Howard’s way ideal for Shorten

After spending ten of the past twenty years working for Labor Party politicians, I recently decided to try something new and joined a free-market think tank, the Centre for Independent Studies. Reaction among my Labor and Left friends to this has been noticeably divided along pre and post Keating era lines.

Many MPs from the Hawke Keating era have been members of the CIS. Senior Labor figures including Kevin Rudd have attended the Centre’s annual conference Consilium. But increasingly Labor MPs have disengaged with institutions that support free markets.

The new generation of MPs have rejected many of the competition and deregulation policies which defined Labor in the 1980s and 90s in favour of a resurgent pre-Whitlamite statism exemplified by car industry subsidies, airline nationalism and defence industry boondoggles.

Labor MPs are quick to claim credit for a generation of economic growth driven by Hawke Keating reforms. They are less quick to promise to finish the job those reformers began. As Bill Shorten reassesses Labor’s policies during the exile of opposition, he would do well to ask why Labor turned its back on the policies that contributed so much to the living standards we enjoy today.

Back in the 90s when Paul Keating gazed cheekily over his Ray Bans at us from the cover of Rolling Stone, it made sense for Labor to be the party of deregulation. Labor represented the poor and the poor have the least money to gift to corporations and other rent seekers to whom governments grant subsidies.

The poor can least spare the dollars to prop up inefficient local industries who thank them for their taxes with higher prices at the cash register. The poor can’t pay a premium for over engineered government services such as the high prices mandated by our energy ‘reliability’ standards. The poor can’t afford to subsidise a national airline mostly used by the middle class and the wealthy.

The poor more than any other group in society could quite do with some of their tax dollars back in their own pockets.

Understood in this context, free market reforms can be seen as progressive policy. Rising living standards based on improved productivity and the decreasing costs of goods and services in real terms meant the poorest Australians were richer at the end of Labor’s reign thanks to deregulation.

Labor’s economic reforms ushered in an era of world beating prosperity and we ended the century among the richest, healthiest, best educated people in the world with very little restraint on our genius, hard work and creativity. By the end of the era it was possible to claim with some justification that Labor was the party of the free market.

But after 11 years of Howard government, Labor lost its corporate memory. Little was left of the Hawke, Keating ethos except for the torches carried by Martin Ferguson and Craig Emerson. Emerson championed freer international trade while Fergusson pursued completion of national energy market reform.

Meanwhile their colleagues went busily about partially renationalising the telecommunications sector; creating national regulation for charities already regulated by the states; deepening the commonwealth’s role in state services such as primary schools and hospitals; adding federal regulation to state based resources developments and preparing but ultimately failing to implement laws to censor the press and filter the internet.

Competition policy which had delivered huge benefits to consumers in the form of cheaper prices for clothes, food and travel lagged. Energy and transport reforms whose benefits were estimated in the billions by the Productivity Commission had no political champion.

As the economic rationalists disappeared, there were plenty in Cabinet deciding how to spend the national wealth but few thinking about how to create it. The once party of the workers revealed itself as increasingly the party of the urban middle class and of the public sector itself.

Middle class statists promoted a social agenda based on growing state control of childcare and education, increased environmental and business regulation, and a preventive health agenda including restrictions on alcohol and junk food consumption.

The working class who were once Labor’s core constituency were increasingly bullied about their weight, alcohol consumption and parenting skills by people who did little to address their economic exclusion or material living conditions.

In 2012 Dennis Glover of the think tank Per Capita wrote, “it’s time for the ALP to start taking its thinkers seriously, and for those thinkers to come out of their self-imposed silence and begin to write books and essays and give lectures.”

Since then quite a lot of books have been published but mostly by people who have left the field. Many are by former Members like Lindsay Tanner, Rodney Cavalier and Frank Sartor or by non-combatants like speechwriter James Button, ex Swan Chief Jim Chalmers, AFR journo Aaron Patrick and journalist/historian Troy Bramston.

Books from politicians spelling out their detailed plans for governing remain rare. The exceptions to this are Chris Bowen whose Hearts and Minds was published last year and Andrew Leigh who gave us Battlers and Billionaires. Kim Carr wrote one as well but the title, a Letter to Generation Next suggests he was writing it from the departure lounge.

Mark Latham with his usual pith noted the outpouring of paragraphs was, “mostly silent on the development of solutions”. He proposed that, “the tragedy of modern Labor was the decision, after the party’s 1996 election loss, to shelve the Keating agenda”.

The politician who lays the best claim the Keating agenda is Chris Bowen. Speaking to The Australian for this article Bowen says, “I would regard myself as an economic rationalist”. He notes that the term became used as a pejorative in the 1990s due in part to books like Michael Pusey’s Economic Rationalism in Canberra. “Of course”, says Bowen, “he didn’t know then that the sorts of policies he opposed in that book like the freeing of trade, the deregulation of the financial sector and the revving up of competition policy would lead to 22 years of uninterrupted economic growth”.

“The Hawke-Keating Labor Government deliberately embraced the market precisely to spur growth,” he says, “because it was ordinary workers paying the price for a sclerotic economy because of higher than necessary unemployment and through inflated consumer prices brought about by protection.”

Markets, Bowen says, should be embraced, “but enhanced with government action to address economic and social issues such as poverty, health care and education. If we are to embrace the individual, government should be active in giving people the best life start possible and the best chance to grow throughout their entire lives. There are valid concerns about the signs of growing inequality around the world, but the answer is not necessarily bigger government. It is better targeting of social payments, ensuring an efficient and progressive tax system, a serious commitment to reducing or eliminating intergenerational immobility.”

These Keating-esque arguments are a long way removed from the positions Bill Shorten’s ALP has taken on SPC, Holden and Qantas. It is further still removed from the responses some members of the shadow Cabinet made to last week’s speech by Martin Ferguson who was accused of having, “changed sides”.

Ferguson’s call for reform covered three key areaseduce red and green tape; commit to market-based policy; and re-evaluate how our workplace relations framework influences 
access to labour and how it affects the economic viability of new projects.

This amounts to taking off some of the brakes placed on job growth by Labor under pressure from the environmental and union movements. Fergusson noted in his speech that, “The oil and gas industry is regulated by around 150 statutes and more than 50 agencies”.

Fergusson further noted the Productivity Commission has estimated that unnecessary regulation is costing Australia up to $60 billion — or 4 per cent of GDP — each year. This is actually old news. It was a finding which supported the establishment of the Seamless National Economy reforms under the Rudd government. The former Finance Minister was promoting these same reforms regularly in the lead up to the election. Labor was trumpeting the benefits of the Seamless reforms as recently as a fortnight ago during the Senate hearings into the National Audit.

That Fergusson is still committed to this important policy of the last Labor Cabinet makes him arguably more consistent and steadfast than those who appear to have changed their tune to fit the narrative of Opposition.

In his own words Fergusson’s goal is to encourage the unions to see, “that their members’ long-term interests are aligned with their long-term job security”. It hardy signals time to call the HR Nicholls Society membership committee.

In books about the years of reform and growth under Hawke Keating Labor, John Howard emerges as the silent partner in these important reforms. From The End of Certainty to The Australian Moment it’s clear Howard’s principled support for Labor’s controversial reforms made the process easier and reduced undue public fear.

As Australia faces a new set of economic challenges, Shorten has the choice to oppose for oppositions sake or take a leaf from Howard’s book and put Australia first.