The National Archives has released Cabinet papers from the 1984-85 Hawke Labor government.
Because the Archives is transitioning from the old 30-year embargo rule to 20 years, two years worth of papers have been released.
Dr. Jim Stokes, the National Archives historical consultant, outlined the political climate of the time, whilst a former Hawke minister, Susan Ryan, provided a personal recollection of 1984-85. Transcripts of their talks are provided below.
- Listen to Dr. Jim Stokes (21m)
- Listen to Susan Ryan (27m)
Text of remarks by Dr. Jim Stokes – December 4, 2012.
Background to the 1984 and 1985 Cabinet records
The political background
Journalist Geoff Kitney wrote in May 1984, ‘The light on the hill that has always beckoned the Australian Labor Party still burns. But another light illuminates the Australian political landscape today: the dazzling, brilliant blaze of Bob Hawke’s popularity’. A Morgan Gallup poll in February 1984 gave the government 54 per cent of the vote, against 40 per cent for the Liberal–National Party Opposition and 4 per cent for the Australian Democrats; Prime Minister Hawke’s approval rating was 70 per cent, against 36 per cent for Opposition Leader Andrew Peacock. Hawke’s personal popularity was enhanced by the perception that he was presiding over a generally competent Cabinet that was prepared to tackle major issues in ways that sought to achieve community consensus. He was also assisted by the internal problems of the Opposition, in particular Peacock’s uncertain hold on the Liberal Party leadership, the ideological conflict between the ‘wets’ and ‘dries’ on economic and social policy, and the strength of the very conservative National Party in Queensland.
However not everyone was a true believer: Hugh Morgan, Executive Director of the Western Mining Corporation, was reported by the National Times to have told a business group in London in January 1984 that Hawke, Treasurer Paul Keating and Industry Minister Senator John Button had maintained business confidence, but that the ‘High Keynesians’ of the Left were waiting in the wings to push for very large budget deficits. Wages were too high, the Conciliation and Arbitration Commission was a ‘viper in the bosom’ of any government, and Commonwealth and state governments were competing to see who could give away the most land under Indigenous land rights legislation. Within the Australian Labor Party (ALP) those on the ideological left were uneasy about or actively opposed to the government’s position on issues such as uranium mining, disarmament, the American alliance, financial deregulation and reduction of the budget deficit at the expense of a substantial increase in welfare spending. The new Centre-Left faction shared some of these concerns and it was also uneasy about Hawke’s perceived closeness to the NSW right wing of the party and the powerful influence of the so-called Gang of Four, which consisted of Hawke, Keating, Hawke’s chief political adviser Peter Barron and NSW Senator Graham Richardson.
The March 1983 election that brought Hawke to power was a double dissolution of both houses of Parliament, requiring another election for half the members of the Senate no later than the first half of 1985. Governments generally dislike inflicting separate Senate elections on voters and it was decided to hold an election for the House of Representatives and half of the Senate on 1 December 1984. The election campaign began on the assumption that the government would win easily, but the ALP found the going harder than expected. The campaign was an unusually long one of more than seven weeks and at times the government seemed to find it difficult to maintain a forceful message on major policy issues. Hawke himself was distressed by a family health crisis. Peacock campaigned more strongly than expected, particularly on tax issues and the proposed pensioners’ assets test, and there was a drift of voters to the Opposition.
In the end the government had a comfortable victory. It won 82 seats in the House of Representatives with 51.8 per cent of the two-party preferred vote, while the Opposition won 66 seats with 48.2 per cent of the vote. From 1 July 1985 the Senate was made up of 34 ALP and 33 Opposition senators, together with seven Australian Democrats, Tasmanian Independent Brian Harradine and Western Australian Independent Jo Vallentine. Vallentine was elected as a Nuclear Disarmament Party candidate, but she left the party over concerns that it was being taken over by the Socialist Workers Party. There were several ministerial changes: Lionel Bowen replaced Senator Gareth Evans as Attorney-General, with Evans taking the Resources and Energy portfolio, John Dawkins went to Trade and was replaced in Finance by Senator Peter Walsh, Kim Beazley went to Defence and Chris Hurford to Immigration.
The election victory did not immediately end the government’s troubles. Hawke had announced during the campaign that the government would hold a national tax summit to seek consensus on ways of reforming the tax system. This defused tax policy as an election issue, but left the government with the formidable challenge of achieving consensus in a notoriously difficult and divisive area. Debate raged within and beyond the government for months, while the deteriorating terms of trade, the fall in value of the dollar and policy upheavals, such as that over MX missile tests in February 1985, suggested that the government was not always in full control of the agenda. By July 1985 Peacock had a higher approval rating than Hawke.
Later in 1985 the government’s fortunes improved. The tax debate and the pensioners’ assets test furore were finally resolved, with Paul Kelly suggesting that the tax debate had ‘reinforced the Hawke–Keating stereotype: Hawke as peacemaker and man of compromise; Keating as the pacesetter, the man of resolution’. Also in September the Prices and Incomes Accord with the Australian Council of Trade Unions (ACTU) was renewed for two years, with a 3 per cent compulsory superannuation contribution by employers and agreement to discount cost-of-living based wage rises by 2 per cent in recognition of the falling value of the dollar. The government was helped by conflict within the Opposition: on 5 September the long-running tensions between Peacock and John Howard came to a head when Peacock resigned the Liberal Party leadership and Howard replaced him. By November the government was close to its goal of creating 500,000 new jobs, although the value of the Australian dollar had sunk to 68 cents against the US dollar and the variable home loan interest rate had reached 13.5 per cent. A Morgan Gallup poll taken in mid-November 1985 gave the government 48 per cent of the first preference vote, compared to 44 per cent for the Opposition and 6 per cent for the Australian Democrats.
The economy and the Budget
In March 1984 Keating launched the annual Treasurer’s campaign to steer his colleagues along the path of fiscal prudence. He told Cabinet that they had already made progress, with unemployment expected to fall to 9 per cent and inflation to 6 per cent by the middle of 1984. However, to achieve a sustained revival of business investment the government would need to hold down inflation and demonstrate that the Prices and Incomes Accord would endure. In July 1984 Keating said that unless spending was checked, the government would pay dearly in terms of high interest rates and lost credibility. They would need at least $1.2 billion to fund an income tax cut of around $8 per week, which was the minimum necessary to keep the trade unions in the Accord, and there was no immediate prospect of increasing revenue from company or indirect taxes. The government would also need to honour its commitments on new social welfare initiatives to the maximum extent possible. Cabinet agreed that the projected growth of 6.2 per cent in spending in real terms was incompatible with budget objectives and that the 1984–85 deficit should be no more than $7 billion. The budget as presented in August predicted a deficit for 1984–85 of $6.7 billion and this proved to be accurate.
Once the December 1984 election was over Cabinet set an ambitious agenda for fiscal reform. On 13 December Keating told Cabinet that the government must maintain its record of sound economic management, which had clearly contributed to the election victory. There had been rapid growth in activity, employment and real income, a reduction in inflation and interest rates, and an improved investment outlook. However, this had been due partly to special factors, such as economic recovery in the rest of the world and the end of the drought in Australia. The private sector had benefited from strong growth in government spending, but it was now time to reduce the budget deficit. Keating saw the major policy issues of 1985 as the need to restrain expenditure to relieve pressure on borrowing and hence on interest and exchange rates, to review Commonwealth–state financial relations, to maintain consensus on wage and price restraint, and to reform the tax system. Cabinet endorsed the so-called ‘Trilogy’ of budget restraint, which pledged that Commonwealth revenue would not increase as a percentage of gross domestic product (GDP) and that Commonwealth expenditure and the Commonwealth budget deficit would not increase as a percentage of GDP.
In April 1985 Cabinet received a fairly gloomy review of Australia’s trade performance. The situation had declined markedly in the first eight months of 1984–85, with the current account deficit standing at $7.57 billion, prompting a sharp fall in the value of the Australian dollar. Australia’s share of world trade was declining and 75 per cent of our exports were of primary products, in particular wheat, coal and petroleum products, whereas the main growth in world trade was in manufactured goods. Import growth was far outstripping export growth and some 60 per cent of imports entered Australia duty free or at non-protective tariff rates because they were products not manufactured in Australia. The report concluded that ‘the foreign exchange market is reacting quite rationally to the current and future outlook for Australia’s trade. Australia’s external position appears to be displaying all the characteristics of a country which is heavily exposed to the vagaries of world commodities markets and lacking a well-developed industry base to provide some counterbalance to adverse trends in commodities markets’. The current account deficit for 1984–85 was $11.07 billion, rising to $14.50 billion for 1985–86.
Keating briefed Cabinet again in July 1985. He said that the economy was growing strongly and the budget forecast of 5 per cent growth in non-farm product was likely at least to be met. Inflation had been much reduced over the preceding two years, but it appeared that the Consumer Price Index might rise by 6 per cent in 1984–85, against a Budget prediction of only 5.25 per cent. Unemployment was down from the September 1983 peak of 10.4 per cent to 8.7 per cent in June 1985 and 384,000 new jobs had been created up to June 1985. Keating predicted continued strong activity, but it was imperative that inflation did not rise much above the OECD average of 4 per cent and that there was a continued reduction in the relative size of public-sector borrowing in the wake of the weakening of the Australian dollar. The sharp rise in the current account deficit suggested that Australia was living beyond its means, thus requiring an unsustainable level of overseas borrowing. The budget delivered in August 1985 predicted a deficit of $4.9 billion, although the actual figure was $5.7 billion.
The search for budget savings
The Hawke government had a bruising encounter with the politics of middle-class welfare when it attempted to introduce an assets test for pension recipients. The 1983 budget had foreshadowed a test based on the assumption that pensioners earned a return of 10 per cent from assets other than their home, car and personal effects. This provoked widespread protests from pensioners and the Opposition. In February 1984 Hawke said that the government was determined to direct pension spending to those who relied on it and not to people who by any reasonable standard did not require it. However he acknowledged that there was considerable community confusion about the assets test and announced that the government would set up a broadly based panel of community representatives to advise it. The panel, chaired by Professor Fred Gruen, recommended that the test should include the pensioner’s home, since to exclude it would discriminate against those who rented their homes. Pensions would be reduced for single people with assets of more than $150,000 and couples with assets of more than $200,000.
In June 1984 Cabinet endorsed a test under which the pension rate would be the lesser amount delivered under the existing income test or the assets test. The pensioner’s home would be excluded from the test but where the pensioner’s other assets were valued at more than $70,000 (single) or $100,000 (couples), the pension rate would reduce by $20 per week for every additional $10,000 worth of assets. The assets threshold for pensioners who did not own their homes would be $50,000 higher and pensioners who had more than 75 per cent of their assets in illiquid forms would be able to draw a pension in the form of a loan repayable from their estate. Community debate about the test continued and in May 1985 Cabinet reviewed its scope. Under the 1983 proposal it had been intended to collect information from all pensioners. However, as finally implemented, the test was applied to only about 15 per cent of pensioners, on the basis that only about 2 per cent of pensioners would prove to exceed the assets threshold. Cabinet decided that over the next three years the remaining 85 per cent of pensioners would be asked to answer a simple yes/no question on real estate ownership and to estimate the total value of their assets if they believed that they exceeded the allowable limit.
Cabinet also grappled with the familiar problem of home ownership schemes that consumed ever larger sums of money. The Hawke government had introduced the First Home Ownership Scheme in October 1983 to replace the Fraser government’s deposit assistance and loan interest tax rebate schemes. The scheme provided assistance of up to $7000 for applicants whose household income did not exceed 135 per cent of average weekly earnings, with a reducing scale of grants for incomes up to 155 per cent of average weekly earnings. However, applications for grants far exceeded expectations and it was estimated that the scheme would cost $412 million annually by 1985–86. In July 1984 Cabinet decided to restrict the scheme to applicants with an income of less than $20,000, or $10,000 in the case of single applicants without dependents. In April 1985 Cabinet cut the scheme’s 1985–86 allocation from $315 million to $290 million by reducing benefit levels by $1000 in each category.
The search for savings tempted departments to snipe at bêtes noires and sacred cows. In March 1985 the Department of Finance, supported by the departments of the Treasury and the Prime Minister and Cabinet, suggested that tuition fees be reintroduced for Australian tertiary students at the rate of some $1400 per annum for university students and $900 for colleges of advanced education. Students would be offered a subsidised government loan system to pay their fees. Finance argued that, despite the abolition of tuition fees in 1974, students from higher socioeconomic groups were still over-represented in tertiary institutions and could thus afford to pay fees. However, the government had made an election commitment that it would not reintroduce fees and the Department of Education was strongly opposed to fees. The memorandum was not considered by Cabinet.
In May 1985 Cabinet considered a memorandum from the Department of the Prime Minister and Cabinet on ways of reducing the cost of the Freedom of Information Act. In 1983–84 the Act had cost $17.63 million to administer, against revenue of only $13,500. The department noted, perhaps with a hint of regret, that it would be contrary to ALP policy to repeal the Act, but suggested a range of ways to discourage demand. Cabinet agreed to introduce a $20 application fee, together with search and retrieval fees of $30 per hour, although applicants seeking their personal files would not be charged. Charges for other applicants would be waived only in cases of personal hardship or genuine public interest, and applications from journalists and members of Parliament would no longer be regarded automatically as being in the public interest. Maximum use would be made of the provision to refuse applications on excessive workload grounds, publicity for the Act would cease and staffing would be substantially reduced.
The Economic Review Committee of Cabinet ruled that demands on the budget by the Australian Broadcasting Corporation (ABC) and Special Broadcasting Service (SBS) should be restrained, but without destroying the basic character of the national broadcasters. In May 1985 Communications Minister Michael Duffy offered Cabinet five options for the ABC, ranging from the reintroduction of radio licence fees through to management improvement, advertising, corporate sponsorship and merchandising, and full privatisation. Duffy argued that privatisation, advertising and corporate sponsorship would be ‘political madness’ that would destroy the national broadcasters: he described privatisation as ‘the Golden Ass of the Opposition’. The bureaucracy was divided: Treasury favoured sponsorship and some advertising, Prime Minister and Cabinet favoured sponsorship but not advertising, and Finance and the Australian Taxation Office opposed licence fees, the former because they were inefficient and the latter because it was afraid that it might be asked to collect them. Cabinet rejected the privatisation, advertising and sponsorship options and directed the ABC and SBS to produce detailed five-year plans to demonstrate that their spending would not increase in real terms.
During 1984 Cabinet considered ways of reducing personal income tax, noting that the ACTU demanded substantial income tax relief for low and middle income earners to ensure the survival of the Prices and Incomes Accord. However there was no easy way of achieving this. Inflation had resulted in taxpayers who received only average weekly earnings paying a marginal tax rate of 46 cents in the dollar. Forty-four per cent of taxpayers were in the lower or middle income groups earning between $10,000 and $20,000 per year, so that even a modest reduction in their tax obligation would result in a substantial loss of revenue. This loss could not be recouped from high income earners because there were not enough of them. Cabinet agreed to replace the existing three income tax scales with five new scales to save most taxpayers $7.60 per week.
The Prime Minister’s election commitment to hold a national tax summit generated a formidable volume of work for Cabinet and Treasury. On 12 May 1985 Cabinet considered a 414-page draft White Paper on options for tax reform. The paper argued that the ‘muddle through’ or ‘potholing’ approach to tax reform was no longer viable. Many tax loopholes had been closed, but often only when they had become outrageous. In any case, old loopholes were merely replaced with new ones, aided by the High Court’s generally lenient decisions on tax cases between the mid-1960s and early 1980s. The White Paper suggested a range of reforms, the centrepiece of which was a reduction in marginal income tax rates, to be offset by a 12.5 per cent broad-based consumption tax. The rationale for the consumption tax was that the existing taxable income base accessed less than half of household income, due to a combination of exemptions and evasions; in contrast, a consumption tax would come much closer to accessing total household income. The White Paper also recommended the introduction of fringe benefits and capital gains taxes, and a tightening of tax laws in areas such as the negative gearing of investment property, primary production losses, gold mining, forestry and film production.
The White Paper was released on 4 June 1985 and the Tax Summit was held in Canberra in the first week of July. Keating briefed Cabinet on its outcomes on 8 July. He noted that the Prime Minister had indicated at the final session of the Summit that there seemed to be general support for a number of broad positions, including a crackdown on tax evasion, some extension of the direct and indirect tax base (including a consumption tax on services), adequate compensation for the needy, a possible replacement of the income tax threshold with tax rebates, changes to the dependent spouse rebate and the possible introduction of dividend imputation, aligning company tax rates with the top personal rate. Keating said that some participants had queried the extent of consensus reached, but that there was widespread endorsement of the view that the government should develop a final package around these broad positions.
Treasury and Keating fought passionately for the introduction of a broad-based consumption tax, although the Prime Minister’s office became increasingly uneasy about its political consequences. The Tax Summit confirmed that a consumption tax would be opposed by a wide range of interests, including the trade unions, the welfare lobby, business groups, and both right and left wing politicians. Cabinet formally buried the consumption tax on 12 August 1985, noting Treasury advice that revenue from a tax on services and a major extension of wholesale sales taxes would be insufficient to fund compensation for low income earners and to make a satisfactory contribution to cuts in income tax. Keating announced that the government would not give further consideration to a tax on services or a major extension of wholesale sales taxes.
Keating unveiled the final tax package in the House of Representatives on 19 September, suggesting that ‘few of the people in the top bracket have paid the 60 cents in the dollar asked of them. They have arranged their affairs to evade, avoid or minimise that liability. Instead their share of the burden has been carried by ordinary middle income Australians’. Despite the loss of the consumption tax the package included a wide range of reforms. There were to be new taxes on fringe benefits and capital gains, the wholesale sales tax was to be streamlined and the tax provisions in areas such as farm losses, water conservation, forestry and film production were to be tightened. Income from foreign sources would be taxed in Australia, with an allowance for foreign tax already paid. These and other measures were expected to raise $1.7 billion in 1987–88, but the revenue gains would be far outweighed by tax cuts worth $4.5 billion, the difference between the gains and the cuts being covered by rigorous control of government spending. The income tax reforms reduced (in stages) the 60 cent rate to 49 cents, and the 48 and 46 cent rates to 40 cents, with smaller reductions for rates below 40 cents. Welfare benefits would be adjusted to alleviate ‘poverty traps’ and give pensioners and other beneficiaries more incentive to earn extra income.
The Australia Card
In June 1985 Cabinet considered the introduction of a national identity card, to be known as the Australia Card, for all adult citizens and permanent residents. The cards would be generated as far as possible by matching data in existing government databases. Health Minister Neal Blewett told Cabinet that there appeared to be general support for a national identity system, but it was doubtful if its tax benefits alone would secure its acceptance among significant community groups. The government should therefore emphasise the benefits of identifying illegal immigrants, thus releasing 60,000 jobs for legitimate residents, and combating welfare fraud. Keating announced the introduction of the Australia Card in his tax reform statement on 19 September 1985. The card was to be developed by the Health Insurance Commission in cooperation with the Australian Taxation Office, and its primary purpose would be to combat tax and welfare fraud. Legislation to introduce the Australia Card was introduced in 1986, but it failed to pass the Senate and was abandoned by the government in 1987. Some of the intended functions of the Australia Card were realised in 1988 when legislation was passed to establish the Tax File Number system and in 1990 when legislation was passed to regulate data matching among Commonwealth databases.
General financial reform
The government undertook radical reform of the Australian financial system. In April 1984 Cabinet agreed to let trading banks pay interest on large deposits held for less than 14 days and on small deposits held for less than 30 days. Controls would be removed from the length and size of savings bank fixed deposits, and savings and trading banks would be able to accept term deposits of more than four years. Savings banks would also be able to offer cheque facilities and accept deposits of more than $100,000 from businesses. In April 1985 interest rate ceilings on bank loans of less than $100,000 were removed.
In September 1984 Cabinet considered Keating’s proposals to increase competition in Australian banking. Only one new banking authority had been granted since 1945, while mergers had resulted in the four major banks holding 81 per cent of bank assets. Cabinet agreed to ease limits on individual shareholdings in banks and to call for applications for a limited number of new banking authorities. Every effort would be made to encourage new domestic applicants, but some foreign participation would be necessary if strong and innovative new banks were to be established quickly. There were 42 applications and it was agreed in February 1985 that 16 of the applicants should be asked to develop their proposals to the stage needed for the granting of new authorities. Of the 16 applicant institutions, six were from the Asia-Pacific region, six from North America and four from Europe. Eight of the 16 proposals involved Australian equity of between 20 and 50 per cent, while some of the others might consider a measure of Australian equity later.
In October 1985 Cabinet considered a series of proposals by Keating to ease controls on foreign investment in Australia. Under current arrangements, all new resource and development projects, other significant new businesses, most real estate acquisitions and all takeovers of existing businesses were subject to formal scrutiny. This reflected public concern about foreign ownership and control of industries and resources, although the Business Council of Australia favoured relaxation of the policy to encourage development and reduce unemployment. Keating did not favour abandoning all controls, but Cabinet accepted a range of reforms, including raising the threshold for scrutiny of foreign takeovers under the Foreign Takeovers Act from $3 million to $20 million and an easing of controls on the sale of Australian land to foreigners.
Reforming the Australian car industry
In May 1984 Industry Minister Senator John Button gained Cabinet approval for comprehensive reform of the Australian passenger motor vehicle industry. Despite a protection level three or four times above the average for the manufacturing industry, the car industry was in long-term decline, in terms of both volumes and employment. Conversely, protection levels had risen substantially: in the early 1960s the industry had been protected by a 35 per cent tariff, but by 1984 the level of protection was estimated to be between 70 and 80 per cent, through a combination of import quotas to preserve 80 per cent of the market for local manufacturers and a 57.5 per cent tariff on fully imported vehicles. Major manufacturers overseas produced at least 200,000 vehicles of each model annually, whereas in Australia even the Holden Commodore and Ford Falcon had annual production runs of only 50,000, while the other 11 Australian models averaged only 20,000 vehicles annually. The industry had also suffered by failing to respond adequately to increased demand for small four-cylinder cars. The Button plan aimed to make the industry more sustainable by 1992, with the expectation that there would be a significant drop in the number of both models and manufacturers, and that even this would require substantial ongoing government support to achieve. Key features of the plan included restricting passenger car imports to 110,000 annually (equivalent to 20 per cent of the predicted market), including the import quotas four-wheel drive vehicles that were essentially private cars, and gradually reducing tariffs on cars imported above the manufacturers’ allocated quota from 100 per cent to 57.5 per cent by 1992.
Industrial relations: the Builders’ Labourers Federation and the Mudginberri abattoir dispute
The Hawke government’s hopes of improved behaviour by the Builders’ Labourers Federation (BLF) soon faded. The union had a long history of industrial turbulence and conflict with governments of all political persuasions. It was deregistered in 1974, but reregistered in 1976 in recognition of undertakings of reasonable behaviour. Conflicts continued and the Fraser government commenced new deregistration proceedings in 1981. The Hawke government withdrew from these proceedings in December 1983, in the hope that the BLF would abide by new guarantees of satisfactory behaviour. However, Industrial Relations Minister Ralph Willis told Cabinet in February 1984 that BLF campaigns for a $9 per week national pay rise and for severance pay and improved site allowances at the new Parliament House site in Canberra threatened the Prices and Incomes Accord. Preservation of the Accord was essential to the government’s general economic strategy and Cabinet no doubt recalled the harm done to the Fraser government by the wages breakout in the metal trades in 1981–82.
In July 1985 Willis told Cabinet that the BLF had undertaken to behave reasonably in return for a package including an industry superannuation fund. It had also undertaken not to make wage claims beyond the provisions of the Accord. However, none of these undertakings had been honoured and the union had continued its strategy of making excessive wage claims, supported by industrial action, violence and damage to property. Employers and other unions had expressed a total lack of confidence in the possibility of the BLF reforming itself. Willis argued that the quickest and simplest solution would be to legislate to deregister the union nationally, but Cabinet preferred a more complex approach under which the Conciliation and Arbitration Commission would be required to find the union guilty of industrial misconduct, after which the Governor-General could wholly or partially deregister it and reallocate its coverage to other unions. Cabinet approved legislation embodying these principles on 12 August 1985.
The Commonwealth was reluctantly drawn into a landmark industrial dispute at Mudginberri abattoir in the Northern Territory. Primary Industry Minister John Kerin told Cabinet in July 1985 that the dispute had been precipitated by the handing down of the Northern Territory Meat Industry Award in 1984, which included a provision for a ‘payment by results’ contract employment system that could be approved by a majority of employees in a specific workplace. The Australasian Meat Industry Employees Union claimed that this excluded the union from negotiations and threatened the ‘tally’ system of payment provided in all other meat industry awards. The union set up a picket at Mudginberri, which meat inspectors employed by the Commonwealth refused to cross, thus preventing the abattoir from exporting beef. Kerin warned that any attempt to break the picket would almost certainly precipitate a national strike. Cabinet decided that inspectors would not be ordered to cross the picket line and that they would not be replaced with non-union inspectors. The owner of Mudginberri abattoir, Jay Pendarvis, who was supported strongly by the National Farmers’ Federation, took action under the secondary boycott provisions of section 45D of the Trade Practices Act. The union was fined heavily for refusing to remove the picket. The dispute was eventually settled in 1986, with provisions that the union was to be notified of any contract arrangements and that conditions agreed for the Northern Territory would not be a precedent for other areas of the country. The Hawke government had attempted to repeal section 45D in 1984, but its legislation was defeated in the Senate.
Foreign affairs, defence and Christmas Island
In January 1984 Cabinet considered Australia’s policy on the Indian Ocean. Foreign Affairs Minister Bill Hayden said that the current security threat was low, but that Australia had an enduring interest in protecting the Western Australian coast, offshore resources, the Cocos and Christmas Islands, and major trade and civil aviation routes. Australia shared this interest with the United States, with cooperation between the two countries including port visits by US ships, visits to Darwin by B52 bombers on training and surveillance missions, and the work of the North-West Cape naval communications station. Both nations had an interest in securing an unstable region and preventing an improvement in the Soviet strategic position. However this interest might not always sit easily with Australia’s commitment to an Indian Ocean Zone of Peace: for example it might be asked to give more active assistance to US military operations in the Middle East. It was important that Australia was perceived as an independent and sympathetic country by other countries bordering the Indian Ocean. Cabinet endorsed the submission, noting that Australia should give the area greater attention by increasing aid, visits by Navy ships and opening a diplomatic post in Mauritius. On the other side of the continent Australia, New Zealand and most of the South Pacific states signed the Treaty of Rarotonga in 1985 to establish the South Pacific Nuclear Free Zone. Cabinet noted however that the treaty would not prevent French nuclear tests or the transit of nuclear armed ships outside territorial waters.
Cabinet also reviewed the future of Christmas Island. Territories Minister Tom Uren reported that the island retained many vestiges of its colonial past. Its residents had no local government, no right to vote in Australian elections and they could not access normal Australian welfare benefits. The island’s laws were based on those of the colony of Singapore in 1958, when Australia took over the administration from the United Kingdom. The island’s only significant economic activity was its phosphate mine, but this was suffering from rising costs and competition from other producers. Both Singapore and Indonesia had shown some interest in the future of the island and Uren argued that it should be brought into the mainstream of Australian life ‘to demonstrate to our neighbours that the Island is regarded as an integral part of Australia, not simply as a phosphate source’. Cabinet agreed in April 1984 to develop a staged integration package, including the establishment of local government, wages and conditions similar to those in Australia, Australian welfare and voting rights, and the introduction of income and company taxes.
Development of the US MX intercontinental ballistic missiles included the test firing of unarmed missiles from California to land in the western Pacific Ocean. In 1981 the Fraser government agreed to a US request to land two MX missiles in the Tasman Sea some 220 kilometres east of Tasmania. It had been intended to announce the plan in 1982, but political considerations caused the announcement to be postponed. Prime Minister Hawke confirmed Australian agreement to the test firing plan when he visited Washington in 1983. The issue does not appear to have been formally considered by the Hawke Cabinet before 1985, although some ministers became aware of it. It was a sensitive issue at a time when there was substantial opposition in Australia to both uranium mining and the nuclear arms race. An estimated 250,000 people took part in Palm Sunday peace marches in April 1984, and the Nuclear Disarmament Party gained 7 per cent of the vote in the December 1984 election, although it soon began to disintegrate. In addition, the election of the Lange Labour Party government in New Zealand in July 1984 resulted in New Zealand banning visits by ships that might be carrying nuclear weapons. The refusal of New Zealand to permit a visit by the USS Buchanan in February 1985 threatened the future of the ANZUS alliance.
On 29 January 1985 Cabinet decided that if the government was required to explain its position on the MX tests it would confirm publicly that, on coming to office, it had been confronted with an undertaking by its predecessor to provide certain assistance to the US program. It had been decided to honour that undertaking, but only after the Prime Minister had secured US agreement to transferring the splashdown zone out of the Australian Exclusive Economic Zone into international waters. The Prime Minister would tell the United States when he was in Washington the following week that Australia’s previous commitment to provide assistance would not constitute a precedent and that any further requests would require consultation with the South Pacific Forum. The government announced on 1 February that US planes monitoring the missile splashdown in the Tasman Sea would be allowed to land in Australia, precipitating considerable public controversy. Hawke was questioned closely on the issue at a press conference in Brussels on 4 February, during the course of which he said that he was now aware of the strength of feeling on the issue and that he would take that feeling into account when in Washington. After a meeting with Hawke on 6 February US Secretary of State George Shultz announced that the tests would be conducted without the use of Australian support facilities.
On 28 March 1985 Cabinet considered a joint submission from Hayden and Defence Minister Kim Beazley on the future of the ANZUS Treaty. The United States considered that ANZUS was now virtually inoperative in relation to New Zealand and almost all trilateral defence and strategic arrangements had been suspended. In addition Australia was unable to pass classified information of US origin to New Zealand. The United States believed that the naval forces of all three countries must train together regularly and it was also concerned that New Zealand’s action might become a precedent for the unravelling of other treaties. Hayden and Beazley said that there was little prospect of the New Zealand position changing, but clumsy handling of the matter might make a resumption of full New Zealand participation in ANZUS even more remote. Cabinet decided that, while defence relations with New Zealand were important, those with the United States were of dominant significance for Australia’s security and it would maintain a full range of defence activities with the United States. Australia’s long-term aim was to restore the full trilateral ANZUS relationship and it encouraged Treaty partners not to make immoderate statements that might worsen political difficulties.
The Age tapes and the investigation of Justice Lionel Murphy
In February 1984 The Age newspaper published material from unauthorised tape recordings of telephone calls allegedly made by the NSW police. The tapes related to a range of possible criminal activities, most of which fell into the NSW rather than the Commonwealth jurisdiction. However, they also indicated that a Commonwealth judge, later identified publicly as Justice Lionel Murphy of the High Court, might have acted improperly in attempting to influence court proceedings relating to his friend, Sydney solicitor Morgan Ryan. This precipitated more than two years of inquiries and legal proceedings. In February 1984 the Director of Public Prosecutions (DPP), Ian Temby QC, was asked to investigate the material to identify any possible federal offences. Temby reported on 20 July 1984 that the material had no present probative value, that the voices on the tapes could not be authenticated, that it could not be proved that the tapes recorded actual phone conversations and that there was no evidence of offences under federal law (apart from the issue of telephone interception itself) to warrant charges or further investigations.
Meanwhile the Senate, in which the government did not command a majority, had set up its own inquiry. Evidence presented to the inquiry in camera included allegations by NSW Chief Magistrate Clarence Briese about Murphy’s involvement in the Ryan case. This inquiry reported in August 1984, but was divided on party lines. On the casting vote of the chairman the committee decided that no conduct of Murphy that would constitute misbehaviour under section 72 of the Constitution had been proved and thus opened the way for action to remove Murphy from the High Court. On 3 September 1984 Cabinet decided to ask the Senate committee to refer the Briese evidence to the DPP for consideration as to whether criminal proceedings should be undertaken against Murphy. However the Senate decided to resume committee hearings on 6 September, this time in public. Briese and two other NSW judges gave evidence about apparent attempts to influence proceedings in favour of Ryan. Murphy chose not to give evidence. A majority of the committee found that, on the balance of probability, Murphy had attempted to influence the course of justice over the Ryan committal.
On 14 December 1984 Cabinet noted that the DPP had decided to charge Murphy with attempting to pervert the course of justice; this was a matter for the DPP and ministers would make no comment about it. In April 1985 a magistrate found that Murphy had a case to answer on two counts of attempting to pervert the course of justice in relation to the Ryan proceedings. In July 1985 he was convicted on one of two counts and sentenced to 18 months imprisonment, but his conviction was overturned on appeal. He was retried and finally acquitted in April 1986. In May 1986 legislation was enacted to establish a Parliamentary Commission of Inquiry to assess Murphy’s fitness to return to the High Court. However Murphy was by then suffering from inoperable cancer and he died in October 1986.
Agent Orange and British nuclear tests
On 19 August 1985 Cabinet considered the final report of the Royal Commission on the Use and Effects of Chemical Agents on Australian Personnel in Vietnam. The Royal Commission had been set up in May 1983 under Justice Phillip Evatt and at times its relations with the government on issues such as costs, reporting times and research strategies had been somewhat strained. The final report found that, apart from the unresolved status of the anti-malarial drug Dapsone, all chemical agents used in Vietnam had been fully exonerated from causing ill-health for veterans; the higher mortality rate among veterans was due to stress, alcohol and tobacco. The report’s recommendations included the tightening of handling procedures for chemicals, automatically allowing Vietnam veterans’ benefit claims relating to circulatory issues and alcohol-induced diseases, and improved demobilisation and counselling procedures. Cabinet decided to table the report in Parliament, noting that a link between Agent Orange and veterans’ health problems had not been established, but not making any immediate commitment to implementing specific recommendations.
On 2 July 1984 Cabinet decided to establish a Royal Commission to investigate British nuclear tests in Australia between 1952 and 1963. The Royal Commission was chaired by Justice James McClelland, Chief Judge of the NSW Land and Environment Court and formerly a minister in the Whitlam government. The Royal Commission’s report was received on 20 November 1985. The Department of Resources and Energy advised Cabinet in a memorandum two days later that the report should be tabled in Parliament as soon as possible to give privilege protection for possible defamation action against the Commonwealth, particularly in relation to comments about Sir Ernest Titterton. The memorandum said that the report was very critical of the Menzies government and in places it was couched in ‘evocative’ and ‘derisive’ terms. The report said that ‘In taking it upon himself to embrace British interests as being synonymous with those of Australia, and to expose his country and people to the risk of radioactive contamination, Menzies was merely acting according to his well-exposed Anglophilian sentiments’. The report recommended an immediate clean up of the test sites (funded by the United Kingdom), a right of compensation for all ex-servicemen, civilians and Aboriginal people affected by the tests, transfer of the onus of proof from the claimant to the Commonwealth and compensation for the Aboriginal traditional owners of the area. Cabinet decided that the report would be tabled, without any substantive comment, on 5 December.
Constitutional reform, administrative law and affirmative action
The Whitlam government introduced a Bill of Rights in 1973, but it lapsed with the dissolution of Parliament in 1974. In March 1984 Cabinet agreed in principle to the introduction of a Bill of Rights as a broadly stated charter of rights and freedoms to protect individuals in their dealings with government. The Bill would be based on the external affairs power and meet Australia’s obligations under the International Covenant on Civil and Political Rights. Attorney-General Senator Gareth Evans told Cabinet that the Bill would serve ‘as an inspirational and educational document, stated in clear language and designed for “the schoolroom wall” ‘. The Bill would have effect as a ‘rule of construction’ to be used in proceedings involving the interpretation of the common law or of another statute. In addition, if the Bill of Rights was infringed in criminal proceedings, the court could make an order to ensure that the administration of justice was not brought into disrepute. Unlike the 1973 Bill, the new Bill could not be relied on directly in, for example, an action for damages. The Bill lapsed at the 1984 election.
Evans’ successor, Lionel Bowen, brought the Bill of Rights back to Cabinet in 1985. The bureaucrats were not entirely pleased with it: the Department of the Prime Minister and Cabinet was concerned about the cost and the considerable scope for judicial interpretation, and Treasury was concerned about both the cost and the potential for conflict with the states. On 30 September 1985 Cabinet basically approved the Bill for tabling in Parliament, but specified that the right to marry should apply only to ‘a person of the opposite sex’ and that the Human Rights and Equal Opportunity Commission would be able to investigate state laws and practices only with the approval of the Attorney-General. The Bill was passed by the House of Representatives in 1985, but failed to pass the Senate. It was withdrawn by the government in November 1986.
On 16 April 1984 Cabinet agreed to the tabling of a Green Paper on affirmative action and the establishment of a working party chaired by Senator Susan Ryan, Minister for Education and Minister Assisting the Prime Minister on the Status of Women, to plan its implementation. In a joint submission Senators Ryan and Evans noted the ALP commitment to take all administrative and legislative steps, including the introduction of affirmative action programs, to ensure equality for women. The Sex Discrimination Act, which was approved by Parliament in March 1984, outlawed discrimination on the grounds of sex, marital status or pregnancy, but did not compel the breaking down of occupational segregation or improvement of the representation of women in all areas. The Green Paper recommended immediate legislation to establish affirmative action programs for women and disadvantaged minority groups in the Australian Public Service. Legislation would ultimately be introduced to require private-sector organisations employing more than 100 people to introduce affirmative action programs, although this would need to be done in a way that did not unduly disrupt business or prejudice women’s long-term employment prospects. The government did not propose to introduce specific employment quotas for women.
Cabinet reviewed progress on affirmative action in August 1985. A pilot program in the private and higher education sectors had ended on 2 July and generally had been judged a success. There was widespread expectation that the government would legislate for affirmative action, although it was anticipated that the Opposition and most business organisations would oppose ‘prescriptive’ legislation. Cabinet asked Senator Ryan to put forward a package including legislation covering organisations with more than 100 employees and all higher education institutions. These organisations would be required to report in confidence on their affirmative action plans to a new agency to be established within the Employment and Industrial Relations portfolio. Measures would also be taken to improve girls’ education and workplace childcare facilities.
Indigenous land rights
In March 1984 Cabinet considered a submission by Aboriginal Affairs Minister Clyde Holding on strategies to achieve consistent national Aboriginal land rights. Holding noted that the states and territories had the capacity to legislate for land rights and the protection of cultural sites, but that their willingness to act varied considerably. South Australia, New South Wales and Victoria had drafted or enacted legislation, but some of the other states were less willing to legislate or, in the case of Queensland and Tasmania, were opposed to it in principle. There was as yet no legislation that fully satisfied the ALP’s policy objectives of Aboriginal land being held under inalienable freehold, sacred sites being fully protected and Aboriginal people being assured of control of mining and access to royalties and compensation for land lost. Cabinet agreed that consultations should continue with the states in the hope of gradually achieving acceptable state legislation, but approved in principle the drafting of national legislation in case it was needed.
In December 1984 Cabinet considered a request from Western Australian ALP Premier Brian Burke for endorsement of the Western Australian Aboriginal Land Bill. The Prime Minister had said on 19 October 1984 that the Commonwealth had no intention of legislating to override Western Australia’s decisions not to permit any veto on mining or exploration, and to confine native title applications to Crown lands for which no public purpose had been allocated. However since then there had been significant changes in the Western Australian proposals. Major areas of concern included the restriction of claims to mission lands and to Crown land unallocated for any public or private purpose, so that land claimed might have little economic or agricultural potential. The four-year time limit on the lodging of claims would encourage ambit claims by both Aboriginal people and miners, while the legislation did not provide for inalienable freehold title, so that the government retained the power to resume land.
Cabinet returned to the issue in February 1985, when Holding reported that Western Australia remained firmly opposed to the Commonwealth’s views in several key areas and that this might influence other states. It was important that the Commonwealth set out its own position clearly, since it tended to be assumed that the Commonwealth position would be based on the Northern Territory legislation enacted in 1976. However the Commonwealth scheme would not veto mining and exploration, although an independent tribunal would be able to make recommendations for the resolution of disputes. Nor would the Commonwealth scheme extend to public land already designated for a specific purpose. Cabinet endorsed a comprehensive set of principles as a basis for consultation with the states. These provided that Commonwealth legislation would operate concurrently with compatible state legislation and that the Northern Territory legislation would be amended to bring it into line with the Commonwealth position. Land available for claim would include former Aboriginal reserves and missions, vacant Crown land subject to mining interests, all other unused Crown land and Commonwealth national parks where the traditional owners were prepared to accept the area’s continued use as a national park. Claims could not be made for private land, land set aside for public purposes and any other alienated land, including pastoral leases.
In August 1985 Holding told Cabinet that the government’s ‘preferred national model’ for land rights had been circulated widely, but had received little support: Aboriginal people found it too conservative, while groups such as miners argued that it went too far. Many respondents argued that land rights should be a state responsibility. Holding suggested that this lack of consensus indicated that the model, with some refinements, would be a workable compromise. Cabinet agreed that the model was a proper and balanced basis for the implementation of land rights. However the Commonwealth’s ‘clearly preferred position’ was for the states to implement land rights legislation broadly consistent with the ‘preferred national model’ rather than for the Commonwealth to pass overriding legislation.
In July 1985 Cabinet considered a recommendation by the Human Rights Commission that illegal immigrants and deportees should be held in immigration detention centres rather than in gaols. It was estimated that there were at least 50,000 long-term illegal immigrants in Australia and at least 30,000 people became illegal immigrants each year, although about half of them either left the country or regularised their position within a year. The present immigration detention centres in Perth, Melbourne and Sydney could hold only about 170 detainees, and it would be several years before all detainees could be held in detention centres rather than gaols. Ministers Chris Hurford (Immigration) and Tom Uren (Administrative Services) told Cabinet that ‘without a balanced level of enforcement activity, illegal immigration could quickly accelerate. The provision of adequate custodial facilities is an essential part of the enforcement program’. Cabinet agreed that detention centres should be provided to United Nations standards and that their funding would be discussed in conjunction with consideration of the Australia Card, one of the functions of which would be to facilitate the identification of illegal immigrants.
On 25 November 1985 Cabinet considered recommendations by Hurford for amendments to the Migration Act. Hurford said that the current immigration system was outmoded and increasingly unworkable. Amendments made in 1981 to limit the number of illegal immigrants who retrospectively sought permanent residence had been largely ineffective. Applications were running at the rate of 10,000 each year and there was more than a year’s backlog in dealing with appeals. Administrative law on the arbitrary use of discretion on appeals had become a nightmare, with delays working to the benefit of applicants. In some cases it had taken years of court cases to deport an illegal immigrant. Hurford recommended that applicants who had acted improperly (for example by overstaying a visa) should not have a right of review and that the minister should have a general power to determine classes of people who might be granted entry permits. The primary review of migration cases should be done by appeal adjudicators independent of the Immigration Department. The minister would continue to determine refugee status, with no external review or recourse to the Freedom of Information Act. Cabinet reserved the matter for further consideration.
Paul Kelly wrote in The End of Certainty, ‘The Hawke government was, like all governments in the Australian political system, a short-term reactive outfit, smarter and luckier than most. While its ministers were superior to their predecessors they had the fortune of good economic news to help smooth their path’. However the surviving members of the Hawke Cabinets of 1984–85 might find this judgement a little severe. Australian politics is generally short term and adversarial. The next election is never far away, governments rarely have an absolute majority in the Senate and the electorate is inherently suspicious of radical change, particularly if it relates to tax, welfare, industry protection or the Constitution.
Within these constraints the records suggest that the Hawke government made substantial progress during its first three years in office. It dealt with a major budget crisis and then gradually reduced the annual budget deficit, although by late 1985 the balance of payments deficit and fall in value of the dollar were raising new challenges. The floating of the dollar was followed by far-reaching reform of the banking system and foreign investment rules. The tax system was also reformed, although a broad-based consumption tax proved to be a bridge too far politically. The Prices and Incomes Accord may not have appealed to free market economists, but it was a significant step towards a more realistic and less adversarial approach to wagefixing. Finally, the government moved on a range of social justice issues, although the Bill of Rights and the vision for uniform national Indigenous land rights ultimately proved unattainable. Many governments have achieved less during their first three years.
Remarks by Susan Ryan on the 1984-85 Cabinet papers – December 4, 2012.
Well, thanks and good morning. One thing that is very evident to me about how times change is that if we were back in ’84/’85 I would know everyone sitting in this room and I probably would have had a few robust exchanges. Not as robust as Treasurer Keating had, but still. Now of course there are very few familiar faces, but it’s good to see them.
I think we are indebted to Jim for his very thorough overview of the period, the big issues, so I will respond to what seemed to be things that really mattered that we did at that time, or the things that mattered that we weren’t able to do at that time. Let me remind you, of course, what the electoral climate was. I am not setting out to raise the envy of current incumbents but, as Jim reminded us, we did start 1984 with a Prime Minister of immense, immensely high personal popularity ratings and an unpopular and insecure Opposition leader, a healthy two-party preferred vote of 54 per cent and the Opposition trailing and miserable at 40 per cent. Despite this enviable electorate support, we were not on Easy Street as the Cabinet records will show you.
My personal position as you have been reminded, was Minister for Education and Youth Affairs, and Minister Assisting the Prime Minister on the Status on Women. If you have a look at the photographs around the room, you will see I was not only the first but the only woman in Cabinet, and that remained the case for some time, in a Labor Cabinet. Margaret Guilfoyle had been in Fraser’s Cabinet and had done a terrific job. I was a member of the relatively newly formed Centre-Left faction and I had been Senator for the ACT since 1975. That was the first year when the territories got Senate representation. So I, along with Liberal Senator John Knight, were the first senators elected.
At the end of 1984 we were elected for a second term, and I can assure you that that election campaign was quite different in mood from ’83. The ’83 election campaign was fantastic because we knew from the moment we switched to Bob Hawke up in a Shadow Executive meeting in Brisbane – that and Malcolm Fraser had conveniently gone over to Yarralumla to ask for a dissolution of the Parliament – we knew we were going to win. There was no doubt about it. Everywhere we went, people were throwing money at us, kissing Bob Hawke, hugging Bob Hawke, you know, it was very clear we were going to win.
By ’84 we started off thinking, ‘Well, it’ll just be a re-run of ’83′. It was not a re-run of ’83, it was quite tough, things didn’t go so well. Bob was distracted by a big family problem and Andrew Peacock did perform very well. I can remember sitting in a B&B in Launceston with my staff watching the TV debate of Hawke and Peacock. It was extremely hot. The B&B happened to be run by Jocelyn Newman who subsequently became a Liberal Senator – that is what a small place Australia is. We sat there watching in this hot little pokey room and realised that Peacock was winning the debate, or appeared to be – if you print that on 1 January, I will get a phone call from my former leader! – but so it appeared. Anyway, it showed how quickly the electoral mood can change and I mean that’s something that you write about every day. So we did get back quite well, but it was quite a scary episode.
However, we did not pull back at all on our program of reform and it did not make us more risk averse or more cautious. The biggest challenge was we needed to reform the tax system and Prime Minister Hawke had promised the Tax Summit. The economic climate, as you have been reminded, was bad – very high unemployment and going up, inflation high and going up, costs of living kept going up, the economy could not stand the wage increases to cover the costs. Despite that very brave decision to float the dollar in ’83, in ’84 and going into ’85 the balance of trade was bad and getting worse. It’s important to remember that the performance of the dollar – the newly freed dollar floating around the place – was really quite a shock psychologically after we’d lived our whole lifetime with a dollar whose value had been decided and we knew what it was going to be.
Our dollar went down which was as it should be, but Treasurer Keating used to come into the Cabinet with some little electronic device, quite an early one in those days, which showed where the dollar was in relation to the US dollar at any moment. So he would keep interrupting Cabinet with, ‘God we’ve gone down to 60 per cent’, and we’d all go, ‘Oh my God!’ We should have known better. We went on as if it was our champion runner coming last in a race, but the psychological effect of the small dollar was quite negative. And that was on us the Cabinet, so imagine how the punters reacted to what was happening to the dollar.
Anyway, despite those sorts of uncertainties and the very, very tough environment, we did have big ideas and we did implement most of them. The Prices and Incomes Accord with the trade union movement was a big idea. It was implemented. And even though there has been controversy about it ever since, I’m a person who is really supportive of the Accord and remain so to this day.
First of all, it gave us a very high measure of industrial peace, but its main purpose was a better way of controlling the economy. And the Accord lead to the fact that the union movement, lead by the ACTU, accepted the tough deal – one in fact that the people would not have accepted – and that was not to take the wage rise of 3 per cent, which under current industrial relations arrangements all award workers were entitled to, but to take that increase as superannuation instead of wages. This agreement, of course, stopped inflation rising further and was the first step to the great national savings scheme and compulsory superannuation, which grew out of this initial deal. But at the time it was a very controversial thing for a Labor government to be doing, much less in a formal arrangement with the trade union movement.
One of the reasons I was a strong supporter of the Accord, of course, was it contained the social wage element, in addition to the 3 per cent super deal. The Labor government’s part in the Accord was to ensure increased support for areas of great importance to the trade union movement like education, welfare, family support and so on, and all that happened. It was the social wage element that helped me get increased budget allocations for education, especially school education. Through this increased funding for example, I was able to fund programs to deal with the really shocking performance of our education system in terms of how many kids finished secondary school. For the younger members here today, it’s probably something you are not aware of, but when we came into office only one-third of Australian students finished high school, which put us around the bottom of the OECD in school completion rates – appalling. Because of the extra funding coming from the Accord arrangements, we were able to fund special programs which even in my term as Minister lifted that shocking one-third up to a very respectable two-thirds completion. So you can understand why I was a supporter of the Accord.
There was also the opportunity to get increased TAFE places. That was also very important because our deregulation activities, our removal of tariffs and so forth, while the correct approach from a macroeconomic point of view, did lead to a collapse of a lot of Australian manufacturing, a lot of factories, a lot of white goods, textiles, all of those sorts of things collapsed. Blue-collar workers – men and women – were thrown out of work with really no other opportunities. They couldn’t suddenly transform themselves into computer programmers for the newly burgeoning IT industry. So the growth in TAFE places where such workers had a chance of getting some skills to make them employable again was very important, and again I put my capacity to get those funds in a very tight environment down to the Accord.
I think the tax reform period in Cabinet when we discussed the White Paper – all 414 pages of it – was really one of the most exciting periods of Cabinet in my time. The discussions sometimes went all night. They were at a very high level of intensity because there was a diversity of views.
I was a supporter of option C, which was Keating’s preferred option. Option C was tax reform based on a 12.5 per cent goods and services tax which was to go on everything, no exemptions. The compensating factors were very, very big improvements in pensions, welfare benefits and the like. In my view a very well-balanced way of getting more efficiency and fairness into the tax system by taxing everything and thus avoiding the situation that prevailed then – which was that many people paid much less than they should have in tax because the income tax, corporate tax, negative gearing, all of those things, allowed people with resources to avoid what should have been their tax responsibilities. So I was a supporter of option C.
Not everyone in the Cabinet was a supporter of option C but Keating really lead the charge, really instructed us all. He was at his best, he was fantastic. He’d explain all these complex things, he’d be very dramatic. He’d always stand up, his arms would be flailing, he’d draw graphs and diagrams about what would happen. I actually found it totally persuasive, though as I said, not every member of Cabinet did. But he did educate the Cabinet, he educated the community at that time about tax, how it worked and why it had to be reformed. He even educated those highly educated members of Cabinet who were Rhodes Scholars and the like; except of course Prime Minister Hawke – a Rhodes Scholar who did know as much as Paul did about it.
We had the Tax Summit. Option C was abandoned as a result of the Tax Summit and what that meant is we did not proceed with the consumption tax. We did a variety of other taxes, which Jim has referred to – wholesale sales tax, capital gains tax, a few tidyings up, services tax. Services taxes came in, which did improve the revenue but our big idea of getting this great big broad-based consumption tax, which could then fund all the things we wanted to do in social policy, didn’t happen and it didn’t happen really because in Hawke’s judgement we couldn’t get the major stakeholders to agree. The Business Council in Australia didn’t want it. The welfare sector – ACCOS – didn’t want it and the ACTU was not at all convinced it was the way to go. So with those three big institutional outfits not supporting it, Hawke’s view was that we shouldn’t proceed with it and Cabinet took decisions that confirmed that judgement. Although you would have to say that Treasurer Keating was not happy with that outcome.
What were the Cabinet meetings like? Well I have to say and you’ve all heard this now a lot of times, that they were very well chaired by Prime Minister Hawke. He was always in control of the agenda and he usually achieved his preferred outcome, even if it took marathon meetings to arrive at that point. The meetings were formal, they were conducted in a highly formal way, they were numerous, we seemed to be forever running across at Old Parliament House from the Senate, running across to more Cabinet meetings. They started on time, all ministers attended, unless you were out of the country – that was really the only reason you couldn’t attend. Senior officials attended but only as note-takers.
The Cabinet 10-day rule, where you had to have your submissions in 10 days in advance, was usually honoured. There were very few exceptions. As a result of this, we were all pretty well prepared. Hawke was on top of every submission and details of the submission. All ministers read all submissions. If you indicated by one of your remarks that you hadn’t completely read another minister’s submission, this failure was pointed out to you in no uncertain terms.
And of course the three coordinating departments – Prime Minister’s, Treasury and Finance – always put coordination comments on your submissions before they came to Cabinet so you knew where you stood with the coordinating departments – in my case sometimes in quite a weak place because the coordinating departments did not like so much expenditure on education. Debate was robust but we hardly ever took a vote. Hawke’s style was consensus and it worked.
We did have a sense of history. I mean not every working minute in Cabinet, but we did from the beginning have a sense that it was a big opportunity for us as a Labor government to do big things. Some of our ministers, of course, had been in the Whitlam government and had been quite scarred by the short and tumultuous term of that government, coming so long after 23 years and then short lived. As it turned out many of the Whitlam reforms are still with us and flourished, but at the time it seemed to have been too risky, too adventurous, perhaps not well prepared enough. We didn’t want to be like that, but nonetheless we wanted to do big things.
We did have the sense that some things we did would only have been done in our Cabinet – that not any Cabinet that happened to come along might have done them. I even had that sense about some of the decisions I was able to make, that it was my job to make them because no one else would have made them. And that sense of doing something, that really adds value and is unique in the group of people you are working with, and is quite sustaining through very big fights and very long nights.
We all had highs and lows. Quite a nice personal high for me, Jim has referred to, was getting agreement to the Green Paper on a working party for affirmative action, which was a program designed to get systematic improvements to employment opportunities for women throughout the private sector and through universities. It had already come in in the public sector. Hawke gave leadership on the initiative. With his leadership we were able to get 27 CEOs, all the vice-chancellors, the ACTU, women’s groups and the Opposition Ian Macphee and Peter Baume sitting on the working party.
We developed a system which facilitated the corporations working out where their female employees were, whether they had enough, if they didn’t why they didn’t, what promotion opportunities were there and so on. It was quite a moderate, quite a modest program, but an important one at a time when we still had a very deep gender divide, a female ghetto in the work force and very little movement of women up to senior positions.
So I expected a lot of controversy with this program because when I introduced the sex discrimination bill in 1983 we had extraordinary controversy of a kind that – if you didn’t see it, you’d think I was exaggerating to tell you about it – but the whole of the conservative forces throughout Australia leapt up to try to stop a law that said you shouldn’t be sacked because you are a woman, or you shouldn’t be sacked because you are pregnant, that it was a communist revolution, the destruction of the family, of Christianity and so forth. It turned out not to be. Anyway I was expecting another big fight but I think particularly because of Hawke’s leadership and the cooperative working party we didn’t have a big fight. We introduced the legislation and we set up an agency to implement the decisions. I thought that was quite a good thing to do, and it was one of those things that I thought if I hadn’t have done it no one else in Cabinet would have done it, so that was good too.
Low point for me – tuition fees for university students. I was a great supporter of the policy that Whitlam brought in, no tuition fees and it was also Labor Party policy. In those days I think we were very much guided by Labor Party policy, in fact in the period when we were shadow ministers, we participated in the national conference and were identified with policy positions, so we took that pretty seriously. My unreconstructed Whitlamite position on fees was not shared in Cabinet. The economic rationalists considered my position to be that not only of a dinosaur but an innumerate dinosaur. In these papers now about to released, you see reference to the move from some coordinating departments, supported by some ministers – and I must name Senator Peter Walsh who was really on the warpath with this one – to introduce fees in that budget, which would have been $1400 per year, quite a lot in ’84 values. A decision was not taken for a number of reasons and there doesn’t seem to be a record of a lot of Cabinet discussion, but once the debate had started it never went away.
I won a couple of battles in the following two years. I lost the war. In 1987 some innocent little thing called the admin charge of $250 for all tertiary students was introduced, it was the thin end of the wedge. After the ’87 election I also lost the portfolio and Education Minister Dawkins very enthusiastically embraced the university fees system and set up HECS. So that’s what happened.
Anyway that was a genuine policy difference but I think the really sad discussions in Cabinet were those concerning Lionel Murphy and The Age tapes saga. Jim’s reminded you of those. Lionel was very highly regarded by all of us in Cabinet and I think throughout the Labor Party generally. He had been a great reforming attorney-general and was a man of immense intellect, empathy, bravery and so forth, so we were very distraught to have to be a part of the events that ultimately lead to his prosecution. Findings of wrong-doing against him were subsequently overturned but it went on and on and on. During that time Lionel became very ill with cancer and as you know, even though he was ultimately acquitted he died shortly after that. So that was one of the really sad and distressing things that we had to deal with.
Another big moment of history that we didn’t quite make was Aboriginal land rights. We were conscious that it was the opportune time to do it, and we wanted to do it. Why didn’t we get there? Western Australia was the main reason. The Western Australian Labor government lead by Brian Burke was totally opposed and his views and the views of the state government did affect our Western Australian Cabinet ministers. Some of the states had started to legislate, some of them hadn’t. There was no sense that there was going to be a fair, major, sustainable reform coming out of this bits and pieces of states stuff. Clyde Holding developed a preferred model with a lot of consultation, but that preferred model was not preferred by the Aboriginal leadership, nor was it supported by the mining interests and not by the states, so we couldn’t proceed with it.
But we did do one very, very good and proper thing. We did hand over Ayers Rock, now Uluru, to the traditional owners and we had a great big ceremony. I don’t know if any of you were there out at Uluru. Indigenous people came in from the desert from everywhere, thousands of them you know, really tribal people with their body paint and so forth. It was a fantastic time and it was, despite our inability to get a national land rights regime in place, it was a very strong signal to the first Australians that we accepted their claims to land. So that was really a high point.
If you revisit the decisions and the memoranda of this period, I think one aspect of the business of making public policy does emerge very clearly. Many policies are made and put in place at a particular time, but it turns out that that’s not the end of the story. They return, they need further action and this can happen again and again. The lists for this period contain quite a few of these resonances, tax reform for starters. Despite the decisions from the Tax Summit and the White Paper and the Howard government’s GST, we hear every day, particularly from those who write for the financial press, calls for a reform of the tax system and indeed the consumption tax even though neither the government nor the coalition say they have it on their agenda. It is certainly a part of that wider debate going on out there by those who want tax reform, so it seems we are not in a very different place now with tax reform as we were when we did the White Paper. Maybe if we had option C we would be in a better place, who knows?
Now affirmative action. As I said we got a law and an agency going, after a little while it went right on the back burner. Nothing much happened in terms of the progress of women into senior positions in employment. However just last week an Act was secured in Parliament – the Workplace Gender Equality Act – which is the grand-daughter of the Affirmative Action Act of 1986 with a few more teeth, and the original affirmative action agency is now reborn as the Workplace Gender Equality Agency. So that thing that we started that didn’t go very far has come back to life, and I am hopeful I will see a lot more action.
New funding for schools, that was a very big decision of the ’84/’85 period. I certainly had my Gonski moment at that time. The whole issue is back again, the last sitting week, as you would be aware, the Bill for the first stage of Gonski implementation was introduced. Now it’s the same debate as ’84, the same objectives, a similar approach, very different dollars – we’ll see what happens. And note that we reviewed the overseas students policy in 1984. We did as a result of that put in place fee-paying overseas places for overseas students. We did that for a number of economic rationalist reasons, but that program grew I think much larger than anyone expected and became a $16–17 billion export earner. It’s still in place. It got a bit knocked around by the global financial crisis and by the very ugly incidents involving some Indian students, particularly in Melbourne, but it’s back on track. A decision that seemed to be quite a modest decision not of great consequence did turn into one of our big export earners.
So some things continue but we still haven’t got a Bill of Rights, despite the efforts of some people and we are still talking about a second airport for Sydney. So they are the issues as I see them.