12.
The more things change …
In 1982 the resources boom, such as it was, turned to bust. The economy contracted sharply, pushing unemployment above 10 percent, while inflation remained in double digits. This new recession might have been enough in itself to ensure Fraser's 1983 election defeat.
However his government had been in decline for some time, and no doubt a certain exhaustion of the government was inevitable after seven years. In capitalist politics the spoils of office open the way for corruption, leading to damaging scandals. The policies which seem coherent at first begin to unravel under the pressure of events, causing ministers to fall out. Meanwhile the Opposition refashions its policies and image, while voters begin to forget its past sins. So it was with Fraser.
The scandals began early. Before the 1977 election Fraser forced Treasurer Phillip Lynch to resign because his business associates appeared tainted by shady land deals in Victoria, then in 1978 former deputy whip Don Cameron effectively accused front-bencher Eric Robinson of manipulating an electoral redistribution. Robinson survived but the ensuing investigation brought down Senator Reg Withers, while the Bulletin published charges that Fraser himself had heavied Robinson to change his evidence. Ian Sinclair came next: in 1979 this National Party heavy resigned from Cabinet, after special investigator Michael Finnane accused him of forgery, as well as suggesting delicately that Sinclair was prone “to give evidence which is untenable”. Finally in 1982 the Costigan Royal Commission tipped a huge bucket on the government's handling of tax evasion.
For years Fraser had supposedly been preparing an attack on tax cheats. In August 1975 the Commissioner of Taxation had authorised the Deputy Crown Solicitor in Perth to act against “bottom-of-the-harbour” schemes, but little happened thereafter. The instructions to prosecute, wrote Costigan, were found in 1982 “relegated to a bottom drawer where I was told they had rested undisturbed for the past five years.” This had allowed a $6 billion explosion of cheating, at the very time that the government was campaigning against “dole bludgers” and pontificating about financial rectitude. After Costigan's report Fraser rushed to prepare legislation, but he was caught between two fires. Workers despised his hypocrisy, while business hated him for making the legislation retrospective.
These pressures spurred on a fragmentation process that had slowly gathered pace since 1978, when complaints surfaced that Fraser was too authoritarian. “You mistake command for leadership,” one front-bencher told him. He was said to go over ministers' heads to consult public servants, and he certainly didn't hesitate to dump colleagues and antagonise people -- to the point where by about 1981 he had assembled a fair collection of enemies within government ranks. There were also ructions between the coalition partners, due mostly to rivalries at State level, but fuelled by resentment among Liberal backbenchers at their grazier PM's chummy relations with the Nationals.
The result was a whiff of that same instability which had so damaged Whitlam, prompting a Liberal minister to say: “It's not the policy or the general direction of the government which is in trouble, it's the management of the government.” He was mistaken, however. While the crisis of management was real, it could have been handled were it not for the collapse of Fraser's economic strategy. His government's credibility depended heavily on economic success because of its peculiar starting point.
Malcolm Fraser had won power in brutal fashion. While only a minority loathed him for it, most of the electorate was uneasy; even in the business world some had voted Liberal with a bad taste in their mouths. Liberal Senator Chris Puplick later observed: “A large proportion of the country always believed, even after the 1977 and 1980 elections, that the Fraser Government was there because in the first instance it had done something improper.” The electorate would continue to support the government only if it produced results.
Yet the very circumstances of Fraser's 1975 victory made this harder to do. Russell Schneider, a close observer of the government, wrote that a “worry over the legitimacy of his bid for power ... dominated Malcolm Fraser's attitude to his years in office” with the consequence, according to John Howard, that “we did not always succeed in practising what we preached.” Liberal “dries” as well as the ALP have developed this line of argument to suggest that Fraser was a failure from Day One, both in fiscal policy and in industrial relations. But it is not necessary to be so simplistic.
Certainly there were early deviations from the Prime Minister's announced path of fiscal austerity, such as the tax cuts offered in the 1977 election (and soon withdrawn). A look at successive budget deficits, however, shows his assault on government spending did achieve some initial success. The deficit had peaked at $3500 million under Whitlam. Under Fraser it fell to $2719 million in 1976-77. It rose again but then fell to $2033 million in 1978-79 and $1110 million in 1980-81, finally hitting a low of $549 million in 1981-82 amidst the short-lived prosperity of the resources boom. Moreover, Fraser undoubtedly won important victories over the unions in his first years in power. The government's problem was that conservative fiscal policy and union-bashing did not address the core of the deep problems facing Australian capitalism.
Consider Figure One (next page) which shows economic growth. A sharp downturn in 1974 brought on the agony of the Whitlam Government. Deficit spending aided a temporary revival by 1976, but once the Fraser regime had administered savage cuts to government programs, recession returned. A better performance between 1978 and 1981 was followed by yet another sharp downturn, the worst since the Great Depression. It was hardly what those voting Liberal had hoped for.
The government's strategy had been based on fashionable theories which linked wages, inflation and unemployment closely together; Fraser thought he could solve economic problems by reining in union power and “fighting inflation first”. The facts did not confirm the theories. A dramatic surge in inflation had taken place in 1974 about the same time as a major wage offensive by the unions, but while something like a “wage-price spiral” undoubtedly occurred, much of the inflation was in such areas as food prices where union demands were not decisive. Unemployment rose in the mid-to-late 1970s, weakening workers' bargaining power and forcing wages down, which took some pressure off prices. After falling for a time in Fraser's early years, though, inflation began to rise again from 1979 -- rather too early to be blamed on the “wage push”.
Inflation and unemployment were sometimes combined in a “misery index”, an eloquent statistic which appears in Figure Two. The two most miserable years were 1975, when Fraser swept to power promising to restore prosperity, and 1983, when Fraser fell to a new Labor leader making similar promises. Given that union militancy figured so greatly in political life, it is equally interesting to consider the levels of disputation shown in Figure Three. These also show the beginning and end of the Fraser era. A huge wave of industrial militancy contributed to Whitlam's crisis, and strike levels were still high in 1975. After a boost to the 1976 figures due to the Medibank strikes, disputation did fall away considerably as the recession hit home, remaining low until 1978. At the first sign of economic revival, however, strikes burst out all over, showing that the unions remained quite strong.
Thus Fraser was unable either to solve the economic crisis or to smash the unions. From the bosses' point of view he could be forgiven the first, for the more sophisticated among the bourgeoisie realised that the crisis was world-wide. Most voters, however, were no more prepared to accept this excuse from Fraser than from Whitlam. Their dissatisfaction was complemented by a growing ruling class disillusionment with Fraser's handling of industrial relations. The employers disliked brawls with the unions unless they yielded results, and the “wage push” of 1979-81 convinced many that his methods were flawed. As early as 1980, when Bill Hayden ran a capable election campaign against Fraser, it was clear the electoral pendulum was swinging back to Labor, so that by 1982 the government was deeply worried. They particularly feared Bob Hawke, who was now in parliament.
Fraser also paid the price for creating false expectations during the resources boom. In 1981 he had expressed a “determination to see that the prosperity flowing from these great ventures will lift the living standards of every Australian family”; alas the fleeting resources boom had generated little enduring wealth. At the same time his last assault on the public sector -- the “Razor Gang” exercise -- had achieved only small savings at a high political cost.
So by 1982 a personally unpopular Prime Minister, with few permanent achievements to show for years of hardship and confrontation, found himself driven back to old-fashioned deficit spending in an effort to lift the economy out of recession and buy votes. The monetarism he had embraced in 1975-6 was sloughed off, to reveal the Keynesian within. In a curious combination of “too much, too late”, he tried a give-away election budget, full of tax cuts and concessions, with many welfare benefits boosted by up to 50 percent. He also funded an ambitious new airport at Brisbane. The pork-barrelling continued through the year and into 1983, until the Sydney Morning Herald was moved to sarcastic jibes about this “born-again Keynesian”:
The name of his game is now job creating capital works. First were the employment projects funded from the proceeds of the wage freeze on Federal public sector wages. Then the speeding up of the Alice Springs to Darwin railway building. Then the offer of $500 million for an alternative to the Franklin Dam. Then the $640 million water resources program. Finally a $166 million program to celebrate the Bicentennial -- although doubtless there is more to come.
The government was locked into even more spending, because it had underestimated both the drought which was emerging and the dole pay-outs which the recession would require. The budget deficit, already swollen by falling revenues, blew out so spectacularly that Liberal right wingers moaned privately about Fraser the “closet centralist socialist”. For another government this would have been embarrassing enough. For Malcolm Fraser it was a fiasco.
A freeze on wages
In the industrial sphere, 1982 did seem to bring the government some success, for while the unions had shown their strength in the economic upturn, recession had tipped the balance of forces against them once more. In November the government seized on rising jobless figures to argue for a clamp on wages, and Fraser called a special Premiers' Conference for 7 December to consider a national “wage pause”. Though National party leader Doug Anthony spoke vaguely about restraining “other incomes”, it was soon clear that professional incomes, interest and dividends would be inviolate. Wage earners would bear the burden of sacrifice.
The core of Fraser's plan was a freeze in the public sector. Government wages would be pegged and the savings used to create jobs, with some of the money going to the States as bait to lock in the Premiers, including those from Labor States. The public sector would then set the pace for private industry. The economics was shaky -- by reducing consumer demand, the pay freeze might destroy more jobs than it created -- but the proposal was primarily political. It legitimised the argument that wage rises caused unemployment. To the extent that Bill Hayden, the ALP Premiers or the ACTU went along with Fraser's plan, Fraser would gain the labour movement's imprimatur for this contention.
The freeze took some selling. Employer groups knew this sort of measure had failed before, because the pent up wage pressures had exploded in “catch-up” claims once the clamps came off. It was likely to provoke calls for price control, the last thing business wanted to hear. The Labor Premiers seized the opportunity to demand expansionary fiscal and monetary policies as trade-offs. Even federal Cabinet divided on the specifics, with Treasurer John Howard wanting to legislate an immediate private sector pay freeze while Ian Macphee, now in the Industrial Relations portfolio, preferred “to basically complete the community round [of pay rises] and then say there will not be any more increases for 12 months.” The Arbitration Commission seemed to agree with Macphee: it gave cost of living increases to 15,000 waterfront workers on 20 November. About 2 million other workers were in the “wage queue” behind them.
Then the ACTU hinted on 23 November that it would comply. While its president Cliff Dolan went through the motions of “rejecting completely” the concept of a wage freeze and reaffirming union policy of maintaining real wages, the ACTU secretary Peter Nolan was telling reporters: “we would be stupid to say we were unbending”. Two days later the Arbitration Commission signalled its own acquiescence by granting only the first instalment of an oil industry pay rise. Towards the end of the month the ACTU went further, suggesting a six-month freeze would be accepted if the savings went to a “national employment fund”, or were in exchange for other job creation measures along with price control. None of these proposals had a hope of being implemented. Their sole impact was to legitimise the freeze concept and the wages-cost-jobs ideology behind it.
After some theatrics the Premiers' Conference produced a messy compromise: a six-month freeze for most workers, 12 months for some, with limited job creation. The Arbitration Commission decided some workers would be allowed a limited “catch-up”. On the other hand federal government employees copped a 12-month freeze imposed by legislation, with employees of the non-Labor States facing a similar fate. The Wran government showed its egalitarian principles by exempting State MPs from the restrictions -- they got 7 percent from January. But despite Cliff Dolan's attempt to dismiss the freeze as an “absolute farce ... political gimmickry at its worst,” it was very effective politics and put the unions on the defensive. Sensing this, a number of employer bodies announced plans for further attacks on wages and conditions.
The unions held a flurry of consultations, then in January 1983 they launched a limited, job-by-job campaign for higher wages in the metal, transport and building industries. They claimed to be winning some rises in the field, but there was no attempt at a generalised campaign to raise wages for the mass of Australian workers, and in the oil industry, unionists met only frustration.
The oil workers had an excellent case. Their employers had signed an agreement in September providing for an initial pay rise, to be followed by a second instalment on 1 January. The second instalment had then fallen foul of the wage freeze. Not a little annoyed at this, electricians at Victoria's largest fuel supplier, the Shell refinery at Geelong, began an indefinite strike. Maintenance workers at the Clyde Shell refinery in Sydney placed overtime bans. On 28 January the ACTU's oil industry tactics committee endorsed these actions, proposing also a series of bans for the whole industry, and calling a delegates' meeting for 2 February to plan action against Bass Strait oil production.
Although the ACTU tried to portray the oil dispute as a one-off event with no flow-on implications -- Simon Crean of the Storemen and Packers gave the government an explicit assurance to that effect -- in reality it was a test of the government's resolve. Macphee sharply rebuffed Crean. The oil workers were quite determined, and an interesting confrontation was developing. By early February, employer representative John Welch was complaining that TWU bans had disrupted fuel supplies to the Australian National Railways in Tasmania while Amoco, Caltex and Shell had been put “out of the market” in Melbourne and Adelaide.
Then Fraser called a general election for March, and a relieved Simon Crean immediately defused things: “It has always been our intention to hit the government hard in this campaign, and now it makes more sense to assist in knocking the Liberals right out of government.” He was pleased to announce a day later that Bob Hawke had “prevailed on us for restraint,” and Crean did his best to suggest that electing a Labor government would ensure a wage rise. Despite the recession, the unions appeared to have the muscle to challenge the wage freeze, but for reasons we'll consider below, the officials had no great desire to do so. The industrial action dissolved as all eyes turned to the election campaign.
To the polls
The conservatives' electoral fortunes had peaked by 1977 at the latest (Labor had won NSW as early as 1976) and the first hints of decline began to appear with the Victorian land scandals. At the start of the eighties Labor began to roll the conservatives steadily back. Under Bill Hayden's leadership the ALP won seats in the 1980 federal poll, then John Cain led it to victory in Victoria in 1981. Cain's win was to be expected given the air of decay and ineptitude surrounding the Victorian Liberals (Sam Lipski wrote that “the State and its capital are gripped by a psychology of defeat”) but even so, losing the “jewel in the Liberal crown” was a shock to the Coalition, which was further shaken when Labor went on to win power in South Australia under John Bannon and Western Australia under Brian Burke.
The new leaders were all “moderate” and pro-business, taking their lead from Neville Wran's successful formula: act like a Liberal, wear a blue suit, and you too can govern. Thus the 1980s era of right wing Labor government arrived well before Bob Hawke seized the main prize, so it would be easy with hindsight to conclude that the ALP's 1983 federal election victory was inevitable -- that a “drover's dog” could have won it. That it was not inevitable was demonstrated by the Flinders by-election in late 1982, which was expected to be a triumph for Labor but only brought a modest swing.
Hayden's problem was that in pulling Labor toward the political centre, he had removed any distinctive policies or even a distinctive “feel”. By 1983 the electorate wanted a change, but Hayden didn't seem to offer it. Rather he appeared an erratic opportunist, saying anything to please, as with his uncertain response to the wage freeze. When launching the Flinders campaign he had denounced the freeze as economic lunacy. Then, on discovering that the Labor Premiers were effectively accepting it, as was the ACTU, he began softening his stance: it was now a “gimmick”, but one which the unions should try to make work. Finally in late January, with the ACTU making noises about backing the oil workers, he sought to harden his position again.
Hayden had trouble responding because he shared Fraser's basic assumption, that wages must fall. Even in the speech declaring the wage freeze a gimmick, he nevertheless demanded a redistribution of income from wages to profits. In fact Labor hoped that if it won power, it would be able to use the framework set by the freeze to implement the incomes policy it was cooking up with the ACTU, but here, too, Hayden stumbled. Although the substance of the Accord had been agreed for months, the ALP leader couldn't seem to finalise it. Whereas the ACTU wanted it to pay lip service to full wage indexation, Hayden feared this would alarm the business community.
These dilemmas underlay the increasing push inside the party to replace him with Hawke, backed by sections of the media who wanted a more credible alternative to Fraser, and encouraged by a considerable feeling among ordinary workers that Hawke was more impressive and likely to win. On 4 February Hayden succumbed, allowing Hawke to take the leadership just as Fraser was obtaining a double dissolution of parliament.
In policy terms there was little to distinguish Hawke, but being new, he was better placed to sell the illusion of radical change. Hayden had spent years establishing a cautious image; Hawke could step into the limelight and act brash. He could make lavish promises without appearing to contradict earlier statements, and he could trade on his radical image as a union leader, yet rely on big business to remember that Bob Hawke had always been their mate. Consequently his campaign slogan of “national reconciliation” sounded like an innovation instead of a social democratic cliche. Probably the ALP's boldest reform was Medicare (the emotion-charged name “Medibank” had been left behind), and even this was sold by Bill Kelty as “a government scheme which would relieve [employers] of corporate expenditure”.
Hawke wrapped up the Accord then rammed it through a national union conference, opposed by only one delegate, NSW Nurses' Federation secretary Jenny Haines. The vexed issue of wage indexation suddenly resolved itself: real wages would be maintained “over time”, with the union officials joining various consultative and planning bodies in exchange for industrial peace. Hawke floated a $2750 million economic expansion plan, which sounded like a lot, then largely forgot about the promises in favour of his gossamer campaign theme, “reconciliation”. Fraser never knew what hit him.
The Liberals had planned to campaign on the slogan, “We're not waiting for the world”, designed to look bold compared with the cautious Hayden. When they found Hawke could outbid them in audacity, the Fraser camp abruptly changed gears. The Accord, once derided as “paper thin”, suddenly became a “blue-print for union government” giving “union militants the right to veto across a broad range of government policy”. The Liberals splashed around a picture of Laurie Carmichael shaking Hawke's hand. None of these tactics worked, however, for Fraser was now up against Hayden's dilemma: he couldn't differentiate himself from policies whose substance he had been steadily embracing. The Sydney Morning Herald remarked:
The commendable practice of consulting the social partners in developing economic policies -- a practice which Mr Fraser's government engaged in extensively before the last budget -- is now portrayed as surrendering responsibility for economic management. Mr Fraser made great virtue of the consultations his government held with the ACTU last year ... There was no suggestion then that Mr Fraser was allowing the unions to run the country.
Hawke and the ACTU, meanwhile, left no room for doubt their Accord would suit business down to the ground. When asked how he proposed to “control the unions”, Hawke said he could rely on “peer pressure” among the officials, who had after all signed an agreement to “restrain their claims” in pursuit of “economic expansion, which is what all unions and business want”. When Cliff Dolan made some unguarded remarks about taxing profits, his new ACTU secretary Bill Kelty quickly declared that the ALP and ACTU were “never likely to embark on a situation where profits are artificially reduced”.
Dolan himself eagerly endorsed Hawke's assurance that a Labor government would not be a “handmaiden” to the unions, and when ALP frontbencher John Brown illustrated the point all too well with an attack on “outrageous” penalty rates, Hawke was unruffled. Labor could afford to relax about these issues in any case. Polling showed that while the public was still concerned about strikes, years of confrontation had reduced the appeal of union-bashing.
The conservative parties' embarrassment reached an ironic peak when Joh Bjelke-Petersen entered the fray. His hopes of seizing on a rail strike to agitate about the union menace had been dashed when the strike failed to occur. Unionists were “so mad for power,” complained his Deputy Llew Edwards, that “they're even acting responsibly.” Nonetheless, Petersen persisted with a 20-minute attack on the Accord, whereupon Labor's Keith Wright rose to “quote chapter and verse of previous statements by Messrs Fraser, Bjelke-Petersen and Edwards indicating that they were in favour of precisely the things advocated by Mr Hawke ... : co-operation between governments, employers and unions.”
Malcolm Fraser wound up a failed campaign at the Princess Theatre in Launceston, the very spot at which he had opened his campaign for the 1975 Bass by-election -- his springboard to power. In 1983 it was his last stop before the biggest federal ALP win since Curtin's day.
All that common ground
Convention offers us two conflicting images of the Fraser Government's end. One has Hawke and Labor bringing fundamental changes: reconciliation in place of union-bashing, growth-oriented policies in place of “fight inflation first”. The other sees Fraser as a closet Tory paternalist, who pretended to be a hard liner but reverted to Keynesianism and dialogue with unions in every crisis. ALP myth-makers naturally prefer the former assessment, while John Howard has implied the latter:
People often say Malcolm Fraser was elected in 1975 with a mandate to smash the unions, but it was nothing of the kind. The industrial relations policies of the Coalition were as benign and complaisant as ever.
I have suggested a third view. Fraser's initial stance was actually fairly determined. It is true that the sharp monetarist edge in government policy generally came from others such as Stone and Lynch, but still, during his first years in power, Fraser destroyed Medibank, cut welfare funding, restricted land rights and forced the unemployed to carry much of the blame for their plight. With Fraser setting the tone and aided by recession, employers were able to defeat major strikes by well-organised groups of workers.
The government was serious and so were the bosses. But like most of society, they underestimated the dimensions of the crisis, and they also misjudged the strength of the organised working class. Neither Fraser nor the employers were prepared for the industrial bloodbath required for them to attain their objectives. They had wounded their opponents rather than destroying them, and when circumstances changed their opponents had struck back fairly effectively.
As this became clear, advocates of alternative strategies began to get a hearing. Some of these had been vocal all along. In South Australia the Dunstan Government was exploring workers' participation; John Uhrig, chief executive of white goods manufacturer Simpson-Pope, was thinking along similar lines as was the management of CSR; and the idea was slowly catching on elsewhere. A 1976 survey of top managers found 39 percent saw “industrial democracy” as a way of getting higher productivity.
Fraser was never capable of embracing this concept (though a government committee did so in 1980), but it remains important as a sign, amidst the class conflict of the mid-seventies, that some executives and policy makers did see advanced forms of class collaboration as an option. Many more became open to some kind of “social contract” at the start of the eighties.
Fraser did use some forms of class collaboration from the start: helped by clear signals coming from Bob Hawke even before the 1975 election, he recognised that the ACTU leadership could be allies. The PM's close personal relationship with Hawke, which had once seen them “sit around at the Lodge working their way through bottles of port,” declined as the ACTU leader emerged as a political rival; but it was replaced in 1981 by a warm relationship with Cliff Dolan. However collaboration at the top had limited value if he merely used Hawke or Dolan as trouble-shooters, for eventually this could erode their credibility while doing little to weaken the roots of worker assertiveness.
When he lost control of the 1979-81 “wage push”, Fraser allowed his more moderate ministers to explore ways of regaining the initiative through a more systematic incorporation of the unions. By the end of 1981 these efforts began to bear fruit, partly because the left/militant unions felt the balance of forces was tilting against them, but partly also because the great majority of union officials from left to right themselves wanted some kind of accommodation. The right wing had wanted it all along, while most of the left had been drawn towards it from 1981 onwards.
Although Carmichael later rightly insisted it was “nonsense to suggest that my actions in conjunction with a few metal workers in Australia created a massive international recession,” such notions certainly did infect the metal unions in 1982, as they watched rapid job losses follow closely on their successful wage offensive of the previous year. It was precisely at this point that the wages-cost-jobs theory became hegemonic in the Australian trade union movement. Carmichael himself was almost pathetically eager to embrace the new approach, which was not hard for him to do, since the wage settlements at the end of 1981 themselves contained the main elements of institutionalised class collaboration.
The metal industry award, which traded wage rises for industrial peace, became a model. “The metal industry award has to be seen to work,” said Ian Macphee in mid-1982. “This is a compact of a kind that we haven't seen in Australia before.” He sought a wider relationship between the government, the employers and the union officials based on similar principles, pressing the unions at tripartite talks in July for a commitment to hold down wages if the government loosened the purse strings in the August budget. The unions were non-committal, but showed enough interest to convince Fraser he could pull off the wage freeze.
By November Macphee was saying the wage freeze could become the basis for an incomes policy, including perhaps even a price monitoring mechanism. If his plans were less specific than those Hawke later unveiled, still the gist was there. And while Macphee never quite won Cabinet over to this perspective, there is no doubt Fraser was moving towards it, as shown by his November appeal for the wage freeze, which presaged Labor's arguments:
We must shake off the attitudes, the prejudices that have led to too much division in the past. We must unite this nation in one cause based on the dignity and rights of all Australians.
The Financial Review did not miss this underlying continuity. During the election campaign it pointed out that a wage freeze and an incomes policy had a common starting point: “that in a recession there are limits on the claims that can be made on the national income.” In plain English, wages must fall. And they must be kept down when the economy showed signs of reviving. “So a wages pause, if it is to have the longevity ideally required for it to become the basis [for a strong recovery] must be developed into an incomes policy.”
Ian Macphee could therefore hardly be blamed, if he incautiously told a journalist during the campaign that much of Labor's Accord was “consistent with my approach”, that Labor's aim of extending the wage freeze “does seem to be the same”, and that “I am committed to the ACTU being as strong as possible.” Although it didn't quite fit the Coalition's election rhetoric, it sure fitted the facts.
If Fraser in 1983 had elements of class collaboration in common with Labor, his attacks on certain unions also presaged the Hawke era. His Royal Commissioner Frank Costigan was investigating the Painters and Dockers, while his government was laying the basis for deregistration of the BLF.
Of course there was graft on Australian waterfronts, but Costigan's attempts to portray the P&Ds as engaged in organised crime were primarily a political attack on a left wing and militant organisation. For nearly two years the Commission heard evidence from the union's enemies, most notably one Bill Longley, then serving a prison sentence for arranging the 1973 murder of the P&Ds' Victorian secretary, Pat Shannon. During that time the union had no opportunity to reply. After Shannon's successor Jack Nicholls was found shot dead the P&Ds ceased cooperating with the Commission. Costigan couldn't prove anything very damning about the union, but he recycled various tales about dockland brawls and shoot-outs, allowing the media to create the impression of a gangster union. Similarly a harmless remark by federal secretary Terry Gordon: “We catch and kill our own” -- a fishing analogy illustrating self-reliance -- was invested with sinister implications.
Costigan's inquiry into the P&Ds was a curtain-raiser for the main event, a two-pronged attack on the Builders Labourers Federation. In Victoria the Liberals set up a Royal Commission to look into charges of corruption centering on Norm Gallagher while the Fraser government concentrated on its deregistration plans.
The BLF leadership certainly had its ugly side. Gallagher's destruction of the old NSW branch had made him widely hated in the Sydney labour movement, and his treatment of dissidents elsewhere had not been gentle. The union's political inconsistency had also helped isolate it; for example it had changed its mind more than once over the bans on Newport, and had moved from banning the US war base at Omega to fighting the Federated Ironworkers for the right to build it. Many union militants were consequently reluctant to defend the BLF. But a close examination of the government attacks made it abundantly clear that, as with the P&Ds, the government was using its persecution of the BLF to attack the industrial left and militant unionism generally. Whatever you thought of its federal secretary, it was correct to defend the BLF for these reasons.
It was charged that Gallagher had accepted help from various employers in building two Gippsland beach houses. Even if all the charges were true, the alleged total value of $181,000 worth of materials, services and labour was hardly earth-shattering given the long history of rake-offs in the industry. Would anyone have bothered with it had Gallagher belonged to the right wing of the union movement?
There was also another question. “For these gifts [the employers] expected some quid pro quo,” wrote the National Times,yet no substantial evidence was ever forthcoming that the BLF had exempted the supposed contributors from industrial action. On the contrary, the campaign against the BLF was designed to establish in the popular mind the image of a group of mad militants who spared no one. The political nature of the exercise subsequently became even clearer when Gallagher got a jail sentence after the builders and developers had only received good behaviour bonds.
Deregistration moves faltered when the ACTU refused to go along, however this was a temporary hiccup. Once Hawke was in power, Labor governments at State and federal level took them up again, building on the foundations laid under the Liberals. The ACTU, now deep in the Accord embrace with Hawke, collaborated fully and in 1986 the BLF was to face a withering attack.
That selective union-bashing occurred alongside the emerging Lib-Lab consensus about deepening class collaboration should not be a surprise. Since some unions might recognise the dangers that Accord-type policies posed to workers' interests and be tempted to stand against them, it was imperative for Hawke to make an example of one or two recalcitrant organisations.
The central aim of the new policies was, after all, much the same as that of the old -- holding down wages. In that sense, things had remained the same. By 1982 most of the union movement was capitulating to the argument that economic problems stemmed from “excessive” wage claims. The 1982 recession did appear to follow on directly from the wage push of the previous years, so it seemed that perhaps the right wing critics had been right to blame the crisis of the seventies on union militancy. In reality the crisis stemmed from quite different causes, located deep in capitalist production relations. But to argue this alternative economic theory, which I have briefly summarised in an appendix, was beyond all except the extreme left fringe of the labour movement by 1983.
Hawke at the summit
Having run a largely issue-free campaign, Hawke entered the Lodge with few real commitments, and what's more the Liberals had prepared a gift for him. He had announced that if the Fraser estimates for the budget deficit proved to be understated, he might reassess policy. After the election he found a very sizeable blow-out, nearly $10 billion foreshadowed for 1983-84 -- sufficient pretext to dump what few promises he had made. Hawke then announced plans for his famous economic summit, knowing that the employers as well as the unions would rush to attend.
Although only The Age and the Illawarra Mercury had endorsed Labor, most of the press had covered Hawke favourably throughout the campaign. They and the class they represented were weary of Fraser-style confrontation, and liked the idea that Labor could persuade unions to make, as The Age put it, “concessions which would have been unthinkable in the past”.
Some employers were absolutely thrilled about the summit. “It is obviously a great privilege to be invited,” said Lloyd Zampatti of Tooheys. AMP's Alan Coates said his mates looked forward to it “with the greatest goodwill”, while the MTIA was taking a “positive approach”. And well might they feel at home in this gathering, for it was an elite affair. Forty or so delegates came from big business, seven knights among them. Women, Aborigines and youth had a few token representatives, with the unemployed presumably covered by social workers. The organised working class was “represented” by a selection of top union bureaucrats -- that layer which had served them so badly for seven years under Fraser, before rushing to embrace the wage-cutting logic of the Accord.
The summit was a triumph for Hawke, who dominated proceedings, establishing the “Bonapartist” flavour of early Labor rule as the ALP/ACTU tag team set the policy agenda, to the mild chagrin of a fragmented and politically disoriented bourgeoisie. There was nothing remarkable in this. Forces apart from big business not only can, but often do set the pace in capitalist society. However they can only do so over time if they either challenge the power of capital, or pursue policies that fit its long term interests. Laurie Carmichael might still talk of doing the former; the summit showed just how thoroughly the Accord partners proposed to do the latter.
As the press reported: “The ACTU seized the initiative on the central issue of wage-fixing by offering important concessions during the opening session of the summit on Monday.” Bill Kelty announced that the unions would moderate wage demands, then discount them further in exchange for Medicare, and would put off catch-up claims for the wage freeze to an indefinite and hypothetical future. Under centralised wage fixing, said Kelty, extra claims by stronger unions would be suppressed. “The union movement can't have it both ways.” Just about everyone present loved Kelty's presentation. “Great speech, great speech,” said Bob Hawke while the next speaker, CRA's Rod Carnegie, thought it “incredible”.
The employers had been wrong-footed only in the sense that the unions were rushing to concede their key demands. In an overnight caucus they hit upon a way to preserve the illusion of hard bargaining: while agreeing on a return to centralised wage-fixing they came out firmly against CPI-based wage indexation. This was pure ideological posturing. The Summit could easily dodge the CPI issue, leaving it to the Arbitration Commission.
In any case, a return to full CPI increases did not constitute an immediate threat. It would only occur after the Fraser wage freeze was extended for another six months. Many employers remembered how real wages had declined under Whitlam's indexation system even with full CPI adjustments; they also recalled how readily that system had lent itself to Fraser's “plateau indexation” with its blatant real wage cuts. On top of all these considerations, the economists had begun predicting an economic recovery. Indexation would be a handy device to block the real wage increases unions had traditionally won during the recovery phase.
What perhaps nobody fully realised in 1983 was the extent to which Labor and the ACTU would use the Accord framework to slash workers' wages when the recovery led to balance-of-payments problems from 1985 onwards. By this, as by most standards, Labor in the eighties achieved Malcolm Fraser's goals more fully than the conservative parties could do. Nevertheless, we must give credit (so to speak) where it is due. Just as Whitlam's retreats and his wage indexation policy had softened workers up for Fraser's attacks, so the conservative onslaught of 1975-78 inflicted wounds severe enough to make them easier prey for the deadly embrace of Hawke's Accord. Then, towards the end of his years in power, Fraser helped lay the basis for the Accord itself.
Thus there were threads of continuity running from Whitlam through Fraser to Hawke. What made each era very different politically was not the intent of the politicians but the ebb and flow of class struggle. Whitlam came to power at a time when the bourgeoisie and its politicians had lost control of the working class and social movements; he set about co-opting them, then faltered when he lost control of the economy. Fraser thought he could master the working class and restore prosperity, but the ensuing confrontations served only to exhaust the contending forces.
That in turn cleared the way for new and more successful attacks on the working class under Hawke, which proceeded primarily through the co-optative mechanisms of the Accord, but did not preclude certain selective union-bashing. Petersen's Queensland government was allowed to finally smash the State's power workers in 1985 with only token protests from the ACTU, while the BLF was effectively destroyed in NSW, Victoria and the ACT after 1986 with the ACTU leaders' active connivance. Seizing on the more favourable climate, the iron-ore mining companies of the Pilbara began undermining workers' job organisation, setting the scene for Robe River's annihilation of its unions. “National reconciliation” indeed!
For the labour movement and the left, the Fraser era had offered both dangers and opportunities. The most serious dangers were fended off in struggles which showed the basic economic strength of organised labour in Australian society. At the same time, however, the main opportunities went begging. A sizeable minority of workers went into the mid-1970s with an ill-defined but real belief that the crisis of capitalism was the appointed time for labour to impose its will on a society whose old order was proving bankrupt. A sizeable minority of political activists held similar views. But in the absence of a mass political movement determined to pull these currents together and lead a struggle for power, this fragmented vanguard could not even seriously challenge the government, let alone prevail.
Exhausted in partial struggles, led down blind allies by the Hawkes and Halfpennies, the increasingly discouraged militants were tempted by the hope that collaboration between governments, capital and labour could solve their problems. Over the following decade of ALP government, we learned how false that hope was; and by the early 1990s Australian society was again in crisis. It was time to revive the rage.
Of course the official leaders of the labour movement continued to counsel moderation, social harmony, reliance on traditional institutions. Only a brash minority, still small in numbers, advocated militancy, class struggle and revolutionary politics -- yet the history of the Fraser years suggested this minority was right. Whether the new years of rage might end more favourably than the old depended on its ability to gain a wider hearing.