UKNA: FCO 24/2052

British High Commission, Canberra, 20 November 1975

Confidential

The Australian Constitutional Crisis, 1975

'The evil of two co-equal Houses of distinct natures is obvious. Each House can stop all legislation, and yet some legislation may be necessary .... In both the American and the Swiss Constitutions the Upper House has as much authority as the second: it could produce maximum of impediment–the deadlock, if it liked; if it does not do so, it is owing not to the goodness of the legal constitution, but to the discreetness of the members of the Chamber. In both these Constitutions, this dangerous division is defended by a peculiar doctrine. ... It is said that there must be in a Federal Government some ... body possessing a veto in which the separate States composing the Confederation are all equal. I confess this doctrine has to me no self-evidence. ... The State of Delaware is not equal in power or influence to the State of New York, and you cannot make it so by giving it an equal veto in the Upper Chamber. ... If indeed it be that a Federal Government compels the erection of an Upper Chamber of conclusive and co-ordinate authority, it is one more in addition to the many other inherent defects of that kind of Government.' Walter Bagehot, 'The English Constitution' ( 1867).

ln October 1975 the Australian Opposition, under its new and single-minded leader, Mr Malcolm Fraser, decided to take advantage of its long lead in the opinion polls and its majority in the Senate to try to force Mr Whitlam's Labour Government to submit itself to fresh election. The Opposition did this by declining to pass the Budget Appropriation Bills in the Senate. This denied the supply of money to the Government. Mr Whitlam refused to accept that a Government with a majority in the Lower House could be forced into an election by Opposition action in the Senate. The two leaders faced each other in a month of deadlock, each waiting for the other to back down. Then on 1 November the. Governor-General took the entire nation by surprise by dismissing Mr Whitlam and his Government, appointing Mr Fraser as 'caretaker' Prime Minister, and dissolving both Houses of Parliament. Rarely can the fortunes of a major political party in a Western democracy have been so dramatically reversed. Not for many years can there have been so bold and controversial an exercise of the powers of the Crown in a constitutional monarchy of the Westminster pattern. And not for many years to come will there be an end to the political and constitutional reverberations of Sir John Kerr's action.

2. In this despatch, Sir, I offer an account of the events leading up to the Opposition's refusal to pronounce on the Budget Supply Bills in the Senate and the Governor-General's historic intervention to dismiss Mr Whitlam; a description of the backdrop to the elections which are to take place on 13 December to both Houses of the Australian Parliament; and some tentative thoughts about the implications for the future of the remarkable events of Remembrance Day, 1975.

December 1972 to October 1975

3. The defeat of the Liberal/Country Party coalition in the elections of December 1972 after 23 years of government was a traumatic experience which they were unwilling to accept. They decided in early 1973 that they would seek an opportunity to bring the Labour Government down by making use of the Senate's power to reject (though it can neither initiate nor amend) money Bills. Mr Fraser was not the first to use the Opposition's majority in the Upper House in this way. That distinction belongs to his immediate predecessor, Mr Snedden, who in April 1974, by threatening the Government with rejection of a Supply Bill in the Senate, took a course which had never before been followed in the 72 years of the history of the Commonwealth of Australia (though it could have been on some 20 occasions). He did so at a time when the opinion polls were favourable to the Opposition and following a complex but abortive manoeuvre on the part of Mr Whitlam to gain control of the Senate by appointing the Democratic Labour (anti-ALP) Senator Gair¹ to the Embassy in Dublin. Since the Senate had previously blocked other Government legislation on two separate occasions, the grounds had been laid for a double dissolution, which Mr Whitlam chose to request. At the ensuing election in May 1974 the ALP Government was returned to power. But the Senate was effectively still controlled by the Opposition.

4. Mr Snedden, having gambled and lost, was replaced by the more ruthless Malcolm Fraser as leader of the Opposition. Mr Fraser soon made his position clear: he would not use his control of the Senate to bring down the Government unless the latter presented him with 'reprehensible' or 'extraordinary' circumstances. The Government seemed fatalistically determined to do just that. Mr Whitlam's appointment of Senator Murphy to the High Court was widely criticised on political and personal grounds; he dismissed his former Deputy, Dr Cairns (by whom Mr Crean had been humiliatingly replaced as Treasurer) for denying to the House, in the face of conclusive evidence to the contrary, that he had offered a commission to a money broker on behalf of the Government. There was Dr Cairns' much advertised relationship with Miss Junie Morosi and his appointment of that lady as his political secretary, paid from public funds; the apparent use for his own gain by Phillip Cairns of his position as his step-father's electoral secretary; the resignation of the speaker of the House after public humiliation by Mr Whitlam, and, most serious, the Overseas Loans affair, on which Mr Aiers reported in his despatch of 28 July, 1975. Public opinion swung dramatically towards the Opposition and Mr Fraser personally. Moreover, following the appointment of ex-Senator Murphy and the death of Senator Milliner,² both of the ALP, the Opposition's position in the Senate improved still further when, in clear breach of convention, the Governments of New South Wales and Queensland replaced them with non-ALP nominees.

5. The political dilemma facing Mr Fraser as the Budget was presented in Parliament was acute. Popular opinion was behind his party. But the polls could easily swing the other way, particularly since the changes in the Government had brought to the front benches a younger and more competent team. The Treasurer, Mr Hayden,³ had brought down an imaginative and widely acceptable Budget with which the Opposition could find little real fault. And a number of Opposition Senators clearly believed that the actions of the Government had not provided circumstances sufficiently reprehensible to justify a rejection of the Budget Bills, a more serious step than that undertaken in April 1974 when the Senate went only as far as to threaten to block a supplementary Appropriation Bill.

6. Mr Fraser was keeping his options open despite pressure from the National Country Party, the non-Labour State Premiers and the Liberal Party machine. On 13 October the Melbourne Herald published a series of telexes showing that Mr Connor,⁴ the then Minister for Minerals and Energy, had continued to negotiate for an overseas loan, some three days after his authority to do so had been revoked, in the clear contradiction of an assurance in the House of Representatives that he had not done so. In the heady atmosphere created by this revelation, Mr Connor was removed from the Cabinet, Mr Fraser got his 'reprehensible' circumstances and the Senate refused to pass the Budget Bills, instead referring them back to the House with a rider that they would not be passed until the Government agreed to hold an election for the House of Representatives.

7. Mr Whitlam, however, at once declared that he would not be forced into a premature election by what he termed a 'tainted' Senate. Had Senator Milliner not died, he claimed, or had the Senator been properly replaced by a Labour supporter, the Opposition could not have carried a motion of deferral; they would have had to decide whether to pass or reject the Budget outright. In Mr Whitlam's view too the Australian political system was that of Westminster: governments were made and unmade in the Lower House, and the Senate had 'no right'–some of his Ministers, contrary to the opinion of most constitutional lawyers, maintained that it had 'no power'–to reject supply. He announced his determination to 'smash' the power of the Senate 'for all time'; the Government would continue to return the Budget Bills to the Senate and in the meantime would seek ways to provide or ensure finance for necessary expenditure, particularly public service salaries, until the Budget passed into law.

8. Mr Fraser also refused to back down; he maintained that the deadlock would be resolved only by a general election, or by the withdrawal of the Prime Minister's commission. Mr Whitlam declared his view that the Governor-General had no constitutional right to act save on the advice of the duly elected Prime Minister, i.e. himself. Meanwhile in the Senate support for Mr Fraser was weakening. One Liberal Senator announced publicly that he would not cast his vote against supply; three or four others also gave signs of unwillingness to take such a step. Mr Fraser's offer of a compromise, whereby the Opposition would pass the Budget provided that Mr Whitlam would promise to hold an election to the House at the same time as that for half of the members of the Senate, due before 1 July, 1976, was rejected by Mr Whitlam as 'blackmail'. The Government's stocks in the opinion polls rose sharply as Minister after Minister explained in detail the harmful effects the actions of the Opposition were having on the economy, and hardship that would be caused if the Opposition persisted. Opposition resources were mobilised afresh to discredit the Government and to stiffen the Opposition in the Senate. Attempts were made to exploit a questionable deal between the Australian Council of Trade Unions (ACTU) and a private oil company; the Treasurer was criticised for disclosing to the President of both the ACTU and the ALP, Mr Hawke, details of the Budget some five hours before it was presented to Parliament; and renewed attempts were made to implicate Mr Whitlam in the Overseas Loans affair; but all to no avail.

The Remembrance Day Massacre

9. Time was running out for Mr Whitlam as the Government found it increasingly difficult to find ways of continuing essential payments to public servants and others, after current appropriations were exhausted and without breaching the Constitution. On the morning of 11 November the two party leaders met, but failed to agree on any solution to the deadlock. Mr Fraser seems to have rejected Mr Whitlam's offer to forgo the option of an immediate election to half the Senate–something which, as Mr Fraser had said in public, might conceivably have given Labour temporary control of the Senate. At 10a.m. Mr Whitlam telephoned Government House to ask the Governor-General for an appointment in order to request the early calling of a the half-Senate election. The Governor-General received Mr Whitlam at 1p.m. and, before Mr Whitlam had time to ask for a half-Senate election, revoked the Prime Minister's commission. Within the hour Sir John Kerr commissioned Mr Fraser, after receiving assurances that supply would be passed to allow Government to continue, as caretaker Prime Minister (that is without the power to make statutory appointments or to initiate policies), to hold office until elections to the Senate and the House of Representatives. By late afternoon the Budget Bills had been passed by the Senate, Mr Fraser had lost a vote of confidence in the House and at his request both Houses had been dissolved by the Governor-General. The date of 13 December was set for the elections.

The position of the Governor-General

10. In explanation of his actions the Governor-General issued a four-page statement.⁵ In brief it stated that the Australian Constitution, unlike Britain's, gave the Senate power to reject money Bills; that accordingly a Prime Minister, to govern constitutionally, must not only keep a majority in the Lower House but also secure passage of supply by both Houses; that a Prime Minister who could not achieve this was obliged to resign or to advise elections to resolve the difficulty; and that if he refused to do either, it was the Governor-General's duty, so as to preserve Parliamentary control over supply, to dismiss him and send for a new Prime Minister who was prepared to secure supply, or to hold election–or, as in this case, both.

11. In the first shock of the events of the 11 th, Mr Whitlam spoke harshly about Sir John Kerr: 'Well may we say God Save The Queen. Because nothing will save the Governor-General.' And he described Mr Fraser as 'Kerr's cur'. (Mr Whitlam subsequently said that he was sure The Queen would not have acted as Sir John Kerr had done; and that he remained too far committed to his views to have any republican sentiments.) Although obviously stunned by his removal from office, Mr Whitlam stopped short of claiming that the Governor-General's action was positively illegal. But he did describe it as unconstitutional.

12. I shall deal in a moment with some of the criticisms that have been made of the GovernorGeneral's action. But it deserves to be considered in the light of his obvious wish to avoid drawing the Crown directly into Australian politics. A spokesman for Buckingham Palace has been quoted as saying that the Governor-General did not consult The Queen before dismissing Mr Whitlam. In acting as he did, Sir John no doubt had in mind Mr Whitlam's reported remark that if threatened with dismissal by the Governor-General, it would be a race to see whether he could get to The Queen to seek Sir John's dismissal before the latter could get to him.

Election issues

13. In the election campaign, the ALP is trying to exploit the wave of indignation which followed the Prime Minister's dismissal. But Mr Whitlam has made it clear that he is focusing his attack on Mr Fraser and not the Governor-General. In the former Prime Minister's words, 'Sir John Kerr is not a candidate for the election–Mr Fraser is'. Mr Whitlam is stressing that twice within the lifetime of a normal Parliament, the Opposition have sought to bring down a democratically elected Government, long before its term was up, by invoking a provision of the Constitution drafted three-quarters of a century ago to protect the interests of the less populous states against any threat to their interests by the majority in the larger states. He accuses the Liberal and National Country Parties (both state and Federal) of repeated breaches of the conventions of the Constitution which make for stable government, with the consequent risk of elections every six months whenever (as often happens) the Government in the House has no majority in the Senate. Whether he can sustain popular indignation until 13 December (and indeed how widespread the indignation really is) are debatable questions. As Mr Snedden discovered to his cost, in May 1974, the Australian electorate has a short memory for particular political controversies; and already the caretaker Government has begun to focus attention on the former Government's economic record. This is the area in which Mr Whitlam is most vulnerable. Under his stewardship, inflation and unemployment have been at record levels; and the succession of controversies–scandals, as the coalition would have it–associated with the former Government's activities has alienated, or alarmed, many voters. The outcome of the election will doubtless depend to a great extent on whether Mr Whitlam can keep the electorate's eyes fastened on the former Opposition's actions in refusing to pass Supply, and on the Governor-General's controversial intervention to sack an elected Government; or whether Mr Fraser can switch the spotlight on to the former Government's record, and the issue of who is to manage the economy for the next three years.

14. This is not the place to attempt to forecast the result of the elections. In any case, it is too early in the campaign for any but the foolhardy to attempt such a guess. I shall be sending regular assessments to the Department as the campaign proceeds. They will be based in part on a detailed analysis of the position in those individual constituencies which are most vulnerable to a swing in either direction. For the moment I shall say only this. Although the Liberal–National Country Party coalition's lead over the ALP, so wide until early October, has been very greatly reduced in recent weeks, and even apparently eliminated in one recent poll, it remains true that Mr Fraser and his colleagues need only a swing of I per cent away from the voting strengths at the elections last year to win a majority in the Lower House and thus confirmation in office. Six seats in that House are now held by Labour on majorities which would be wiped out by such a small swing against them. However great the concern, even indignation, aroused by the events of October and November, it would indeed be remarkable if the former Government with Mr Whitlam's record on unemployment and inflation were to avoid even a swing of I per cent against it. At present, therefore, a cool calculation must suggest that Mr Fraser is the favourite to win by a short head. But the circumstances of the election are so peculiar, and the possibilities of a swing in opinion in the late stages of the campaign so real, that it would take a bold punter indeed to place a bet of more than modest proportions on either in this unprecedented race.⁶

Implications for the future

15. The actions of the former Opposition and of the Governor-General are bound to provoke a number of fundamental questions about the future role and powers of both the Governor-General himself and of the Senate. It may be of interest to look briefly at both.

16. The Governor-General's dismissal of Mr Whitlam has been criticised on grounds of constitutional or legal propriety, of political prudence, and of timing. The constitutional argument hinges on the acceptability or otherwise of Mr Whitlam's declared intention of governing for as long as necessary without the vote of supply by the Upper House of Parliament, declining either to resign or to take such action as would cause supply to be granted. Mr Whitlam and his Treasurer gave repeated assurances that they would do nothing illegal or unconstitutional; but by definition any expedient to circumvent the Senate's obstruction of supply would also have amounted to a circumvention of Parliament's right to control Government spending. The implications of this aspect of the controversy reflect more on the powers of the Senate than on those of the Governor-General. Sir John has been more directly criticised for appearing to disregard the advice of the Law Officers in reaching his decision. He seems to have relied instead on the advice of Mr Ellicott, a former Solicitor-General⁷ and subsequently a Liberal MP, backed by consultation with the Chief Justice (himself a former Liberal Minister).⁸

17. The political judgement may be more damaging to the Governor-General's position in future. This is related to the problem of timing. Had Sir John Kerr waited until essential Government services had ground to a halt, until real hardship began to be felt, then there could have been little argument about the need for his intervention. Perhaps he acted in the belief that if he postponed his intervention fresh elections would have to wait until the end of the Australian summer holiday period in February, leaving an unacceptably long delay before the people's decision could resolve the deadlock. But by moving when he did, he laid himself open to the charge that he had jumped the gun. The Senate had not yet actually rejected the Bills, only deferred action on them. The opinion polls were exerting growing pressure on Mr Fraser or the Liberal Senators to find a way of climbing down: perhaps in another few days they would have done so. Existing appropriations had not yet run out: Mr Whitlam still had two or three weeks in hand. His threats of impending economic and financial hardship as a result of the Opposition's actions could have been regarded as bluff, designed to pile on the pressure for an Opposition surrender, rather than as scientific predictions of an inescapable future. Even if the Opposition had stood firm for another two weeks, perhaps Mr Whitlam would have adopted some other tactic–even agreeing to a dissolution of the House–rather than merely staying in office and finding debatable means of spending public money without Parliamentary authority. Perhaps the half-Senate election, for which Mr Whitlam was on the point of asking when he was dismissed, would have resolved the deadlock by giving Mr Whitlam a majority, if only temporarily, in the Senate. Perhaps a straightforward demand by the Governor-General that Mr Whitlam should take some positive step, or else face dismissal, might have broken up the logjam. Certainly Sir John Kerr's action seems to have been based on a series of assumptions, any one of which might legitimately have been regarded as unwarranted. Above all, it seems open to question whether the situation on 11 November was so desperate, so extreme, that such a drastic exercise of the vice-regal reserved power was both justified and likely to be seen to be justified.

18. That Sir John acted with courage and from the highest motives cannot seriously be doubted. Nor is his legal skill in question. But it may be that he has used a power which, because it has now been used once, cannot be used again. Certainly future Prime Ministers, and especially Labour Prime Ministers, in this country will be anxious to ensure that they are not threatened on two flanks, by the Opposition and by Government House, at the same time. Their natural instinct now may be to try by every possible means to ensure that The Queen's representative is not a person having, or likely to develop, such independence of judgment or spirit as to pose a possible future threat to the elected Government of the day. It is hard to see how this can fail to lead to the future appointment of relative nonentities as Governors-General, and thus to a deterioration in the quality of impartial advice available to future Australian Governments. It may also mean that each new Government of a different political hue from that of its predecessor may feel it necessary to install in Government House its own politically sympathetic, and dependable, nominee, thus requiring a change of Governor-General with every change of Government. (Mr Whitlam has said that if he wins the elections in December he would expect the Governor-General to resign, rather than have to advise The Queen to dismiss him; but the practical effect would be the same.) This could only damage the role of the office as a symbol of continuity and impartiality, representing a form of state authority above party politics. (Resentment of Sir John Kerr's intervention in the political arena may also encourage a minor upsurge of republican sentiment. But for the foreseeable future this is unlikely to command more than fringe support in Australia.)

19. The Senate too has taken a large gamble with its own future powers and authority. The polls suggest that although a substantial majority of Australians disapproved of the Opposition's attempt to force early elections by refusing supply in the Senate, nevertheless an equally large majority would oppose a constitutional amendment to deprive the Senate of the power to refuse supply in future. The history of referenda in Australia on proposed amendments to the Constitution suggests that the electorate gives its approval by the requisite majorities only in cases where both the main parties are in favour of the proposal. It is hardly likely that the Liberals or Country Party would acquiesce in a proposal to deprive the Senate of powers which they have sought in each of the last two years.

20. Whether a future Senate with a majority in opposition to the Government in the Lower House will think it prudent or proper to attempt once again to use its right to reject supply so as to drag a reluctant Government to the polls, will depend mostly on the result of the election. If Mr Whitlam wins, he will no doubt pronounce his victory to be vindication of his thesis that the Senate was in breach of an established and valuable convention when it acted as it did; many would agree, and the deterrent against a repetition would be powerful, even if a referendum to put the matter formally into the Constitution were to fail. If on the other hand Mr Fraser wins, and if–as is quite possible–the Labour Party plus some independent or minor party Senators together have enough votes to block supply in the Senate, there will be a powerful temptation to turn the tables and make it impossible for Mr Fraser's Liberal–National Country party Government in the Lower House to carry on by using the same technique as the then Opposition did in 1974 and 1975. Since Australian Governments need fresh appropriations every six months, the outlook for reasonable stability and continuity in Australian Government would then be bleak. A repetition of the 1975 deadlock with the party roles reversed might even persuade the Australian public that a constitutional amendment had finally become a necessity. And perhaps in those circumstances even the continued existence of the Senate itself might be called into question.

21. This latter attempt at crystal gazing is not entirely academic or idle. It helps to illuminate, I think, the real responsibility for the lamentable dramas of the past few weeks in Canberra. Certainly the naked ambition for power of Mr Fraser, and the obduracy of Mr Whitlam, have contributed to the crisis; and it is impossible to dismiss completely the suspicion that Sir John Kerr's judgment has been open to question. But the real villain, ifthere is a villain at all, has been the inherent contradictions of the Australian Constitution. The quotation from W Bagehot with which I preface this despatch is very relevant here. Was it ever really a practical possibility to continue an Upper House on the American model, in which all the states are represented equally irrespective of population, and having broadly the same powers as those of the Lower House, with a Westminster style of relationship between the executive and the legislative branches, in which by convention the possession of a majority in the Lower House confers the right to form the Government and to govern as long as the majority lasts? It is this attempt to reconcile the irreconcilable which the Australian Constitution enshrines. If the contradiction has only now led to a major political upheaval, the reason is that hitherto Australian leaders have respected, not just the letter of the Constitution, but also the spirit of the unwritten conventions concerning the exercise of power which breathe vitality into written documents. If the Constitution has been made to work until now, it is owing–as Bagehot remarked, more than 30 years before the Australian Constitution was enacted–not to the goodness of the legal Constitution but to the discreetness of the members of the chamber'. The moral is that sooner or later a reliance on the discreetness of members of the chamber, and on their willingness to refrain from exercising their nominal rights in the pursuit of power, is likely to come unstuck. I suppose it is a moral which those who depend more on unwritten convention than on written Constitutions ought, in their own interests, to ponder.

1 Vincent Clare Gair, Democratic Labor Party Senator for Queensland, 1969–74.

2 Bertie Richard Milliner, Senator (ALP) for Queensland from 1968.

3 William George Hayden, Treasurer, 6 June–11 November 1975.

4 Reginald Francis Xavier Connor, Minister for Minerals and Energy, 1972–75.

5 See Document 505.

6 The general elections were held on 13 December 1975 and resulted in a landslide victory to the Liberal–National Country Party coalition. In a double-dissolution election they won 91 seats to the ALP's 36 in the lower house and 36 to the ALP's 27 in the Senate ..

7 James inserted a footnote here: 'In Australia the position of the Solicitor-General is held by an official, not by a Minister or Member of Parliament.'

8 Sir Garfield Barwick. As a former Chief Justice of New South Wales, Kerr likely only sought reassurance from Barwick and had probably already made up his mind to dismiss the Whitlam Government as a result of their continued failure to obtain supply. Their supply bills had been blocked in the Senate for months. He was correct in his judgment that forcing the government to go to an election would clear the supply logjam. Whether his decision to use his reserve powers was justified, however, will long remain a subject of political controversy.