Labour's claim that the government had failed to put value back in the
pound, Liberals answered that its promise had really stated that the solution was to get prices down through greater production. The government had tried to do this by increasing the supply of products from abroad and by raising
1 See for example, the articles 'An Increasing Menace', Review, Vol. IV, No. 1, (January-February 1950), pp. 3-13, and 'Inflation Again', ibid., Vol. IV, No. 4, (July-August 1950), pp. 97-105. The Review also
contained several other articles on inflation in its issues of the years 1943-51.
2 See, for example, the federal policy speech of 1951; the extracts from the budget speeches in Copland and Barback eds., The Conflict of
Expansion and Stability, ch. 4; and The Budget's Attack on Inflation, a speech on the 1951 budget and the government's economic policy given by Menzies in parliament in October 1951, issued by the Federal
Secretariat (Sydney, 1951). Menzies also gave two national broadcasts on October 5 and 6, 1950 explaining the reasons for rising prices and outlining the government's programme for dealing with them. (See Current Politics, Vol. 1, No. 7, October, 1950).
loans which enabled it to buy equipment essential for productive development. However, its good efforts had often been frustrated by international factors
over which it had no control and by the ’go-slow' tactics of unions. In any case, although prices had often risen, real purchasing power had increased through higher wages and, in some instances, lower prices. Labour's
professed concern, it liked to add, was hypocritical, because its own
panaceas would only worsen the problem, and its cries at every anti-inflation measure that it would cause 'mass unemployment' were grossly irresponsible.
To its own supporters, the government appealed for understanding on the grounds of the wider national interest.'*' As Menzies explained to the meeting of the Federal Council in 1951, the foreign situation required Australia to make defence preparations. These demanded increases in taxation, which in turn inevitably heightened the pressures of inflation. But it was a case of national self-discipline: the government had no choice but to take steps which were necessary for security reasons. Menzies
challenged those who demanded cuts in government expenditure to state where, 2
amongst the government's commitments, those cuts should be made. Some reductions in general administrative costs, he could claim, had been made; but the government's broad commitments in social services, defence, public works and funds for the states could not be reduced. His manner of
defending an unpopular action by reminding critics that the government was aware of its departure from its professed principles, then pleading
necessity, promising a correction as soon as possible, and ending on a resolution to get to the root of the problem, is well illustrated in the phraseology of his statement in 1952 on the imposition of import
restrictions -
We dislike controls...but a critical position must be met and overcome...we were forced to intervene... any other course would have produced a crisis...we are reluctantly compelled to fall back on the method of licensing imports
...but as soon as our balance of payments permits we will be able - and indeed anxious - to modify and eventually remove the controls...Though the action now announced is necessarily of a negative kind, we are devoting much attention to the positive aspects of increasing our income.3
If this was not likely to be fully persuasive, critics could always be reminded of the greater controls which they had had to endure under Labour's 1 See, for example, Menzies' speech to the Federal Council meeting of
1951, Current Politics, Vol. 3, No. 1, (February 1952), pp. 4-5. 2 See The Budget's Attack on Inflation, pp. 3-9.
rule in the 1940s.
Whatever necessity could be pleaded for each action separately, the overall pattern of Liberal economic administration had been erratic and unpredictable, as the business community saw it. As business liked to simplify the matter, the government had departed from the principles which it had espoused as an 'anti-socialist1 party by not relaxing controls and by failing to reduce government expenditure substantially. The government had not been very successful in its attempts to check inflation, and its own enormous expenditure was still a major factor aggravating the high cost structure of industry. The constant implication of this criticism by the business community in the early fifties was that Australia's basic economic problems could be solved if the government made large cuts in its own
expenditure, released controls, and stabilised the wages system in order to allow more room for the operation of natural economic forces. These remedies were frequently accompanied by the injunction that the job of a government was'to govern' and not to involve itself 'in the affairs of business'.
This sort of criticism from business was, of course, often the outcome of particular frustrations. At the same time, less materially interested groups and individuals such as the IPA-Victoria and the federal president were voicing a more strictly doctrinal concern for free enterprise and the principles of the Liberal party. This was also, by strong implication, critical of the record of the government. They were disappointed that there had not been a revival of that spirit of enterprise which had characterised earlier periods in Australian history and feared that business might
unthinkingly succumb to dangerously socialistic controls in its anxiety for security.
The IPA-Victoria, in an article entitled 'What is the Meaning of Free Enterprise?',^ observed the 'paradox' that free enterprise governments in Australia and Britain were imposing measures of a strongly socialistic character while socialistic parties had opposed these with ideas that would be applauded by many supporters of free enterprise. This, it said, had resulted in the 'blurring' of the political divisions betwen the parties. There was a real danger that the phrase 'free enterprise' might become,
to its own supporters, no more than a meaningless political slogan or catchcry. After the 'levelling' process of the last twenty years, free enterprise now had to provide expanded production of wealth. Although the 1 Review. Vol. 6, No. 4, (July-3eptember 1952) pp. 119-22.
great part of the productive assets of the community were privately owned and the great part of employment provided by private business, the strong incentive which free enterprise was supposed to offer had been considerably watered down by heavy taxation on incomes and companies. Private enter prise, the article continued, was now hedged about with controls reaching
'practically into every nook and cranny of the economy' and a high cost structure was discouraging large-scale capital expansion. These all provided formidable obstacles to free enterprise. Only the wool boom, migration, postwar shortages, and the government's concern to maintain
full employment had preserved a climate reasonably favourable to economic expansion. But this system, the Institute pointed out, was not one of
'true' free enterprise but little more than a 'pale, unconvincing imitation*. It did not contain the essence of free enterprise: the incentive of a
suitable reward for the individual for his skill, effort and risks, and the operation of the principle by which, once minimum needs were assured, every man should be prepared to 'stand on his own two feet' and to suffer the consequences of his mistakes or shortcomings. The Minister for Defence, Sir Philip McBride, made a similar observation at about this time. 'It appears', he said, '...that a majority of businessmen, farmers, etc., in this country, in spite of their alleged support for the virtues of
competition appear to dislike it when it affects them. They have frequently sought Government assistance to reduce competition or to themselves combine to prevent competition.'^
The presidential address of W.H. Anderson to the Federal Council in 1952" turned the 'spotlight of frank discussion' on things 'dear to Liberal principles'. Anderson said that there were three major questions relevant to Liberal principles which should be looked at. These were: economic controls; the relationship between the public service and the individual citizen; and the 'growing contempt' of governments for the right of owner ship of private property. Price controls, landlord and tenant regulations, and controls on capital issues should all be removed. Although freedom was rightly qualified to take account of the rights of others, notably in
1 From a speech entitled 'Historic Survey of Liberalism and Private Enterprise', printed in Trade Digest, July 1953, pp. 14-19.
(Quotation at p. 17.) The rather tart reply of the acting president of the Adelaide Chamber of Commerce (Mr Joseph Crompton) was: 'Vie agree with Sir Philip McBride that there is too great a tendency for people to rush to the Government for help whenever things become difficult. But this has been brought about by Government controls and restrictions interfering with private enterprise and the sound economics of supply and demand.'
wartime, there was a danger that the community might accept a perpetuation of economic controls as part of a 'controlled order of life*. A high proportion of today's voters had known little of any other than this and therefore had no memory of 'more spacious' times upon which to call. The responsibility was squarely on older Liberals, possessed of wartime exper ience, to ensure that they did not become accustomed to socialist habits and drift into socialistic ways of thought. In a socialist economy the rights of self-development, of choice as consumers, of making decisions as citizens, and eventually of changing governments, were all surrendered. But, looking back to 1944, they could be 'justifiably startled' at how far their day-to-day thinking had already drifted with the tide of socialism. The era ahead was going to provide a testing round for the Liberal faith, in which the philosophic position of the Liberal party should be clearly expressed. Liberals, Anderson declared, must -
stand and proclaim a return to healthy competitive economic conditions, with abounding opportunities
for the adventurous to prosper, for the industrious to reap his just reward, and for the enterprising to pursue his plans for the future unshackled by the need for government approved official sponsorship.^
Although they should present an unbroken front to their political opponents and do everything to keep a Liberal government in power, Liberals also had a duty to remain steadfast to the principles of Liberalism. The great principles of freedom, he concluded, were not to be regarded as
'texts on a wall, as pious aspirations'. They should always be the 'real basis' of a programme of action. For no party could endure and gather strength unless it lived by its faith. When in power it must compromise with circumstances at times, but whenever it compromised with principles it weakened itself. The Liberal party should not allow temporary reverses to temper its policy with features which provided its opponents with a certain spurious popularity. Rather it should be an occasion on which
'not to doubt [our] cause', but to 're-affirm it more fervently'. Anderson was to forcefully remind the party of its creed of free enterprise in part
2 of his pamphlet Liberal Horizons.
1 ibid., pp. 6-7.
2 W.H. Anderson, Liberal Horizons, (Sydney, n.d.), pp. 3-6. This pamphlet, a 'Liberal Party Publication', was written by Anderson as federal president, probably in 195b.
Though unusually vigorous in expressing it, Anderson was not alone in his dissatisfaction with the record of the government. The Council to
which he had given his address in that year passed the following resolution: that in order to allay the fears of a large section
of the community that the continuance of controls will destroy initiative and incentive, this Council re-affirms its belief in the principles of free enterprise and individual freedom...^
In 1955 it also resolved 'That this Council opposes the use of price, profit and capital issues control by the Federal Government, as being
2
contrary to Liberal principles’. Quite frequently, the criticism was directed to the state Labour governments which controlled five of the six
states at the time. In June 1953, for example, the Federal Executive passed a resolution stating that the conditions which justified price control
during the war no longer existed. Price control, the resolution added, was a 'backdoor means of developing the Socialist pattern — to condition free
3 enterprise by slow strangulation for eventual nationalisation'.
(9) The Liberals in the mid-1950s: 'Expansion and Stability'
The government was in a safer position by the mid-fifties. Economic conditions were generally improving, if with occasional setbacks. Inflation had been checked. Primary industry, a major economic problem in the thirties and forties, was flourishing after good seasons. The balance of payments no longer showed violent fluctuations; and Australia' overseas trading began to yield surpluses more often. The economy was beginning to show signs of affluence in terms of its aggregate production and development; this was increasingly reflected in the possession of durable consumer goods. Labour continued to criticise the government for inadequacies in social services and housing and to inveigh against 'monopolies'; but this now had little effect on a society enjoying good wages, an abundance of consumer goods, and almost full employment. Discontent within the government's own ranks had also been quietened. Then, from the mid-1950s, the Liberal party dwelt frequently and with increasing emphasis on 'growth', 'development' and overall progress to demonstrate its achievements since it took office.
1 Minutes of the Seventh Annual Meeting of the Federal Council, 27-8 October 1952, p. 85.
2 Minutes of the Tenth Annual Meeting of the Federal Council, 6-7 February 1956, p. 129.
SMH, 30 June 1953. 3
Australia, Liberals said, was becoming ever more prosperous, developed, and 'middle-class’.1
The government was also more secure politically. It had only just survived a close election in 1954, but the subequent split in the Labour
2
party, giving Labour's opponents the opportunity to exploit the issues of ’socialism' and 'communism', meant that in ordinary circumstances it was not likely to be defeated. In this more favourable situation, the govern ment could more confidently answer its critics and elaborate on its
economic philosphy.
The major aim of Liberal administration of the economy in the mid and 3 late fifties was to provide 'stability' at a time of rapid 'expansion'. As the government frequently explained in simple terms, Australia was
experiencing a forced rate of development through immigration and industrial expansion on top of the normal demands made by full employment, defence and other governmental services. The economy was also suffering the
1 The truth of these claims is hard to assess. Australia's economy did become more prosperous, as did most economies. And the work force, as might be expected in an increasingly urbanized and industrialized country, became more middle-class in terms of occupation. The percentage of the work-force engaged in white- collar occupations increased from 31.4 in 1947 to 36 in 1961 and the percentage in tertiary industries was rising from 54.8 in 1947 to 61.6 in 1966. The percentage belonging to trade unions was declining in this period from 61 in 1954 (to 53 in 1968). To the extent that blue-collar occupational status and membership
of a trade union are the main sources of working-class identifi cation and Labour voting, this bears out the Liberal claim that Australia was becoming a more middle-class society. (See G.W. Ford,
'Work', in Davies and Encel eds., Australian Society, pp. 91, 121; Mayer, 'Social Stratification...', p. 42; and McCarty, 'The Economic Foundations...' p. 23.) Butthe claims of 'growth' and 'development' were, when treated comparatively, exaggerated. By most of the common estimates based on national income, GNP at constant prices, or owner ship of cars, homes and household appliances, Australia's rate of growth and standard of living in the post-war period, while good, were far from exceptional among comparably industrialized countries. (For some different measures of growth see N.G. Butlin, 'Some Perspectives of Australian Economic Development' in C. Forster Ed., Australian Economic Development in the Twentieth Century, (Sydney, 1970), ch. 6.) 2 See Ch. 6 (8).
3 See, for example, the budget speeches by the Treasurers (Sir Arthur Fadden and H.E. Holt) for the years 1955-6 and 1959-60, CPD, H R 7 ,
pp. 29-62 and HR24, pp. 31-85; and the federal policy speeches of 1955 and 1958, pp. 5-8, 15-20, and 6-7. (Holt, MHR for Fawkner, Vic., B35-49, then Higgins, 1949-66, was Treasurer 1958-66 and deputy-leader of the Liberal party 1956-66.)
problems associated with prosperity in a relatively undeveloped country still very dependent upon exports. Labour was scarce; there was a shortage of materials, though not as great as in earlier years; and the cost
structure of industry was high. The economy therefore required constant re-adjustments to ease pressures resulting from these strains.
Mindful of the antagonism 'which it had provoked in the early 195Cs, the government was anxious to avoid having to fall back on controls to achieve its ’stability'. The call in budget speeches and addresses to business groups was now for 'voluntary r e s t r a i n t ^ But behind this remained the threat of forcible intervention if the call was not heeded. Menzies'
2
language in his Statement on the Economy in 1955 contained both of these in delicately phrased emphases. His government 'proposed', as in the past,
to pursue a steady course; to be not unwilling to adopt unpopular measures; but to prefer so far as is practicable and intelligent and willing co-operation on the part of the community in order to avoid, as far as possible, artificial orders and controls.
Shortly afterwards, Menzies defended some unpopular tax increases by the 3
now familiar method of exculpation. He said that these measures signified a 'sensible period of consolidation' rather than a 'retreat from ultimate objective^. They constituted a 'moderate and balanced' programme where more would have created fears and less would have exposed the economic well-being of the people to the destructive attacks of a growing and
unrestrained inflation. The cumulative effect of criticism had nevertheless brought some changes in the making of economic policy at this time. In February 1956 the government had appointed a panel, which included represen tatives of industry, agriculture, banking and commerce, to provide advice
4
on economic problems. Andin May of that year the government put out its first White Paper on economic conditions. (Menzies stated in the foreword that the government recognised the need for 'public co-operation' and
1 See Fadden's speech, cited above. Also the Age, 19 September 1955, report by the 'Canberra Correspondent'.
2 CP D , HR7, pp. 964-74. The speech was made on 27 September.