IN A NEOLIBERAL STATE
When the Coalition evicted the Whitlam government, it promised to restore Australia to the prosperity it had enjoyed in the long boom that had run for twenty years or so since the early 1950s. Unemployment levels nudging 4 per cent and inflation reaching a high of 17 per cent in 1975 were, according to Fraser and Anthony, the result of Labor’s errors. With the right men back in charge of the country, all would be right. But it wasn’t. The long post-war boom had ended. Stagflation, the joint appearance of unemployment and inflation, confounded economic policy-makers. Both unemployment and inflation continued to rise, and by 1980 Australia was in recession. In 1983, when the Coalition faced an election, unemployment was 10.3 per cent. The Coalition lost.
Back in power, Labor was determined to establish its economic credentials. New ideas were abroad about the need to rebalance markets and governments in the distribution of a nation’s resources. The plan was for governments to get out of the way and let markets pick winners and restore prosperity. This was neoliberalism, and it posed a fundamental challenge to the large role government regulation played in Australia’s highly regulated and relatively protected economy. Labor took up the challenge and set about opening up the Australian economy. As well, it took on a second challenge: to restructure the economy to find sources of export income beyond primary commodities. The combination pushed the country to the brink.
By the 1980s it was evident that the dual structure of the Australian economy was becoming unsustainable. The Hawke government embarked on a series of reforms designed to build a competitive export base: floating the dollar, reducing tariffs and modestly encouraging research and development. John Button’s car plan hoped to save Australian car manufacturing by forcing it to rationalise and to export. Australia would no longer be a farm and a quarry, shipping wheat, wool and dirt to the rest of the world, but would build a modern, diversified export base, with a good share of the elaborately transformed manufactured goods which were the hallmark of a modern industrialised economy. This was Labor’s modernising dream, and although it achieved a good deal, we now know that in essence it failed. The Australian economy is again prosperous, not because of strong export-oriented manufacturing but because the newly industrialising countries of Asia, especially China and India, are buying our minerals.
Under Hawke/Keating, Australian agriculture, too, would be made more competitive. Tariffs and quotas on produce were abolished or reduced, statutory marketing authorities dismantled and industry regulatory regimes simplified. A key argument was that there were too many farms. In large part this was the result of the policies of earlier governments, which had led to a proliferation of small family farms. But no matter: the social and political goals of filling the land with people were now irrelevant to the overriding economic goal of creating an efficient agriculture which did not rely on government subsidy. The main game was to increase agriculture’s contribution to the national income. Oft-repeated statistics on farm viability reported that most of the profits in agriculture were made by the minority of enterprises large enough to benefit from economies of scale. A key aim of agricultural policy became to encourage owners of unviable farms to “exit the industry.” “Get big or get out,” farmers were told, and as financial markets were deregulated, many borrowed heavily to “get big,” only to come to grief as interest rates were hiked in the late 1980s and early 1990s. Government would then mop up the social cost by helping the unprofitable “adjust.”
Neoliberalism treated farms as businesses, and farmers as business owners and entrepreneurs. Farmers were told they were personally responsible for their farm’s viability, and consequently for its failure. For example, in 1992 the National Drought Policy redefined drought, the bane of Australian farming, from a natural disaster to a risk which requires appropriate risk-management strategies. Drought-stricken farmers were no longer heroic victims of fickle nature, but merely bad risk managers. The new thinking stripped farmers of their previous cultural and nation-building roles and exposed many of them as not very good operators who had little choice but to leave. No wonder many farmers suicided.
To emphasise farmers’ responsibility for the economic viability of their farms sits uncomfortably with a push for greater environmental awareness. Even though it makes long-term economic sense for farmers to adopt practices that will preserve the value of their land, short-term economic pressure can change priorities. Not surprisingly, when farmers are under economic stress, their commitment to environmental management wanes. Farmers just trying to stay afloat are far more likely to over-stock or to clear marginal land than farmers with fat margins. With its focus on economic productivity, neoliberalism has trouble with the commons, both social and natural.
The second blow to the country came from neoliberalism’s bedfellow, the New Public Management, which inspired a radical rationalisation and restructuring of government service delivery. Just as national economies were to be transformed and revitalised by opening them up to competition and the entrepreneurial spirit, so too were the lumbering government bureaucracies, which had developed to deliver relatively equal services to Australian citizens wherever they lived, to be redesigned according to market principles. In Australia this included the large state-owned enterprises, many of which were privatised during the 1980s and 1990s: for example, gas and electricity companies, the Commonwealth Bank, public transport, airports and the two airlines. Other government enterprises, such as Australia Post, were corporatised. Rationalisation inevitably followed, as the requirement to make a profit forced the closure of unprofitable branches and user-pays became the order of the day. For example, between 1991 and 1997, following corporatisation, Australia Post reduced the numbers of post offices by around 25 per cent, many in rural areas where they were popular local meeting places. But such social functions couldn’t be costed.
Treasuries and finance departments, intent on balancing budgets and producing surpluses, reined in the budgets of the service delivery departments, where most of the money is spent, and this had a disproportionate impact on rural services. The private sector followed suit. The most visible change was in banking, as main-street branches in their imposing historic buildings were downsized and eventually replaced by automatic tellers. Rural towns were dismayed. Since the founding of these towns, banks had brought in new families: bank managers to join the local golf club and chair fundraising drives, and tellers to play in the football team and marry their daughters. Now all they had was an ATM.
The waves of rationalisation that broke over rural Australia during the 1980s and 1990s have affected people living in the country in two main ways. First, and most obviously, there has been a decline in easy local access to many basic public services, such as health and education, which have now been centralised. The quality of services in many large regional centres has improved, with more universities and much better hospitals, but at the expense of smaller surrounding towns. This cost is most obviously borne by those who can’t drive and must rely on family, friends or infrequent buses to transport them to the regional centres. Second has been the loss of jobs. The closing of post offices, banks, telecommunications and state rail depots, hospitals and schools, together with mergers of local councils, has had a multiplier effect. As government agencies and private businesses have individually pursued cost efficiencies, their decisions have impacted on each other to produce social outcomes for which no one takes responsibility – dying small towns and confused and distressed Australians who feel abandoned and betrayed.
Jennifer Curtin, who talked with rural voters in the early 2000s, reported a widespread feeling of being forgotten and unheeded. Said one, “People here are not against politics, they are all for democracy, they are all for the system we’ve got in Australia – it’s been a good system – but there’s that feeling of ‘My voice isn’t important’ coming through.” And another: “It wouldn’t matter who is in there. It’s the fact that it’s so sparsely populated out this way means that when politicians come out, they promise the world – they say, ‘Oh yes, we’ll do this for such and such little community, isn’t that wonderful.’ But when they get back and they do their sums and ‘Oh, we’re going to get more votes if we do something somewhere else,’ so they forget about us.” In 1999 the Nationals leader John Anderson called his address to the National Press Club “One Nation or Two?” and claimed that “The sense of alienation, of being left behind, of no longer being recognised … for the contribution to the nation being made, is deep and palpable in much of rural and regional Australia today.”
Earlier generations had acknowledged that regional inequalities were structural, the consequences of living in a big country with a sparse population, but in the neoliberal 1980s and 1990s regions were encouraged to take responsibility for their own futures by becoming more self-reliant, more entrepreneurial, more creative. There was some assistance with this, for example by providing leadership training, and there was much talk about the need to mobilise social capital, but the message was clear: don’t look to government to bail you out; you’re on your own. Like the farmers, regional communities were told they were responsible for their own future viability. What’s more, they should stop complaining. A frustrated Tim Fischer told rural NSW paper The Land that he was “fed up with people saying the Government is doing nothing – it is. But rural communities must respond with courageous leadership and motivation.” Addressing a forum on rural economic development in 1998, he made some suggestions: “Towns large and small must make their own way by maximising opportunities … Lockhart, verandah town; Crow’s Nest, the only town with a true square; Broken Hill, world-renowned art colony.” Tourism is the main strategy, boosted by a plethora of festivals to bring much-needed money into local economies. Music festivals like Tamworth, Gympie, Woodford and Port Fairy are huge and lucrative and there are hundreds of smaller ones, as well as wine and food, writers’ and multicultural festivals. Some are organised by state ministries of the arts and community development, but many are home-grown. Wallington, on the Victorian Bellarine peninsula, has a strawberry festival; Goomeri, a town of only 500 souls to the west of Gympie, has a pumpkin festival; and Crookwell, in the southern tablelands of New South Wales, a potato festival. Pathos vies with inventiveness in these daggy celebrations of agricultural production and local history.
The speed of micro-economic reform increased in the second half of the 1990s, when the Council of Australian Governments agreed that all Australian governments would review and reform their laws to ensure that they did not restrict competition. It was then that I heard the retired National Party politician Bruce Evans make the statement that I have taken as a theme for this essay: “We all live in a big country and we should all share the cost.” For Evans, and for many other country people, National Competition Policy became a symbol of the failure of state and federal governments and of city-based elites to understand the problems of the country as people paid more for services that were previously subsidised, or lost them altogether. To apply market principles to the provision of government services was to reject country Australia’s historic sense of entitlement to special treatment, its belief that it was owed a “fair share.” Or rather, it re-configured what a fair share meant as something that the market would determine.
Once the problems of the country were problems for the country as a whole. But then government stepped back to allow market forces and technological change to redistribute resources in the interests of economic efficiency, and made little specific commitment to country Australia beyond helping individuals and communities to “adjust,” although the welfare state did remain as a safety net for the worst affected. The problems of the country were seen as unfortunate for those affected but not likely to have much impact on the rest of Australia. The agents of neoliberalism cut the country loose from the city and left it to fend for itself.
ALSO FROM QUARTERLY ESSAY