Gough Whitlam’s foreign policy was his true economic legacy

Gough Whitlam’s foreign policy was his true economic legacy


By Tim Harcourt*


Gough (Tim Harcourt's story)


Prime Minister Gough Whitlam visits the Echo Wall, which surrounds the Imperial Vault of Heaven in the Temple of Heaven in Beijing, 1973. Source: National Archives of Australia.


“Where were you when Gough was sacked?” This of course refers to Remembrance Day, the 11th November 1975, the very day when the elected Prime Minister Gough Whitlam was sacked by Governor-General Sir John Kerr in cahoots with the Leader of the Opposition Malcolm Fraser?


For Australians, it’s a bit like the question, “Where were you when Kennedy was shot?” Of course I mean US President John Fitzgerald Kennedy (JFK), when he was shot in Dallas on 22nd November 1963, but apparently in Melbourne where Graham Kennedy hosted the very popular TV programme ‘In Melbourne Tonight’ the news “Kennedy is shot” caused some viewers to reply: “Well I guess that gives Bert Newton his big chance.”


On the day of what is often now known as ‘The Dismissal’ I was at Cubs. After all I was 10. And I was so angry about Gough being sacked, I said to the Akela we should take down the portrait of the Queen and put one up of Gough Whitlam in her place. Gough said ‘maintain the rage’ and my father had spoken at a protest rally that day, so as 10 year old this was my response to the call.


But whilst Gough said to maintain the rage, after the elections defeats of ‘75 & ‘77 the ALP did actually get down to some serious policy work – particularly in economics – with the Committee of Inquiry chaired by John Button. So by the time Labor returned to office in 1983 with Bob Hawke, we had the Prices and Incomes Accord with economic management at the centre of the Hawke Government. There was a trained economist in Hawke, another in his fellow ACTU research officer in Cabinet Ralph Willis, and an energetic reforming Treasurer by the name of Paul Keating. And the rest is history.


Of course Gough had a very successful post Prime Ministerial career and I had the opportunity to work with him as part of the Whitlam lectures series for Trade Union Education Foundation (TUEF) particularly with his work on China and the Asia Pacific region. It was a great honour and it was also hilarious being Gough’s chaperone around various cities. He would often enter the gentlemen’s bathroom, approach the urinal, and when the occupants said “my god it’s Gough” he’d say “make way for the great man” with heavy irony. Also when he met someone who had migrated to Australia, and if they came from anywhere Spain, Greece, Italy, Chile or China, he’s know all about the history of their home village, their surname, and so one, which delighted them (and amazed me).


However, I have a confession to make. As an economist albeit from family of true believers I was firmly in the “Gough doesn’t know any economics camp and that’s why he lost.” Several Labor leaning economists – mainly from Adelaide – my father Geoff Harcourt, Eric Russell (father of Don Russell), Barry Hughes and Philip Bentley all tried in the late 60s and early 70s to get Gough interested in economics. Geoff, who was the economist on the ALP Committee of Inquiry, found Bill Hayden as a trained economist much easier to work with. Of course, Gough did have Fred Gruen (father of the distinguished economists David and Nick Gruen) as an adviser but his focus was clearly elsewhere. In fact, when I interviewed Bob Hawke about this period he said to me:  “What Gough knows about economics you could write on the back of a postage stamp and still have some room to spare.” Hawke as ACTU and ALP President had wanted Gough to focus more on economics, and just before the 1972 election, at the ALP federal executive, he said: “Gough…you’re going to do some great things in government in the social welfare area and internationally…but your government will live or die on how you handle the economy.”


Gough didn’t have the passion for economic management that he had in other areas of ‘the programme” like foreign policy, social reform, education, the status of women, indigenous affairs and the arts and it showed in areas of macroeconomic management (although this was true of all OECD governments after the OPEC Oil shock and true of the Fraser-Howard years too as they struggled with the recession of their period of office). Gough did have some micro economic policy achievements in anti-competition reform, and productivity boosting reforms in the labour market by implementing equal pay for women and increasing opportunity in education.


Then there were the across the board tariff cuts – judged to be too harsh and too quick (“The short sharp shock”) and more designed as an anti –inflationary tool given the impact of high import prices on inflation. The implementation was all wrong too. As Bob Hawke recall: “I think Fred Gruen said to him we should reduce tariffs and he said ok, ok.” And that was it. Gough’s former chief of staff John Menadue said that Gough did have a view of structural reform in Australian industry and quipped rather harshly about the textile clothing and footwear (TCF) industries, “We’ve f***d those industries and that’s a good thing,” but overall all the short sharp shock approach was neither economically feasible (and was politically disastrous with result being a harsh swing against the government in the Bass by-election).


In fact the experience, lead the way to the gradual, strategic approach to trade and industry policy by the Hawke Government with the phases tariff reductions of the Button Plans, in cars, steel and TCF. After the hurried approach to public policy by the Whitlam Government, the Hawke Government changed the policy, the pace, and the process in everything from tariffs to industrial relations. And of course they had the co-operation of the trade unions through the Accord process. The ACTU was determined not to make the same mistakes in the Hawke era that had occurred in the Whitlam era. As Bill Kelty recalls when Gough was speaking at a trade union rally at the South Melbourne Town Hall after the dismissal in the ill-fated 1975 election campaign, the great metal workers union leader Laurie Carmichael said: “You know they (the Labor Government) deserved better.” And the dye was set for comprehensive ACTU co-operation with the next Labor Government when Hawke returned Labor to power in 1983.


But when sitting down with the advisers of that era and talking to Gough himself, it dawned on me that there’s more to it when assessing Gough. In fact, the great irony was that Gough’s economic legacy was in foreign policy. Gough’ s decision to recognise China did more for the Australian economy than many other more heralded changes in economic policy sphere. When you think about it China was a risk. Especially as Gough went to China as Opposition leader before he formed government. Here was Gough in 1971 on the cusp of being the first Labor Prime Minister since Ben Chifley in 1949 (the year the Chinese communists took power) breaking bread (or rice) with a Communist state. And he took some heat from it from the McMahon Government, for about a week until it was revealed that Henry Kissinger had been in Peking (now Beijing) too pathing the way for US President Richard Nixon to recognise China. And of course, after winning the 1972 election Gough retuned to Beijing as Prime Minister in 1973 and he and Margaret were feted as great friends of China. It was a triumph.


And when talking to Gough and later John Menadue, it was explained to me that the decision to recognise China was part of the Whitlam vision to engage Australia more comprehensively with the Asia Pacific region. Gough and South Australian Labor Premier Don Dunstan had fought hard to get rid of White Australia Policy from the ALP platform and took the principled view that if you want to trade and invest with people, or sell education services to them you shouldn’t prevent them from immigrating because of the colour of their skin or racial origin. It was part of the big picture, diplomatically to engage with Asia, and to allow exchange of ideas, art and culture as well as good and services. To feel more confident in the Asia Pacific region, particularly after the difficulties of the Vietnam war.


In some ways it was one of the ‘waves’ of Australia’s engagement with the Asian Century. We had the Country Party Deputy Prime Minister and Trade Minister ‘Black Jack’ McEwen signing a deal with Japan in 1957, Gough in China in 1971-3, and then the Hawke Keating reforms of 1983. Now, in 2014 both sides of politics take Australia’s engagement with Asia as a given and it’s largely bi-partisan. And China’s our number one trading partner worth almost $142 billion. But it wasn’t in 1971 when Gough took the plunge. China was a risk. It was a bold and confident move.


This brings me back to 11 November 1975. It was a bold and confident thing for a 10 year cub to say (my kind and easy going Akela thought it was hilarious by the way). But Gough Whitlam made us confident. Confident to be Australia, confident to be ourselves and confident to take on the world knowing who were are. He showed that in China, all over the world and all over Australia and helped modernise Australia and enhance our place in the world. Now when I travel to Beijing, (or even Berlin or Buenos Aires) I think of that Whitlam confidence.  It could well be that Gough’s foreign policy adventure provided us with one of our greatest economic legacies after all.


Thanks Gough.


*Tim Harcourt is the J.W. Nevile Fellow at the UNSW Business School, UNSW Australia and author of Trading Places – The Airport Economist’s guide to International Business www.theairporteconomist.com


He worked with Gough Whitlam at the Trade Union Education Foundation and even developed the theme music for the first Whitlam lecture (known as ‘The Gough-meister’). These are his personal views only and not those of any organisation his affiliated to past or present.


  1. Thanks for publishing footy almanac. Many sports fans are political junkies too and no matter who you vote for there’s no doubt Gough had a big impact on Australian life

  2. Right on the money Tim. Elegantly argued.
    I was thinking about Gough’s proclivity for talking endlessly, and seemingly often about himself. There are many interesting books about him and his times, but his own “The Truth of the Matter”, is more sleep inducing than test cricket in the UAE.
    When he seemingly talked about himself, it was always as a conduit to “THE PROGRAMME” as you describe it. He was obsessed with 1,001 ways in which government could expand and enrich the lives of ordinary Australians. He awoke us from the “sheep’s back” torpor, and as you say all of the economic reforms of the 80’s and the mining boom were built on the foundations of his successes (and failures).
    We shall not see his like again.
    in the Information Age everyone is an incrementalist.
    Thanks for enriching the Almanac tapestry, Tim. I had some Introductory Economics lectures from your Dad in the 70’s. Did me absolutely no good.

  3. Mark 'Swish' Schwerdt says

    Thanks Plug

    I’ve always thought that it was Gough’s failure to comprehend the importance of the Phillips Curve (let alone the Expectations Augmented Phillips Curve) that brought about his undoing.

    There were plenty of kids from my neck of the Adelaide Plains who were the first of their family to experience tertiary education and Australia, nay, the World is all the richer for that.

    More importantly, I wonder if there is a thesis topic somewhere on the profound cultural impact that this had on the fabric of the Blacks?

    And was Julia at the Mitcham Guides that night?

  4. Bob Speechley says

    I emerged from “swatting” at the La Trobe University Library in the late afternoon of November 11, 1975 to hear that Gough had been dismissed. The Dismissal should have led to a consciousness raising across the country instead of showing the extent of our collective naivety where politics/economics is concerned. Too many lawyers in our Parliamentary system and not enough broad-minded nationalists to understand real needs and solutions.

    Tim your contribution to The Almanac is another welcome aside to this important source of inspiration.

  5. Malcolm Rulebook Ashwood says

    Thanks Plug I was at Norwood High school library and remember it well , I can certainly picture you re the Akela and wanting the Queens picture removed , not having the understanding of politics as your self re politics thank you for this found it interesting and a great learning piece great point , Swish re the cultural effect on the blacks !
    Re the propensity for Gough to speak about himself is he secretly , Dean Jones father ? Thanks Plug

  6. The poor handling of the tariff cuts to the TCF sector can explain in some ways the large anti ALP swing in the Bass byelection . Factory layoffs in that region, partially as a result of these tariff cuts, helped shape the 14% wing away from the ALP in Bass. This helped set the stage for what became known as Kerrs coup.


  7. I remember where I was when I heard the news of Gough’s Dismissal. I was amending the prices of our manufactured lines at McMillians Grain Store on the Mornington Peninsula – for the fourth time that week – to cover the galloping inflation that was destroying the livelihoods of the Men & Women of Australia, many Akelas & Barloos amongst them.

    But the thing that tees me off the most is the he and his disciples failed to demonstrate the discipline and intellect to last long enough to finish what they started. And to make a thorough job of it.

    Don’t get me started on every Mafia boss’s best friend, Al Grasby. Or Gough’s personal choice of GG.

    As ye sow, sow shall ye reap.

  8. Anyhow if anyone is interested i’lll be having a chat re Gough Whitlam this morning. You can hear this by tuning in to 3CR, which is 855 on your am dial, from 09-00 Melbourne time.


  9. Arabella Douglas says


    Thank you for the article – it is an interesting view on the dynamics of leadership. If we are to take a view that economic management and leadership are the same thing then we lose sight of the role of a PM or head of state. We have known since Aristotle that stable constitutional democracy rest on self-confident middle class, and humbly I would suggest the fact you are more confident because of the platform provided to you by Gough’s leadership is itself proof of a failure in your argument that his focus was misaligned.

    “Economic growth is more than a material goal is it a moral enterprise as well” , and in that Gough was by far ahead of his time in understanding economic principles and policy application, those lagging were narrow minded economist who failed to be able to bean count, impacts, and measure SROI appropriately.

    Just because it could not be measured in his time to translate to the economic position of Australia it does not mean it did not have value and still does. Did he understand this soundly, to be able to articulate this to money managers, I doubt it. Not because he didn’t sincerely understand it but rather because its form, and function and value are relatively new endeavours in how OECD countries operate with economies and values systems.

    What Gough knew in his mind of thinking was that with the collapse of USSR and China and India this eventually this would integrate 2 billion new workers into the global economy, and Australis was not going to move from the British bench player system by remaining benign to the movements of the world.

    I expect my leadership to have a view higher than mine, a position of play that is strategic in nature without being curtailed by tactical stability.

    The delay of gratification is always a hard sell, and that is what Gough fought, I feel perhaps you are doing Gough a little disservice by suggesting his mind and attention to real economic principles did not exist. I would suggest a different view, the economists failed to see new marketable values in a way that would serve the country and place Australian people in a position of prosperity, therefore failing in understanding and guiding and advising on the financial management of the vision.

    I often advise CEO (often economics and accountant by position and thinking) on what SROI means and there little eyes are alight when they get to understand the value proposition and how it translate into fiscal paradigms that know so well.

    I find there is a lovely sway my way, when applying the long term view to value and understanding the rewards are significantly greater. Its all in the translation – not in goals.

    Gough goals were exactly appropriate to elevate economic stability, prosperity and value of Australia and for Australia. A pretty good mark of man who gets economic principles.

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