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24 March 2015

A strong leader who set the scene for the major reforms of later years.

Malcolm Fraser will be remembered as the father of Multicultural Australia, for giving policy substance to the end of White Australia, and to aboriginal land rights, for his humane and effective handling of Vietnamese boat people and expanded immigration, for his stand against apartheid and for a host of other significant contributions to the development of our society and our national standing at a time of very significant economic and social transition.

A great Australian, who contributed greatly. Indeed, it could be said a surprising contribution for a shy farmer from Victoria’s Western District, for years an unnoticed backbencher with a mere third from Oxford.

So much is written and said these days about leadership and potential leaders, yet it is indisputable that you can’t judge just how well someone will lead, irrespective of their background and experience, until they are in the job. Malcolm exceeded all expectations, arriving in the most tumultuous and challenging constitutional circumstances, having to “settle down” our nation under the pressures of globalisation, in the aftermath of our most ill-considered war.

These were days when government relied much more on “captain’s calls”, than to serve as slaves to exhaustive polling. For example, as Malcolm pointed out subsequently, if he had pre-polled his response to Vietnamese boat people, he probably would have found some 80 to 90 per cent opposed, yet, in time, with vigorous explanation, the electorate was convinced otherwise.

The electorate perceived and recognised his strength, voting for him overwhelmingly in 1975, and again in 1977, the latter an early election called, as he told me, to confirm support for him and his government in his own right, as he never really felt “legitimate” with the win in 1975. However, he only scraped back in 1980, on the back of a scare campaign over Labor’s possible capital gains tax on housing, as the electorate started to doubt his capacity for reform.

Indeed, he has been widely criticised for failing to grasp the reform nettle, especially having enjoyed control of both houses for some five of his 7½ years.

However, it is not widely acknowledged what he did actually achieve in laying much of the groundwork for the economic reforms for which Bob Hawke and Paul Keating were subsequently applauded. I do this having played various roles in the offices of the two Treasurers of his government, working intricately with him and his office, sitting through most meetings of cabinet’s economic and budget committees, and so on.

Informed policy 

When Fraser took over, not only did he have to deal with the fiscal profligacy, wage and other excesses of the Whitlam government, but Australia was in transition from a very insular and isolated, over-regulated, and inward-looking economy to find its place in the globalising world economy.

His first great success was to open up the sources of advice. Initially, Treasury was the sole source of advice, claiming to speak on behalf of the RBA and others. Cabinet was generally presented with two options, the one Treasury wanted, and the other you’d almost be insane to contemplate. Also, quite often, there would have been an “inspired” editorial in The Australian Financial Review, on the day of the crucial cabinet meeting, seeking to drive the government towards the Treasury option.

Fraser simply turned to the Reserve Bank governor at one meeting asking him whether he agreed with the Treasury. The differences were soon evident. PM&C, office advisers and others were similarly encouraged. The result was a much-better-informed cabinet, working with a spectrum of policy options.

Most key economic decisions were taken in the monetary policy committee, consisting of seven members, four farmers, the remaining three including the Treasurer and the finance minister. To say these latter two were often irrelevant would perhaps be too harsh, but farmers found it hard to consider higher interest rates, or a higher dollar, or cuts to farm assistance, tax concessions, etc.

They also found it hard to give up control of interest rates, banks and our dollar, but one of Fraser’s greatest successes was that we could convince him of the merits of the Campbell inquiry, as a driver of financial deregulation, also against the reservations of the Treasury, the RBA, and a host of vested interests.

The “snowball” launched by this inquiry, and Fraser’s subsequent cabinet responses, made it inevitable the financial system would be deregulated, interest rates would be market determined, our dollar would be floated, foreign banks would be licensed, and we would see an independent Reserve Bank.

Financial deregulation also ensured more broad-based reform of centralised wage determination, tariff protection and micro-reform.

An Australian first 

However, not all opportunities were seized so effectively. I can recall the enthusiasm with which bureaucratic and ministerial advisers rushed a substantial package of reform measures into the early cabinets of ’78, following his clear electoral legitimacy of ’77, including, I might add significant tax reform with a GST, only to see them thrown out even quicker, for fear of their “unsettling” nature, and imagined “inflationary consequences”.

Fraser also struggled to address budget realities, having felt they had burned so much political capital with Lynch’s initial Razor Gang – lessons for Abbott today?

As tough and difficult as Malcolm could be to work for and with, he was a truly great Australian, and, for me, an honour to have played a small part in his government.

Malcolm should be remembered for his passion, compassion, humanity and strong leadership.  In recent years, he was often criticised by Liberals for daring to criticise subsequent Liberal leaders and the party. As Liberals, we should be proud Malcolm was an Australian first and a Liberal second.

Present day Liberals have much to learn from his contributions and example.

This piece was first published by the Australian Financial Review.

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