Of the inhabited continents of the world, Australasia is the least developed and the most empty of people. The Aborigines had been building their lives and culture for millennia when, in the late eighteenth century, settlement from Britain began and progressively dispossessed them of their lands. Regarded as little more than savages, exploited and treated at best like children, they lived an existence that was marginalised until the third quarter of the twentieth century. Gough Whitlam, the Labor prime minister, in 1972 condemned Australian racism: ‘Australia’s treatment of her Aboriginal people will be the thing upon which the rest of the world will judge Australia and Australians – not just now but in the greater perspective of history.’ But the Aborigine voice of protest is not strong enough to have made much impression on the world. Before the European came there were, according to rough estimates, between 300,000 and 400,000 Aborigines; by 1961 it was estimated that only 40,000 had survived. No one could judge their precise numbers because they were not included in the census before 1967. They posed no threat to white Australia. The menace Australians felt came from outside the continent. The geographical position of Australia at the ‘edge’ of Asia did much to shape the outlook of Australians during the twentieth century. Asia, with its poverty-stricken teeming millions loomed menacingly over its southern neighbour, with its tiny and comparatively prosperous white population of some 7 million in all in 1945, largely of British stock, few of whom inhabited the northern half. Could Australia survive as a ‘white’ outpost of civilisation? That was the burning question. For Australians a civilised culture was a Western culture, the preferred ‘race’ people of British descent. In the nineteenth century there had been some Chinese immigration and labour had been brought in from the Pacific islands. The number of these workers, however, remained small, and they mostly remained aliens with little defence against deportation. In 1901, immediately after Australia had ceased to be a colony and become a self-governing federal commonwealth, significantly the issue of paramount concern was immigration. The Immigration Act of that year was enacted to keep out ‘undesirables’; that included all ‘non-Europeans’, as the official phrase went, though the immigration programme is better known as the ‘white Australia’ policy. Even after large-scale immigration from Britain and Ireland, from 1909 to 1913 and from 1921 to 1925, the population of Australia during the Second World War had reached only 7 million. Before the Second World War Australia was still closely tied to Britain, and not only by common bonds of origin. As a member of the empire and Commonwealth, Australia’s trade in wool and other rural products enjoyed their main market in Britain. British industry supplied most of its imports. For defence, Australia looked to Britain too. When Britain went to war in 1914 and 1939, Australian volunteer divisions fought side by side with the British in Europe and the Middle East. These were distant wars in defence of the mother country. But the threat of Japan hung over the Pacific. In June 1940 after the fall of France a cable from London to the Australian and New Zealand governments warned them that they would need to look for protection to the US. When Japan did enter the war in December 1941, the British nevertheless undertook to defend the key Singapore naval base. The unexpected and rapid victories of the Japanese came as a tremendous shock to Australians. The British and Dutch failed to contain the Japanese advance, and three days after Pearl Harbor, on 10 December 1941, two of Britain’s modern battleships, the Repulse and the Prince of Wales, sent to defend Malaya, were sunk from the air. Worse followed. In February 1942, the great defence bastion, the Singapore naval base, surrendered to the Japanese. Fifteen thousand Australian troops were taken prisoner. Next the Japanese speedily captured the Dutch East Indies (Indonesia). They were now close to the northern shores of Australia. Darwin was bombed. Queensland and the Northern Territories lay open to invasion. In Australia a mood close to panic ensued. Three seasoned divisions were fighting overseas in Libya. Two were withdrawn. Plans were made to abandon central and northern Australia, up to the ‘Brisbane line’. Now what London had foreshadowed came to pass. Australia and New Zealand were dependent on American protection. The arrival of General Douglas MacArthur and a contingent of US troops, with headquarters in Melbourne, steadied nerves. African American GIs were another shock, of a different kind, but they had to be tolerated while the war lasted. Not Britain now but the US had become the principal Australian ally. Australians made a major military contribution. While one division continued to fight under Montgomery’s command, the main effort was directed to the war in the Pacific. By the time the war came to an end 863,000 Australian troops had been mobilised. The experience of war heightened Australian fears of the Asian menace from the north. Empty Australia must be filled with migrants or Asians would move in. Immigration had now become a matter of survival. These fears also reinforced the ‘white Australia’ immigration policy, which was racist at heart. The Labor government, in power since 1941, shaped these racist preconceptions. Prime Minister Chifley had appointed Arthur Calwell to head a new department of immigration. A propaganda campaign was launched to overcome Australian fears that substantial immigration would only increase unemployment. The government played on Australian fears that in the absence of such migration Asians might overrun the continent. In Europe, Australia was presented as a country of sun and freedom where families could build a new life and prosperity in a society not riven by class consciousness and prejudice. Passage for ex-servicemen and their families was free; others paid a nominal £10. The assisted migrants found life hard, especially during the first two years, during which they were housed in camps and put to work on such huge schemes as the Snowy Mountain hydroelectric dams. The post-war boom fortunately created labour shortages in Australia. Britain and Ireland were regarded as the right reservoir for immigrants, and immigration officers were sent secret instructions to reject applicants of non-European origin; a Jamaican grandparent in Cardiff would exclude a whole family. The immigration officers were left to form a judgement based on the colour of the skin or such ‘tell-tale signs’ as an oriental slant of the eyes. Some unfortunate British applicants were even rejected when they arrived sunburnt from a Mediterranean holiday. Jews were separately categorised; like most established immigrants, Australian Jewish welfare organisations were not in favour of allowing unrestricted entry; however, nearly all the Jews they applied for were allowed to come; between 1945 and 1954 some 17,000 arrived from displaced persons camps. But there simply were not enough pale white Britons to satisfy the enormous demand for migrants. Calwell flew to Europe to widen the net. Lightskinned Balts were favoured next. Until the mid-1950s immigration officers were instructed to ensure that migrants were of pure ‘Aryan’ descent. The efforts to increase the rate of immigration were a great success. When the supply of pale northern Europeans proved insufficient, the government encouraged, at first discreetly, immigration from the Mediterranean countries – Italy, Greece, Yugoslavia, later on Turkey and the Lebanon – and simply braved the continued prejudice in the 1950s and 1960s of the majority of the Australian people. Asians, except in small numbers, were rigidly excluded, and some of those who had settled were even deported. With the changing generation came a change in attitudes. Australia could not escape its proximity to Asia. From the late 1960s onwards, Asian immigration was liberalised. Refugees from Vietnam were accepted in the early 1970s. A third of all immigrants now came from Asia. An obsession with assimilating all ‘new Australians’ to Australian culture and the English language was replaced by an acceptance of a multicultural approach. Australia’s population would have increased only slowly but for mass immigration from Europe and Asia. By 1967 its population had reached 12 million and by 1990, 17 million, a rate of increase exceeded only by Israel. The successful absorption of so many millions, the weakening of bunkered racial attitudes and greater tolerance are among the most important achievements of recent Australian history. Australia enjoyed, in 2000, the second-highest gross national product per head of population in Asia (GNP per head in 2000 was $30,420), beaten only by Japan with $38,160. The expansion of the Australian economy was made possible by the migration, which brought young families and people of working age to man the factories and the mines and to help build the country’s infrastructure. The demand for housing, furniture, cars and other goods is largely met by Australia’s own manufacturing industry, which together with mining and services absorbs most of its labour, housed in big-city conurbations. Australian society is obviously no longer pastoral, but the rest of the world is not so aware that Australia has fundamentally changed since the Second World War. Nevertheless, its export trade is still heavily dependent on primary products – wool, wheat, minerals, coal, iron and steel – and on their price fluctuations. Wool no longer held first place as an export earner during the last quarter of the twentieth century; coal and iron ore brought in more dollars. Australia’s prosperity was always dependent on its external trade. Britain had traditionally been the best market and supplier of capital and manufactured goods, but long before it joined the Common Market on 1 January 1973 the trend for Australian exports to go to Asia, the US and the wider world had been well established. Exports to the US and Canada in 1967 began to exceed those to Britain, while exports to the rest of the European Community almost equalled exports to Britain. But the most startling change was exports to Japan, which exceeded in value exports to any other country. A new trading pattern was being established. Australia aggressively sought new markets in the Pacific. Wheat exports went to China, beef to the US. The south-east Asian nations and Japan accounted for more than 40 per cent of its exports. The economic miracle in Japan, which began its take-off in the 1960s, had a huge impact on Australia. Initially short of coal, iron ore and minerals, its mining industry rapidly expanded; vast new reserves of iron ore were discovered in the Pilbara region of Western Australia. The industrial development of south-east Asia added to the demand. During the last quarter of the twentieth century prosperous Western Europe has remained an important market, but Australia’s most important trading partners are the nations of the Pacific basin. When Emperor Hirohito died in 1988 flags on official buildings in Canberra flew at half-mast. This token of respect symbolises just one facet of the transformation of Australia’s relations with the rest of the world. It is still an important member of the British Commonwealth, the queen of Britain was still queen of Australia in 1992. Australia owes its constitution and legal system to Britain, as also its commitment to democracy. Test matches between the two countries are followed avidly by cricket enthusiasts throughout the Commonwealth. Thousands of Australians visit London. Family ties persist. But Australia’s future lies in the Pacific. Fear of Japan has been replaced by economic interdependence. Japanese invest- ment, businessmen and technologists are welcome in Australia. Australians can no longer look to Britain to safeguard its security in Asia but must rely on its own relations with post-colonial Asian nations, and on its alliance with the US. For more than two decades after the Second World War the US and Britain were Australia’s most important allies. Together with New Zealand, Australia concluded the defensive ANZUS alliance with the US in July 1951. The US was only reluctantly willing to extend its commitments to the southern Pacific to meet Australian fears of a resurgent Japan, with whom the US was then wishing to conclude a peace treaty. Britain, although abandoning its imperial role in India, was still the military shield of its own and Australian interests in the region, vigorously defending Malaya during the communist insurrection in the 1950s. During that decade aggressive communism was perceived in Australia as posing as great a threat as Japan had done in the past. The Cold War, which began in Asia in 1949– 50, came to dominate relations in south-east Asia and Australian foreign policy. The communist victory in China in 1949 revived fears of millions of poor Asians expanding south by direct aggression and subversion. China might repeat Japan’s thrust south – prosperous and underpopulated Australia would be a tasty morsel. But it was in the north Pacific, in Korea, that war actually broke out in 1950. Australia sent troops to South Korea to help American and United Nations forces to halt aggression. Still closer to Australia lay Indonesia. Australian leaders after the war had sought to establish friendly relations with the newly independent states. Indonesia, after India and Pakistan, was one of the earliest objects of this policy, as Australia mediated between the Indonesians and the Dutch. But Indonesian expansion was a worry. Britain in the 1950s and for much of the 1960s was still the dominant military power in this region. In the early 1960s after the formation of Malaysia, Australia joined Britain in the confrontation with Indonesia, though it wanted to live on good terms with the former Dutch colony, whose population dwarfed its own. In 1962 Indonesia and Australia became neighbours in New Guinea when Indonesia absorbed West Irian. Until 1968 when Britain progressively withdrew from its military role ‘east of Suez’, Australia maintained links with a British and Commonwealth alliance. But the events of the Second World War had shown that for Australia’s and New Zealand’s security in Asia the alliance of the US had become more important, indeed essential. The defeat of France in northern Indo-China in 1954 and the Geneva settlement did not bring peace to the region. Australia became a founding member of the South-East Asian Defence Treaty which, under US leadership, attempted to provide collective security. Britain and France were members too, yet refused to send military help for the defence of South Vietnam. But successive Australian governments accepted the validity of the domino theory – that communist China was fighting proxy wars to advance communism and that unless it was halted one state after another would fall like a row of dominoes. So it was in Australia’s own security interests to provide military help to South Vietnam. It was no less important to demonstrate to the US that Australia could be relied on as an ally. But sending conscripts to Vietnam proved controversial at home. From the 1950s to the 1990s the American alliance has remained the cornerstone of Australia’s foreign relations, as the ties that bound Australia to Britain weakened. Fear of Japan has long since been replaced by cooperation. The prosperity of the region has been hugely promoted by Japan’s economy and overseas investment in the noncommunist nations of south-east Asia. In the 1990s Japan has emerged not just as the most important bulwark against communism, but its successful example is undermining the ideology of central planners in the remaining Asian communist nations. Australian politics at home revolved around three parties, the Australian Labor Party, the Country Party and the Liberal Party, but in practice a twoparty system operated, with the Country and Liberal Parties forming coalition administrations. Each party itself represented various interests and views. The Labor Party, founded by trade unionists, fought to improve conditions for the poorer section of the population by means of legislation, but in practice it was not a Marxist– socialist party and supported a privately owned, free-enterprise economy with a minimum of state financial controls. At state and federal level the differences between the parties were more a matter of personalities, emphasis and attitudes than anything profoundly ideological. Labor’s long period in opposition from 1949 to 1972 increased factional tensions within the party, but it achieved a sustained period in office from 1972 to 1975 and after 1983. The Country Party has its base in the rural areas and represents the farmers and their special interests. Vehemently anti-socialist, it is a minority party but as coalition partner of the Liberal Party its influence has been greater than its numbers. The Liberal Party too is largely conservative, reluctant to extend welfare and keen to prevent the trade unions from exerting too much influence. A small Communist Party has its strongest support among some trade unionists. On the whole, Australian politics revolves less around ideologies than around the appeal of individual politicians and special-interest groups. As prime minister, John Curtin led a Labor government which earned Australia’s gratitude for the successful prosecution of the Second World War. Welfare provisions were modestly extended and Canberra’s federal muscle in policy making was greatly strengthened in 1942 by taking over from the states the sole right of imposing income tax. The states remained jealous of their constitutional rights and the tug of war between them and the federal government continued as a recurring feature of post-war Australian politics. As early as December 1942 Curtin’s government made plans for a better post-war Australia, setting up a department of post-war reconstruction. The guiding inspiration was more Roosevelt’s New Deal and Keynes than socialist doctrine. Able young economists worked on a masterplan under Ben Chifley, the minister responsible. It was Chifley who on Curtin’s death in 1945 became prime minister. What haunted Australians, as it haunted the rest of the Western world, was the prospect of a return to the 1930s and mass unemployment. So planning was undertaken in relation to housing, farming, industry and training. Australians were to be assured that they would have work and adequate housing for the family. The extension of welfare provision was more modest: pensions for widows were granted, but persistent efforts to extend state cover against illness, even the minimal proposals for free medicines, fell foul of the powerful medical lobby, which fought tooth and nail against any form of ‘socialised medicine’ and which especially abhorred the model of Britain’s National Health Service, the most important achievement of Britain’s post-war Labour government. Ben Chifley’s attempts to extend welfare benefits and to maintain in peacetime the federal powers Canberra had secured in war were challenged by the states, whose claims were generally supported by a conservative High Court. The most important of Chifley’s reforms was to secure government control over monetary policy by nationalising Australia’s central bank, the Commonwealth Bank, in 1945, though an unpopular and unnecessary attempt to extend control over all private banks was eventually struck down by the High Court. Conditions were favourable for the Australian economy in the post-war years, there being a high demand for its wool, meat and wheat, which ensured good prices, growing prosperity and labour shortages. Chifley’s sound financial management and limited federal engagement in industry left the bulk of the Australian economy in private hands. Unlike the British Labour Party, the Australian Labor Party was ready to work with and profit from private enterprise, attempting only to regulate the market and rejecting nationalisation. Chifley’s Labor Government would have no truck either with militant trade unionism, which was now recovering after the hardship and exploitation of working men before the war. Strikes were blamed on the communists, and the opposition tried to tar Chifley’s cautious and pragmatic administration with this brush. But the prime minister continued to insist that settlement of trade union demands should be reached through the Arbitration Court, which he refused to dismantle. The Arbitration Court was conservative, as was clearly shown for instance in its rejection of equal pay for women in 1950, but granted basic wage demands and the forty-hour week which the trade unions had fought for. Chifley did not hesitate to take tough measures against unions that went on strike. The most serious of these stoppages was the miners’ strike in the summer of 1949. With the country threatened with paralysis, troops were sent in to reopen the coal mines and the miners were forced back, winning only some of their claims. The general influence of communists in the trade union movement receded, though it was strongest among the miners after the unsuccessful 1949 strike, but obsession with a non-existent communist threat remained a feature of Australian politics for years to come. In December 1949 Australians felt secure enough to vote the Labor government out of office. Robert Menzies, who had led the Liberal– Country Party opposition, promised prosperity and a better life free of bureaucratic control. Like the Conservatives in Britain in 1945, where the tactic had misfired, he now warned against totalitarian socialism. There was no such danger of course, but the electorate was ready for a swing of the pendulum. Menzies, who soon became one of the best-known politicians on the world stage, had founded the Liberal Party and rebuilt the opposition during the war. He was a moderate conservative, appealing for consensus, an Australian version perhaps of Stanley Baldwin, a middle-of-theroader with a common touch, standing for decency and family values and fulminating against communism and trade unions, especially when they went on strike. Later his staunch support of British royalty and his deference to and affection for the young Queen Elizabeth II appeared to reinforce the old traditional Britishness and dependence of Australia. But behind the avuncular image lurked a shrewd politician. His government made no great changes from Labor’s previous policies. Some welfare provisions were improved; more was done to pay for health care, in the teeth of the suspicious medical profession. Although Australia was in no danger of being subverted by communism, Menzies attempted to stir up feelings against the small Communist Party and in 1950 legislated to outlaw it and seize its assets. It is to the credit of the Australian High Court’s sense of democratic values that it struck this measure down by a majority decision; the Australian people themselves rejected it, but only by a tiny margin, when in 1951 Menzies campaigned to outlaw the party in a national referendum. Menzies dominated Australian politics in the 1950s and 1960s. These were the golden years of expansion and continuous improvement in the standard of living. More than 2 million immigrants were successfully absorbed. The black spot was the continued neglect of Aborigine interests. They had little share in Australia’s boom. As far as white Australia was concerned there seemed no need to take risks by turning to Labor, whose policies were no more hostile to the capitalist basis of the Australian economy than the Menzies-led government. The Liberal–Country Party coalition was therefore able to stay in office for most of the three decades up to the 1980s. Prosperity had eroded working-class support. Condemned to almost virtual opposition Labor became factionalised. Can parliamentary democracy really survive in such conditions? Reassuringly it did. Labor did win power in a number of state governments. In 1966 Menzies retired after serving continuously as prime minister for sixteen years. His one enduring domestic achievement, apart from presiding pragmatically over Australia’s years of prosperity, was the giving of government support for school and university education, which greatly expanded. The timing of his departure was well judged, as more difficult economic times lay ahead, and a new generation of Australians prepared to face them. Most Australians remained resolutely anticommunist, but the challenge from the younger generation, which swept the Western world in the mid-1960s, did not entirely pass Australia by. The Vietnam War gave the discontent a focus. Demonstrations were mounted against the support that successive governments gave to the US from 1966 to 1971 under Harold Holt, John Gorton and William McMahon, the three prime ministers who followed Menzies. They were precursors of a shift in Australian political loyalties after twenty-three years of Liberal–Country Party domination. Industrial disputes became more frequent. The Labor Party drew new hope from these conditions, which many Australians blamed on the Liberal–Country Party’s political elite, just at a time when Labor had at last found a resourceful new leader with national appeal and charisma in Gough Whitlam. In December 1972 a majority of Australians voted Labor to power and Gough Whitlam became Australia’s first Labor prime minister since 1949. That vote for Labor was a signal for a fresh start, for new faces, but not for socialism. Australia would remain an economy of free enterprise where the few could amass large fortunes. Whitlam had not risen from the ranks of the working man. University educated, a lawyer by training, a politician by profession, he relished power and did not go out of his way to avoid confrontations and antagonism. He regarded Labor’s victory as a mandate for social change and promised to bring it about with an immediate burst of activity, as Franklin D. Roosevelt had done in the early weeks of the New Deal. God had taken seven days to create the world; Whitlam reshaped Australian politics in fourteen. The list of decisions taken and promises given was startling: Aborigines were promised better treatment, Papua New Guinea was given independence, national service was ended, Vietnam draft defaulters were pardoned, a stand was taken against racism in the Commonwealth, communist China was recognised, and plans were drawn up for closer supervision of manufacturing industry. During the first two years the Labor government’s main goal was to reduce the inequalities of opportunity suffered by the less well-off Australian – migrant, worker or professional; white, brown or black. The great leveller was education, and better schools for the disadvantaged and universities open to students on merit were among Labor’s achievements. Another was the legislation creating a universal insurance-based health service. Labor’s concern for the poor was also reflected in the expansion of the social services. It all cost money, and inflation could not forever delay the day of reckoning. Labor’s fortunes declined in 1974. The economy had been hit by the world economic crisis that followed the ending of the Vietnam War and the oil-price rise. Inflation and unemployment were rising. The measures taken to curb inflation were bound to be unpopular. Financial ineptitude and scandals, and unemployment reaching 5 per cent, cast Labor’s management of the economy in a bad light. The anti-Labor press made the most of these difficulties. The Labor government came to a dramatic end in November 1975. The leader of the opposition, Malcolm Fraser, assembled enough votes to deny passage of the Budget, justifying this by accusing the government of financial mismanagement. At the height of the constitutional crisis, the governor-general Sir John Kerr, who as representative of the queen held a ceremonial appointment with theoretical powers, chose actually to use them and, acting insensitively and high-handedly, dismissed Whitlam from the premiership. Whitlam accepted his dismissal and gave Fraser the task of forming a caretaker government until new elections to be held in December should decide the issue. When Australia voted there was less concern for the constitutionality of the dismissal than for the country’s economic prospects, which were grim. It seemed safer to a majority of Australians to return to power the Liberal–National (formerly Country) Party. Labor had been unlucky to hold power during what had been difficult years throughout the Western world. Whichever party had been in office would probably have been voted out. But, for all its mistakes, the Labor government’s aims of greater social justice and racial harmony foreshadowed a return to these aspirations when Labor regained power in 1983 and this time stayed in government for more than a decade. The Liberal–National coalition headed by Malcolm Fraser took up the reins of the administration again after the short and eventful Labor intermission. There was nothing startling about the next seven years of moderate conservative government. Where Whitlam had stood somewhat left of centre, Fraser was not too far to the right of centre. The trade unions were conveniently blamed for economic ills. When the world recession eased, Australian exports, which were so dependent on international economic health, recovered. Fraser was more conciliatory than his predecessor had been towards state rights and their relations with the federal government in Canberra. Australian society had steadily become more polarised. Many Australians, particularly the professional classes, enjoyed a high standard of living. But working people during the 1970s had made less progress and more than one Australian in every six was classified early in that decade as living in poverty or close to it. Fraser’s economic policy was orthodox. Despite increasing unemployment, social benefit expenditure did not rise. A backward step was the dismantling of Whitlam’s health care provision, Medibank, and its abolition in 1981; free medical provision was restricted to the poor, who qualified by a means test or as senior citizens. In March 1983 Fraser’s Liberal–National coalition lost the general election and a Labor government was once more returned to power. Robert Hawke, who dominated Australian politics as Labor’s dynamic and colourful leader for the remainder of the 1980s, was academically well qualified and had won his spurs in Australian politics as a research officer for the Australian Council of Trade Unions (ACTU) thirty years earlier. Bob Hawke had been an active and skilful advocate on behalf of ACTU and, eventually, its president. He entered the House of Representatives in 1980, determined to gain the leadership of the Labor Party. Hawke’s period in office was marked by conciliation with the business community on the one hand, and trade union moderation on the other. He wanted all sides of industry to work together, with the federal government playing the role of benevolent third party. This time Labor was lucky in the timing of its victory. The mid-1980s were years of unprecedented world economic boom. Australia did well out of it. There was nothing radical or socialist about Hawke. He used to good advantage his trade union experience of negotiating and balancing opposing sides, in this way holding the Labor Party together and resisting its tendency to split into left and right wings. Nor was there any great move to benefit the poorest section of Australians by extending and increasing social benefits, except in the area of health care. A national health scheme providing universal benefit had become something of a political football in Australia, with the Australian Medical Association fighting a fierce rearguard action over the decades. Hawke’s administration resurrected Whitlam’s Medibank, now called Medicare, and Australia’s doctors acquiesced. But the Labor government did not engage in a spending spree or impose high taxation policies, and in this Hawke was loyally and ably supported by his ministerial colleague Paul Keating. But the private sector and state governments were running up large debts. Most political excitement during these years was caused by Hawke’s efforts to rid Australian politics of corruption. Australians approved of his undoctrinaire approach, his friendly relations with business and the apparent stability of the economy, which was expanding with the influx of foreign capital. The price was paid later in recession and spectacular business failures. Hawke won the two elections of 1984 and 1987, his expansive personality and selfconfident espousal of an Australian identity making him for a time the most popular prime minister in the country’s history. He presided over the bicentenary in 1988, a fitting celebration of an Australia reaching maturity. But the festivities also became a reminder that one group of Australians, its oldest settlers, the Aborigines, had not shared equally in that wealth, and that their grievances had not yet been adequately addressed. The early settlers of the late eighteenth century had been instructed to deal with the Aborigines as a whole, leaving them ‘in the full enjoyment of their possessions’. But the benevolent intentions of the sovereign’s government in London thousands of miles away did not make much impression on pioneers engaged in the hard task of making a living out of what appeared to them to be empty lands. State governments’ efforts in Australia and missionary endeavours could do little to alleviate the disastrous impact of Western lifestyles on the culture and way of life of the exploited Aborigines. After the Second World War the Aborigines began to organise themselves, demanding citizens’ rights and better wages. In 1957 the Northern Territory admitted mixed-race Aborigines and full Aborigines who could look after themselves to citizenship. Aborigines were regarded as civilised if they assimilated to white Australian culture – assimilation was the welfare aim. The ‘white Australian’ policy in practice had the effect of demoralising them. Only slowly, beginning in the 1960s, did Aborigines win equal rights. An Aborigine leadership emerged able to organise effective protest movements and focus demands on wage issues, discrimination and land rights. Gough Whitlam, when he came to power in December 1972, broke with tradition by paying attention to the needs of the Aborigines, promising schools for them and the protection of their land rights against mining companies that wished to exploit the mineral wealth below. The companies’ desire to extend exploration in this way pitted profit, national production and wealth against the rights of the Aborigines. The following year another well-intentioned effort led to the establishment of a National Aboriginal Consultative Committee. The improvement in Aborigine welfare has brought abuses into even sharper relief. Discrimination remained rife in Australia in the early 1990s. The Aborigines, denied good health care, housing and education, were trapped; high unemployment added to their misery, to the problems of crime and alcohol abuse. Australians were shocked by a report that more than a hundred Aborigines had died locked up in police cells since 1980. As recently as 1992 one of the commissioners investigating these deaths found it necessary to say, ‘We as a community have to change our attitude toward Aborigines. We have to recognise them as a distinct people who were dispossessed of this continent and deal with them with respect.’ Racism could not be obliterated overnight. But white Australia was not alone in confronting what in the 1990s was now one of the major causes of war and bloodshed elsewhere in the world. The task of raising the standards of a minority who had for decades lived in or close to destitution was a formidable one. The Australian Labor government in 1992 unveiled another scheme to improve the educational, housing and health provisions for Aborigines and, above all, to ensure better treatment by the police and courts. White Australians would be obliged to consult with representatives of Aborigine groups about measures and actions that affected them. The boom of the 1980s began to overheat in 1988. But despite economic worries Bob Hawke led Labor to a fourth successive victory in federal elections in 1990. Labor had been following a market-economy philosophy, reducing protection for Australia’s industries, raising interest rates and striving to keep money supply under control. Hit by a recession that showed no sign of lifting, and faced with another election in 1993, the Labor Party changed its leader in December 1991. Bob Hawke was dropped and his long-time treasurer (finance minister) and political rival Paul Keating became prime minister. Far from changing direction, Keating announced the government would move with even greater determination to make industry more efficient, abolish tariffs and help business with tax breaks, while keeping government expenditure under tight control. In the early 1990s Australia suffered badly from the recession in the West, with an unemployment rate of 10 per cent. The growth of the south-east Asian economies of Indonesia, Thailand and Malaysia did not provide an immediate cure to unemployment as Australian business increasingly relocated industry where the markets were and where labour was cheap. In March 1993 Keating narrowly won another term for Labor against the expectation of many observers that the severe recession would cripple his chances of re-election. By the 1990s Australia was a sophisticated cosmopolitan culture. With more than 30,000 millionaires it was hardly classless, but ‘class’ had hitherto been based on the wealth of the selfmade man, not on birth to high station. But that would change as wealth was inherited. The Australians were conscious of great changes to come. Industry and industrial exports would have to play an ever increasing role in the economy. The traditional export markets of Europe and the US retained their importance but the new, rapidly expanding markets lay in Asia, where nearly half of Australia’s exports now went. Australia could no longer afford to ‘fight against the reality of its own geography’, to quote Gareth Evans, Australia’s dynamic foreign minister. Japan was the model for effective, advanced industrial organisation. Yet Australia is not an Asian country: the majority of its people are of European origin, and its majority culture and way of life and its democratic form of government are Western. In the 1990s it was being inexorably drawn closer into Asia yet remained apart. Although the ‘white Australia’ immigration policy was abandoned in the mid- 1970s, Asian resentment of Australian racism had not disappeared. Nor was the multiracial Australia universally accepted by Australians. No wonder that the national identity and future of Australia were hotly debated. The elections of March 1996 brought a Liberal–National coalition back to power and John Howard became prime minister, having to cope with Australia in recession. The conservative government passed tax reforms, privatised state industries and faced a tide of racist anti-multiculturism which had, for a long time, brought to prominence a new One Nation Party led by Pauline Hanson directed against Asian immigration and the expansion of the rights of Aborigines. The government was struggling to bring into operation the Native Title Acts passed in 1993 which recognised that the interests and rights of the native people had not been superseded. The basic issue was whether pastoral leases on Crown land had expunged Aboriginal land rights, land important in Queensland Western Australia with mining interests. In 1995 the High Court confirmed that the federal government, in applying the Native Title Acts, could override state governments. The struggle was not over. The amended Act of 1998 was designed to make it ‘more workable’. Between 1994 and 1998 1,200 native title agreements were reached between indigenous groups, pastoralists, miners, industry and the government. The government also acted on a shocking revelation that Aboriginal children had been forcibly removed from their parents during the years from the 1880s until as recently as the 1960s. The government offered monetary compensation, but John Howard refused a collective apology for the ‘stolen generation’. Aborigine activists remained dissatisfied with government compromises. In foreign affairs, Australia’s relations with the Pacific countries deteriorated. John Howard was opposed to the influx of refugees from the trouble spots of Indonesia and East Timor which threatened to descend into anarchy and bloodshed. Helping the UN to restore order was a notable achievement. By the time of the November 2001 election the granting of asylum to refugees had become the big issue. John Howard earlier that year had been expected to lose the election to Labor. His high profile uncompromising stand on refugees brought him the support he needed to meet the challenge of the Australian Labor Party. In August 2001, 430 wretched Afghan refugees were stranded offshore and prevented from landing. They were eventually sent to a detention camp in the South Pacific paid for by the Australian government. In the election the coalition was able to retain office, the Australian Labor Party had secured marginally more votes but the National Party swung the balance. John Howard continued as prime minister in the new millennium. One issue likely to be revived is whether Australia should become a republic severing the link with the Crown. A referendum hotly fought in 1999 rejected a change to a republic, but the resignation of the governor-general appointed by the queen on the advice of the Australian prime minister raised what many Australians continued to see as an outworn anomaly. Not Sweden, but a small and remote British colony in the South Pacific, New Zealand, can make a good claim to being the precursor of the welfare state. Since its foundations in the 1890s when a Liberal government came to power and passed welfare legislation, benevolent intervention by the state to protect the poorer and weaker in the community was a persistent feature of politics, whichever party was in power, at least until the early 1990s, through both good times and bad. The Liberals, in power for twenty-one years (1891–1912), were radical reformers. Compulsory arbitration of labour disputes introduced in 1894 protected what were at that time weak trade unions. A year earlier women had been enfranchised. In 1898 New Zealand pioneered the oldage pension. The Liberals believed in democracy and what in later times would be called ‘social justice’. They accepted capitalism, that is private ownership and the market, and had no socialist aspirations, but wished to use the power of the state to curb the exploitation of the weak. Their ideal was a more egalitarian society. But in the process the national government also greatly increased its own power. Early in the century some of the main lines of political development were set. The Liberals aimed at a harmonious national consensus, between country and town, worker and employer, farmer and businessman. They succeeded for a long period but sectional interests in the end destroyed the aim though not the reforms the Liberals had enacted. The increase in the number of urban workers stimulated the formation of a distinct Labour Party more narrowly identified with their interests, and the trade unions grew more militant. Largely based on the dairy farmers, a more conservative opposition, the Reform Party, evolved. Between 1912 and 1935 no one of the three parties had a clear lead over the others. The 1920s were a period of general depression, with falling prices for New Zealand’s farm produce. The depression of the early 1930s was even worse. New Zealand was utterly dependent on world prices for its exports, and Britain, its main market, was deeply depressed. Even so the early Labour Party’s socialist programme could not hope to find sufficient support to make Labour the governing party. The great majority of New Zealanders had no truck with Marxist socialism or the abolition of property rights. On the contrary, they aspired to a higher standard of living and to owning their own land and home. The New Zealand Labour Party therefore accepted socialism in theory but not in practice. These were the politics of the white New Zealand settlers. But what of the original indigenous New Zealanders, the Maoris? The early impact of the European was catastrophic, as it was on the indigenous peoples of the Americas. The new settlers sometimes acquired land by fair means but more usually they did so by foul. As their numbers increased so did the pressure on Maori land. European settlers disrupted traditional societies. Worst of all, they introduced new diseases against which the indigenous people had no defence. When the Europeans first settled it is estimated that there were about 200,000 Maoris in New Zealand, mostly inhabiting North Island, which was divided by warring tribes. Possession of land by the tribe was the most important indication of status – and it belonged to the community as a whole and not to individuals. In the nineteenth century, dispute over land led to violent conflict with the settlers, the Maori wars. Some 2,000 Maoris lost their lives. The rapid decline of the Maori population to 42,000 by the turn of the century was, however, due more to disease and the disruption of their traditional culture and lives than to war. Far away in distant London the intention of governments towards indigenous peoples had been benevolent. Unlike the Aborigines of Australia, the Maoris had even received guarantees by treaty intended to preserve their rights. That compact was the Treaty of Waitangi in 1840, by which Maori chiefs ceded New Zealand to the British Crown and in return were guaranteed possession of their lands, forests and fisheries and granted the rights and privileges of British subjects. This gave the Maoris a solid legal basis for demanding the righting of wrongful seizures, which has persisted to the present day. In the relations between the white settlers and their descendants and the Maori people this treaty is a crucial contract, though its interpretation in contemporary conditions is certainly complex. The Maoris thus attained rights in the nineteenth century not enjoyed by the Aborigines until late in the twentieth century. They were also granted separate electorates and four members of parliament in 1867. Later in the twentieth century, to preserve their sense of identity, Maoris as well as descendants of mixed race who wished to be identified as Maori could be entered on the Maori electoral roll on request. The Maoris began to recover only in the twentieth century after they had lost or sold most of their lands. A leadership educated in an Anglican school for Maoris began to emerge early in the century and a modest measure of local selfgovernment was granted before the First World War. The Maori population recovered slowly. By 1921 it numbered 56,000. Their cultural identity was now greatly strengthened by the establishment of a distinct Maori religious cult, the Ratana Church, founded by Tahupotiki Wiremu Ratana, who had had a vision in 1918. Ratana disciples captured all the Maori political seats in parliament and formed an alliance with Labour. When Labour came to power in 1935 it began a programme of Maori welfare campaigns in education, social entitlements and land settlement. By 1946, the Maori population had increased to about 100,000 and it had doubled a generation later (1966) to over 200,000; by then about half the Maoris lived in urban areas. White New Zealand no longer aimed to assimilate them. New Zealand had become a multicultural society. Racial discrimination lessened and was replaced by a renaissance of interest in Maori culture. Maori achievements in battle during the Second World War and on the rugby field became a matter of pride for all New Zealanders. Discrimination remains, however – not on grounds of colour but because of the lower educational attainments of the Maori people. This places Maoris at a severe disadvantage and their unemployment in times of recession is much higher than that of white New Zealanders. From 1935 to 1949 New Zealand politics regained stability with the Labour Party in power. The party had shed much of its theoretical socialism and now appealed to sections of the middle classes as well as to working people; it also guaranteed prices for farm produce. Labour wished to protect the farmers and manufacturers by insulating New Zealand from its dependence on world price fluctuations through greater state control of marketing and distribution. It also followed the earlier humanitarian tradition of the Liberals in extending welfare safeguards for the poor. The Labour government led by Michael Joseph Savage was an able one and was lucky to come to power as world economic conditions began to improve. It created the modern welfare state. Workers were safeguarded by a minimum wage, but trade union power was limited by the reintroduction of compulsory arbitration for industrial disputes; public works programmes on the model of the New Deal were implemented; unemployment was reduced; pensions were increased. The Social Security Act of 1938 was also notable for starting a national health service with virtually free treatment and medicines a decade before Britain did so. In 1945–6 a second burst of legislative energy provided child benefits without a means test for every family. New Zealand thus created an integrated and comprehensive social-security system that abolished fears of extreme poverty and included white New Zealanders and Maoris alike. The contrast between New Zealand’s social policies and Australia’s treatment of the Aborigines at the time, and Australia’s bitter battles over health services, is striking. But social provisions had to be paid for by a relatively high level of taxation. New Zealanders could afford their welfare state during the post-war decades because there was great demand for their farm products – beef, lamb and dairy produce. The opposition, the Reform Party and the old Liberal Party, combined to form the National Party. Like Labour it accepted the welfare-state provisions – indeed, in outlook it no longer differed markedly from Labour, except insofar as it emphasised reduced state intervention and the importance of individual enterprise. New Zealand’s most distinguished historian, Keith Sinclair, described both the Labour and National Parties post-war as ‘conservative’. This remained true for Labour in the 1980s. In the 1949 general election the National Party won power, promising to end unnecessary socialist controls and to follow policies more in New Zealand’s interests than the internationalism of Labour had been. Sidney George Holland became prime minister. By this time, Cold War hysteria had spread to New Zealand. The government defeated the more militant unions, which were accused of fomenting unrest in Russia’s cause. The National Party won election after election. New Zealanders were well satisfied, prospering from the post-war economic boom. Sid Holland anticipated British conservative politics in enabling tenants to purchase on favourable terms their publicly owned (state) houses. But control over the marketing was retained to ensure more stable prices. In 1957 Holland was replaced by Keith Holyoake. The general election gave Labour a narrow victory, only for the party to preside over three difficult economic years, 1957–60. In consequence the government had to raise taxes and was punished by defeat at the next election. Keith Holyoake, returned to power, led a government determined to carry on the reforming tradition: capital punishment was abolished; an ombudsman was appointed who could adjudicate where aggrieved citizens had complaints against government departments; compensation for accidents and equal pay for men and women were introduced. Another Labour administration in 1972 had to cope with the worry about New Zealand’s future exports now that Britain was joining the European Economic Community, though transitional arrangements cushioned the blow. Meat and butter were still the major exports. Diversification of markets and the development of non-primary products became ever more urgent. By the mid- 1970s markets had diversified and the Japanese imported from New Zealand almost as much in value as Britain. While only a minority of the workforce was needed for farming, and industry had greatly expanded in petroleum products, paper, wood, plastics, chemicals, iron and steel and machinery, New Zealand was still dependent on exports of meat and dairy products to pay for its imports. Therefore, it relied on its earnings from farming and on the low cost of imports. But the former dropped and the latter rose, plunging New Zealand into severe economic difficulties in the 1970s, especially after the rise in the cost of oil. The golden years of affluence were over. The electorate was fairly evenly divided between National and Labour during the unsettled 1970s. In 1975 Robert Muldoon became prime minister when the National Party won the general election and he and his party just managed to gain more seats in parliament for him to retain the premiership after elections in 1978 and 1981. Elections were decided by the state of the economy and by promises to lead New Zealand back to prosperity. Muldoon was a robust political leader, inclined to berate the opposition. But in the one area of government dear to all New Zealanders, social welfare, he legislated the most generous retirement provisions in his country’s history. The economic condition of New Zealand was grim in the 1980s, with unemployment and inflation rising. New Zealand is divided from Australia by 1,300 miles of sea, but by the 1990s relations between the two former British dependencies had become increasingly close. No other Western developed country may be reached after a few hours’ air travel. In their white pioneering phase, both countries had faced similar problems. Yet their development has been distinctive in the twentieth century, and the New Zealander takes pride in the differences. Economically New Zealand’s mineral and petroleum resources were of limited significance. Unlike Australia, it was overwhelmingly dependent on agriculture for exports. But in one respect the two countries confronted a common concern in the twentieth century. They were countries with small populations in relation to the millions of Asians to the north. To safeguard their security both countries felt the need for a powerful ally. As part of the empire and Commonwealth it was Britain on whom they could rely. As long as Britain still ruled the waves, they would be safe. Reciprocal feeling of kinship and support played a part, and New Zealanders (no less than Australians) fought with Britain in both world wars in Europe and in the Middle East. After the fall of Singapore in 1942, New Zealand did not bring the bulk of its troops home from Europe and the Middle East. The threat of Japan now loomed large, but Britain could spare no forces. It was a portent for the future when a US marine division of 20,000 men was stationed in New Zealand. The US was seen to be protecting the Dominion. In 1944, New Zealand and Australia formed their own regional mutual security alliance, the Canberra Pact, since they could no longer rely on the defence link provided by Britain before the war. When the war was over, the US became New Zealand’s principal ally, as it was Australia’s. But the Americans had been willing to extend their commitment to the South Pacific only after the Cold War had broken out in Asia. The US resolved to rebuild Japan and concluded the tripartite ANZUS defence treaty in September 1951 to allay Australian and New Zealand fears of a Japanese resurgence and of Asian communism. Excluded from ANZUS, Britain – with New Zealand – joined SEATO. New Zealand sent forces to defend Malaysia in the confrontation with Indonesia, and a token force in the 1960s to Vietnam. New Zealand was showing loyalty to both allies, the US and Britain. But there was little doubt which was the more important. From 1966 to 1976 Britain progressively withdrew from its responsibilities ‘east of Suez’. ANZUS remained the sheet anchor of New Zealand’s and Australia’s defence policies. In New Zealand this was to change dramatically only in the mid-1980s. The Labour government, which came to power after the landslide victory of 1984, set to with a will to cure New Zealand’s economic problems with Thatcherite fervour. The identification of Labour in New Zealand with politics of the left is quite inappropriate. The consensus over welfare legislation remained intact, as it did in Conservativegoverned Britain. What Labour set out to do was to make New Zealand more competitive – deregulating, removing subsidies and tariffs, turning state enterprises into corporations and raising new taxes. At the same time a tight monetary policy was followed. Unemployment increased and the standard of living began to drop. But the electorate trusted the government’s harsh remedies, believing there was no other way. Labour was re-elected in 1987, despite the hardship the restructuring was causing to many New Zealanders. Prime Minister David Lange’s forceful conduct of New Zealand’s relations with powerful nations gained popularity and compensated to some extent for problems at home. New Zealand would not be pushed around. Lange rightly discerned that the old Cold War mentality was outdated. Nuclear testing in the Pacific by the French had been widely condemned. Labour had made an election pledge in 1984 to ban nuclear-powered warships. Lange’s government saw no future in a nuclear defence of New Zealand that would destroy the Dominion. But in American eyes the nuclear deterrent was the only credible means of defence. The temperature of the nuclear controversy was raised to fever pitch in New Zealand when in July 1985 French secret agents sank Greenpeace’s ship Rainbow Warrior in Auckland harbour just as it was preparing to set sail for the French nuclear testing site; one crewman was killed, and two French agents were captured. Later a US nuclear warship was refused permission to visit New Zealand. For Washington this was a test case. When the Lange government would not relent, the US responded by declaring that it no longer felt bound by the ANZUS commitment to defend New Zealand. Fortunately, with the world changes taking place, the need to defend New Zealand from any hostile nation became ever more remote. In the 1990s New Zealand’s future was bound up with its foreign relations and trade in the Pacific basin. The European Community, including Britain, remained an important market for its agricultural produce, but its largest trading partners were Australia, Japan and the US. The Pacific now accounted for three-quarters of its trade. Although the economic remedies were not lifting New Zealand out of recession, the government did not alter the main thrust of its policies. In 1989 David Lange gave up the premiership, but this did nothing to aid Labour’s popularity. The electorate had suffered enough pain, and no benefits were in sight. During the election of 1990, many people supported third parties in their disillusionment. This allowed Jim Bolger to lead a National government. Bolger’s main policy was to continue deregulation. In an attempt to alleviate unemployment, his government repealed those measures that protected wages and trade union rights. The consensus over welfare support was broken. Universal family benefits were abolished and cuts in other welfare programmes were made. The government succeeded in reducing inflation in 1991 to just over 2 per cent. The cost – over 10 per cent unemployment – was high. The rich had got richer and the poor were poorer, with the Maoris, lacking the whites’ standards of education, now at the bottom of the unemployment heap. The ideal of an egalitarian society had long ago vanished. The government responded to the country’s economic ills by slashing welfare further. But the New Zealand economy in the early 1990s failed to respond to these drastic changes. In conditions of prolonged depression the real danger lay in the electorate despairing of their politicians altogether. New Zealanders are pioneers. They pioneered the welfare state. In the early 1990s they were pioneering the most radical U-turn away from the welfare state, with the intention as the government saw it of weaning the people off the expectation of automatic handouts. Trade union power was weakened by the ending of the closed shop and centralised wage bargaining; trade union protest in 1992 was faced down by Bolger’s government. Publicly owned industries were privatised or turned into corporations, and the financial sector was deregulated. Protected markets of farmers and manufacturers were opened to the winds of competition. State spending was slashed. The break with an almost century-old tradition of state regulation and welfare was a radical one. Instead of progressive taxation, which transfers income from the rich to the poor, high rates of income tax, typical of the welfare state, were slashed. The shortfall in revenue was made up by an indirect tax on services and on everything sold, even food, which hit the poor hardest. What endured were the democratic parliamentary traditions and the legal framework of the state, with the ideal of equal justice for all its inhabitants of whatever race, religion or ethnic background. New Zealand had grown from a population of less than 1 million at the turn of the century to close on 3.5 million in 1992, and enjoyed one of the highest standards of living in Asia. The hardships, deregulation of employer trade union relations and budget tightening reduced support for Bolger. In the 1993 elections his majority was reduced to two. But Bolger’s economic policies paved the way for years of strong economic growth from 1993 to 1996. After the 1996 elections he formed a new coalition administration with the centrist New Zealand First Party. In the following year while Bolger was abroad, Jenny Shipley organised a demonstration coup that ousted Bolger from the party leadership. She then headed a minority government in December 1999 as New Zealand’s first woman prime minister. Economic growth continued despite the Asian crisis, but the coalition was steadily losing popularity as it entered the November 1999 general election. Labour won the election handsomely and a former university lecturer, Helen Clark, became prime minister. She was pragmatic in her approach to traditional labour policies and described her policies as seeking a better balance between policies of the ‘head’ such as economic deregulation and of the ‘heart’, providing targeted welfare that the country could afford. She expresses her views robustly and has reasserted some of New Zealand’s distinctive foreign policy, moving away from close identification with the US. She opposed Britain’s and America’s leadership to wage war in Iraq in 2002 and renewed New Zealand’s nuclear-free policy. Forthright and plain-spoken she impressed the electorate which, in the general election in 2002, gave her party a large majority (41 per cent) over the National Party (21 per cent). At home Helen Clark did not avoid some controversial legislation such as legalising prostitution for the sake of protecting the welfare of the women concerned. Though regarding the link with the Crown outdated, Clark recognised that the time for making New Zealand a republic had not yet come. There were at any rate more important issues to handle. Immigration is also causing some popular anxiety and Helen Clark has to be careful in following a non-racist ‘skills’ approach. A quota system is in place limiting immigration annually. As long as the New Zealand economy continues to do well and adapt to conditions in the new millennium, becoming less dependent on the export of primary commodities, the Labour Party will continue to receive strong support. Important for New Zealand is the removal of European Union and American trade barriers. Clark presses New Zealand’s interests in this respect. New Zealand is a country that can look with confidence into the future of the twenty-first century.