There seems to be an air not only of nostalgia but almost euphoria
surrounding the 20th anniversary of the election of the Hawke government.
It is even suggested that the government's economic reforms are the
principal cause of our present prosperity today. Is this going too far?
The need for economic reform was surely obvious. In particular, the end
of exchange control and the floating of the dollar, as well as trade
liberalisation, were long overdue. What was surprising was not so much
that they were introduced. Rather it was that they had not been introduced
by the previous Fraser government. After all, Malcolm Fraser had enjoyed
the mother of all mandates, including the luxury of a Senate majority! He
could have enacted all the reforms he wished. Notwithstanding the
proposals of his youthful reforming minister, John Howard, Fraser just
would not, or could not, grasp the nettle. Was he afraid of reviving the
divisions in the country that had surrounded his use of his Senate
majority to bring down the Whitlam government? Or was he just an
unreconstructed agrarian socialist?
The other surprise was that these reforms were introduced by a Labor
government. Not that Labor had never dipped its toes - ever so tentatively
- into the waters of economic reform. It was, after all, the Whitlam
government which introduced the Trade Practices Act and the Industries
Assistance Commission, as well as adopting at least one significant
measure aimed at trade reform.
In any event, Bob Hawke proved to be a good chairman of the Cabinet and
he certainly had talent around him - Bill Hayden, Peter Walsh and Paul
Keating to name just three. And he also had that rarity: an opposition
which voted on principle and did not see its role as just obstructionist.
That said, the government's economic record was patchy. There was too
much reliance, at least in certain sectors, on the tools of a centralised
command economy. This was most evident in health and tertiary education,
where the highly successful and decentralised models of the Menzies era
had been replaced by inferior and doomed utopian models. These involved
interference in the detailed management of both sectors and were, at least
initially, based on the assumption that government revenues were a
bottomless pit. Perhaps the worst aspect was the belief that government is
better at spending peoples' money than the people themselves!
The Hawke government had an essentially bandaid approach to these
sectors. Probably the better (but only partially successful measure) here
was HECS (the Higher Education Contribution Scheme), which replaced the
impossible and socially unfair policy of so-called 'free' tertiary
education. This had meant not only that the rank-and-file blue-collar
workers were paying for the education of the rich, it also meant that that
the facilities of the universities were being seriously run down, with
staff underpaid and overworked.
In another area, much is made of the government's privatisations, which
were surprising, to say the least. (Ben Chifley must have turned over in
his grave when that centrepiece of Labor's crown jewels - the Commonwealth
Bank - was knocked down.) And for what? The proceeds were dissipated on
current expenditure. It seems that only governments (and corporate
executives) can sell off capital accumulated over time to spend it as if
it were income. The ordinary citizen, of course, instinctively knows
better. (Imagine if everybody sold their houses and spent all of their
savings this year. We could all throw ourselves on the government. The
only problem is, there would not be nearly enough money to go around to
look after all of us.)
Privatisations are more than justified to encourage competition,
investment in the industry concerned, better management, and when there
are superior alternative investments, but they are entirely inappropriate
if they are undertaken principally to fund current expenditure. How do you
maintain that expenditure when you run out of capital to sell?
In addition, the presence of a publicly owned, or better, a mutually
owned institution in an oligopoly can induce more competitive behaviour,
including sound pricing. A pity, then, that we have lost so many such
institutions - especially in insurance and banking, where the presence of
a mutually owned corporation could have provided real competition outside
of continual cost cutting with little apparent benefit for the public.
The Hawke government wrapped privatisation in the attractive argument
that government should only do what they can do best. This in the abstract
is a sound principle, but it was applied selectively. It certainly did not
apply in, for example, health and tertiary education. More serious was the
government's tepid approach to labour market reform, which had the
unintended consequence of entrenching the then high level of unemployment.
Nor did the government tackle the burning issue of welfare reform, except
to provide that the future aged - and then only those working - would be
guided towards independence through superannuation.
Behind the proposition that a government should restrict itself to
those things that a government does best is the truth that a government,
any government, will never find it easy to acquit itself in the truly
demanding task of performing just its core functions. So why should it
take on more? It should certainly not take on, or keep, those things that
individuals, families and business can do better. Rather we need limited
government, government which allows us and encourages us to face our
individual responsibilities and thus confirms our independence. And the
last thing a community needs is a government which makes any of us
dependent - unless of course there are exceptional circumstances
justifying the provision of a safety net, or where a core function of
government is involved, such as defence, law and order, or the maintenance
of a sound currency.
In assessing the work of the Hawke government, it can be said that as
it did some of the things Malcolm Fraser failed to do, it deserves credit.
But it did not go far enough in lifting the yoke of excessive government
from Australians. In this respect too much credit is given in some
quarters to the Hawke government for the current health of the Australian
economy. Much more of this is the result of the prudent husbanding of
national revenues over the past few years. And much also is the result of
the simple fact that can be seen all across the nation - Australians have
for some time been working harder, more effectively and for longer hours.
In other words, while the impact of the reforms of the 80s should be
acknowledged, this should not be exaggerated. To a far greater degree we
are reaping the results of the change to more prudent budgets and the
peoples' own hard work. This is not to denigrate the work of the Hawke
government, but to place it in its proper context.