The second Dismissal – the loans affair and meetings with Kerr
November 5, 2025
The second part in a series of first-hand accounts of the Dismissal, from the man who was there: John Menadue.
Justice Anthony Mason advised Sir John Kerr by phone not to see the speaker on the afternoon of Gough Whitlam’s dismissal. It was the second dismissal of the day.
The office of speaker was central in the centuries-long struggle between Parliament and the Monarchy in the UK. The history of the speakership shows several speakers dying violent deaths, while others were imprisoned, impeached or expelled from office. In our House of Representatives, there is still a pantomime when a new speaker is elected. He/she is dragged unwillingly to the chair because historically being speaker could be dangerous – for defying the monarch.
In the UK in the early 1640s, there was a major dispute between Parliament and King Charles. It led to a civil war and the execution of a king. In that dispute speaker Lenthall of the House of Commons addressed King Charles.
“May it please your majesty. I have neither eyes to see nor tongue to speak but as the House is pleased to direct me, whose servant I am. I humbly beg your Majesty’s pardon that I cannot now give any other answer then this to what your Majesty is pleased to demand of me. I am the servant of the House, not the King”
I’m sure that in the UK, the Queen would not have refused to see the speaker in similar circumstances.
Fortunately, Kerr wasn’t executed, but he was driven from office.
The proposed fundraising by Rex Connor had thrown the government off course. The loan raising was unsuccessful and there was no illegality. However, it contributed to the public view that the government was unstable.
The government was not performing well. There were a lot of prima donnas in the Cabinet and Whitlam was not good at managing them. Unfortunately, in 1974 the world was in economic turmoil following the doubling of oil prices. Unemployment in the US rose by 7% and inflation by 11%. In Australia, we were not immune to this.
Further governance, as we found in the department, was made extremely difficult with government survival threatened, with the prospect of refusal of supply a daily problem. And the Murdoch media was determined to cripple the government. Good policy and performance were made very difficult.
It is also important to note that when Malcolm Fraser sought to justify his action on refusing supply, he said it was not due to the loans affair but was because of the sacking of Bill Robertson, the head of ASIS. I will turn to that later and explain the role that Robertson, together with the CIA and MI6, played in the Dismissal
One reason why the loans affair became such a political issue was that senior officers in Treasury leaked continually to the Opposition and the media about the loan raising. Treasury had chummy relations with companies like Morgan Stanley and didn’t want to upset such relationships. They also believed, genuinely, that the loan raising was bad policy. They were right on that, but by then Whitlam had stopped listening to them.
Whitlam often said that Treasury “took their bat home “when the government rejected their advice. He had lost confidence in Treasury and Treasury reciprocated his hostility by leaking continually against the government to shadow treasurer Phil Lynch.
Kerr was not present at the critical Executive Council meeting on the $4 billion loan raising. That was not unusual. He signed the minute the next day. He never objected to the loan raising that Connor was seeking to develop Australia’s mineral resources and to avoid them falling into foreign hands.
There was a further possible fundraising of $2 billion and Kerr was present at the Executive Council meeting and was quite enthusiastic about it.
Kerr was worried about how his role was being portrayed, particularly in the Murdoch media. He complained to Whitlam about it. He insisted that if Fraser was to form a government, there was to be no Royal Commission into the loans affair and his role. Fraser agreed.
Whitlam decided reluctantly that Connor should resign. He asked me to secure Connors’ resignation! I thought it unusual that a public servant should ask a Cabinet minister to resign. But, with Clarrie Harders, secretary of the Attorney-General’s Department, we went down to Connor’s office. I conveyed Whitlam’s request for his resignation. He told me to “piss off” although Paul Keating has a more colourful account: that I was told to “bugger off.” In any event, I didn’t get the resignation. Whitlam had to attend to it himself.
Meetings with Kerr
In my regular meetings with Kerr before the Dismissal, he inquired many times about how the prime minister was faring. I took this to mean — and I’m sure what Kerr intended — that he was very supportive of the prime minister and concerned about his personal welfare. Kerr approvingly told me that he had heard comments that former prime minister Menzies had said that Fraser was “wet behind the ears” to try on refusal of supply.
Kerr spoke to me about his plans for an expanded role for himself. He was an able, articulate man, still quite young and did not see himself as a person retiring to Yarralumla. He was seeking to make and find a role for himself. He asked me on many occasions what his role should be in speaking engagements and the extent to which he should discuss public issues in a way which, whilst not causing embarrassment to the government, demonstrated that he had a view of his own. He asked my advice on whether he should hold press conferences and how he should respond to press queries. He was also most anxious to travel and to project the role of the governor-general abroad. I said to him that this did raise problems as he was the Queen’s representative in Australia, but it might be difficult in some countries to explain, particularly in countries which did not have a British background, what a Queen’s representative in Australia was when he was travelling overseas. We discussed these issues at considerable length. I said that he should be careful.
In later trips to Asia, he had meetings with prime ministers and heads of state. He believed that he could play a useful role.
Subsequently, when I was ambassador in Japan, Sir Zelman Cowen was governor-general elect. He was visiting Japan and was keen to meet the Japanese emperor. I discussed with the Gaimusho, the Japanese Ministry of Foreign affairs, about the possibility of a call on the emperor. I was told that as governor-general elect it would be possible for the emperor to see Cowen. However, the Gaimusho made it clear that if Cowen was the governor-general, he would not be able to see the emperor. This was because the governor-general represented the Queen in Australia, but did not represent anyone when he was overseas.
The prime minister was very cautious about an expanded role for the governor-general. The previous governor-general, Hasluck, was “commander-in-chief, in and over the Commonwealth of Australia”. Whitlam insisted that Kerr’s role and aspirations be more limited. From the beginning of his term, on 11 July 1974, he was “commander-in-chief of the Defence Force of Australia”.
As the political crises deepened, I decided not to continue my meetings with Kerr. The prime minister was the government adviser, and I was anxious to ensure that Kerr did not receive any mixed message from me.
After the Dismissal, I had several meetings with Kerr. He was clearly very concerned about the demonstrations across the country. He sought some reassurances from me as he thought I might have contact with people in the Labor Party. I told him that Mick Young, a close friend of mine, was certain that the demonstrations would continue and increase. Kerr asked me several times about his personal safety.
Perhaps demonstrators might jump over the fence at Yarralumla!
At all these meetings, Lady Kerr was present. That was most unusual. I was surprised but it reflected how uncertain and worried Kerr was.
Some have suggested that it was a mistake by Whitlam that, after the Dismissal, he should have focused on blocking supply in the Senate to ensure that the new Fraser Government would not obtain money! There is a touch of wisdom after the event to argue this. Whitlam later told me that at least two Liberal Senators would not refuse supply to the new Fraser Government. Perhaps Whitlam focused too much on securing support in the House of Representatives rather than the Senate. In part, I think that was due to confusion at the time but also to Whitlam’s strong belief that the House of Representatives was the chamber where governments were made and unmade and not the Senate.
The ALP had also contributed to the political confusion with its view about an expanded role for the Senate. Senator Murphy promoted an increasingly activist Senate, particularly its committees. In Opposition, led by Murphy, the ALP had attempted to block supply on several occasions. It would come to rue this, even though it didn’t happen and couldn’t happen because of the numbers in the Senate. We will be reminded of this on the 50th anniversary.
I was not on the steps of Parliament House when Whitlam delivered his memorable speech about “Kerr’s cur, and nothing will save the governor-general”.
I was back in the department in West Block preparing papers for the swearing in of the new government the next day.
Subsequently, I recall a discussion with Paul Keating that he was on the steps at Parliament House providing Whitlam with a megaphone. Keating told me that he had said to Gough, “I’m from the NSW right and we would call out the troops”. Whitlam was never of that mind.
It was surprising that Bob Hawke did not at least call a one-day national strike. But Hawke was seldom helpful to the Whitlam Government.
The Dismissal pushed me more to the left politically. I had been too trusting of the powerful and wealthy. I saw at first hand that a governor-general, justices of the High Court and subsequently the Queen and her advisers were untrustworthy. They were deceitful. And the abuse of power by the Murdoch group continues.
I learned later when I was a member of the Council of the Order of Australia that Sir Harry Gibbs, the chief justice at the time, lied to me about the appointment of Lionel Murphy to the Order of Australia.
In their twilight years, Whitlam and Fraser came to respect each other. Whitlam often said to me, “unlike Kerr, Malcolm never deceived me”. He was out in the open.
I was present when Fraser presented a book to Whitlam he had just written. He inscribed it…”Dear Gough, in affection and great respect, Malcolm”. My eyes misted over.
Kerr’s cur and Whitlam had found much more in common than in their earlier years. Fraser had changed more than Whitlam.
Later, I worked in immigration with Fraser and Ian Macphee. It was the most meaningful and enjoyable time in my public life. Together, I believe we put an end to the White Australia policy. Fraser was better on that than Whitlam.
The last contact I had with Fraser was when he asked me if I was interested in joining a new party he was contemplating. I declined.
Tomorrow: the role of the Palace