Nationwide Archives of Australia/Wikimedia Commons, CC BY-SA
After main the Australian Labor Social gathering to its first federal election victory in 23 years, Gough Whitlam wasted no time.
The Tuesday after his election on December 2 1972, he fashioned an interim two-man cupboard – a duumvirate – along with his deputy Lance Barnard, and set about altering the nation.
Modestly, he took solely 13 portfolios, whereas Barnard obtained 14. The pair ruled the nation for 2 weeks till the outcomes of the election had been formally declared and a full ministry sworn in. None of this, nonetheless, was secret.
The Whitlam authorities’s enthusiasm for reform has left an enduring legacy. It launched common medical health insurance. It made tertiary schooling free. It lifted pensions. It abolished conscription. It established diplomatic relations with China. It started the method to recognise Indigenous land rights.
However additionally it is usually remembered for poor financial administration. Many would regard this notion as the principle motive Labor, having gained a second election in Might 1974, was trounced in December 1975.
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Whitlam himself admitted his “preoccupations and predilections lay past the narrower area of financial concept”.
Definitely the Whitlam authorities’s financial efficiency was removed from good. Nevertheless it deserves a greater fame than it has. Fifty years on, we will now see how a lot the circumstances of the time colored perceptions.
Financial progress
Campaigning in 1972, Whitlam scoffed on the 3% annual financial progress achieved beneath the incumbent McMahon authorities. He aspired to reaching 6-7%. However he ended up truly reaching lower than 3%.
We will now see this wasn’t the failure it appeared on the time. The expansion charges of the Fifties and Sixties had been atypical, and set unrealistic expectations. Since federation, the truth is, common annual financial progress has been 3%.
A time of disaster
Like two different Labor governments – that of James Scullin in 1929 and Kevin Rudd in 2007 – Whitlam had the unhealthy luck of taking workplace simply earlier than a big world financial downturn.
This was precipitated by the 1973 oil disaster, when Saudi Arabia and different OPEC nations refused to promote oil to the USA and nations that supported Israel within the Yom Kippur warfare.
World oil costs tripled, supercharging inflation and weakening financial exercise, creating the situations for “stagflation” (inflation with stagnating progress).
Inflation
Inflation peaked at virtually 18% throughout the Whitlam years. It had been larger – virtually 24% in 1951, beneath the Menzies authorities – and it had began climbing earlier than Whitlam was elected. This was additionally due partly to world components and partly to the McMahon authorities spending massive to curry favour with voters.
In contrast to the Hawke-Keating authorities, which saved union calls for for larger wages in examine in trade for “social wage” enhancements, Whitlam did not persuade the unions to curb their wage calls for. This made stagnation worse.
However his authorities did take steps to battle inflation. It revalued the Australian greenback and raised rates of interest. It established a Costs Justification Tribunal to discourage massive firms from elevating costs.
By the top of its time period inflation was declining – although it was not till after the Reserve Financial institution adopted inflation focusing on within the early Nineties that it was actually again beneath management.
Employment
The unemployment price rose – however perceptions of the severity of that rise had been additionally colored by comparisons with the traditionally low charges of the Fifties and Sixties.
On the finish of 1975 the unemployment price was 4.6% – lower than the 5% long-term common.
Price range spending
Spending beneath the Whitlam authorities rose to its highest share of GDP since World Conflict II. On the time, the opposition attributed this to waste and extravagance.
However no authorities since has returned spending ranges to pre-Whitlam ranges. This means the upper spending has principally gone to issues which can be in style with the general public.
The funds stability moved into deficit. This was unsurprising because the economic system slowed beneath the impression of the oil shock.
This deficit not stands out, given these incurred in subsequent financial crises – the early-Nineties recession, the worldwide monetary disaster of 2008, and the COVID-19 recession. It’s additionally price remembering that among the subsequent surpluses mirrored the sale of public property resembling Telstra.
The beginning of financial reform
In some methods, the Whitlam authorities represents the beginning of the financial reform course of that peaked throughout the Hawke-Keating years (1983-96).
Whitlam was sceptical of protectionism and began slicing tariffs. This was partly to scale back inflation by decreasing import costs, however there was additionally a long-term purpose to develop a extra environment friendly economic system.
His authorities applied a brand new Commerce Practices Act and reformed authorities entities resembling tthe Publish-Grasp Normal’s Division, which was changed by the extra commercially targeted Telecom Australia and Australia Publish.
The Whitlam authorities’s financial efficiency was actually not good. Nevertheless it deserves a greater fame than it has.
John Hawkins doesn’t work for, seek the advice of, personal shares in or obtain funding from any firm or group that might profit from this text, and has disclosed no related affiliations past their educational appointment.