Embassy, and another rise in the rate of unemployment in June. But its absence from the debate was also driven by its rigid belief that events still had to play out and that the Conciliation and Arbitration Commission was best equipped to handle the matter. This, along with a ban on ministers speaking out, was a serious error. By mid-July, the government’s silence was conspicuous, and Hawke’s star was all the more lustrous for his unerring advocacy.
On 22 July, McMahon began looking at ways to intervene. He told Bunting to assemble an inter-departmental committee to ‘examine what the government can do and what it should do’.48 Around midnight, four days later, McMahon phoned Bunting to say ‘there was a need to move quickly. Action might be necessary in the next 48 hours.’49 Cabinet met the next day. Believing that the ACTU was trying ‘to divide the unity of the employers’ in the dispute, the government decided it ‘could no longer stand aside’. Senator Ivor Greenwood (attorney-general), Peter Nixon (minister for shipping and transport), and Phillip Lynch (labour and national service) were tasked with meeting with employers and the ACTU to find ways to resolve the matter.50 It was an idea that McMahon would claim to have been against from the beginning.
The ministers proceeded to call upon Hawke at the ACTU office in Trades Hall, Melbourne. ‘You’ve never seen such embarrassed people as those three as they walked into the old ACTU building, past the media,’ Hawke later said. ‘But they faced up to it. And we just belted at them that what they were doing was totally unacceptable.’51 The meeting was fruitless, and Hawke now took aim at the government, whom he said had ‘applauded’ as the oil companies cheated and reneged on agreements.52
Hawke’s involvement was paying off. While McMahon blamed the strike on left-wing unions determined to destroy the industrial relations system, Hawke was winning credit for successfully steering the dispute towards a point where it was possible to envisage a resolution. It jolted McMahon again. ‘He had decided to go ahead with something decisive,’ Bunting wrote, after another telephone call on 29 July. The decisive act that McMahon had in mind was to announce his intention to call Parliament together to resolve the dispute.53 Should it come to this, he would be prepared to legislate to de-register the responsible unions and freeze their funding, much as he had threatened the WWF in 1965. McMahon believed that time was of the essence in all this. ‘I must be saying something tomorrow night,’ he told Bunting.54 ‘We need the facts and the issues set out. Deceit and disunity must be exposed,’ he told Bunting the next day, Sunday 30 July.55
McMahon broke into national television programming that night. Declaring that the arbitration system ‘can and must’ settle the dispute, McMahon threatened to call Parliament together if the dispute were not resolved; then he telegrammed the state premiers to say that he would need their co-operation to alleviate the difficulties caused by the strike.56 With his own side down two senators for health reasons, McMahon set his ministers to determining the likely numbers for a sitting of Parliament. The numbers in the Senate would be close, relying on the DLP and independents joining the government in any vote, and the House would require at least two days’ sitting in order to overcome Labor’s expected procedural obstruction.57 McMahon would not be dissuaded from acting; as he told Bunting in another midnight phone call, ‘The feeling for drastic action is unbelievably strong.’58 Certainly he had plentiful support. Howson thought the ‘strong showing’ would be well received and of ‘great electoral value’.59
But McMahon had not yet said publicly what he would do. This left an opening for criticism that his threat was inappropriate, and that over-the-top action might lead to a much larger and more dangerous confrontation with the unions. Rumours that he intended to de-register unions also opened the government to criticism that it would be the one usurping the role of the Conciliation and Arbitration Commission. ‘The interests of the nation, the oil industry, workers, and the public may have been better served if the government had had nothing to do with the dispute,’ Hawke said.60 Labor, which had remained mostly quiet throughout the dispute, now gave notice that it would move a motion of no confidence in McMahon’s leadership if Parliament were recalled.61
Within the government, there was now concern about the idea. Would Parliament still be recalled if the dispute was resolved? Uncertainty about the wisdom of the move grew. Searching for options, drawing on his experience as minister for labour and national service, McMahon telephoned Bunting in the morning of 1 August to refer him to section 29A of the Conciliation and Arbitration Act, which would allow Justice Moore to call together the parties for negotiation. Could Bunting telephone the secretary of the Department of Labour and National Service, Dr Halford Cook, and tell him to pass on the option to Justice Moore? Bunting did so.62 By the evening, McMahon was still intent on pushing ahead, but was making clear intimations that developments in Melbourne could avert Parliament being recalled.63 Reid was certain that McMahon did not want Parliament to meet at all. ‘Obviously fearful of a motion of no-confidence,’ he wrote in his diary. ‘Fairbairn and the others forced him into it. He kept hoping for a miracle — for Hawke, Moore, God, anyone to solve his problem.’64
The end came quickly. At 6.30 that evening, a meeting of the legislation and programming committee of cabinet signed off on proposals for legislation, modelled on that used to break the coal strikes in 1949, that would de-register the unions involved in the dispute.65 Emerging from the meeting, McMahon announced that Parliament would return on Friday 5 August.66 But within minutes of his statement came news of an announcement from Justice Moore. ‘Acting on my own initiative, I have today had informal discussions about the oil dispute and in the result I have made the following recommendati
ons,’ Moore said, in a statement issued to the press. Striking workers would resume work on 3 August, and employers would seek an adjournment of the proceedings listed for 4 August in the Industrial Court. ‘In the event of these two conditions being complied with I will call a conference for Monday, August 7,’ Moore said, ‘to fix a timetable for the final resolution of this matter by a date to be decided by me.’67
Moore’s statement ended the matter then and there. Hawke, who had made noises for several days about showing proof of the government’s intransigence on national television, cancelled his appearance on grounds that he might prejudice an early settlement, and, instead, agreed to debate Lynch on the ABC’s This Day Tonight. The unions, apprehensive about the effects of a full-bore attack in the Parliament, were ready to negotiate, as were the oil companies themselves. It was over.
‘French champagne called for,’ Reid wrote, of events in McMahon’s office after Moore’s announcement. ‘They sat in PM’s office drinking it. As Hawke debated with Lynch, [Don] Dobie said, “That’s the finish of Hawke,” as fine a political non sequitur as anyone could produce at that time.’68 Dobie was wrong, and, though the crisis was certainly finished, it was not long before McMahon again began to attract criticism. Fraser thought it embarrassing that Lynch, Greenwood, and Nixon had gone ‘crawling’ to Hawke, prompting McMahon to say that he had disagreed with the idea.69 Sinclair thought that McMahon’s handling of it had been inept. McMahon had rushed out of the cabinet meeting on 1 August to take a ‘telephone call every five minutes,’ Sinclair would say later. ‘Everybody accepted that the meeting was a disaster.’ To Sinclair, McMahon’s handling of the matter was proof that he could not fit the mantle of prime minister. ‘The job was beyond him.’70 Snedden had a similar view. ‘That was the beginning of the end of the McMahon government,’ he would say.71
There was also criticism of McMahon’s announcement that Parliament would be recalled. As he told Bunting on 2 August, ‘it was being said that he should not have issued his statement.’ He had butted in on Moore, apparently. McMahon told Bunting he had not been aware of Moore’s statement.72
The confusion continued. By Thursday, journalists were questioning McMahon, and Bunting was counselling the prime minister to move on. One reporter, Sydney Morning Herald journalist Brian Johns, accused McMahon of being a liar. He had spoken with the prime minister on 1 August, and, in that conversation, McMahon had said he had no knowledge that Moore was about to intervene. But then, in an interview that Thursday morning, McMahon had been asked whether he knew before issuing the statement. This time he said he did know. ‘It may not be a case of lying,’ Alan Reid wondered, when he sniffed out this story. ‘It might be another example of memory going.’73
McMahon may well not have been aware that Moore was going to involve himself — but he certainly was aware that his suggestion Moore do so had been passed on. This was the basis for McMahon’s later attempts to claim the credit for the end of the dispute. He had acted to end the strike, he would say.74 He was right: he had made moves to do so, and his pointing out of section 29A of the Act may have been influential in Moore’s actions. Few, unfortunately, would believe him.
SNEDDEN delivered the 1972–73 budget on 15 August. It was, as the treasurer said, designed almost wholly to ‘step up’ the rate of economic growth after a year of uncertainty and crises, of unexpected developments both domestic and international. Total Commonwealth expenditure, therefore, would rise by 11.6 per cent while simultaneously returning more money to Australians on predominantly middle and low incomes. Pensions would increase; the means test would be further eased with a goal of abolishing it, within three years, for those aged 65 and over; exemptions from estate duties would double to exempt ‘modest estates’; people earning under $1,041 would be exempt from income tax; changes to the income tax rate would see the average wage earner’s tax bill reduced by 17 per cent. ‘The briefest portrayal of the Budget is as follows,’ Snedden said. ‘Taxes down; pensions up; and growth decidedly strengthened.’75
Was it? Commentators at the time noted that the 1972–73 budget was the culmination of a marked turn from the strategy laid out the year before, and the evidence that Snedden cited to justify that change was thin. Inflation had abated only modestly, and the rise in the consumer price index for the June 1972 quarter, at 6.1 per cent, was not much below the 7 per cent rise that had so troubled McMahon and Snedden at the start of the year. Snedden could not appreciate it at the time, but the conditions were a sign of a shifting economic order: slow economic growth and high inflation, nicknamed ‘stagflation’, would soon come to bedevil governments the world over. In a political sense, too, the change in budget strategy left the government open to charges of inconsistency. While it had been generous, it also ran counter to any sense of a consistent and steady government with a developed policy. As Whitlam observed, ‘Last year, all brakes were on; this year, in the words of the Prime Minister, all stops out.’76
Preparation of the budget had, again, been difficult. The most contentious and long-running issue of difference had been Billy Wentworth’s well-publicised proposal that cabinet abolish the means test for people above the age of sixty-five. ‘The means test could turn out to be a killer,’ he had said.77 McMahon had been broadly in favour, claiming it could be an election-winning issue. But Snedden had been utterly opposed on grounds of the enormous cost — estimated to be between $400m and $600m — and the inequities of allowing the wealthy to access what, in his view, would become a supplementary income. Cabinet compromised by deciding to phase the test out over the following three years.78
McMahon continued to have problems with the Treasury. Throughout the course of the budget preparations in July and August, he peppered Bunting with notes to record what he regarded as the department’s obfuscation, wilfulness, deceptions, and mistakes. Its attempt to have social service and welfare budget submissions circulated among all ministers was ‘another Treasury stunt’, likely designed to ensure the submissions would be heavily criticised, he said.79 ‘Treasury was seeking to lay down policy in areas belonging to other Ministers,’ he told Bunting later.80 He was ‘amazed’ at the papers coming from Treasury. ‘He said they were putting the papers forward as if they were the policy makers,’ Bunting recorded. ‘They should not do this.’81 McMahon found it ‘strange’ that the Treasury was suggesting across-the-board tax cuts of 10 per cent when they were saying only in February that 2.5 per cent was too much.82 He returned to the topic not long afterward:
He again expressed surprise at the ‘big turn-around’ by Treasury. They had been telling us five or six weeks ago to stand fast. Now they were saying there was scope for significant stimulus.83
All of this turned McMahon completely against his old department. He was angered by it, antipathetic towards it — and towards his treasurer.
There was bitterness between them both over leaks. Appearing on television on his new programme, Federal File, on Sunday 13 August, Alan Reid had appeared to forecast many of the budget measures.84 That it was Reid doing so ensured that McMahon was quickly suspected as his source. In a telephone call with an angry Snedden on 14 August, McMahon conceded that Reid had visited him on the evening of 12 August and asked about the budget’s contents. But he had sent Reid packing, McMahon told Snedden. Furthermore, what Reid had said about the budget was, in fact, incorrect. Snedden’s persistent anger over the matter, and the subsequent rumours rife among cabinet colleagues that McMahon had leaked the budget measures, caused McMahon to become so aggrieved with Snedden that he considered removing him as treasurer.85
Labor assailed the budget and the leaks, but within days it became clear that the tax cuts, education spending, and pension rises, had made an impact. Most important, it seemed, was its reception within the government. Just over a month earlier, a group of cabinet ministers — including Anthony, Sinclair, Snedden, and Fraser — had supposedly discussed in the cabinet anteroom whether it was still po
ssible to remove McMahon from the prime ministership. ‘The idea was that [Robert] Southey would persuade McMahon to have a diplomatic illness and then Anthony would take over,’ wrote Reid, once he heard. ‘Then after elections [the] diplomatic illness would turn into a mild heart attack and other arrangements [would be] made about the succession.’ Was it true? Was it even possible that they could think McMahon would let go so easily? ‘Pipedreaming,’ Reid called it, but even a week before the budget he was returning to the question: ‘Is it too late to replace McMahon?’86
Thus the favourable reception to the budget was of larger significance than it might have seemed. ‘Rebels jammed,’ wrote Reid. ‘They’d still like to get rid of McM[ahon]. But they can’t in the light of what he has done.’ An ‘ecstatic’ McMahon believed he was ‘over his final hurdle’.87 But his advantage over the malcontents quickly evaporated. A favourable press reception and awareness that the budget could be a campaign issue caused Snedden and Anthony to wonder whether the government should call a snap election. Whitlam, after declaring the budget ‘the last gasp’ of a twenty-three year-old liberalism, had even said, ‘By all means let us have an election on this budget; the sooner the better.’88 Why not take him on, force him to oppose the budget in an election? At the very least, Snedden and Anthony thought, it would allow the government to avoid a presidential-style campaign where the merits of McMahon and Whitlam would be thrown into stark comparison.89 It took a week for the idea to spread, but when Anthony and Snedden put it to McMahon he would not consider it. His need to protect his status and authority caused him to resist, to be utterly opposed. ‘He exploded and shouted us out of his office,’ Anthony said later.90