In 1972, Gough Whitlam was elected Prime Minister of Australia on the slogan “It’s time,” backed by an advertising jingle and countless celebrities. His government expanded the size of the Commonwealth government by around a third to 23.5 percent of GDP, abolished university fees, established Medibank (now called Medicare), re-established relationships with China (while cutting them with Taiwan), cut tariffs by 25 percent, revalued the dollar, and established an Aboriginal Land Fund. However, Whitlam’s biggest challenges were economic—the OPEC Oil Shock, persistently high inflation, and a recession; and personnel—a series of scandals caused by incompetent ministers. His government was eventually ejected from office with a record loss in 1975 after having been sacked by the governor-general.
Fast forward to 2022, the Golden Jubilee of the election of Gough Whitlam’s government, and the inaugural year of Anthony Albanese’s. Whitlam and Albanese face similar economic challenges and have some strikingly similar solutions, leading some to expect Albanese will emulate him and crash and burn within three years.
Fossil fuel prices are, in some cases, such as thermal coal and natural gas, at record highs, and in the case of oil, at a price substantially above the average of the last 10 years. Additionally, the government’s net-zero policy by 2050 is set to dramatically increase power prices as cheap-at-the-margin-and-expensive-in-the-network unreliables, like wind and solar, are added to the system. At the same time, the previous Morrison government substantially boosted the size of government with spending increasing from 27.7 percent of GDP in 2020 to 34.8 percent in 2021, and money supply over the course of the pandemic rose between 30 and 50 percent.
The Australian Council of Trade Unions has made the bizarre claim that company profits cause inflation, and the only way to beat it is to increase wages. With a new government, the Fair Work Commission seems to agree. Legislation introduced in the last sitting of parliament now makes pattern bargaining legal again (first time since 2005), and the government has also signalled it will try to eliminate “insecure” work, which looks like a direct attack on contractors and the gig economy. This has the potential to lead to wage rises on the back of decreased flexibility and decreased productivity.
All the conditions for stagflation—rapidly increasing government expenditure, skyrocketing energy prices, an inflexible economy, and low productivity growth—are in place as they were for Whitlam, coupled with similarly ambitious social policies. There are also echoes of Whitlam in The Voice referendum, which owes its provenance to his Aboriginal Land Fund.
However, some differences suggest Albanese could be more radical than Whitlam, yet more long-lived. The electorate was ready for a change after 23 years of the coalition government, but not too much. The culture that is pumped out through educational institutions and the media is more radical and left-wing than it ever has been, and Albanese has a cadre of ministers blooded during the Rudd-Gillard-Rudd years. He also has the support of Greens and Independents in the Senate, and the Opposition has been significantly degraded as a result of the Teals and Greens eating into heartland metropolitan seats. Furthermore, Australia is now facing external threats, which tend to encourage citizens to rally around the government.
The final arbiter of Whitlam’s success was a recession, and it may also be the executioner of the Albanese government. It’s always better to win an election than to lose it, but some victories have harder landings than others: 1972 was not a good year to win government, and 2022 was the most challenging in the 50 years since.