P.P. McGuinness – The coronial inquiry into the 1975 deaths of the five journalists in Balibo, East Timor, is an interesting exercise in raking over old controversies – or should be. So far it seems to be yet another of the many politicised attacks on Indonesia which have characterised this issue from the start. Yesterday, the prime minister at the time, Gough Whitlam, appeared to defend yet again his own and his government's response to, and knowledge of, what happened.

In a word, unlike many of his decisions in government, this seems to have been one of Whitlam's most sensible. The truth about East Timor, then and now, has never been in favour among the political Left, which in this matter includes the media and much of the Catholic Church. It is still not clear exactly what happened and why at Balibo, but there appears to have been a good deal of foolhardiness by the journalists who died.

One of the great modern Australian analysts of Indonesia was Heinz Arndt (he died in May 2002, at the age of 87), who was also a keen observer of events in East Timor subsequent to the Indonesian invasion and annexation of 1975. Unfortunately he, like many genuinely knowledgeable witnesses of these events, was not only subjected to persistent vilification for refusing to accept the fashionable version of events, but is no longer available to bear witness.

So I was fascinated the other day to come across a letter which he wrote to me dated December 21, 1994, commenting on an article which I had written on the subject.

The crucial paragraph of the letter reads: "Some weeks after news came of the death of the five Australian journalists, Mick Shann [a distinguished Australian diplomat and ambassador to Indonesia] rang me with the following story: The previous day, a middle-aged man called on him, just arrived from Darwin. He had been in a Darwin pub when he encountered the five journalists, excitedly telling him how they were going to hit the headlines. To get as close to the frontline as possible, they were going to put on Fretilin uniforms. (We were told the Indonesian military had dressed them in Fretilin uniforms after they had been killed. It also became known that they had explicit instructions from their head offices not to get near the fighting.) Mick told me the informant was prepared to confirm the story in a statutory declaration. Mick asked me what he should do. We discussed the pros and cons but in the end decided not to go public since the press and activists would turn it against the department [of External Affairs] and Mick."

There is no doubt that the Indonesian army acted brutally, then and afterwards. But Arndt's comments on East Timor subsequent to 1975 served to dispel the myth beloved of the activists that under Indonesian rule the province suffered famine and deprivation. In fact, by the time of independence it was far better off than it had ever been under Portuguese rule, and so far arguably than under the regime which has followed independence. And its social services and education system were far superior to anything the Catholic Church had allowed when it controlled these areas. The events of independence unfortunately, with fault on both sides, destroyed a good deal of this beneficial Indonesian legacy.

But Arndt is no longer there to act as an honest analyst of these matters, in the face of abuse and denigration from those with a political axe to grind in Australia – sometimes referred to as the war party against Indonesia. (They are still peddling a similar line about West Papua.)

What led to my referring to this letter was a reading of a new book on Heinz Arndt's life and work, Arndt's Story (ANU E Press and Asia Pacific Press, by Peter Coleman, Selwyn Cornish and Peter Drake).

This is a detailed account of Arndt's life and work prior to and particularly since his arrival in Australia in 1946, to a lectureship in economics at the University of Sydney. He had behind him a term in an internment camp (he was originally from Germany), and a distinguished first publication, Economic Lessons of the 1930s.

In due course he became a professor first at the old Canberra University College and then at the Australian National University. At first a socialist and adherent of Keynesian economics, he developed intellectually and professionally to a position closer to that of Milton Friedman, partly through his earlier specialisation in monetary economics: he was the author of what became for many years the standard work in the area, The Australian Trading Banks (1957 and many reprints), and many other books and articles.

But his greatest contribution to Australian economic life came from his interest in development economics and our near neighbours. Early on he realised how important Indonesia was for Australia and he became a leading scholar of that country's economy, thus no doubt earning the enmity of those who thought the future had to be socialist (they began as fans of the Sukarno regime and the Indonesian Communist Party), and the scholars who wanted to preserve traditions in aspic at the expense of the welfare of the people.

He founded and largely wrote for years in the Bulletin of Indonesian Economic Studies, which had world significance as the main English language publication in this area.

Thus the ANU became an important centre for the study of Indonesia, as well as of other countries of interest to Australia. Arndt's students have continued to have great influence in these matters, and so have contributed much to Australia's understanding of its region.

This account of Arndt's life and work contains much that will mainly interest academic bureaucrats, but it is a rare portrait of one of our great immigrants who became a benefactor of his new country. Would that more of our economists (not to mention sociologists, anthropologists, etc) were of such social utility.

He was also for years a co-editor (with Coleman) of Quadrant but severed his connection with the magazine when it had an episode of protectionism and economic irrationalism under Robert Manne in 1990s.

[P.P. McGuinness is the editor of Quadrant magazine.]