He did nothing between that Sunday and the following Thursday. He was spending the time with his great friend, Mr Eric Robinson, President of the Queensland Branch of the Liberal Party on the Isle of Capri at Surfers Paradise. There are 100 businessmen and journalists around Australia who could give evidence that they received calls from the Prime Minister at that time. Some were asked for advice; some were asked for help. The advice sought was how to get rid of John Gorton. The help sought was how to pour a bucket on him … He [McMahon] was determined, like other Little Caesars, to destroy the Right Honourable member for Higgins and he sat there on the Isle of Capri plotting his destruction — Tiberius with a telephone.
From there came a detailed explication of McMahon’s relationship with Packer. From there came an argument that McMahon was simply not good enough for the ‘great’ Liberal Party. From there came an argument that McMahon was a politicking, venal man looking to take advantage of the protests over the South African tour, including pressuring Bradman. From there came his indictment of McMahon for his dismissal of ministers, ‘men of considerable skill’, who now sat on the backbench. Perhaps a little weakly, from there came Whitlam’s plea that those former ministers cross the floor and vote with the Labor Party — and, in doing so, give the Liberal Party ‘a lease of life’.22
McMahon’s response was not wholly inept, but he was certainly outclassed. A point-by-point refutation of Whitlam’s motion would not be convincing, especially when so many of those points were plainly correct: the relationship with Packer, the relationship with Reid. On the whole, McMahon’s argument was thin: the ALP was of no substance. The government — as it would prove in the budget it would hand down that evening — had substance. His government had been working for just five months and ‘brought down a solid list of domestic legislation’. But, beyond this, McMahon flailed. He was scattered: he brought up tariffs, price controls, pensions. He tried to turn the suggestion of subservient influences back on Whitlam. ‘Who is really speaking for Labor? It is not a question of who runs the country,’ he said, ‘it is a question of who runs the Labor Party.’
‘Ask Frank Packer,’ yelled ALP wit Ralph Jacobi, the member for the South Australian seat of Hawker.
The attack collapsed in an instant. McMahon was left defending the change of leadership, making loud proclamations of unity and purpose. ‘You will find that the Liberal Party which I lead, with the Country Party standing behind us, will give to this country the kind of government that it needs and which will take it to a very much higher destiny than we know at the moment or that the Labor Party could ever think was realistically possible.’23
In the opinion of Bert Kelly, McMahon would have done far better if he had made a ten-minute speech, rebutting some of the personal attacks and nothing else.24 Howson thought the entire debate had fallen flat.25 He was wrong: Whitlam’s attack would live on in the popular memory, and his sobriquet for McMahon — ‘Tiberius with a telephone’ — would become famous.
TWO hours after Whitlam’s motion was voted down, Billy Snedden rose to present the McMahon government’s first budget. It was a document framed almost entirely against the backdrop of rising inflation: as Snedden said that night, ‘Australia is in the grip of inflationary pressures.’ Over the previous two years, he said, average weekly earnings had risen by 8.9 per cent and 10 per cent respectively; the consumer price index had risen by 3.2 per cent and 4.8 per cent. Wage increases — most notably in a 9 per cent increase granted under the Metal Trades award — were ominously large, and the slow uptick in unemployment, towards 2 per cent, posed problems for the government.
In Snedden’s mind, it was a ‘difficult time’ to be treasurer. Though he and McMahon agreed on much, they differed on the degree to which political expendiency should affect economic policy. McMahon, according to Snedden, was keen to take any advantage he could to earn plaudits, to pursue the short term in order to recover the government’s position. His approach had long been transparent. To Bert Kelly, McMahon’s announcement of the pensions increase, in the censure motion he had faced in March, was a disappointing move:
This comes badly from Billy who knows better than anyone of the necessity for sitting on the economy’s head and is evidently determined to be popular at any price, and to make his new image glow a bit.26
Kelly’s misgivings proved, temporarily at least, unfounded. McMahon would not yet be quite so craven. For the 1971–72 budget, he wanted to be ‘tough’ and find a new rigour in the budget. According to Snedden, however, this was only so that in the following year, right before the 1972 election, the government could afford to be generous. Snedden disagreed with the strategy. He wanted to allow the economy to ‘develop’, as he put it, and manage problems as they arose. He also preferred to control the flow of information: he disliked McMahon’s propensity for seeking to speak with officials from Treasury and requesting papers from the department.27 None of these were new or unforeseeable conflicts — just the traditional tension between a prime minister and treasurer — but divisions within Snedden’s staff at the Treasury exacerbated the disagreement between the two men. According to Snedden, both the secretary of the Treasury and the deputy secretary, Richard Randall and Jack Garrett, wanted a ‘tight’ budget that would impose taxes; the head of the Financial and Economic Policy division within Treasury, Frank Pryor, and his deputy, Bert Prowse, were against it.28
When the budget strategy was discussed in a cabinet sub-committee, Snedden found himself overruled, with Anthony taking McMahon’s side, who in turn was joined by Randall and Garrett. Snedden began looking at cutting expenditure, hassling and driving unwilling colleagues to prioritise their spending. Their task was given additional urgency by world shocks, most notably when US president Richard Nixon decided on 13 August that the United States would suspend the conversion of the American dollar into gold, a decision that had seemed in the offing since gold prices had collapsed in 1968. This was, in effect, the end of the Bretton Woods agreement, which had underpinned world economic stability since the late 1950s; in Snedden’s words, this ‘undid everything’.29 The need to diversify reserve holdings became paramount. The need to set currency exchanges became fraught. The systems of clean and dirty floats started to take shape.
Thus the budget that night sought to slow down the rate of growth in Commonwealth expenditure. Taxes were increased on company income and personal income. Excise duties on petroleum products and tobacco were increased. There were increases in licence fees. The charge payable under the Pharmaceutical Benefits Scheme was doubled from 50c to $1.30 McMahon regarded the budget as an opportunity to recapture the agenda: he asked his officials to prepare a speech for the budget debate that emphasised the government’s approach, the ‘sense of sanity and leadership’ that the budget provided, and its work to contain expenditure and inflation.31
Overshadowed by the turmoil of Gorton’s resignation, the contest for his replacement, the need for a cabinet reshuffle, and by international reactions to Nixon’s decision, the budget was tough, rigorous, and deflationary, all of which ensured it went without many admirers. ‘This is not going to make us loved in the electorate,’ Bert Kelly wrote in his diary that night, ‘but it had to come.’32 John Stone, observing the budget’s preparation and strategy in the Treasury, agreed that it was designed to contest the inflationary forces that were reshaping the world, and, on the whole, ‘was more or less successful from that viewpoint’.33
For Snedden, however, the budget was an example of how he was obliged to wear criticism for decisions that others had made. When the press criticised it as too tough, it was he who took the blame. The extent to which this contributed to his adverse regard for McMahon is difficult to tell, but there is no doubt that he believed his prime minister made life impossible. ‘McMahon was mercurial, like quicksilver,’ Snedden said later. Nervous, unpredictable, shifting his positions constantly, the prime minister ‘could not have led a trail of ants to a fallen ice
cream.’ It was the difference between McMahon’s idealised self, and what he really was. McMahon, Snedden thought, believed himself to be wise and cautious, even constant when he was wavering. ‘He was never consistent and did not understand that he was being inconsistent; he simply did not understand consistency.’ Keeping the record straight was another problem: after meetings, McMahon would call in a typist and dictate an aide-mémoire of what had happened. ‘Bill, that wasn’t said,’ Snedden would invariably say, and the whole process would begin again. On one particular occasion, it led to a back-and-forth of rewritten versions:
Every time he started to write it down he got it wrong. Ultimately I dictated it but it was expunged and he dictated his own version. It was not very accurate. It seemed to me that he wrote things down as he would have wanted them to have happened, not as they did happen. He had reconstructed them after the event.34
It made life difficult for all concerned: cabinet decisions had to be re-drafted and re-discussed, and what McMahon said of his conversations with industrialists and businessmen could never be trusted. Combined with his propensity to use the phone at all hours, and his willingness to telephone Treasury officers directly for information and advice, Snedden found himself fighting McMahon for consistency and control of his bailiwick.35
Bury’s removal, Snedden’s election to the deputy leadership, and Gorton’s resignation, required successive reshuffles of the ministry: David Fairbairn was moved into defence; Nigel Bowen was moved into foreign affairs; and Malcolm Fraser came back into cabinet to replace Fairbairn, taking up his old portfolio of education and science.36 Senator Ivor Greenwood became attorney-general, and senator Kenneth Anderson became minister for health. McMahon’s new ‘assistant ministers’ were sworn in following a debate in the House about their positions, responsibilities, and accountability to the Parliament.
But there were always problems, and indiscipline was constant. Government backbenchers John Jess, Harry Turner, Bert Kelly, and Tom Hughes had all threatened to cross the floor if the subject of assistant ministries were not debated, and Hughes had pointed out that the success and failure of this ‘experiment’ would be all McMahon’s.37 The Senate president, senator Magnus Cormack, had already been quite clear about his regard for a ‘covey’ of ministers in the Senate: ‘I am quite willing to support the Bill,’ he said, ‘… provided we do not get any more cuckoos in the nest here.’38 Such divisions continued to undermine attempts at unity and professionalism. ‘The government’s immediate as well as long-term concern must be to offer convincing proof that it can give the assured, stable, forceful and creative leadership that alone will retrieve the electoral confidence it has jettisoned,’ the Canberra Times editorialised, on the day of the budget.39
Could McMahon harness the energies of those around him to do that? Could he lead a government that would retrieve that confidence? Certainly he was trying. Aware that Vietnam continued to be a millstone around the government’s neck, he seized an opportunity to loosen it. On 18 August, he announced in the House that all Australian combat troops would be withdrawn from Vietnam, with a great number of them to be home by Christmas 1971. ‘The combat role which Australia took up over six years ago in Vietnam is soon to be completed,’ he said. Moreover, in the same speech, McMahon announced that the period of national service would be reduced, from twenty-four months to eighteen. Prompted by the government’s sensitivity to domestic political pressure, the defence committee of cabinet had initially recommended withdrawal of Australian forces by August 1972. The shock of Nixon’s rapprochement with China, however, had caused cabinet to re-evaluate and then accelerate that withdrawal: quite plainly, Australia could not assume ‘that the United States would not now speed up its own programme of withdrawal’.40
However the decision came about, it was surely to McMahon’s credit that he was extricating Australia from a conflict that had taken a tremendous toll, caused extraordinary upheaval, and appeared to be a near failure in attaining its strategic goals. But McMahon could not, and would not, escape the political cost of the decision to commit Australian forces in the first place. Nor would he receive the credit for ending Australia’s involvement. To McMahon’s statement that it was ‘the Government’s conviction that the decision I have announced tonight is a mark of the success which has attended our policies and actions in Vietnam over the years,’ Whitlam’s response was simple and immediate: ‘There is one reason and one reason only why Australia is now getting out. We are getting out because the US is getting out.’ McMahon, Whitlam said, ‘is the sole survivor of the guilty men who sent us there in 1965’.41
Was McMahon rattled? Was he overworked and flailing? It seemed so. Alan Reid heard rumours that during a cabinet meeting McMahon was told that he needed ‘vision and a blueprint for the future’. The prime minister’s response? ‘Get Bunting on it.’42 On the same day that McMahon supposedly said this, 27 August, Parliament was adjourned for lack of a quorum, a failing that only added to the aura of disorganisation that was taking hold. The quest to regain the initiative, to overcome Labor’s ascendancy in the Parliament, led McMahon into errors and made him suspicious. On 7 September, amid questions about the call-out of the PIR in 1970, Whitlam asked McMahon about his visits to Papua New Guinea. Was the last one he had made back in 1952, while he was minister for the navy? Had he stayed on Manus Island for less than twenty-four hours? McMahon’s response was cavalier:
If the honourable gentleman had been cautious enough to obtain information from the Department of Air as well as from the Department of the Navy he would have found that I visited Papua New Guinea on several occasions and not one. But I will try and obtain the details for him if I can … I went to Papua New Guinea on several occasions as Minister for Air, flying in a VIP aircraft, which in those days was most unusual.43
Peter Bailey, the first assistant secretary in the department of prime minister and cabinet, had his staff check to ensure the answer was accurate. Although they could verify that McMahon had visited Papua New Guinea once, they could not be certain about further visits. There were no records for it. Trying to be diplomatic, understanding that he could hardly call the prime minister a liar, Bailey drafted a minute noting that the department could not find documentation of a further visit. A few weeks later, once the parliamentary session was over, Bailey joined a few officials at McMahon’s home in Sydney for drinks. At one point during the evening, Bailey had the uneasy feeling that McMahon was looking at him. What’s going on here? Bailey thought. Then McMahon hoisted a glass of beer. ‘You called me a liar!’ he yelled at Bailey — and threw the glass at him.44
For the public service, managing the work with McMahon was impossible. McMahon would read and underline his memos and briefing materials, but fail to indicate decisions; he would harass public servants for material constantly.
Peter Lawler felt that there ‘was a frenetic quality in McMahon’s work as prime minister.’ But all that business, all that work, seemed futile, Lawler thought. ‘The McMahon show was tired, rambling, and had lost its way.’45 Bunting found similar problems. Telephone calls with demands for information were frequent, and questions about unexpected topics made the veteran public servant uneasy. ‘Although it was a pleasant and effective working arrangement,’ Bunting said later, ‘there was some degree of wariness in it.’ He could ‘never [be] quite sure’ of his ground.46 McMahon’s relations with his colleagues complicated matters. ‘I don’t know that he commanded the authority that the others [prime ministers] had,’ Bunting said later. ‘… He was first among equals, but only by a short whisker, a short half-head.’47
It was certainly the case that McMahon did not like working with the Country Party. In March, amid falling wool prices, there was a long back-and-forth with Doug Anthony and Ian Sinclair over the Australian Wool Commission, with McMahon suspicious of attempts to trick him. He thought the commission was being profligate, and that the leaks that followed the debate were being orchestrat
ed by the Country Party in order to pressure him.48
But there were other, more serious problems that the Country Party brought McMahon that he needed to heed. Following the Conservative Party’s victory at the 1970 UK general election, John McEwen had secured an agreement from the British to allow Australian agricultural suppliers ‘the longest possible transitional period’ to adjust to the new conditions that would result from Britain’s fresh attempts to enter the European Economic Community.49 After almost a decade in which Australia had been buffeted and disappointed by Britain and the EEC, it seemed that McEwen’s actions had ensured there would be space for Australia to re-calibrate. But in mid-1971, while on a tour of EEC capitals, Anthony found out that Australia had been deceived: while Britain had secured a three-year transition for its own industries to adjust to its entry, it had not secured the same for Australia. As one later observer put it, ‘While the British had obtained breathing room to allow their own industries to adjust, Australian primary producers would be subjected to the full blast of internal EEC preferences from the very day of Britain’s accession.’50
Anthony greeted this news with profound anger. At best, the British had neglected to tell Australia of this change; at worst, Britain had deliberately deceived Australia. When he met with Geoffrey Rippon, the British minister overseeing the country’s negotiations with the EEC, Anthony did not hold back. As he recalled, ‘Rippon opened the discussion by making some derogatory and insulting remarks about things I had said and about Australia’s attitude to Britain entering the EEC. I bristled and reacted in an equally brusque tone.’51 The British gave equal serve, both to Anthony and Australia’s high commissioner to London, Alexander Downer, who recorded Rippon telling him:
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