Prepare for war but use our economic power to avoid it

Robert Menzies pictured with children in 1958.

In history, context is almost everything. A single event without context can be rendered meaningless.

One of the iconic photographs of Robert Menzies is of him walking through a crowd of angry protesters in Wollongong in January 1939 during the Dalfram dispute. While accompanied by policemen, he is right in the thick of an unfriendly crowd. They hold placards, protesting against his deci­sion to allow the export of pig iron to Japan, Australia’s putative enemy in the upcoming Pacific War. Menzies earned the moniker “Pig Iron Bob” from the incident, and his opponents still use it to show their disapproval of him.

Defence Industry Minister Pat Conroy rolled out the anti-Menzies tropes, Pig Iron Bob included, at last month’s ALP national conference to convince the left-wing factions and unions of the need to support AUKUS and the inclusion of nuclear submarines in the Australian fleet.

It’s hypothetical, but it’s highly likely Menzies would have been a strong supporter of AUKUS as a natural evolution of ANZUS, which was signed by his government on September 1, 1951. As a supporter of the development of nuclear technology in Australia in the 1940s and ’50s, including hosting tests for the British nuclear program, he likely would have agreed to nuclear-powered submarines as part of the Australian fleet. But what Menzies certainly would have opposed was allowing unions to dictate the terms of Australia’s foreign and trade policy.

The irony would not be lost on Menzies that Labor ministers are now using his name to push back against union interference in Australian foreign policy.

The Waterside Workers Federation-led protest against selling pig iron to Japan in the late 1930s was explicitly political. WWF branch secretary Tom Roach argued “success to the Japanese fascist militarists in China will, according to their own statements, inspire them to further attacks on peaceful people, which will include Australia”. At the time, the Lyons government in which Menzies served as attorney-general and industry minister had banned the export of iron ore to Japan but continued to permit the export of pig iron.

While the government may have considered a wholesale ban, it was not prepared to do so unilaterally for fear of provoking Japanese aggression against Australia. Menzies said of such a move: “Is it seriously thought to be either prudent or desirable that of the 50-odd nations in the League of Nations, Australia should be the only one to adopt such a course? And if this course is to be pursued in relation to pig iron, which may provide materials for munitions, must it not also be applied to wheat and wool, seeing that food and clothing are as essential … in military operations as guns and ammunitions?”

The Lyons government refused to yield to union pressure to change Australia’s foreign policy, despite the WWF’s strike action gaining much public support. Menzies explained “the issue at stake is not whether the waterside workers are right or wrong in their view on what the international policy of Australia should be” but whether that policy should be decided by the “duly constituted government of the country or by some industrial section”.

What is a pressing question for Australia and our allies today is how we use our economic power and trade relationships to uphold our national interest. The US, once the leading advocate for free trade, is veering towards protectionism. The CHIPS Act and Inflation Reduction Act are designed to reshore manufacturing and move the US away from reliance on hostile powers. This may work for the US, with a population of more than 330 million but, for Australia, abandoning free trade is risky.

China is Australia’s largest two-way trading partner and accounts for almost a third of our global trade. We must scrutinise carefully calls to decouple from China and onshore manufacturing to Australia. Unilateral action will cost us dearly. At the same time, we must consider the possibility of supply lines being cut during a regional conflict and our potential exposure to fuel shortages when we lack a domestic refining industry.

But reshoring manufacture in a high-cost country such as Australia will make things more expensive (particularly as federal and state governments pursue policies that increase labour costs and shut down reliable baseload power).

Building a network of trusted trading partners might work, but we need to think through the impact of who is in and who is out. The message such actions send to China will be provocative and potentially alienate Australia from those countries less convinced of the need to choose a side. The government’s upcoming Southeast Asia Economy Strategy to 2040 must consider how Australia can persuade our neighbours of the wisdom of Australia’s approach to geoeconomics in a precarious strategic environment.

The lesson from World War II is to prepare while we have time to do so and deter conflict. Joe Lyons as prime minister in the lead-up to the war knew this, initiating five rearmament programs, while successor Menzies accelerated it, building up an army of 130,000 soldiers, equipping Australia to produce thousands of arms and munitions locally and establishing local production of aircraft and warships. Avoiding a major regional conflict should be a priority of every leader, whatever their political stripes. It isn’t appeasement, it’s humane, sensible and right.

Georgina Downer is chief executive of the Robert Menzies Institute.