Move in New York to stop sand-mining ban

A US businessman threatened to make life "very uncomfortable" for the government of Malcolm Fraser in 1976 if it went ahead with a ban on sand mining on Queensland's Fraser Island.

A US businessman threatened to make life "very uncomfortable" for the government of Malcolm Fraser in 1976 if it went ahead with a ban on sand mining on Queensland's Fraser Island.

Mr Fraser told The Australian the threat was made to him during a lunch in New York attended by chief executives whose companies had business interests in Australia.

He said he was not swayed by the attempted intimidation. "I just made it plain we were not going to budge. We had made a decision, and that was it as far as I was concerned."

Mr Fraser said he suspected Treasury had briefed the company concerned, which he would not name. The department had been strongly opposed to the decision. "They were very outspoken, as though they were speaking about something in their domain," he said.

Mr Fraser's comments were part of trenchant criticism he made of Treasury, accusing it of disloyalty and briefing the media on economic policy contrary to government decisions.

The Fraser government decided in November 1976 to use its export control powers to stop issuing permits from December 31 for mineral sands from Fraser Island. The decision helped establish the new government's environmental credentials, with Fraser Island becoming the first place to be listed on the Australian Heritage Commission's register of the national estate.

But it outraged the Queensland government led by Joh Bjelke-Petersen and sand-mining companies Queensland Titanium Mines and DM Minerals, which were largely US-owned.

The Fraser government faced accusations, including from its own Department of National Resources, that the decision would damage Australia's reputation as a reliable country for investment and trade.

Mr Fraser's biographer, Philip Ayres, wrote in 1987 that DM Minerals estimated the decision had cost it $US25 million, but the government offered the company only $4million for profits forgone for 1977.

Mr Ayres said the company had unsuccessfully tried to retaliate by complaining to the US government about its treatment.

In the interview, Mr Fraser accused the Treasury of failing to support government decisions.

"Some people in Treasury held views so strongly they felt they had a right to disobey government policy," he said. "If a senior public servant believes his view has a right to prevail over the government, then even if the government is wrong, that senior public servant should not be in the public service - he should be in parliament."

Mr Fraser said he did not have any particular person in mind in making the accusation.

His acrimonious falling-out with Treasury - often seen as the most powerful government department - resulted in his moving to reduce its influence by splitting it up and creating a new finance department.

The irony is that it was leaks from Treasury that helped the Coalition in opposition to put pressure on the Whitlam government over the overseas loans affair. This triggered Mr Fraser's decision to block the 1975 budget in the Senate, and culminated in the sacking of the Whitlam government by then governor-general John Kerr.