Present along with the prime minister when the meeting was convened were the attorney-general, Lionel Murphy, and Rex Connor, the minister for minerals and energy. Jim Cairns, deputy prime minister and newly appointed treasurer, stumbled on the gathering entirely by accident, as neither he nor any of the government’s other ministers had been informed of Whitlam’s decision to convene the council.
Nor, for that matter, had the governor-general. That certainly wasn’t because Whitlam didn’t realise that the council could meet only if the governor-general’s approval had been secured. On the contrary, the secretary of the Federal Executive Council had reminded him, that very day, of the legal requirements.
But Whitlam wasn’t in the mood to worry about ordinary legalities – there was extraordinary business to transact. In effect, without parliament having been told, the meeting was to authorise the raising of a foreign loan of unprecedented proportions. And the sheer size of the loan – $US4bn at the time, or about $34bn at today’s prices – was not its only remarkable feature.
There was, to begin with, the fact that principal and accumulated interest were to be repaid all at once in 1994-95, when the government of the day would have to disburse, in a lump sum, a staggering $US18bn (nearly $50bn in 2022), which was 80 times the maximum amount any Australian government had paid overseas in a single year.
Even more staggering was the commission: the government was to guarantee the intermediary a fee of $US100m – nearly $850m in today’s money – regardless of whether the loan was ultimately raised.
And most extraordinary of all was the intermediary himself. An undischarged bankrupt of Pakistani origin, Tirath Khemlani had been characterised by Sir Frederick Wheeler, the secretary of the Treasury, as a “carpetbagger”, which he soon proved to be.
But Whitlam, infuriated by Wheeler’s stubborn refusal to endorse the loan, had done everything he could to cut Treasury out of the process, despite the far-reaching implications of the proposed borrowings, which, at nearly 6 per cent of gross domestic product, would increase Australia’s international debt by a factor of four.
Instead, Whitlam intended to secretly give Connor control over the loan raising, bypassing processes in place since Federation. Later eulogised by Whitlam as a “heroic” champion who “pursued Australia’s goals with unswerving fortitude”, Connor wanted to bind Australia to the Arab states, as did Whitlam; the loan Khemlani had pledged to secure from those states’ petrodollars would represent a crucial step in distancing Australia from the US, which (according to Connor) wanted to “bring Australia to heel”.
As Whitlam expected, the meeting approved the loan in the early hours of December 14, with the documents being forwarded to the G-G later that morning. John Kerr signed them, as convention required; but it seems he did so only because he believed the states could and would pursue in the High Court the manifest inconsistency between the loan and the Australian Loan Council’s fundraising regulations.
In the event, the whole exercise collapsed as the government unravelled. But that wasn’t before several further rounds in which Whitlam, scrambling desperately for funds, actively misled his colleagues, including the treasurer, and kept parliament in the dark about commitments that would have crippled Australia’s fiscal position for decades.
Indeed, when the “loans affair” exploded in the press, Whitlam, instead of allowing the public to learn the facts, sought to prevent parliamentary committees from having access to even the most basic information on the arrangements his government had entered into.
To call that a scandalous attack on parliamentary oversight would be an understatement. Yet the Fraser government, on coming to office in December 1975 and discovering the almost bewildering extent of the transgressions, decided not to pursue the matter.
Having won the largest majority in Australian history, it could easily have moved a censure motion shaming Whitlam – who had become leader of the opposition – and condemning actions that were irresponsible at best and illegal at worst. It didn’t, for good reason. After all, the electorate – democracy’s jury – had just passed its stinging verdict: the demands of political accountability had been satisfied.
Additionally, censure motions had a bad name. Already in its 1951 McGrath decision, the US Supreme Court had warned that while congress had a right to discipline its members, “legislative acts, no matter what their form, that inflict punishment on named individuals without a judicial trial are bills of attainder”, which were historically repugnant to the English common law and specifically prohibited by the American constitution – and there was no doubt that humiliation was a form of punishment.
However, even long before that decision, both Edmund Burke in the House of Commons and James Madison in the US House of Representatives had stressed the risks of unfairness when parliamentary majorities used their dominance to denigrate individual opponents.
The intent of such motions, which lacked the procedural safeguards of an impeachment trial, was plainly to arouse public indignation; embodying an ugly, politically dangerous complicity between the government and the crowd, they were a species of officially sanctioned mob justice, which reduced the dignity of parliament and corroded the rule of law. They were therefore far removed from parliament’s duty, which was not to pursue vendettas but to channel political passion into productive purpose.
All that was once widely understood; it has, unfortunately, been entirely forgotten as shame punishments, inflicted by the internet’s lynch mobs, have infected our political culture.
The harm that caused was apparent last year when the Coalition – under intense pressure from the MeToo movement – supported Labor’s Senate motion censuring Bettina Arndt.
As for Labor, it has plainly relished the opportunity to strike a blow against Scott Morrison in the first censure motion to target a former prime minister.
Nor has Labor’s enthusiasm been dimmed by the fact that just as it was excoriating Morrison’s ministerial appointments, it was loudly celebrating the 50th anniversary of the election that brought Whitlam to office and opened the door to the trashing, on a still unparalleled scale, of every rule of fiscal integrity, ministerial responsibility and public accountability.
Yet Labor would do well to remember the biblical admonition: the sword of power “devours sometimes one way and sometimes another”. Now unsheathed, it is not only its immediate victims that it threatens to consume; it is what little remains of our political decency.
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As midnight approached on Friday, December 13, 1974, EG Whitlam QC, the 21st prime minister of Australia, convened a meeting of the Federal Executive Council that shredded both the appearance and the substance of legality.