POLITICAL AMNESIA

Correspondence

John Quiggin

Laura Tingle is right to suggest that memory is a problem in Australian politics. But, for most of the Australian political class, the problem is not amnesia. Rather, like the Bourbons, they have learned nothing and forgotten nothing.

The key word here is “reform.” As Tingle observes, “reform” remains a fetish word, at least for the political class. Its continuing magical power can be seen in the recent National Reform Summit, jointly sponsored by our rival national dailies, the Australian and the Australian Financial Review, along with the inevitable participation of consulting firm KPMG (which helpfully notes its affiliation with KPMG International, “a Swiss entity”).

The content of “reform” is generally taken to be self-explanatory. Obviously, for example, anyone who suggested a tax reform that would require higher income earners to pay more income tax, or a productivity reform that involved more leisure, would not have been welcome.

As Tingle observes, “reform” has become “a hollowed-out word which you attach to anything voters won’t like in the hope that it will make you appear a strong and decisive government.” The problem lies in her implicit contrast with an earlier era in which there was consensus around a reform agenda based on an “obligation to explain and advocate.”

The memory of this golden era is what gives the word “reform” its continuing magical power, at least among the political class. But it is largely mythical. Reform has been a top-down process, imposed without any serious attempt at persuasion, from the very beginning. The floating of the dollar, generally seen as the starting point of the microeconomic reform era, was announced following late-night meetings between Treasurer Keating and senior Treasury officials, the content of which is still disputed.

By the early 1990s, the term “economic rationalism” had entered the public lexicon, thanks to Michael Pusey’s book Economic Rationalism in Canberra. The era of explanation and advocacy was well and truly over, replaced by a sharp divide between the political class and the public. As Tingle observes (with implicit reference to the political class), to argue against economic rationalism was to invite “ridicule or contempt.” By contrast, among the public at large “economic rationalist” became, and remains, a term of abuse.

The results were seen in the National Competition Policy (NCP), a deliberate and successful attempt to institutionalise economic reform by means of an end-run around the political process. A carefully selected committee, appointed to analyse an obscure area of commercial law, produced recommendations which turned into an intergovernmental agreement, backed with huge and financial incentives and penalties. By the time NCP came to the attention of the ordinary voter (through, for example, the contracting out of local government services), it was a fait accompli, impossible to challenge through any democratic process. 

The upsurge of support for Pauline Hanson was not only due to John Howard’s dog-whistle attacks on “political correctness.” It owed at least as much to the (correct) perception that ordinary people no longer had any say in the crucial issues of economic policy. Tingle recognises this, but, like the rest of the political class, treats it as an unalterable fact about the world rather than the result of specific (and misguided) policy choices.

John Quiggin