Chapter 1: Malcolm Fraser
The following text is part of a short biographical essay written by journalist and author Dr Margaret Simons. Use the navigation bar or the 'Next' and 'Previous' links below to view other parts of the essay. Chapter 1 comprises the full essay.
Malcolm Fraser was Prime Minister from December 1975 to March 1983. He won three elections – in 1975, 1977 and 1980. He took office before Margaret Thatcher became Prime Minister of Britain and before Ronald Reagan became President of the United States. He spanned the years between unquestioning acceptance of big government and the rise of faith in free markets as an organising principle in human affairs. He spanned the years between faith in détente as a means of achieving world peace, the Soviet invasion of Afghanistan and the beginning of the collapse of the Soviet Union. There were immense social changes.
In 1975, conservation of the environment was not a significant issue for the majority. By the time Fraser lost government, it was at the heart of politics. In 1975 the popular press was full of talk of hippies and the permissive society. By 1983 it was power dressing and the beginning of the decade that would become known for the phrase 'greed is good'. At the time he became Prime Minister, Fraser had been in politics for 20 years, serving under five different leaders of the Liberal Party, and had been a minister in four governments. He had also watched the Whitlam implosion. He had spent a long time thinking about how things should run. Now he put those ideas into practice.
Image 12: Malcolm Fraser at the launch of the Liberal Party’s election campaign at Dallas Brooks Hall, Melbourne, 1975.
NAA: A6180, 1/12/75/13
The economy and financial system
With the luxury of hindsight, it is possible to divide the Fraser government's story into three periods – the early years when the emphasis was on rebuilding the economy after the first oil shock and the Whitlam years; the middle years when Fraser could claim success; and the final years when, beset with crises both political and economic, many of his achievements came undone.
The early months of the Fraser government were dominated by the battle to cut government expenditure. The idea of limiting government's role owing to limited resources became commonplace over the next 30 years, part of public understanding of what can and cannot be expected from government. In Fraser's time this was a new theme. Placing economic management at the centre of politics was an important part of Fraser's legacy.
The Fraser government was the first in the western world after World War II to make the need for government restraint a dominant part of its narrative. Yet Fraser was a Keynesian, convinced of a role for interventionist government. During his time in government, the ideas that later became known as neo-liberalism were gaining their advocates. Fraser's adviser, David Kemp, was making sure Fraser was aware of them. He read articles by the Australian philosopher Lachlan Chipman and the US economist Milton Friedman, but he was guided chiefly by his understanding of what Keynes would have done in the environment of the 1970s and 1980s. Even as there were swingeing cuts, he initially struggled to retain Medibank – the universal health insurance scheme introduced by Whitlam – although it was gradually dismantled over subsequent years. He introduced family allowances by abolishing tax rebates for dependent children, which had previously benefited the rich the most, and introduced a new allowance paid to mothers.
A characteristic of Fraser's time in government was a battle with Treasury and its dominant secretary, John Stone. Stone wanted deeper cuts, and there was a continuing battle for policy dominance. It was against Treasury advice that Fraser, acting at the behest of his advisers, took key moves towards financial deregulation. When Treasury opposed the government's plan to devalue the Australian dollar, Fraser reorganised the department. On 18 November 1976, Treasury was divided into the Department of Finance, under permanent head Bill Cole, and the Department of Treasury under Sir Frederick Wheeler. Ten days later, on 28 November 1976, Treasurer Phillip Lynch announced devaluation of the dollar by 17 per cent and introduced a flexibly administered exchange rate, or a 'managed float'.
The years 1979 to 1981 were the high point of the Fraser government's economic record. In 1980–81, the Budget was in surplus. Industry profitability was recovering. Unemployment dropped to below 6 per cent – the lowest level since the first oil shock of 1973 when OPEC placed an embargo on oil exports, severly impacting on western economies.
Image 13: Pro and anti-Fraser protesters meet during the federal election campaign, c. 1980.
UMA, 2007.0028, BWP/25627
At the time of his prime ministership, Fraser was criticised by many for lack of heart and making cuts that were too deep. Since then, some commentators have suggested he did not cut hard enough – that his was a timid, do-nothing government – and he lost the opportunity to shrink the size of government.
Fraser slowed the growth in government spending. Between 1976 and 1982, Federal Budget spending grew by an average of 2.7 per cent a year in real terms. This compared to an average of 11.9 per cent under the Whitlam government, and in the region of 4 per cent under the Holt, Gorton and McMahon governments. If the last year of the Fraser government was excluded – a period when the government faced international downturn and the worst drought in the country's history until that time – the average growth in government spending during the Fraser years would have been a comparatively modest 2.1 per cent per year.25
Spending by the government as a percentage of GDP was 24.6 per cent in the first year of the Fraser government. It hit a low of 23.9 per cent in 1981–82, before climbing to 26.3 per cent in the context of the drought and recession of 1982–83. During the Howard years, government spending hit a high of 25.7 per cent of GDP in 2000–01. The lowest figure was 23.7 per cent in 1999–2000. When Howard left government in 2007 and the economy was booming, government spending was at 24.2 per cent of GDP. It was predicted to go to 28.6 per cent under Kevin Rudd's government in 2009–10. While never a hard-line advocate of small government, nor a radical economic reformer, the record shows the Fraser government delivered on its promise to restrain the size of government in proportion to the rest of the economy.
There were failures in the Fraser economic record. Tax indexation was promised, but fell by the wayside. Wages policy did not succeed. Plans to introduce the rule of law to the industrial realm completely failed. Nobody at the time was pushing for a fully deregulated labour market, and the Fraser record has little or nothing to claim on this issue.
Another key theme of the Fraser government was financial deregulation. Fraser has been depicted as resisting this. The archival record tells a different story. There were four main reforms in the late 1970s and early 1980s. They were the surrendering of controls over the exchange rate, deregulation of interest rates, foreign bank entry, and abolishing exchange control over movements of capital inside and outside Australia. All of these advanced under Fraser. The archival record shows key moves were made on the initiative of key advisers in Fraser's office and department, and with his support. At every stage, deregulation was resisted by both Treasury and the Reserve Bank. Vital was the establishment of the Campbell Inquiry into the Australian Financial System, which recommended comprehensive deregulation. Implementation of the Campbell recommendations under Fraser was not fast, with work bogged down and moving slowly at the time Fraser lost government. The Campbell agenda was picked up and acted on by the Hawke government that followed. The role of the Fraser government was one of transition and education at a time when the key financial institutions of government had not been convinced of the need for change.26
Human rights and Aboriginal affairs
Under Whitlam, there had been big increases in spending on Aboriginal affairs. There had also been a Royal Commission that recommended the granting of land rights in the Northern Territory. The Whitlam government had introduced, but not yet passed, the necessary legislation. One of Fraser's achievements as Leader of the Opposition was to help push through a policy that was in line with the Whitlam land rights agenda – an unprecedented move for parties whose support base included the mining and pastoral industries.
In government, Fraser's continued support for comprehensive land rights saw the Aboriginal Land Rights (Northern Territory) Act became law in December 1976. In the years that followed, the Fraser government used all its powers of influence, example and persuasion to get state governments to follow suit with land rights. New South Wales and South Australia followed. Queensland and Western Australia were intransigent. A states' rights advocate throughout his career, Fraser was not prepared to over-rule the states.
Image 14: Galarrwuy Yunupingu with Prime Minister Malcolm Fraser at Jabiru, Northern Territory, 1978.
NAA: A6180, 4/5/78/62
For Fraser, Aboriginal affairs were part of a broader human rights agenda, which he shared with Whitlam. The Whitlam government had begun moves towards the establishment of a system of judicial review for administrative decisions, and the setting up of a human rights commission. Both initiatives were brought to completion by the Fraser government. The Administrative Decisions (Judicial Review) Act came into force in October 1980 and the Human Rights Commission was established in 1981. The Fraser government also introduced freedom of information legislation, against the vehement opposition of the public service, in 1982 and completed a Whitlam initiative in the appointment of the first Commonwealth Ombudsman.
Immigration and refugees
The Whitlam government had swept away the last vestiges of the White Australia Policy – but had at the same time greatly reduced immigration. In 1975 Australia's total immigration was only 52,748, the lowest since World War II. The Fraser government continued an immigration policy that did not discriminate on the grounds of race, and at the same time increased immigration to an average of 90,000 a year over the term of the government. This, together with a compassionate approach to South-East Asian refugees, meant that it was Fraser's government that actually implemented a more open immigration policy after the White Australia Policy was scrapped by Whitlam. The Fraser government changed the ethnic mix of the Australian population, and its reform of policy concerning both refugees and immigration was arguably its most important legacy. Fraser also continued and gave practical effect to the policy of multiculturalism, which had been started in name under Whitlam.
Fraser, with the exception of a single speech early in his parliamentary career, had always advocated high immigration. By the end of his time as Prime Minister, immigration policy and the relevant machinery of government had been completely recast. The government set up a Population and Immigration Council with a broad membership to write a green paper, which was tabled on 17 March 1977. It estimated that Australia had the capacity to absorb an intake of about 100,000 migrants annually, and up to 200,000 in the future, with the aim of bringing the population to 19.3 million by 2001. The only constraint was the ability of the population to accept migrants, the report said.27
Fraser believed that fostering such acceptance was the role of government and political leaders. The green paper was used to encourage Australians to think and talk about immigration. Seminars were held around the nation. By the time the new immigration policy was announced in mid-1978, it had already been the subject of a government-sponsored national conversation. The policy anticipated an annual intake of at least 70,000, and laid out nine principles governing who would be allowed into the country. Migrants must provide some benefit to Australia, 'although this will not always be a major consideration in the case of refugees and family members'; they should not jeopardise social cohesiveness and harmony; and while they were expected to integrate they would be 'given the opportunity to preserve and disseminate their ethnic heritage'. From now on immigration would be planned on a triennial basis with annual reviews and adjustments, and with targets linked to government programs for training and assistance.28
Fraser believed that if Australia was to absorb more migrants harmoniously, it was essential that they had real equality of opportunity. 'If particular groups feel that they and their children are condemned, whether through legal or other arrangements to occupy the worst jobs and housing, to suffer the poorest health and education, then the societies in which they live are embarking on a path that will cost them dearly,' he said in 1981. Attitudes would harden. Strife would result. Multiculturalism required government action to ensure equality of opportunity, Fraser believed.
The less constructively a society responds to its own diversity the less capable it becomes of doing so. Its reluctance to respond, fuelled by the fear of encouraging division, becomes a self-fulfilling prophesy – the erosion of national cohesion is a result not of the fact of diversity but of its denial and suppression.29
It was this agenda that led Fraser to establish a review of post-arrival programs and services for migrants. To head the review Fraser chose Frank Galbally – the former Catholic seminarian and leading barrister. The Galbally review resulted in a comprehensive suite of post-arrival services, including the establishment of the Australian Institute of Multicultural Affairs and the Special Broadcasting Service (SBS) as a specialist broadcaster promoting multiculturalism and reflecting Australia's diversity.
Image 15: A Vietnamese migrant family and their hosts at a community function, Canberra, 1980. As part of the refugee resettlement program of the late 1970s, many Vietnamese families were hosted by local church or community groups.
NAA: A12111, 2/1980/46A/22
It was against the background of his belief in the role of political leadership in achieving harmonious migration that Fraser dealt with the influx of refugees from Vietnam and Indochina. Australia was coming under increasing pressure from Association of Southeast Asian Nations (ASEAN) countries to step up its tardy response to the hundreds of thousands of desperate people in refugee camps across the region. The Fraser government's response marked the beginning of a dedicated humanitarian program backed by a system of settlement support. Fraser initiated the adoption of a 'comprehensive and consistent' policy to allow for a continued intake of refugees, which was adopted in May 1977. For the first time, the policy made it clear that Australia intended to be in the front line of international responses to refugee situations, and that it would take in large numbers. Indeed, it was the first time Australia had a refugee policy at all.
Within months, a trickle of 'boat people' arriving from Vietnam had turned into continuous waves. By 1979, Vietnam seemed to be deliberately exporting its unwanted citizens – particularly ethnic Chinese and small businesspeople who were out of sympathy with the communist regime. South-East Asian countries were saying they could not accept any more boat people into the overcrowded camps. Towards the end of 1977 boats were arriving in Australia almost daily – sometimes several a day. The public service was alarmed. In May 1978, the Secretary of the Department of Immigration and Ethnic Affairs, LWB Engeldow, told Cabinet the boat people threatened the orderly refugee program. There were only two options: stopping the boat movements in transit, or sending arrivals to a:
… reception centre to be established somewhere in Australia where they can be held pending further decisions … these people are 'queue jumpers' who are virtually self-selecting themselves for migration to Australia.30
Only a small minority of the refugees being settled in Australia had arrived by boat. Most were coming through proper processes, selected in the refugee camps of Thailand and Malaysia. Yet the boats were the focus of publicity and fear.
Suggestions for 'reception centres' and other harsh measures came to Cabinet several times, but were always rejected. Entry of refugees (most of whom were not boat people) together with family reunion programs meant that by 1995 there were 238,000 first and second-generation Indochinese living in Australia, more than 1 per cent of the population. The Fraser government had altered the ethnic composition of the Australian population forever. Its reform of policy concerning both refugees and immigration more generally remains one of its most important legacies.
Fraser came to the prime ministership with firm ideas on foreign affairs. Unlike most western political leaders at the time, he was deeply sceptical about détente with the Soviet Union. This led to Whitlam describing him as a 'sabre rattler', and to leading foreign policy advisers seeing him as dangerously antagonistic to the Soviet Union and too critical of the United States' more conciliatory approach.
Fraser's foreign policy was articulated in the early months of his prime ministership with a major statement, known to his staff as the 'State of the world' speech. The speech, delivered on 1 June 1976, opened a new and original era in Australian foreign affairs. It was controversial – an announcement of Fraser's arrival on the world stage. A successful Australian foreign policy, said Fraser, must be 'flexible, alert and undogmatic', recognising that the superpowers were dominant but also that other major powers – China, Japan, Europe and groups of nations such as ASEAN – could influence events. 'Although our capacities to advance our interests are limited, we should be active and constructive in pursuit of a peaceful and favourable international environment.' His wording on détente, much softened from the original draft, was still scathing. Fraser, unlike most foreign policy leaders in the west, believed the Soviet Union was still aggressive and expansionary. China, Fraser said, was on the other hand a 'great unknown', but he argued this was all the more reason to seek good relationships. The picture Fraser painted of the world was one of multiple threats – from inequality, injustice and unfairness, from Soviet aggression and lack of will among the democracies. He wanted Australia to:
… be an example of the vital strength of the values of freedom and democracy … in finding our way in such a world, the democracies must not lose their sense of purpose. There must be no failure of will or resolution … let history not record that this was the time when the democracies abandoned their faith.31
Fraser went on to push Australia to the forefront of world developments where it need not have been involved – including opposition to apartheid in South Africa and advocacy for developing nations. Another dominant theme was Fraser's belief in the Commonwealth of Nations, and his commitment to what he saw as Australia's potentially leading role in the Pacific region. Fraser also made clear that Whitlam's policy of engagement with China would be continued and strengthened under his government.
Image 16: Jimmy Carter, President of the United States, with Prime Minister Malcolm Fraser and Andrew Peacock at the White House, Washington, DC, 1980.
NAA: A6180, 18/3/80/6
Dominant narratives of the time were east–west relations, meaning those between the United States and the Soviet bloc, and north–south relations, meaning those between industrial and developing nations. The developing countries in the United Nations had proposed a New International Economic Order. Unlike the Bretton Woods system, which had benefited the industrial countries, the new order would improve the terms of trade and reduce the tariff barriers that prevented developing countries from fair access to the markets of Europe and the United States.
Fraser's original contribution was to frame Australia's interests as the same as those of the developing countries. Like them, Australia was an exporter mainly of commodities, rather than manufactured goods. Like the developing countries, Australia was locked out of world markets. Fraser therefore became a vigorous advocate of free trade – and pursued the agenda hard at every opportunity. On this, he was largely unsuccessful, defeated by the intransigence of Europe and the United States. Nevertheless, the fight absorbed an enormous amount of his time and energy.
Fraser also was a significant figure in promoting a strong and unified western alliance. When the Soviet Union invaded Afghanistan in 1979, Fraser saw it as vindication of his sceptical attitude to détente. He feared the Soviets would push on into the oil fields of the Middle East. He thought it essential that the west present a united face. He advocated sanctions on trade with the Soviet Union and pushed through a boycott of the Moscow Olympics, at immense cost to his political support and individual cost to the athletes.
Meanwhile, Fraser was involved in shuttle diplomacy between US President Jimmy Carter and European leaders who were annoyed with Carter's lack of consultation. In letters and in person Fraser argued for unity, convinced that, as he put it in one letter to Carter, the reverse might lead to a world war.
Image 17: Malcolm Fraser and Secretary General Shridath (‘Sonny’) Ramphal at the Commonwealth Heads of Government Meeting, Lusaka, Zambia, 1979.
NAA: A8281, KN21/8/79/180
Fraser also had to deal with the complications of foreign affairs in our region, which often left little room for moral comfort. The Indonesian invasion of Timor, which was completed during the period of caretaker government in 1975, was a continuing sore. Fraser regretted the invasion, but took the path of not antagonising Indonesia. He fell out with his Minister for Foreign Affairs, Andrew Peacock, over the Vietnamese invasion of Kampuchea in 1978 and the resulting question of whether Australia should continue to recognise the murderous regime of Pol Pot. Peacock thought the Pol Pot regime so abhorrent that Australia should withdraw its recognition. Fraser and the rest of Cabinet gave priority to supporting the countries of ASEAN, which did not want Australia to give de facto encouragement to the Vietnamese aggression. This led to a cascade of events that culminated in Peacock challenging, unsuccessfully, for the leadership. The government never recovered its stability.
Fraser welcomed Ronald Reagan's election as President of the United States. Reagan's views on the Soviet threat were close to Fraser's own, but Reagan soon disappointed Fraser in other ways. He had no interest in the continuing moves to begin serious world trade negotiations that so preoccupied Fraser.
Perhaps the most singular aspect of Fraser's foreign policy was his activism in the Commonwealth of Nations. In the 1970s there was the potential for schism between the 'old Commonwealth' of white, wealthy nations and the new nations, dominated by African black leaders shrugging off the colonial past. The issue was apartheid and the future of southern Africa. This came to a head at two Commonwealth Heads of Government Meetings – the first in London in 1977, which dealt with sporting boycotts against South Africa, and the second in Lusaka in 1979, which dealt with Rhodesian independence and majority rule. Fraser was an important figure in the negotiations that led to effective sporting sanctions and, over a lengthy period of reasoned argument and strong-arm tactics, in persuading British Prime Minister Margaret Thatcher, largely against her will, to move Rhodesia towards majority rule. Australia took a leadership position on the issue of justice in southern Africa that was to persist through the years of the Hawke government.
It was during Fraser's prime ministership that environmental issues began to take a place at the forefront of Australian politics. Fraser's record was mixed. He was always reluctant to over-ride state governments pursuing development.
The Fraser government created Kakadu National Park and banned whaling. His actions, including tough negotiations with Queensland Premier Sir Joh Bjelke-Petersen, saved Fraser Island from sand mining and the Great Barrier Reef from oil drilling. Fraser also oversaw the mining and export of Australian uranium, establishing strict safeguards and royalty income for the traditional Indigenous owners.
Yet it is also true that if Fraser had remained in power, it is likely the last great wild river of south-western Tasmania would have been dammed. Fraser did not advocate the Franklin dam and took action to discourage it. He had pushed for the area to be listed on the World Heritage Register, which enabled the Hawke government to later establish its right to over-rule state governments when international obligations were at stake. Fraser offered the Tasmanian Government incentives not to dam the river, but would not overrule state rights. The resulting battle – not resolved until a High Court decision during the years of the Hawke government – led to the birth of the modern environmental movement and was a factor in, although not the dominant reason for, Fraser's defeat.
25 The figures on which this assessment of the Fraser record is based are in 'Statement 10: historical Australian Government data', Budget Paper No. 1: budget strategy and outlook 2009–2010, budget.gov.au/2009-10/content/bp1/html/index.htm, accessed 22 May 2012.
26 A more detailed explanation of the Fraser record on financial deregulation, with full references to the relevant Cabinet documents, can be found in chapters 10 and 16 of Malcolm Fraser and Margaret Simons, Malcolm Fraser: the political memoirs, The Miegunyah Press, Carlton, 2010.