The Lasting Impact of 1975’s Loans Affair

‘God Save the Queen, Because Nothing Will Save the Governor-General’

The 11th November is known to most as a day of remembrance for those that died in WW1 and for the innumerable conflicts that followed; poppies are worn, wreaths are lain, the eery notes of the Last Post can be heard. However, for Australia, 11th November is also remembered for another monumental event that happened fifty years ago.

Let’s set the scene. It’s November 1975, Mamma Mia by ABBA is the Number 1 single, Angelina Jolie is 5 months old, and the Australian government is in trouble. In December 1972, the Australian Labor Party (or ALP) had won the election after 23 years of coalition governments (a mainstay since the adoption of proportional representation in 1948), with Gough Whitlam as Prime Minister. Subsequently, large-scale reforms were made in the years leading up to our story, including national healthcare and ending Australian involvement in the Vietnam War. On the flip side, the economy was struggling.

Following years of sub-2% unemployment and post-war economic growth, the energy crisis of 1973 hit Australia harder than a 9am lecture after a Wednesday sports social. By our month of November in 1975, unemployment had more than doubled to 5.4%. Differences between the Senate (controlled by the Coalition) and the House of Representatives (controlled by the PM’s ALP) were exacerbated as departing Senators were replaced with non-ALP politicians. This led to many proposals from Whitlam’s government being rejected by the Senate, causing standstills.

In March 1975, Malcolm Fraser replaced Billy Snedden as leader of the Liberal Party despite the upcoming election, and in the June, the ALP lost a seat in a by-election for Northern Tasmania despite being a historic Labor seat. Additionally, scandal arose in the same month after Treasurer Jim Cairns was discovered to be having an affair with his private secretary, Junie Morosi, leading to Cairns’ demotion (a clear demonstration of what happens to FREPs that shark on freshers). The ALP was now distinctly unstable leading into the summer of 1975.

However, the main trouble reared its head when it was discovered that some government ministers –  including the now disgraced Cairns as Treasurer and Rex Connor as Energy and Minerals Minister  – had been attempting to facilitate a $4 billion loan from Pakistani businessman Tirath Khemlani. Despite the backlash in Australia due to the loan’s size and bypassing of the Loan’s Council, negotiations continued for several months. Both Cairns and Connors initially denied involvement, but following Khemlani’s testimonial these claims quickly unravelled. On 14th October, Connor resigned. Following calls by the Liberals for an election were ignored, so the Senate blocked ALP bills, cutting off funding to the government in an effort to force the government’s hand. Australia was in gridlock.

Then, on 11th November, Sir John Kerr, governor-general of Australia, dismissed Whitlam and installed Liberal leader Fraser as Prime Minister. Speaking on the steps of the House of Representatives, Whitlam spoke the immortal lines: ‘Well, may we say save God save the Queen, because nothing will save the Governor-General’. Better words have quite simply never been spoken at Durham Union.

The position of governor-general is an odd one; they are the representative of the Crown in some of Britain’s former colonies (notably Australia, New Zealand, and Canada), and while the role does technically wield power, it was not often used after the shift from Empire to Commonwealth during the early 20th century. Hence, this move by Kerr was seen as an attack on Australia’s democracy, even by those opposed to Whitlam’s government. The position of governor-general was unelected, so Kerr’s actions caused many Australians to question why they were, in theory, still subject to the whims of a monarch who was not from and did not live in Australia. To them, it undermined the principles of Australia’s Commonwealth relationship with the United Kingdom, which was built on the idea that Commonwealth members were equals to the UK, and not beneath it like in the days of Empire.

Therefore, it may be a shock to some that Australia’s governor-general still holds these executive powers today. When there are debates over Australia becoming a republic, the actions of Kerr in 1975 invariably come back up faster than cheesy chips after your third Jagerbomb. After all, if the Governor-General interfered in the past, what is stopping them from doing it again? Despite this, Australia does not seem to be in any sort of mood to become a republic: plans following the late Queen Elizabeth II’s death for a referendum have been put on hold and Australians themselves appear to be somewhat apathetic to whether the monarchy exists or not.

This all brings to question about whether the event means anything today if Australia’s governmental structure is essentially unchanged. However, I believe it is significant because while the event may have not caused much official change in Australia’s governmental structure, it can be argued that it caused enough shock to be the final nail in the coffin for the British monarch having any meaningful representation in Australian government. Following Kerr’s resignation in 1977, no other Governor-General has acted in the same way, fully cementing the role as truly ceremonial in practice.