In public, McMahon did his best to conceal the fact that the government had been forced into the decision. He believed it was the responsibility of government to find out where the poverty line was, he said, and thus it had decided to hold the enquiry.39
TERRORISM would also draw the government’s attention. In the early hours of the morning of 5 September, eight members of the Palestinian terrorist group Black September stole into the Olympic Village in Munich, Germany. By dawn, they had murdered two members of the Israeli athletic team and taken nine further members hostage. Twenty-one hours later — after protracted negotiations, a bungled attempted rescue, and an airfield firefight — all of the hostages, a German police officer, and five of the eight hostage-takers were dead. Ten days later, on 16 September, an explosion in the General Trade and Tourist Agency, on Sydney’s George Street, injured ten people, two of them seriously. Another explosion occurred on Parker Street, after a bomb was recovered from the George Street Adria Travel Agency. Both of these attacks were thought to have targeted Yugoslavian migrants who occupied and operated the agencies. A week later, Australian authorities intercepted two letter bombs, posted from Amsterdam, intended for the Israeli consulate in Sydney. Three further letter bombs, intended for the Israeli embassy in Canberra, were intercepted on 25 September.
Collectively, these attacks elevated terrorism on the political agenda and brought to the fore significant tensions within the government. Initially, those tensions centred on appropriate ways to register sympathy. McMahon’s quick condemnation of the Munich attacks on 6 September was followed by questions over whether to follow it with a condolence motion in the House.40 In light of the Israeli government’s subsequent strike on Palestinian positions in Syria, Lebanon, and Jordan, which had caused 200 fatalities, Keith Waller advised McMahon’s office that such a resolution would be ‘badly received in the Arab world’.41 McMahon would move the resolution, on 12 September, but only after clear pressure from Labor MP Barry Cohen and representations from prominent Jewish Australians to do so.42
Then there were divisions over how best to respond to the domestic terrorism of the Sydney bombings. Clearly, these were targeting Yugoslavian migrants, and were connected with a long-running campaign of violence by Croatian extremists. McMahon was not unaware of this campaign, nor of the long-running failure to take action over it: in December 1969 he had written to the attorney-general, Tom Hughes, of his worry that Croatian extremists had ‘come to believe that they can act with impunity and that they can, therefore, without risk to themselves, step up the level and frequency of violence’.43
A possible reason for the failure to take action lay in the considerable support the government enjoyed among Eastern European migrant communities, and the sympathy for these stridently anti-communist communities within ASIO and the Commonwealth Police. Why irritate those supporters, or draw attention to the Liberal Party’s association with less-savoury elements of those communities? In August, then, after security and militia forces killed six Australian-Croatian members of the Utaše terrorist group while repelling a failed incursion into Yugoslavia, attorney-general Ivor Greenwood told a disbelieving Yugoslavian ambassador that there was no evidence of Utaše terrorist groups operating in Australia.44
In the wake of the September attacks in Sydney, Labor leaped on the government’s apparent indifference to domestic terrorism, and drew attention to the likely explanations. Accusing Greenwood of failing to act, Clyde Cameron noted that Croatian terrorist groups were, like Greenwood, to be found ‘on the extreme right of the political spectrum’.45 Lionel Murphy, meanwhile, used the attack to criticise the government’s security credentials. ‘How is it possible,’ he asked, ‘with the resources at the disposal of the Attorney-General, that after these warnings came and after the complaints were made to the Australian Government, so little is done that we have people able to be bombed in Sydney on Saturday?’46
The criticism was a jolt to action for McMahon. Keen to be seen to be doing something, he began to voice thoughts about a royal commission to investigate violence among migrant communities, potentially even among the more militant unions as well.47 His thoughts about action coalesced with the international pressure, in the wake of the Munich attacks, for greater government attention to terrorism. But there was immediate opposition to the prospect of a royal commission within the bureaucracy and government. In a meeting with the secretary of the attorney-general’s department, Clarrie Harders, Bunting noted that there were constitutional problems that needed to be considered: the government could investigate violence against migrants, yes, but ‘violence generally in the community was another matter’, potentially one that would require joint action with state governments. Moreover, a royal commission should be reserved as a ‘last resort’ for ‘major investigations’. Harders did not debate this: he said that he hoped McMahon would not ‘bolt’, though it was clear that the prospect of a royal commission would be discussed by cabinet.48
When cabinet met, on 19 September, it provisionally decided against any action that might interfere with the police investigation underway in Sydney. Greenwood’s subsequent submission to cabinet on 29 September continued to hold the line against a royal commission, variously arguing that nothing had changed since cabinet’s original decision; the constitutional problems were near insurmountable; the government might appear to be overreacting, and to be doing so for political advantage; if a commission were established in time for the election campaign it could become a ‘forum for unsubstantiated allegations involving political prejudice’; and a royal commission solely into the Yugoslav migrant community would not be advisable. McMahon was not inhibited when he read it: ‘I don’t agree,’ he wrote repeatedly.49
If McMahon had hoped that he could wield a royal commission as a sign of his government’s determination to act (however belatedly), or to fuel a campaign based on law and order, he was to be disappointed. Cabinet would not agree with him. When it met on 10 October, it directed instead that an inter-departmental committee be established to ensure greater co-ordination with the states ‘in relation to political and industrial violence and terrorism in Australia’.50 That committee would meet four times before it was disbanded. Its work would be palpable only in the future: in a disastrous raid on ASIO, and in a much-later royal commission into ASIO.51
ONE area that received a significant amount of McMahon’s attention in 1972, in a clear demonstration of his attempts to steer the government towards new ideas and policies, was that of urban and regional development. The Commonwealth had long regarded involvement with urban affairs as beyond its remit, but in the previous seven years — amid calls for a national approach to urban affairs from academics and planning professionals — there had been pressure for this to change. Whitlam was soon aware of the opportunity that the issue presented, and had foreseen an accompanying push for decentralisation and rejuvenation of regional centres. His 1969 prospectus, An Urban Nation, had set out plans for a new Department of Urban Affairs to provide a way for the Commonwealth to play a role in urban and regional development, with provisions for sewerage, rehabilitation, and area assistance. There had also been pressure for action in the states: officials with Commonwealth and state governments had worked for seven years to produce a report on decentralisation that would become public in October 1972.
Labor’s long interest in the policy, and the government’s long antipathy for the area, was quite evident in the way it approached urban affairs throughout 1972. In March, the minister for housing, Kevin Cairns, bemoaned the fact that state and local governments had failed to attend to quality-of-living issues in cities, thus ‘causing the public to direct its attention to the Commonwealth Government’. From a political perspective, this attention necessitated a response. As Cairns pointed out:
It would seem that there is a general absence of anything like an urban policy at all levels of government. Nor are we likely to have the framework for urban policy formul
ation whilst a variety of institutions at different levels operate in relative isolation. Moreover, as long as there are no agreed-upon goals, there can be no meaningful co-ordination. This submission suggests that our first priority is not to try to determine urban policy, but to seek agreement at all levels that an urban policy is needed and to establish the facts on which a sensible urban policy may be based.52
Cabinet deferred a decision, but the next month McMahon was pushing for action: he wanted a special decentralisation unit set up in his own department.53 He knew that it was both new and that there was a clear requirement for a response. As he wrote to Anthony on 15 May, his ‘firm view’ was ‘that portfolio authority in relation to what would constitute major new initiatives by the Commonwealth touching state responsibilities must, for the time being at any rate, remain with me’.54
The secrecy and careful handling was deliberate. McMahon was coming up against concerted scepticism within the bureaucracy over decentralisation and urban affairs: only recently, the Treasury had ‘poured cold water’ on a mooted scheme from Hunt’s Interior department to develop regional centres.55 Attempts to push a policy along were constantly hampered and slowed. Sir Frederick Wheeler regarded one draft of a new policy as ‘a somewhat dangerous document … particularly as to urbanisation’, namely for the expenditure that could be involved.56 Approaches were made to Sir John Overall, the head of the National Capital Development Commission in Canberra, who agreed to give advice. By mid-September, cabinet had agreed that a National Urban and Regional Development Authority (NURDA) should be established, with Overall as its first head.57
McMahon announced the decision five days later. The authority would be tasked with ‘fostering a better balance of population distribution and regional development in Australia,’ he told the House, and would back the growth of regional centres and sub-metropolitan areas around existing cities. As with the environment, there would need to be consultations and close co-ordination with the state governments, and legislation for establishment of the authority would soon follow.58 It was a start, however belated, but it was immediately clear that the ALP, by virtue of its long-developed policy, had the upper hand. What about local government, Whitlam asked of McMahon. What about pollution, education, health care? Where would they figure in all this? Whitlam had specifics to offer, too. Noting that McMahon had been ‘coy’ about which regional centres would receive backing, the Labor leader was straightforward: ‘There should be no coyness about this. The obvious first centre at which to start is Albury-Wodonga.’59
There were others who wondered whether McMahon knew what he was doing. Reid received an ‘incredible’ briefing from McMahon that same day. He was amazed. ‘McM[ahon] didn’t seem to know what he was talking about,’ Reid confided in his diary. ‘Anthony was present. He was grimfaced. He raised his eyes to heaven as he left. Understandable.’60
But there were still problems. Coming amid a rush of other legislation that the government wished to introduce, the drafting of the legislation for NURDA took until 10 October, and required McMahon’s personal intervention to see it finished. When McMahon did introduce the legislation, on 11 October, it was amid some embarrassment for his mixing it up with other Bills that the government was working on. It was ‘interim’ legislation only, but McMahon was proud of it nevertheless. It fulfilled his promise to tackle the issue; moreover, the Bill, in his eyes, was ‘amongst the most important legislation introduced into the Federal Parliament during the post-war years’. It was an important about-turn on previous views of Commonwealth power and responsibilities. ‘It marks our recognition that there is a direct contribution that the Commonwealth Government can make in national urban and regional development for the benefit of all Australians.’61
Importantly, for the campaign to come, it was also a move to engage with Labor. ‘In making its late run,’ The Sydney Morning Herald editorialised afterward, ‘… the government is ensuring that the Labor case will not win by default, and for the first time on record the two major political groups will present competitive policies on the problems of the cities and on decentralisation.’62 But it was very late in the year, very late in the political cycle. As Jonathan Gaul was to say, ‘It didn’t get much attention.’63
Amid these efforts on decentralisation, the government worked to address areas of palpable commercial concern. The High Court’s decision to strike down the Trade Practices Act 1965–69, in the so-called ‘Concrete Pipes’ case, had overturned decades of understanding about the corporations power.64 The ruling would eventually provide for a great expansion of Commonwealth power, including the ability to regulate the trading activities of trading organisations, but, in the short term, the ruling left no valid trade practices legislation in operation. This ended when the government passed the Restrictive Trade Practices Act 1971, but it made clear at the time that this was interim legislation only: there would be more to come. Amid concern over competition and monopolies in Australia, this turmoil caused trade-practices legislation to become the object of a significant amount of scrutiny — more, in fact, than there had in quite some time, as the surprised commissioner of trade practices was to write.65 In May, attorney-general Ivor Greenwood declared that the government would introduce new legislation that would, most notably, widen the scope of existing provisions within the interim Act so as to investigate monopolies and mergers (including takeovers) when they were judged to be against the public interest, and establish a Monopolies Commission that could investigate monopoly conditions.66
But the complexities involved, as well as the degree of attention given to different parts of it, caused the government to forego introducing all-encompassing trade-practices legislation. In the same month as Greenwood made his statement, the DLP sought to halt all foreign takeovers and, pending a report from a Senate committee, demanded that the government initiate legislation to maintain Australian ownership of Australian companies.67 Although it appeared to be an issue of cynical nationalism, the concerns raised about foreign takeovers were not without foundation. Capital inflow to Australia had increased dramatically over the preceding three years, from $797m in 1969–70 to $1,841m in 1971–72, and foreign takeover bids for Ansett, Kiwi, Fresh Foods, and Australian Frozen Food Industries had been controversial. Pressure within the Liberal Party caused the government to address the issue. But where McMahon felt the pressure to do something, Snedden was less than lukewarm. He believed that any action could be damaging to Australia’s development.68 McMahon grew frustrated. ‘He wants Treasury hurried up on foreign investment and unemployment,’ Bunting wrote, after a hectoring phone call from McMahon. ‘Do they and I understand the importance?’69 Snedden’s reluctance, along with that of Treasury, meant that it took considerable time for the government to find solutions — and for indecision to hamper those solutions when it did.
In September, a cabinet meeting concluded that ‘it would not be practicable’ in the remaining parliamentary session to pass legislation that would prevent foreign takeovers. Time was running out too quickly.70 But then, while announcing the government’s policies on overseas investment, McMahon stated that ‘the right balance between our desire for an Australian Australia and for greater growth and prosperity must be struck’. The time was right, he said, to begin trading off some of the benefits of overseas capital for a greater share of Australian industries and resources.71 Speaking on the Macquarie Network the next day, McMahon stated that there should be a consideration of how Australia’s interests figured in takeover bids from foreign companies. ‘The point is that we have an abundance of overseas reserves and, much more importantly, Australians want to own Australian companies and they want an increasing share of ownership in overseas corporations.’72
But the lack of an immediate follow-through and the diminishing days in the parliamentary calendar led to suggestions that the government had no intention of acting. In an effort to counter those suggestions, when he returned for another interview with Ma
cquarie on 5 October, McMahon stated that he had given directions to his department to prepare legislation to establish the vetting he thought necessary for foreign takeover bids. ‘The Bill has been completed now, and I put the final touches on it yesterday with the technical experts, and I very much hope I will be able to introduce it into the House in the coming week,’ he said.73
McMahon was either mixed up, or he was lying — for he was wrong. There had been no preparations made for a Bill on takeovers. ‘It just was not in existence as yet,’ Bunting would write.74 This would not dissuade McMahon. The next day, 6 October, he told Bunting that ‘strenuous efforts’ were needed to get a Bill ready for Parliament. He believed that his statements had to be backed up with action. But there were problems. Bunting was uncertain whether a Bill could be drafted in time. Moreover, cabinet had decided against any kind of interim legislation. Would instructions for a Bill go against what cabinet had decided? McMahon was critical of Bunting’s suggestion that he consult with colleagues about the matter. He wanted to know why Bunting was ‘resisting’ his line of action; Bunting must understand that he was making ‘his own political judgments,’ McMahon said. There had to be a statement of action. He needed to be able to say that the government was moving — on foreign takeovers, on urban and regional development, on restrictive trade practices, and on monopolies.75
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