This article from the December 2012 edition of the IPA Review is by Research Fellow at the IPA, Richard Allsop.
The publication of this new biography of legendary antitariff campaigner, Bert Kelly, is particularly timely. For it was fifty years ago, in late 1962, that the Australian policy of ‘protection all round’, sometimes dubbed McEwenism, arguably reached its peak and Bert Kelly entered the frontline of its opponents.
That Australia was to be a protectionist country had been established in the first decade of Federation. By the 1920s, Australia had established one of the highest levels of protection in the industrialised world. It maintained, and indeed increased, this status for the next few decades. An addition to the regime in the 1940s and 1950s was the imposition of quantitative restrictions on a wide variety of imports. In February 1960, the Menzies Government decided to remove these restrictions, but this measure just prompted Country Party leader and trade minister, John McEwen, to introduce other drastic measures to increase protection.
One obstacle in the path of McEwen achieving his aims was that the tariff board under its chairman, Sir Leslie Melville insisted on carefully evaluating in a transparent manner each proposal for protection that came before it. Thus McEwen sought a way to circumvent the board, coming up with the idea of a special adviser who could deal with ‘urgent’ matters.
The 1961 credit squeeze assisted McEwen’s argument that quick decisions were required. Firstly, it enabled him to point to businesses in distress and allegedly needing more protection, but more importantly the credit squeeze was a key factor in the Coalition only winning the 1961 Federal Election by a single seat. Menzies needed the Country Party more than ever and thus, for the next two years, McEwen was at the height of his powers.
One of the first manifestations of his enhanced position was that McEwen got approval for the special adviser. His choice was Sir Frank Meere whose mantra for manufacturers was ‘you make it and I’ll protect it’.
Colebatch relates an example of how the new 1962 regime worked in practice. The board recommended that Polyvinyl Chloride (PVC), the only Australian manufacturer of which was ICI, be made subject to a 40 per cent duty. The government got the special adviser to second-guess this result and he recommended the tariff be almost doubled and, as Colebatch describes, ‘a disguised tax was being levied in order to benefit a single wealthy company in a secretive and arbitrary manner’. When the manufacturers who then used PVC to make their products complained that their costs had gone up the solution was simple— increase their protection too!
Faced with this undermining of his authority it was no surprise when on 7 November, 1962 the resignation of Tariff Board head, Sir Leslie Melville became public. In question time, Kelly asked McEwen about the resignation and caused McEwen some angst. Protection would not increase unchallenged.
1962 was not the start of Kelly’s involvement in trade issues. In fact, he had been talking about tariffs since his maiden speech in early 1959. The speech is reproduced in one of the book’s several appendices and, in one of the most quotable passages he stated that ‘the free flow of world trade is the best hope we have of raising the standard of living all over the world’.
Kelly had been elected to the parliament as the Member for Wakefield in rural South Australia in 1958. This seat seemed to bring forth better than average parliamentarians as in the 1930s it had been represented by Charles Hawker, one of the rare breed of free traders in the Federal Parliament in the six decades after 1910. Hawker’s support for sound economics was just one element of a heroic, but ultimately tragic, life which ended with the crash of the aircraft Kyeema into Mt Dandenong in 1938. The chapter which Hal Colebatch devotes to Hawker’s legacy adds to the work he has already done with the biography of his father, Steadfast Knight: A life of Sir Hal Colebatch, which detailed the contribution of another of those free traders who filled the chasm between the eclipse of the Free Trade Party in the first decade after Federation and the rise of the Dries in the late 1970s.
As well as the Hawker legacy, Kelly was influenced by his father, Stan, who had been a part-time commissioner of the tariff board from 1929 to 1940. Stan’s opposition to high tariffs clearly rubbed off on Bert and the son’s regard for the father is reflected in the fact that in 1979 he established a memorial lecture named in his honour. However, one of the rare bits of personal insight in this otherwise career-focused work, is in the revelation that Stan never got on well with Bert’s wife Lorna and that during the war, when Bert went away to join the RAAF, Stan refused to allow Lorna and her children to stay in his home.
Colebatch only lightly sketches Kelly’s life in the 46 years before entering parliament, but it is clear he was a very successful farmer. His abilities were recognised when he was awarded one of the first two Nuffield Farming Scholarships which entitled him to seven months in Britain. Perhaps more significant for his future career was the fact that, on his return, he delivered over fifty speeches on what he had seen and learnt about British farming methods. This, allied with the ‘Dave’s Diary’ column which he contributed to the Adelaide Stock Journal, indicated that his horizons were beginning to extend beyond the farm gate.
Kelly did not have his heart set on a political career. However, urged on by his father’s keenness for someone to become a parliamentary advocate for lowering tariffs, and by ‘Hawker’s ghost’, he felt that in good conscience he should stand for pre-selection when the incumbent retired.
Kelly’s subsequent career provides a lesson for any careerist politician with an interest in his or her place in history. In a 19-year parliamentary career, which saw his government in power for 16 of them, Kelly was only a minister for three years. He became a minister in 1966, initially in Works and then in Navy, the latter clearly a significant portfolio as the Vietnam War raged. He became embroiled in controversy when the HMAS Melbourne collided with the US Destroyer Frank E. Evans in Subic Bay in July 1969, resulting in the deaths of 74 US sailors. Without waiting for the results of an inquiry, Kelly immediately expressed confidence that the Melbourne would ‘come out with a clean sheet’ and while this was not given as the reason for his subsequent demotion, suspicion lingered. Further notional ‘failure’ came in 1977 when he was defeated at a pre-selection by a colleague whose adjoining seat had been abolished.
Yet, far from a failure, there is a strong argument to say that Kelly was one of the most influential Australian politicians of the 20th century, and the only thing that arguably interrupted that influence was his time as a minister. Colebatch recognises that making Kelly a minister could have been a way of shutting him up, but also believes that the fact he had been a minister gave a bit more stature and gravitas to his public comments. The point which Colebatch emphasises is just how well-prepared Kelly was to mount his arguments—he read all the tariff board reports; his opponents rarely did.
Once relieved of the burden of ministerial office Kelly was able to focus on writing the ‘Modest Member’ column for the Financial Review, a column which he continued post-Parliament just changing the title to the ‘Modest Farmer’. The column featured not just the Modest Member himself, but his fictional wife Mavis, farmerneighbour Fred and the economist Eccles. The column continued in various publications until 1987.
The focus of this biography is Kelly’s war against protectionism, but readers occasionally get insights on some of his other views. As a farmer, Kelly was particularly sensitive to just how little of the mass of Australia was actually suitable for farming and he did not approve of subsidised immigration that provided a workforce for the protected motor vehicle industry which in turn led to the building of housing for these double-subsidised workers on prime farming land on the urban fringe.
Trade policy may have been in a worse state then in the 1960s than it is today, but on the other hand there is an argument that parliamentary democracy was healthier. Kelly regularly posed difficult questionswithout-notice to his ministers on his own side of the House. While Colebatch explains that there is evidence that in the post-Melville resignation controversy Menzies was annoyed that Kelly had not flagged his intention to raise the issue with him first, at other times he was happy to give him a reasonably free rein.
One interesting anecdote the book describes is Kelly taking Whitlam to task in the early days of the latter’s government for having made an announcement at a press conference rather than in the House. Whitlam accepted Kelly’s criticism with good grace.
Of course, when it comes to cutting tariffs in Australia perhaps the most drastic was the Whitlam government’s 25 per cent cut in 1973. The book notes that some have suggested that the unilateral cut actually set back the cause of tariff reform. This is perhaps true, but only because the Opposition opportunistically campaigned against it.
Of course, no party had a monopoly of the moral high ground on the issue of tariffs and Colebatch explains how many MPs and some business people were a bit duplicitous, mouthing support to Kelly in private, but publicly opposing him. In his early days in parliament, Kelly had few supporters on his side of the House, one of the first consistent ones being Dr Jim Forbes. On the Labor side, one of the first to question protection was Bill Hayden who, in 1967, said that ‘super-high protection safeguards inefficiency … [and] guarantees sloppy, costly production methods’.
Of course, given that its base was exporting farmers, the Country Party should have been the most sympathetic to free trade. Obviously, McEwen is the anti-hero of the book, yet it is worth noting that McEwen’s own biographer, Peter Golding argued in his 1996 work that while McEwen could be a great hater, opposing him on a policy matter was not sufficient to earn his ire, specifically commenting that he ‘quite liked’ Kelly, despite the fact that Kelly ‘was a constant irritant in parliament and party room’. Yet Colebatch describes how, particularly when first challenged by Kelly, McEwen responded with ‘black fury’, pointing to the ‘venom of his tone’ when answering a Kelly question.
It says something of the change in attitudes on the tariffs issue, between the time of McEwen’s departure from politics in 1971 and Kelly’s death in 1997 that one of the more effusive parliamentary condolence motions about Kelly came from McEwen’s successor as National Party leader, Tim Fischer.
An important share of the credit for this change in attitudes lies with the Dries who followed Kelly into parliament, in particular John Hyde, who was a colleague for the final three years of Kelly’s career. However, it is also important to recognise that the battle of ideas is one that has to be fought in a variety of forums, not just parliament. Another significant development also took place early in Kelly’s parliamentary career when journalists, headed by Maxwell Newton and Alan Wood, took up the cudgels in opposition to protection. Similarly, Treasury, as well as the tariff board, provided strong contrary advice to the virulently protectionist Department of Trade.
While we still have protection in Australia, the fifty years since 1962 have certainly been better for the cause of freer trade in Australia than the half century which preceded it.
This biography reminds us of just how courageous and conscientious Bert Kelly was in fighting the just fight against tariffs when that fight was at its toughest.