Thanks for the confidence, Gough

Then there were the across-the-board tariff cuts – judged to be too harsh and too quick (“the short sharp shock”) and more designed as an anti–inflationary tool given the impact of high import prices on inflation. The implementation was all wrong too. As Bob Hawke recalled: “I think Fred Gruen said to him we should reduce tariffs and he said ok, ok.” And that was it.

Gough’s former chief of staff John Menadue said that Gough did have a view of structural reform in Australian industry and quipped rather harshly about the textile clothing and footwear (TCF) industries: “We’ve fucked those industries and that’s a good thing.” But overall the short sharp shock approach was not economically feasible and was politically disastrous, with the result being a harsh swing against the government in the Bass by-election.

In fact the experience led the way to the gradual, strategic approach to trade and industry policy by the Hawke Government, with the phases of tariff reductions of the Button Plans, in cars, steel and TCF. After the hurried approach to public policy by the Whitlam Government, the Hawke Government changed the policy, the pace, and the process in everything from tariffs to industrial relations. And of course they had the co-operation of the trade unions through the Accord process. The ACTU was determined not to make the same mistakes in the Hawke era that had occurred in the Whitlam era.

In fact, the great irony was that Gough’s economic legacy was in foreign policy.

The first wave of the Asian Century

Gough’s decision to recognise China did more for the Australian economy than many other more heralded changes in the economic policy sphere. When you think about it China was a risk. Especially as Gough went to China as opposition leader before he formed government.

Here was Gough in 1971 on the cusp of being the first Labor prime minister since Ben Chifley in 1949 (the year the Chinese communists took power) breaking bread (or rice) with a Communist state. And he took some heat from it from the McMahon government, for about a week until it was revealed that Henry Kissinger had been in Peking (now Beijing) too paving the way for US President Richard Nixon to recognise China. And of course, after winning the 1972 election Gough returned to Beijing as prime minister in 1973 and he and Margaret were feted as great friends of China. It was a triumph.

When talking to Gough and later John Menadue, it was explained to me that the decision to recognise China was part of the Whitlam vision to engage Australia more comprehensively with the Asia Pacific region. Gough and South Australian Labor Premier Don Dunstan had fought hard to get rid of the White Australia Policy from the ALP platform and took the principled view that if you wanted to trade and invest with people, or sell education services to them you shouldn’t prevent them from immigrating because of the colour of their skin or racial origin. It was part of the big picture, diplomatically to engage with Asia, and to allow exchange of ideas, art and culture as well as good and services. To feel more confident in the Asia Pacific region, particularly after the difficulties of the Vietnam war.

In some ways it was one of the “waves” of Australia’s engagement with the Asian Century. We had the Country Party Deputy Prime Minister and Trade Minister “Black Jack” McEwen signing a deal with Japan in 1957, Gough in China in 1971-3, and then the Hawke-Keating reforms of 1983. Now, in 2014 both sides of politics take Australia’s engagement with Asia as a given and it’s largely bipartisan. And China’s our number one trading partner worth almost A$142 billion. But it wasn’t in 1971 when Gough took the plunge. China was a risk. It was a bold and confident move.

Gough Whitlam made us confident. Confident to be Australian, confident to be ourselves and confident to take on the world knowing who we are. He helped modernise Australia and enhance our place in the world. Now when I travel to Beijing, (or even Berlin or Buenos Aires) I think of that Whitlam confidence. It could well be that Gough’s foreign policy adventure provided us with one of our greatest economic legacies after all.

Thanks Gough.