Say not the Struggle ...

CHAPTER 17

Say not, the struggle naught availeth,
The labour and the wounds are vain,
The enemy faints not, nor faileth,
And as things have been they remain.
If hopes were dupes, fears may be liars;
It may be in yon smoke concealed,
Your comrades chase e'en now the fliers,
And but for you, possess the field.

AH Clough (Used by Bert Kelly to keep my nose to the grindstone.)

By 1990, many of the economic policy changes that have featured here were accomplished and others were in train.  During the 1990s, as a consequence of a program of phased reductions, protection continued downwards so that between 1991-92 and 2000-01 manufacturing effective-rate protection was reduced from 14% to 5% and agricultural from 12% to 6% in 1999-2000. ⁽⁵¹⁰⁾  The Keating years saw the collapse of budget discipline but the beginning of the competition policy regime.  Labour market reform had had to await the Howard Government when the Senate frustrated much of it.  The tax reforms proposed by Keating in 1985 had had to wait until 1999, then to be badly mauled by the Senate.  The Howard Government turned its reforming attention to the welfare system.  Nevertheless, by 2000 the zeal that had sustained freedom's advocates had gone.

Spooked by the Hanson phenomenon and the Victorian defeat, politicians blamed the public, while the public blamed the politicians.  The Australian published a widely acclaimed article by Paul Kelly, the author of The End of Certainty, that railed against the betrayal of the nation by the political class, a flawed Prime Minister and a weak Opposition leader.  Their sins, he said, were cheap populism, lack of vision and subservience to the complaining class.  Many of those who acclaimed the article were, however, the same people who made the self-serving demands to which flawed Prime Ministers and weak Opposition Leaders were alleged to yield.

Not just the will to reform had abated.  The arguments that sustained freedom and had been so clearly expressed in the latter part of the 1980s had been corrupted. Government and Opposition rhetoric was by 2000 almost totally mercantilist.  It is true that industry lobbies could no longer resort to the disingenuous campaigns that they had employed before 1983, but neither would the Prime Minister employ the economic arguments that Hawke had employed in March 1991.

The Australian reforms of the 1980s and early 1990s had been part of a worldwide phenomenon.  They had more followed than led the spirit of the times but neither the Zeitgeist itself nor Australia's ability follow it had been chance.  My personal hero, Bert Kelly, and many others had preached, nagged and recruited with the possibility of such reforms always in mind. If such a period of exceptional Government is to be repeated, then leaders -- politicians, think tanks, academics, and business and trade union officials -- must cause it to be repeated.

When Pitt and Acton adverted to power's tendency to corrupt they, like Jean-François Revel, had in mind not money but power -- not the occasional politician who feathers his nest at public expense but authority knowingly misapplied for political gain.

It is time to remind ourselves of the definition of corruption that I chose at the outset.  It was:

In a civilised efficiently alert democracy, you have to be a fool to commit the major felonies punishable by the law:  breach of trust, peculation, embezzlement, influence peddling.  So in order to gauge the extent of corruption in our own kinds of liberal society, we need to look beyond the classic offences.

Being "corrupt" means somehow misapplying political or administrative power, whether directly or indirectly, outside its proper sphere, for one's own financial or material advantage or in order to distribute the gains among one's friends, colleagues, relations, or supporters. When a minister grants a subvention to an association of dubious utility, even when he observes all the rules in doing so, he is committing an abuse, especially if it turns out that the beneficiaries of the subvention are his personal or political friends.  A subvention of a million Francs, for example, is the equivalent of a year's profits for a thriving business.  Multiplied by some thousands of instances (and by sums mostly very much greater), this act amounts to a levy imposed on the labours of the producers, in favour of the occupants of the power structure.  The further the system extends, the heavier the hidden tax on production and the less profit and employment.  Even if legal appearances are saved in these transactions, it may be assumed that democracy is not.  The national inheritance is diverted into private or partisan uses, causing a pernicious drain on the general economy. No doubt the good Minister who performs this little service for his henchmen has no sense of being dishonest -- and that is the most serious thing about it. ...the greater the role of the State the more numerous the opportunities for corruption. ⁽⁵¹¹⁾

Until ministers who knowingly advance political interests to the disadvantage of national interests come to see that their behaviour is corrupt, good Government will remain difficult to achieve and bad Government will be about as common as Cabinet meetings.

Statesmen undoubtedly experience temptations with which we do not have to cope and none who achieves authority totally avoids being corrupted by them.  A political system that was not criticised would be extremely dangerous, but let us not pretend to be too holier than they.  We who have not possessed any considerable power should not imagine that, if we had, we could have escaped power's insidious influences.  The democratic political process that overlooked us is not totally blind to quality and we can be fairly sure that we would have performed even worse than those who reached democratic political heights.  Nevertheless, some governments are much better than others and political morality (like any other) may be buttressed.  The more readily the public recognises misapplied authority, the less likely politicians are to misapply it.  There is no task more enduring or more worth the effort required than aiding that recognition.

The civil society favoured by Dries is that of its original Lockean meaning -- an often better more-free alternative to Government coercion.  The rules that permit a society to be half-decent are fragile and need constantly to be defended.

Like many of John Hyde's generation, I was once fascinated by the Weimar Republic's collapse into tyranny.  The causes of that included inflation, public debt, economic stagnation, unemployment, xenophobia, concentrated authority, discriminatory laws, propaganda and political correctness, a pervading sense of grievance, unfounded fears encouraged by scaremongering, jingoism, and the tendency to allow ends to justify dubious means.  It was not because we are an inherently superior people that, when Australians heard the Siren calls of National Socialism and Communism, dæmonic screams of hatred raised against trivial injustices by fellow Australians and the braying about our own self worth, most of us were mildly sceptical.  We mostly rejected the flawed philosophies, the antipathy and the disdain because the civilising institutions we practiced seemed, in spite of the Great Depression and the war, to be sound.  Upholding these is not a matter of preference but of duty. We owe the next generation a society with the institutions that cause Governments to govern even¬handedly and permit markets to operate fairly and efficiently.

If the period of exceptional Government is to be repeated, then politicians true to their trust must cause it to be repeated.  Obviously, politicians owe their ultimate loyalty not to faction, party or interest but to the whole state or nation.  It is less obvious when and to what degree the individual should put aside the rules of political cooperation.  Those who defy the party system, unless they are insanely self opinionated, live in fear of their own serious error.  They may, however, legitimately console themselves with the knowledge that when they know that their stands conform with mainstream informed opinion, then and only then the Prime Minister is at least as likely to be wrong as they are themselves.

Unpopular advice emanating from such conventional sources as Treasury and the Reserve Bank has a high probability of being sound. The MPs who will chance their arms defending economic rectitude, as both Howard and Keating did successfully for financial deregulation, may do great service but few battles are so directly won.  Service is more often done by taking sound advice and by slow degree making popular wisdom of it.  Therefore, the success of a political cause is not determined by just the ability to devise workable policies but more fundamentally by the ability and willingness of leaders to woo and win support for policies that are initially unpopular.

In Orwell's imaginary England of 1984, "Newspeak" was shorn of all capacity to convey ideas inimical to the prevailing ideology, making real political debate impossible.  In the real world too, politically-correct euphemisms have crowded out the expression of essential ideas.  Australia's economic fortunes in 2010 are being determined by what governments do today and also, in say 2020, by what people say today -- by the ideas that contend. Politically-significant words, such as democracy, liberty, equality, equity, civilisation, honour, justice, morality and peace need to be rescued from lexicology's garbage heap, as do their ugly sisters, tyranny, injustice etc, to have their precise meanings restored and their usage in popular debate accepted.

There is a lot of ruin in nations based on sound traditions, but the 20th century had evidence enough that they are immune neither from precipitous ruin nor sad decline.

Bert Kelly understood these things, as did Ref Kemp, Alf Rattigan and several more now dead and still living. These Dries (by any name) were, nevertheless, members of a relatively small band.  The central point of this account is that at least for a time they prevailed.  Their agenda -- spelt out in chapter 4 -- was substantially achieved by persistence and increasing sophistication.  Today, the nation benefits.  Political and economic lags are long and another generation's fortunes turn upon what we do now.

---

ENDNOTES

510.  Productivity Commission 2001, Trade and Assistance Review 2000-01, Annual Report Series 2000-01, AusInfo, Canberra, December.

511.  Jean Francois Revel, Encounter, March 1987

---

APPENDIX

	Commonwealth Budget Balance $ millions	Def/Surp/ GDP	Inflation	Unemp- loyment	Economic Growth	Productivity growth Prev cycle	Effective Protection
							Mnfac	Agrclt
McMahon 1971/72: 1972/73:	$134 deficit $696 deficit	-0.3% -1.5%	6.5% 8.1%	1.3% 2.0%	4.8% 4.0%		35 35	21 14
Whitlam 1973/74: 1974/75: 1975/76:	$263 deficit $2483 deficit $3579 deficit	-0.4% -3.7% -4.5%	13.0% 16.9% 12.0%	1.3% 4.1% 4.5%	4.9% 4.2% 3.4%	1.6% pa	27 28 28	13 8 9
Fraser 1976/77: 1977/78: 1978/79: 1979/80: 1980/81: 1981/82: 1982/83:	$2685 deficit $3260 deficit $3387 deficit $1957 deficit $987 deficit $507 deficit $4512 deficit	-3.0% -3.3% -3.0% -1.5% -0.7% -0.3% -2.5%	13.5% 8.0% 8.7% 10.8% 8.7% 10.7% 11.1%	5.3% 6.3% 6.3% 6.4% 5.4% 6.8% 10.2%	2.1% 1.6% 5.2% 1.8% 4.2% 2.0% (0.4%)	1.3% pa	27 26 24 23 23 25 25	9 13 10 7 8 9 17
Hawke 1983/84: 1984/85: 1985/86: 1986/87: 1987/88: 1988/89: 1989/90: 1990/91: 1991/92:	$7987 deficit $6696 deficit $5636 deficit $2631 deficit $2061 surplus $5893 surplus $8036 surplus $1907 surplus $9339 deficit	-3.9% -3.0% -2.3% -1.0% +0.7% +1.7% +2.1% +0.5% -2.3%	4.0% 6.6% 8.4% 9.2% 7.1% 7.6% 7.7% 3.4% 1.2%	9.1% 8.6% 7.7% 8.0% 7.4% 6.1% 6.7% 9.4% 11.0%	8.9% 5.2% 1.5% 5.0% 4.3% 5.5% 2.2% (1.8%) 2.0%	1.2% pa 0.8% pa	22 22 20 19 19 17 16 15 13	11 10 12 19 11 8 7 13 11
Keating 1992/93: 1993/94: 1994/95: 1995/96:	$14571 deficit $13666 deficit $11627 deficit $5001 deficit underlying $10278 deficit	-3.4% -3.0% -2.6% -1.0% -2.0%	1.9% 1.7% 4.5% 3.1%	11.0% 10.0% 8.4% 8.5%	4.2% 4.7% 4.0% 3.9%	1.1% pa	12 10 9 8	10 11 11 na
Howard 1996/97: 1997/98: 1998/99: 1999/00: 2000/01	$2550 surplus underlying $4897 deficit $16468 surplus underlying $1185 surplus $12705 surplus underlying $5630 surplus $22171 surplus underlying $12671 surplus $	+0.5% -0.9% +2.9% +0.2% +2.1% +0.9% +3.5% +2.0%	0.3% 0.7% 1.1% 3.2%	8.5% 8.2% 7.2% 6.6% 6.7%	4.6% 4.6% 4.1% 3.72%	2.4% pa	6 6 6 5 5	na na na na na

PERSONAL COMMUNICATION FROM IAN CASTLES CONCERNING CHANGES IN AUSTRALIA'S RELATIVE LIVING STANDARD

The OECD has recently (June 2001) published Angus Maddison's 'The World economy:  A Millennial Perspective', which presents annual estimates of GDP per capita, all properly expressed in a common currency (1990 US dollars) using the purchasing power parity method.  These estimates are highly regarded --those published by the World Bank and other international institutions would I believe be very similar.

I have taken as the "rich country group" the whole of Western Europe, Maddison's "western offshoots" (US, Canada, Australia and NZ) and Japan.  This corresponds closely with the "old" OECD (i.e., before the admission of Korea, Mexico and some transition countries) less Turkey.

On this basis, Australia's per capita GDP expressed as a percentage (i.e., the index of Australia's per capita GDP taking the rich country group as 100.0) declined from 132.3 in 1950 to 99.9 in 1975.

From 1975 onwards it will be best if I give you the figure for every year, so that you can follow the trend and be in a position to defend whatever choice you make for the starting year of the comparison:

1976, 99.0;
1977, 96.1;
1978, 94.4;
1979, 95.3;
1980, 95.6;
1981, 96.9;
1982, 95.7;
1983, 92.3;
1984, 93.6;
1985, 94.3;
1986, 92.6;
1987, 93.1;
1988, 92.1;
1989, 91.8;
1990, 90.7;
1991, 88.6;
1992, 88.6;
1993, 90.8;
1994, 92.1;
1995, 93.2;
1996, 93.4;
1997, 93.4;
1998, 95.0.

Maddison's figures end at 1998, but on the basis of estimates by IMF staff published in the twice-yearly "World Economic Outlook", it seems that Australia's ratio to the rich country average went up by a further 0.5 points in 1999 but then went down by about 1.0 in 2000.

In short, Australia's position against the rich country average can be seen with hindsight to have reached a low point in the early 1990s recession, but to have recovered by 5 percentage points or so since then.  An earlier low point was 1983, and Australia seems to have at least held its own in relative terms since then, after many decades of decline.

THE SURVEY FROM KATHERINE BETTS' ARTICLE

Katherine Betts, People and Place, vol 7, no 4, page 37

The Questions:  The sample size in each case was of between about 1600 or 1700.  Only the outlying opinions, that is those most likely to hold the view strongly enough to influence how they vote, are shown.  In every case the majority heldno strong view on the question but in every case there was a significant minority of strongly held opinions.

Aboriginal land rights have     Not gone nearly far enough     Gone much too far	108 453
Building closer relations with Asia has     Not gone far enough or not gone nearly far enough     Gone much too far	434 152
Government help for Aborigines has     Not gone far enough or not gone nearly far enough     Gone much too far	338 423
Equal opportunities for migrants have     Not gone far enough or not gone nearly far enough     Gone much too far	225 224
Immigrants take jobs away from people who are born in Australia     Strongly disagree     Strongly agree	131 230
People who come to live in Australia should try harder to be more like other Australians     Disagree and strongly disagree     Strongly agree	415 316

---

TIME LINE

1929

Brigden Report

1932

Ottawa Agreement

1944

Bretton Woods fixed exchange rates implemented

1949

Menzies Government elected

1952

Import licensing introduced

1958

Bert Kelly elected to the Federal Parliament

1960

An end to import licensing

1962

Rattigan appointed to the Tariff Board

Creation of SAA to grant ‘temporary' assistance

1965

Vernon Report

1967

Kennedy Round

1972

Whitlam Government elected

1973

25% across the board tariff cut

The Crawford Report recommending the structure of the IAC

1974

Dairy subsidy withdrawal

Green Paper on Agriculture

1975

Fraser replaces Snedden

Industry Assistance Commission established

Bass bye-election

Jackson Report

Asprey Report

Fraser Government elected

1976

17.5% devaluation

1977

Government tightens TCF quotas and increases powers of TAA.

Draft Report on TCF Industries released

1979

Thatcher Government elected in the UK

1980

4 wheel drive success

Government rejects IAC's ‘post 1984' motor recommendations

1981

1981 Airline Bills carried despite Dries

1982

Davidson Report

General Reference findings rejected

CER with New Zealand

1983

First Hawke Government elected

Peacock leads Opposition

Moving peg introduced to exchange control

Economic summit

Cost cutting mini-budget with publication of forward expenditure estimates

Currency floated

1984

Lange/Douglas Government elected in New Zealand

Martin Committee Reports

First forward estimates published

Uhrig Report.

The Temporary Assistance Authority is abolished

Second Hawke Government

1985

Tax Summit

Howard becomes Opposition Leader

Expenditure savings statement

1986

The last interest rates, those on housing, deregulated

Keating's ‘banana republic' interview

Moodies downgrades Australia's AAA credit rating

Cairns group formed

Uruguay Round begins in Punta del Este

1987

Joh for Canberra Campaign

Button addresses protection for the TCF industries

Expenditure savings statement

The Commonwealth budget moves to surplus

Third Hawke Government

1988

Adelaide by-election

Lifted restrictions on foreign investment in oil and gas projects.

Motor import quotas abolished

Greiner Government elected

Ministerial statement cuts tariffs, reduces company tax to 39%, and taxes superannuation

HEC Scheme introduced

1989

Peacock becomes Opposition Leader

Expenditure savings statement

Domestic Wheat market deregulated

Hughes Report

Garnaut Report

APEC formed

1990

Bolger/Richardson Government elected

Fourth Hawke Government defeats Peacock led Coalition

Hewson becomes Opposition Leader

Termination of the Two Airlines Policy

Automotive industry submission to IC accepting tariff reduction if other costs are addressed.

Legislation in NSW and Arbitration Commission guidelines permitting

Enterprise Bargaining

Commonwealth Bank partially privatised

1991

Prime Ministerial Statement on Garnaut recommendations reduces tariffs on TCF to 25% and motors to 15%. The last quotas are abolished from 1993.

Centesimus Annus

New Zealand's Employment Contracts Act

Fightback launched

Keating replaces Hawke as PM

The Commonwealth budget again retreats to deficit

1992

Keating's One Nation Statement

Optus begins to compete with Telstra

Superannuation Guarantee Levy

Qantas floated

Kennett Government elected

1993

Keating returned – Fightback defeated

Hilmer Report

Uruguay Round completed

Remaining TCF quotas abolished

Native Title Act

1994

Downer becomes Opposition Leader

Keating's Working Nation

Competition Policy accepted by CoAG

1995

Howard becomes Opposition Leader

Australian Governments at CoAG agree to the National Competition Policy

1996

Howard Government elected and Hanson's win in Oxley

Reith's Workplace Relations Act

Extension of competition laws to the professions.

Commonwealth Government budget surplus

Legislation to sell one third of Telstra

Kennett hands industrial relations powers to the Commonwealth

High Court's Wik Judgement

1997

Howard retreats on PMV and TCF

Wallis Committee Reports

Work-for-the-dole legislation

Mortimer Report

Blanket opposition to foreign ownership of financial institutions ended

Restrictions on entry to the telecommunications market end.

1998

Productivity Commission formed

Distribution of the broadcast spectrum

Howard wins the second GST election

1999

Seattle meeting of WTO

Ralph Report

Kennet defeated

2000

Victorian dairy industry accepts deregulation.

ACCC ruling on access to telecommunications network.

Debacle at the WTO meeting in Seattle

The McClure Report