OPPOSITION Leader Malcolm Turnbull and his deputy Julie Bishop have offered bipartisan co-operation with the Rudd Government in the face of a global credit crisis and looming recession. As Bishop put it to Laurie Oakes on the Nine Network last Sunday, there are a number of Opposition members with years of government experience and they could help.
There is no reason to imagine this is a cute political ploy. The market meltdown emanating from Wall Street and Europe is obviously serious. International Monetary Fund head Dominique Strauss-Kahn, speaking to the G20 meeting in Washington last week, warned that the global financial system is close to meltdown, but also threw his hope behind government bailouts worth billions, a measure he says should start banks lending again.
The federal Government has assured Australians our banks are sound and not facing anything resembling the tremors experienced by their US counterparts. All true. However, every new development, from a sharp cut in official interest rates by 1 per cent, news of fast-falling returns of older Australians’ superannuation investments and the Government’s insurance of bank deposits (what’s a bank?) are shaking ordinary Australians’ confidence in the future.
If the divisive climate of the US election is anything to judge by, electors are seeking a solution as well as reparations. Co-operation seems to make sense. After all, it’s not who takes office that matters most but whether lives and livelihoods are protected. The Rudd Government may well find itself on a war footing soon enough, although the enemy will no longer be the traditional sort of opponent but financial destruction. This is not a first in Australian experience.
As for bailing out those who need financial support for a renewal of confidence, Peter Costello’s memoirs provide graphic detail of Australia’s leading role in getting the IMF to back the economies of Asia in the Asian meltdown of 1997.
Closer to home, there was co-operation of historic proportions in 1930 when Labor treasurer Joe Lyons, working with conservative MP Robert Menzies and helped by figures in the financial markets, raised a bailout (of a kind) from thousands of Australians to convert a pound stg. 28million overseas loan to Australian bonds after the stockmarket crash of 1929.
The crisis of 1929-31 came at a time of Labor rule in Canberra. In late 1930, the recently elected Scullin government faced the repayment of an enormous loan with British banks.
Radical Labor voices in caucus, including John Curtin, argued the loan repayment should be delayed: that is, the loan agreement should be repudiated. Acting Labor treasurer Lyons argued that such an action would be financially reprehensible, and global suicide for a small trading nation such as Australia.
What followed was, for Australia at the time, something almost as dramatic as the recent Washington bailout of Wall Street financial institutions. But, unlike the situation in the US today, the financial backing came from private investors large and small.
In a move that was as bold as it was unusual, Lyons, in collaboration with a young Menzies, then a Nationalist Party member of the Victorian parliament, and Staniforth Ricketson of stockbroker J.B. Were, over some weeks raised about pound stg. 30million from citizens and investors in a government scheme to refinance that overseas loan.
Credit confidence in Australia was renewed as a result of combined efforts by Labor and non-Labor operatives. It made Lyons a national figure. Even, as time would prove, an international figure. The loan conversion served as a basis for collaboration between Lyons and Menzies and a number of senior figures in finance and conservative politics in Victoria.
The fate of Labor was decided in the ensuing months. Failure by Scullin to quell the divisive elements within Labor, as citizens groups began mushrooming to protest against the federal government’s failure to unite behind a responsible rescue scheme, led Lyons and a handful of other MPs to leave the Labor Party.
On May 7, 1931, the birth of a new conservative party was announced: the United Australia Party. Its name reflected the aspirations of the troubled citizens’ leagues. Lyons became leader, as then Opposition leader John Latham stepped aside. The UAP crossed political divides: a non-Labor party with a Catholic at its helm, a historic first. In the 1940s it would become the basis for the Liberal Party.
There is no suggestion here that the Rudd Government is in anything like the trouble federal Labor faced in 1930-31. But failure to act in a united way to solve a crisis did lead, in 1931, to the defeat of Labor. And it is early days in the financial meltdown.
Washington, with the $US700 billion bailout, has shown that a unity ticket on government policy, even while the US presidential election continues to be fought out, is what most people want.
The two-party or multiparty system of democracy in the West is the best we could wish for in representative politics. But, in the worst of crises, maybe non-partisan collaboration is better.
Article published in The Australian