Contrary to the prevailing cliche, history does not repeat itself – either as tragedy or farce. However, at times historical comparisons are useful and precedent plays a part in all democratic societies.
In the current political debate, many commentators have referred to the fact that every Commonwealth government has been elected to a second term since the defeat of the Scullin Labor government in 1931.
True. But this overlooks the fact that Gough Whitlam’s Labor government would have lost an election at the end of its scheduled three-year term. It was saved this fate because the Coalition threatened to block supply in the Senate and Whitlam used this tactic as an excuse to call an early election. Labor won in May 1974 but lost comprehensively in December 1975 – three years after it was first elected.
If Labor is interested in historical parallels it would be advised to focus on Ben Chifley’s defeat in December 1949, which ushered in Robert Menzies’ record term as prime minister. Chifley had become prime minister after John Curtin’s death in office in 1945 and led Labor to a convincing victory in 1946.
Chifley was presiding over a successful administration as the Australian economy grew after the end of World War II. Then he decided to nationalise the private banks. The full story is told in A.L. May’s The Battle for the Banks. The decision was taken by cabinet on a Saturday morning in August 1947 without adequate discussion. The lead figures in the cabinet briefing were the prime minister himself and his erratic attorney-general, Bert Evatt.
Chifley presented the cabinet’s decision to the electorate as a fait accompli. Chifley did not address the issue at any length until a speech a month after the decision was made.
L.F. Crisp, a dedicated fan of the Labor legend, went so far in his biography, Ben Chifley, as to describe the prime minister’s announcement of this momentous decision as “unqualified, unexplained and perhaps even arrogant-sounding”.
Stubbornly Chifley refused to back down. The bank nationalisation legislation was successfully challenged before the High Court. The case ran for almost seven weeks before the decision was handed down in August 1948.
Then the Chifley government decided on an appeal to the Privy Council in London. The Privy Council’s decision was delivered in July 1949 – almost on the eve of the election due that year – and it went against the government.
Chifley’s bank nationalisation legislation was aimed at the well-off executives who ran the private banks. It sparked the expected response from what Labor liked to call the “top end of town”. But the decision was counterproductive in that it also threatened all private sector bank employees, including relatively lowly paid tellers and clerks. Menzies’ appeal to what he called “the forgotten people” – meaning the middle class – had not worked in 1946. But, thanks to Chifley, Menzies’ message certainly cut through in the December 1949 election.
After Labor’s defeat, Chifley conceded to his friend Frank Green that he had moved too fast on banking and that this had led to Labor’s defeat. He had an opportunity to back off after the defeat of the legislation in the High Court, but ploughed on.
Labor should start as the favourite to win the 2010 election since it has the benefit of being an incumbent government presiding over a relatively strong economy. However, the precedents of 1975 and 1949 should be cause for sobering reflection.
Any government can lose three years after a big victory – John Howard went close to suffering this fate in 1998. Moreover, Kevin Rudd has to be careful that he does not “do a Chifley” with his resources super profits tax by uniting both wealthy mining executives and entrepreneurs with miners, contractors, and medium and small businesses that benefit from a booming mining industry.
There is a case that successful mining companies should pay more tax. Rudd’s error has been to impose a new tax on mining without adequate consultation with the industry and without properly communicating the decision to the electorate.
Obviously there are vested interests in this controversy – from the Minerals Council of Australia on one side to the weekend’s intervention of the Australia Council of Social Service and the ACTU on the other.
But voices have also been heard criticising the Rudd government’s approach from Labor supporters and commentators who are not unfriendly to social democratic governments. Last week the Trade Minister, Simon Crean, acknowledged that there should have been more consultation with the mining industry. And the likes of Vince Fitzgerald and Geoff Carmody have criticised the structure of the resources tax.
The precedents of 1949 and 1975 indicate that poorly structured policy plus stubbornness can lead to a quick desertion of Labor voters to the Coalition. It’s worth remembering that Menzies and Malcolm Fraser were not all that popular when they defeated Chifley and Whitlam respectively.