The Money Men Chris Bowen (the red fox clan .txt) 📖

at the ALP National Conference in the NSW town of Terrigal in February 1975, the interview in which Cairns’ professed a ‘kind of love’ for Morosi—the headlines arising from this were, inevitably, explosive. This comment was typical of Cairns and Morosi’s lack of concern for the political implications of their behaviour. The pair also cooperated with a Channel Nine current affairs program in which Morosi professed her love for Cairns.

The journalist Paul Ormonde captures Whitlam’s displeasure at the situation. He writes that Whitlam, happy after the success of the conference, was sitting with a number of journalists by the pool of the Terrigal resort at which the conference had been held. When someone produced that day’s Sydney Sun with the infamous headline ‘My Love for Junie’ on it, ‘his face clouded and he turned away. The chill killed the conversation as black frost kills grass.’30

Whitlam’s frustration at the political distraction being created by Cairns and Morosi as he attempted to engineer a political recovery of the government’s fortunes is understandable. There is no doubt that Cairns showed poor judgement in the matter, and his handling of the media coverage of the issue was naive at best. Morosi was unqualified and too inexperienced for such a senior appointment. She also annoyed Cairns’ parliamentary colleagues because of her unusual prominence and influence—she attended meetings of the parliamentary Left faction and kept a strong grip on Cairns’ diary, deciding which MPs were granted meetings. However, Cairns was not the first senior minister to make a less-than-ideal appointment to his ministerial office, and he was certainly not the last. Much of the media coverage was unfair and disproportionate.

The Loans Affair

Cairns had a tangential involvement in the Loans Affair, which engulfed the Whitlam government and was a key factor in its downfall. He was not a central player in the key decisions, and he let minerals and energy minister Rex Connor have carriage of the issue. And herein lies Cairns’ culpability. Although Cairns was eventually forced to resign over misleading the House of Representatives, his error was, in my view, more fundamental than this. A treasurer must be the custodian of the economic integrity of the government. Ministers, and indeed prime ministers, will have grand plans and dreams. Some will be worthy; others will not. But the treasurer must ensure that full economic rigour is applied to all decisions. That Cairns did not do this in relation to the Loans Affair means he deserves the lion’s share of the blame for the imbroglio.

In the 1972 federal election, Whitlam had talked in vague terms of ‘buying back Australia’. This was not a new concept, as former Country Party deputy prime minister Jack McEwen had for years talked of ‘buying back the farm’.31 Connor did not need a detailed manifesto, however, in order to justify his plans for massive government investment in uranium mines, a petrochemical plant, gas pipelines and oil enterprises.

Cairns first heard of efforts to finance this investment in resources through borrowing in October 1974 when, as acting prime minister, he chaired a meeting between Connor, Labor minister Clyde Cameron and an Adelaide businessman by the name of Jerry Karidas. At the meeting, which had been convened at Cameron’s request, Karidas told the senior ministers that he could arrange an introduction to intermediaries in the Middle East who had access to some of the vast financial reserves that petroleum-producing countries had amassed over recent years due to the explosion in oil prices. Cairns was sceptical of the claim that the money could be accessed at favourable interest rates, but he did nothing to stop the venture, nor did he inform or seek the advice of the Treasury. Karidas would go on to introduce Connor to a Pakistani national called Tirath Khemlani. Khemlani could charitably be described as an unorthodox businessman; he could more accurately be described as a con man.

In December 1974, Cairns visited The Lodge to attend a meeting of the federal executive of the ALP. He describes the scene in his 1976 book Oil in Troubled Waters:

During the course of that [federal executive] meeting I learned that another meeting was taking place in the dining room and, after inviting myself in, I found that the Prime Minister, the Attorney-General and the Minister for Minerals and Energy and members of their departmental staffs, including in each case the Secretary, were discussing overseas loans. They seemed to have made considerable progress and I returned to the Federal Executive meeting, feeling there appeared to be nothing I could do.

    Later I saw the Prime Minister and Rex Connor in the entrance hall to The Lodge and was told they had agreed to take authority to borrow $US4000 million. The size of the loan came as a complete surprise to me and I said ‘That’s certainly big but I hope you get it. It would make a world of difference to us if you did.’… The Prime Minister told me that Rex Connor wanted to handle it. I said that would be acceptable to me, but that sooner or later the Premiers would have to be brought in, and commented that it might be wise to get the money tied up first.32

It is worth reflecting on this account. The deputy prime minister and treasurer of Australia finds out, effectively by accident, that the prime minister and a line minister have agreed to seek to borrow US$4 billion, with no reference to him, and he acquiesces. It is inconceivable that any other modern treasurer, of any party, would have found this situation acceptable. Cairns would have been within his rights and responsibilities to veto such an irresponsible course on the spot. At the very least, it would have been responsible to insist on Cabinet consideration, as Cairns had done regarding the previous Budget. Instead, he allowed this decision to be made without appropriate government processes being enacted.

Seeking a US$4 billion loan would be a big decision by today’s standards. In 1975 it was, of course,