In February 1972, Richard Nixon became the first president of the United States to visit the People's Republic of China. Nixon had made his reputation as a warrior of the Cold War, his party was virulently anti-communist and most of his key supporters viewed the Chinese as no less evil than the Russians. A leader without Nixon's credentials would not have dared such a task for fear of being seen to be weak on communism.
The trip was hugely successful. Domestically it helped propel Nixon to re-election by a landslide later in the year, and it dramatically strengthened America's strategic position. His meeting with Mao Zedong was the defining positive moment of Nixon's presidency.
Those events of 1972 have since been the subject of numerous television documentaries and countless scholarly papers. It was even the subject of a classical opera. Beyond the importance of the event itself, the phrase "Nixon in China" has been used to describe a particular phenomenon.
A Nixon in China moment occurs when leaders act against the short-term interests of their own minority constituency to achieve a long-term benefit for a majority not necessarily part of that constituency. The distinguishing feature of such moments is that the outcome could only have been achieved by leaders who would have been expected to do the opposite of what they did.
Pursuing a Nixon in China moment is not without its risks, as leaders face the threat of alienating their own supporters and not winning the backing of those who have yet to gain from a policy change. Only leaders who have accumulated sufficient political capital and who are trusted by their own followers can contemplate such a strategy.
Nineteenth-century Britain provided one of the most famous Nixon in China moments. In the 1840s, prime minister Robert Peel convinced the Conservative Party to repeal tariffs on food imports. The immediate economic effect of the decision was to reduce the earnings of British farmers who had sheltered behind protection, while politically the Conservative Party was split because the agricultural sector was a key voting bloc on which the party relied. But in the long term the policy was hugely beneficial. The living standards of the working class rose as the price of food fell, and a free-trade policy ensured the country's prosperity into the second half of the 19th century.
The ALP-ACTU accord of the 1980s is a more recent example closer to home. Bob Hawke and Paul Keating recognised that labour costs had to be reduced and profits on capital increased to ensure future economic growth, and that if this happened there would be financial and political costs for the labour movement. Only Hawke, the man who had made his reputation representing trade unions, could have struck a deal that limited the growth in real wages for union members. If the coalition had attempted something similar the ACTU would have rejected it out of hand and fought it tooth and nail.
John Howard is facing a Nixon in China moment.
Any worthwhile tax reform must substantially reduce income tax rates and eliminate the myriad anomalies that infest the tax regime (for example, the differential tax treatment of companies and trusts). But for this to occur the coalition must cut government expenditure, something it has so far been unwilling to do. One of the reasons for this reluctance to reduce spending is that a core constituency of the Prime Minister, Liberal MPs in marginal seats and the Nationals, have come to rely on the distribution of commonwealth largesse to secure their re-election.
Of course, not every spending promise made in the last election campaign was a bad one. But real tax reform is dead in the water for as long as the coalition continues to extend to the wealthy middle class non-means-tested benefits such as the baby bonus, and fund regional development projects whose only justification is political.
Fortunately, on more than one occasion the Prime Minister has been willing to undertake hazardous tasks. In 1996 he single-handedly drove changes to national gun laws, which undoubtedly cost him votes in the short term.
Now he has another opportunity to seize the moment.
His leadership is unassailable and he will have control of the Senate. He is the only person with the moral and political authority to lead and win a debate on the need for fundamental reform to the coalition's taxation and expenditure policies. And while reform definitely threatens the political interests of some coalition MPs, there is the prospect of benefiting the interests of all Australians.
The question is, can Howard do a Nixon in China?
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