Connor was not the only minister who was implicated in the loans affair. Jim Cairns, the Deputy Prime Minister and Treasurer, had also been involved in a separate loan deal with a Melbourne businessman, George Harris, who had offered to secure funds for the government. Cairns had signed a letter in March 1975, agreeing to pay Harris a 2.5% commission, which he later denied in parliament. When the letter was revealed in July 1975, Cairns was sacked by Whitlam.
The Aftermath: The Constitutional Crisis and the Dismissal of the Government
The loans affair damaged the credibility and popularity of the Whitlam government, and gave the opposition a pretext to block its budget bills in the Senate, where it had a majority. The opposition hoped to force the government to call an early election, or to persuade the Governor-General to dismiss the government and appoint an interim administration. The government refused to yield, and a constitutional deadlock ensued.
The crisis reached its climax on 11 November 1975, when Kerr dismissed Whitlam and appointed Fraser as the caretaker Prime Minister, pending a double dissolution election. This was a controversial and unprecedented move, as it was the first and only time that the Governor-General had exercised his reserve powers to dismiss an elected government. The dismissal sparked a public outcry and a constitutional debate that continues to this day.
The election was held on 13 December 1975, and resulted in a landslide victory for the Fraser-led coalition, which won 91 seats out of 127 in the House of Representatives, and 35 seats out of 64 in the Senate. The Whitlam government was decisively defeated, and its reform agenda was largely dismantled by the Fraser government. The loans affair was one of the main factors that contributed to the downfall of the Whitlam government, and marked a turning point in Australian political history.
Conclusion
The loans affair was a political scandal that involved the Whitlam government’s attempt to borrow billions of dollars from the Middle East through a dubious Pakistani banker, Tirath Khemlani, without following the proper procedures and constitutional requirements. The affair exposed the government to allegations of corruption, incompetence, and deception, and contributed to its downfall in the 1975 constitutional crisis, which resulted in the dismissal of the government by the Governor-General, Sir John Kerr, and the election of the Fraser-led coalition. The loans affair was a major political and constitutional drama that shook Australia and had lasting implications for its democracy and governance.
