Australian Biography

Jim Cairns - full interview transcript

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People said at the time that had you stood your ground over the question of the Melbourne seat you would have won on it, because you were in the right over it, and in the end you would have won on it. But in the end you compromised and you agreed to take defeat. Why was that? What was your reasoning?

Well, I suppose I don't like fights really. Maybe that's a weakness. I think it's a weakness. I think there are times when I haven't been able or willing to stand up, and I'd have been better if I'd been able to do that.

You've always been able and willing to stand up for principle but standing against a person is your problem.

Yes, that kind of thing I really mean. You see principles are not people. They're ... It doesn't seem to me that by standing for a principle you can ever hurt somebody. The principle is do better for somebody. Now if you're standing on these other things that I'm not able to do, or afraid to do, involves people as bleeding animals ... and I'd rather go away and leave it to them.

You'd built up a terrific relationship with the people who lived in the Yarra electorate and you know, it's very much on the record that you were an extraordinarily devoted local member, was that an issue for you, that you lived in that electorate and you were going to have to move to another one?

Oh yes, my word it was an issue. You see I hardly knew Lalor at all and I knew Richmond in particular, Collingwood and Abbotsford and Hawthorn a little less - because Hawthorn was a majority of Liberals in Hawthorn - but I knew a lot of them and lot of ... We reduced the Liberal vote in Hawthorn to the lowest ever there had been.

It was where you lived too, wasn't it?

Yes. The [Labour] vote around Scotch College was twelve per cent when I first went there, it was twenty-two per cent when I left. And it was a very strong reason for me not to want to go to Lalor. Lalor was foreign country and to do that I had to design a new way of being a member of parliament. I couldn't rely on my home as a centre, and I didn't want to have an office just to be available. So what I did was first got a huge truck - furniture van and had my name painted on the side of it, and steps to go up into the office at the back, and I used to drive around the electorate and be present for an hour in ten different places over the weekend and Monday - Friday afternoon, Saturday morning and Monday.

Was Lalor a very large electorate?

Yes, compared to Richmond. It extended from Hopper's Crossing to St Albans. [But] that van didn't work - didn't get many people coming inside it. They'd never been accustomed to going and seeing their member of parliament either. So I bought a Valiant station wagon - there's a photograph of that somewhere - with a banner on the top 'Jim Cairns, Member for Lalor' and I used to go to those places I've mentioned in that station wagon. Now I'd sit on the boot, on the running board - whatever it was, and talked to people who came along. But they were never accustomed really, to coming to say, 'Look, something's gone wrong with my pension'. 'Look I want to get me mum out from overseas'. 'Look, I've been evicted because I haven't paid my rent but I've been paying it regularly 'til now'. Those sorts of things used to come up in Richmond every day, but they didn't go to members of parliament for that. They never thought of it, in so many areas, going to a member of parliament for that. Mind you they did after a while. And I did much business in Lalor ... I had the best secretary I'd ever had. She'd been working at Mackay Harvester and there was a strike at Mackay Harvester and I went there to talk and she came to listen, and the secretary I had, had been Muriel Drakeford and another, who I've forgotten who, was no good, so I needed a new secretary. So I said to her one day, 'Would you like to come and work for me?' 'Oh too right', she said. So she was really good, she was a member for Lalor.

What were the concerns of the people of Lalor? What did they bring to you, what was happening in that electorate that you had to deal with?

They needed hospitals, they needed medical centres, they needed public buildings and I used lot of influence over that. We got a big medical centre at New Park in St Albans. We increased the size of the Footscray Hospital by a third. We put a new efficient town hall into Werribee. We spent a lot of public money in Lalor because it had been awfully neglected for so long, and Lalor got quite a little bit of character out of that nine years that I there. I've got my name on parks, I suppose in a dozen places around Lalor.

Did you move to live in the electorate?

Oh no. Gwen wouldn't move an inch to live in the electorate. So we still lived at 21 Wattle Road, Hawthorn and I used to drive over to Lalor. It was a bit of a problem, it meant again more time away from home.

Do you remember where you were and what it was like on the night that Labor finally gained power in 1972?

Yes. I was in the backyard of Phillip and Alice's house at 2 Vista Grove, Hawthorn, which backed on to the front garden of our house at 21 Wattle Road, Hawthorn. We had been doing our distribution of cards outside the polling booths and so on, and we'd got home from the meeting at the Hawthorn Town Hall, and it was a nice night, so we were sitting out and having a drink of beer and that was where finally I heard the result.

And how did you greet it?

Very quietly, as good luck. And then I didn't hear from Whitlam of course, for another three weeks after that, because you remember he and Barnard shared all the ministries between themselves until the Labor Party could meet early in the new year of 1973 and elect its cabinet. So until that election took place, he and Barnard shared all the ministries.

And when the meeting took place, what was in your mind, what did you want out of this new situation to further your objectives you'd brought into politics?

I had been shadow Minster for Overseas Trade and it was Overseas Trade that I was looking forward very much to having. I knew I would get it, no doubt about that. When we had the election for the cabinet I topped the list as I had done for several years before that. And of course I automatically was allocated by Whitlam to Overseas Trade as I expected, and as everybody else expected. But then, it wasn't my idea, I'm not sure where it came, but in addition to overseas, I became Minister for Overseas Trade and Secondary Industry. The logic of it was that they were related together. Overseas Trade meant imports and exports, and secondary industry means Australian industrial development in Australia and there was always a relationship between the two. The competition of imports against Australian manufacturing development, and the value of exports to Australian primary production, so there was a connection between those two and that was logical. So for a bit over two and a half years or so I was Minister for Overseas Trade and Secondary Industry. Now both of them satisfied me very much. I had a very, very good two years in those jobs. First of all I set out to reach trade agreements, and the first was to be China, the second was to be in the Middle East, the third was to be the Soviet Union, and the fourth was to be with South American countries. Not America or Canada or England. They weren't on the agenda because we had a lot of trade with them and the idea was to have agreements with countries in which we had very little trade but which we could build up a great deal more. The one with China was most satisfactory. In 1974 I announced that I was going to do that and I asked Australian leaders - business leaders - to come with me to China and twenty-seven of them did. The top Australian business men came with me to China. We had a wonderful session. There is a photograph there of me in the Great Hall of the People talking to all the Chinese Government and everybody else, except Zhou Enlai. He didn't turn up that day. But I had a three hour meeting with Zhou Enlai, with most of the business men sitting back here in the audience and Zhou Enlai sitting at a table up at the front. Well, he was the second most significant man in the Chinese Revolution. He was the heart of China, Zhou Enlai, more so than Mao Tse Tung really ever was, and he was a very easy man to talk to, his English was good. Now we were doing about 200 million dollars worth of trade with China before that visit, and it rose within a year to over a thousand million dollars. Trade with China was very significant. The Australian exports there went up very much.

Did your own political background, that is your sympathy with the Left of politics, help you in that personal relationship?

I don't know at all. It was never mentioned. The Chinese never said, 'You were once a communist'. Nor did ever the Vietnamese for that matter. I never ... None of them ever said anything like that to me or assumed it at all. I was given awards by the Vietnamese. There are some on the wall there. Letters of thanks and acknowledgement. There are some there from Zhou Enlai. No, they never even seemed to think that I was even to the Left. Now I'm sure that they knew that. They knew that I had been active, to use the term 'on the Left', and I'm sure it had an effect.

How did the business world greet the idea that you were going to be, in effect, their ministry as Minister for Secondary Industry in that period?

After six months they were very, very involved.

What about at the beginning? Did they expect to have difficulties with you?

I don't know. Never saw any sign of it at all.

So how did you get on together?

Well I formed committees with business men, who owned industry, for development of industry in Australia, and they arrived at a system of working out in what way they and the government could work together. My aim was not to withdraw the government and leave everything to the market. My aim was the opposite of that: to bring the government in by agreement, by discussion, by participation, but to maximise what the government could do. To work with them, even if they were capitalists.

And was this effective?

Yes, I think it was very effective. It was more effective in trade than secondary industry. One reason was the Department of Trade public servants were more flexible, were more capable. The secondary industry ones were a bit bureaucratic and not as flexible as the trade ones. The trade ones were great. I never had a difficulty with them at all.

There was a great deal of talk about the need for reform and it sort of continues in Australia's manufacturing industry. What did you ... How did you see that and what did you try to do about it?

Well, I wanted Australia to ... Australian manufacturing industry to be efficient and to know what technology was that they needed, to know where to get it from, and to help them pay for it if necessary. But above all, I wanted to see a high degree of participation by workers. Now we didn't succeed much in that. That was a disappointment to me. The trade unions and workers didn't seem to care much about participation. They wanted to get the best wage they could, and in effect not do much work, but not become involved in the running of the industry. They wanted the boss to do that.

Was this a surprise to you when you discovered that this was the attitude when you offered the opportunity?

Yes, it was a surprise and especially a disappointment, but it was a surprise. My impression of trade unions before that was that they were open to participation in the running of their workplaces, and I was quite disappointed that they weren't. Their leaders, people like Hawke in particular, weren't. Hawke was out to get higher wages and we had a burst of inflation in 1973, '74, which was significantly a result of Hawke-won wage increases for the unions.

What did you think worker participation would have done to improve things in that sector?

Well, I thought it would have increased the self-esteem of workers. I thought they would feel more important, more attached to what they were doing, more career-minded, more inclined to build facilities around their work places where they could play, where they could bring their families, where their children could be looked after properly if they were not able to be looked after at home. I wanted, in a sense, to combine the home and the work place. Not so easy in the case of big work places, but even there it would have been feasible. I wanted to see the metropolitan area made into a combination of work places, homes and gardens, not just streets and high level buildings and factories separated in one place and homes out in another. I'd like to see the whole geographical development radically changed. Not too late I think.

How do you think these sorts of social [and] cultural changes would effect economic outcomes?

There would be cost at first. It would be a cost factor. It would be resisted because of cost at first. Now when I talk about costs I'm talking about the key to the whole situation. It involves governments spending money. I have been saying all my life that the government has to spend money if you are to provide employment for everyone who wants it, that is full employment. The market never will do that. If the people are going to have things that the market now does not provide or adequately provide, it has to be provided by the government. Once upon a time we had no schools. We got a few schools in church backyards as a few churches established schools. We got a few secondary schools in the most wealthy suburbs of Sydney and Melbourne and Adelaide and Perth too, apparently. The famous schools in Melbourne Scotch College, Wesley, Melbourne Grammar - they were the secondary ones all provided along side churches, privately, for people who could afford to go, [for] people who wanted to have their children go to these distinguished schools. Now if we had to go beyond that and we did want to, we had to go where primary schools or state schools, as we call them, could be established and where high schools could be established. When I first started going to a high school in Melbourne I went to one of the three first high schools ever opened: Northcote, Melbourne and University High. There came in a year or two later Coburg High and Essendon High. Prior to that there were no secondary schools where any one could go. You couldn't go beyond the age of twelve, thirteen or fourteen, no matter how, unless you had plenty of money. Now if these better living conditions are going to be provided, they have to be provided by the government, and so on. Now where's the government going to get the money? First of all obviously by taxation. It can tax those who can well afford to pay taxation. And they pay a very small amount of it now. The average tax now, paid by people with a 100,000 a year or over, is about fifteen per cent and a good deal of that is hidden. It's less than that even. Where the average taxation paid by a person with 70,000 to 20,000 is roughly twenty-eight per cent - almost double that of the rich. And there are many rich companies that pay nothing. So taxation could be made more equitable. Taxation can be used to cut unjustified speculation. All this speculation that goes on in the stock exchange, in which the values of companies fall or rise twenty or thirty per cent in a couple of days ... Taxes ought to be imposed on share values, and where say they rise X amount in a week, fifty per cent of that ought to be taken in taxation. That would provide additional money for these purposes that I'm talking about. Now therefore the money problem can be solved but you need someone with strength to stand against the wealthy, because they'll use the media, they'll use everything else to fight you if you're going to tax.

As they did when the Whitlam government came to power.

Yes.

Now you, as someone with an economics background, although you weren't Treasurer - Frank Crean was Treasurer - you had a big influence on the economic stances that the Whitlam government took, didn't you? [Yes] And ... [Birds in background]

Now I want to give you the opportunity to really explain what was going on with that whole economic debate about inflation, employment and so on at that time because it is really hard to get a clear account of it from anyone. You were very much involved in influencing economic policy in the Whitlam government, even though at the beginning Frank Crean was Treasurer, but one of the huge criticisms of that period was that the policies that were adopted were inflationary and that this created the real problems of the time. Could you talk about that and about what the approach was to that, within the government?

I don't think any way of measuring inflation is adequate unless you also look at the other things that are happening at the same time. If you're going to cut inflation by three per cent by increasing unemployment by six per cent, it's not justified. What was argued at that time was to cut inflation by three per cent. It was obvious if that was done unemployment would have gone up by four, or five or six per cent. When inflation did ... was brought down, unemployment did go up by six per cent. Unemployment rose from six to nine or ten per cent. It's no good asking a government in a capitalist system to be able to do both: you do one or the other. And very few people are capable of recognising that. The inflation that occurred under the Whitlam government was the result of two things that the government was not responsible for. The first was a doubling and trebling of the price of oil because the price of oil went up in the Middle East. [It] went it up here by two or three times. The second was the increase in wages by six or seven per cent on the average, and that was because of a very positive wage bargaining policy of the ACTU led by Hawke. The ACTU never, at any other time, has been so irresponsible in pushing up wages as they were under Hawke.

It was said that part of his success was due to the general favourable climate that the Labor government gave to the unions.

The Labor government gave a very favourable climate to the unions. Clyde Cameron was Minister for Labor and he was very critical of the fat cats, of the public servants that were doing it, but he was critical of the trade unions. And so they had an almost open go. It wasn't public expenditure by the government that caused inflation. It was oil prices and wage increases under the Whitlam government that did so. Public expenditure remained fairly stable in the first twelve months. So much so that a good deal of our policy, about health and welfare and education, remains still on paper. And the kind of role in the government that I found myself occupying was telling caucus and the cabinet these things. So much so that they fell in behind. People like Hayden wanted money for health, people like Uren wanted money for regional development, Beazley for education, Jones for roads. So they wanted to get what they had been elected for, and what I was articulating and they were too, saying they should get, I provided, as it were, the economic theory for this. So at the end of 1974 our budget became in deficit to the extent of three billion: the biggest deficit in Australian valued history. And that notable journalist, Alan Reid, wrote a big story in The Bulletin saying it was all caused by me, or something like that, at least I'd taken control of the cabinet. It was only very partly true, and so 1974 ended not perfectly, but closer to Labor policy than it might otherwise have been.

And what did you feel would happen in relation to that deficit? What was the plan for it?

Not to be much influenced by it. That deficit was to be financed by the Reserve Bank. Now I want to tell you something about the Reserve Bank here. For the Labor Party and any government that is to perform the work that it has to do, the Reserve Bank has to be central in this. Until 1910 we had no people's bank, they were only private banks. If the government was to borrow money it could only borrow either from the people directly or from private banks. And it borrowed significantly from private banks, at private banks rates of interest, and continued to do so unless there was an actual emergency. The first national emergency that turned the government to the Commonwealth Bank was World War One, and about nearly three-fifths of the cost of World War One to Australia was financed by the Commonwealth Bank, at about two per cent of interest, two per cent. They were financed by the issue of treasury bills. The Treasurer issues a piece of paper called a treasury bill authorising the Commonwealth Bank to meet cheques issued by the government on the Commonwealth Bank. So we financed critically World War One by the issue of treasury bills through the Reserve Bank. Now the Commonwealth Bank was not used at all during the Depression, despite the fact that we had thirty-five per cent unemployed, poverty ... Labor, nor of course the other people, were capable of using the Commonwealth Bank. They didn't even try and so there was no significant borrowing to reduce the impact of Depression on Australia. So Depression continued through the first few years of the '30s, into the middle '30s, and it was only World War Two that ended the Depression in Australia. Now as soon as World War Two began, with Menzies as Prime Minister, they began to draw on the Reserve Bank - the Commonwealth Bank, as it was still called - by treasury bills, that meant at two or three per cent, to pay the soldiers, to buy arms and ammunition, to manufacture them, to build roads like those to Darwin, and so on. So that even more than two-fifths or three-fifths of the cost of World War Two was financed by the Commonwealth Bank, even more, and treasury bills went up as they had done after World War One. Now as soon as the war is over, the need is over, they begin to repay the treasury bills by debiting tax revenue, so much a year, so much a year, until they're paid off. Now government borrowing: if you look at the diagrams of government borrowing in respect to gross national product, they don't fluctuate much, because over a period of five years of not spending much publicly we can pay off what we have spent [previously] over three or four years, and so you even it off.

So was that your idea in the Whitlam government?

Yes. Central idea. [tape ends]

[end of tape]

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