How Whitlam Managed The Miners

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Late last week mining magnate Gina Rinehart warned that “miners and other resources industries aren’t just ATMs for everyone else to draw from”.

This analogy modernised the old story of the goose who laid the golden eggs, which the mining industry and its supporters have used to the point of cliché ever since in 2010 then-PM Kevin Rudd first proposed a profits-based resources tax. One need not believe in a mythical Golden Age of Public Discourse to feel the Australian public is being ill-served and patronised in the debates over the taxes paid (or not paid) by the mineral sector.

Rinehart’s statement was somewhat clumsy, attracted considerable amusement, and elided the fact that mineral resources in Australia are publicly owned. It was however consistent with the narrative the Coalition and mineral sector are pushing about the federal government. That is, we are apparently living in an era of almost unprecedented profligacy; in Tony Abbott’s budget reply speech, he referred matter-of-factly to “the budget crisis Labor has created”.

As Ben Eltham points out, the sense of disaster is not based in fact, yet it has been remarkably persuasive.

The narrative of doom has been reinforced by invoking the suddenly hallowed Hawke/Keating governments against their successor, using previous Labor administrations as a stick to beat Julia Gillard and Wayne Swan. 

It is not only Hawke and Keating, or some rose-tinted versions thereof, which are deployed to damn the current incumbents. The Rudd and Gillard governments have often been compared to the Labor governments of 1972-1975, and nowhere has this been more apparent than in the area of resources policy.

For instance, in early April a Daily Telegraph blog charged that “Wayne Swan’s … contempt for the wealth of the mining industry is only a rhetorically inferior dedication to Whitlam philosophy”.

It is unsurprising that Whitlam is used to critique Gillard; for the right in Australia he remains a sort of bogeyman, notwithstanding a recent appeal from the Institute of Public Affairs to Abbott to "be like Gough" and enact radical changes once elected.   

The differences between the Whitlam and Rudd/Gillard governments are profound, though, and it is worth briefly looking at the area of resources policy to illuminate some distinctions.

Whitlam came to power with a comprehensive policy platform, which included a promise that “the Australian people shall be restored to their rightful place … as the owners and keepers of the national estate and the nation’s resources”. The concerns set out in Monica Attard's incisive piece on the foreign ownership of “our” mineral sector were deeply felt in the 1960s and 1970s; spurred on by these and by scepticism about the extent to which the benefits of a mining boom were trickling down to the general population, Labor sought to shift the status quo.

In a speech to the Australian Mining Industry Council in March 1973, Whitlam confidently told his audience that the “free-wheeling approach of the previous government is gone forever”. His first minister for the brand-new portfolio of Minerals and Energy was Reginald Francis Xavier (Rex) Connor, a fiery advocate of Australian ownership who dismissed Liberal resources policy as “If it moves, shoot it, if it grows, cut it down, if it is under the soil dig it out and sell it to the highest bidder”.

Some of Connor’s policies, however, were shoots already planted by Coalition predecessors. For instance, McMahon’s Companies (Foreign Take-overs) Act 1972, which enabled the Treasurer to veto takeovers “not in the national interest”, proved useful to Whitlam and Connor.

This was not an anti-mining government, but one which took an avowedly nationalist approach, seeking to gain the maximum value for Australia. 

As noted previously in New Matilda, the government’s desire for more information on the resources industry’s impacts on the national economy prompted Connor to commission economist, former journalist and public servant Tom Fitzgerald to report on the mineral industry's contribution to Australian welfare.

Fitzgerald’s 1974 report caused great controversy, for it departed from the conventional wisdom that mining was inherently beneficial to Australia. Fitzgerald concluded that, due to tax concessions in the Income Tax Assessment Act 1936, during the period 1967-1972 federal government assistance to the mineral sector exceeded tax receipts from mining companies by $40 million. Whitlam duly closed off a few tax concessions after the 1974 election, most of which were later reopened by the Fraser government.

Tax reform was only one of Connor’s goals. His many initiatives included export controls and foreign investment guidelines, and his vision centred around creating the Petroleum and Minerals Authority (PMA), a body which would act in partnership with companies “to develop our natural resources with Australian participation, ownership and control”,  heralding direct government involvement in the minerals industry. In later years, Whitlam explained the goals behind the PMA: 

“Should an Australian corporation have discovered a lode that appeared to have great potential yet lacked the finance to further explore or develop it, such a corporation would have been able to gain assistance from the PMA rather than from overseas capital … Like the multinationals it would have been able to search for and find minerals, extract them, process them and market them … Unlike the multinationals, however, it would distribute its benefits to the people of Australia – and that meant all the people, not just a few thousand shareholders.”

This encroachment on the role of the private sector was bitterly opposed by many in the Coalition; Country Party leader Doug Anthony damned the Petroleum and Minerals Authority bill as “a monstrous piece of legislation … tainted with socialism” and accused Connor of an “open hatred of free enterprise”.

Concerns about high rates of foreign ownership and control within the resources sector were however not limited to the Labor party. In her excellent book Gough Whitlam: His Time, Jenny Hocking noted that former Liberal Prime Minister John Gorton was absent when it came time to vote on the PMA bill. Hocking concluded that Gorton, who had advocated “greater Australian ownership in the resources sector … would rather abstain than vote against a Bill that he considered appropriate, responsible and long overdue”.

We will never know how effective the PMA would ultimately have been; whether it would have lived up to its creator's dreams. The legislation creating it was found invalid on procedural grounds, and Connor experienced a dramatic fall with the ‘loans affair’ in 1975: he sought to raise a substantial loan to fund the PMA’s infrastructure and public ownership requirements, independent of Treasury and after his authorisation to do so was revoked. In October 1975, Whitlam sacked Connor for misleading Parliament about these activities, and the affair was invoked by the Opposition Leader Malcolm Fraser as “extraordinary and reprehensible circumstances” which justified an early election. The Opposition blocked supply in the Senate in an attempt to bring about such an election, and every student of Australian political history knows what happened next.

These events cast a dark cloud over the Whitlam government; academics Elizabeth Harman and Brian Head later suggested that the “very effective vilification” of the administration had “placed a virtual embargo on substantive research into (or political advocacy of) the policies pioneered by R.F.X. Connor in the early 1970s”.  

Where does all this leave us in 2013?

Although it is important to acknowledge flaws in Whitlam's administration and resource policies, it is disappointing that the reformist governments he led from 1972-1975 remain such an albatross for the ALP. Perhaps even sadder, though, is the fact that even policies as modest as the MRRT are now seen as evidence of a dangerously grand Whitlamesque vision.

That this is so says even more about our flat political landscape than omnipresent homilies about ATMs, golden eggs and surpluses.

New Matilda

New Matilda is independent journalism at its finest. The site has been publishing intelligent coverage of Australian and international politics, media and culture since 2004.

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