In the face of economic difficulties and the political impact of the Loans Affair, Whitlam remained vulnerable throughout 1975. After a series of resignations in 1975, Opposition Leader Malcolm Fraser announced that the Senate would defer passage of all appropriations bills until Whitlam called another election. Whitlam refused, and this confrontation was followed by several weeks of constitutional crisis, which raised a number of crucial questions about Australian democracy and the roles of the House of Representatives and Senate in the Australian system.
Kerr, by now governor-general, took an active interest in the crisis and became convinced of the need to dismiss Whitlam from office. In a later statement Kerr said he believed that it was the democratic and constitutional solution to dismiss a prime minster who could not guarantee 'supply' and to let the Australian people decide the conflict. Kerr