Just more than a week ago in Canberra, Kevin Rudd called on Australians to move beyond the arid intellectual debates of the history wars and the culture wars of recent years. The term history wars was popularised by the leftist historian Stuart Macintyre in 2003.
He and some colleagues were upset the prevailing left-wing interpretation of Australian history set in place by the late Manning Clark, Macintyre and others was being challenged by some conservatives. This process is likely to continue irrespective of what elected politicians or tenured professors might say.
Notably, the Prime Minister’s address did not call for a closing down of the economic debate. In fact, it is Rudd himself who challenged the essentially bipartisan agreement on economic reform shared by political conservatives and social democrats which had prevailed in Australia for more than two decades. He did so in articles in The Monthly in 2006 and last year, and in the Herald in July. The gravamen of this material was to challenge what he has called the triumph of neo-liberalism.
Rudd and his Treasurer, Wayne Swan, are celebrating that, so far, Australia has not gone into recession. Clearly the Rudd Government is entitled to take some credit. However, Australia also escaped recession during the Asian economic downturn of 1997 and the US recession at the turn of the century.
It is the economic reform process which began under Bob Hawke, continued during the Keating government and was prolonged by John Howard and Peter Costello that explains today’s strong performance.
When Howard was prime minister he occasionally paid tribute to the economic reform agenda of Hawke and Keating. Rudd is not inclined to return the favour. Rather he is attempting to associate the previous Coalition government with what he regards as the discredited agenda of neo-liberalism or free-market extremism.
The problem with Rudd’s tactic is that it diminishes, unintentionally, the Hawke-Keating role in the transformation of the economy. In February, Keating queried Rudd’s critique of neo-liberalism on Lateline, pointing out he had been central to the reduction in protectionism, the floating of the exchange rate and introducing flexibility into highly regulated industrial relations. This reform agenda was continued by the Coalition from 1996 until its defeat.
Rudd’s attack on neo-liberalism is not just a matter of spin. Neither he nor Julia Gillard has ever been in the forefront of the economic reform debate. Both entered Parliament at the 1998 election when, foolishly, Labor was walking away from the Hawke-Keating legacy and both opposed the Howard-Costello reform agenda. During their time in opposition, Howard and Costello supported the overwhelming majority of Labor’s economic reforms.
The Howard government was dominated by Howard himself, Costello, Alexander Downer and, in its early years, Peter Reith. The equivalent in Labor are Rudd, Gillard, Swan and Lindsay Tanner. Only Tanner has demonstrated a long-standing commitment to economic reform.
The evidence suggests Rudd and Gillard genuinely believe in the need for re-regulation, especially of labour. The problem is exacerbated by neither the Opposition Leader, Malcolm Turnbull, nor his deputy Julie Bishop being deeply committed to advancing the cause of economic reform.
Rudd is now focused on introducing an emissions trading scheme which, whatever its primary aim, will lead to more regulation and be a disincentive to exports. Gillard is working to re-regulate industrial relations which will restore union privileges and act as a disincentive to small businesses to take on employees.
Last Friday’s decision of the Australian Industrial Relations Commission underlines the problem. It has been unable to implement Labor’s intention neither individual employers nor workers would be worse off under award modernisation. As senior union operative Joe De Bruyn said on The 7.30 Report, these twin aims were irreconcilable objectives.
In the recessions of the early 1980s and early 1990s, the implementation of Australia’s highly regulated industrial relations system put employees out of work. This time round, flexibility introduced by Keating and extended by Howard has led to the retention of up to 200,000 jobs. Even so, unemployment has risen from about 4 per cent two years ago to close to 6 per cent today.
When recovery takes place, the economy will need maximum flexibility to cope with an expanding resources sector, increasing interest rates and a likely appreciating currency. This is not the time to be bemoaning the alleged evils of neo-liberalism. The task should be how to continue the good work of Hawke, Keating, Howard and Costello and those who supported them.