The Whitlam Papers show how poorly past mistakes have been understood

I was told of the decision on the tariff cut only when it was already publicly promulgated. I was asked only to convey the decision to other governments through diplomatic channels.

Whitlam says that the "credit squeeze" was his "greatest mistake" and this may well be. Hikes in interest rates, though they curb asset-price inflation and, with it, much highly valuable fixed-capital investment, do not curb consumer-price inflation. On the contrary, they increase those inflationary pressures. During the Whitlam years, the "credit squeeze" did this at the same time as he discouraged production through such measures as appreciation of the Australian dollar and the unilateral 25 per cent cut in tariffs.

I do not know how extensive the release of Cabinet papers from the Whitlam era has been. However, within the usual departmental and ministerial channels, I continued to advocate policies to stimulate fixed-capital investment and, with it, to increase productivity and production. At the same time, I suggested, as in The Indigent Rich, that "demand must be held down while production is pushed up, so that an equilibrium between demand and supply is achieved at a level at or above what we now regard as the level of full employment of the economy". These views were put to Prime Minister/Foreign Affairs Minister Whitlam, for example, as I recall, for a Commonwealth Heads of Government Meeting or something of the kind in Canada in 1973 or 1974. However, the dead hand of the Treasury weighed too heavily, as I think Whitlam himself noted on one of my submissions to him that came back to me around that time.

Since I had failed to turn policies around by my efforts within the government and administration, I decided to try to turn them around by "going public" and writing another book, Inflation: A Study in Stability. This was published around the middle of 1974. The blurb on the new book recorded that The Indigent Rich had been "acclaimed as an 'erudite book', 'perceptive and stimulating', 'forceful', 'imaginative', 'brilliant', and 'highly readable'." However, neither book had any practical impact on policy. The dead hand of the Treasury and conservative financial and economic policies more generally steered policies away from positive reform, not only then, but in the three decades that have followed.

Since I could not change policy, I decided to accept an ambassadorial appointment overseas from early 1975. From there, I watched the inevitable collapse of what was, in many ways, an imaginative, energetic and well-intentioned Whitlam government. I also watched, later, the mostly feckless attempts of successor governments to do better.

If the policies of The Indigent Rich had been followed, not only might the Whitlam government have survived as one of our country's greatest administrations but we would have become one of the Asian Tigers, riding along an open highway to their kind of economic and social miracles. We would have done this by exploiting the ill-advised American and other Western policies, instead of dumbly following those policies and so presiding over the chronic decline of our economy and our society, relative to so many of our Asian neighbours, and, at home, the spread of unemployment, poverty and inequality.

It would be nice to think that, whatever the failures of the Whitlam government, they have been redressed in the three decades since. But is that the case? In this new year of 2004, we will hold our breath - as long as we can! - while the Reserve Bank decides whether it will, yet again, raise interest rates to curb inflation and bounce us up and down, painfully, just one more time. We still look for salvation to even closer ties with the United States economy - an economy and society that has lost its way in the past 30 years, becoming the world's largest debtor, gutting its own industry for the benefit of some of the world's most dynamic economies and, in the process, even putting at risk its superpower/hyperpower status by massive transfers of economic power. At the same time, poverty and inequality have spread and the rewards for the ordinary, everyday American working man have hardly moved, except downwards.

Allowing for the differences in size and economic and financial consequence, that story is the story of Australia in the past 30 years too. Now, as a sort of culmination, our government's ambition is to solve our chronic economic and social problems by tying ourselves, in a free-trade area, to the very economy that epitomises the failure of our own economic and social policies.

Let us hope that the release of the Whitlam Papers will show us what to avoid and how to get back on that road to economic prosperity, progress and greater social equality that we travelled in the period from 1945 to 1969.

The present Australian government seems unlikely even to consider such a turnaround. So we must ask: Is there an Opposition anywhere out there that, in an election year, might offer us, not another Scullin government, not another Whitlam government, but a brand new, updated, wise and determined Chifley-like government to lead us out of the fog of misconceived policies and fake remedies, into a clear light in which we will use to the full the great human and material resources that our country has to offer?