Labor’s Ben Chifley lost the 1949 election after he took aim at the ‘big end of town’.

Labor’s Ben Chifley lost the 1949 election after he took aim at the ‘big end of town

Some say Bill Shorten did a John Hewson by losing an unlosable election from opposition. The better view is that he did a Ben Chifley, in that he led the Australian Labor Party to defeat by upsetting some traditional supporters in his aim to attack the “top end of town”.

The Hewson story is well known. Elected Liberal Party leader after Andrew Peacock was narrowly defeated by the incumbent Bob Hawke in 1990, Hewson took an ambitious Fightback policy to the 1993 election. It was an agenda that included an all-embracing GST accompanied by the reduction of some wholesale taxes.

As it turned out, Hewson could not explain his GST proposal. However, to be fair, he was taking on the politically skilled Labor prime minister Paul Keating. Moreover, the economy was ­recovering after the recession of the early 1990s.

Chifley became prime minister following John Curtin’s death in office in 1945. He led Labor to a comfortable victory over the Robert Menzies’ Coalition in 1946. Menzies, who had founded the Liberal Party in late 1944, was devastated by the defeat and contemplated retirement from politics. But he decided to stay on.

Chifley was leading a popular government that benefited from economic growth following the end of World War II in 1945. But then, in 1947, he decided it would be a good idea to nationalise the private trading banks.

In a moment of considerable insouciance, the Labor cabinet made its decision on the morning of Saturday, August 16, 1947, in a statement that consisted of a mere 42 words. For a month no effort was made to explain the policy. Even then, Australians were presented with a take-it-or-leave-it approach.

Curtin’s government, in which Chifley was treasurer, had extended banking regulations during the Pacific War (1941-45) under the defence power. It passed legislation after the end of hostilities to carry the regulations into peacetime. The Menzies-led ­opposition accepted this.

However Chifley, who had an obsession with private banks ­extending back at least a decade, wanted more, hence the nationalisation decision.

It proved to be a political disaster. Chifley’s legislation was ruled unconstitutional in the High Court, a decision that was upheld in an appeal to the Privy Council. In the meantime, Menzies grabbed the issue and ran with it up until the Coalition’s victory over Labor in the December 1949 election.

Chifley’s intention was to take on the private banks, a manifestation of what he regarded as the “top end of town”. In doing so, he failed to take into account the question that was part of the ­labour movement’s catchcry, namely “what about the workers?”.

Sure, bank nationalisation struck at the boards and senior ­executives of the major banks. But it also threatened the jobs of bank managers in the suburbs and towns along with bank tellers and the like.

In short, nationalisation was a strike at white-collar workers on moderate to low pay. If they had not voted for the Coalition before, many did after. But there was more. If Chifley was intent on ­nationalising the private banks, why not the private insurance ­industry — some of which were mutual societies? Insurance workers joined with their banking colleagues in protest. Menzies won the election in 1949 and resigned undefeated 16 years later.

Chifley died, as leader of the opposition, in 1951. Frank Green, the one-time clerk of the House of Representatives, knew the former prime minister well. He wrote in his book Servant of the House that Chifley conceded that he had moved too fast on bank nationalisation but never reneged on his commitment to the cause. Chifley’s opposition to private banks began in the early 30s and continued to the grave.

Approaching last Saturday’s election, Shorten and opposition Treasury spokesman Chris Bowen failed to heed the bank ­nationalisation lesson. They targeted self-funded retirees with franking credits along with future investors in negatively geared properties, and proposed to increase the capital gains tax on second and more properties.

Some of those who would lose under Labor were men and women whose income was far lower, and whose investment properties were far fewer, than some leading politicians. They did not appreciate being branded part of the “top end of town”. Shorten and Bowen should have understood this.

Then there are men and women who are part of what Resources Minister Matt Canavan terms the “hi-vis revolution”. They include well-paid workers in mining and related industries along with the ever growing number of well-paid tradies.

The miners want their jobs; so do the areas in which they work because miners are big spenders. The tradies want to live in a world where government does not pressure them to replace their four-wheel drives with electric ­vehicles.

Both groups were attracted to the Coalition’s promised tax cuts but are not members of the Melbourne Club or Sydney’s Australian Club.

It is understandable why so many members of the Canberra press gallery, along with left-wing commentators, misread the mood of the electorate and underestimated the appeal of Scott Morrison. Many of them are out of touch with how most Australians live. But there is no ­excuse for Labor’s failure to keep in touch with what was once a big part of its base. It took more than two decades for Labor to fully recover from Chifley’s mistaken war against the “top end of town”. But at least Chifley was targeting a large institution, namely the banks.

Shorten’s class war included attacks on individuals living in the suburbs and rural areas on as little as $40,000 a year. It was as if Labor resented Australians who have worked or still work in the private sector. Even Chifley’s hostilities did not extend this far.

Labor’s new leader Anthony Albanese seems to understand the problem and has put up a white flag in the class war. How strange that a leader of Labor’s Left has seen the folly of Labor’s right-wing leadership under Shorten and Bowen.

Gerard Henderson is executive director of the Sydney Institute. His Media Watch Dog blog can be found at