Tag Archives: Robert Menzies

Issues that swung elections: the ‘credit squeeze’ that nearly swept Menzies from power in 1961



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Arthur Caldwell almost defeated Robert Menzies in the 1961 federal election, dominated by debate over the economy and unemployment.
National Archives, National Library of Australia, Wikimedia, CC BY

David Lee, UNSW

With taxes, health care and climate change emerging as key issues in the upcoming federal election, we’re running a series this week looking at the main issues that swung elections in the past, from agricultural workers’ wages to the Vietnam War. Read other stories in the series here.


In 1961, the Australian Labor Party came within a whisker of an unlikely victory.

At the time, the ALP was still recovering from a split with the Democratic Labor Party and was not viewed as a serious threat to the Liberal-Country Party Coalition. The DLP was a conservative, Catholic-based, anti-communist party that consistently gave its preferences to the Coalition over the ALP.

In the 1958 federal election, aided by DLP preferences, the government of Robert Menzies was returned to power in a major swing against the ALP. The Coalition gained 54% of the two-party preferred vote, with 77 seats in the House of Representatives to the ALP’s 45.

What nearly cost the Coalition the next election, though, was the Menzies government’s “credit squeeze”.




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The end of import restrictions and the credit squeeze

Despite its huge electoral advantages, the Menzies government began to encounter political problems in the early 1960s. From 1952 to 1960, the Menzies government had been forced to license imports because Australia’s rural exports did not earn enough to pay for its imports. An opportunity to abolish import licensing came at the end of the 1950s, when inflation started to rise.

Harold Holt, the then-treasurer, urged the government to end import licensing to boost imports and thereby dampen inflationary pressure. Sir John Crawford, the secretary of trade, disagreed. He feared a blow-out in the balance of payments, and urged caution and a gradual easing of import controls.




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Despite Crawford’s objections, the Cabinet preferred Holt’s plan and abolished import restrictions in February 1960. The result, as Crawford predicted, was a balance of payments crisis. In November 1960, Menzies took drastic action, sharply increasing sales taxes and imposing restrictions on credit to bring the economy back into balance.

The consequence of the “credit squeeze” was a minor recession. Unemployment, rose to 53,000 people at the end of 1960, and 115,000 at the end of 1961. The Menzies government’s longevity after 1949 had partly been due to its achievement of high levels of employment. Even moderate levels of unemployment posed a significant danger for a government that would have to face re-election in 1961.

But Menzies remained optimistic. He said:

I do not think we will be beaten. There are no circumstances which would suggest even a remote possibility of the opposition winning 17 seats.

The 1961 election

Gough Whitlam meets with Arthur Calwell.
L. J. Dwyer, National Library of Australia, nla.obj-142691238

The ALP, led by Arthur Calwell and Gough Whitlam, seized the opportunity given them by the Menzies government’s apparent mismanagement of the economy. Calwell, despite being a far less impressive television performer than Menzies, campaigned doggedly on the economy. Calwell also received support from the Sydney Morning Herald, whose owner, Sir Warwick Fairfax, had become disenchanted with Menzies.

Calwell promised that, if elected, the ALP would reduce unemployment through a series of selective import controls and expanded social services. Menzies lampooned Calwell’s ideas as pie-in-the-sky rhetoric, and broadened his attack to include the ALP’s alleged closeness to the Communist Party.

Queensland was the key state. The Coalition held 15 of the 18 Queensland seats in the House of Representatives, and the ALP needed to win a swag of them to have any chance of victory. But election observers predicted that the ALP would not pick up more than two or three in Queensland, and that the ALP’s overall gains would be limited to seven or nine seats.




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Following a frantic whistle-stop tour by Whitlam to north Queensland, the results of the December 9 election surprised everyone. For days, the election hung in the balance.

In the end, the ALP won a total of 15 seats, eight in Queensland. But the vote count finally tipped in Menzies’ favour when Billy Snedden was returned in Bruce and James Killen in Moreton, both supported by DLP preferences.

Menzies was so shell-shocked by the results that he did not congratulate Killen on his victory, forcing Killen to concoct a story that the prime minister had famously greeted him with the words:

Killen, you were magnificent.

Consequences of the election

In the long-term, Menzies and his colleagues were able to turn the near-defeat in 1961 into another decade of Coalition rule, aided by further electoral victories in 1963, 1966 and 1969.

When Labor was finally able to win office in 1972, it faced three years of unremitting hostility from the Senate, non-Labor states and an opposition that regarded an ALP government as so exceptional as to be illegitimate.

If Labor had won in 1961 and lasted until 1964, or perhaps longer, could this have had a longer-term impact on the country? Would Australia have entered the Vietnam War? Would conscription have been introduced? Would Australia have officially recognised the People’s Republic of China a decade earlier?

Menzies’ legacy also would have been cut short by what would undoubtedly have been considered one of the biggest election upsets in Australian history.The Conversation

David Lee, Associate Professor of History , UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Issues that swung elections: petrol shortages and the dawn of the Menzies era



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Paying for petrol in Brisbane in 1949 using what are likely petrol ration coupons.
State Library of Queensland

David Lee, UNSW

With taxes, health care and climate change emerging as key issues in the upcoming federal election, we’re running a series this week looking at the main issues that swung elections in the past, from agricultural workers’ wages to the Vietnam War. Read other stories in the series here.


In the 1949 federal election, a Liberal-Country Party Coalition led by Robert Menzies defeated the Australian Labor Party, ending Ben Chifley’s four years as prime minister. Menzies also dashed expectations that Labor had established itself as the “natural party of government” following decisive victories in 1943 and 1946.

Prior to the 1949 election, Labor had led Australia successfully through the second world war. The popular mood was solidly behind its agenda of full employment and social welfare.




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The Chifley government only began to encounter troubled waters in 1947. Its bid to nationalise the private trading banks swung popular opinion behind the Liberal Party. But after the High Court’s invalidation of bank nationalisation, the fortunes of the Labor Party revived. A Gallup poll in April 1949 showed a narrow lead for Labor and presaged a tight contest at the end of the year.

Historians have tended to attribute Menzies’ eventual victory to issues like bank nationalisation and the differences between the major parties over how to handle the Australian Communist Party. While these were undoubtedly factors in the election, the decisive issue was something else: petrol rationing.

Robert Menzies’ election policy speech in 1949.

Petrol rationing and the ‘sterling area’

In the 1940s, Australia was a loyal member of the British Commonwealth, as well as of a monetary and trading group known as the “sterling area”. Australia and other members of the group pooled their external reserves in London and rationed “hard currencies” like the American dollar. The sterling area was a system that helped British Commonwealth countries get through the second world war.

After the war, Australia continued to import most of its goods from Britain, with the exception of essential items such as petrol and news print. Petroleum, sourced overwhelmingly from US producers, could only be purchased with dollars. But Australians could not secure enough dollars to meet all their petrol needs. This meant that Canberra had to go to the British Treasury every year to ask for extra dollars – a situation that soon became unsustainable.

Britain was virtually bankrupted by the second world war. In an effort to avert a financial crisis, British leaders convened a meeting of Commonwealth finance ministers in July 1949 and asked the group to impose restrictions on dollar imports for the common good.




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To meet the British government’s request, Chifley had to overcome a major hurdle: the High Court’s invalidation of federal petrol rationing regulations. Menzies himself had introduced the rations as a wartime measure in 1940. But in June 1949, the High Court ruled that the rationing of petrol could no longer be justified in peacetime. To work around the court ruling, Chifley had to secure the agreement of the states. Once he did, petrol rationing was again in force across the country.

But by that time, Australians were hooked on petrol. In 1949, about one in every 10 Australians had a car in the garage. When rationing came back into effect, it sparked a national crisis. Motorists suddenly found it harder to fuel up than at any time during the war.

The 1949 election and its consequences

Following an electoral redistribution in 1948, the size of the House of Representatives had increased from 74 to 121 seats. A September 1949 Gallup poll estimated the Chifley government still had enough electoral fat to withstand a 3% swing against it in the enlarged House.

It was not enough. In the campaign speeches in November 1949, the Chifley government stood on its record. Menzies, meanwhile, pledged to do away with petrol rationing, in part by drawing on defence oil reserves held in Australia.

A Liberal Party campaign ad in the 1949 federal election campaign.

This bold, some might say reckless, move by Menzies was precipitated by Arthur Fadden, leader of the Country Party, who had earlier promised in his own campaign speech to eliminate petrol rationing. Fadden would later write:

I am inclined to think that petrol rationing was the rock on which the government finally foundered.

Opinion polls taken after the election confirmed Fadden’s assessment. The Coalition swung 6.61% of the popular vote to its side. Of the voters who switched allegiances, 60% said they considered petrol rationing when casting their votes. At the election on December 10, Menzies’ Coalition won 74 seats to the ALP’s 47 – a sizeable majority.




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After the Coalition victory, Menzies followed through on his campaign promise and brought an end to petrol rationing. And the economy began to look up. The Korean War ushered in a boom in the early 1950s. A massive increase in Australian wool exports, as well as other raw materials from British Commonwealth countries, helped bring about a revival in the fortunes of the sterling area.

So, the gamble by Menzies and Fadden on petrol rationing proved lucky. Far from confirming the ALP as the “natural party of government”, as would be the case in New South Wales from 1941 to 1965, the 1949 election actually began a period of more than two decades of Liberal-Country Party rule.The Conversation

David Lee, Associate Professor of History , UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.


Australian politics explainer: Robert Menzies and the birth of the Liberal-National coalition



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Robert Menzies knew the Liberal Party would never be able to govern in its own right.
Wikimedia Commons, CC BY-SA

Gregory Melleuish, University of Wollongong

The Conversation is running a series of explainers on key moments in Australian political history, looking at what happened, its impact then, and its relevance to politics today. The Conversation


It has become an established fact of Australian politics that when the non-Labor side of politics is in power, the government will be a coalition of the Liberal Party and the National Party. This has been the case for almost 100 years, since the formation of the Country Party in 1920.

Even on those occasions when the Liberals have won a House of Representatives majority in their own right, the Coalition has held.

What happened?

It is also true that when the then Nationalist Party and the then Country Party came together in coalition in 1922, the Country Party had much more clout than it has today. In the 1922 federal election, the Nationalists won 35% of the vote and 26 seats in a 75-seat House of Representatives. The Country Party won 12.5% of the vote and 14 seats, including seats in Tasmania.

The price Country Party leader Earle Page demanded for coalition was the political execution of Prime Minister Billy Hughes, and the treasurer’s job. He got both, creating the Bruce-Page government.

Former National Party leader Stanley Bruce, who became prime minister in 1923 in a Coalition government.
Government of Australia, CC BY

When Robert Menzies became leader of the United Australia Party in 1939 following the death of Joe Lyons, Page attempted the same trick again. He made a savage personal attack on Menzies and refused to serve under him – only this time the Country Party refused to follow suit, and replaced Page as leader.

The political reality was that to form an effective political relationship, any non-Labor prime minister needed to have a good working relationship with the Country Party. Menzies understood this.

When Menzies put together the bits and pieces of the non-Labor political forces following the collapse of the United Australia Party and formed the Liberal Party in 1944, he knew the Liberal Party would not be able to govern in its own right.

What was its impact?

At the 1949 election, which swept Menzies to power, the Liberal Party won 55 seats in a 121-seat House of Representatives. The Country Party won 19 seats.

Country Party leader Arthur Fadden became treasurer and remained so until 1958, when new leader John McEwen chose not to move to Treasury. McEwen’s influence in non-Labor governments, especially in relation to tariff matters, was considerable until his retirement in 1971. His antipathy to William McMahon effectively forced him out of the contest to elect a successor to Harold Holt in early 1968.

During this period, the Country Party could use its influence to shape Coalition policy. It did so because it had strong electoral support, which kept its numbers in the House of Representatives hovering around 20.

Liberals seemed to be quite happy to acquiesce in that influence, especially as Menzies and his immediate successors – with the possible exception of McMahon – were not opposed to government regulation of the economy.

Over time, Australia’s demography worked against the Country Party. The number of people living in urban areas has always been high in Australia, but the numbers have swung even more against rural areas. The size of the House of Representatives increased in the 1980s to 148 but the number of Country Party members remained static.

In 1982, it officially became National Party policy to indicate it was not merely a sectional party. This was followed in the 1980s by an attempt by Queensland Premier Joh Bjelke-Petersen to create an urban base for the Nationals in Brisbane. This had some initial success, but ultimately failed.

Joseph Lyons makes an election speech in Sydney in the 1930s.
State Library of NSW, CC BY

What are its contemporary implications?

The Nationals remain a country-based party in an Australia in which urban areas experience the greatest growth in population. Since the 2016 election, the Nationals have held 16 seats in a 150-seat House of Representatives.

What this means is that National Party policy will not disappear in the medium term, unless the party agrees to a union with the Liberals. The Liberals will have to take account of the wishes of the Nationals, up to a point.

However, it is clear that current Nationals leader Barnaby Joyce does not have the power to veto particular individuals from the leadership of the Liberal Party.

It is also clear that a Nationals leader will not be able to influence policy in the way McEwen did. Joyce may be a sort of agrarian populist, but times have changed – and the Liberal Party is no longer the party it was in the 1950s and 1960s.

It all comes down to numbers. The Nationals have relatively fewer seats in parliament than did the old Country Party 50 years ago. So, their capacity to influence what the government does has diminished.

Nevertheless, the Liberals need the Nationals if they are to form stable governments. They need each other. But, ultimately, the Liberal Party can only become the more powerful part of the relationship.

Gregory Melleuish, Professor, School of Humanities and Social Inquiry, University of Wollongong

This article was originally published on The Conversation. Read the original article.


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