Most readers of the Financial Review would associate the Whitlam Government – elected 50 years ago – with financial disaster. Gough Whitlam certainly wasn’t a champion of fiscal rectitude. But as Einstein famously observed, everything is relative. Despite its shortcomings, the Whitlam government was a pioneer of enduring social and environmental reform.
Whitlam was not much interested in economics. Real government spending increased 20 per cent in one year, followed by a further 16 per cent the next year.
But Whitlam deficits came in at under 2 per cent of GDP, pretty much the same as they are nowadays.
Yet it was the Whitlam government’s fiscal record that set in place a lasting public perception that Labor governments are bad at handling money while Liberal governments are good at it.
In fact, even before the COVID-19 pandemic struck, the Coalition government was the second-highest taxing government in modern history, behind only the Howard government. And pre-pandemic Coalition government spending as a percentage of GDP easily exceeded that of the Whitlam government.
On the broader economic front, following the first global oil price shock, inflation soared in the Whitlam era and a wage-price spiral followed.
It is a repetition of this wage-price spiral and another in the early 1980s following the second oil price shock of 1979 that the Reserve Bank is seeking to avert right now.
But the economy of 2022 is so vastly different from that of the 1970s that the Reserve Bank’s monetary policy decision on Tuesday should have no regard for the economic circumstances of the Whitlam and Fraser years.
Whitlam was the first post-war prime minister to reduce tariffs, implementing a 25 per cent reduction across the board – a forerunner to the Hawke-Keating reforms that reduced tariffs mostly to zero, creating Australia’s open, competitive economy.
While arguments will continue about Whitlam’s economic performance, it is his social and environmental reforms that have created an enduring legacy for our country.
Less than a fortnight after the Whitlam government’s election, the Conciliation and Arbitration Commission, at the government’s urging to re-evaluate its 1969 decision granting equal pay to women only where they did exactly the same work as men, granted equal pay to women for work of equal value.
This, together with the introduction of a supporting mother’s benefit, marked the beginning of decades of reforms towards gender equality. They have included the Sex Discrimination Act of 1984, the granting of Commonwealth paid parental leave in 2011 and its extension in 2022, and recent changes to the Child Care Subsidy to improve women’s work incentives.
Whitlam introduced Australia’s first national health insurance scheme, Medibank, which had been developed five years before winning office. The incoming Fraser government dismantled Medibank, but the Hawke government reinstated it as Medicare.
Other Whitlam social reforms included no-fault divorce, the Racial Discrimination Act and the abolition of conscription and of the death penalty for Commonwealth offences.
Most Australians today would take for granted the protection of the Great Barrier Reef from oil drilling and the protection of the wild rivers of Tasmania, the wet tropical forests of north Queensland and Kakadu. It was the Whitlam government’s ratification of the World Heritage Convention that gave the Hawke government the legal powers to protect these and other areas of World Heritage value.
The Hawke government was able to argue successfully in the High Court that it had a duty to protect World Heritage values in the Gordon-below-Franklin dam case in 1983 and in the Lemonthyme and Southern Forests case in 1987.
These and many other enduring Whitlam reforms were implemented in just three years.
But the Whitlam government’s demise can be attributed to its shambolic decision-making processes, with ministers making decisions that ought to have been considered calmly and methodically by cabinet.
Parallels can be drawn with the behaviour of the Morrison government following the 2019 election, but it wasn’t a case of ministers but the prime minister going solo.
Good government derives from adherence to proper policy development processes, with submissions circulated to departments well ahead of time and debated in cabinet informed by departmental advice.
With former director-general of the Queensland Cabinet Office, Professor Glyn Davis, overseeing cabinet processes at the helm of the prime minister’s department, the early signs for the Albanese government are promising – despite the occasional minister barracking publicly for his portfolio’s interest groups ahead of cabinet deliberation.
Albanese is left wing yet a traditionalist, a supporter of proper cabinet government. He has been around and in parliament, on and off, for 37 years, witnessing the worst and best of times.
If Albanese sticks with cabinet government, he can build on the reforms his government has already achieved while avoiding the recklessness that dogged the Whitlam government and his immediate predecessor, setting Australia up for the best of times while avoiding the worst.
Craig Emerson is managing director of Emerson Economics. He is director of the Australian APEC Study Centre at RMIT University, visiting fellow at the ANU and adjunct professor at Victoria University’s College of Business.