Key documents “missing” from 1975 Canberra Coup

Mike Head

This year will mark the 50th anniversary of the November 11, 1975 dismissal of the Australian Labor government of Prime Minister Gough Whitlam by Governor-General John Kerr, the official representative of the British monarchy.

Labor Prime Minister Gough Whitlam speaking after the dissolution of parliament in November 1975. [Photo: National Museum of Australia]

Kerr used the royal “reserve powers” embedded in the 1901 Australian Constitution to remove an elected government at a time of acute global geo-strategic and political crisis, tearing aside the façade of parliamentary democracy.

The political lessons of the Canberra Coup and what it revealed about the real anti-democratic calculations and machinations in ruling circles are more important than ever today as the capitalist class turns increasingly to authoritarian and fascistic forms of rule, spearheaded by the Trump White House.

2025 opened with the January 2 publication of extracts[1] from an article by academic and Whitlam biographer, Professor Jenny Hocking, drawing attention to three seemingly crucial sets of documents about the Canberra Coup that have apparently inexplicably disappeared.[2]

These murky disappearances add to the already-existing evidence of high-level involvement by the political establishments and intelligence apparatuses in the US, UK and Australia in the orchestrated removal of a government under conditions of explosive international and domestic turmoil.

One of the reportedly missing documents is a file kept on Whitlam by the Australian Security Intelligence Organisation (ASIO), the country’s political surveillance agency, which works closely with its American and British counterparts. Another set is the Government House Guest Books for the months leading up to the dismissal, which could reveal the visitors who personally advised or conspired with Kerr inside his official Canberra residence. The third is an archive of correspondence between Kerr and his now known prominent supporters, notably Lord Louis Mountbatten, who was a pivotal member of the British royal family, a former head of the UK armed forces and a man who had intimate connections with the US intelligence apparatus, as did Kerr himself.

Hocking was informed that the ASIO file on Whitlam was purportedly “culled” by the National Archives of Australia (NAA) “only weeks” before her formal request for access to them. She was also told that the Government House Guest Books for 1974–75 were nowhere to be found, while the archive correspondence between Kerr and his supporters was “accidentally” incinerated.

February 15, 1974 edition of The Bulletin

The global context

To understand the significance of the culling, disappearance or incineration of these documents, all in violation of legal archival protocols, it is necessary to first place the events of 1975 in their historical context.

The Whitlam government’s removal was not simply an Australian experience. It was part of the response in the ruling class internationally to the global upsurge of the working class and potentially revolutionary struggles that erupted with May–June 1968 general strike in France. That upheaval was followed by:

• A near-general strike in Australia in May 1969 over the jailing of a trade union leader
• The “Hot Autumn” of workers’ strikes in Italy in 1969
• The 1970 election and 1973 CIA-backed overthrow of the social democratic Allende government in Chile
• A wave of struggles in Britain, culminating in the bringing down of the Heath Conservative government in 1974
• The downfall of the Nixon administration in the US in 1974 and the final defeat of the American military in Vietnam in April 1975
• The ousting of dictatorships in Portugal, Greece and Spain in the period 1974–76.

Whitlam’s government was removed because it had failed to contain the powerful movement of the working class that had brought the Labor Party to office in 1972, after 23 years of conservative party government. There were related concerns in Washington over Labor’s inability to stem the popular opposition to the US military alliance, triggered by the atrocities of the Vietnam War, and the presence of the key US satellite spy base at Pine Gap in central Australia.

Whitlam, like the Labor Party as a whole, was firmly committed to the US military and strategic alliance, no less than his Labor prime ministerial successors, Hawke, Keating, Rudd, Gillard and Albanese. Whitlam was not an opponent of the Vietnam War, let alone of Washington. But popular opposition to the war, and to the conscription of 20-year-olds to fight it, had grown rapidly since the late 1960s as the massive scale of the US bombings and killings in Vietnam became more widely known. In order to prevent that movement, which erupted largely outside the control of the Labor Party, from challenging the parliamentary order itself, Labor promised to end conscription and withdraw Australian troops from Vietnam, subject to consultation with the White House.

Whitlam and Nixon in the White House, July 1973. [Photo: © Richard Nixon Library and Museum ]

These policies were, in fact, in line with those of the Nixon administration, which sought unsuccessfully to hand the war over to its South Vietnamese puppet regime before the ultimate defeat in 1975. In the Nixon Library in 2012, Vietnam War-era records revealed that by the time Whitlam was granted an audience with Nixon, in Washington in late July 1973, the Australian prime minister had done everything he could to prove that he could be relied upon to back US imperialism, including by backing away from advocating a grouping of non-aligned nations in Asia and a supposed zone of peace in the Indian Ocean.

The tapes showed that Whitlam had also assuaged American concerns that a Labor government would rescind the agreements over Pine Gap and other US installations in Australia. But anxiety continued in Washington about the Whitlam government’s capacity to contain the discontent. Just a month before the Watergate affair forced Nixon from office in August 1974, the US president ordered a secret study of American relations with Australia, exploring options for relocating US intelligence facilities elsewhere.

Whitlam had led the Labor Party to electoral victory in 1972 on a program of limited social and economic reforms, such as a medical insurance scheme and abolition of university fees. However, the formation of a Labor government triggered pent-up working-class demands for higher wages and better conditions. In response, Whitlam called a 1973 constitutional referendum to hand the federal government the power to control wages (“prices and incomes”), only to suffer a resounding defeat. The following year, 1974, saw the greatest levels of strikes since 1919, resulting in the largest wage rises in Australian history.

In the midst of this turmoil, and facing a disastrous defeat in Vietnam, the Nixon administration dispatched Marshall Green as the US ambassador to Australia. Green had a record with US-backed coups, including while he was the US ambassador to Indonesia during the CIA-backed military coup of 1965–66 that massacred up to one million workers and peasants and brought General Suharto to power. Under Green’s command, State Department and CIA officials at the US Embassy in Jakarta provided the Indonesian armed forces with “shooting lists” bearing the names of thousands of local, regional and national leaders of the Indonesian Communist Party (PKI). (See: “Fifty years since the Indonesian coup”).

There is no doubt that Green, the White House and the CIA had a hand in the destabilisation of the Whitlam government that preceded its dismissal. That included businessmen with various intelligence connections embroiling the government in a scandal involving overseas loans. This “loans affair” provided the pretext for the Liberal Party opposition to block the government’s 1975 budget in the Senate, potentially depriving it of funds. That in turn became the justification for Kerr to sack Whitlam, with the support and encouragement of the British royal establishment.

Lord Mountbatten’s authorised biography later recorded him writing to Kerr days after Whitlam’s dismissal to congratulate Kerr on his “courageous and correct action.” During the same period, Mountbatten was heavily involved in parallel operations in Britain, including a potential military dictatorship, for similar reasons, to overturn Prime Minister Harold Wilson’s 1974–76 Labour government. That eventually led to Wilson’s sudden unexplained resignation in 1976. In 2006, it was revealed that Mountbatten, a relative and mentor to both Queen Elizabeth and her son (now King) Charles had been engaged with other senior military figures in the CIA and MI5-backed plots against Wilson.

The Palace letters

The latest revelations of missing 1975-related documents further point to anti-democratic machinations at the highest levels. In 2020, after a four-year legal battle—all the way to the High Court, Australia’s supreme court—Professor Hocking finally secured the release of correspondence between Kerr and the Queen’s Palace showing how closely Kerr conspired with the monarch and her senior advisers in the British ruling establishment in executing Whitlam’s removal.

John Kerr [Photo: Australian Government]

Between 15 August 1974 and 5 December 1977, Kerr exchanged an extraordinary total of 212 letters with the Queen through her official private secretary, Sir Martin Charteris, a former high-ranking military officer. Kerr, in the manner of an intelligence officer—which he had once been—supplied the palace with detailed briefings, complete with newspaper clippings, on the political crisis wracking the Labor government, including the “loans affair.”

In this correspondence Charteris gave the green light for the dismissal, and assured Kerr of the Queen’s support if Whitlam tried to head off his sacking by asking her to dismiss the governor-general instead. Nervous of the response in the working class, however, Charteris advised Kerr to time his coup carefully and to claim that he acted as a last resort and without the palace’s knowledge. Kerr, in turn, reassured Charteris that Whitlam would seek to prevent a general strike.

A mass political movement of workers, students, youth and professional people had erupted against the Liberals’ blocking of supply, but the entire Labor Party and trade union leadership, notably the Labor “lefts” and Stalinists of the Communist Party of Australia, worked to stifle it.

Throughout his letters, Kerr referred to the threat posed by the working class, while reporting that Whitlam was doing his best to prevent a revolt. On October 17, for example, he informed Charteris: “The prime minister [Whitlam] appealed to the trade union movement not to stage a general strike.”

When it was finally carried out, the dismissal sparked days of mass strikes and huge protests. Once again, Whitlam and the union bureaucrats, under the leadership of then Australian Council of Trade Unions (ACTU) president Bob Hawke, blocked demands for a general strike, paving the way for the anti-democratically installed Liberal-Country Party government to call and win an election in December 1975.

Whitlam’s “culled” ASIO file

In her latest article, Hocking reported that 20 years ago she stumbled across a reference, in an unrelated document, to Whitlam’s ASIO file, which clearly would be “a critically important historical record.”

However, four months later, the National Archives, the official repository of all such government records, informed her that, “having maintained this security file for nearly 40 years, it had been destroyed in a routine culling, just weeks before I requested it.”

The NAA told Hocking that, according to ASIO’s records, the destroyed file “contained material of a vetting nature only”—as if such intelligence agency “vetting” of a prime minister was perfectly acceptable! Hocking’s request for access to the ASIO documents referred to in this response went unanswered. Despite NAA legislation and protocols requiring such records to be collected and preserved for history, the NAA had issued an authorisation for ASIO to destroy Whitlam’s security file within weeks of Hocking’s request to view it. 

This is doubly significant because ASIO played an active role in the coup. Most prominently, a negative ASIO “dossier” on then Deputy Prime Minister Jim Cairns was sensationally leaked to a right-wing media magazine, the Bulletin in June 1974. That fed the destabilisation operation against the government, which ultimately involved Whitlam sacking Cairns in July 1975 an unsuccessful bid to save his own post.

The lost Government House guest books

In her article, Hocking reported that in 2010, she first requested access to the Government House guest books held by the NAA, which provide the official details of visits and visitors to governors-general. The catalogue listed 29 files, enumerated consecutively, constituting visitor books from May 1953 to February 1996, but there was a gap, covering two consecutive file numbers, from July 1974 until December 1982.

In June 2023, the NAA submitted an application to Government House requesting the delivery of the guest books for 1974–75. Government House replied that “it does not hold any guest books, visitor books, guest registers or visitor registers from 1975 as defined by the Archives Act 1983.” Government House is required under that Act to place the guest books as “Commonwealth records” in the NAA archives.

There has been longstanding speculation that security and defence officials, including the Chief Defence Scientist Dr John Farrands—supposedly the recognised authority on Pine Gap and the other US bases in Australia—had briefed Kerr about military and intelligence concerns that Whitlam planned to divulge information about CIA agents working at Pine Gap. Vice-regal Notices show that Farrands met Kerr on 28 October 1975.

Much more collaboration is likely to have taken place. Kerr regarded himself as the military commander-in-chief, as specified in the 1901 Constitution. He had direct relations with military commanders and is known to have also had consultations with at least two High Court judges before removing the government.

The burnt archive of Kerr’s prominent supporters

In 1978, soon after Kerr left office, a cache of letters “of outstanding value” to Kerr was supposedly accidentally reduced to ashes inside the Government House. Kerr’s official secretary, David Smith, wrote to Kerr expressing his dismay at having carelessly left this box of significant letters unattended in the photocopying room. According to Smith, a cleaner then inadvertently threw the entire contents into an incinerator.

Kerr had apparently sought these congratulatory letters for use in his forthcoming autobiography Matters for Judgement. Among his correspondents was Mountbatten, along with a former Governor-General and distant royal relation, Viscount De L’Isle, and other prominent figures supporting Kerr’s removal of the government.

From the letters finally released in 2020 following the High Court’s ruling in Hocking’s case, we know that the future King Charles was one of those hailing Kerr’s action. Charles’s letter to Kerr, written in similar terms to Mountbatten’s, stated: “What you did […] was right and the courageous thing to do.”

Conclusion

Together with the bloody CIA-backed military coup in Chile in September 1973, the Labor government’s dismissal was one of the first moves in what became an international counter-offensive against the working class, fronted by figures such as Reagan in the US and Thatcher in Britain. The role of Whitlam and the union leaders, like their counterparts internationally, in suppressing the opposition of workers and youth encouraged the capitalist class worldwide to go on the attack.

A tank in support of Augusto Pinochet approaches the government palace during the 1973 coup. [Photo by @goodvibes11111 / CC BY-SA 4.0]

Today, the economic and political situation is even more unstable and explosive. As this year’s World Socialist Web Site New Year statement explained, the unprecedented oligarchic and fascistic character of the Trump administration, marks a violent realignment of the state to correspond with the nature of capitalist society itself, and not just in the United States. The world’s richest individuals and corporations control resources on an unfathomable scale, producing immense class tensions.

Oxfam says world ruled by “aristocratic oligarchy,” as billionaire wealth surges by $2 trillion

Andre Damon

Guests, including Mark Zuckerberg, Jeff Bezos, Sundar Pichai and Elon Musk, arrive before the 60th Presidential Inauguration in the Rotunda of the U.S. Capitol in Washington, Monday, Jan. 20, 2025. (AP Photo/Julia Demaree Nikhinson, Pool)

The wealth of the world’s billionaires increased by more than $2 trillion in 2024, according to the anti-poverty charity Oxfam’s annual report Monday. Oxfam warned that global society is increasingly dominated by an “aristocratic oligarchy.”

The charity reported that the wealth of the world’s billionaires grew from $13 trillion to $15 trillion in 2024, a rate that is three times faster than in 2023.

The wealth of each of the richest 10 individuals grew by almost US$100 million a day in 2024, on average.

The number of billionaires grew by 204 to 2,769. Collectively, their wealth grew by about $5.7 billion each day, and there were on average four new billionaires created per week.

In its report, Oxfam predicted that the world would have five trillionaires by the end of the decade, compared with its estimate last year that there would only be one.

“The capture of our global economy by a privileged few has reached heights once considered unimaginable,” said Oxfam International Executive Director Amitabh Behar. “The failure to stop billionaires is now spawning soon-to-be trillionaires. Not only has the rate of billionaire wealth accumulation accelerated—by three times—but so too has their power,” he said.

The world’s richest individuals are Tesla and SpaceX founder Elon Musk, with a net worth of $449 billion; Amazon CEO Jeff Bezos, with a net worth of $245 billion; and Facebook CEO Mark Zuckerberg, with a net worth of $217 billion.

The inauguration of Donald Trump prominently featured the attendance of five of the world’s 10 wealthiest people, including Musk, Bezos, Zuckerberg, France’s Bernard Arnault and Google co-founder Sergey Brin.

“What you’re seeing at the moment is a billionaire president taking oaths today, backed by the richest man,” Behar said, referring to Trump and Musk. “So this is pretty much the jewel in the crown of the global oligarchies.

“It’s not about one specific individual,” he added. “It’s the economic system that we have created where the billionaires are now pretty much able to shape economic policies, social policies, which eventually gives them more and more profit.”

The massive enrichment of the financial elite comes amid a spiraling cost-of-living crisis for the vast majority of humanity. While the richest 1 percent of society owns almost 45 percent of all wealth, 44 percent of humanity is living below the World Bank’s poverty line of $6.85 per day.

The Oxfam report also points to the increasingly entrenched character of what it calls an “aristocratic oligarchy.” The report states, “The idea that extreme wealth is a reward for extreme talent is pervasive and strongly reinforced in our media and popular culture. But this perception is not rooted in reality.”

It continued: “In 2023—for the first time—more new billionaires got rich through inheritance than through entrepreneurship. All of the world’s billionaires younger than 30 inherited their wealth.”

The report includes statistics making clear that the wealth of these financial oligarchs is indeed “unfathomable.” It noted, “Even if you saved US$1,000 daily since the first humans, 315,000 years ago, you still would not have as much money as one of the richest ten billionaires.”

It added, “If any of the richest 10 billionaires lost 99 percent of their wealth, they’d still be a billionaire.”

The report related the growth of social inequality to the increasing monopolization of industry. “As monopolies tighten their stranglehold on industries, billionaires are seeing their wealth skyrocket to unprecedented levels. Monopoly power is escalating extreme wealth and inequality worldwide. Monopolistic corporations can control markets, set the rules and terms of exchange with other companies and workers, and set higher prices without losing business.”

As an example, the report noted the staggering figure that “Amazon [owned by world’s second-richest man, Bezos] accounts for 70 percent or more of online purchases in Germany, France, the UK and Spain.”

In a speech upon leaving office over the weekend, US President Joe Biden warned of an “oligarchy taking shape in America of extreme wealth, power and influence.”

The Oxfam report makes clear, however, that this oligarchy is not merely “taking shape,” it has vastly grown its wealth and power under the Biden administration. Biden took office at the height of the COVID-19 pandemic, and the central domestic focus of his administration was bailing out Wall Street and driving workers back to workplaces that were hotbeds of infection, with the aim of reducing costs for major corporations. As a result of its policies, workers’ share of national income fell to the lowest level in decades.

This financial oligarchy uses its control of both political parties to expand its wealth and power at the expense of the working class, whose exploitation forms the basis of their wealth. The incoming Trump administration is a government, as the World Socialist Web Site has explained, “of, by and for the oligarchy.”

Oxfam’s report was published ahead of the annual gathering of the World Economic Forum in Davos, Switzerland. While the report presents powerful and undeniable data about the growth of inequality, it argues that the increasing grip of the financial oligarchy can be broken by “ensuring corporations and the super-rich pay their fair share of taxes.” It does not explain how this is to be accomplished under conditions in which the financial oligarchy controls all of the levers of power.

New Zealand government moves to scrap regulations that constrain corporate profit

Tom Peters

New Zealand’s National Party-led coalition government is preparing to introduce a new Regulatory Standards Bill (RSB) which will entrench a set of far-right principles designed to prevent government regulations from negatively impacting private property rights, “productivity” and profit-making.

The bill is being drafted by the libertarian ACT Party, which received 8.6 percent of the votes in the 2023 election but is playing a leading role in implementing the government’s agenda of tax cuts for the rich, savage slashing of public services and attacks on workers’ rights. ACT’s Workplace Relations Minister Brooke Van Velden recently introduced new anti-strike laws and announced a reduction in the minimum wage.

New Zealand Prime Minister Christopher Luxon (left) and Minister for Regulation David Seymour [Photo: NZ Governor-General]

The government last year created a new Ministry for Regulation, with ACT leader David Seymour in charge, to review regulations and, in Seymour’s words, “to look for red tape to cut.” The RSB will provide the framework for the ministry’s work.

In a speech to the Wellington Chamber of Commerce on November 19, Seymour complained that in 2015 “the cost for businesses to comply with tax and regulatory requirements [was estimated at] $5 billion, or around 1.3 percent of GDP.” He promised to return New Zealand to the de-regulatory environment of the 1990s, when corporate taxes were slashed and social welfare, public education and other services were systematically attacked and state-owned corporations were privatised.

ACT has been calling for something like the RSB for nearly two decades, supported by the New Zealand Initiative (formerly the Business Roundtable), the country’s main lobby group for big business.

An official discussion document on the RSB lists several principles that will be used to evaluate new and existing regulations. The most important one states: “Legislation should not unduly diminish a person's liberty, personal security, freedom of choice or action, or rights to own, use, and dispose of property, except as is necessary to provide for, or protect, any such liberty, freedom, or right of another person.”

As several academics and environmental groups have pointed out, this excludes any consideration of the good of the environment, society, and collective rights and duties. For example, it may be argued that deforestation and pollution by corporations do not directly diminish individual liberty, despite contributing to climate change and the destruction of ecosystems.

Similarly, laws and regulations to limit the availability of junk food, alcohol or tobacco might be considered contrary to “liberty,” “freedom of choice” and property rights, even if such measures would reduce rates of obesity, diabetes and cancer.

The discussion document states that legislation should not “take or impair” a person’s property without “good justification” and the owner receiving “fair compensation for the taking or impairment.” Such compensation must be “provided to the extent practicable, by or on behalf of the persons who obtain the benefit of the taking or impairment.”

In a submission on the law, public policy professor Jonathan Boston noted that under this principle someone whose business is “impaired” by environmental regulations could be entitled to “fair compensation,” paid by the “beneficiaries” of such regulations, i.e. the public/taxpayers.

“In effect, the principle of ‘polluter pays’ would be replaced with the principle of ‘non-polluters pay’,” Boston wrote. He likened it to compensating slave owners for their loss of “property,” instead of compensating slaves for what they have endured.

Employers might also argue that costs related to workplace health and safety laws are inconsistent with the RSB, unless they get “fair compensation” provided on behalf of the people who benefit, i.e. workers.

The RSB would impose sweeping limitations on taxation and levies. Speaking to researcher Melanie Nolan on her Coherent podcast, Boston said: “Potentially, depending on how you interpret some of these provisions, it would be difficult for the government to justify many of the current taxes that it has, and fees and levies that it imposes.”

According to the discussion document: “Legislation should impose, or authorise the imposition of, a levy to fund an objective or a function only if the amount of the levy is reasonable in relation to … the benefits that the class of payers are likely to derive, or the risks attributable to the class, in connection with the objective or function.”

In other words, businesses cannot be levied for anything unless it is demonstrated that businesses themselves are likely to benefit. This could call into question, for example, the levies currently paid by businesses to the state-owned Accident Compensation Corporation, which provides limited support to people injured in the workplace and elsewhere. Employers could argue that they derive no benefit from assisting people who are unable to work and can no longer be exploited for profit.

The RSB will create a streamlined process for corporations to challenge virtually any piece of legislation. A Regulatory Standards Board will “assess complaints about existing regulation that is inconsistent with the principles” and issue recommendations. If the Board finds that there is inconsistency, “the governing Minister must respond to justify deviation from principles.”

The RSB is part of an intensifying social counter-revolution. In New Zealand, as in the US and throughout the world, the government is tearing up social rights and protections that were won by the working class in struggles during the past century, and placing unprecedented power in the hands of billionaires and their representatives.

The corporate media has published only a handful of reports on the RSB and is downplaying its far-reaching implications. By contrast, the media provides non-stop coverage to the ACT Party’s Treaty Principles Bill, which is aimed at fueling racism towards Māori and diverting attention from attacks on the working class. That bill is not likely to become law, since it is opposed by the rest of the government.

The opposition Labour Party has criticised the RSB, with MP Duncan Webb calling it a “power grab” by Seymour. In a December 20 statement Webb said the focus on property rights would “limit [the] government’s right to make rules in the interests of all New Zealanders” and address climate change, safety and inequality.

All of this is utterly hypocritical. The wholesale destruction of regulations in favour of the so-called “free market” began in the 1980s under the then Labour Party government of prime minister David Lange and continued under subsequent National and Labour governments. The dismantling of building regulations led to hundreds of thousands of substandard and leaky buildings and contributed to disasters such as the 2011 CTV building collapse, while laws that allowed mining companies to self-regulate led directly to the 2010 Pike River mine disaster.

The 2017-2023 Labour government did not rule “in the interests of all New Zealanders.” It engineered an historic transfer of wealth to the rich and, after making empty promises to reduce inequality, oversaw an increase in homelessness and child poverty. In 2022 it bowed to big business demands for the removal of all restrictions on the spread of COVID-19, leading to tens of thousands of hospitalisations and more than 4,500 deaths. All of this was enabled by the trade union bureaucracy, which suppressed opposition from workers.

Coalition negotiations in Austria: Right-wing government to implement drastic austerity measures

Markus Salzmann

The far-right Austrian Freedom Party (FPÖ) and the conservative People’s Party (ÖVP), currently negotiating a coalition government in the Alpine state, are planning massive attacks on the working class and on migrants.

Demonstration against FPÖ government participation, at the Vienna Ballhausplatz on January 9, 2025 [Photo by C.Stadler/Bwag / CC BY-SA 4.0]

After coalition negotiations between the ÖVP, Social Democrats (SPÖ) and right-wing Neos failed, Federal President Alexander van der Bellen last week commissioned FPÖ leader Herbert Kickl to form a government. The ÖVP, which during the election campaign had still been calling Kickl a “right-wing extremist” and a “security risk for Austria,” and had ruled out any possibility of government participation under him, has since declared its willingness to serve the fascist as a means of securing a majority.

Foreign Minister Alexander Schallenberg is currently heading the government on an interim basis in place of Karl Nehammer, who resigned as chancellor. The ÖVP politician had taken over the chancellery for a few weeks in October 2021 after Sebastian Kurz resigned due to corruption allegations.

Immediately after the start of negotiations, both parties began to put together an extensive austerity budget. Containing drastic cuts, the budget deficit is to be reduced to below 3 percent, as required by the EU. Currently, depending on the estimate, it is up to 3.7 percent. The dispute over how and over what period the savings will be implemented had led to the failure of the coalition negotiations between the ÖVP, SPÖ and Neos.

According to the information available so far, the planned savings this year alone amount to over €6.4 billion. Within the next seven years, the government wants to save at least €18 billion.

Details of the cuts are not expected until the end of the week, but it is already clear that the cost of the new budget will fall entirely on the backs of the working class. Both parties categorically ruled out any increase in business taxes, such as corporation tax.

More than €3 billion are to be saved by cutting grants and subsidies, with the rest to come from “reforms” and unspecified “further measures.” It is certain that the cuts will affect public services. Under the catchphrase “reducing bureaucracy,” massive job cuts are to be made in public administration, but also in hospitals and other social institutions.

It has also been decided that all measures to limit climate change will be stopped. Even though most of these are hardly more than symbolic, such as the climate bonus, a yearly payment made to all Austrian residents to encourage sustainable practices, this represents a complete renunciation of any kind of climate protection measures.

Even before negotiations began, both parties had declared their intention to cut social benefits. The FPÖ’s demand for a general reduction in social benefits for immigrants also has broad support in the ÖVP. The proposals here range from halving benefits for immigrants to completely linking benefits to Austrian citizenship.

Under the pretext of combating social benefit fraud, both parties introduced a “Social Benefit Fraud Task Force” in the state of Styria. The ÖVP-led federal Interior Ministry has regularly praised the task force, so it is expected it will now also be introduced at national level. The real job of the task force is to harass social assistance recipients and cut the benefits to which they are entitled.

The budget cuts will also be directed against all workers. It is certain that educational leave (paid further training), will finally be abolished, as long demanded by business associations. At the same time, current daily and weekly working hours are to be extended.

There are no concrete plans yet to cut pensions and health services, but both parties have spoken in favour of extensive cuts in these areas in the past.

Another focus of the negotiations will be the attack on refugees and migrants.

The FPÖ has aggressively campaigned on the fascist and inhumane demand for “remigration.” This is now to be implemented. In December, Kickl had already called for “priority action” to immediately withdraw protection status from refugees from Syria and deport them. Further asylum applications from Syrian refugees will no longer be accepted. The same applies to refugees from Afghanistan.

In the “fight against illegal migration,” both parties are calling for border closures. Border crossings, such as those to the Balkan states, are to be secured with fortified fences.

The future government may also target people with a migrant background who have been living in Austria for a long time. A ban on women wearing headscarves in public service, as already set out in the government programme of the FPÖ and ÖVP in the state of Styria, could now also be introduced at federal level. Obtaining Austrian citizenship would be reserved exclusively for “assimilated” persons. The Vienna ÖVP leader Karl Mahrer has demanded that applicants be checked by the state security service for their level of integration and that their internet activities be monitored.

The FPÖ and ÖVP also agree on significantly expanding the powers of the police and secret services and using them against any kind of opposition.

The FPÖ wants to set up a central registration office for “left-wing” teachers. Those recorded could then be threatened with “consequences if necessary.”

Further programmes to “combat extremism” are also to be established. These will be, as could hardly be expected otherwise, directed against “left-wing” tendencies. In this context, both parties have called for tightening up the law on voluntary associations and free assembly in order to ban demonstrations and disliked organisations. The reintroduction of conditional mandatory pre-trial detention is already under discussion, which would allow people to be held in pre-trial custody even where there is insufficient suspicion or evidence.

Kickl’s announcement that the coalition negotiations would also deal with the national public broadcaster ORF (Austrian Broadcasting Corporation) can only be understood as a threat to curtail freedom of the press in parallel to the cuts.

Meanwhile, right-wing extremists or openly fascist groups have nothing to fear under an FPÖ government. On the contrary, they could rise directly to high office.

Kickl and the FPÖ maintain close ties to the ethno-nationalist Identitarian Movement, members of which were present at the FPÖ’s election party for the September parliamentary elections. Some of them had their pictures taken making the white power sign alongside Herbert Kickl. He has already publicly stated that the Identitarian Movement was an “interesting project worth supporting.”

The ÖVP supports the inclusion of these circles. In an interview, the Wiener Standard asked ÖVP chairman Stocker, “So, you do not rule out the possibility that Identitarians could soon be working in state institutions or ministerial offices?” To which Stocker replied, “I will not control the Freedom Party’s personnel lists. I am not the FPÖ’s nanny either.”

While the establishment parties are helping the far-right extremists to power in order to implement their aggressive domestic and foreign policies, a possible government under the leadership of the FPÖ faces resistance from the population. In Vienna alone, at least 30,000 people gathered in front of the chancellery on January 9. The demonstrators carried banners with messages such as “We don’t want a right-wing extremist Austria” and “Never again [fascism] is now.” There were protests in other cities such as Innsbruck, Salzburg and Graz.

China growth reaches official target as economic conditions trend down

Nick Beams

China’s official GDP growth rate for 2024 has come in, as expected, at 5 percent in line with the official target set by the government a year ago. But the growth numbers have given rise to a deal of scepticism as they are framed to meet political objectives and do not reflect the real state of the economy which is experiencing its most significant slowdown in more than three decades.

Pedestrians walk across a traffic intersection near office buildings in the Central Business District in Beijing in February 2024. [AP Photo/Andy Wong]

The National Bureau of Statistics (NBS) said the economy had “recovered remarkably” in the fourth quarter, during which it rose at an annual rate of 5.4 percent. This was attributed to the package of stimulus measures announced since September which bolstered confidence.

Its statement was very much in line with the objectives of the government which is seeking to show that it is taking action to boost the economy.

Analysis of the figures, however, showed that the growth rate was lifted by industrial production due to increased exports. Companies have front loaded their orders from China in order to escape at least the initial effects of Trump’s threatened tariff hikes.

Frederic Neumann, chief Asia economist at HSBC said the headline figure masked “some underlying vulnerabilities” and the frontloading of export orders would “inevitably lead to a payback at US import restrictions begin to bite.”

Despite the upbeat tone of the official press release, NBS director Kang Yi told a press conference that 2024 could be described as “highly turbulent, marked by intensified geopolitical conflicts and escalating trade protectionism” and that the “adverse effects of the external environment are deepening.”

He also remarked that domestically “insufficient demand persists” and employment and income growth were under pressure.

The achievement of the target has not silenced the critics of the government. Long-time China analyst Eswar Prasad, a professor at Cornell University, said the government’s “ostensible achievement” was a “Pyrrhic victory” which further eroded credibility in the official figures.

Scepticism about the official data has been articulated by a number of economists, within investment and financial institutions and even from within official bodies.

One of the most prominent critics has been Gao Shanwen, chief economist at state-owned SDIC Securities, who has advised the government on economic and financial policies.

He raised his doubts at a meeting of the Peterson Institute in Washington on December 12.

“We do not know the true number of China’s real growth figure,” he said. “My own speculation that in the past two to three years the real number on average might be around 2 percent even though the official number is close to 5 percent.”

His comments are reported to have angered President Xi Jinping who ordered authorities to take disciplinary action against him. Other reports indicate that spokespeople for official bodies have been directed to speak positively about growth and financial data.

Analysts at the US think tank, the Rhodium Group, estimated last year that the growth rate was probably half the official target at between 2.4 and 2.8 percent.

Whatever the truth about the actual growth numbers, official data make clear the Chinese economy is experiencing a significant downturn and could be entering a deflationary spiral. Some economists have likened it to what took place in Japan after the collapse of its property and stock market bubble at the beginning of the 1990s.

The worsening economic situation is expressed in a number of areas.

Growth in consumer prices for December was 0.1 percent against a year ago, lower than the rise of 0.2 percent for the previous month. The producer price index, which measures the price of goods at the factory gate, declined by 2.3 percent in December making it the 27th month in a row that it has fallen.

The deflationary pressures are expected to continue through 2025. This is despite various stimulus measures initiated last September which, while having had some limited effect, have been regarded as being insufficient in providing a boost to consumption spending.

The deflationary environment is having an impact on corporate profits.

Data from the NBS released earlier this week showed that profits for companies with more than 20 million renminbi ($2.7 million) in revenue fell by an average of 4.7 percent between January and November last year. This was a bigger decline than the 4 percent experienced in 2022 when the country was still under COVID lockdowns.

The data, which covered some 500,000 companies, showed that 25 percent of companies made outright losses in the January-November period last year compared with 16 percent in 2019, the year before the pandemic struck.

Commenting on the numbers, Laura Wang, chief China equity strategist at Morgan Stanley told the Financial Times (FT): “The biggest reason behind that slowdown, I would say, is deflation.”

Deflationary pressures extending into the future are also being cited as the reason for the fall in yields in the bond market. Earlier this month, the yield on the 10-year Treasury bond fell to a record low of 1.6 percent and has stayed around that level since.

Falling yields are expression of a worsening outlook in the economy as investors, seeing lower prospects for profit in the economy, divert money into government debt, raising the price of bonds and thereby lowering their yields.

Hui Shan, chief China economist at Goldman Sachs, told the FT the downward trend in yields was about “longer term growth expectations and inflation expectations becoming more pessimistic” and “that trend is likely to continue.”

The stock market is telling the same story. Despite some efforts by the central bank to stimulate it, the stock market made its worst start to the year since 2016.

Bloomberg said that “a familiar sense of pessimism” was returning for equity investors in China and cited remarks by Charu Chanana, chief investment strategist at Saxo Markets. She said external pressures on China—the result of Trump’s tariff threats—were being “compounded by China’s domestic economic struggles, including weak consumer confidence, a battered property sector, and looming debt issues.”

The debt concerns relate above all to the property market. Bloomberg reported that developers “are starting 2025 facing liquidation petitions, sliding share prices and mountains of debt, as the nation’s real estate crisis enters its fifth year with little sign of improvement.”

In fact, in some ways the situation is worsening. Sales by the top 100 builders fell 28.1 percent last year, compared with a 16.5 percent decline in 2023.

According to Gary Ng, senior economist at the financial firm Natixis: “Unless home sales recover quickly, the phantom of weak cash flows can continue to haunt China’s high-yield property developers.”

There had been some improvement in so-called Tier 1 cities, but the problem was much bigger in smaller ones, he said.

The major area of growth was in exports in line with the focus of the Xi government in developing Chinese capacity in what it calls the new productive forces based on advanced technology.

Official data released this week show that China’s trade surplus with the rest of the world reached a record high of $992 billion last year. But with a third of this surplus incurred in trade with the US, this source of growth is immediately threatened by Trump’s declaration he will impose a 60 percent tariff on all Chinese goods. It is impossible to calculate their full effect if implemented but current estimates are that the cut to GDP growth would be at least half a percentage point and possibly more.

One way of countering the effect of the tariffs would be to allow the value of the renminbi to fall. But China’s central bank has said it is committed to holding the line on the currency. This is because it fears that any major devaluation would spark a capital outflow and create problems in financial markets.

The slowdown in the Chinese economy is also creating major political problems for the Xi regime. Its sole source of political legitimacy in the eyes of broad sections of the working class and middle class is that it has promoted economic growth.

But there is now a growing gap between official statements and lived experience which was reflected in some comments reported by the FT.

It cited the remarks of the owner of a printing and advertising firm in Beijing who expressed what were growing sentiments.

“I don’t know where this growth is supposed to be coming from. The authorities can say whatever they want. For me, 2024 has been the worst year in my 20-plus years of running this business.”

His firm suffered a 40 percent decline in revenue last year and an even larger fall in profits.

A ride-share driver told the FT: “They said 5 percent growth year after year, but do people feel this growth? For ordinary people… it’s just about earning enough to get by and not starve.”

An economist at Beijing university said: “Middle-class people are losing their jobs for the first time. In 45 years, this never happened.”

When the Chinese Stalinist regime committed itself fully to capitalist restoration after the brutal suppression of the working class in 1989, in which the violent attack on the Tiananmen Square protests was only most public expression. It promised that integration into global capitalism would bring prosperity and the peaceful rise of China.

Poland’s EU Council presidency: Rearmament, police-state measures and a war economy

Martin Nowak

António Costa (president of the European Council) and Donald Tusk (prime minister of Poland) at the ceremony inaugurating the Polish presidency [Photo by European Union]

On January 1, Polish Prime Minister Donald Tusk took over the rotating six-month presidency of the Council of the European Union. Above all, this role involves the organisational preparation of the council meetings. However, it also gives the council president the opportunity to set certain thematic priorities.

Tusk made clear from the outset what is central for him: the EU must be prepared for war. Under the motto “Security, Europe!” he presented a militarist and authoritarian agenda in Warsaw. By this he meant not only the arming of the state and its powers at home and abroad, but in all areas of society, which he linked to the buzzwords “information, economy, energy, food and health.”

In other words, in view of the “tense situation” in which Europe finds itself, all areas of society must be adapted to the demands of war. “If Europe is powerless, it will not survive,” said Tusk.

He made clear how far his considerations go with the following sentence: “The sources of Europe’s greatness—freedom, a sense of sovereignty and our culture—are all worth the effort. Some say that they are even worth the ultimate sacrifice.”

In view of the numerous crimes committed by the major European powers, from colonialism to the Holocaust, conjuring up a pan-European myth of “greatness” is already abhorrent enough.

But much more disturbing is the question: what is the “ultimate sacrifice” for Tusk? The renewed death of millions of soldiers on the battlefields and millions more civilians, as in the past world wars? A systematic mass murder of civilians, as in the Gaza Strip? The annihilation of all major European cities in a nuclear exchange? Or even the annihilation of all humanity as a result of a nuclear winter?

When Tusk raises these questions, he does so not as an individual, or even as the Polish head of government, but as the voice of European imperialism. As a long-standing president of the European Council, he is well connected in the EU. His words show how far the debates among the European elites have already proceeded. The NATO states are increasingly escalating the proxy war in Ukraine, and at least since French President Emmanuel Macron’s statements last year, it has also become clear that the deployment of ground troops in Ukraine is being intensively debated.

Tusk’s agenda is also a reaction to the imminent return of Donald Trump to the White House. During his first presidency, Trump had already intensified the trade war against his European NATO allies. Now, even before taking office, he has made it clear that he will not stop there. By calling for US control of Greenland, which is under Danish sovereignty, he has shown his willingness to create military facts against other NATO states as well.

For the Polish elite, whether in the PiS or Tusk camp, the historical alliance with US imperialism is a given. Defence Minister Władysław Kosiniak-Kamysz promptly supported Trump’s demand to increase military spending to 5 percent of gross domestic product and offered himself as a “transatlantic link.”

But Poland’s economic ties with Europe are much stronger than with the US. Around 30 percent of Poland’s foreign trade is with Germany, followed by the Czech Republic and France (each around 6 percent), while the US accounts for just 3 percent. This contradiction will inevitably intensify in the new Trump era.

Tusk, who clearly represents the faction in Poland’s ruling class that favours cooperation with Berlin, Brussels and Paris, has therefore repeatedly emphasised the need for European unity.

Last year, for example, under Tusk, Poland joined the European Air Defence System (European Sky Shield Initiative) initiated by German Chancellor Olaf Scholz in 2022. At the same time, in May, Tusk, together with Greek Prime Minister Kyriakos Mitsotakis, criticised the lack of a unified European air defence shield. So far, neither France nor Italy nor Spain are participating in the European system.

A clear diplomatic affront was the non-invitation of Poland to the war summit of Scholz and US President Joe Biden in October in Berlin, to which the British Prime Minister Keir Starmer and the French President Emmanuel Macron were invited, but not Tusk. The Warsaw correspondent of broadcaster Deutsche Welle therefore warned that Poland, “disappointed in Germany,” had reoriented itself around the Scandinavian-Baltic bloc.

In a pseudo-philosophical digression, Tusk also proclaimed in his speech that “strength and unity produce wisdom, even in the face of suffering,” leaving no doubt that he wanted to ensure more suffering. He wants to escalate the war against refugees—or the “protection of people and borders,” as he cynically called it.

Tusk, who is often presented as a liberal alternative to the far-right PiS, as well as the Hungarian government of Viktor Orbán, not only seamlessly continues their attacks on refugees, but intensifies them.

On December 18, the Polish government, with the blessing of the EU, passed a package of laws that effectively abolish the right to asylum in Poland. The Council of Ministers can now suspend the right to asylum in designated areas for 60 days. The PiS had already acted in a similar way but had declared a state of emergency to do so, thereby also eliminating the rights of journalists and refugee workers. Under Tusk, the exception is now being made the legal rule.

Although the new law pays some lip service to vulnerable people, with pregnant women already among the victims of illegal push-backs, this is not worth the paper it is written on.

In addition, asylum protection that has already been granted can now be withdrawn if the person concerned has been convicted of serious crimes or supposedly “poses a threat to national security.”

The latter is directed in particular against the millions of Ukrainians who have fled to Poland. While they initially received comparatively extensive and unbureaucratic help, almost all state aid has now been discontinued. Instead, agitation against them is increasing, from openly fascist groups warning of the “Ukrainisation of Poland” to Defence Minister Kosiniak-Kamysz, who denounces them as “draft dodgers.” Kosiniak-Kamysz has declared his willingness to cooperate with Kiev in registering Ukrainian conscripts, so they can be sent to the front.

In the face of recurring crimes by Polish soldiers on the border, Kosiniak-Kamysz has set up a special unit of his own to provide legal assistance to the soldiers. He had previously described as “unacceptable” the arrest of soldiers who had fired warning shots at refugees in spring 2024.

The regular reports of drunken soldiers, violence against refugees and other offences continued seamlessly into the new year. On New Year’s Day, a drunken border guard shot at a civilian car near the border town of Mielnik.

The Orwellian narrative depicting fleeing people as a danger runs like a red thread through the entire far-right agenda. As early as May 2024, the Polish government had already justified the multibillion-dollar “East Shield” project by citing the “hybrid war” that Russia and Belarus were allegedly waging by “exploiting” asylum-seeking refugees.

The Tusk government is not satisfied with the 100-kilometre-long, five-metre-high fence that the previous PiS government had erected. It wants to expand the existing death strip, which is visually comparable to the former border fortifications of the “Iron Curtain,” to include extensive military positions. It is obvious that these installations stand to serve a war with Russia, which is why Warsaw has asked its European allies to contribute to the costs.

Poland is not alone in this. In Finland, Spain and Greece, the EU’s external border is also guarded by the military. The attacks on refugees are only the tip of a general assault on democratic rights. This is shown by the attacks on journalists and refugee workers in the border area. At the same time, the unrestrained attitudes of a fascistic soldiery are being cultivated among border officials.

Under Tusk, social and intra-European tensions will inevitably increase; Trump’s policies will serve as a catalyst. The European Commission is discussing plans to raise around €500 billion for armaments over the next 10 years, in addition to increasing national spending.