From Fraserism to Fightback

CHAPTER 12

Ill est bon de tuer de temps en temps un amiral pour encourager les autres.

Voltaire

THE OPPOSITION REFORMS ITSELF

The record of Parliamentary Oppositions is to encourage demands on the economy that they would not countenance were they in Government.  Against that background, the Coalition in Opposition from 1983 to 1996 was exceptionally responsible.

After the experiences of stagflation in the 1970s, the rapid emergence of liberal/free-market/ small-Government values had sent socialism into retreat everywhere.  Australian Labor, which could no longer credibly pay it even lip service, moved into the ideological territory to which the Liberal/National Party had paid its lip service.  Because the Coalition's philosophy was strictly "Claytons" and nobody drew much inspiration from it, that had not been difficult.  To govern, it had relied heavily on the advice of bureaucrats, and to win elections it had, more often than it should have done, used regulation and taxpayers' money to buy votes from interest groups.  For decades the Coalition MPs had prided themselves on pragmatism, avoiding ideology primarily by not thinking about it.  It is, however, virtually impossible to present a political party to the public as "the party without beliefs".  So, while practising creeping collectivism, Coalition MPs had repeated an ill-comprehended litany of its dangers.  During the stable fifties and sixties the approach had worked politically and had seemed initially to serve the economy reasonably well, particularly as overseas comparisons were then less easily made.  However, by 1983 those days had long gone.  When the dry movement evolved it was interpreted as being "ideological".

Perhaps John Hyde dismissed the philosophical commitment of some of his colleagues to the collectivist practices of the Fraser Government too readily.  Be that as it may, within the party as it went into Opposition in 1983, there was a small band of committed Wets who advocated control over events and people's lives that Dries thought wrong.  One of these, Ian Macphee, was to engage in bitter rearguard warfare, another, Chris Puplick, a less bitter campaign, and yet another, Peter Baume, was to resign the front bench on a matter of principle.

When the Hawke Governments became among the more effective reforming Governments in the world and in Australia's short history, they and these Wets presented the Coalition with a dilemma.  It could have behaved as Oppositions mostly behave, but to cosy up to disgruntled vested interests would have meant calling for collective action to prevent free enterprise.  A Liberal Party on the collectivist edge of Labor was barely credible, risking loss of identity.  It would, however, be unfair to imply that the Coalition's dry credentials were merely pragmatic.  Many of those who survived the 1983 election were ashamed of how their parties had governed and were determined now to do better.

These chastened Coalition MPs often led the debate for reform.  The advantage they gave the Government went well beyond management of the Senate to management of public perceptions and political risk.  The Hawke Governments were thus able to escape the full measure of the short-run political odium that so often attends reform.  With the Opposition backing reforms with only modest differences and often insisting that the Government go further, status quo vested interests had nowhere effective to turn.  Without the support of a major party there was no point in their wooing the Democrats.  Hawke, who in any case led an unusually high-quality team, was thus given a rare advantage by a responsible Opposition.  Credit for the period of reform of exceptional quality must go in part to the Opposition.

From the moment of its defeat in 1983, the Coalition began adopting drier economic policy.  To the extent that telephone conversations were anything to go by, John Hyde might have been excused for believing that several "Wets" had all along been closet Dries.  Nevertheless, when Prime Minister Hawke made some free trade noises while overseas, Peacock, who was then Liberal Party leader, chose to criticise;  saying, among other things, that the policies of the previous Government in relation to the car industry and textiles, clothing and footwear industries had been about right.  Bert Kelly and John Hyde issued a stinking and widely-reported press release.  Hyde received a hurt telegram from Peacock's office complaining that he was attacking his friends. ⁽³²⁶⁾

Every sensible announcement of Hawke's May mini-budget ratcheted up Hyde's wrath with Fraser and Co.  In the House, the Opposition interjected the usual banalities but its press comment was generally to the point and constructive.  Friends, advisers and critics all reminded Hyde that, "One swallow did not a summer make" but for once, he looked back with the thought that his optimism was nearer to the mark than their cynicism.

The Opposition was, of course, no candidate for beatification.  During a 1988 by-election campaign for the Adelaide seat, for instance, it campaigned vigorously and effectively against timed local telephone calls.  Ross Gittins and Max Walsh both interpreted the result as a set back for economic rationalism.  Walsh wrote:  "The telephone issue symbolised the choice between a rational economic policy and political exploitation through fear ... [The issue] was simply used by the Liberals ... to frighten the ill informed." ⁽³²⁷⁾  On that occasion the Coalition had indeed behaved badly, but it excited the criticism that it did only because senior columnists, such as Walsh and Gittins, had by then grown accustomed to it behaving better.  Both before the mid-1980s and since the early 1990s such populist behaviour did not excite comment.

CHANGING THE PILOT

Fraser resigned the Liberal Party leadership without grace.  He neither rang many of the defeated to offer commiseration nor addressed the first Opposition party meeting.  The Liberal Party began 12 years of leadership instability that was to cause many people to look back to the Fraser years with some nostalgia.  On the Friday after the election the survivors elected Peacock leader with 36 votes to 20 for Howard.  Howard was re-elected deputy.  Then a mere two and half years later, in September 1985, Peacock yielded to Howard.  In May 1989, it was Howard to Peacock again;  in April 1990, Peacock yielded to Hewson;  in May 1994, it was Hewson to Downer;  and finally, in January 1995, John Howard returned to the leadership.

Concerning changing the leadership of the Labor Party Graham Richardson wrote:

You must undermine the leader in the eyes of the Caucus to unseat him but not so much that the electoral damage is irreparable ...

With all sides snugly cloaked in the best interests of the party, everybody could get up to all sorts of bastardry with a clear conscience. ⁽³²⁸⁾

It was like that in the Liberal Party also, except that the Liberals were less professional when it came to recognising irreparable damage and Richardson was wrong to say that everybody got up to bastardry.  In either party, those were the methods of only a minority.

Four of the five principal parliamentary Dries had lost their seats.  Only Carlton remained but Peacock appointed one of the four, Peter Shack, as his political adviser.  Howard, however, chaired the crucial policy committee and it included two who were clearly dry, Carlton and the National, Stephen Lusher, and Chaney who, despite his reputation, is in my opinion at least as much dry as wet.  The Coalition parties tried to avoid the wet/dry labels, but it proved impossible to gloss over the differences of opinion.  These were soon to see the Liberal Party fighting over industrial relations, with Howard taking the dry corner. ⁽³²⁹⁾  The policy committee shortly recommended further reliance on indirect taxation and an education system based on vouchers to promote choice. ⁽³³⁰⁾

PEACOCK'S FIRST LEADERSHIP

From the beginning of his leadership Peacock struggled to maintain his authority within the party and his stature without.  In the Parliament and the media Howard tended to out-perform him on policy.  That Howard should have done so in the Parliament was his form but that he should do better with the media probably reflected the media's view that it was in Hawke's interest to destabilise Peacock.  Anyway, four years later when Howard led the Opposition, the favourable stories were all about Peacock.

David Barnett wrote that when Keating floated the dollar Howard had to talk Doug Anthony out of issuing a press release condemning the Government. ⁽³³¹⁾  Anthony seemed still not to appreciate the injury done by political interference in exchange rate setting, not least his own.  His retirement from the parliament shortly afterwards marked the passage of another of the "young old men" -- of the McEwenists.

Under Peacock the Coalition adopted a radically changed policy stance.  Only six months into Opposition, it was espousing greater reliance on indirect taxation, gradual reduction in tariffs and partial dismantling of Medicare. ⁽³³²⁾  The Peacock and Howard camps were to claim credit for these policy positions, both I suspect with some justice.  Although the most critical issue, industrial relations policy, remained unresolved and although it is easier to say things in Opposition than to do them in Government, these were all tough decisions with political costs attached.

The Coalition went to the December 1984 election calling for "family income splitting", that is, where husband and wife lived from one income, then their earnings would be taxed at the lower rate that would apply had they earned half each.  The change was to be funded by expenditure cuts and broadening the indirect tax base. ⁽³³³⁾  To most Dries the justice of the measure seemed straightforward but some feminists opposed it vehemently.  The Coalition was showing guts.

Labor won the election but Peacock had performed better than many expected.  Following the poll, he appointed a drier shadow Cabinet, shifting Ian Macphee to Foreign Affairs and appointing Peter Shack, who had just been re-elected, Shadow Minister for Employment and Industrial Relations.  Carlton was dropped.  His demotion was, however, for the indiscretion of canvassing his own leadership prospects during the campaign rather than for policy differences. ⁽³³⁴⁾  It had not been Jim's smartest move but he was as influential on the backbench as in the Shadow Ministry.  Howard was dropped from chairmanship of the policy committee but that too seemed not much to affect his influence.

David Barnett tells us that at the time of the Tax Summit:

Howard regarded the broad-based consumption tax as an issue which placed the Opposition's credibility at stake.  To backtrack was impossible and he would not.  Moreover, he told colleagues, by supporting Keating he was bringing pressure on the Government, because of the Opposition coming to it from left-wing members of the Government and the caucus.  "I believe the line I have taken is the correct one" he said in The Age on 11 May.  "I'll make no apology for it.  I will continue it.  To the extent that Mr Keating supports policies I agree with, I'll agree with him."  Howard may have been putting pressure on the Government in caucus but in the public arena he was trying to make sound policy politically feasible.  He nearly succeeded.

Howard continued his practice of giving credit where due and publicly establishing an economic agenda that could be repudiated only at political cost.  It was the technique that the parliamentary Dries had employed and Howard employed it with the authority of a potential leader to greater effect than they had.  His response to the 1985 budget caused him no disadvantage in the continuing comparisons with his leader.

HOWARD'S FIRST LEADERSHIP I

In September 1985, John Howard won the Liberal Party leadership and became Leader of the Opposition.  At the time he was arguing for privatisation and deregulation.  The 38th Liberal Council held in Adelaide eleven months later was seen as a watershed.  Howard's address to the Council was reported in The Bulletin "as all the Dries could ever have dreamed of" and he told the media that he would do what had to be done and if that meant only one term so be it.

In fact, the address was nothing of the sort.  However, it was clearly progress and his Thatcherite remark to the press was all that the Dries could have asked.

From the time of the accession of John Howard, the Coalition provided clearer leadership from the Opposition benches.  It was not radical -- that was to come later -- but during the period from late 1985 to late 1987 the Coalition did manage to stay on the smaller-Government side of the Government.  The Opposition was promising to take Australia back to the tax and spending levels of the early 1980s.  The AIPP produced The Forgotten Election Issues describing the differences between Labor and Liberal policies on spending and taxing as trivial compared with the differences on trade and labour market reform. ⁽³³⁵⁾

Both the Peacock and Howard Oppositions opposed Capital Gains Tax.  The business community also opposed taxing capital gains but their cause had not been taken up by most Dries.  Many of them opposed the taxation of capital per se and most were strongly opposed to policies that caused the combination of inflation and income taxes on nominal rather than real earnings to reduce the real value of cash assets.  Nearly all, however, accepted the taxation of real capital gains, if only because, without such a tax, income tax avoidance was too easy.

The Liberal Party's platform for the 1974 election was said, probably truthfully, to have been cobbled together by Philip Lynch over Easter from the minutes and statements of various policy committees and his own good sense.  It was a shopping list of uncosted promises, framed to convey concern for groups that could deliver votes while avoiding promises with impossibly high price tags.  It had been well received.  Platforms drafted more democratically by the policy committee and its sub-committees representing the major areas of potential voter discontent -- rural, manufacturing, welfare, environment etc etc -- had been even less mindful than Lynch of the long-term interests of the nation.  When in 1985 David Trebeck, who had been the deputy director of the National Farmers' Federation and one of the nation's most sophisticated Dries, was hired by the Liberal Party to service the Policy Review Committee, serious reform was obviously intended.  He was unlikely to allow himself to be associated with nonsense and getting rid of him once appointed would have been politically costly.

The Party produced Policies for Business written by Wolfgang Kasper and David Trebeck.  It undertook to implement:

• comprehensive labour market reforms;
• a freeze of Government spending in real terms;
• in the context of further deregulation, abolition of the Foreign Investment Review Board and simplification of takeover regulations;
• a phased and orderly reduction of industry protection;  and
• an assault on the high cost of the transport and communications industries, including coastal shipping and airlines.

A future Howard-led Government would one day retreat from the full extent if the labour market promises, increase Government expenditure in real terms, use its foreign investment powers to prevent the takeover of Woodside Petroleum by Shell and foreign investment in Qantas, and extend the protection of both the motor car and TCF industries.  Dries of the time, however, expected better of him.  Policies for Business had drawn directly on the continuing Crossroads meetings. ⁽³³⁶⁾  It was very widely distributed and its promises were backed by consistent free-market, classically-liberal arguments.  In short, Policies for Business, was effective political leadership of a quality rarely attempted but which was consistent with a trend in the politics of its time. ⁽³³⁷⁾

Nevertheless, by the end of 1986 the dry cause and with it the Howard Opposition was in disarray.  A group of Wets had coalesced behind Ian Macphee who disagreed publicly with Howard on media and industrial relations policy.  From a policy perspective John Hyde disapproved thoroughly of what Macphee was doing but he had to ask if Macphee offended political proprieties that Hyde had not offended when Fraser governed.  Macphee had initially been in the Shadow Cabinet and therefore bound by the collective-responsibility principle, whereas Hyde was not.  However in April 1987, after he had tried to railroad the Coalition into collectivist industrial relations and media policies, Howard dropped him.  Two years later Macphee lost Liberal endorsement for Goldstein to David Kemp.

Despite an increasingly dry Government, these were bad times for Dries.  Discredited by open warfare in Coalition ranks and the gathering storm of the Joh-for-Canberra campaign, the dry cause was rapidly losing the high ground from which it could exert an influence.  It was soon also to lose Howard.  Howard had dominated Liberal policy formation and would outface and out-persist the Premier of Queensland.  The public should have seen him as strong but, plagued by the "little Johny" tag, an image of dominance eluded him.

At the height of the Joh-for-Canberra and Andrew-Peacock-for-Leader dramas (see below) in March 1987 the Coalition's policy was leaked to the media.  It reflected Trebeck's drying influence.  The Coalition promised to cut annual expenditure by $5 billion.  To obtain the necessary savings and to further a dry agenda it would raise the female pensionable age to 65, cut bounties to manufacturing industry by 20%, freeze public service numbers, abolish the 17.5% leave loading, tighten pension eligibility, abolish the Foreign Investment Review Board, and privatise TAA and parts of Telecom, Aussat, the Commonwealth Bank and Qantas.  It further promised to abolish the Schools Commission and the Australian Film Commission, consider abolishing the Commonwealth Tertiary Education Commission, end the First Home Owners Scheme and cut grants to the Australian Conservation Foundation and the Australian Council of Social Services. ⁽³³⁸⁾

Dries were more than happy with the content of the policy, if a little sceptical about the large budget cuts.  About these, the AIPP's Mandate to Govern released two weeks earlier had had this to say:

In the current climate it may not be possible for the Government to achieve more than a 1% real reduction in Commonwealth outlays for each of the first three years.  A better result is certainly desirable, but although the potential economic gains are great the policy adjustments necessary to achieve and manage the suggested figure will be difficult for an Australian administration.  Among the reasons are:  none of the major parties is united on the need for spending cuts;  the cries to Heaven from wounded interest groups will test any politician;  and resistance can be expected from the public servants who would have to implement the policy.  There is no public consensus yet on the need for big cuts in major spending programs such as pensions, education and health care (while there is one for labour market deregulation).  Such a consensus will have to be built. ⁽³³⁹⁾

The premature leaking of Coalition policy suited the dry cause in as much as it advanced the debates that might eventually build necessary consensus, but it was a serious blow to Howard (as it was probably intended to be) and to the Coalition's chances of defeating Labor.  The vested interests were given too much time to mobilise.

JOH FOR CANBERRA

From the middle of the previous year the Dries had suffered a setback that they had not anticipated, although they ought to have done.  Because success in democratic politics relies so heavily on credibility, every politician understands the cliché "with friends like these, who needs enemies?"  The successors to the Parliamentary Dries who had dented Fraser's credibility were now to suffer loss of credibility at the hands of a populist who climbed aboard the dry bandwagon promising impossibilities.

Sir Joh Bjelke-Petersen's record as Premier of Queensland had been interventionist, regulating both commercial and personal behaviour.  In Queensland, as in other places where detailed Government control is practiced, it had resulted in cronyism.  The unprincipled, self-indulgent nature of the Bjelke-Petersen Government was yet to be placed on the public record by the Fitzgerald Inquiry, but for many years Canberra-based politicians and bureaucrats had disliked the way, excellent budgetary management aside, that Queensland was being governed.  Towards the end of 1986, Sir Joh mounted a campaign to make himself Prime Minister on a platform that promised two things especially.  Both were populist nonsense.  One was a 25% flat rate of tax.  But since he said nothing about very substantial expenditure reduction, the 25% rate would have had to be applied to the lowest incomes and that was impossible.  The other was suppression of the none-too-popular trade union movement.  However, he did not tell us of the means by which this might be done liberally and democratically.

The Joh campaign would have been without legs had it not been for the instability of the Liberal Party leadership and despair about the absence of a Coalition leader in Canberra who looked like winning.  Against that background it temporarily gathered considerable support, particularly in rural areas, some of it taken from Labor. ⁽³⁴⁰⁾  With even less policy substance, Bjelke-Petersen provided a foretaste of the appeal of Pauline Hanson's populism a decade later.  Andrew Peacock at one point lavished praise on Bjelke-Petersen, and the Liberal Premier of Tasmania, Robin Grey, intimated that he favoured a Petersen and Peacock combination.  Des Keegan and Katherine West, Canberra columnists who had supported the dry cause, threw their weight behind the campaign.  John Stone, ex-Secretary to the Treasury, was reported as saying that Joh was forcing the Hawke Government to face fiscal reality.  Charles Copeman, the Chief Executive of Peko Walsend who had taken on the mining unions at Robe River, said the campaign was very helpful.  John Leard, one of the few businessmen who had taken up the dry cause, albeit in an idiosyncratic way, took out full-page advertisements in support of it.  The credible Newspoll recorded that 33% of the public believed that Bjelke Petersen was the best conservative leader while only 17% thought that Howard was.  Sir Joh won the support of the Queensland National Party for his campaign.

The executive directors of the Centre for Independent Studies (Greg Lindsay), the Institute of Public Affairs (Rod Kemp) and the Australian Institute for Public Policy (John Hyde), however, saw the Joh-for-Canberra campaign as a threat to all that they stood for.  Without collusion each temporarily abandoned his political neutrality to dismiss it.  They had struggled too hard to replace wishful thinking with hard-headed analysis to wish to see their cause corrupted.  Centre 2000 threw in its lot with the Joh-for-Canberra campaign and when that ultimately folded, Centre 2000 disappeared from the think tank scene.

Paul Kelly wrote in The Australian at the time:

The economic rationalists and "Dries" should have no illusions about what is happening in non-labor politics.  It is all about power.

Sir Joh wants to achieve dominance over Mr Howard and Mr Sinclair;  to bend them to his will.  Sir Joh, of course, is not now and never will be a dry.

Mr Howard is the leading political dry in Australia.  If Sir Joh's crusade succeeds, then the cause of economic rationalism and the free market approach of the "Dries" will suffer a major defeat.

Some of the "Dries" do not seem to have grasped this basic point about the power dynamics of this struggle.

Incredibly, some people who are Dries actually support Sir Joh.  Perhaps they should look again at the Premier's record, examine Mr Howard's record, have a chat to Mr Hyde and then have a Bex and a good lie down. ⁽³⁴¹⁾

The Joh-for-Canberra campaign did dry policy immediate fourfold damage.  First, it gave false hope to people who were not given to studying budgets and tax systems and, worse, it associated small Government and other dry catch-cries with a hope that would all-too-soon be dashed.  Second, it showed the world how shallow was the support for several dry causes and gave the Dries' enemies a stick with which to beat them.  Third, it seemed to the uninformed to indicate that Dries and conservative collectivists were natural bedfellows.  Fourth, it was instrumental in Howard losing his party's effective and shortly thereafter nominal leadership.  I believe it was thereby instrumental in the Coalition losing the 1987 election.  Andrew Peacock's behaviour in his dealings with Sir Joh caused bitterness between those Dries who supported Howard and those who supported Peacock.

When the Joh campaign struck, during the Queensland election campaign in October 1986, the Liberal Party's opinion poll rating was six percentage points ahead of Labor and the Party seemed to be recovering its raison d'etre.  Howard's personal popularity (the "beauty contest" poll) was the highest it had ever been and his status as the leading political dry was clear.  Hard evidence of cause and effect is wanting, but at least it may be said that his well-known dry policies had not been inconsistent with rising popularity.

Despite or because of having few policies, the Joh for Canberra campaign had gathered steam over the summer.  Peacock remained a political threat to Howard's leadership and there was an endless stream of leaks and media coverage of divisions in Coalition ranks.  Remarkably, the Coalition still matched the ALP -- sometimes a little ahead, sometimes a little behind -- in poll after poll.

Bjelke-Petersen held a successful rally in Wagga in February 1987 but failed to gather the support that would have let him field a respectable team of candidates.  Most importantly he failed to attract Ian McLachlan, the highly effective President of the National Farmers' Federation who had managed the live-sheep dispute and a big farmers' rally in Canberra.  Ten years later the Hansonites were to do rather better with much the same irresponsible populism but less of the I-have-just-descended-from-Mount-Sinai hubris.

Following upon an intercepted mobile telephone conversation in which Jeff Kennett and Andrew Peacock had discussed Howard in uncomplimentary terms, Howard sacked Peacock.  However, as David Barnett observed, the leak of a strategy document was the greater political handicap.  The leaks;  Peacock's sacking;  Peter Baume's resignation over difference of opinion about anti-discrimination policy;  fights over Liberal endorsements in Victoria;  the Joh campaign's insistence that Federal National Party MPs from Queensland support its policies;  the ultimate splitting of the Coalition;  Macphee's organisation of the Parliamentary Wets;  and other dramas allowed the Government to coin the effective slogan, "if the Coalition cannot not govern itself, how can it govern Australia?"

True Dries were dismayed by the fact that Petersen, of all people, had been able to portray himself as an exponent of small Government.

Howard's chance of winning the 1987 election received its final blow when it was revealed that his budget policy did not add up.  The arithmetic error fell short of destroying the thrust of the policy but it was the final blow to the Coalition's credibility.

That Labor won the July-1987 election was not perceived as necessarily a blow to the dry cause.  On the contrary, John Hyde rejoiced that Labor's victory had demonstrated that reforming Governments could offend a host of vested interests and still win elections, admittedly with the luck of a self-destructive Opposition.  The win had followed the tough May "mini-budget" intended to cut the deficit by $4 billion, a slight fall in real living standards and refusal to match the Liberals' tax cuts.  What is more, the swing against the Nationals was greater in Queensland than elsewhere. ⁽³⁴²⁾  The Groom by-election ten months later confirmed Queenslanders' disenchantment with the National Party since the Joh Campaign. ⁽³⁴³⁾  This, at least, was good news to Dries.  Had Bjelke Petersen type populism had lasting appeal, their task would have been even more difficult than in fact it was.

Despite Sir Joh, some Queensland Nationals had been elected.  These quickly joined the Federal National Party and the Coalition in Opposition.  When every card-carrying Liberal wet, bar Chris Puplick, was excluded from the Liberal front bench, the Nats applauded but many of them had been even damper and were to prove so again.

A year later when deregulation of the domestic wheat market was proposed by Labor, the National Party demonstrated its continuing commitment to agrarian socialism.  As might be expected, the Liberals supported the move but National Party MPs, who had been vehement in advocacy of a deregulated labour market, wished to oppose it.  On the Nationals' behalf, Bruce Lloyd announced that he would propose a plan to strengthen the Australian Wheat Board's control over domestic sales.  He revealed that every National member of shadow Cabinet including not only Sir Joh's camp followers but also even John Stone, and Wal Fife of the Liberal Party, had opposed the reforms.

The principles offended by the regulation of both wheat and labour were, as nearly as was relevant, identical.  The most significant difference was only that payment in one case was made by weight and in the other by time.  The objection to the Wheat Board and the Arbitration Commission was that both were monopolies that fixed prices.  The Arbitration Commission set common prices for workmen, the Wheat Board for grains.

When Joh had climbed aboard the dry bandwagon singing that the Coalition was too wet, his only plausible excuse for giving Labor a victory it could not otherwise have anticipated had been rational economic management yet, when put to the test, his supporters had been economically irrational with the worst.  With hypocrisy matching anything in their dubious history those Nats who supported Joh had remained true to their roots deep in collectivism and populism.

HOWARD'S "ONE AUSTRALIA"

During 1988, immigration and migrant-settlement policy got Howard into difficulties from which he was never fully to recover.  Earlier, Professor Geoffrey Blainey had sounded warnings that immigration was raising tensions which we might in time find to be a problem.  For his pains he had disgracefully, but partly successfully, been sent to Coventry.  Possibly because it thought Blainey and others might have had a point, the Government commissioned Stephen Fitzgerald, a former Ambassador to China, to report on immigration policy.  His Report released in June 1988 had warned that public support for immigration was threatened.  It seemed that immigration policy itself attracted only manageable criticism but settlement policies that gave immigrants favours not available to other Australians and encouraged them to retain separate ethnic identities was attracting widespread disfavour.  The report was pro-immigration but recommended policies that were focused more upon the national interest. ⁽³⁴⁴⁾

At the Annual Conference of the Western Australian Liberal Party, Howard chose to address immigration policy and Australian unity.  The issue was, as Fitzgerald had made clear, already a live one.  It was not a wet v. dry issue, save that most Dries believed that it should be debated whereas many Wets believed that debate itself would exacerbate ethnic friction.  Howard added to his difficulties by referring to warring Lebanese factions as "Asian".  Nevertheless, his treatment following the WA speech remains a prime example of the difficulty too often experienced by Australians when tying to engage in civil debate about politically contentious issues.  The political storm prevented open debate of the issue itself while stirring it up for private discussion that could not be informed.  The One Nation Party later demonstrated that this issue could not be successfully swept under the carpet.

Howard had appealed to popular sentiment by employing the expression "One Australia".  He was, however, successfully damned as "racist" by supporters of the ethnic tribalism that passed for "multiculturalism", the Labor Party and his opponents within Liberal ranks.  These all sanctimoniously protested that this one issue was above party politics while ensuring that it was not.

Exactly what Howard meant by the expression "One Australia" was, thanks to his enemies, never adequately spelt out.  It may have implied a melting pot Australia, within which old and new residents all took from, and gave to, a largely common culture.  He, however, surely implied at least tolerance on the part of residents and equality of treatment on the part of Government.  At issue were the multicultural policies by which the Government unequally provided funds and services to people of only some ethnic backgrounds discouraging their integration with others.  Howard's would be political assassins used a politically unwise remark about the level of Asian immigration to remove "One Australia" from the political agenda.  The Labor Government, however, quietly changed family-reunion rules to achieve all that Howard had asked.  I think Blainey and Howard overstated the dangers of ethnic division but the issue is debateable and far from trivial.  Australia would have been better served if it had been debated.

Dries had defended the boat people and tended to favour higher levels of migration and refugee intake but they mostly disliked the tendency of settlement policies.  It was, they believed, past time that ethnic favouritism that was neither random nor targeted to need ceased to be employed for vote buying.  Official policy was favouring some races over others.  During 1985-86 the multicultural payments made by the Victorian Government alone to Greeks added to $1213 for every new arrival or $5.39 for every member of the Greek ethnic group in that State.  At the same time, it spent only $515 per Italian new arrival or $0.98 per member of the Italian ethnic community.  Turks and Lebanese did six times better than Indo-Chinese when considering grants to new arrivals and nearly twice as well when comparing them their Australian populations.  The German community got only sixteen cents per head. ⁽³⁴⁵⁾

Immigration that during the fifties and sixties had enjoyed comfortable majority support, by the 1980s, had lost it.  The effect of sharply risen unemployment upon the popular misconception that immigration takes from a fixed supply of jobs was probably the major reason for its lost popularity.  Resentment of Australia's particular form of multiculturalism was, however, an unnecessary further reason.  Jerzy Zubrzycki, the man who had the best claim to be the father of multiculturalism, was to say publicly "multiculturalism has clearly gone off the rails", derailed by politicians of every stripe wooing the ethnic vote.  He called for the scrapping of the term.  Howard had been ahead of his time but unable to communicate his insight either for the nation's or his own advantage.

Also in 1988, Howard opposed an Aboriginal Treaty on the ground that Australian society could not afford two classes of citizenship.  His stand in each case was essentially the dry opposition to privilege in any of its forms.  He and other Dries found themselves accused of racism for advocating law that was blind to race.  They faced three difficulties.  One was the cheering of some people of European background who assumed the superiority of their own race or culture and who would not have objected had the discrimination been reversed, that is, who really were racists.  Another was the common one of opposition from established interests.  The third was that, although the ethnic lobbies behaved only as the textile and motor industries behaved, a politically-correct press corps, unlike its attitude to the protection debate, was disinclined to assess their demands in the light of general principles.

These racial issues allowed the new (trendy) left to reclaim the moral high ground that they had lost in the economic debate.  While working class Australians appreciated the dry position without even knowing or caring about the Dries and their arguments, articulate, affluent intellectuals pushed Aboriginal land rights and multiculturalism in its essentially tribal form.  The periodic Crossroads meetings failed to address race and did not devise a strategy for dealing with it.  AIPP did try to open it up with two publications.  The first by Roger Scruton, Frank Brennan and John Hyde ⁽³⁴⁶⁾ attempted to start a public debate between people with apparently incompatible views of Aboriginal land rights.  It sunk without trace.  The second, an essentially statistical assessment of what was actually happening to multiculturalism funding, written by Stephen Rimmer, ⁽³⁴⁷⁾ received more attention.  However, even that hard-to-refute paper cost the AIPP influence among at least the staff of The Australian newspaper and no doubt in other media circles.  That influence was needed for other issues.

INDUSTRIAL RELATIONS

By the 1980s, the capacity of the centralised award system to inhibit economic growth, cause macro-economic instability and create unemployment was widely understood.  It was, perhaps, not so widely appreciated that it also hindered productivity growth by preventing firms and their employees from experimenting with work practices.  For only some people the most fundamental issue was not efficiency but liberty -- should workers have full ownership of their own labour or should an "authority" determine how they disposed of it?  The Accord was intended to restrict the unions and the Commission's incentives to create the first group of problems -- a corporatist brake upon a corporatist system.  The Industrial Relations Club wished to strengthen the capacity of the Commission to resist union or employer pressure.  Dries, on the other hand, felt that, if the Accord was good policy, then it was good policy only within a bad system that they wanted replaced by freedom for the parties to negotiate.

Despite the contrary views of Ian Macphee, who was the Opposition's industrial relations spokesman, Howard told a National Press Club luncheon in August 1983:

We need an approach which avoids the automatic and unrealistic application of comparative wage justice.  We need an approach which is far more market sensitive and flexible than that which prevails at present or prevailed at any time during the period of office of the former Government.

The time has come when we should turn Mr Justice Higgins on his head.

The last was a reference to the 1907 Harvester Case that began centralised wage fixing.  Higgins had said that if "a man could not maintain his enterprise without cutting down the wages which are proper to be paid to his employees, it would be better that he should abandon the enterprise."

Howard had articulated the essence of the dry argument and, with the assistance of Gerard Henderson who was on his staff, was developing an industrial relations policy around the opportunity for individual employees to "opt out" of awards.  His Press Club address was more than a straw in the wind.  It went to the heart of the most important matter on the dry agenda and, whether Howard realised it or not, had implications for trade policy, the second most important item.  Without competition in the product markets the cost of inefficient work practices could always be passed to consumers.  That is, the incentive to opt out would have been minimal where it was needed most, in the manufacturing and regulated tertiary sectors.  To work effectively, his formula required relatively free domestic and foreign trade.  His policy was "softened" in shadow Cabinet to give the Industrial Relations Commission a power of approval over the voluntary deals.

Policies for Business had committed the Coalition parties to flexible labour markets:

[Our policy] spells out the most substantial and far-reaching reform in Australia's industrial relations system in 80 years. ... The policy has the aim of making Australia more productive and more competitive, of creating new jobs and thus improving the living standards of all Australians.  The keynote is to create prosperity through productivity by enabling employers and their employees to reach mutually agreeable decisions on conditions of employment and work practices, under a system of voluntary, legally enforceable agreements.  The policy is to improve industrial harmony, promote workplace flexibility, enhance productivity and bring unions back within the rule of law. ... ⁽³⁴⁸⁾

When Howard spelt out his industrial relations policy in a Sydney Morning Herald article, Peacock accused him of "destabilisation".  Indeed it was.  Howard faced the same dilemma that the Dries on Fraser's backbench had faced, with the added difficulty that he was not on the backbench.  Did he let good policy go by default or did he destabilise?  Was the goal to be office or good Government?  And, of course, ambition drove him to out¬perform Peacock.

When the Hancock Report came down, Peter Shack, who had replaced Macphee as industrial affairs spokesman, welcomed it because it took account of the national interest while Howard panned it because it retained the inflexible centralised system.  Howard's approach was predictably dry;  Shack's was surprising and a mark of Coalition disunity.  While organising the two-airline campaign four years earlier, he would not have "gone public" without rounding up support and checking his own, necessarily hastily-made, judgements.  For Howard to react without first taking the trouble to bring the party's designated spokesman around to a common view was probably more naughty than careless.  The tension in the party was prohibiting co-operation.

Later, during his own leadership, Howard explained his "opting out" provisions to the Business Council.  It was not surprising that some of the damper corporatists of that grouping opposed them.  Their opposition to the IR policy and some other better-directed criticisms were leaked in detail to the Australian Financial Review.  A senior businessman protested to John Hyde that none of the businessmen present would stoop to leaking.  Hyde told him that he would not know about that, but that this time no one suspected them.

Later again, the Labor Party received another document prepared by the Liberal party Secretariat.  It named potential supporters of labour market reform among business leaders and press.  Following the leaks, the Sydney Morning Herald wrote "The Shadow Minister for Leaks strikes again".  The leaks' significance from a purely dry perspective was only that Liberal Party infighting was making it difficult to advance the reform agenda.

One leak did, however, give industrial relations reform an unexpected and significant shot in the arm.  It was a leaked submission by Charlie Fitzgibbon, the national secretary of the Waterside Workers Federation, to the Economic Planning Advisory Council (EPAC).  Fitzgibbon advocated enterprise agreements between managers and employees of small businesses that were outside the award system and said that ending comparative wage justice could do no harm.  His submission acknowledged that, if employees insisted upon a bigger proportion of economic production, then that could result in lost competitiveness and growth, and increase inflation.  Furthermore, he said that believing in protection for Australian industry was like believing in Father Christmas. ⁽³⁴⁹⁾  The importance of the submission was not in what had been said but in who had said it.  Here was a senior trade union official who was well on the free-market side of the Liberal Party Wets.

Without this help from Charlie Fitzgibbon, the Coalition Industrial Relations policy announced in April of 1986 might have been damper than it was.  In the event, it committed the Coalition to:  voluntary agreements;  a Commission that took account of the effects of its decisions on employment, inflation and competitiveness;  voluntary unionism;  youth wages;  and legal aid for parties suing for damages when agreements were breached.  The Coalition had abandoned replacing the Commission with a more powerful enforcement body.  It, however, contained one not-dry provision, essential-services legislation.  This last would have weakened the union stranglehold but was not consistent with market negotiation.  The policy received the blessing of both the Business Council and the Confederation of Australian Industry. ⁽³⁵⁰⁾

By the end of the 1980s the links between factor and product markets were more often recognised in public debate.  For instance, responding to an assertion that, whoever won the coming election Australians would savour enterprise bargaining, Norm Dufty, Visiting Fellow of Industrial Relations at the University of WA had commented:  "Only if something is done about union power on the one side and tariffs and anti-competitive regulation on the other".

The Liberals had grasped the point and the Opposition's Industrial Relations policy that enhanced the role of enterprise unions at the expense of craft unions also promised to reduce protection.  Here it ran into the opposition of the Confederation of Australian Industry.

The Business Council of Australia was less hypocritical.  Its paper, Enterprise Bargaining Units, called for abolishing the unwarranted privileges of both capital and labour.  To reduce unwarranted union power, it argued for "unions representing employees in a work place" and for abolishing the "conveniently belong" clause of the Conciliation and Arbitration Act.  To reduce unwarranted employer power, it called for the opening of the economy to international competition which was, it said, essential to achieve adjustment of work methods, orderly and amicable dispute settlement, fair remuneration, and encouragement of a competitive, productive culture.  Both the CAI and the BCA recognised the danger of weakening centralised discipline that sometimes exercised some moderating influence over unions.  The CAI response had been to retain and strengthen the coroporatist system while the BCA broke with the traditional big firms' attitude to advocate competition.

For four years the Coalition had publicised, explained and defended its IR Policy, against vehement opposition from the IR Club, gradually winning support from important groups such as the Business Council.  Although Labor dared not admit it, second-tier bargaining had been a small step towards implementation of Coalition policy.  Many people were, nevertheless, already asking whether the Coalition in Government would implement its policy.

PRIVATISATION

By the first half of 1984, in the relatively early days of Peacock's two-and-half-year first leadership and well before the Hawke Government began selling off state-owned trading enterprises, the Coalition's policy undertook to privatise the Australian Industry Development Corporation, Medibank Private and the Housing Loans Insurance Corporation.  It promised further to consider sale of the OTC, Aussat, TAA, the ANL, Telecom, the Commonwealth Bank and the Pipeline Authority when it had the experience of the first three. ⁽³⁵¹⁾  During the second Hawke Government and while Peacock still led the Liberals, citing Britain's success under Thatcher, Howard asserted publicly that Telecom, Australia Post, the Commonwealth Bank, TAA and Qantas should be sold.  More destabilisation but again more long-term policy.

HOWARD'S FIRST LEADERSHIP II

The 1987 election was followed by the October stock market crash and a difficult time for the Government.  Howard by then led the Liberals, Peacock was his Deputy and John Elliott was Liberal Party President.

It was at this time that Howard departed far from principle during the Adelaide by-election by condemning the Government for the mooted introduction of timed telephone calls.  The Liberals descended to cynicism to win a seat that could not affect dominance of the Parliament.  The Coalition's reputation for integrity -- desperately needed when Keating later lied successfully about Hewson's GST -- was impaired for nothing worth having unless it was to save Howard's leadership from Peacock, which it failed to do anyhow.  Indeed some of Howard's drier supporters were heard to ask:  why bother to save him?

Howard's standing was being undercut.  Elliott, who may have been the victim of a businessman's political naivety as much as his own arrogance, kept buying into policy issues.  Howard could not carry his preference for leaving media ownership issues to the market in either the shadow Cabinet or the party room.  Bowing to pressure from colleagues, Howard promised that a Coalition Government would not introduce a broad-based consumption tax in its first term.  But, as already noted, Dries were not of one mind upon consumption taxation.

Nevertheless, the Future Directions policy statement issued at the end of 1988 was basically a dry document emphasising economic responsibility, one nation of legal equals, and family values.  It began, moreover, with a coherent statement of principles that joined social conservative values and economic liberalism.  Had future Coalition policy prescriptions, especially Fightback, done the same they would have been more convincing and more difficult to attack.  A Liberal Party survey indicated that Future Directions had 70% community approval and Labor spokesmen were cautious about criticising it.  It was, however, roundly condemned in chattering class circles.  The Sydney Morning Herald said it was "Forward to the past" and The Telegraph "Back to the Future".  Both found the emphasis on the conventional family outdated. ⁽³⁵²⁾  Its cover had displayed a conventional family of a couple and two children in front of a home with a white picket fence.  The picket fence (of all things) became the focus of venom.

Under Howard the Liberal Party had to a large extent freed itself from vested interests such as protected industries, Industrial Relations Club members and farmers' organisations.  As much as disunity, the fact that its policies were not for sale may have been why it was unable at this time to match ALP campaign spending.

THE SECOND PEACOCK LEADERSHIP

When on 9 May 1989, the Liberal Party room rolled Howard, replacing him with Peacock, it was not an event greeted with widespread dry enthusiasm.  The coup had been masterly if morally questionable.  A week later, however, when Four Corners interviewed the principal plotters, two, John Moore and Wilson Tuckey, could not resist boasting their own brilliance during what must rank as one of the most egotistical and stupid television performances of all time.  Peacock was off to a bad start.

He never really recovered.  Despite an initial assurance that Future Directions was sacrosanct, the Peacock team replaced it with a new policy statement, the Economic Action Plan.  Its analysis of Australia's economic dilemma was conventional:

The principal economic challenge. ... is to restructure our economy to deal with external debt. ... We are entering a self-perpetuating debt trap. ... Australia urgently requires a major shift of resources into the traded goods sector. ... To achieve this task we need to contain our consumption levels;  to boost savings;  and to boost our productivity and production by engendering a period of sustained investment principally in the traded goods sector.

It did not adequately face the problem of how Australians were to be induced to save more of their incomes but was better when discussing how those incomes were to be increased.  Any real attempt to deal with the penalty that direct taxes impose on savings was absent but the promise made in Future Directions not to introduce a broad-based consumption tax in a coalition Government's first term was gone.  The proposed budget surplus that would have been largely offset by State deficits was inadequate.  A promise to replace capital gains tax with a speculative gains tax at an annual cost to the revenues of $450 million would have been administratively difficult and probably on balance counterproductive.

Over half the Coalition's budget savings were to come from limiting unemployment benefits to nine months' duration.  John Hyde argued at the time that, to be fair, the proposal had to be accompanied by the radical labour market reform that would allow the low-skilled to get employment.  Nearly all of the savings made by cutting expenditures were to be spent on two items, tax rebates for families with children, costing $1000 million, and non-means-tested rebates for families that had two incomes and put their kids in child-care facilities costing $820 million.  The policy statement, in fact, contrasted favourably with those that had, before the Hawke Government, been released by parties in Opposition, but the times had changed.  The Coalition was shying at tough choices.

It is as important to know how the Coalition failed as how it succeeded and nothing illustrated the failure better than healthcare.  There had been much talk about $2000 million potential annual savings in health care.  The figure was nonsense, but substantial costs could have been justly and efficiently transferred from taxpayer to private budgets.  Sir William Cole, writing for AIPP, estimated that budget savings of about $800 million could have been made without prejudicing low-income people.

Peter Shack, now Shadow Health Minister, had drafted a health policy that would require those members of the middle class who were not privately insured to buy insurance.  Because it called for "losers", it was unacceptable to his vote-conscious peers.  It was, nevertheless, a good policy that would have provided more choice for patients, a more level playing field upon which to conduct the competition between public and private insurers, and competition between public and private hospitals.

Peacock failed the prime test of dryness, the ability to face facts.  The way healthcare costs were met could have been varied between fees, insurance premiums and taxes but, efficiency gains apart, it was not possible for an insurance arrangement to make some people better off without making others worse off.

He did no better with interest rates.  When Labor admitted that in the prevailing economic circumstances interest rates would have to remain high Peacock asserted that under an incoming Coalition Government they would fall. ⁽³⁵³⁾  The undeliverable promise was one that other irresponsible Oppositions and Fraser in Government had also made -- but times were different!  Other Coalition spokesmen agreed with the Government and Peacock looked foolish.

THE STATE OF THE OPPOSITION AT THE END OF THE 1980s

In December 1989, John Hyde wrote for The Australian:

It is almost ten years since four Liberal Party MPs and one ministerial staffer set out to change the direction of the Liberal Party.  They, and those who joined them, became known as "the Dries".  The original Dries, who were at one time an effective team, were dispersed by electoral fortunes.  Recently, the fact of the Peacock coup and the manner in which it was conducted have divided the remaining Dries.  The Liberal Party has travelled a long way since 1980 --but not always at the Dries' behest and not always in a constant direction.

The Dries were disrespectful and critical -- their unsettling ideas undoubtedly caused the Liberal Party some pain.  So long as the Liberal Party believed in little, unity was easily maintained.  But as soon as the Dries started to spell out the implications of the classical liberal position, which we asserted was the natural philosophy of a Liberal Party, others, who became known as "Wets", demanded an interventionist utilitarian form of liberalism.  The wet arguments, except in the area of environmental legislation, have been substantially defeated by argument, by events here and overseas, and by the Labor Party adopting dry policies.  Most Liberals were, however, neither wet nor dry -- they just hoped the questions would go away and stop costing them votes.  Some of the Wets, especially the late Alan Missen, earned my profound, if at times grudging, respect.  Not so those who wanted the issues to go away -- the pragmatic vote-seekers.

Although plainly some of my dry colleagues of old see it differently, I see in Peacock's ascendancy a return of old ways -- of the political pragmatism that so wasted the Fraser years.  Electoral pragmatism has been responsible for more of what the Garnaut Report called "economic dead weight" than have been the activities of the few true Wets.

Some long-time Dries and some more recent converts believe that, like puppeteers, they can control Peacock.  With some justification they point to the way that economically rational ministers, such as Keating, Walsh, Button and Kerin, periodically force economic sense upon the Prime Minister.  I don't entirely share the confidence of these dry Peacock supporters.  In the first place, the Labor Party puppeteers do not always succeed. ...

We might take comfort from recent events.  When Mr Peacock predicted a massive fall in interest rates, his economic lieutenants refused to support him, the party line was restored to something plausible, and no great harm was done.  Peacock was written down as a person of little economic literacy -- indeed of even less than the Prime Minister.  Economic literacy is not a prerequisite for successful Prime Ministership and the matter died, as it should have done, if that was the correct interpretation.

Again I am not quite so sanguine.  I do not think Mr Peacock is economically illiterate.  That leaves the much more damning possibilities:  that he did not care;  that he was driven by the opinion polls;  that he had returned to the behaviour the Dries first set out to combat.

The next Government will either be economically prudent or risk seeing the economy collapse about its ears.  Under Mr Howard, although not because of him alone, the Liberal Party briefly became a party with a classical-liberal mission.  That it did so was not an accident but was planned by, among others, Mr Carlton and Mr Shack -- two of the original gang of five -- yet they both supported Mr Peacock against Mr Howard.  Maybe they were right, but only if they can promise to deliver Mr Peacock to the dry cause whenever that becomes necessary.

As the 1990 election approached Liberal and National Parties were out of office Federally and in every State but New South Wales.  They had lost three consecutive Federal polls, the last two of the three in economic circumstance that should have assured victory.  They had failed, albeit by narrow margins, to defeat State Labor Governments in Victoria, Western Australia and South Australia that had demonstrated both incompetence and want of a proper regard for the proprieties of office.  Following the Peacock coup, the Liberal Party's professional image-makers could do nothing because their polling told them that a resolute Mr Peacock was not a believable image.  For some time before Peacock replaced Howard, the Coalition had been about 3 percentage points ahead of Labor in the opinion polls but the chief plotters had sought to justify their actions by saying that, in all the circumstances, the lead should have been much greater.  Shortly after the change of leadership the Coalition slipped to about 3 percentage points behind Labor and stayed more or less there until the election.  It may hurt elites to believe it, but voters respect principles and are perceptive.

Because of the bitter internal wrangles, the Coalition seemed more directionless than it was.  It in fact had more detailed, more economically-responsible and less-cynical policies than at most times in its history.  Voters, however, had the choice of an unusually economically responsible and principled Government and had raised their standards accordingly.  Labor, by implementing the economically responsible policies, had taken from the Coalition its usual electoral asset, that of being the better economic manager.

When Hawke called the March 1990 election the Coalition decreased Labor's majority but, nevertheless, lost.  That the Coalition could have lost the election when Labor was presiding over the then levels of inflation, interest rates and debt was remarkable.  Liberals told John Howard that their disenchantment with Howard had little to do with ideology but that his leadership style and inability to organise had become unbearable.  Nevertheless, the choice of Peacock had had what some saw as the benefit of blurring the distinctions between disparate opinions within the party.  That could not, however, be done without also blurring what the party stood for.  The genie that the Dries had released was not so easily put back in the bottle!

Had it not been for the TV appearances of the coup leaders, even with hindsight, John Hyde might have said that the coup was a misguided action by people with a genuine concern for the party.  They, however, had revealed that disaffection with Howard had been orchestrated.  Others shared Hyde's wrath.

Following the electoral loss, the Party had to choose a parliamentary leader.  Peacock was finished and Howard would have been the focus of too much bitterness and was himself too bitter.  Chaney, who could have had the leadership if he had shown a deputy's loyalty at the time of Howard's dismissal, had sacrificed his strongest card.

The Party Room elected the inexperienced John Hewson with Peter Reith his deputy.  Hewson an economics professor with a background in international finance had been a member of Howard's personal staff during Howard's time as Treasurer and in mid-1987, at the age of only 39, had won the safe seat of Wentworth at a by-election.  He won the leadership because all the experienced contenders had acquired too much baggage for one or other of the anti-Howard and anti-Peacock camps to accept.  Although a compromise candidate, he proved more rigorously dry than any leader before or since.  Although ideology and accusations of bastardry divided his party, he led the most united Liberal Party for decades and the most united Coalition ever.

At the same time Tim Fischer won the leadership of the much-depleted National Party.  His leadership of that Party was even more significant for its new-found dryness than Hewson's for the Liberal Party.  Under Fischer, the Nats abandoned minor-party cynicism and as much rural socialism as it dared to contribute to the Coalition's common cause.  This Coalition team too was, however, to lose an "unlosable" election.

OPPOSITION POLICY UNDER HEWSON

Ian McLachlan, the ex-President of the NFF who had declared that farmers "are not after short-term handouts from this or any other Government" and who had been wooed unsuccessfully by the Joh-for-Canberra push, was now the Liberal Member for the safe seat of Barker and the Shadow Minister for Industry and Commerce.  Only eight months after his election and his party's defeat, he promised on behalf of the Coalition that "by the year 2000, all forms of protection for all industries will be, at most, negligible".  This was the Garnaut recommendation but one that neither John Howard nor Andrew Peacock could have led the Coalition to accept.  Courageously, it rather than Labor now set the policy agenda.

Hewson, Fischer, Reith, Howard and others in the Opposition ranks of the time all laboured hard over policy.  When Hewson won the leadership, Coalition policies had already included:

• waterfront reform to match New Zealand's doubling of productivity,
• the opportunity for employees and employers to strike agreements outside the awards,
• an end to cabotage rules that prevented foreign vessels from competing for cargo on the Australian coast,
• reform of telecommunications by the introduction of full competition, privatisation, and the placing of "community service obligations" within the national budget,
• privatisation of Government business enterprises, and
• the introduction of a broadly-based goods and services tax (GST) to replace the wholesale sales tax and to allow income taxes to be reduced.

Only rural policy was still unambiguously on the collectivist side of Labor.  Even there, however, Hewson and Fischer managed to prevent the Coalition from opposing John Kerin's liberal reforms.

Without political risk, Labor was now able to adopt Coalition policies, as once when the trend was in the opposite direction the Holt, Gorton and McMahon Governments had "stolen" Labor's policies.  The tightening of administrative procedures for invalid pensions and unemployment benefits, the consolidation of employment training programs, a reduction in the ease with which Austudy could be claimed, concessions made to enterprise bargaining, the mooted privatisation of Australian Airlines, the partial privatisation of Qantas and the Commonwealth Bank, were all Government policies previously advanced in the Coalition's Policies for Business and elsewhere.

The Opposition no longer needed to carp to distinguish itself from Labor.  When it broadly agreed, as it did about sending ships to the Persian Gulf and lowering the wool reserve price, it said so.  The Federal Coalition looked less divided, more confident and more principled than at any time since well before it lost office.

FIGHTBACK

Governments often fail to appreciate the unintended consequences of policy changes and Oppositions, for want of resources, are far worse placed.  They are easily snowed by selectively-chosen data.  Nevertheless, the policy package the Opposition now developed achieved a greater degree of rigour and absence of political fudging than any before or since.  The legacy of the squandered opportunity of the Fraser years still haunted its policy making.  It desperately wanted to govern but had become convinced that it must do so on merit.  I thought that this was more a moral than a tactical decision.  Be that as it may, with the arguable exception of the pricing of petroleum products to keep the National Party constituency on side, it abstained from sucking up to organised interests -- the public-choice political game.

Hawke had not addressed the reform that would have done most to reduce injustice and raise efficiency -- that of the labour market.  Australians had, nevertheless, been given much greater freedom to invest and consume and were in a better position to cope with future shocks than they had been in 1983.  In 1991, however, this was evident only to those who understood and accepted the economic arguments upon which the reforms had been based.  Misdirected investment in capital and people is not quickly remedied.  Even the best of policies have long lags.  Many of the inefficiencies that had developed in the less competitive economy were at the beginning of the nineties being identified by commercial losses, downsizing and even bankruptcies, which are seldom popular.  The Hewson Opposition could, therefore, very easily have made political capital out of the Hawke reforms as the Fraser Opposition had done in 1975 with the 25% tariff cut.  That it chose not to reflects credit on its leadership that I believe is without parallel.  Instead, it developed policies to take over from where the Hawke Government had arrived.  This time it would be Labor that behaved unconscionably.

Howard worked on an industrial relations package of the type that he had long advocated, in due course to be labelled Jobsback.  Hewson led others developing a more comprehensive package covering all of the important areas of governance and including an excellent philosophical statement.  In due course it was called Fightback, a title that came to be used to refer to both.  It was the culmination of the steady drying-out of policy during the 1980s.  The Liberal Party had run with what had been in essence the Jobsback policy in the 1987 and 1990 campaigns.

Fightback did not begin with philosophical principle to then build policies logically upon it.  Had the document been organised differently the consistency of the whole might have been more apparent, especially as most people are less at home with economics than with moral philosophy.  It would have been more difficult to characterise the package as a sop to the greedy, which it was not.  On the contrary, its effects upon disposable income were progressive, but few people trusted politicians' figuring or could check the tax arithmetic.  The statements of basic principle were there for the serious reader but lost in tax mumbo jumbo and econometric detail for the casual one.  One chapter, Framework for Certainty:  A New Role for Government, made it clear that the certainty promised was fair rules, not particular outcomes.  Even this quite fundamental division between socialists and liberals barely entered debate that was dominated by tax, much of it tax-trivia.

Fightback directed welfare away from the greedy and towards the needy;  opposed privilege;  and set out to strengthen three proven institutions:  the family, the federal structure and to a minor extent the parliament.  It undertook to:

• reduce income taxes by 30%;
• abolish the wholesale sales tax, payroll tax, petroleum products excise;  superannuation lump sum tax, training guarantee levy and coal export duty;
• phased out customs duties by 2000;  and
• reduce the capital gains tax and fringe benefit tax.

These measures were to be financed by:

• a 15% Goods and Services Tax;  and
• $4 billion net expenditure reduction.

Expenditure cuts totalling $10 billion were identified but $6 billion was required to compensate low-income people for the price rises occasioned by the GST.

The package began the task of addressing the nation's low and declining propensity to save by offering tax concessions for long term savings via superannuation.  It began to address the health insurance problem by offering low-income people tax credits for health insurance and applying a tax surcharge to high-income people who did not insure -- the "losers" that had been unacceptable when Shack had proposed his health policy to the Coalition.  It began to address the inequity faced by single-income families with children by increasing family allowances and the dependent spouse rebate for families with children.

Fightback's promise to cut tariffs "to negligible levels by the Year 2000" was an appreciable but modest increase in the rate of tariff reduction initiated by Labor.  It was appreciable because the proposed reduction was to include passenger motor vehicles and textiles, clothing and footwear.

Industrial relations were to be reformed by allowing employees individually or collectively to enter employment contracts.  (The Industrial Relations Commission had conceded the principle by allowing work-place agreements, albeit hedged with restrictions to protect its own ultimate authority.)  The parties to work-place bargaining could engage unions, lawyers or other negotiators to assist them.  It mirrored the New Zealand reform.  Guaranteeing the right not to join a union as well as to form or join one ensured freedom of association.  These measures would have effectively removed the unions' legal privileges and brought labour markets within the ambit of the rules of the common law.  Recourse to the ordinary civil courts, rather than the proposed industrial court was offered and sections 45D and 45E of Trade Practices Act outlawing secondary boycotts remained in force.  An office of the employment advocate was to be established to provide a low cost settlement procedure for people who believed that they had been unfairly treated in negotiations.  Four weeks annual leave, two weeks non-cumulative sick leave, and twelve months unpaid maternity leave were to be guaranteed for employees of twelve months standing.  Overtime rates were to be by agreement of the parties.  Hewson had wanted to abolish the Industrial Relations Commission altogether but Howard had successfully argued that that would be too great a break from past practice. ⁽³⁵⁴⁾

The case for labour market deregulation had been much assisted by disputes that emphasised the ridiculous nature of the award system -- Robe River, APPM, Queensland shearers, the waterfront, and the building industry.  Some unions had made the mistake of defending work habits that most other unions fervently wished would not become public knowledge.  Would the Coalition have fared better if it had fought more upon industrial relations and less on tax reform?

Government trading enterprises that the Hawke Government had not yet privatised were to be sold to private investors.

The policies were instructed by coherent beliefs.  These were:

• comfort with Australia's history and Western traditions such as the rule of law, private property rights, popular capitalism, democracy, equality of the sexes and tolerance itself;
• the promise of one nation of equal citizens governed without fear or favour;
• security from internal and external threat;
• the necessity of regaining the relative wealth that Australians had once enjoyed;  and
• strong but limited Government that stuck more closely to its essential tasks.

Its authors were clear about the pernicious role of interest groups and rejected clientism and corporatism.

Over this century various powerful interests -- private companies, Government authorities, trade unions, and, increasingly, powerful lobby groups --have trampled the freedom of the average citizen.  Notwithstanding attempts to justify these intrusions in the public interest, they have mostly been at the expense of the majority of people.  The powerful have extracted benefits and privileges for themselves:  special protection and regulations, generous subsidies, compulsory memberships.  The costs have been higher prices and higher taxes, lower economic growth, less innovation, and declining international competitiveness. ⁽³⁵⁵⁾

Fightback outlined the nature of the legal and economic framework within which markets must operate if they are to be efficient and fair.  It was promptly described as "ideological", although, less pejoratively and as fairly, it might have been portrayed as "philosophically consistent".  Since the first Crossroads meeting, Dries in and out of the parliaments had been developing their own and public understanding of several principles that had clearly influenced it.

From the late 1970s, the nature and role of "community" had been much discussed with a growing appreciation of the role of voluntary associations.  Here too, Fightback tended to be ahead of its political time -- ahead of British Prime Minister Blair's Third Way, and coincident with the Pope's 1991 encyclical Centesimus Annus ⁽³⁵⁶⁾ and Robert Putnam's Making Democracy Work.  Of the voluntary associations, families received most attention.  Partly as a result of overseas work but also because of work that Barry Maley had done with the CIS and Alan Tapper with AIPP and the CIS in Australia, Fightback's authors appreciated that Government policy was actually inhibiting the upbringing of children in stable two-parent families.  The role of private-sector charities and of the informal welfare available from relatives, friends and neighbours was contrasted with public sector welfare.  Private health care was contrasted -- sometimes favourably sometimes unfavourably -- with public provision.

Of course the package had flaws.  Government policies, let alone those of Oppositions, are prone to misjudgement and error.  There was doubt that the spending cuts were achievable, and it was generally conceded after the event that the package had a "black hole" of about $3 billion.  Even that sum was, however, within the margin of error of many recent Government budgets.

Fightback's centrepiece was, nevertheless, tax reform which was not at the top of the dry agenda.  Many leading Dries, of whom John Hyde was one, referred to it as a second order issue.  They believed that the GST was a substantial improvement but were disappointed that it was allowed to swamp more important parts of the package -- industrial relations, trade, family and welfare policy and expenditure reduction.  John Stone wrote, "The Opposition is in danger of sacrificing reforms that are fundamental to Australia's future, for the sake of a third order reform which is not". ⁽³⁵⁷⁾

Far from keeping its ideas under wraps until Election Day approached, the Opposition tried to taunt the Government with them as they were developed.  It stated explicitly that it should have a mandate to implement its policies should it win the next election and a sufficient reason to call another election should the Senate block them.

By late 1991 the Coalition was ready to launch Fightback and did so in November.  It was the most radical reform program ever attempted by an Opposition described by Hawke Government Minister Neal Blewett as "a comprehensive plan for economic renewal". ⁽³⁵⁸⁾

COALITION RESOLVE

During the first half of 1992 a revolt against the Federal Coalition's undertaking to reduce sugar tariffs developed in the party room.  By the accounts that came to John Hyde, the Coalition Joint Party meeting that dealt with the Queensland National Party sugar rebels was like none that he had experienced.  Backbench MPs gave "sugar-rebels", Senators Boswell and O'Chee, a verbal savaging.  A Liberal MP, a survivor from Hyde's own time in parliament, told him:  "We have had other demonstrations of party room wrath, even one or two of similar intensity, but those were all backbench versus the Government.  This was backbench versus backbench".

Fascinated, John Hyde devoted a day around Parliament House to trying to understand the phenomenon.  Several Coalition MPs, who had been involved in the bitter Peacock/Howard, Fraser/Snedden and Sinclair/Bjelke-Petersen disputes spoke to me as though cheerfully-conceded solidarity was a natural state of Coalition affairs.  Hyde listened slightly open-mouthed.

Although, as the Party Room episode had demonstrated, the pro-solidarity forces were temporarily overwhelming, they were not complete.  While John Hyde talked to about a quarter of the Party Room, it was not a cross-section.  A few bitter old bunyips growled away and there were still some Wets.  But the same personal characteristics that prevented these people from standing up to vested interests prevented them from standing up to committed colleagues.

There was also another exceptional feature of the sugar revolt.  The Queensland Nats were not just another group of rebels.  They had been associated with the Joh-for-Canberra campaign that in 1987 had destroyed the Coalition's reasonable expectation of victory.  Others beside Boswell and O'Chee attracted criticism but not the same resentment.  For instance, Ray Braithwaite, also a sugar rebel but not a Joh-for-Canberra man, was hardly mentioned, even though, as a Shadow Minister, he had the clearest obligation not to deviate from the Coalition line.

The sense of purpose in Coalition ranks was like nothing that John Hyde had experienced.  Hewson had characterised the demand that the Coalition oppose the reduction in the sugar tariff as a return to pork-barrel politics that breached principle and nobody that Hyde spoke to contested his characterisation.  Instead, the comment from one who had once been a committed wet was, "Give in to one and you open the floodgates".

Hewson and Fischer could have fudged the sugar issue by, for instance, supporting a pious, ineffectual amendment, in the Senate to a forthcoming tariff bill, or supported a motion calling on the Government to delay sugar tariff reduction until, say, progress had been made with labour market reform.  But they had not.

When John Hyde suggested that the Coalition had survived "a baptism of fire" (not really an appropriate metaphor), he was told not to talk nonsense.  Hyde was reminded that the joint party room had risked Coalition disunity to support correct Government policies when the Government reduced the wool reserve price and when it had deregulated the domestic wheat market.  These episodes had, Hyde was assured, presented them with bigger problems.

John Hyde concedes that it was clearly in his informants' interests not to say anything Hyde might interpret as disunity in his newspaper column.  However, Hyde knew these people.  If Hyde was being lied to, surely they could not have sounded so convinced.  The phenomenal sense of purpose was not to last beyond the election but was, given the coming vicissitudes, to hold remarkably well.

FIGHTBACK'S FAILURE

Initially Fightback was well received but because the policies were known, they could be evaluated and also misrepresented.  Keating set about the latter with characteristic vehemence singling out the GST despite it being in all its essential elements his own Option C.  With scarcely believable dishonesty, despite the abolition of the wholesale sales tax and other taxes, Fightback was portrayed as raising prices by the full 15% of the tax.  Despite more than adequate compensation for the consequent price rises, the tax changes were portrayed as regressive.  Not content with misrepresenting the GST, Keating attacked even Hewson's tariff reduction policy that was so close to his own, labelling him "Captain Zero".

Keating's behaviour was cynical.  It was the more so because the Opposition had denied itself the political advantage that it could, with similar behaviour, have extracted from the Hawke Government's reforms.  Keating might justify his treatment of Fightback by referring critics to Fraser's use in 1975 of the 25% tariff cut and with greater relevance to Fraser's misrepresentation of Labor's housing taxation policy in 1980 but not even in politics do two wrongs add to a right.  Keating traded the opportunity of a very honourable place in Australian political history for another term as Prime Minister.

By campaigning on a platform that would eliminate so many privileges at once, the Opposition had left itself vulnerable to criticism from many disappointed vested interests.  This had been anticipated, but it had been reasoned that by attacking privilege on a wide front, self-interested people would be able to appreciate their own advantages from elimination of other's privileges.  Roger Douglas had argued that his experience was that New Zealand's public had reacted with considerable sophistication to the Lange Government's comprehensive reforms.

There were however important differences between the Australian situation and Douglas's experience.  Douglas had not announced policies, but undertaken them and then defended them.  Thus, some of the benefits were visible and the costs less readily beaten up.  Because his reforms were already in place, vested interests faced a more difficult hurdle that they did not always attempt.  Nor had there been anyone in New Zealand with Keating's ruthless campaigning skills.  Finally, even though Australia was suffering the 1990-91 recession, Australia, unlike New Zealand and later Victoria, was not in such deep economic trouble that most people understood the need for radical policy.

On top of the politically-inspired misrepresentation, the Coalition found itself under sustained self-interested but reasoned attack from the superannuation and tourist industries.  The people concerned were short-term losers from the proposed policy changes and their complaints were to be expected.  Some of their tactics were, however, outrageous.  David Jull was then the Opposition tourist industry spokesman.  During the course of the campaign a tourist industry lobby typed his name on a document he would not sign and leaked it to the Government, which claimed that Jull had signed it.

The partisan and short-sighted criticism of the social security lobby was more serious.  As was that of several Catholic bishops who claimed that the GST, when applied to "essential food" or in some contexts just to "food", was a fundamentally immoral tax.  They did this despite Italy's indirect taxation applying in the Vatican and Centesimus Annus' advocacy of undistorted markets.  These bishops issued a statement on the GST in which they said that Governments should have a preference for the poor.  The Coalition, however, proposed to over¬compensate the poor for the GST's consequences, that is, the Fightback package was progressive.  Starting from the correct contention that the tax without the compensation would have been regressive the bishops indulged in some interesting casuistry leading to the contention that taxing food was, like blasphemy and fornication, wrong.  Yet they did not call for the abolition of the wholesale sales tax or the tariff that also taxed food.  The bishops could not have been so ignorant of the Australian tax system that they believed their own statement.

Hewson, like John Howard, also had to contend with criticism made in public by Malcolm Fraser.  It is not axiomatic that ex-Leaders should refrain from trying to discredit their successors but the case for the silence assumed by Menzies and Hawke is a strong one.

The media, anticipating a Coalition victory, concentrated on the real and alleged flaws in Opposition policy without distinguishing between the trivial and the significant.  It did not address Government policy.  Fightback was analysed, criticised and torn to pieces, a legitimate media activity, while the Government's much dodgier One Nation statement almost escaped critical analysis.  The bias was not ignorance on the part of the press that needed to apply only the same standards to One Nation that it was applying to Fightback.  Journalists have since excused themselves to me by saying that they did not expect Keating to win.  They had, however, posed as reporters and commentators, not as political players.  The power of the media is exaggerated and they are not as uniformly biased as people on both sides of politics contend, nevertheless, no amount of charity can absolve them from their comparative treatment of One Nation and Fightback.

When Fightback ran into difficulty, the business community, which had sought the tax reforms, was conspicuously silent and it looked as if it were having second thoughts.  Liberal politicians quip, "You can rely on the support of business at any time except when it is needed".  Some businessmen enjoined the Coalition parties to back off the proposed Goods and Services Tax, not because it was a bad policy, but because it was politically too difficult.

The car industry, that had in June 1990 made the joint submission to the Industry Commission favouring ongoing tariff cuts as long as these were accompanied by comprehensive measures to reduce cost handicaps, essentially the Fightback offer, reverted to type.  Led by Jacques Nasser of Ford Australia it now began to oppose Fightback.  In response, Hewson commissioned ACIL that had helped prepare the industry's IC submission to estimate the consequences of Fightback for the industry.  ACIL showed that the average car would cost less, profitability per car would decrease, new car demand would rise substantially and component exports would rise substantially.  Spokesmen for Ford and Toyota dismissed the report but the authors were vindicated when tariff and car-tax cuts similar to those proposed in Fightback were implemented.  General Motors and Mitsubishi, however, did not join the Ford-Toyota push.

The forces marshalled against Fightback were considerable and included some whose enmity Hewson probably felt that he did not deserve.  Although their motives varied, Keating conducted their performances and they played to the rise and fall of his baton.  Although it is easy to mount an ethical case against him, his performance was masterly.

As the election approached the GST became a huge liability.  It was, however, by then sunk political capital no longer available to the Coalition Parties for other ends.  Had Hewson abandoned tax reform, his backbench and the National Party that had not found it easy to go along with several of the Coalition's more free-market policies, would have revolted over one policy after another.  Nothing is worse for morale within political parties than policy reversals.  Other policies, including labour market reform, would then have been challenged, perhaps successfully.  Although staking so much on the Goods and Services Tax may have been politically unwise, it soon became too late to abandon it.

By the end of the year Fightback was in serious trouble and Labor was in front in the polls.  Hewson, under pressure from his backbench, excluded many food items.  The package, never regressive, was now very clearly progressive.  Fightback II also provided for a $3 billion injection into public works and accelerated depreciation for business.  The welfare and tax benefits were brought forward.  These changes were financed by deferring tax cuts for the wealthy and by the sale of Telecom.  Blewett commented that "its fiscal recklessness blurred the distinction between Government and Opposition policies". ⁽³⁵⁹⁾

Fightback I had been an exceptional attempt by an Opposition to explain needed reform.  It was as rigorous as anything that had come from a party in Opposition.  Fightback II, although no worse than One Nation, was in contrast a sloppy document financed in part by asset sales and wishful thinking.  With it the courageous attempt was abandoned and democracy lost out.  John Hewson had sworn that he would sooner not be the Prime Minister than to retreat from Fightback, but when faced with the prospect of actually not being the Prime Minister he had backed down.  Twice on chance meetings with Hewson I had bet him that he would not in fact have the resolve to stick with Fightback I.  My tactic was an overly cruel one.  He was becoming lonely at the top and sympathy might have won them more.

The immediate effect of Fightback II was, nevertheless, to halt the Coalition's decline in the opinion polls, but the advantage did not last.

Keating called the election for 13 March 1993, when the economy was recovering, and won with a swing to the Government.  Exit polls indicated two dominant issues, the GST and unemployment.  Hewson could have fought upon the latter more important issue.  He failed in largest part, however, because of his inability to articulate the values toward which his reforms tended.  As Bronwyn Bishop observed on election night, campaigning is about issues of the heart as well as the head.  When Keating had referred to Hewson as a "feral abacus" he had identified his opponent's most serious political weakness.  They have not always succeeded, but Dries who had learned their trade in and around the think tanks understood the care that was needed to ensure that their hard heads were not easily portrayed as hard hearts.  Hewson did not have that background and he seemed not to appreciate that successful advocacy depends on shared values.

Although the setback was not as great as I feared at the time, it was a turning point from which the dry cause was not wholly to recover.  The Dries had cultivated politicians who would run on their agenda and had found a champion who had failed electorally.  How this came about became the subject of soul-searching and was to influence the policies of more luke-warm reformers.

Should an Opposition attempt to take the public into its confidence?  Douglas had not done so in New Zealand and neither had Hawke but, on the other hand, Thatcher had been frank about her intentions.  A democratic principle was involved.

When a Government is unlikely to control both houses, should an Opposition attempt to obtain a mandate that will persuade the upper house to pass policies it had run on?  The Senate had not been too respectful of Whitlam's mandate after 1972 nor would it be of Howard's GST and industrial relations mandates.  Arguably another democratic principle was involved, but one that could not be enforced.  Following the Fightback election it became the practice of all parties to hold their policies and particularly their costings until late in the campaign when it is too late for them to be torn apart by honest or dishonest opponents.

The Coalition parties had been justly criticised for past failure to commit to principles, a failure that had allowed vested interests too easily to influence economic policy.  When Hewson had developed Fightback, some critics, of whom John Stone was the most notable, had predicted that the GST would be misrepresented and therefore could not be sold to the public;  but he was not asking the Coalition to return to unprincipled pragmatism.  He was complaining that the GST would absorb too much political capital for too little social gain.  There is not, and in a democracy can never be, an unlimited supply or either political power or influence.  As much of both as politicians have must be nurtured and used selectively.  Hindsight tells us that some politicians do this badly, but it is far more difficult to do well than their critics tend to admit.

With that hindsight, Stone seems to have been correct, but had the Coalition won by abandoning what it had professed would it have been an effective Government?  Both the union bosses and the captains of protected industries recognise weakness.  The more that a Government is seen to succumb to pressure the more pressure it is subjected to.  When Hewson announced the reconsideration of the GST, he faced outlandish demands for GST exemptions, for instance, for desexing dogs and sport.

Peter Walsh did not favour either Keating's Option C or Hewson's GST.  His comparison of them is therefore likely to be as objective as any and it is better informed than almost any.

On any reasonable assessment, Option C's income distributional negatives were greater than the tax component of Fightback I, and vastly greater than Fightback II.  The higher CPI impact in Option C posed greater risks for economic growth, interest rates and a higher de facto capital levy that inflation always imposes on those who hold assets in cash instead of property.  In this way both taxes punished those who opted to accumulate cash savings instead of indulging in property speculation.  But the BBCT [broad based consumption tax] punished them more.  The GST social security compensation measures were more adequate.  The BBCT was collected only at retail level, and thus lacked the self-policing multi-stage collection point which all value added taxes have.  One collection point simplifies administration, but also facilitates evasion. ⁽³⁶⁰⁾

Walsh also observed:

One of the great ironies of the 1993 election is that the Liberal Party was for cheaper food for the workers and higher taxes for the rich.  Labor was for dearer food for the workers and lower taxes for the affluent.

How much did loss of one election matter?  A once-in-generation chance to benefit the nation had gone forever.  The disappointment was particularly acute because Hewson had attempted two things that Dries had advocated.  The first was to move on a broad front as had been done in New Zealand.  The second had been to pre-announce a comprehensive reformist agenda, rather than just elements of it, and thereby to obtain a comprehensive mandate.  That had seemed the honest thing to do and to offer the best chance of achieving the passage of necessary legislation in the Senate.  Dries (by many counts but most of all by underestimating both Keating's talent and his cynicism) had misjudged what the political system could deliver.  However, recrimination, excessive resort to hindsight and selectively reminding people of where our own foresight proved correct was and remains pointless.  The hard fact was that the Dries stuffed up in a manner that had been foreseen, discussed and ultimately misjudged.  If true to their mission, they had no option but to pick up the pieces and carry on.

On the positive side, the debate had been considerably advanced.  Had not Dries always argued that in the longer-run the argument is everything?  It was not, moreover, the first or the last setback in "the good fight" nor did it mark an end to rapid progress which had already shifted to Victoria.

They were never to learn how closely Hewson would have been able to stick to his program in Government, what deletions would have been necessary and what additions opportune.  Nor were they to discover whether the Senate would have felt obliged to implement Fightback.

Democracy is a developing art.  And, although it has not been much remarked in these terms, Fightback was an experiment in democracy.  The Hewson Opposition, in search of a mandate for reform, released a warts-and-all policy eighteen months before a poll.  In so doing, it placed unprecedented trust in the Australian public.  It did not, of course, expect most voters to study its policy, but Hewson, Fischer and Co must have expected the media, the bishops and other conduits for ideas to give Fightback a more honest appraisal than it received.

Were the circumstances so exceptional that they contain few lessons?  Could anyone other than Keating have diverted attention from the nearly one million unemployed, the current-account and the foreign-debt to direct it to the Opposition?  Keating whipped up self-interested resistance to Fightback that was based upon misapprehension.  For that matter, how many political leaders would have mounted a campaign that relied so heavily upon misapprehension?  The experiment did not work that time but the Australian electorate a decade later is resentful of the practice of springing policies upon them only in the closing stages of election campaigns.  At some point there must be a limit to how much of that sort of behaviour a democracy can withstand.  Fortunately the Australian democracy is particularly robust.

One lesson can be learned.  Hewson failed when he failed to communicate Fightback's moral basis.  Merely by being unusually frank he laid early claim to the moral high ground but he was not then able to defend it.  Accustomed to non-judgemental neoclassical economics he avoided visions and values.  While not denying that visions and values both provide ready refuges for rogues, people must see the goal and then it has to be approached by means seen to be decent.  Voters are not economists but they do care.  Fightback was defeated by a false moral argument, namely that it prejudiced the poor.  The Opposition had, however, reinforced the falsity by concentrating on telling people what was in the policy for them -- by assuming that the electorate's motives were more selfish than I believe they are.

Taking account of public opinion, while not becoming subservient to the minorities within it, is the great balancing act of democratic leadership.  C.D. Kemp, who was, despite his sons' roles in writing it, a critic of Fightback, wrote after the 1993 election defeat:

I have been shocked by the way so many Liberals have been in such indecent haste to distance themselves from ideas which, only a few weeks ago, they seemed to have a passionate attachment.  It is not a pleasant spectacle:  it does them and their party no credit.

Even though Hewson failed, and Fightback but not Jobsback was formally abandoned, it had set a precedent in Australian political development that was to be repeated with more success by Howard in 1998.

When the election was lost, amid the enmity and arcane manoeuvring that had become Liberal Party practice, Hewson retained the Liberal Party leadership.  But when he abandoned Fightback he abandoned all that he was in politics.  Plagued by want of public or party support he was forced to hand over to Alexander Downer.  Also plagued by want of public and party support, Downer resigned in favour of John Howard.  From this round of Liberal musical chairs, Downer emerged a loser but one whom, in the words of Liberal Party President, Tony Staley, was blessed with "civilised values, dignity and decency".  Here, in Downer, was a player who had been prepared to put the national interest before the temptation to recriminate, destabilise and plot -- dryness of a sort.

---

ENDNOTES

326.  John Hyde's diary, Feb 8, 1984,

327.  Edna Carew, Keating -- A Biography, Allen & Unwin, 1988, p 222

328.  Graham Richardson, Whatever it Takes, Bantam Books, 1994, p 81

329.  David Barnett, John Howard, Viking Press, 1997, p 251

330.  ibid, p 251

331.  ibid, p 258

332.  David Barnett, John Howard, Viking Press, 1997, p 254

333.  ibid p 282

334.  ibid p 293

335.  The Sydney Morning Herald, 22 June 1987

336.  Wolfgang Kasper personal communication.

337.  The Liberal Party, Policies for Business, 1986

338.  David Barnett, John Howard, Viking Press, 1997, p 437

339.  John Nurick editor, Mandate to Govern, AIPP and The Australian Chamber of Commerce, 1987, p 12

340.  The Australian, 20 February 1987

341.  The Australian, 20 February 1987

342.  David Barnett, John Howard, Viking Press, 1997, p 464

343.  ibid, p 496

344.  Paul Kelly, The End of Certainty, Allen & Unwin, 1992, p 421

345.  Stephen Rimmer, Fiscal Anarchy:  The Public Funding of Multiculturalism, Policy Paper No. 15, AIPP

346.  Scruton, Brennan and Hyde, Land Rights and Legitimacy, Critical Issues No 1, AIPP, 1985

347.  Stephen Rimmer, Fiscal Anarchy, Policy Paper No 15, AIPP, 1988

348.  Policies for Business, The Liberal Party, pp 14-17

349.  David Barnett, John Howard, Viking Press, 1997, p 370

350.  David Barnett, John Howard, Viking Press, 1997, p 371

351.  David Barnett, John Howard, Viking Press, 1997, p 266

352.  David Barnett, John Howard, Viking Press, 1997, p 527

353.  David Barnett, John Howard, Viking Press, 1997, p 565

354.  David Barnett, John Howard, Viking Press, 1997, p 605

355.  Fightback p 26

356.  Centesimus Annus was a thoroughgoing endorsement of a free-market economic order that gave much-needed recognition to the ethics that sustain markets equating justice not only with an absence of force and trickery but also with mutual agreement.  The encyclical implied approval for the privatisation of welfare delivery but offered no escape from the obligation to be charitable.

357.  The Australian Financial Review, 19 September 1991

358.  Neal Blewett, A Cabinet Diary, Wakefield Press, 1999, p 12

359.  Neal Blewett, A Cabinet Diary, Wakefield Press, 1999, p 237

360.  Peter Walsh, Confessions of a Failed Finance Minister, Random House, 1995, p 143