Described when he took office as "a man with the flexibility of mind and ability to mix with people, so necessary for a Governor", Hannah was appointed a Knight Commander of the Order of St Michael and St George (KCMG) and a Knight and Deputy Prior of the Venerable Order of Saint John in September 1972. His term as Governor was relatively uneventful until 1975. In October that year, he created controversy at a Brisbane Chamber of Commerce luncheon by criticising the "fumbling ineptitude" of Prime Minister Gough Whitlam's Federal Labor government for placing Australia in "its present economic state". Vice-regal appointees in Australia were expected to remain above politics but Hannah declared that he would be "guilty of sheltering behind convention, of denying my heritage and failing in my regard for the people of Queensland" if he did not speak his mind. The incident occurred in the midst of a constitutional crisis and, according to military historian Chris Coulthard-Clark, was "widely seen as a blatant intervention in the national political arena". The Federal government responded by advising the Queen to revoke Hannah's dormant commission to serve in place of the Governor-General if required; at the time Hannah was the second in line to serve as Governor-General, after the Governor of New South Wales. Commenting on the episode 20 years later, former Governor-General Bill Hayden, himself from Queensland, spoke of "Whitlam's peremptory and justifiable dismissal of Queensland Governor Sir Colin Hannah". Hayden observed that, "Hannah's transgression was not so much that he suffered from an excessive notion of his own importance, which he did, but rather in the intemperate manner he assailed the national government at a public function in Brisbane. In doing that he soared dangerously above his natural level of pomposity."