CHAPTER NINETEEN
Lauding the Headmaster
1984
McMahon’s treatment of Menzies in his autobiography was a problem. Overly long and overly reliant on the public record, the section on Menzies had the effect of shunting McMahon off-stage. When he wrote to McMahon setting out his thoughts on the manuscript, Bowman couched this criticism carefully: ‘To step aside is valid when the other character looms very large and the author is able to portray him in the light of personal knowledge and experience and to a lesser extent personal opinion.’ But the present treatment was inappropriate, Bowman suggested. ‘[Menzies] should not be used as an umbrella or a prop, nor would any second-hand portrait of him be appropriate.’1
The advice was important and, indeed, went to the heart of one of the probable selling points of the book and its value as an historical document — the story of McMahon’s relationship with Menzies.
The relationship was long. Speaking after Menzies’ death in 1978, McMahon claimed an acquaintance that went back as far as the early 1930s. Menzies had given legal advice on Jack Lang’s attempts to abolish the New South Wales Legislative Council, which Allen Allen & Hemsley had been involved in, and their paths crossed in another case on patents, McMahon said. ‘I did not like him for a long period,’ McMahon said. He had found Menzies arrogant and disrespectful, but subsequent events had forced him to swallow his pride.2
According to McMahon, their relationship while in government was harmonious, if marked by occasional problems. He believed that Menzies respected his abilities but disliked his iconoclasm. McMahon’s public statements about him were admiring, but always tempered by declarations that he had never been an unquestioning sycophant:
I would never call him a headmaster, but he loved to predominate. He loved to excel … I never found him very difficult to handle. I always went my own way. I know that frequently he didn’t like it, and that frequently [he] reacted. But that didn’t stop me at all. I enjoyed myself whilst he was there.3
But there was a change in McMahon’s approach, one prompted by Menzies’ remarks that the journalist David McNicoll had published in 1979. Drawing from an interview surreptitiously recorded in the face of an express wish that McNicoll not do so, conducted when Menzies was bedridden, depressed, and recovering from two strokes, the interview had caused uproar when it was published, even though the background suggested it should have been treated carefully.4
Menzies’ remarks about the Liberal Party and his successors had been withering. He had ‘no respect’ for Richard Casey. Garfield Barwick had been ‘a disappointing politician’ and ‘never any good in the Parliament’. Harold Holt was ‘dreadful’, had mucked everything up. John Gorton was just a ‘mischief maker’. Billy Snedden was ‘a hopeless leader’. The greatest fire, however, had been reserved for McMahon:
McMahon … to me is a contemptible little squirt. He just looked forward to tomorrow’s leading article. That’s all … McMahon, I think, is the most characterless man who was ever prime minister of Australia. A dreadful little man.5
McMahon had brushed those comments aside when they were published. ‘When I first read it, I just burst out laughing,’ he said. ‘… I don’t think it served Sir Robert well.’ But he did not intend to respond further, he said. Throughout his life he had always avoided public, personal recriminations, despite provocation, and he saw no reason to change that now. ‘In the seventeen years I served under Sir Robert, I gave him undivided loyalty and he continued to promote me — which was not his practice.’6
But when it came time to write his autobiography, McMahon, it seems, decided that he would have to respond — albeit in a more indirect fashion. He would admit to admiring Menzies and lauding his successes and his qualities. But he would attack Menzies, too. What he told Bowman, and what Bowman subsequently drafted on McMahon’s instruction, showed this aplenty.7
First, McMahon would question Menzies’ political success. The Labor Party that Menzies faced was weak and flawed, he would argue. Chifley was sick; Evatt was erratic; Calwell led a divided party. In McMahon’s reckoning, Menzies was lucky to have had such opponents. Second, McMahon sought to claim credit for measures Menzies had taken. He had advised and, yes, he had warned Menzies about the economy in the lead-up to the 1961 election. He had drafted Menzies’ policy speech in the lead-up to the 1963 election. Along with Garfield Barwick, he had been the one to convince Menzies to offer assistance to private schools.
McMahon could be quite bold. He wanted to tackle his reputation as an inveterate leaker and debunk the rumours that Menzies had extracted a signed confession from him. In McMahon’s telling, the supposed confession that Menzies had extracted in 1959 was a fiction. His office had not even received the cabinet submission he had been accused of leaking, he claimed, but when he told Menzies this, the prime minister had been untroubled. Menzies showed McMahon a note that he had dictated to Hazel Craig. McMahon told him it was false, but Menzies did not reply. (There are obvious problems with McMahon’s version of this story: in addition to confusing the dates — in the draft, McMahon claimed that this incident occurred while he was minister for primary industry — McMahon’s version fails to account for his handwritten annotations on the confession.)
On Menzies’ criticism of his relationship with the press, McMahon could hardly deny reality, so he sought to turn it into a positive. Of course he had been close to the press, he said. Why should he not be? The support of the media barons — Sir Frank Packer, Ezra Norton, and Rupert Henderson — helped the government, most obviously in 1961. What was wrong with it?
In McMahon’s telling, Menzies was petty, vindictive, bitter — almost as bad as McEwen. Menzies had reneged on a promise to appoint him to a ministry in 1951; had berated him for leaking when he had done so at the request of Menzies’ office; had panicked during the colours controversy; had been vainglorious and wrong during the Suez crisis; had nursed a grudge after McMahon refused the invitation to stand for the deputy leadership in 1956; had called his honesty into question over the leaked social services proposal in 1959; had attempted to take McMahon down, using senator Alister McMullin in 1965; had timed his retirement in January 1966 to coincide with McMahon’s honeymoon, so that McMahon would not be able to stand for the deputy leadership; and had, in his retirement, made statements about McMahon that were ultimately more damaging to himself.
Nor was McMahon the only one to suffer unduly. Menzies’ mercurial regard, McMahon would argue, extended to colleagues. Jo Gullett and John Howse, both Liberal backbenchers, had, like him, been promised ministries by Menzies, but were left to languish, McMahon claimed. But for his refusal to play along in 1956, McMahon said, Holt might also have suffered from Menzies’ mercurial regard. Menzies would laugh at Casey’s deafness, McMahon claimed, and had left Hasluck in the Territories portfolio as retribution for Hasluck’s criticisms in the official history of Australia’s involvement in World War II. Menzies had acquiesced in Barwick’s appointment as chief justice of the High Court only under duress; had been supportive and then sharply critical of Gorton when his name was proposed as Australia’s ambassador to the US. Menzies had wanted Gorton, McMahon told Bowman, but, the moment his name was put forward, turned wholly against him.8
It was an unflattering portrait, all the more so since it jarred with the laudatory glow that usually surrounded treatments of Menzies. And it was certainly deliberate. In order to salvage his reputation, in order to overcome the insults and disregard of his party, the press, and the public, McMahon had to make space where he could prove himself right, where he could show how others around him had faltered, been treacherous, been wrong.
The question that inevitably accompanied this, however, when Bowman set to rewriting, was simple: how much of it was true?
CHAPTER TWENTY
Protection (I)
1966
The lead writer for the newsletter Inside Canberra predicted
it correctly: aside from foreign affairs, the factor that would most affect the Holt government was McMahon’s appointment as treasurer.1 In the short term, McMahon’s appointment was to cause bitter disputes within the Coalition; in the longer term, it signalled the waning of protectionism and the ascendancy of pro-market beliefs in Australian economic policy-making.
These duelling ideological beliefs had been swirling for decades. They had defined political debate at Federation. They had been the faultlines in the governments of Barton, Deakin, and Reid. Eventually, protection had won out and been elevated to the point that it was, in W.K. Hancock’s words, ‘a faith and a dogma’.2 Despite that triumph, the dispute about protection and free trade defined, albeit latently, the differences between non-Labor politicians from Victoria and New South Wales.
As the scholar James Jupp later noted, the differences between the non-Labor politics in both states and their capitals were most apparent at these ideological levels. ‘Here the conventional contrast is between the cynicism and materialism of Sydney and the altruism and idealism of Melbourne. Sydney has been hard-nosed where Melbourne is softhearted. Sydney inherits market-oriented conservatism from the old Free Traders, where Melbourne espouses the welfare stateism of Deakinite Liberalism.’3
McMahon’s appointment represented a geographic and ideological shift in this debate. His promotion to the Treasury elevated the visibility of the critics of protectionism, along with the state where those critics were most dominant. Moreover, McMahon’s appointment gave the Treasury a minister who was much more aligned with its thinking and much more inclined to argue against the interventions of the Department of Trade and Industry.
This brought McMahon back into conflict with McEwen. As leader of the Country Party, McEwen had sought to broaden his party’s base by attracting the support of Australia’s manufacturing industries. Recognising that their viability rested on their being able to compete with imports, McEwen presided over the use of tariffs as a form of protection. He would recommend to the Tariff Board that it conduct an inquiry on the efficacy of tariff protection for a class of imports, and then see that the board’s resultant reports — which inevitably recommended protection — were accepted in cabinet. ‘It was my view that Tariff Board recommendations should be accepted wherever possible,’ he wrote later.4 Furthermore, to ensure that no Australian industry would suffer unduly while that inquiry was being conducted, McEwen oversaw the creation of the Special Assistance Authority, which had the power to impose tariffs as an interim measure. ‘In my view there are few things I did in my period as a minister more important’, he said.5 The tariffs were to be a temporary shield for industries that were developing and growing, and were much in line with the strand of economics promulgated by David Syme and Alfred Deakin, itself inherited from Friedrich List’s ‘National System economics’.6
It was a precarious and audacious strategy. In advocating for the imposition of tariffs, McEwen was arguably acting against the interests of his core constituency. Tariff protection for the manufacturing industries increased the costs borne by the farmers, graziers, and pastoralists that the Country Party purported to represent. They had to pay more for the chemicals, clothing, and machinery that were necessary for business.
The apparent contradiction, and McEwen’s skill in navigating it, caused some to scorn and others to marvel. Arthur Fadden, observing politics from retirement in Brisbane, was privately savage of McEwen’s direction.7 Alan Reid, watching from the Press Gallery, could only wonder. ‘McEwen was like a rider in a Roman ampitheatre, riding upright with a foot on each of two horses,’ he wrote.8 But McEwen did not agree that these ‘horses’ were in any kind of conflict; he saw them moving towards ‘common interests’ of national development and prosperity.9
McEwen’s approach had held sway for almost a decade. In that time, he had few critics and he could usually afford to ignore their criticisms. But by 1966, the ground was shifting. In Queensland, prominent graziers were voicing criticism of McEwen’s approach and its effect on primary producers. Maxwell Newton was running regular tirades against McEwen’s policies, and other members of the press were taking an interest in tariff policy. Godfrey ‘Alf’ Rattigan, the recently appointed chairman of the Tariff Board, was unexpectedly pursuing an increasingly independent line on tariffs, pushing not for blanket protection but for balancing protection with Australia’s trade relationships. Liberal MP Bert Kelly’s long-running criticism of tariff policy was beginning to attract an audience in Parliament and beyond. A farmer from Merrindie before entering politics, Kelly did not agree that Australia’s manufacturing industries required the protection afforded by tariffs, and he repeatedly pointed out the burden that tariffs were placing on farmers. Though he had sometimes felt isolated, Kelly knew he was not alone in his criticisms. He knew that the issue was bound up in party politics. ‘The Liberals were frightened of McEwen,’ he said later, ‘[and] that’s the truth of it. He was a bonny fighter and he could clobber you like hell.’10
But McMahon’s appointment to the Treasury hinted at change in the landscape of the debate. ‘McMahon knew the damage that was being done,’ Kelly said. McMahon was surreptitious about it, but Kelly knew he was on his side. In 1962, they had run into one another after a debate on tariffs. At the time, Kelly had been frustrated, despondent about his lack of traction. ‘I don’t know why I stop here,’ he said. ‘No one takes any notice of me.’
McMahon told him to come to his office. Once there, he showed Kelly two copies of the tariff legislation that Kelly had criticised. The first was the legislation as it stood before it had been put to the party room; the second was the legislation afterwards. ‘You’re the only man who spoke,’ McMahon said, pointing out the differences. ‘It just goes to show that it’s worthwhile. You know it can alter things.’11
BECOMING treasurer was the fulfillment of a dream. After six months in the portfolio, McMahon was proclaiming his comfort with it. ‘I like it best because I feel I have trained myself for this kind of portfolio,’ he said, ‘and because I speak the lingo — and because I have had considerable university and practical experience in this field.’12
That experience ensured McMahon was willing to question advice.13 Between this and his acknowledged propensity to telephone all and sundry, journalists wondered how the secretary to the Treasury, Sir Roland Wilson, would handle his new minister.14 According to a popular story, Wilson did so without trouble: ‘Bloody do what we tell you and you’ll be fine,’ the experienced mandarin told McMahon.15 But Wilson did not tell anything for long. In October, three years short of his retirement, but three months after his appointment as chairman of Qantas, Wilson resigned — partly to allow his deputy and colleague Richard Randall to lead the Treasury, and partly to escape from McMahon, whom he held in some disdain.16
McMahon had taken over in favourable conditions. He and the Treasury were reasonably confident about Australia’s prospects, despite a drought that had hampered growth in the previous year. The conversion from pounds, shillings, and pence to decimal currency on 14 February had gone smoothly. The economy was expanding. Employment had returned to the ‘boom year’ levels of 1960. ‘There is certainly a strong urge for expansion within the economy and a wealth of opportunities for it,’ the Treasury mid-year assessment read. ‘The scope for it is bounded only by the limitations on our resources of capital and labour.’17
Conscious of those limitations, McMahon did the requisite job of a treasurer in this era, and scrutinised proposals for spending. He cut to pieces a request from the Queensland state government for financial assistance for its dairy industry, variously arguing that there was no precedent for assistance, that accepting the request would become a precedent, that a state-based policy would become a national policy, and that the request was not detailed enough to warrant acceptance.18 Over the objections of Charles Adermann, the deputy leader of the Country Party and minister for primary industry, cabinet took McMahon’s side.
19 When Adermann submitted a proposal to renew and increase the three-year-old superphosphate bounty, McMahon sought to reject it, then delay it, then scale it down. He was partly successful: it would be renewed, but there was to be no change in the rate, and he would be the one to announce it in the budget.20 When cabinet considered a proposal to increase Commonwealth assistance to flying training, McMahon was simply dismissive: ‘The proposals, in total, go beyond what is a reasonable measure of assistance.’21
There were continual skirmishes with McEwen and Trade, not all of which went McMahon’s way. In February, McEwen succeeded in getting the government to accept a Tariff Board report on motorcars. It had heretically declared that ‘no general increase in the level of protection afforded [to] vehicle production can be justified either by the recent level of imports or in terms of normal tariff making criteria’. The report also recommended, however, that tariffs on passenger cars and station wagons be increased if imports reached 7.5 per cent of new registrations.22 That same month, a McEwen proposal to offer more capital investment to farmers was superseded by McMahon’s counter-proposal that sought to meet McEwen’s halfway.23 In March, the two men clashed over rural finance, McMahon winning out and ‘thrilled’ by his victory.24 Soon after that, when Holt presented cabinet with a long-in-the-works report on creating a system of grants to spur research and development in secondary industries, McMahon and McEwen argued again.25 McEwen preferred that eligible research and development programmes qualify immediately, and McMahon argued for a scheme that would select the best research after evaluation by experts. Officials within the public service were alive to the ‘sharply opposed positions’ presented by the two senior ministers.26 When they were discussed in May, cabinet referred the proposals to a committee for further consideration. It was a stalemate.27
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