What's Wrong with the Liberal Party?

What's Wrong with the Liberal Party? Federally the fortunes of the Liberal Party have rarely been higher, yet times rem...

Author: Greg Barns

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What's Wrong with the Liberal Party? Federally the fortunes of the Liberal Party have rarely been higher, yet times remain uncertain for the party, and questions about its future remain: How much more division about its economic and social direction can it sustain? What changes has it made to stop the Democrats and One Nation stealing its voters? How can a party associated with the 'big end' of town hope to keep the trust of the 'battlers'? How is the old dogma of the party coping with the new challenges of globalisation and terrorism? Why are the Liberals so obsessed with Paul Keating? Greg Barns is a former Liberal, and the only member apart from Pauline Hanson to be disendorsed by the party before an election. Drawing upon his insider's knowledge and his outsider's freedom to consider the issues objectively, Greg Barns exposes the major challenges facing the party today. Greg Barns was disendorsed by the Liberal Party in February 2002 over his criticism of the Howard government's policy towards asylum-seekers. He was chair of the Australian Republican Movement and chief of staff to federal finance minister John Fahey. He is a columnist for the Hobart Mercury, and a regular contributor to the Age, the Australian and the Sydney Morning Herald. He is now a member of the Australian Democrats.

What's Wrong with the Liberal Party? GREG BARNS

CAMBRIDGE UNIVERSITY PRESS

PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE

The Pitt Building, Trumpington Street, Cambridge, United Kingdom CAMBRIDGE UNIVERSITY PRESS

The Edinburgh Building, Cambridge CB2 2RU, UK 40 West 20th Street, New York, NY 10011-4211, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia Ruiz de Alarcdn 13,28014 Madrid, Spain Dock House, The Waterfront, Cape Town 8001, South Africa http://www.cambridge.org © Greg Barns 2003 This book is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2003 Printed in Australia by Ligare Pty Ltd Typeface Minion 10/12 pt, Monotype Strayhorn. System QuarkXPress* [PK] A catalogue record for this book is available from the British Library National Library of Australia Cataloguing in Publication data Barns, Greg. ( What's wrong with the Liberal Party? Bibliography. Includes index. ISBN 0 521 54288 X. 1. Liberal Party of Australia. 2. Australia - Politics and government. I. Title. 324.29405 ISBN 0 521 54288 X paperback

Contents

Acknowledgements

1 2 3 4 5 6 7 8

vii 1 8 25 41 52 69 84

Introduction 'Walking Down the Middle of the Road' A Liberal Party Obsession Whither the Nationals? Assuming One Nation The Paradox After Howard? Meeting the Challenges: Have the Liberals Been Captured? 9 So Where To from Here? 10 Conclusion

104 118 140

Endnotes Bibliography Index

145 152 160

For Oliver

Acknowledgements

As someone who loves distance running, I have found that writing a book requires the same ingredients - a preparedness to be lonely, to find strength and stamina when it seems that the next hill is going to be too testing, and to be grateful for those who line the course and shout their encouragement. I regard it as an honour and privilege to have been asked by Kim Armitage of Cambridge University Press to attempt this project. A more encouraging and incisive editor than Kim would be hard to find. The other members of the team at Cambridge University Press have been totally professional and always enthused. To those whom I could bounce ideas and thoughts off during the creative process - my very good friends, David McLachlan and Tony Nagy; Barbara Gare, for her thoughtful critique of the ideas; and the person who spent hours reading and enlightening the text, Jane Rankin-Reid, thank you. Thank you also to my editor at the Hobart Mercury, Garry Bailey, who has encouraged my writing. I am grateful to Graham Young and the Age newspaper for permission to use extracts from an article that Graham and I wrote on the Nationals and the Liberals. Likewise, thanks to my co-authors, Cameron Andrews and Syd Hickman, and to Arena magazine for permission to use, in Chapter 9, extracts from an article on a liberal political framework for Australia. My master's degree supervisor, Professor Murray Goot at Macquarie University, has also assisted me greatly in my thinking about the Liberal Party. My journey in politics would not have been possible without the keen interest that my parents took in it when I was young, and, when VII

viii

Acknowledgements

I reached Monash University, the immersion into liberal thought that Professor Hugh Emy afforded me has been invaluable. The opportunity to work for Liberal leaders Nick Greiner, Alan Brown, Ray Groom and John Fahey showed me the decency of true liberalism. Finally, to my wonderful son, Oliver, and his mother, Fransina, thank you for being understanding. Greg Barns Hobart, Tasmania 31 July 2003

Chapter 1

Introduction

In Tasmania, the cities of Hobart and Launceston are a comfortable two-hour drive apart. However, Launcestonians are reluctant to drive to the 'southern' capital and Hobartians regard Launceston as a rather dull, 'old money', and provincial town with historical tickets on itself. The midpoint between the two, Campbelltown, is therefore a perfect meeting place. It is also where my twenty-year journey with the Liberal Party ended one bleak summer day in 2002. On 3 February 2002, the Tasmanian Liberal Party met in Campbelltown to do something it had never done before - disendorse a candidate, in this case one who was running for the Hobart based-seat of Denison in that year's forthcoming state election. The candidate's 'crime' had been to speak out loudly and often against the federal Liberal Party government of John Howard for its policies and practices towards the asylum-seekers who populate our detention centres. The Tasmanian Liberal Party voted twenty-eight to one, with one abstention, to disendorse the candidate. The candidate was me. The Liberal Party effectively forced me into a club occupied, paradoxically, by only one other, the right-wing One Nation Party founder Pauline Hanson, who had formerly been the Liberal Party candidate for the Queensland seat of Oxley in the 1996 federal election. While I was obviously upset at what happened to me, my experience brought into stark relief a broader and more important question facing not only the Liberal Party today, but also every other relevant political party in Australia. Today's political parties seem to have less capacity for open and rigorous public debate than

2

What's Wrong with the Liberal Party?

they did twenty years ago - and yet the issues that confront our society today demand open and informed discussion. The Liberal Party, and the Australian Labor Party (ALP) for that matter, has become obsessed by orthodoxy, unity and risk aversion. Upsetting as few people as possible seems to be the name of the game in politics today. Labor's 'me-tooism' on the issue of asylum-seekers in the 2001 federal election is a case in point, as is the reluctance of opposition parties to put any substantive policy positions before the electorate until close to an election, for fear of scrutiny. And when a political party such as Labor does engage in public debate on an issue such as asylum-seekers, the media whips itself into frenzy by talking about a 'split' or 'division'. In short, we have in Australia today a party-political debate that is slogan-ridden, lacking in substance and controlled by the party bosses. Yet only twenty years ago we saw the establishment within the Fraser government of a very public grouping called Crossroads. This group, set up by Liberal backbenchers Jim Carlton, John Hyde and others, advocated free-market economics in a government that was moderately protectionist. The establishment of such a public group today would be unthinkable in either the ALP or the Liberal Party - the political advisers, pollsters and party leaders would see it as a threat to the all-important monolithic image that must be presented to the electorate. In fact a leading federal Liberal moderate I spoke to recently told me that although he and his colleagues have thought about banding together to argue an alternative policy position on refugees, nothing ever comes of these discussions because 'the PM has an iron grip on the party'. What this MP was really telling me was that the leaders of today's Liberal Party have lost sight of the personal character driving political beliefs in favour of capitalising on a collective need to gain and retain power. If the stifling of public debate in political parties continues, then the relevance they have in debates on public policy will continue to decline. A better-educated society demands answers, not slogans and spin, on the myriad issues and challenges - such as climate change or the ageing society - that are being thrown up by the post industrial society in which we live.

Introduction

3

One politician who does understand this reality, and who has been a vocal advocate of public policy debate, is federal Labor's shadow Treasurer, Mark Latham. He sums up the crisis the major political parties are heading towards: People want a bigger say in the decision-making process, to take control of lifestyle issues. They are not prepared to be left on the outside, as the change agents of globalisation swirl around them. Across society, institutions that tell people what to do are losing support. This is true of all forms of hierarchy, whether expressed through government agencies, political parties or media elites. We have entered an era of institutional rebellion.1

Latham's colleague Lindsay Tanner is another in the Labor Party who understands the urgent need for political parties to take risks in formulating ideas. They have no visible counterparts in the Liberal Party. None of this is to suggest that political parties are dying in Australia; indeed, we have one of the most robust party systems in the world. But unless political parties take the muzzle off their members, parliamentary and non-parliamentary, they will become less relevant and attractive to our society. Why join a political party that will silence you if you step out of line on policy once too often, when you know that you can have an impact on public policy by belonging to an interest group, or by creating your own website, or by demonstrating outside the World Trade Organisation? Attempts by the ALP and the Liberals in recent years to vigorously police orthodoxy on issues is a lose-lose game. It reflects a mind-set more appropriate to the days when there was rigid division between labour and capital, and when the community was less well-educated, issues were simpler, and dogma was more in vogue. It is out of step with the fluidity of ideas that permeates our world today, and it is decidedly unattractive to a society that is becoming better-educated with each generation. In short, while this book is about what is wrong with the Liberal Party, much of what is said here goes to the broader issue of the relevance of the two major political parties in Australia today.

4


Having established the endpoint of my direct involvement with the Liberal Party, it is important contextually that I also describe my recruitment. We all bring our own experiences and prejudices to our writing, and never more so than in political discourse. The context from which a writer on the subject of politics is operating is an important disclaimer to make from the outset. Monash University, in Melbourne's southeast, was in 1980 still regarded by the community as a 'radical' campus. A decade earlier it had been the home of strident and bitter debate and confrontation over Australia's involvement in Vietnam. It had spawned student leaders who were to become household names - Albert Langer, to name but one. But despite the reputation of this campus, by the time I reached it twenty-three years ago there was little to see in the way of organised political activity. The beginning of that unfortunate disinterest in the world, which so permeates university campuses today, was emerging even then. Fortunately, high up in a building named after Robert Menzies (and thus known by students and staff alike as the 'Ming Wing'), the Politics Department at Monash was headed by a person of extraordinary capacity as a scholar and teacher - Professor Hugh Emy. It was Emy who, along with his colleague Dr Dennis White, introduced liberalism to me - a young student who had been schooled in a Catholic and Labor (the two often went together) intellectual tradition that decried the Liberal Party's lack of credentials in that department. The fecund world of the Enlightenment was mapped out to me at Monash. The philosophical giants of the two centuries of extraordinary richness that had swept Europe came alive. John Locke, Thomas Hobbes, Edmund Burke, John Stuart Mill, David Hume and Immanuel Kant wove a fabric that emphasised the primacy of the individual, respect for rights, the importance of social cohesion, and the appropriateness of renovating the symbols of society to ensure their continuing relevance. This seemed to me then, and still seems today, a worthy intellectual framework on which to base a civil society. It was the intellectual tradition that underpinned the Liberal Party in Australia, and was manifested in decisions of the Fraser government to take

Introduction

5

a principled stance against South Africa's apartheid regime, to pass legislation establishing a Human Rights Commission and land rights for indigenous Australians, and to allow thousands of Vietnamese 'boat people' onto our shores. This was a Liberal Party that - as we noted earlier - saw within its ranks an emerging and vigorous debate over the role of the modern state in the economy and society. On at least two very public occasions, Fraser-government backbenchers crossed the floor of Parliament in some numbers to vote against bills that went to the heart of liberalism. They were the question of the continuation of the two-airline policy, which prevented competition in domestic aviation, and retrospective tax legislation. These debates, inevitably laced with personality conflicts (Howard the conservative versus Peacock the liberal), meant that the Liberal Party was a fascinating institution in which to be involved in the 1980s and early 1990s. During this era, debate over ideas and party direction seemed all-consuming. In fact, although the Liberals were notable in this period for their lack of electoral success - they lost five federal elections to Labor between 1983 and 1993 - it was also a period when the party witnessed its most fertile intellectual debates and greatest cultural evolution. The election of John Hewson to the federal leadership of the party in 1990, after only three years in Parliament, seemed to confirm that the Liberals were now the ideologues of Australian politics. Hewson's antecedents made him an unusual leadership contender. An American-trained academic economist who had become a professor at a relatively young age, and who had served as a staffer to Frasergovernment Treasurer John Howard, John Hewson took the Liberal Party's focus on policy debate to a new level when, in November 1991, he released the most comprehensive document produced by an opposition party in Australian federal politics - Fightback!2 It has to be said of the ten years between 1983 and 1993 that the battle in the Liberal Party between the social conservatives and liberals was won by the former - but it did not result in a comprehensive stifling of dissent and debate. Hewson was, and is, -a social liberal - a fact that upset his former boss, John Howard, who quashed any idea of Hewson supporting then Prime Minister Paul Keating's push for a republic in the early 1990s.

6


By 1994, when John Hewson lost the leadership of the federal Liberal Party, one could still advance the case, without fear or favour, for a progressive liberalism informing social and economic policy. At a state level, leaders such as New South Wales premiers Nick Greiner and John Fahey, Victorian Premier Jeff Kennett, and his Tasmanian and South Australian counterparts, Ray Groom and Dean Brown, were all well to the left of the conservatives in the federal party, led by John Howard and Alexander Downer. Nine years on, this is no longer the case. Under John Howard's federal leadership (assumed for the second time in early 1995) the Liberal Party has become decidedly conservative, economically and socially. And the differentiating factor between this lurch to the right and previous such adventures is that this time there is no room within the party for public dissent. Debate within the parliamentary Liberal Party in Canberra now takes place only behind the firmly locked and sealed doors of the party room. Because of the stultifying constraints that have permeated the party, backbenchers rarely, if ever, cross the floor of Parliament, and one will rarely find an MP writing a newspaper opinion piece articulating an alternative approach. When was the last time a group of Liberal Party members organised a public meeting or a conference to debate the philosophical direction of the party? Such meetings never occur today, or if they do the broader community never hears of their deliberations. The Liberal Party of 2003 is a creature that has adopted most of the shibboleths of its cousins in the Republican Party in the US and the Conservative Party in the UK. Its foreign policy stance is firmly tilted towards the US and away from the region in which Australia is located - the Asia-Pacific. Its attitude to refugees and asylumseekers is one of pandering to xenophobia, it seeks to re-create the distinction between the deserving and non-deserving poor through its mutual-obligation policies in the welfare sector, and its national leader, John Howard, is firmly opposed to Australia having its own head of state. On social issues, it is only the party's 'elder statesmen' who speak out against the current conservative orthodoxy. Former Frasergovernment ministers Fred Chaney, Peter Baume and Ian McPhee,

Introduction

7

former Prime Minister Malcolm Fraser, and former leader John Hewson at the federal level, and Nick Greiner at the state level, are the voices for liberalism these days - yet all are retired from political life, and some have left the Liberal Party. The federal Liberal Party, under John Howard, has sought to leave its conservative stamp on key cultural and policy institutions in an unprecedented way. Every appointment to the boards of bodies from the National Museum through to the Defence Housing Authority is checked by the Prime Minister and his office. The aim is always to cement ideological control. Debate, and the likelihood that having a diversity of views represented on the boards of such institutions is desirable, is overridden by the desire to reshape Australia into a conservative polity for a generation. There is no longer any interest from the Liberal Party's state and territory leaders in reforming the Federation, as there was when Nick Greiner led New South Wales from 1988 to 1992. Each branch of the party around the nation is wedded to harsh rhetoric on criminal justice, and to populist economic solutions that favour the rent-seeking tactics of lobbies such as small business and the manufacturing sector. This picture makes it difficult for one such as me to remain in the Liberal Party today. It is a party that is liberal in name only. And the failure of those who are seriously concerned with its current direction to speak out and seek to reclaim some turf means that one can have little confidence that the Liberal Party can reverse direction quickly. My decision to leave the Liberal Party in June 2002 and join the Australian Democrats, where debate seems to be the order of the day (perhaps to a fault), was a painful one. I left many friends among the Liberals who want to see a party that is more open and inclusive. It is not the intention of this book simply to recite the ills of the Liberal Party as one who has left it sees them, but rather to provide some thoughts on why such a once powerful purveyor of policy and ideas has reached a point where it is in power but bereft of philosophical diversity, vitality and energy.

Chapter 2

'Walking Down the Middle of the Road'

The party Robert Menzies founded in 1945 spent its first three decades travelling down the middle of the road. Its political and philosophical stance was characterised by a mixture of anticommunist/antisocialist rhetoric, clever interest-group politics (such as Menzies' 1963 election strategy of announcing state aid for Catholic schools), and state intervention where necessary or politically expedient. This party was one of the major advocates and implementers of what commentators Gerard Henderson and Paul Kelly have termed the Australian Settlement. This meant the industrial-relations framework of consensus and centralised wage-fixing emanating from Henry Bourne Higgins' Harvester judgement of 1907, and industrial and agricultural protection that had been a feature of Australia's economy since Federation. While Robert Menzies believed that'without the chance of profit and the search for profit ... the whole of the industrial expansion would never have been accomplished', he also concurred with the view expressed by CD. Kemp of the Institute of Public Affairs that there were 'agreed lines between when governments should attempt to thrust themselves forward and when they were being intrusive'.1 But Menzies appeared to have had little truck with the ideas of the Austrian neoclassical economist and 'darling' of the 1970s and 1980s 'free marketeers', Friedreich von Hayek. In 1943 Menzies said of classical economics, that he would 'never give a moment's countenance to ideas of laissez-faire, of unrestricted and soulless competition for goods and labour and money...'. Indeed, in Menzies' famous 'Forgotten People' speech of 1942 he argued the case for a strong and interventionist state: 8


9

Individual enterprise must drive us forward. That does not mean that we are to return to the old and selfish notions of laissez-faire. The functions of the State will be much more than merely keeping the ring within which the competitors will fight. Our social and industrial obligations will be increased. There will be more law, not less; more control, not less.2 The Liberal Party, in Menzies' view, was to be in the 'centre' of Australian political life. It was to be individualist yet promote a unified Australia, in contrast to Labor, which utilised the politics of class warfare. The notion of the 'individual' in this context meant 'responsibility', not 'choice and freedom' in the sense in which the party would come to look at it in the 1980s and 1990s.3 And it was a party that was essentially mainstream Protestant in its outlook and profile - Menzies' own middle-class lifestyle and Presbyterianism set the tone. It was suspicious of the religion that represented working-class Australia, Roman Catholicism. The Liberal Party of Menzies and his successors through to Malcolm Fraser was one that utilised an electoral formula that satiated the aspirations and needs of groups such as 'business, finance, farmers, returned soldiers, pensioners, home owners and house wives'.4 These were the Liberal Party's core group of supporters and they all benefited from the umbrella of the Australian Settlement. From Menzies to Fraser the Australian Settlement remained virtually untouched.-State intervention in key sectors of the economy such as transport, communications and broadcasting, through government ownership of enterprises such as a shipping line (ANL), a telephone company (Telecom), an airline (Qantas), and a radio and television network (Australian Broadcasting Commission), and regulated markets such as that of the two-airline policy, were as much part of the Liberal Party's ethos as that of Labor. In a sense the Australian Settlement was a political and economic rejection of classical economic prescriptions in the areas of trade, the labour market and small government. And after the Depression of the 1930s, onto it was built Keynesian economics. Why? Because developed world economies in Europe and North America were alive to the Keynesian prescription - the dismal failure of classical economics in providing a solution to the Great

10


Depression, coupled with the devastation of the Second World War, had ensured that the goal of full employment and economic prosperity for all (or as Evelyn Waugh put it in Brideshead Revisited, 'the age of Hooper' - a reference to a subaltern in the army who aspired to live in a red-brick housing estate that would be built on the estate of an English country house that was decaying due to wealth and inheritance taxes and a 'levelling' disposition in post-Depression politics) should be paramount in the policies pursued by governments of the left and right. Of course, this post-war economic and political consensus began to break down with the onset of inflation, sluggish growth, and the gradual shift of economic power to Japan and the Middle East in the late 1960s and early 1970s. It was a decay that culminated in the 011 crisis of 1973-74, which saw inflation in Australia reach the high teens for the first time in anyone's memory, and full employment (less than 2 percent unemployment) slip below the horizon. And while the economic decline was engulfing the West, there were major social realignments occurring. The advent of reliable contraception for women in the form of the pill, divorce-law reform, an increased role for women in the workforce, an increasing distrust of the political and economic establishment by a bettereducated population, and an artistic and cultural renaissance all combined to ensure that the 1970s would be vastly different to the decades that had preceded it. Australia was not immune to the economic and social change sweeping the world. The elevation of Gough Whitlam to the federal Labor Party leadership in 1967 saw that party remake itself into a political force that seemed better able to embrace the trends and the constituency that were emerging as a result of the economic and cultural movements being embraced by an increasing number of Australians. The ruling Coalition parties, with the iconoclastic John Gorton being a notable exception, seemed incapable of responding to the changing times and developing new policy ideas to capture the imagination. This was partly because they had been continuously in office since 1949, but also because they relied on the morally conservative Democratic Labor Party to deliver preferences to them in key marginal seats. Ironically the Menzian development of a major tertiary-education sector was now delivering thousands of gradu-

'Walking Down the Middle ol the Road'

11

ates much more attracted to Labor's liberalism on social and economic issues than to the policy-bankrupted conservatives. The 1969 election saw Labor make huge inroads into the Coalition's majority, and over the next three years the Coalition fell apart, with John Gorton being replaced by the hapless Billy McMahon - the latter a personification of the Liberals' demise as a policy and political force. Whitlam was elected to office in December 1972, and his social and economic reforms were of some magnitude: introduction of the Family Law Act, a major boost for arts funding, recognition of China, establishment of Telecom, 20 percent reduction in tariffs, the introduction of land-rights legislation, the Trade Practices Act, the Karmel Report into education, the Henderson Inquiry into Poverty - the list goes on. Of course, coupled with this, and to a large extent dwarfing these achievements, were the scandals and incompetence of Whitlam's ministers. And the Australian economy suffered the stagflation (low growth with high inflation) that was being felt in other OECD countries. The dismissal of the Whitlam government and the subsequent election of Malcolm Fraser's Coalition government saw an enormous influx of new Liberal MPs. They included the New South Wales secretary of the party, Jim Carlton, and his fellow New South Welshman Murray Sainsbury, and West Australians John Hyde and Peter Shack (elected in 1978). These MPs were to form the core of a group called Crossroads. It met frequently from 1980 until the demise of the Fraser government in 1983, and it demanded that the government adopt free-market policies.5 Crossroads was the ginger group on the backbench that revolted against the Fraser Cabinet's continued promotion of the Australian Settlement. It observed and advocated the need for the Coalition members to follow their brothers and sisters in the US and the UK and embrace policies such as free trade, deregulation of the financial markets, an end to centralised arbitration between employers and employees, and a reduction in taxes and the size of government. Its members were not afraid to vote against the government - they did so on the government's decision to extend the two-airline policy and to legislate retrospectively against tax schemes.

12

What's Wrong will) the Liberal Parly?

But Crossroads and its allies were not necessarily moral or social conservatives. Their commitment was to free markets and smaller government, not to social engineering. Essentially they could not find consensus on moral issues.

The defeat of Malcolm Fraser in 1983 by the Hawke-led ALP was a watershed for the Liberal Party. The subsequent years were to find it following Labor and moving to redefine its policy positions by dismantling the post-war policy consensus and, at least under John Howard's leadership, adopting a social-policy stance that was conservative rather than liberal - exclusionary rather than inclusionary. In the aftermath of the Fraser defeat, the Liberal Party commissioned a senior New South Wales party official, stockbroker John Valder, to look at its period in office under Fraser and where it went wrong, and what it needed to do to remedy the situation. Valder's report branded the Fraser years as directionless and too expedient. During that time it was a party that did not know why it was in office, according to its critics.6 Certainly, during the Fraser government's last term of office, 1980 to 1983, the US and the UK had moved rapidly down the path of tax cuts, swingeing cuts to government programs, and increased financial-market internationalisation and deregulation. Fraser argues that what characterised his government, and in fact what characterised the Liberal Party in office from 1949, was that it believed in government acting in partnership with the private sector and that it 'had a profound sense of obligation to all Australians'.7 In the areas of human rights, support for the arts, and a more ethical foreign policy, it certainly scored highly. But these areas of policy were of little interest to those who shaped the party after the 1983 election loss. From the time Andrew Peacock became Liberal Party leader in March 1983, the move towards the policy positions of classical economics and a tougher outlook on social issues emerged. Peacock was driven essentially by two factors. First, his leadership rival, John Howard, became characterised as the policy 'high priest' of the party. Howard, freed from the shackles of the office of Treasurer


13

that he held in the Fraser government, began to espouse freemarket views, particularly in the area of industrial relations and privatisation. In fact, Howard chaired a policy committee that reported in April 1984 in favour of cuts in real wages, the abandonment of Labor's Prices and Income Accord (commonly known simply as the Accord) with the ACTU, privatisation of public utilities, income tax cuts, and a move to indirect taxes.8 Second, Labor was 'stealing the emperor's clothes'. Under Treasurer Paul Keating, it had floated the dollar and begun the process of deregulating the financial system. It was also committed to reducing tariffs, reducing the size of government, and reforming the tax system. In the minds of some commentators, the package of policies that Peacock was articulating represented the revenge of the economic 'dries', who had been without influence under Fraser. The champions of'small "1" liberalism' would find their position marginalised by the end of the decade to the point where one of their champions, long-serving MP Ian McPhee, would lose preselection to one of the intellectual forces driving the party's ideological transformation in the 1980s, David Kemp. But the most significant thing the Howard Policy Committee achieved with the take-up of its recommendations by Peacock and the federal Liberal frontbench was to sever, to this day, the Liberal Party's link to the Menzian tradition of shoring up and relying on the Australian Settlement principles to guide the political fortunes of the party. Menzies' dictum that the Liberal Party 'proposes to march down the middle of the road' had been replaced by a view that said Australia needed tough medicine if it was to become sustainably competitive on the world scene, and that the country's future prosperity rested on the electorate swallowing a good dose of classical economic medicine. While Labor was heading down the same path during this period, it was doing so in a more gradualist and, some would argue of necessity given the attitude of its left wing, stealthy way. Take, for instance, the privatisation of Qantas and the Commonwealth Bank. Both were policies pursued by the government in the face of hostility from the union movement and the Labor rank andfile,yet both were achieved. In the case of the Commonwealth Bank, the

14

What's Wnang with the Liberal Party?

key was to sell 'bit by bit', seeking approval as the government went from stage to stage. The policies that Peacock took to the 1984 election reflected a most decisive change in policy direction, away from the MenziesFraser policy parameters. It was an election in which the Liberals included privatisation, industrial-relations deregulation, lower taxation, and a shift to indirect taxation and government spending cuts. The policy prescriptions put forward in the 1984 campaign created a new set of issues for the party. Having abandoned the Australian Settlement and thus its various constituencies, the Liberal Party now had to embrace voters with a new message - that the medicine of free-market economics was good for the individual, the family and the nation. If there was ever a time to sell such policies - with their underpinnings of self-reliance, competition, hero status for entrepreneurs, and the need to ensure that Paul Keating's 1986 'Banana Republic' did not become a reality - the mid-1980s was it. But Andrew Peacock was never a 'true believer' and soul mate of the party's free-market zealots. His was the politics of pragmatism. While Peacock seemed prepared to accept the prevailing ideology of the party at the time, he also seemed prepared to be pragmatic in the pursuit of votes - a little too much so for the supporters of John Howard, who gained the leadership of the federal Liberal Party in August 1985. Howard was instinctively more attuned to the policy prescriptions that the party was now adopting, so much so that the 'ameliorative' Liberals regrouped in 1986 to form the Liberal Forum. This group, driven by New South Wales senators Peter Baume and Christopher Puplick, Victorian frontbencher Ian McPhee and maverick Tasmanian Max Burr, believed in a liberal vision for the party that embraced much of what the supporters of Howard had rejected. It was opposed to a rigid ideological approach to politics. This was the first formal backlash against the party's course of action that had emerged since the 1983 election loss. John Howard used his 1986 Federal Council speech to argue the case for why the Australian electorate would respond positively to radical policy prescriptions. In his and the Liberal Party's view, Australia was a 'soft' nation that had been too reliant on the 'handout' mentality and now needed to be exposed to the chill winds of


15

competition,9 just as the New Zealand government of David Lange and his Finance Minister, Roger Douglas, were doing across the Tasman. Howard also cast his eyes at the US and the UK, and likened himself to Reagan and Thatcher. But while Howard and the party argued the case for policy purity and standing up to interest groups, the reality was that even under someone like Howard the Liberal Party's pragmatic streak was never far below the surface when it came to policy backflips or pure political opportunism ruling the day. The Hawke government's 1985 Tax Summit and resultant taxreform package was a case in point. This package was designed to improve the efficiency and equity of the Australian taxation system, and to that end introduced capital gains tax, fringe benefits tax, abolition of deductibility of entertainment expenses, abolition of tax shelters, an increase in company tax from 46 to 49 percent, and a reduction in the top rate of personal income tax from 60 to 49 percent. Howard's initial reaction was to generally applaud the package as good policy, but the vociferous and constant outrage from the party's key constituencies, such as farmers and small and large businesses, saw him campaign vigorously against the package in order to shore up those key groups. So much for supporting much-needed economic reform! It should be said, however, that the forces putting pressure on the Liberals at this time were formidable indeed. The newly energised National Farmers' Federation, led by South Australian millionaire Ian McLachlan; the Queensland National Party, which was at the time electorally impregnable; mining magnate Hugh Morgan; the Victoria-based Small Business Association, led by Peter Boyle; and a bevy of 'new right' commentators - all were beginning to make their presence felt in the media. Coupled with this was the fact that the Liberal dries were political amateurs. Against the political skills of key Hawke advisers such as Peter Barron, Bob Hogg and Rod Cameron, and a federal Treasurer in Paul Keating who after a nervous start was now hitting his stride, they were no match when it came to convincing the electorate of the need to accept the new policy prescriptions that sought to take away much and deliver little in the immediate term.

16

What's Wrong with the Literal Papty?

The capacity of the Labor machine to destroy the Liberal Party's radical economic message was on display in the 1986 South Australian state election. In this campaign the Liberals proposed privatising the government's stake in the energy company Santos. Labor's heavyweights descended on Adelaide and the scare campaign began in earnest. According to Labor, the Liberal Party was simply a slave to Thatcherite ideology, and privatisation would destroy services and jobs, and force up prices for everything from telephone calls to postage stamps. Olsen lost the election badly, with Premier John Bannon being returned to office with a 2 percent swing in Labor's favour. Howard sustained the collateral damage and was forced onto the defensive over Labor allegations that the federal Liberal Party wanted to sell Telecom.10 But Howard, despite mounting public criticism of the party's policy direction by former Prime Minister Malcolm Fraser and Ian McPhee, remained convinced of the need for the party to maintain its new-found faith in market economics. At the same time, the Labor Party, through Paul Keating's May 1988 Economic Statement,11 was pursuing the same course. In this statement, the Hawke government announced some of the largest tariff cuts since Gough Whitlam's 1973 across-the-board 25 percent cut. The statement reduced the average rate of assistance for manufacturers from 19 percent to 14 percent by 1992-93. It also reduced company tax from 49 to 39 percent. But for the Liberals, embracing economic liberalisation while enduring continuous leadership tensions was causing it constant political trouble. In October 1987 John Stone, a former Treasury Secretary and convert to the ill-fated Joh-for-PM crusade that cruelled the Liberal Party's chances of winning the 1987 election, raised in the public arena the issue of a broad-based consumption tax. Stone argued that for the Coalition parties to adopt such a tax as policy would be a mistake. This was contrary to the way in which the party had been progressing since 1983, the shift in policy being clearly towards a greater reliance on indirect taxation. The consumption tax was to become a bugbear for Howard and help to undermine his leadership through 1988. John Elliott, then the Liberal Party president, responded to Stone by indicating that the party should support a consumption tax, or at least leave its options open on the issue. The Elliott-Stone divide spilled over


17

into an acrimonious fight within the party. The pro- and anti-consumption-tax forces debated the merits or otherwise in public, through the media. Howard sought to staunch the bleeding by asking the shadow Cabinet in May 1988 to agree to a set of tax principles. They did, and the principles did not include a consumption tax. But the issue would return before the 1990 election and would continue to haunt the Liberal Party until 1993. In February 1987 John Howard decided to crystallise Liberal philosophy and policy direction into a mantra for mass consumption. The Liberal Party's advertising agency, Masius, came up with the unwieldy term 'incentivation'. It reflected the Liberals' movement away from the idea of community, security and the notion of a 'hand up' that had been a hallmark of the Menzian Party, towards an ideal of competition and the deserving individual being one who is motivated to work hard and become self-reliant. The word itself sank under the weight of intense ridicule and of the party's trials and tribulations in the lead-up to the July 1987 election, which saw the Joh-for-PM push dominate the minds and energies of the party's leadership. But what it did introduce was a style of encapsulating policy in a slogan that sought to reflect the party's view of the world. Whereas 'incentivation' had merely been a slogan, Future Directions12 was a comprehensive policy document and statement of philosophy according to John Howard. Released in December 1988, it stood out because of its focus on social issues as much as economics. This emphasis brought to the surface tension among the dries - many were not only economically but also socially liberal. John Howard was not one of them. Future Directions sought to elevate to the centre stage of Australian politics social values and community cohesion in a world that was becoming uncertain as the Australian Settlement broke down under the gradualist reforms of the Hawke government. The document argued that Australia was in an economic and social crisis - the living standards of ordinary Australians were in decline, and corporatism and, particularly, overpowerful unions were undermining our sense of wellbeing and our living standards. Future Directions promised privatisation, labour-market deregulation, income tax cuts and a shift towards indirect taxation -

18


these had been party policies articulated by Howard and Peacock since 1983. In short, it was treading further into policy areas that Labor under Hawke had found internally difficult and electorally unpopular. There is, of course, a fundamental point of departure for Future Directions in terms of it belonging to a genre. John Howard's personal philosophical conservatism set him apart from John Hewson, Andrew Peacock and many Liberal dries. For Future Directions focuses as much on the need to strengthen the traditional family unit, educational standards and a homogeneous Australian culture as it does on economic prescriptions. The front cover of the document showed a husband, wife and two children behind a picket fence - it was a nostalgic image designed to reassure Australians that the 'good old days' could be just around the corner again. Why do 'average Australians' not feel secure and safe as they once used to? According to this document, it is because governments have 'devalued and dismissed' religion and community pride. The 'professional purveyors of guilt have attacked Australia's heritage and people' and there is not enough plain old common sense. The interest groups have imposed multiculturalism and Aboriginal reconciliation on Australians, and Future Directions rather crudely helps to fuel that resentment. It is a document that utilises the language, sentiments and tactics that eight years later were captured by Pauline Hanson and One Nation. But as Hugh Emy has pointed out, the problem with a document that emphasises family values and social cohesion while recommending radical economic reform is that while on the one hand you have 'an expressly moral and political tradition', it frequently conflicts with 'the kind of emphasis given to self-interest, growth and material values' of economic liberalism.13 This was the problem for Future Directions in a nutshell. There was also the issue that the Liberal Party never owned Future Directions. It was a policy framework that was very much John Howard's own, and while there would have been many in the broader party who would have bought its conservative social outlook and radical economic prescriptions, it was at the end of the day a policy document that 'was imposed from the top'.14 It was a year in the making and relied on the most comprehensive research


19

the Liberal Party had ever commissioned.15 The key group that put the document together was called the Leaders' Strategy Group made up of Howard's office, the Liberal Party Federal Director, Tony Eggleton, and the federal party's leadership team. The left of the Liberal Party felt uncomfortable with it. One federal Liberal MP said: 'We seem to be saying: Let's go back to a time when life was simple and good ... But good for whom? Are we to infer that women should be back in the kitchen?'16 In Future Directions Howard was grappling with a very strong force in Australian society - the maintenance of a strong socialdemocratic tradition in the face of a rapidly changing economic dynamic of which Australia had to be a part if it was to increase its GDP and remain relevant to the developed-world economic scene. The Hawke-Keating duo was showing signs of strain and their credibility as economic managers was beginning to wear thin. In addition, the landmark government-ACTU wages agreement, the Accord, had seen real wages for many workers decline over the previous six years. The time was ripe for the Liberal Party to enter the forthcoming 1990 election as a clear favourite to win. But in the eyes of the electorate the Liberal Party needed economic credibility more than anything else, particularly with a leader like Andrew Peacock, who had replaced John Howard as leader in May 1989, at the helm. Peacock, by nature a typically pragmatic, middle-ground Liberal, understood that the party had been damaged by the incessant infighting between him and John Howard since the 1983 election, and thus it had to demonstrate that the Opposition had a plan that could make people feel as though there was a real alternative to Labor. The antics of the then federal party president John Elliott in 1988 in fuelling leadership speculation about himself and commenting on party policy had only strengthened the urgent need for the party to have maximum policy credibility at this time. So Peacock came up with the grandly named Economic Action Plan (EAP),n which highlighted the difference between Labor and the Liberal Party on economic reform. The ALP, while having won many plaudits for its breadth and depth of economic reform, was, as noted earlier, a gradualist party that forged alliances and neutralised key interest groups in its policy formulation and execution.

20


This was the reality of Labor in power, despite the flourishing rhetoric of Treasurer Paul Keating to the contrary. The EAP, on the other hand, was designed to address a nation that the Liberals said was in crisis. It proposed major budget cuts totalling $2.7 billion, ending unemployment benefits after nine months except for chronic cases, privatisation, waterfront reform, a reduction in centralised wage-fixing, and deregulation of the telecommunications sector. Its pitch was unashamedly to marginal-seat voters - the centrepiece was in the area of tax policy. The EAP promised an annual tax cut by ensuring that 'bracket creep' money was returned to taxpayers. It promised to reduce income tax scales to just two and abolish the capital gains tax, which would be replaced by a narrower and finite speculative gains tax. It would introduce a childcare tax rebate. This was mortgage-belt politics. Here was a document devoid of discussion about societal values and a return to an Australia that no longer existed in the main, if it ever had at all. But it did set out a list of institutions that would be abolished under a Coalition government - the Australia Council, the Royal Commission into Aboriginal Deaths in Custody and the War Crimes Special Investigation Unit. And as noted earlier, it proposed ending the payment of unemployment benefits to anyone who had received them for nine months. Its name said it all - it was a Plan, with a capital P, and presupposed that the electorate would swallow its radical medicine because the nation was falling off the face of the earth. Like Future Directions it was a document imposed again from the inner sanctum. It was produced by a group chaired by Leader of the Opposition in the Senate, Fred Chaney. The group included future leader John Hewson. But most importantly the EAP represented the economic platform from which the party would spring after the 1990 election. Labor never effectively debunked it in the 1990 campaign and it represented the economic dries' view of the world with very few Settlement concessions. Thus in policy terms the Liberals became the radicals of the Australian political scene. This was a process that was to continue until the 1993 election. They had become a party that looked and


21

sounded more ideological than at any time in their history. And it was an ideological approach that had intellectual consistency in economic terms - it was built on the free-market economic principles of the Chicago School and of Austrian thinkers von Hayek and Schumpeter. But in social-policy terms the party still reflected the eternal tension between its moral capital-C conservatives and its liberals. However, it was the Liberals' leadership tensions that destroyed its chances of winning the 1987 and 1990 elections, not ideology. With the election of the political neophyte John Hewson as leader of the Liberals after the 1990 election loss, the party desperately sought an end to the debilitating and cancerous Howard-Peacock rivalry. And they got it. John Hewson imposed an extraordinary discipline on the Liberals, which lasted until the 1993 election. The elevation of Hewson was curious. In a number of ways he represented a first for the Liberal Party. He was elected after only three years in Parliament. He was the first Liberal leader with a PhD and he came from a Baptist religious tradition - not the Presbyterian-Methodist-Anglican traditions from which all previous leaders had come. And in Hewson the party was getting an individual who firmly believed that'walking down the middle of the road', as Menzies had proposed, would lead Australia nowhere. Hewson told his party that they must take him on trust - he promised to deliver them a blockbuster policy manifesto that would be embraced by an electorate tired of Labor and heading into the worst recession since the 1930s. Hewson's massive 900-page, three-volume magnum opus, Fightback!,ls was released in November 1991. It took a politically ailing Bob Hawke by surprise and within a month Paul Keating replaced him as Prime Minister. For many today, Fightbackl is associated with the goods and services tax. However, it was very much more than that. It was a comprehensive policy platform that covered every aspect of public policy - tax, tariffs, Medicare, the environment, education, welfare and industrial relations were all key features of this remarkable document. Its core philosophy was informed by the notion of national competition and efficiency. The 'challenge for modern governments is to make their societies and economies attractive to the people, capital

22

What's Wrong with the Liheral Party?

and technology which can easily find another base'. Fightback! was about driving 'the system for maximum efficiency and maximum productivity. Not because that is the end in itself... It is that that is what gives you the capacity to go and do proper funding of the environment and the arts, social policy, welfare'. Its language was Messianic - there was a deep-seated economic crisis in Australia and only an apocalyptic prescription would fix it. Hewson was 'John the Baptist' or, as Lord Skidelsky termed John Maynard Keynes, 'the economist as saviour'. But while Hewson successfully tamed the unruly Liberal backbench with his neoclassical economic prescription, he was not nearly as successful as a reinvigorated Paul Keating. Keating had assumed the prime ministership at a time when Labor's fortunes were rock bottom. They were up to twenty points behind in the polls and the economy was rancid. But in February 1992 he produced One Nation19 - an old-fashioned pump-priming economic statement designed to lift the Australian economy and rally his troops. This statement, coupled with his surgical capacity to rip apart Hewson's logical textbook approach to policy with headline grabbing delivery of one-liners ('If you don't understand it, don't vote for it - and if you do understand it, I know you won't vote for it') and his masterful parliamentary performances, put Labor back in the hunt in the lead-up to the March 1993 election. Hewson's other problem was that under him the Liberals were seen to have become purely economic in focus. By instinct Hewson is a social liberal, but when Keating raised the spectre of Australia becoming a republic, and the High Court delivered its Mabo decision, which granted native title to indigenous Australians, the conservatives in the party undermined Hewson relentlessly. In any event, the National Party would never have allowed Hewson to deviate from conservative purity on these issues. The conservatives in the Liberal Party, led by John Howard, captured many of these social policy debates - and essentially put Hewson's hard-won party unity on the line. For Hewson, structuring and then selling Fightback! was the task at hand and it was his weapon to finally deliver the Treasury benches back to the Liberals. Of course, it was not to be. On 13 March 1993 Keating declared his comprehensive win over Hewson as the 'sweetest victory of all',


23

and Hewson was 'dead man walking' until his demise as leader came in May 1994. It is worth remembering that the loss of the 1993 election had some commentators and Liberals wondering whether Menzies' creature was dead and buried. But wait! Just as Hewson had been the Messiah, so another came along. His name was Alexander Downer, and with thirty-seven-year-old Victorian Peter Costello he formed a ticket for the future. Downer, who declared himself a 'creature of the Liberal Party' a reference to his father and grandfather having both served in governments of the conservative persuasion - was determined to cloak the Liberals in deep-blue garb. He was a social conservative and on matters economic a free-market type, but more pragmatic than Hewson. His tenure was short - nine months. Bedevilled by controversial media appearances, foolish one-liners (such as 'The things that batter' - a play on his policy document 'The things that matter')20 and a prime minister determined as always to take full advantage of both, Downer stepped aside in January 1995 so that John Howard could do what his old rival Andrew Peacock had done - retake the leadership. While Downer was a disastrous choice as leader, his focus on appealing to 'things that matter' was an electoral strategy, better badged and marketed, that Howard followed into the 1996 election. It was a strategy that sought to capture voters in lower- to middle-income seats who perceived that they were not winners from Labor's economic reforms and who believed that the Keating agenda of reforming symbols, focusing on Australia's cultural language and outlook, and the nation's need to reconcile itself with its brutal actions towards indigenous people, were simply 'politically correct' or being pursued at their expense. Looking at it in this light, John Howard was therefore finally the right man at the right time. His long-held conservative ideals and convictions, along with his focus on economic reform, which was pitched at strengthening traditional families, suddenly seemed to stack up better than Keating's troika of'Mabo, APEC and Republic'. And Howard was sufficiently spooked by Hewson's Fightback! experience that he was determined to remain decidedly sotto voce

24


about what economic, welfare and industrial-relations reforms he might have had in mind for the electorate should he be elected. After all, the Liberals' target voter was the one with the most sensitive hip pocket. And a party that had lost five successive elections was more than a little wary about its opponent shooting it down in the tumult of a rugged election campaign. The result in March 1996 was a Labor wipe-out. Howard and the Liberals took the reins for the first time in thirteen years - the Menzies 'middle of the road' concept, which had been dying, was to expire completely. John Howard was to mount the horse that would be ridden firmly and always down the right-hand side of the highway. In doing so, Howard would not only give full rein to his own convictions, but he would be influenced by two other factors. First, Howard and some of his senior colleagues were hell-bent on demolishing the record of the man he and his party loathed most - Paul John Keating. Second, the seats that John Howard cherished most were those that the Liberal Party had won in Labor heartland, and Howard wanted desperately to keep them for a very long time.

Chapter 3

A Liberal Party Obsession

Bankstown Sports Club, 13 March 1993. The poker machines are beeping and the beer is flowing. It is a normal Saturday night, according to one who was there, Paul Keating's speechwriter, Don Watson. Except that on this particular evening, Paul Keating, the punters' local MP, is about to claim victory for the Labor Party in one of the most bitterly fought elections in Australia's history. Keating's Labor Party had beaten John Hewson's Liberals and their cousins the National Party, despite the fact that the Australian economy was wallowing in a mire and that Labor had already been in office for a decade. To make matters worse for the Liberals, Keating had snatched a victory that seemed highly improbable when the opinion polls twelve months earlier had put Labor at up to fifteen points behind a united Liberal Party. Keating delivered a memorable line to the ALP faithful and the punters who left their pokies and beers to listen: 'This is a victory for the true believers'. His words amounted to the catalyst for many Liberals, turning the resentment and anger they had harboured towards Keating into sheer hatred. As Gerard Henderson put it, 'some Liberals felt real political pain leading to obsession - when Keating won the so-called "unlosable election" in 1993'.1 The conservative magazine Quadrant devoted most of its post-election edition to questioning the long-term viability of the Liberal Party. John Hewson, the most policy-focused and rigorous leader the Liberals had had in their history, was a marked man, and his leadership ended a year later when Alexander Downer took on the unwelcome task of trying to outsmart Keating. With the 1993 election victory under Keating's belt, many ^Liberals feared that he would now unleash a wholesale makeover of Australian society and culture. This was the source of the hatred 25

26


and obsession that would lead to the Liberal Party pursuing Keating long after he had left public office. The major economic reforms that Keating as Treasurer had implemented - floating the dollar, deregulating the financial markets, labour-market reform, budgetary reform - had all been more or less supported by the Liberal Party. After all, the Liberals could hardly oppose freemarket solutions given their own rhetoric and policy direction since the Fraser government lost office in 1983. In fact, the Liberals' complaint about the Keating reforms in these areas was often that they did not go far enough, particularly in the area of industrial relations. For many in the Liberal Party, symbols such as the Australian flag and the British monarchy were sacred. They were dear to the heart of the party's founder, Robert Menzies, and the party branches were disproportionately represented by conservatives who saw the seeds of revolution in Keating's preparedness to change both. Buried within their hostility to Keating's approach on the flag and the monarchy may also have been an anti-IrishCatholic sentiment. I can recall many older Liberals telling me that the reason Keating was disrespectful to Australia's heritage was because he was an Irish Catholic. Gerard Henderson, an astute and accurate watcher of the Liberals for many years, seems to confirm that some of the resentment the Liberals held towards Keating was based on a dislike of a republican Irish tradition in Australia. He notes that John Howard referred to Keating's advisers as 'Irish Labor' and that Howard's own adviser, Nicole Feely, supported a republic because of her Irish heritage. John Howard was one of the most aggressive in ensuring that the federal Liberal Party did not head towards any accommodation of Keating's views on theflagand the monarchy. John Hewson says that when he was leader of the party, Howard told him that it would be 'over my dead body' that the Liberal Party would support the Keating moves towards a republic. Such anger! Liberal backbenchers would sit during Question Time with Australianflagson their desks, sending a none too subtle message: hands off, Mr Keating! Hewson, however, was not wedded to the conservative shibboleths of the Liberal Party. He dragged the party into recognising the High Court's Mabo decision, although the Liberals subsequently opposed Keating's Mabo legislation on the basis that it was fatally flawed in not dealing adequately with pastoral leases. Hewson's con-


27

tempt for Keating was real enough, but it was highly personal rather than cultural. Here were two men from southern and western Sydney: one had become a highly qualified academic in economics, living in Sydney's salubrious Eastern Suburbs, while the other represented the people of Bankstown, the place in which he had grown up. This socioeconomic difference, more imagined than real given Keating's industrious and shrewd investment strategies and his taste for the delights offered by the antique dealers of Queen Street, Woollahra, was not the key driver of this obsession that each had to better the other. Instead it was that Hewson fancied himself, as did others in the Liberal Party at the time, as being the one who could take on Keating on economics. There is little doubt that Keating's dazzling performances and capacity to master the economic brief had left various Liberal shadow treasurers all at sea since 1983. But Hewson was an economics professional who was articulate and well-presented, and Keating went for him on that basis. He accused Hewson of being a 'financial market yuppie who has been shoe-horned into parliament', and then labelled him variously 'the visiting professor' and the 'feral abacus'. Hewson's language to describe his rival was reflected in a dark, foreboding painting that took up most of the wall behind his desk in his Canberra office. It showed Paul Keating with his foot on a vacuum cleaner - sucking the lifeblood out of Australia. The intense intellectual and personal rivalry between Keating and Hewson helped to provide the Australian electorate with a clear choice in the 1993 federal election. The electorate was engaged much more so than it had been in the 1990 election, when Bob Hawke and Andrew Peacock had gone into battle. And it was a good deal more interesting than either the 1996 or the 1998 election. As Murray Goot notes, the number of people who showed a 'good deal' of interest in the 1993 campaign was 49 percent, compared with 33 percent for 1990, 34 percent for 1996, and 36 percent for 1998.2 The Keating-Hewson rivalry was an aberration. For the most part the Liberals felt a deep grievance against Keating and it did not stem from his economic prowess. It seemed that Keating's formidable parliamentary and media skills and his willingness to challenge Australian traditions that the conservatives in the Liberal Party saw as sacrosanct had taken their toll on the Liberals' nerve endings. By 1991, when Keating became Prime Minister, the federal Liberals had

28


experienced eight years of invective, bile, contempt, and ridicule from Labor's star frontbencher. Mind you, Keating was not the first brilliant performer who used these tools of the trade. Robert Menzies was a masterful debater, as was Gough Whitlam. But both these men were traditional debaters - barristers who constructed the case with some carefully inserted and generally humorous, albeit cruel, jibes at their opponents. And both these men would respect the forms and traditions of public life. Even Whitlam, regarded as the 'Great Satan' by many Liberals at the time of his prime ministership, followed royal protocol, for example. But Keating was a different type altogether. His language was larrikin, he relentlessly abused Liberals almost as though it were a sport and, worst of all, he started talking about pulling apart the symbols that were sacred for the Liberals - the flag and the monarchy. One could never imagine Menzies or Whitlam using this sort of language to describe their opponents: '... what we have is a dead carcass swinging in the breeze, but nobody will cut it down' (on John Howard);3 '[His performance] was like being flogged with a warm lettuce' (on John Hewson);4 and on the Liberal Party generally, 'They just insist on being mugs, Mr Speaker - absolute mugs ... Honourable members opposite are a joke... they are irrelevant, useless and immoral'.5 To add insult to injury, Keating touched the Queen on the back as he guided her through a crowd when she visited Australia in 1992, and then talked about a republic in her presence. The British tabloid media went berserk and so did John Howard. Keating, to use the memorable phrase of British playwright Joe Orton, was the 'ruffian on the stairs', upsetting the established order on the upper floors. And when he won the 1993 election some key federal Liberals, such as the party president, Tony Staley, and the former leader, John Howard, decided that the gloves had to come off. Keating had to be stopped by fair means or foul. Otherwise he might just remake Australia in a way that was tantamount to revolution so far as Liberals such as John Howard were concerned.

Keating attacked the very heart of the Liberal Party without apology, skewering the conservative side of patriotism. The Liberal


29

Party has always regarded itself as the guardian of certain features of Australia's past. These features, essentially constitutional and symbolic, must be preserved to ensure stability in society. More than twenty years ago, David Kemp, now the Minister for the Environment in the Howard government, said that the Liberal Party 'provides one of the very few channels though which ... various elements of Australian society can find a voice for their sense of desirable social order ...'.6 In common with other conservative parties throughout the world, it also seeks to 'own' patriotism. These characteristics manifest themselves in the Liberals' reverence for keeping intact Australia's ties to the UK, and equally in the maintenance of the current flag, the commitment to US-led overseas armed conflicts, and the belief that the party's founder, Robert Menzies, presided over the 'golden era' in Australia's history. There has also emerged in the Liberal Party post-Fraser a contempt for educators who focus on historic indigenous grievances. (Of course, there were, and are, some in the Liberal Party who do not hold to these sacred beliefs, but they are seldom heard.) Above all, these were the defining characteristics of the Liberal Party. It was Keating's rhetoric and actions in relation to all these core Liberal traditions and beliefs that set him apart from Hawke. And because Keating was traversing 'sacred' Liberal territory, he was much more dangerous to the party in the long term. For if Keating could remake Australia by modernising its key symbols such as its head of state and itsflag,and upset the social order by proposing a major alteration to the system of property title by legislating the High Court's 1992 Mabo decision (which recognised native title for indigenous Australians), then the Liberal Party would lose much of its core. Keating was a nemesis to the Liberal Party, in a way that Bob Hawke never could be, because debates about economic performance and reform were one thing, but when it came to core conservative values, the Liberal Party would become fierce beyond belief. Tony Staley's keen interest in the Keating piggery is a notable example of this ferocity. So traumatised were the Liberals by Keating's attention to the detail of Australia's independent soul that John Howard termed his agenda 'insidious'. Howard, delivering the 1996 Sir Thomas Playford Memorial Lecture in Adelaide on 5 July of that year, spent a good

30


deal of his speech chiding Keating for the crime of rewriting Australian history. Keating had embarked upon 'one of the more insidious developments in Australian political life over the past decade', namely 'the attempt to rewrite Australian history in the service of a partisan political cause'. But as Gerard Henderson said at the time of Howard's speech, this accusation that 'Labor has tried to "rewrite Australian history" is misplaced. The Liberals have only themselves to blame for their lack of participation in the historical debate'. And Henderson observed that the use of such a strong adjective as 'insidious' might normally be a word that a 'Prime Minister might be expected to use if he was talking about issues such as international terrorism, nuclear proliferation, inflation or the foreign debt ... Instead his targets were Paul Keating and Labor'.7 The hyperbole seems to have been a reaction to Keating's own rhetoric and intent when he fixed on the Liberal Party. His tirade on 27 February 1992 was possibly the most patent example of why the Liberal Party's obsession grew into what it has become today. That day, during Question Time in Parliament, Keating launched into a description of the Liberal Party's role in Australia's history that, even by his standards, was breathtaking in its scope and invective: The Liberal Party had presided over a period-the 1950s and 1960s — when gross domestic product per head was half what it is now; when commodities occupied 85 per cent of our exports; when telephones were half what they are now; when there were half as many cars per thousand people of population; when pensions were half their real value of today and when 10 children per 1,000 went to university instead of 30 per 1,000. That was the golden age when Australia stagnated. That was the golden age when Australia was injected with a nearlethal dose of fogeyism by the conservative parties opposite, when they put the country into neutral and where we very gently ground to a halt in the nowhere land of the early 1980s, with a dependency on commodities that would not pay for our imports. That was the golden age when vast numbers of Australians never got a look in; when women did not get a look in and had no equal rights


31

and no equal pay; when migrants were factory fodder; when Aborigines were excluded from the system; when we had these xenophobes running around about Britain and bootstraps; and that awful cultural cringe under Menzies which held us back for nearly a generation ... I was told that I did not learn respect at school. I learned one thing: I learned about self-respect and self-regard for Australia - not about some cultural cringe to a country which decided not to defend the Malayan peninsula, not to worry about Singapore and not to give us our troops back to keep ourselves free from Japanese domination. This was the country that you people wedded yourself to, and even as it walked out on you and joined the Common Market, you were still looking for your M BEs and your knighthoods, and all the rest of the regalia that comes with it. You would take Australia right back down the time tunnel to the cultural cringe where you have always come from. These are the same old fogies who doffed their lids and tugged the forelock to the British establishment; they now try to grind down Australian kids by denying them a technical school education and want to put a tax on the back of the poor. The same old sterile ideology, the same old fogeyism of the 1950s, that produced the Thatcherite policies of the late 1970s is going to produce Fightback. We will not have a bar of it. You can go back to the fifties to your nostalgia, your Menzies, the Caseys and the whole lot. They were not aggressively Australian, they were not aggressively proud of our culture, and we will have no bar of you or your sterile ideology.8

This artfully crafted speech encapsulates almost the entire meaning of the difference between Keating and the Liberals. Keating delves right to the core of a 'sterile' but lasting 'ideology', distancing himself and his party about as far as you can get from Liberal ideology, relegating the Liberals to history's scrap heap,'the same old fogies who doffed their lids and tugged the forelock to the British establishment', taking 'Australia right back down the time tunnel'. Even the term 'golden age' makes you feel like he is talking about a party paralysed by its own backward-looking ideology not only of the picket fences of the 1950s, but also of the retro charm of the steam trains of the early 20th century. Couple the Liberals' backward-looking vision with Keating's juxtaposed concern for

32


those who had been the subject of lasting exclusion (Aboriginals, women, migrants, the working classes), with the need to see ourselves as part of the Asian region, rather than as tied to the British Empire, and with the need to take pride in rather than cringe at our culture, and you have one of the more powerful parliamentary speeches in this nation's history. Keating's intentions were clear: to remake Australia in the image that he created. Keating saw himself as the great moderniser, in stark contrast to the 'old fogeys' of the past. As Don Watson notes in Recollections of a Bleeding Heart, Keating's tagging of the republic, the flag, Asia and reconciliation were the result of a view that the 'last symbols of Australia's colonial past were inimical to a cleareyed appreciation of reality ... from this clearing of the national decks might come the energy to make the whole Australian experiment exciting again'.9 The props that Menzies had so effectively utilised to cement his Party's control of Australia for twenty-three years, such as the British monarchy, the US alliance and a decidedly gradualist and limited attitude to social reform, were being smashed by a Labor Prime Minister. That the Liberal Party should react with such hostility to Keating says much about what is so dear to the current party's heart and soul. But it also says much about the Howard-led Liberal Party. And if further evidence of this assertion is required, then the comparison between Gough Whitlam - whose daring was comparable to that of Keating - and the Liberal Party's reaction to his reformist Labor leadership confirms it. It is true that the Liberal Party reacted to Whitlam with extraordinary vehemence. Gough Whitlam came to office after twentythree years of unbroken Liberal Party rule, and he determined, like Keating, that he and his party must turn Australia on its head, shake it out, and then put it upright again. He began this task immediately upon assuming office in December 1972, when he and his deputy, Lance Barnard, formed a government of two so that they could make such momentous decisions as pulling Australia completely out of the Vietnam conflict without having to wait for the conventional cabinet-government process to commence. What distinguished Whitlam from former Liberal and Labor prime ministers was his socially progressive approach to politics, expressed in the


33

introduction of land rights legislation for indigenous Australians, universal medical insurance, free university education, no-fault divorce, and large-scale funding for the arts. All this took place in three bloody years in which the Liberal Party and its Coalition colleagues in the National Party (and the Democratic Labor Party) used their numbers in the Senate to block many of these reforms, most notably the legislation establishing Medibank, and eventually blocking the 1975 budget, resulting in Whitlam's dismissal and subsequent heavy loss in the December 1975 election. In fairness it should be said that Whitlam's government was incompetent in many respects and seemed to be asking for trouble. The propensity of its ministers to embroil themselves in scandal, coupled with Whitlam's own freewheeling and bombastic style, pro-' vided daily ammunition for an Opposition Liberal Party still struggling to come to terms with the fact that it no longer occupied the Treasury benches. Thus far, the comparison between Whitlam and Keating and the Liberal Party holds; both Whitlam and Keating sought radical reform and the Liberal Party, witnessing its custodianship of the preservation of symbols and 'social order' unravelling, consistently opposed them. However, the comparison ends here. The difference is Malcolm Fraser. Unlike John Howard, Fraser saw no point in, and nor did he believe in, dismantling the Whitlam legacy. There might have been something 'insidious', to use the Howard term, about the Whitlam government's methodology, but Fraser built upon the major policy shifts effected by Whitlam's reforms. It was Malcolm Fraser, for example, who ensured that initiatives begun by the Whitlam government in the areas of open government and human rights saw the light of day. The Ombudsman, the Human Rights Act and land-rights legislation were all instituted under Fraser's prime ministership. Fraser's major bone of contention with Whitlam was over the latter's perceived mishandling of the economy and the questionable conduct of some of his ministers, not with the identification by Whitlam with social change that was sweeping the developed world at that time. In fact, Fraser's preparedness to follow Whitlam's social liberalism has been contentious among many in the Liberal Party who even today regard Malcolm Fraser as a 'failed' Prime Minister precisely because he did not unravel the Whitlam agenda.

34


In comparison, Fraser's former Treasurer, John Howard, believed that Paul Keating's cultural reshaping of Australia needed to be dismantled completely. Unlike Fraser, Howard is and has always been a capital-C conservative. And his conservatism manifests itself in social policy and his nostalgic view of Australia's past. Howard, again unlike Fraser, is a passionate believer in the need for the preservation when it comes to the symbolic core of Australian culture. A cursory glance at Howard's official website (http://www.pm.gov.au) shows what this Prime Minister is about. Whereas Keating would seek to hide the Union Jack section of the Australian Flag, on Howard's home page it is a dominant feature, along with navy blue - no green and gold! Howard has long championed socially conservative causes, but in this sense he is as much a warrior as Keating. In the 1980s, Howard's first stint as leader of the Liberal Party was marked by a commitment not only to economic reform, but also to social conservatism. As noted in the previous chapter, his 1988 Future Directions document was an attempt to provide a conservative social framework for economic liberalism. When John Hewson was leader of the Liberal Party, Howard ensured that there would be no concessions towards Keating's position on the republic. He actively polarised the only bipartisan public referendum in Australia's history by giving credence to the monarchists' 'scare campaign' about the folly of constitutional change. And while Hewson was publicly uncomfortable with supporting the Keating agenda of reconciliation, native title, the republic and changing the flag, much of that discomfort seemed to be manufactured for political expediency - the unity of the party was being put at risk by Hewson's conservative opponents For Howard, Keating represented the antithesis of what he believes the Liberal Party to be. And he let it be known, prior to his election as Prime Minister in March 1996, that he intended to undo the Keating legacy in a comprehensive way. In June 1995 Howard delivered what he termed a 'Headland' speech.10 In it he crystallised his twelve years of frustration and anger at Paul Keating's record. It was a speech that could never have come from Hewson, Peacock or even Downer. There was, according to Howard,


35

a frustrated mainstream in Australia today which sees government decisions increasingly driven by the noisy, self-interested clamour of powerful vested interests with scant regard for the national interest. The power of one mainstream has been diminished by this government's reactions to the force of a few interest groups. Many Australians in the mainstream feel utterly powerless to compete with such groups, who seem to have the ear completely of the government on major issues. This bureaucracy of the new class is a world apart from the myriad of spontaneous, community-based organisations which have been part and parcel of the Australian mainstream for decades. These trends reflect a style of government which will change profoundly under the Liberal and National Parties. Under us, the views of all particular interests will be assessed against the national interest and the sentiments of mainstream Australia. For the past 12 years Labor has governed essentially by proxy through interest groups. Identification with a powerful interest group has been seen as the vehicle through which government largesse is delivered. Increasingly Australians have been exhorted to think of themselves as members of sub-groups. The focus so often has been on where we are different - not on what we have in common. In the process our sense of community has been severely damaged.

For Howard, the Keating agenda invites argument because vested positions are being tested, symbols are called into question, and the social order is being altered. Howard assures the nation that, if he is elected to the prime ministership, he will 'reverse this trend', looking after the'interests of the whole community', as if considering the rights of marginalised or minority groups, as Keating did so well, particularly indigenous peoples, was somehow excluding the mainstream. Not only does this not make sense - because mainstream is, by its very meaning, already at the centre - but it demonstrates how far to the right Howard will go, in the months and years that follow, in everything from his failure to reject what the One Nation Party stands for, the Tampa crisis, the refusal to participate in Aboriginal reconciliation, and, most recently, his role in the pre-emptive strike

36


on Iraq. (On the last of these, despite what some commentators asserted at the time, Howard seemed attuned to the fact that public opinion for and against the war was fairly even and that Howard was seen as more capable of leadership on the matter than Labor.)11 Howard expanded his counterargument when he confronted the most controversial MP of recent memory, Pauline Hanson. Hanson provided Howard with a perfect early opportunity to again demolish the Keating agenda. In Pauline Hanson, Howard found someone who was the antithetical love child of a social agenda that he saw as being 'politically correct'. If Paul Keating had not pursued constituencies such as indigenous Australia and the arts, or causes such as engagement with Asia and the republic, then Hanson would never have been elected. Pauline Hanson - a disendorsed Liberal candidate for the Queensland federal seat of Oxley - won that seat as an independent candidate in the 1996 Howard landslide. She spoke on behalf of those John Howard liked to call 'battlers'. Hanson resented indigenous issues claiming a place at the top table of policy, and she preached far and wide about the perils of globalisation and engagement with Asia, while draping herself in the Australian flag for good measure. Her running commentary on issues such as race, welfare and Australia's security fascinated the media. And among Howard's 'battlers' Hanson struck a chord. John Howard interpreted all this as a good thing. Howard's first formal exchange with the newly elected Hanson came on 17 June 1996 when the latter asked him a question in Parliament. Howard used the opportunity to proclaim that since he had been elected to office, there had been a lifting of the pall of'political correctness' that he believed characterised debate in Australia in the Keating years, and that while he did not share many of Ms Hanson's views on race, single mothers and Asians, he understood that many Australians felt better now that they could say what they really felt. Howard's remarks set off a furious reaction. The debate that ensued focused on the damage that these comments would do to Australia's reputation in Asia. His critics believed that Howard had 'allowed the genie of intolerance and racism out of the bottle' and that they were correct after all: John Howard was a racist himself, which was a reputation he had acquired in 1988 with his remarks


37

about the composition of Australia's migration intake. All this may have been true, but the main point was that Howard's remarks, like those of his 1995 'Headland' speech, were key steps in his dogged and passionate determination to undo Paul Keating's project. Howard is as much a cultural warrior as Keating, and in Keating he sees the black to his white on social and foreign policy. Howard's passion for the cultural war is also a legacy of his being a creature of the Liberal Party, to use Alexander Downer's phrase about himself. But unlike Downer, who is as much a product of Tory Adelaide as he is of traditional Liberal Party culture, John Howard has spent his every waking moment from his late teens immersing himself in the party that has given him the opportunity to scale stellar heights. Howard's immersion is such that he spent his twentyseventh wedding anniversary at a Liberal Party function, a fact of which he was so proud that he bothered to tell a gathering of the party faithful the day before at the conclusion of an address.

In taking on the Keating legacy so directly and absolutely, John Howard has determined that the Liberal Party should reclaim custodianship of Australia's past and its destiny. While Howard has pursued Paul Keating in the cultural war-zone, his henchmen have sought to demolish Keating's personal reputation once and for all. Enter Tony Staley, a former numbers man for Malcolm Fraser when the latter assumed leadership of the Liberal Party in March 1975. Staley had suffered a near-death experience in the late 1980s when involved in a car accident. But he survived and rebuilt his life to the point where he would become federal president of the Liberal Party in 1993. Having left politics in 1980, Staley had sat on the sidelines and watched Paul Keating's highwire act for a decade. And he obviously didn't like what he saw. More than this, though, Staley seemed mesmerised by Keating's cultural and financial capital, his famous taste for antiques, classical music, Italian suits, and business, and the seeming incongruousness of all this with his Bankstown origins, irreverent social manners and Irish Catholicism. Staley would suggest to large gatherings of the Liberal Party faithful that Keating was an unsavoury character, unfit to lead this country. He told the

38


Liberal Party in Perth in 1995 that 'Keating has made abuse and vilification an art form. Lying and cheating your way to office is OK as long as it works. Vile public language which would make a pig's grunt sound elegant has become the order of the day. This is not the stuff of strength but the strutting of a bully and a braggart'.12 Staley's obsession with Keating led him to spend countless hours with John Howard's close ally New South Wales Senator Michael Baume, seeking evidence that would find Paul Keating guilty of some wrongdoing in a piggery venture that had gone sour. Keating had bought into a piggery in the early 1990s and his former business partner alleged that when Keating sold his interest he took $4 million but the business partner took only $100,000, despite an agreement that they share the proceeds of sale. Keating denied the allegations, and his former business partner didn't come out of the issue smelling of roses. There were allegations of Indonesian influence and Keating abusing his office as Prime Minister. Staley and his cohorts, including a staffer of Tony Abbott, pursued Keating with such vigour that the matter was discussed around the corridors of the Executive Wing of Parliament House for weeks on end in 1999, and even involved the Attorney-General, Daryl Williams, being asked to investigate Keating's affairs. Staley's decade-long obsession involved Channel 9's '60 Minutes' program doing a typically sensationalist expose on Keating, yet in the end the AttorneyGeneral could only conclude that there was no basis for an further inquiry into the matter The issue here is not the piggery, but the lengths to which the Liberal Party would go, even after Keating had left public office, to destroy his reputation. The activities of Staley and Baume in seeking to skewer the former Prime Minister's reputation took place when John Howard was firmly entrenched in the Lodge. And it wasn't just Keating's piggery that the Liberals raked over obsessively. There were rumours spread about Keating's sexuality after his marriage broke up shortly after he lost office in 1996. No former Prime Minister has had this treatment from his political opponents after he has left office. The only conclusion one can draw is that for Staley and Howard, Paul Keating is a nemesis, an obsession. Keating provided the Liberals with their winning 1996 election campaign slogan, 'For All of Us'. It was a slogan aimed squarely at Keating's


39

progressive championing of indigenous affairs, the republic, the arts and multiculturalism. It was simply another way for Howard to say to the electorate, 'Look, I am the embodiment of everything that Keating is not'.

In case one gets the idea that the Staley adventure was the last word on the Liberal Party's obsession with Paul Keating, then the performance of the man who would be Prime Minister and Leader of the Liberal Party the day after the 2003 budget was delivered would make you think again. Peter Costello, who had just equalled Keating's record of delivering eight successive budgets, had the Howard Liberals' backbench chanting behind him in Question Time. The topic was tax cuts and the Treasurer was chiding Labor over the fact that at least the Howard government was delivering a tax cut, unlike Paul Keating. He referred to Keating's famous line, used in the 1993 election campaign, that tax cuts promised by him would be delivered because they were 'L-A-W. That Keating subsequently delivered the cuts in the form of increased superannuation contributions caused him considerable political pain in the lead-up to the 1996 election. But that was seven years ago. Costello, in evoking Keating's name, was still able to spark frenzy in the backbench a decade after the Keating statement. Perhaps the refusal to allow the Keating obsession to drop completely is a mark of the impact of Keating on the Australian electorate. A senior pollster who works regularly 'in thefield',sitting in on focus groups, told me that many voters remember Keating all right - usually in the context of economics. As the pollster said, 'Keating was the one who delivered them record interest rates they don't remember the fact that Keating was the most reformist Treasurer this country has ever had'. No doubt the Liberal Party's polling tells them the same thing. In this sense it's an obsession for the Liberals that has a practical upside - mention Keating and interest rates and it strikes a chord with voters. But the obsession with Keating that the Liberal Party developed en masse after the 1993 election is about more than interest rates, as I have noted. It is about the threat that Keating's grasping of the

40

What's Wrong with Hie Liberal Party?

key symbols and institutions of Australia's heritage, and his promising to remake them, posed for the Liberals. Judith Brett, writing shortly after the 1993 election, provides an enlightening quote from the Liberal Party's 'resident philosopher', David Kemp, that neatly illustrates just how serious the Keating threat was to the Liberal Party. Kemp notes that the Liberal Party alone in Australia is a party of individual people and not a voice of any one sectional interest. It represents instead the 'unorganised majorities'. And the concerns and values of these people 'embrace the nature of Australian society and its history. They embrace such issues as the unity and constitutional stability of the country, which are now under threat'.13

As Brett notes, what Kemp demonstrates here is that individual responsibility and social unity are inextricably linked. Within this framework, she says, 'the political claims of women, ethnic Australians, of Aborigines seem illegitimate, or to sit uneasily with the language of individualism'.14 The Keating agenda - with its emphasis on creating a new Australia that would fully nurture artistic talent and creativity, ensure the special and central place of indigenous Australia, and cement Australia's future as a uniquely Asian-Pacific country - was a direct threat to the Liberal Party's core belief system. Add to this the desire for a new flag and a republic, and the Liberal Party was facing an unprecedented challenge to its raison d'etre. Whitlam had provided a similar challenge, but the genuine liberalism of Malcolm Fraser had seen much that was good in that program - the Howard Liberal Party (of which Kemp is a paid-up member) saw Keating as wrecking the Australia they imagined, or believed, existed.

Chapter 4

Whither the Nationals?

Tim Fischer was an extraordinarily popular leader of the party that has, since 1919, represented the political aspirations and interests of those Australians who live outside major urban areas - the National Party (which was originally called the Country Party until 1975, then became the National Country Party until it took its present name in 1982). Fischer's inherent decency as a human being a rare quality in politics - and his eccentricity (a second-to-none knowledge of train timetables, for example) meant that in his southern New South Wales electorate of Farrer he was nigh on unbeatable. But when Tim Fischer departed the political scene at the 2001 election, his popularity departed with him. His seat - held for the National Party since 1984 - is now occupied by a Liberal Party MP. The loss of Fischer's seat was seen by some commentators as another sign that the National Party was in permanent decline as a political force, in no small part because the Liberal Party was mercilessly undermining its traditional Coalition partner by running candidates in seats against the Nationals. Over the border from Fischer's old seat, the Liberal Party beat the Nationals to retain Indi, in northeastern Victoria, in the same election. One of Australia's leading National Party analysts is Monash University's Brian Costar. In the aftermath of the 2001 federal election, Costar set out the bare facts of the Nationals' predicament. It lost three House of Representative seats (including Fischer's) in the 2001 election, which leaves it 'with a total of just 13 which, having regard for a much smaller parliament before 1949, is the worst result since the party entered the federal arena in 1919 and cost the party a ministerial post. Its 2001 primary vote share was the second worst on record, up only 0.3% on the dismal 1998 5.3 per cent [sic] result'.1 41

42


And in case you think that the Nationals' decline is just part of the cruel cycle of political fortune, then Costar will leave you in no doubt that you are misguided. As he states, in 'the 25 years since the great Coalition landslide of 1975 the number of National members of the House of Representatives has declined from 23 to 13 and the proportion of seats from 18.1 per cent to 8.6 per cent. Its share of the primary vote has halved from 11.3 per cent to 5.6 per cent'.2 And it is the Liberal Party and conservative independents that have been the primary beneficiaries of the Nationals' haemorrhaging. There is a new breed of Liberal Party politicians that represents the non-urban areas of Australia. Industry Minister Ian Macfarlane in the Queensland seat of Groom, Sussan Ley, the Liberal who took Fischer's seat from the Nationals, Sharman Stone in the Victorian seat of Murray, and the strident and unlikely MP for Indi, Sophie Panopoulos, are but three of a growing list of Liberal Party members who now represent regional Australia in Parliament, but more importantly in the Liberals' party room in Canberra. Calls have been made for the Liberals and Nationals to merge, the last being made in the middle of 2002 by the Howard government's Minister for Finance, Liberal Senator Nick Minchin. Minchin was quickly silenced by Howard, but the embers of that fire lie glowing ever so faintly still, never quite extinguished. The Liberal Party's growing capture of regional Australia is having an impact that will only increase if it continues to undermine the Nationals and seeks to be the primary source of representation for populist conservative voters. That impact is both philosophical and practical. At the former level, the conservatism that has seen the Howard-led Liberal Party abandon the Menzian 'middle of the road' will become entrenched and make it impossible for what is left of the liberal wing of the party to reassert itself in a systematic way. And at the practical level, the propensity of the Liberal Party strategists to want to play the politics of xenophobia, race and hostility to 'elites' will become de rigueur in elections. The Liberals' successful capture of regional Australia is a key element in the creation of the new Liberal Party - a work in progress. And what makes it remarkable is that John Howard is leading this reinvention before the very eyes of his Deputy Prime Minister and National Party leader, John Anderson. Anderson, like his predeces-


43

sor, Tim Fischer, seems to wear this state of affairs - but what is his alternative? To declare all-out war on the Liberals - a battle he knows he will lose? But how much long-term damage to the conservative side of Australian politics will this realignment of regional representation cause? And just how desirable is the idea that the Liberals ought to swallow the Nationals through a merger, rather than by attrition? The answers to these questions - if there are any- need to be based on an understanding of the impact of the well-documented demographic changes that Australia has witnessed over the past two decades. Demographics, it is said, are the Nationals' worst enemy. People moving from the bush to the city, and the changing profile of coastal areas such as northern New South Wales, are both cited as factors in the shrinkage of the National Party's vote. After all, the Nationals have lost four coastal seats in the past twenty years. But Brian Costar, for one, doubts that it is simply a matter of demographic shifts. He notes 'the drift from the country to the metropolises ceased in 1981. If the related decline in the number of farms and farmers were so important then the National Party would have disappeared decades ago'.3 Equal to demographics are the political opponents that the Nationals now face - Labor, Liberal and independents. Between 1975 and 1993 the Liberals took only three seats from the Nationals, while Labor took five. But since 1993 the Liberals have won a seat from the Nationals at each election - thus accelerating the inroads they have made into the Nationals' vote over the past twenty years. In short, while independents and Labor will pick up National Party seats from time to time, and lose them again to the Nationals, the pattern has been set for long-term and permanent Liberal Party encroachment into regional Australia. The demographic changes mentioned earlier are of limited usefulness when it comes to analysing the reasons for the Liberals' success. The seats that have changed hands in the past three federal elections - Farrer and Murray, Hume (where the resignation of National Party heavyweight John Sharp in 1998 saw a state Liberal MP, Alby Schultz, make the switch to federal politics), and New England (which was won in the 2001 election by a conservative

44


independent) - have not experienced the major urbanisation that coastal areas have over the past twenty years. The Nationals' additional problem is that they have been smothered by the Howard-led Liberal Party's obsession with governmental unity. The capacity for National Party MPs, and particularly those around the Cabinet table, to state the case for their constituents is now much more limited than at any other time in the history of the Coalition. Just as Liberal Party backbenchers likewise feel constrained in their dissent, so the problem is magnified for their National Party colleagues, whose constituents are often perceived to be, or are, the victims of globalist forces that have shifted investment, industries and educational opportunities away from them and their communities. And the world in which the National Party finds itself operating with the Liberal Party in 2003 is very different to that which existed in the halcyon days of the 1960s, when Robert Menzies' deputy, Country Party leader Jack McEwen, controlled a protectionist and regulatory infrastructure that pandered to key rural constituencies. Today, as much as the Nationals might rhetorically rail against the free market, they know that there is little they can do to arrest Australia's engagement with the outside world. In fact, to demonstrate just how impotent the National Party has become when it comes to delivering for its constituencies, one of its key boasts to the electorate is that it has been able to divert more than 80 percent of federal road funding to rural and regional Australia! This, coupled with the shift by the Liberal Party to the right in rhetoric and reality, means that for a conservative rural voter there is little point in voting for the National Party. Only on the issue of gun control, where John Howard grasped the nettle for tougher nationwide regulation after the Port Arthur massacre of April 1996, have rural voters been able to distinguish between the Nationals and the Liberals. However, even in this case Tim Fischer bravely stared down elements of his party to support Howard. Then there is the tendency for the Nationals to be 'seen but not really heard' while in Coalition with the Liberals. This has been nowhere more evident than on the issue of the sale of Telstra. The opposition to the sale of Telstra has been, and still is, highest in regional Australia. Yet the National Party backed both stages of the privatisation of


45

Telstra that have taken place thus far. Yes, the party's backbench has made noises about the adverse impact of the sale on the bush, and it has managed to extract concessions from the government for rural and regional users, but in the end the voters see a National Party that has backed the policy of privatisation. The long-time election pundit Professor Malcolm Mackerras has summed up the National Party's current dynamic with the Liberals in this way. According to Mackerras the Nationals have a 'terrible problem because the more they do deals with the Liberals to be a kind of country branch of the Liberal Party, the more danger they are in from these rural electorates who think they can do better by having independent members'.4 Or, ask voters in electorates such as Tim Fischer's old stamping ground of Farrer, why not vote for a Liberal? At least you have an MP who is part of the dominant party in the Coalition. And, in the case of Farrer, and of Indi in Victoria, the Liberals appear to be reading regional Australia's desire for energetic and young candidates. In Tim Fischer's former seat at the 2001 election, his mooted National Party replacement was fifty-seven years old. As that doyen of the Nationals and seasoned observer of the political scene over many years, Ian Sinclair, noted at the time, 'We've lost Tim Fischer's seat because our candidate, who is a delightful fellow, wasn't seen by the electorate as having a future that related to them ... He was seen as too old. We have to have candidates that the electorate feel relate to them'.5 In the neighbouring electorate of Indi the Liberals' choice of candidate, Sophie Panopoulos, was in her late thirties and a highly conservative monarchist -just the ticket for this electorate! - telling attributes that made up for a lifetime spent growing up in an urban environment. Her National Party opponent was in his fifties. And in Groom, the Liberal candidate in the 1998 election was the highly capable former head of the Queensland cane growers, Ian Macfarlane, aged forty-three. University of Canberra Vice-Chancellor Don Aitkin, someone who has watched the National Party for forty years as a political scientist, confirms the Liberal takeover of Nationals. In his view, 'bush constituents no longer realise that their member is actually a National. As each National MP goes, it will become harder for the Nationals to replace them'.6

46


If the National Party ceased to exist - that is, if we assume that the Nationals will be taken out of the game by the Liberals, either through what some commentators have termed the 'friendly fire' of the Liberals' electorate-by-electorate strategy, or through Liberals such as Nick Minchin getting their way and the Nationals being taken over - then would this be a desirable outcome for voters in rural and regional Australia? Let's put this proposition in the terms of Coke and Pepsi - two brands of cola, just as the Liberals and Nationals are two brands of conservatism. The merger of the Liberal and National parties makes about as much sense as the merger of Coke and Pepsi. If the cola brands were to merge, then fewer people would drink cola not more. It's the constant competitive rivalry between the two drinks that boosts consumption as the products reach out to new markets. And so it is between the two non-Labor parties. Despite the Liberal Party increasing its rural and regional representation, it is still a highly urbanised political force, and it remains equally true that the National Party is to regional Australia what Labor is to the unions. The Nationals still hold thirteen seats in the House of Representatives - all of which are based in regional Australia. It is the natural party to represent the unique interests of rural and regional Australia, and the challenge is, just as it is for Coke and Pepsi, to find innovative ways of tapping into greater support in those rural and regional areas. For the Liberal Party, a merger with the Nationals would represent disaster in the long term. There is no doubt that a merger is attractive to the Liberals' right-wing warriors such as Nick Minchin, because they see it as an opportunity to cement in place forever the populist conservative hegemony that dominates the party under John Howard's stewardship. But the impact of this will be to cleave away supporters who are liberal in outlook on economic and social issues. In fact, we have witnessed in a small way already what would occur more often if the Liberals and Nationals merged. In Western Australia, where the right wing of the Liberal Party dominates, and where the Nationals had a very strong say in the government of Richard Court, the issue of logging in old-growth forests saw the creation of a splinter group in key wealthy Liberal electorates in Perth before the latest state election, in 2001. That group, Liberals

the Nationals?

47

for Forests, had a membership base that was essentially higherincome earners with tertiary education - the Perth equivalent of Sydney's North Shore or Melbourne's inner-eastern suburbs. And the possibility of more splinter groups emerging from a merged conservative party is reinforced when one considers the significant shift in Liberal Party policy outlook in recent years. How much longer can those who support the non-Labor cause but believe in globalisation, socially progressive policy and 21 st-century symbols for a multicultural Australia keep voting for a political party that, even without the Nationals on board, is increasingly disconnected from these ideas and values? Meanwhile, the National Party knows that it could not countenance a merger because it would be a takeover - nothing less. But more than that, it would make it more difficult for moderate conservative candidates in regional Australia to beat off extremist conservative candidates. The current coalition arrangements make it possible for the Nationals to appeal to those constituents whose cultural instincts are protectionist and isolationist. A stand-alone National Party can argue the case to the electorate that it stands up for the groups and individuals who believe that they are the victims of globalisation. Perhaps most importantly, a merger represents the politics of democratic deficit. At a time when voters are increasingly disillusioned with mainstream politics because the major parties seem to be monolithic and intolerant of dissent, to suggest that the electorate's choice in much of Australia will be reduced even further is to simply increase cynicism and disillusionment with the democratic process. A merger of the two conservative forces is one that seeks to substitute organisational restructuring for plain hard work, and merely demonstrates that the proponents are either running away from that hard work or have ulterior motives. Rather than figure out how they can better represent their constituencies to increase their electoral appeal, these modern monoliths fancy they can borrow each other's voters. It can't work, and the loser would be public policy as it affects rural and regional Australia. Leaving aside the issue of the Liberal Party's takeover of the Nationals, what is the long-term impact of the Liberal Party's hitherto successful electoral strategy in rural and regional Australia on the party itself and on its longstanding and generally successful

48

What's wrong with the Liberal Party?

political partnership with the National Party in Canberra? As to the latter, just prior to Christmas 1999 we saw a glimpse of what might emerge if the Liberals' strength in rural and regional Australia continues to grow in the 21st century. On 15 December that year, Ian Macfarlane told the ABC Radio's 'AM' program that it was his view, as a Liberal MP representing regional Australia, that the federal Liberal Party hadn't 'really got down to the nitty gritty on regional affairs and I think, as a government, we tend to rely too much on perhaps the National Party's view of what needs to be done in the bush. We really need to sheet home regional development and regional affairs directly to the Head of Government, and that is the Prime Minister'.7 And just in case you missed that none-too-subtle swipe at the Liberals' faithful old ally and the battle cry for the Liberals to take pole position in the race to secure the hearts and minds of rural and regional voters, then Macfarlane would have left you in no doubt in this further exchange during the same interview: Interviewer. What do you mean about relying too much on the National Party? Ian Macfarlane: Well, I guess the Liberal Party these days has the vast majority of regional seats, in fact we hold more seats than the Labor Party and National Party put together. And what we need to do as a party and as the bigger party in the government is to take the regional development strategy by the throat and show that we, as government, are serious about it. So serious in fact that we're going to tag this on to the Prime Minister's office.8

The National Party's leader, John Anderson, was uncharacteristically harsh in describing Macfarlane's comments as a 'load of rubbish'. But Macfarlane's message was logical and clear. With twenty-two federal MPs from rural and regional Australia in the Liberal party room and only thirteen Nationals, why shouldn't the leader of the Liberal Party eclipse his National Party counterpart and deliver the policies tailored to increase the Liberals' vote in the bush? This outburst hasn't done Ian Macfarlane any damage in the eyes of John Howard either. Macfarlane was only elected to Parliament


49

in 1998 and has risen to become a Cabinet minister within four years, currently holding the powerful Industry portfolio. This merely confirms what some in the National Party might suspect that for John Howard, criticism of the National Party is sanctioned, given that he apparently yearns to see the Liberal Party as the natural party for rural and regional Australia. Indeed, Howard is the first Prime Minister to regularly address that part of Australia through a scheduled television slot, something he did throughout 2000. The Macfarlane outburst appears to be the inevitable consequence of this equation. It is hard to imagine that rural and regional Liberal MPs will not form a bloc in coming years - particularly if the Nationals continue a slow pattern of decline - and argue the case for less than 'friendly fire' at their allies so as to finish them off as a political force once and for all. And the Liberal Party organisation seems to share this aim, with a special message for its new-found rural-regional heartland on the front page of its website - http://www.liberal.org.au - which includes this announcement: 'For people living in Rural & Regional Australia, the Government has provided a website for your use'. If the rump of the genuine liberals left in the Liberal Party are worried sick about their extinction today, then they ought to be even more concerned if a strong and cohesive rural and regional Liberal Party bloc emerges. That bloc - with the notable exception, it might be said, of Ian Macfarlane, who argued unambiguously for an Australian republic in the 1999 referendum, despite the conservative nature of his Queensland electorate - will seek to ensure that the Liberal Party's social and economic policy direction heads down the cautious and conservative path at all times. The simple fact is that rural and regional Australia, particularly away from some coastal areas in northern New South Wales, remains politically resistant, or at least hesitant about, major social, constitutional or even economic reform. The republic referendum of 1999 provides the'most recent empirical evidence for this claim. Of the forty-two electorates with a majority of voters supporting the 'Yes' case, not one was in a rural electorate and only two were in what the Australian Electoral Commission terms 'provincial' seats. Not one rural or regional Australian electorate is named among the 'rich list' of thirty-four electorates that Malcolm

50

What's Wrong with the Liheral Party?

Mackerras constructed in 2000.9 That there is not as much wealth in the bush, and that the rate of economic and social dislocation tends to be higher than in urban Australia, ensures that this part of our nation will continue to be vulnerable to the politics of envy that Pauline Hanson milked so successfully in the mid-1990s. It is assumed, however, that this conservatism will change over the next two decades as more people move from crowded city areas to rural and regional Australia - the so-called sea-change effect. However, some of this shift is due to those who have been displaced by the high cost of housing in cities. There is also the simple fact that the bush will never look like the city. It will never have the economic and cultural diversity to attract in sufficiently large numbers those voters who, for want of a better description, we will call lower North Shore or Inner West voters. These are the areas of Sydney where there is a preponderance of social liberals who are the beneficiaries, and the architects in some cases, of the globalised, economically liberal economy. It must also be said that the consequence of a lack of strong cross-cultural currents in rural and regional Australia will continue to ensure that political conservatism - of an occasionally radical but mainly fairly conventional variety - is the major force at the ballot box. This will not alter greatly in the foreseeable future. As the 2003 New South Wales state election showed, there is still a solid core of populist conservative voters outside of Sydney. Parties such as the Shooters and One Nation, and Pauline Hanson herself, garnered more than 200,000 Upper House votes in that election. The consequence of a continuing political and social conservatism in rural and regional Australia is that the Liberal Party can be expected to see little value in pursuing a more adventurous and liberal approach to issues such as reconciliation, the republic, refugees or welfare. Why would it, when it has worked long and hard to win - as it did in 1996 - a swag of rural and regional seats, and to then hold those seats in the two subsequent elections? It has no need to fear the National Party as a rival for the conservative vote any longer - as we noted, the Howard-led Liberal Party is a comfortable option for voters outside major urban areas because it assiduously courts the rural and regional vote.


51

All this will become important if the current Treasurer, Peter Costello, assumes the reins as Prime Minister on the retirement of John Howard, a scenario that is less certain now that Howard has announced his intention to stay on indefinitely as Prime Minister. Costello is seen by some on the left of the Liberal Party as the one who would swing the party back to the centre, if not slightly to the left. But the challenge for Costello and those who want him to take such a position will be to bring the rural and regional grouping of Liberal MPs with him - they represent the seats that stand between the Liberal Party's dominance not only of conservative politics, but in many cases of government. Costello would be saddled with the need to deal with the political tactic that his predecessor used so superbly from the time he was elected Prime Minister in 1996 how to kill off the genie of Pauline Hanson without turning her into a cultural martyr who was crucified at the altar of the political establishment. Howard's tactic was to follow his gut instincts in an unrestrained way and provide Hanson sympathisers and supporters with a political leader who could empathise with their fears and thoughts, but in a way that looked polished in comparison to Hanson's reactionary shrillness. Under John Howard, the Liberal Party went where it has never gone before - to the underbelly of Australian culture, an underbelly that Pauline Hanson and One Nation had turned over for all to see in 1996. And Howard's tactics have gone down a treat in the bush.

Chapter 5

Assuming One Nation

On Wednesday, 28 October 1996, just after 2 p.m., the Prime Minister, John Howard, rose to his feet in Parliament to answer a question. There was nothing unusual in this per se - after all this Prime Minister has boasted that he spends more time in the House answering questions, and allows for a much longer Question Time, than did his predecessor, Paul Keating. But on this occasion the questioner was none other than the MP who had become the latest object of fascination to the Canberra press gallery - which is continually searching for the 'new, new thing' (to use the US writer Michael Lewis' observation about business writers covering the 'dot-com' era). That person was Pauline Hanson - the independent MP for the Ipswich-based seat of Oxley. Hanson had been disendorsed by the Liberal Party prior to the 1996 federal election as a result of racist comments she had allegedly made. She had won the seat nonetheless - with a 20 percent swing - from the ALP. This Queensland seat had been a Labor stronghold for many years; the former Opposition Leader and Foreign Minister, Bill Hayden, had held it for Labor for two decades. Hanson used her rare opportunity to ask questions in the House of Representatives to drive home her core messages, and these included the fact that, as she saw it, 'mainstream' Australia wanted to stop Australian governments shelling out so many taxpayers' dollars in foreign aid. So she asked Howard - to use his own counter-terrorist message - 'look out for Australia': I believe, along with millions of other Australians, that as the leader of Australia your first and main obligation is to the people of Australia. 52

Assuming One Nation

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Would you consider reducing our foreign aid, which runs at approximately $1.5 billion a year, to create a civil national service for our youth, to enable them and others to gain employment, as well as personal and social gains, through the building of roads, bridges, railway lines, reafforestation and water conservation systems, to name a few national projects?1

In other words, 'Charity begins at home, Prime Minister'. No doubt Paul Keating, or perhaps even Peter Costello, would in their reply have swatted Hanson unmercifully for her clumsy logic, xenophobia and plain selfishness. But John Howard took great care in answering Ms Hanson. He argued the case for why Australia's foreign aid level was about where it should be and he ruled out the use of national service for civilian purposes. But Howard was scrupulously careful to in no way denigrate or condemn Hanson and her supporters for their views: I understand why, in times of difficulty- in particular, in areas of economic and social difficulty in Australia - some Australians would look suspiciously upon the provision of foreign aid. The other side of the coin is that there are many countries that receive foreign aid from Australia whose living standards are absolutely appalling by any measure. There are other countries whose relations with Australia are important and therefore the provision of foreign aid to those countries not only carries a humanitarian component but also is in Australia's national interest. It is equally true that on occasions Australians legitimately feel that foreign aid is sometimes not as effectively used as it might be. I can understand the anger in that ... So I would say to the honourable member for Oxley and, through her, to those of her constituents and, indeed, the constituents of any other honourable member who feels that somehow or other foreign aid is being wasted, that I think in the long run that is a short-sighted, mistaken view. I do think that this country has some moral obligations. There is also a national interest for Australia involved in the provision of foreign aid ... I think the honourable member's question does place an obligation on governments and all political parties to make absolutely certain that foreign aid is directed in the most efficient manner, that there

54

What's Wrong with the Liberal Party? is political pressure applied to those countries that have intolerable regimes, who use starvation and the wasting of civilian populations as a method of achieving ends... I can understand the feelings of Australians who think that their taxes are wasted in relation to aid to those countries ... 2

This answer is crafted with all the care of a seasoned and skilled artisan. Howard's reply is yet another example of extraordinary persistence over three decades, mastering the craft of politics. He is arguing against Hanson's proposition but at the same time providing a wink and a nod to those who support the Hanson view of the world, and saying that he understood why they felt this way. Howard more or less openly acknowledges their insecurities, and uses them, as ever, to his political advantage. It is in this act of recognition that we first see just how seriously he takes Hanson, the hero of the moment for many. As Howard said, her 'question does place an obligation' on governments to ensure aid is properly directed as if it needed the independent MP for Oxley to remind a highly experienced Prime Minister of this. Howard was courting Hanson and her supporters - his was a softly-softly approach to a public figure who, in her short time in the public eye, had lifted the lid off a range of subjects where leadership was required, and then dragged the debate into the quagmire of racism, resentment and envy. Only six weeks before John Howard answered this question from Hanson, she had made an explosive and highly publicised maiden speech to federal Parliament, in which she had castigated indigenous welfare, and alleged that the policies of reconciliation and indigenous welfare were creating a separatist society, that Australia was in danger of being 'swamped by Asians' who do not assimilate and who live in ghettos in Australia, and that the Family Law Act was responsible for misery and death. She used the phrase 'mainstream Australia' when referring to herself and those who supported her view of the world. It was a speech the like of which had not been heard in Parliament for a number of years. Yet Hanson used phraseology and descriptions of groups and individuals that were by this time part of the Howard-led Liberal Party's lexicon.

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'Mainstream Australia' and 'battlers' were two concepts that Howard and Hanson used to label blue-collar or lower-income white-collar voters. These were people for whom the Keating 'big picture' of Aboriginal reconciliation, the republic and APEC meant very little indeed. And these were the voters that John Howard chased and captured in his 1996 landslide victory. Howard and Hanson also liked to label bureaucrats, particularly in the culture industry and upper-income professions, and the intellectual groups to which they belonged, as 'minorities' who were out of touch with 'mainstream Australia and the battlers'. With this tag attached to such people, Howard could portray them as overt supporters or the direct beneficiaries of the Keating agenda. And Howard and Hanson were also at one on the matter of creeping 'political correctness' that had led to a stifling of debate about certain emotive issues such as multiculturalism, indigenous affairs and migration. The rhetorical, and one assumes intellectual, likeness of Howard and Hanson can be seen in the following comparison between a speech Howard gave in June 1995 and a short quote from Hanson's September 1996 maiden speech. In Chapter 3 (page 35) I quoted from a speech that Howard had made in June 1995 regarding some of the themes to which I am referring. Part of that quote was Howard's claim that there is 'a frustrated mainstream in Australia today which sees government decisions increasingly driven by the noisy, self-interested clamour of powerful vested interests with scant regard for the national interest'. And in Hanson's maiden speech: We now have a situation where a type of reverse racism is applied to mainstream Australians by those who promote political correctness and those who control the various taxpayer funded 'industries' that flourish in our society servicing Aboriginals, multiculturalists and a host of other minority groups. In response to my call for equality for all Australians, the most noisy criticism came from the fat cats, bureaucrats and the do-gooders. They screamed the loudest because they stand to lose the most—their power, money and position, all funded by ordinary Australian taxpayers.3

As an aside, but of relevance here, Hanson's maiden speech was followed by a speech from one of those Liberal MPs - Jackie Kelly of

56


the seat of Lindsay - who had won a former Labor stronghold in the 1996 election. Kelly's seat is located in and around Sydney's outerwestern satellite city of Penrith. In her speech she praised the Howard government's first budget for not pandering to 'noisy minorities'. According to Kelly, the people she represents 'do not want their representatives dancing around to the tune of noisy minorities; they want their representatives in mainstream Australia'.4 Note, yet again, the use of that phrase 'mainstream Australia'. It was the same minorities to which Kelly referred that Hanson alleged were running Australia into the ground - by minorities she meant indigenous and multicultural organisations and groups. John Howard's kid-gloves approach to Hanson on that Wednesday in October 1996 has as its explanation that the Liberal Party needed to keep onside those who turned against Labor so viciously in the 1996 election if Howard was to make that result more than a one-off. John Howard needed to become Pauline Hanson and the political party she established late in 1996 - One Nation. That did not mean applying the bizarre policy prescriptions of One Nation, but it did mean finding totemic opportunities to reassure these voters that the Liberals were really on their side, and more importantly, that the Liberal Party was the natural home for those voters who believed that Australia was the society that they felt comfortable with - one where the predominant ethos was one of integration and unity, the rebirth of a 'fortress Australia' where the ongoing cultural dominance ofEuropean settlement was actively enhanced. The issues of race and immigration provided Howard with the totemic opportunities to prove that he and his party were a better proposition for voters tempted by Hanson and One Nation. To understand why the Howard-led Liberal Party so desperately courted Pauline Hanson and One Nation, at least insofar as the rhetoric and sentiment of both camps matched, we should look at the situation facing John Howard as he headed into the 1996 federal election. It was this election that changed the Liberal Party more dramatically than ever before in its sixty-year history. Howard was reaching out in that election campaign to a group of voters he called the 'battlers', or members of'mainstream Australia'. These voters were often contrasted in the same sentence with what

Assuming One Nation

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Howard termed the 'elites' - useful and cunning language in a culture that prides itself on egalitarianism. The 'battlers' have been identified and profiled by a number of commentators. But it is a fascinating study of Labor's dismal 1996 result in Queensland, where the swing against it was a record 8.7 percent, that the success of Howard's strategy, and why it overlaps with One Nation, becomes clear. Three University of Queensland academics, Jeff Singleton, Paul Martyn and Ian Ward, analysed the election results for southeast Queensland, where Labor lost ten seats, to test the thesis that the Liberals had captured Labor's traditional heartland. Their findings were relatively unambiguous. Blue-collar Labor voters turned on their party with a vengeance. But worse than that from the Labor Party's perspective, it was also low-income white-collar workers, a mainstay of the Labor vote since the late 1960s, who deserted them for the Liberals. Singleton, Martyn and Ward's analysis also found that 'whereas in 1993 30% of blue-collar respondents identified themselves as coalition supporters, in 1996 this had increased to 43%'.5 That 13 percent increase in Liberal Party support is nothing short of phenomenal, but when we examine the grievances of these voters it's easy to see why they abandoned Labor. John Howard was no John Hewson. The latter, who had been the Liberal leader in the 1993 election, had promised radical changes to the tax system, most prominently through the imposition of a goods and services tax, a curtailing of Medicare, and greater industrial-relations deregulation, as well as sizeable budget and tariff cuts. Hewson had 'scared the horses', who were none too happy with a Labor government that had been in office for a decade and presided over the worst economic downturn Australia had experienced since the 1930s. In 1996, however, John Howard ensured that he and his party became as small as possible a target for the forensic campaigner Paul Keating. On Medicare, industrial relations and tax policy, Howard stressed that his party was essentially at one with Labor, prompting Keating to ask why you would vote for the copier when you could vote for the architect. But Howard provided a vital point of difference between himself and Keating - he genuinely empathised with the blue-collar and lower-income white-collar Labor voters' uninterest or even

58


hostility about Keating's 'big picture' - reconciliation, Asia, multiculturalism, the primacy of the arts, and the republic. Howard wanted, he so famously said in late 1995, for Australia to be once again 'relaxed and comfortable'. Howard was going to govern 'For All of Us' - the clear implication here was that Keating's Labor was the captive of vested 'elite' interests, and that blue-collar and lowerincome white-collar workers were excluded. But while the Liberals were able to recruit large numbers of this former Labor constituency, they were facing another challenge from voters who were similar in some respects to these, but essentially a subset of them. This was the group of voters who also helped Pauline Hanson achieve a 20 percent swing to win her seat of Oxley from Labor. Their concerns were akin to those of the Labor deserters, but as Hanson's supporter base grew and reached its high point in the 1998 Queensland state election, in which One Nation won eleven seats, it became obvious that there were some defining characteristics of these voters that Howard's Liberals would need to deal with if their party was not to be outflanked from the right. Mind you, it was not all that hard for Howard's Liberals to accommodate such voters, given the success it had had in winning over the 'battlers' in 1996 with its anti-special-interests rhetoric, and retaining the vast majority of them in the 1998 federal election. Meanwhile, Hanson's One Nation was proving to be an extraordinarily accident-prone, highly strung and flawed outfit that seemed to be headed by eccentrics, egomaniacs and eclectic individuals seemingly unsuited to the hard slog of day-to-day politics. So how did this affect their supporters? The circus that was One Nation proved to be too much for most of its supporters, which allowed John Howard to garner their vote at the 2001 election - a matter I will touch upon later. The One Nation voter is likely to be male, come from a rural electorate, be a blue-collar worker and own firearms. He tends to be anti-immigration, anti-Aborigine and dissatisfied with Australia's democracy. These three characteristics, according to one of this country's most seasoned electoral watchers, Murray Goot, make One Nation voters 'strikingly distinct' from voters for other parties.6 The One Nation voters were also likely to be over fifty years of age, the party's vote being highest among those aged fifty-five to sixty-five.

Assuming One Nation

59

This spells 'bingo' for the Liberal Party. It is the Liberals who can more readily harvest the support of these voters than Labor. As Goot and Watson note: 'From which parties do One Nation voters come and where do their preferences go? The answer to both questions is the same: on the whole, the Liberal and National Parties'.7 It should also be said that blue-collar and lower-income whitecollar voters also tend to be economically insecure. But, as Goot and Watson point out, in addition to this swing to One Nation, Labor and the Australian Democrats are as much the beneficiaries of voters who have this as their 'top of mind concern' when they enter the ballot box. So John Howard and his strategists moved to provide a permanent home - or as permanent a home as is feasible in modern politics - for the voter attracted to the right-wing radicalism of One Nation. The Liberals knew that One Nation was unsustainable as a long-term political force but that the issues and sentiments around which so many voters were prepared to coalesce would not go away. These are 'One Nation sympathisers'. Howard had also tapped into this potent force in a speech of June 1995, when he deftly argued that the lid should be lifted on what he termed 'political correctness'. In his careful handling of Hanson in their first confrontation in Parliament, he demonstrated that he was prepared to sanction debate, no matter how dangerous it might be in terms of social cohesion, on the three matters that Goot and Watson identify as being specifically identified with One Nation sympathisers.

John Howard has long laboured under the shadow of the perception that he is a racist politician - or at least one who is prepared to play the race card if it suits his political purpose. It was an accusation first hurled at him by his opponents in his own party as well as by the ALP in 1988 when he questioned the level of Asian immigration into Australia. It is also a charge that he has vehemently denied to this day. But it is a charge that has compelling implications for the Liberal Party going forward. The Liberal Party's track record on race issues was, until Howard's 1988 outburst, unblemished. Under Harold Holt's prime

60


ministership the Liberal Party abolished the White Australia Policy, and Malcolm Fraser can lay a very legitimate claim to being the most humanitarian Prime Minister Australia has ever had - it was he who opened our borders to Vietnamese refugees arriving at the end of that country's twenty-year war, and who masterminded the policy of multiculturalism. But John Howard was never totally comfortable with the direction the Liberal Party was taking in its support for the Hawke Labor government's increase in Asian immigration. It was straining Australia's social cohesion, according to Howard. And although Howard tried to recant these views prior to the 1996 election, there is little doubt that he was aware of the rich vein of xenophobia and fear that was very much alive at the end of Labor's thirteen years in office. Gerard Henderson records an extraordinary exchange between journalist Margo Kingston and John Howard on 19 October 1996 on the matter of discriminatory immigration policy: Howard:... I think people who now argue for a reversion to a racially discriminatory criteria are probably arguing against Australia's interests - that is how I would prefer to put it. Kingston:... you don't see them as racist for arguing for a racially discriminatory immigration policy? Howard: Do I see it, I wouldn't, I mean, I think a lot of people would and I think I'd be one of them. I think it is, I mean, you can argue a racist position without necessarily being a racist.8

As Henderson notes, it is difficult to imagine that Menzies or Fraser would have got so tangled up on a sensitive issue of their time. Howard's first musings about the composition of migration occurred during the period in which Bob Hawke and Paul Keating internationalised the Australian economy and this wholesale restructuring exposed this country for the first time in its history to the chill winds of globalisation. Job losses, rationalisation of industries, and foreign capital were all features of this period of adjustment. Australia's social mores were also in a time of change. An activist High Court, a renaissance in nationalism, and the economic and cul-

Assuming One Nation

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tural commitment to Asia meant that for the average Australian this was a time of change that was sweeping in every sense. And while the Liberal Party supported the push for economic reform - it argued that Labor was too slow in reforming certain areas of the economy such as industrial relations and the waterfront - John Howard and the conservative elements of the Liberal Party, and their Coalition colleagues in the National Party, were distinctly uncomfortable about the social and cultural changes that were happening in tandem. So for Howard the opportunity to once again grasp the immigration issue and weave into it the Asian question was too good a political opportunity to resist. It became even more difficult to resist once he saw the Hanson roller-coaster emerge from the 1996 election. Howard knew that Labor, despite its earlier anti-immigration and anti-Asian stance that had lasted until the late 1960s, could not now countenance any weakening in its support for a strongly multicultural Australia. He also knew that Labor was divided on the question of the level of immigration and the composition of immigration. The Democrats likewise, despite many opposing increased immigration on environmental grounds, would also find it impossible to head down the path of an implied racist tone to the immigration debate. And Howard knew, despite what he might protest publicly, that Australian xenophobia and racism was alive and well, particularly among blue-collar and lower-income white-collar workers. The Liberal Party knew in 1996 that racism is, as art critic Robert Hughes once said, as Australian 'as lamingtons and sausage rolls'. No doubt there would be vigorous denials by Howard's key advisers since 1996 - the Liberal Party's pollster, Mark Textor, key strategist Graeme Morris, and the party's national directors under Howard, Andrew Robb and Lynton Crosby - that there has been any research carried out by the Liberal Party to determine how to craft a political strategy based on xenophobia and race, but let's look at what the empirical research would have shown them. Tucked away in an academic journal - the Australian Journal of Political Science - is an Australian academic's empirical study on race and Australia's body politic.9 Professor Simon Jackman of Stanford University concludes that race has been a key component

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of Australian political ideology and remains so at the turn of the 21st century. Using survey material, Jackman's perceptive analysis demonstrated that Liberal and National Party candidates were much closer to the average voter on expressing sentiments about there being too much immigration, about migrants receiving too large a 'hand up' from government, and about government help for indigenous Australians having gone too far. The electorate is conservative on race. For example, in relation to indigenous welfare, on a scale of 1 to 5, where 5 represents the policy having 'gone much too far', the electorate scored 3.6 and the ALP 2.2. On the numbers of migrants allowed into Australia, the electorate scored 3.9 and the ALP 3.0. Jackman found that the attitude of a candidate or voter to race enabled one to predict what that candidate's or voter's attitude might be to 'other components of political ideology', as he put it. In other words, for example, racial liberals tended to support an Australian republic and trade unions. Music to Liberal Party strategists' ears would have been Jackman's finding that although on many issues the electorate and the political parties hold similar views, on race issues - immigration and indigenous affairs - 'the electorate holds opinions at least as conservative as that of the average Coalition candidate, and is well to the right of the average ALP candidate'. Jackman's conclusion from all this is that the Coalition parties are 'more subject to the electoral temptations of race than the ALP'. And it is a temptation that has proved too much for the Howardled Liberal Party. The Liberal Party has been prepared to adopt much of the conservative electorate's rhetoric either explicitly or implicitly by refusing to condemn it. Howard's answer to Pauline Hanson's question on foreign aid, cited on page 53 of this chapter, is one such example. Bringing Them Home,10 the powerful report of the Human Rights and Equal Opportunity Commission, tabled in Parliament in 1997, provided another opportunity for the Howard government to demonstrate that it was in step with the electorate's conservatism on race. Instead of using that report as another tablet stone for a reconciliation monument, it castigated the report's chief author, former High Court Justice Sir Ronald Wilson, and con-

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signed its recommendations to the dustbin. It then engaged the services of a senior Melbourne barrister, Douglas Meagher, QC, to fight successfully in the Federal Court in Darwin against a claim by members of the Stolen Generations for compensation by the Commonwealth government. I recall vividly attending a meeting in mid-1997 in the Canberra office of the Attorney-General, Daryl Williams, with senior Howard-government political advisers. The purpose of this meeting was to set in place the politics of dismissing the report - not one mention was made of reconciliation or of how to redress this historic wrong. I muttered something sotto voce about this aspect, but not loudly enough. And Howard also moved quickly on another race front to line himself up with the conservative electorate. His Immigration Minister, Philip Ruddock, announced in July 1996, just four months after the Liberals were elected, that the government was cutting the non-humanitarian migration program from 83,000 to 74,000. And in May 1997 Ruddock dropped the intake even further to 68,000. His media release announcing this further decline cited the link between unemployment and migration - a link that is far from proven if one surveys the literature on the economics of migration. But Ruddock was giving a clear message to One Nation supporters - the Liberal Party was happy to take the side of the many conservative voters who believe that migrants are taking jobs at the expense of Australians. Undoubtedly, the most glaring and extraordinary example of the Liberal Party's capture and harvesting of the virulent One Nation sentiment has come at the expense of asylum-seekers, and in particular, those who have sought to enter Australia in leaky boats. This political strategy reached its high point in August 2001, when a Norwegian merchant vessel, the Tampa, sought permission to dock on the northwest coast of Australia. It was carrying more than 300 mainly Middle Eastern asylum-seekers it had rescued from a sinking vessel. The Howard government told the ship it could not land on Australian territory, and for a fortnight the nation was gripped by this manufactured international crisis in which John Howard managed to reposition himself in the opinion polls and split the Labor Party.

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Howard used the Tampa episode to tug at every xenophobic heartstring in Australia. He played the ultimate mind game with those voters susceptible to fear. And he skewered Kim Beazley and his Labor Party in the process. The Tampa episode, and a subsequent event, where Howard and his Immigration Minister, Ruddock, alleged that a boatload of asylum-seekers were throwing their children overboard - an allegation now proved to be utterly false - allowed Howard to conjure the notion that if he did not take strong action on 'border protection', then hordes of these 'undesirable' people would head to Australia. These people, he told us, were different from Australians. People who would throw their children overboard to get a sympathetic response from the good-hearted people of this country are 'not the sort of people we want in Australia', the Prime Minister became fond of saying. And by placing asylum-seekers in brutal detention centres in remote parts of Australia, such as Woomera in the South Australian desert, John Howard and the Liberals were able to send an obvious message to a fearful electorate - these people will be punished once they land in Australia and we will not let them near your neighbourhood. Howard and Ruddock also hit another of the raw nerves of One Nation sympathisers and many other blue-collar voters - by saying that asylum-seekers, like indigenous Australians, were getting something to which they were not entitled. They had 'jumped the queue' in risking their lives on leaky boats to get to Australia - where the queue was exactly was never explained, but that didn't matter. It was enough that Howard and Ruddock were taking action against a group of people that the disaffected voter felt angry about. As Shaun Wilson11 noted in the lead-up to the 2001 election, there was plenty of empirical evidence to suggest that Howard knew that his pursuit of political positions that were appealing to One Nation and other disaffected voters would snare their votes. Wilson's research showed that although the Liberals had a strong lead over the ALP in the 1996 election on the issue of more controlled immigration, by the 1998 election, due to One Nation's extremism (exhorting the government to send any asylum-seekers back whence they came, for example), there was little difference in the working-class voter's mind between the Liberal Party and the ALP.

Assuming One Nation 6 5 But thanks to Tampa and Howard's strong rhetoric and actions against asylum-seekers by the 2001 election Labor's dream of a return to the Treasury benches, which opinion polls had been predicting for most of that year, faded. Howard had taken the One Nation position on the extreme right of the spectrum and it worked. The critical votes in key rural and lower-income marginal urban seats were delivered to Howard and the Liberals with the result that he recorded his third successive victory against Labor. The One Nation sympathisers stuck with Howard's Liberals. Howard's tough, subliminally race-based immigration campaign, with its signature theme of'We will decide who comes into this country', resonated with these voters and with those in the former Labor strongholds that Howard's Liberals had won in 1996: seats in Sydney's Western Suburbs, Melbourne's southeast, Adelaide and Brisbane - 'new territories' that the Liberals defended successfully in this election. And to prove Jackman's point about liberals tending to be more tolerant about race-related issues, the professional classes turned against Howard. As the Australian National University study of this election commented, 'John Howard's campaign on immigration policy clearly succeeded in garnering support for the conservative side of politics from both skilled tradespersons and unskilled blue-collar workers'.12 Howard's race strategy has paid dividends for the Liberal Party in the short term. It has halted the One Nation juggernaut, improved the party's stranglehold over the new territories and ensured that the Liberals, along with their Coalition colleagues in the National Party, continue to own much of rural and regional Australia - electorates that Labor captured and held for much of its thirteen years in office under Bob Hawke and Paul Keating. This comment from the social monitor Hugh Mackay about the Liberal Party's shift to capture the One Nation sympathisers and the new territories demonstrates just how clever Howard's strategy has been. In Mackay's view, by giving Australians 'permission' to castigate asylum-seekers, 'other prejudices are also unleashed: antiAsian, anti-immigration, anti-Muslim, anti-Aboriginal'.13 As always John Howard has ensured that the Liberal Party has read and applied the research correctly. And if there is any doubt as to the thesis that under Howard the Liberal Party has 'become One Nation', then its stance on Australia's

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integration with Asia should cast this aside. For John Howard, Paul Keating's strong advocacy of Australia's advancement and integration into the Asian region was unbalanced. Keating had, in an April 1992 speech entitled 'Australia and Asia: knowing who we are', launched his effort to make Australia play a major role in the Asian region. This role would be enhanced, and have more impact, if Australia was to throw off the last colonial vestige that quite obviously set it apart in the region, and become a republic. This overt nationalism irked Howard, and when he was elected to office in 1996 he immediately set about abandoning the Keating strategy. Howard saw the Asian focus as another form of 'political correctness'. An anecdote illustrates this. Sitting with a small group of his colleagues, including me (I was chief of staff to the Minister for Finance), running through minor items that were to go before the 1997 budget process, Howard came across the extension of funding request for the Asian languages in schools program - a key Keating initiative. Howard reluctantly ticked the program, but expressed concern about it being 'politically correct'. Prior to assuming the prime ministership, Howard had spent little time in Asia, and his Asian-immigration remarks in 1988 had not been well-received by other leaders in the region. Paul Keating, with typical rhetorical flourish, claimed during the 1996 election campaign that he doubted whether the then Indonesian President, Suharto, would deal with Howard if the latter became Prime Minister. For John Howard the key relationship for Australia was with the US. This was demonstrated by his readiness to sign up for the Iraq war of 2003, despite the absence of UN backing for that conflict. He was willing to risk resentment among close, Muslim-dominated neighbours such as Indonesia to attest to Australia's reliability as a rock-solid ally of the world's only superpower. Howard summed up the key difference between him and Keating with regard to Asia with the following defiant statement in 1997, in which he portrays himself as having stood up to the foreign-policy 'elites' of the Keating years: I have followed not an Asia-only policy, which my critics wanted me to follow, but I have followed an Asia-first policy. And I have said that we

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have economic linkages and economic strengths and economic investments in other parts of the world as well as Asia. And this idea that I was deluged with when I became Prime Minister that we practically had to ignore the rest of the world and only concentrate on Asia was always wrong. And I think the wisdom of our strategy, which puts prime importance on Asia, it is an Asia-first policy but it is not an Asia-only policy.14

In fact Howard is continually ensuring that the Asian region knows that Australia is not one of them and never will be - it's a mercantilist relationship of convenience, nothing more, as he told Time magazine's Asian edition in 1998: We are a western European society with deep British and other roots, and we also have very strong links with North America. But here we are in the Asia-Pacific region. I think that if we use those assets we ought to be the financial center of the future. We're in the right time zone, we speak the English language, we have a strong legal system, we have a well-supervised and welkredentialed banking system, we have ethically run stock exchanges, we have a great life-style and low costs. We ought to be the New York of Asia.15

John Howard's steering of the Liberal Party away from Asia is also politically convenient. As we have noted, Pauline Hanson and One Nation attracted much support for the enunciation of a sentiment that spoke of the Anglo-Australian culture, once dominant, being swamped by Asian and other cultures that were to be feared. Her voter base, according to Goot and Watson, drew heavily on people born in Australia or northern Europe. We should also note that Howard's dramatic shift away from the centrality of Asia as part of Australia's future also resonated well with the blue-collar and lower-income white-collar Labor voters who felt alienated by the Keating approach to the issue. In reconfirming that Australia was European, and primarily British, in its origins, John Howard was able to ease the fears of the One Nation voter class. Once again, Howard has cleverly positioned the Liberal Party alongside conservative voters on this totemic issue - totemic because it is about identity and the fear of losing that identity.

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What are we to make of all this? That John Howard is a Pauline Hanson without the attendant 'mother of the nation' imagery that the latter so seriously and persistently wanted us to believe? Not quite. But Howard has moulded the Liberal Party in such a way that it is now the party that echoes the conservative sentiments of the One Nation supporter, and the materialist former Labor voter - the One Nation sympathisers, and voters in the new territories. It has cleverly hijacked highly symbolic issues where it is easy to galvanise great resentment among these voters, against the needs of indigenous Australia, asylum-seekers and Asia. And on each of these issues the Liberal Party of John Howard has defiantly stood up to those that Pauline Hanson would call politically correct interest groups - urban professionals, elements of the media, and multicultural groups. And it has worked. The federal Liberal Party has now assumed One Nation almost completely. There is now only a single One Nation MP in federal Parliament - a little-known Queensland Senator, Len Harris, who is as invisible in Canberra as Hanson was visible. The One Nation sympathiser no longer needs Hanson in Canberra: he or she has the most conservative Liberal government on record delivering on the things that matter - race, indigenous Australia and political correctness. And what could be more wrong with the Liberal party than all of this?

Chapter 6

The Paradox

When the South Australian Labor Party leader, Mike Rann, clinched a deal with the maverick former Liberal MP Peter Lewis five days after the state election of 9 February 2002, Labor was now occupying the Treasury benches in every state and territory in Australia. Rann's victory came only three months after John Howard had led the federal Liberals to their third successive victory. This is the paradox. In the past twenty years we have nearly been there before, but never like this. In 1991 the only conservative leaders in government in Australia were Nick Greiner in New South Wales and Marshall Perron in the Northern Territory, but by 1994 only Queensland Premier Wayne Goss was able to fly the Labor flag at premiers' conferences. But Labor's current dominance of state politics was further cemented when Victorian Premier Steve Bracks wiped out his Liberal opponents in November 2002. Bracks - the unlikely winner of three years earlier, when he snatched a remarkable victory from the hitherto rampant Jeff Kennett - humiliated the Liberals, who saw the number of their Lower House seats drop from thirty-six to seventeen in 2002. Remarkably this was a much worse result than Labor wore in 1992, when it was severely punished by voters for its perceived gross economic mismanagement that saw the state wallowing in record debt. In that election Labor still retained twenty-seven seats. And in New South Wales the Labor government of Bob Carr ensured that the Liberals' chances of winning government for the first time since 1991, when the incumbent Premier Nick Greiner scraped back into office, were at least another four years away with his resounding third consecutive victory in the March 2003 election. 69

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What's Wrong with the Liberal Parly?

The Liberal Party's chances of splashing blue onto the sea of red that colours the nation now shifts to the Australian Capital Territory, and to Queensland, where the highly popular Labor Premier, Peter Beattie, faces an election in 2004. But in Queensland the chances of the Liberals, who could only govern as junior coalition partners of the National Party, must be seen as nil. The party has only three MPs in a Parliament of eighty-two. In the Australian Capital Territory, the small Parliament (only seventeen MPs) and the nature of the voting system mean that the Liberals probably have some chance of regaining office at the next election in 2004. Meanwhile Labor struggles at a federal level - it has not recovered from its 2001 election loss when, as we noted earlier, it had looked set to beat John Howard's Liberals and been drowned by the tsunami of Tampa and the politics of fear and xenophobia. Much is beginning to be made of this paradox. The Financial Review has editorialised that if it were not for John Howard's 'outwitting Labor so effortlessly on immigration and Iraq', then the Liberal Party would be sustaining'serious damage'.' But is the paradox simply due to a confluence of events, the political cycle being in tandem across the six states and two territories in a way that is merely an extension of 1991? Or is there something deeper here? The Financial Review editorial writer thought so when he noted that it may be that voters are comfortable with state Labor governments because their track record on 'buses and trains, schools and police' is better than that of the Liberals, but that at the federal level voters prefer the perceived strength of the Howard-led Liberals on national issues such as immigration and defence. This analysis is similar to that which became fashionable in the US when George H.W. Bush won the 1988 presidential election the third successive Republican White House success. Voters, some commentators said, were reflecting a new equilibrium - the Democrats controlling the spending powers in the Congress and the Republican presidents sabre-rattling on the international stage, looking after the superpower status of the US. That analysis proved to be wrong only six years later when Democrat Bill Clinton was halfway through his first term as President and Newt Gingrich led the Republicans to a decisive victory in the House of Representatives.

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Politics in democracies moves quickly and what one writes today can be overturned by a single election or even by-election result. But with this caveat in mind it is still worthwhile analysing why it is that the eight Liberal leaders around Australia all wish they were John Howard, and why Simon Crean wishes he were one of the eight Labor premiers and chief ministers. After all, in the case of both the Liberal and Labor parties, much of their federal strength and weakness is drawn from the well of their state and territory party branches, and the performance of the party at state level can have a telling impact on its federal fortunes. Australia's history is littered with such examples. Gough Whitlam's 'crash through or crash' reforms, as he memorably termed them, of the Victorian branch of the Labor Party in the late 1960s constituted a key element of his modernising the ALP to enable it to win government in 1972, after twenty-three years in opposition. When the ALP government of the highly successful Queensland Premier Wayne Goss fell after it lost the Mundingburra by-election in 1995, it was a severe body-blow to the Keating government, which was facing an election in early 1996. The replacement of West Australian Labor Premier Peter Dowding with Carmen Lawrence in early 1990 was a step taken to bolster support for the ALP in the forthcoming federal election that year. And as John Howard no doubt recalls, the chronic undermining of his leadership ofthe federal Liberal Party from 1985 to 1989was driven by Victorian Liberal heavyweights such as Jeff Kennett and others barracking for Howard's great rival of the period, Andrew Peacock.

From the Liberal Party's perspective, it today exists in a surreal world. As we noted, it is experiencing a new Menzian age in Canberra due to its exceptional political strategies, and to the tenacious and ruthless leadership of John Howard. Howard has no peer among his state or territory colleagues. Gone are the days, such as in the early 1990s, when the Liberal Party talked openly about drafting state leaders such as Nick Greiner of New South Wales to lead the federal party. That desperate dialogue is becoming the province of the Labor Party - Queensland's Peter Beattie and New

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South Wales' Bob Carr are now the favoured ones when Labor has its talent-quest discussions. But how worried should the Liberals be about this surreal state of affairs? The answer to this depends on the results that emerge when the magnifying glass is applied to each state and territory branch of the party to determine the cause for its current weakness. And, perhaps as importantly, it depends on the nature of state government. Take New South Wales, for example. The Liberal Party is as strong federally now as at any point in its history. It holds twenty-one seats out of fifty. This is the inverse of the position the party faced after the 1993 federal election, when it held only eight of fifty seats, and yet was in government in New South Wales. After the March 2003 state election, the Liberals remain in opposition with only twentyseven seats in the ninety-nine-seat Parliament. In Victoria, the paradox is even more pronounced. There, as we noted, the party holds only seventeen state seats in a Parliament of eighty-eight, but holds fifteen of thirty-seven federal seats. And in Queensland, the situation for the Liberals is decidedly bizarre - three seats in the state Parliament but fifteen of twenty-seven federal seats. In South Australia and Western Australia the federal Liberal Party has been remarkably successful since 1996, despite losing office in the state sphere since then in both jurisdictions. In the latter, the party holds eight of fifteen federal seats and in the former, nine of twelve. Only in Tasmania are the state and federal stars in alignment. The state Liberals have only seven members in the twenty-five-seat House of Assembly and not one of the five federal seats. In seeking explanations for this seemingly extraordinary set of numbers and what it means for the Liberals, it is worth examining the nature of state government and why it is that the politics of the states seems to have an established rhythm that probably means the Liberals have no cause to panic yet.

One of the giants of Australian political science was Melbourne University's A.F. Davies. Davies, writing in 1960, provided a description of the nature of state politics that remains as true today as it did more than forty years ago. It is 'overwhelmingly adminis-

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trative', he observed.2 And just to prove the point Davies went on to comment that 'the most important economic decisions of the state Government ... [are] those concerning the distribution of resources in the public sector'.3 Twenty-six years after Davies' remarks, another prominent political scientist, Brian Galligan, wrote that state politics are 'parasitic on economic conditions', and that state politicians are 'promiscuous in their pursuit of popular support'.4 While state politicians may not go so far as to sleep with the enemy, Galligan rightly pointed to the fact that they 'will embrace the past proven styles and policy stances of their opponents'.5 It is inevitable in the federal governance structure of Australia that such unflattering descriptions of state politics should be so apt. The Commonwealth controls the major economic levers and is itself to a large extent now captive of global economic trends. Since the 1920s, and particularly since the Curtin and Chifley Labor governments of the 1940s, the Commonwealth has assumed a strong strategic role in policy areas such as health, education, transport, trade and energy. It has achieved this dominance because of its much greater revenue-raising capacity and the imposition of a fiscal federalism, which involves the states being dependent on the Commonwealth for grants in key policy areas such as health - even now, despite the goods and services tax providing direct revenue streams to the states. Thus, as a former federal Liberal Party leader once told me, state politics is 'politics through a drainpipe'- another unflattering description to add to the Davies-Galligan collection. But the managerial and administrative nature of state politics, coupled with its closer proximity to the community, makes it a hazardous business. When schools and hospitals are closed, trains don't run on time and crime rates get out of hand, the voters have a habit of turning on their state politicians in an unforgiving way. It does not matter that the macroeconomic conditions are humming along very nicely and that unemployment is low - voters know that their state politicians are 'economic parasites', but they also know that the job of the politicians is to ensure that the daily life of the voters is made easier. Nick Greiner, who justifiably prided himself on policy reformof the New South Wales public sector, nearly lost the 1991 state election

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to Labor leader Bob Carr. Greiner had been in office only three years, but the number of school and hospital closures and train lines being eradicated counted heavily with the voters of New South Wales and they let Greiner have it at the ballot box. South of the border, the most dominant political figure in Victoria since the long-serving Premier Henry Bolte, Jeff Kennett, lost office to the little-known Labor leader Steve Bracks in 1999. Kennett is widely credited with having restored Victoria's economic fortunes after they had taken a huge nosedive under the Labor governments of John Cain and Joan Kirner in the early 1990s. Yet in areas outside of Melbourne, Kennett paid the price for his perceived neglect of the 'bush' - again it was the symbols of community relevance and pride, schools and hospitals, that the Kennett government closed in these areas. Kennett was governing in benign macroeconomic conditions for most of his term, and Victoria's employment and investment growth was strong. Kennett also provides another insight into why Davies and Galligan are so right in their descriptions of what it takes to be the leader of a state in Australia. Jeffrey Gibb Kennett was a highwire act - like Paul Keating he dared to think and act 'outside the square'. He was totally dominant of his party room and Cabinet. Kennett's election campaigns were presidential in style, culminating with an advertisement slogan in the 1999 election of'Jeff F—ing Rules, OK!' But while other premiers dominate their party and Cabinet New South Wales Premier Bob Carr and his Queensland counterpart, Peter Beattie, for example - Kennett's dominance was reflected in the community's eyes in a decidedly flamboyant way. It was not an 'administrative' dominance, as A.F. Davies might have put it. Rather, Kennett sought to create an image of himself as a global player who just happened to be running a state government. This was the Premier who, while in Greece, offered his thoughts on an international dispute involving the Greek and Macedonian authorities. This was the leader who was on the front cover of a fashion magazine looking every bit the clothes horse. It was an image of authority and dominance that does not appear to have sat easily with the electorate. Kennett's successor, Steve Bracks, is a polished but conservative premier - the antithesis of Jeffrey Gibb Kennett. So if the Kennett model of state-government leadership is ultimately flawed for the reasons we have set out, is there a formula that

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brings long-term success? Let's head back to Davies and Galligan in the administrative and parasitic nature of state politics and the capacity to steal one's opponents' best features it seems there is such a model. A state political leader who runs a tight budgetary ship, but who ensures that schools and hospitals work efficiently but responsively to their community, and that the trains and buses do their job of getting people from point A to point B most of the time, and who talks tough on law and order and panders to the police union's demands of good pay and more resources - this is the very model of a successful state premier. Do all that, and ensure that jobs are created through major infrastructure projects and symbols of community pride such as concert halls, sporting fields and new roads, and the electorate will reward you at the ballot box. This is the formula that Labor leaders relearned in the 1990s, after their predecessors had abandoned it in the 1980s when the lure of the newly deregulated, open Australian economy that Bob Hawke and Paul Keating created infected even sober leaders such as South Australian Premier John Bannon and Victorian Labor leader John Cain. As a result, state Labor governments in Western Australia, Victoria and South Australia ended their decade-long terms in the early 1990s in tatters. Their reputations as sound administrators had collapsed along with their economic interventionist creations - the Victorian Economic Development Corporation, the State Bank of South Australia, and Rothwells Merchant Bank in Perth. The beneficiaries of this mess were the Liberals in each of these states, so that by 1994 the Liberal Party was in government in every state and territory of Australia, bar Queensland. Labor was in government federally. It was a state of affairs that makes the current paradox less remarkable. The Liberal governments that were in office in 1994 returned to Davies' and Galligan's formula, in part, as in the case of Victoria with the redoubtable Jeff Kennett, or in whole. The governments of West Australian Richard Court, Tasmanian Ray Groom, South Australians Dean Brown and then John Olsen were all cut from the same cloth. Fiscal prudence, measured reform and a strong focus on the bread-and-butter issues of transport, health, education, and law and order. There was nothing spectacular about any of these

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three leaders or their governments, but after the tumult of the late 1980s and early 1990s this was in tempo with the electorate. The Labor bosses that run the state and territory 'shops' today are essentially wearing the same clothes as their Liberal predecessors. The rhetoric might change, the emphasis on health and education might seem greater, but they are administrators and economic parasites just like most premiers before them. The Davies-Galligan prescription is now taken daily by eight state and territory Labor premiers and chief ministers, without exceptions. Swap South Australia's Mike Rann with Tasmania's Jim Bacon and would the people of those states be any the wiser? The answer is probably not. The same swap could be done right around Australia and the answer would be the same. This is a group of leaders who make themselves as small a target for opposition as possible. This group will not touch any issue that smacks of genuine controversy. Refugees, the republic, abandoning the tough law-and-order rhetoric - these are all too hard for the 21st-century Labor premiers. (In fairness to Queensland's Peter Beattie, he has announced his intention to democratise the selection process for state Governor, but he is the exception proving the rule, with Jim Bacon ruling out any such move a week later.) The other characteristic of the 21st-century Labor premiers is the iron grip that each has over the party - like John Howard at the federal level, the premiers tolerate little or no dissent. This makes it even more difficult for the Liberal oppositions to lay a glove on Labor at the state level. And this last fact is in contrast to the experience of Liberal premiers of the 1990s. Nearly every state Liberal government suffered from chronic disunity or parliamentary obstruction. Victoria again was the exception - Jeff Kennett dominated his party and had control of both houses of Parliament. But in Western Australia, Richard Court's rivals were visible constantly in the last years of his premiership. In South Australia, Dean Brown's rival, John Olsen, stalked the former until he took the leadership from him in 1997, and in Tasmania Ray Groom led a team in which former leader Robin Gray held considerable sway. John Fahey in New South Wales controlled neither the Lower House nor the Upper House. In short, despite the relatively good management and administrative records of these leaders, the cancer of disunity

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wiped out much of that record and the voting public was left with the impression of the Liberal Party as a poisonous lot incapable of governing. That disunity stays with the party around much of Australia today. In South Australia, for example, the leader of the state Liberal Party, Rob Kerin, is being stalked by ambitious frontbenchers. In Western Australia the leadership of the acerbic but extraordinarily talented Colin Barnett is continually speculated upon by that state's factional heavies. In Tasmania the new leader, Rene Hidding, is in the gun for daring to suggest that the entire party rank and file rather than a small committee should preselect senators. And in New South Wales and Victoria, men who both have the burden of thumping election losses on their CVs lead the Liberals. The perceived disunity of the state Liberals in their parliamentary and extra-parliamentary wings is not only a handicap to their effort to present a serious alternative to Labor, but is also draining of effort and resources. In Victoria the aftermath of the disastrous 2002 election loss was reverberating into early 2003 with a bitter battle for the presidency of the party between supporters of the former party president Michael Kroger and deputy leader of the federal party Peter Costello on the one hand, and supporters of Jeff Kennett on the other. The extent to which such a bruising and continuing fight can impact on the parliamentary party was seen in April 2003 when the Teflon-coated Bracks government suddenly found itself coated in a substance that just might have stuck. The issue was roads - and the problem was that the Bracks government had to reverse an election promise not to impose a toll on motorists using a new freeway. Such an issue - a broken promise of some magnitude given that the freeway runs through Melbourne's marginal-seat territory was manna from heaven for the beleaguered leader Robert Doyle and his fledgling and demoralised team. But Doyle's attack was blunted not by the Labor Party's ruthlessly efficient team of spin doctors, but by Jeff Kennett, who announced to all and sundry that he just might make a comeback and run Victoria again. Just to assure the community that the Liberals have lost none of their renowned personal bitchiness towards each other, the Victorian party president, Helen Kroger, said of Kennett's comeback

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comments, 'I'd love to know if he's raised it with Felicity'(referring to Kennett's wife). And just for good measure, Kennett took a swipe at Doyle's leadership.6 And well he might have, because the Victorian Liberals are now at pains to reinvent themselves, a strategy that other state Liberals are adopting as they seek to make inroads into the Labor ascendancy. Doyle has told the Victorian people that the Kennett years are behind the Liberal Party and it's a new beginning. The Liberals are not just good economic managers, according to Doyle, but they are also decent environmentalists and educationalists. The Labor Party would say much the same thing, no doubt. Robert Doyle's renovations are just that - the structure of the Liberal Party has not changed. It is a party that in Victoria will still cut budgets in key service areas if it has to, sell off what remains of the public sector, and ramp up criminal penalties and police powers. In fact, Doyle said as much in a recent pitch to the electorate - under his leadership 'the Liberal Party will be a party of broad appeal. It will devise policy solutions for future generations'.7 Once again, no doubt the Labor Party led by Bracks would say exactly that too. Across Bass Strait, Doyle's counterpart Rene Hidding is promising that under him the Liberals will pursue a 'fresh, new approach to polities'. Like Doyle, he seems to be as focused on the Liberals being seen as genuine policy alternative as he is on being judged by the electorate on the role his party plays as a traditional Westminster-style opposition. One of Hidding's major plays is to take the lead on lifting the standard of behaviour of MPs in Parliament. Up to this point he has been true to his word, and it is the Bacon Labor government that is looking thuggish and negative in Parliament rather than the Liberal Opposition. Hidding's is a clever strategy in an age when the community's commitment to Parliament as a genuine forum of democratic discourse remains at a low point. Hidding has even produced a 10 Point Plan for his party that includes a commitment to 'fresh, new ideas', and to be a 'positive' opposition. In the other states and territories the Liberals seem to be prepared to do what an opposition traditionally does in the Westminster system - oppose the government, scrutinise its activities and hope

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to successfully milk any trip-up by the government for its own benefit in the polls. And in some states the chronic bitter divisions continue to plague attempts by the Liberals to renovate and renew their team. In South Australia, for example, the destructive factionalism that plagued the Brown and Olsen Liberal governments remains alive and well and prevents that party from effectively tackling the populist Labor Premier, Mike Rann. The right wing of the party, led by Howard-government minister Nick Minchin, relentlessly destabilises the party to assert control over who wins preselection and gets to share the spoils of office. In Western Australia the Labor government is haunted by the presence of disgraced leader Brian Burke to the point where Premier Geoff Gallop has now banned his ministers from meeting with the former leader. The government has raised a range of taxes and, because of a redistribution of seats, faces a tough battle at the next election, due in 2005. This has given the Liberal Party an outside chance of winning this election, but the party is still recovering from the vicious and highly personalised attacks of former leading light and ex-Senator Noel Crichton-Browne. A former minister, Doug Shave, who is backed by the hard right of the party, is also now talking of a comeback that could destabilise Barnett's leadership. In Queensland the party is ridden by factionalism - again driven mainly by the right-wing warriors. And the party's leader faced down challengers at a Liberal Party Convention in late 2002 on the issue of branch stacking. Things are looking up for the beleaguered Bob Quinn, however, because he has managed to secure a coalition agreement with his young National counterpart, Lawrence Springborg. At least the Liberals have an ally now in their fight against the ever-popular and politically agile Labor Premier, Peter Beattie. The Tasmanian Liberal Party is locked in a mortal conflict between Rene Hidding and his reformist grouping and the Christian right faction of federal MPs Eric Abetz and Guy Barnett - 'mortal' because in the end someone's career will nosedive when this conflict ends. And in the state from which all the federal leaders came until Bill McMahon beat John Gorton in 1971, Victoria, the right wing of the party has taken over the non-parliamentary wing. 'A plunge to the

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What's Wrong with the Liberal Parly?

right' was how one party official has described the assumption of the presidency by Helen Kroger, the ex-wife of the reformist leader of a decade ago, Michael Kroger. Ironically, Mr Kroger is now married to a daughter of another former federal leader and the darling of the progressive wing of the party - Andrew Peacock. Note that it is the right wing of the Liberal Party that is driving the destabilisation in state branches. Right-wing Liberal Party faction leaders tend to be tough, ruthless political operators who have within them a fair capacity to hate and loathe - much like the notorious right wing of the New South Wales Labor Party. The national leaders such as Senator Minchin and his fellow Howard-government minister Tony Abbott spend much of their time manoeuvring and plotting in their state branches. For them the battle is about not only ideas, but also raw political power. And they tend not to be sentimental in their exercise of power. Abbott, for example, was a key figure in attempts to defeat the former Premier of New South Wales and federal MP John Fahey when the latter faced a preselection fight with colleague Alby Schultz. The instability that currently plagues Liberal Party branches in many states is not necessarily fatal. Political parties that are in opposition tend to squabble. The Victorian Labor Party had three leaders during the time Jeff Kennett was Premier, and in the eight years of Richard Court's premiership in Western Australia Labor had four leaders. Being in opposition creates frustration and constant opportunity for rivalry. Those who control the factional games in the Liberal Party believe, albeit often misguidedly and in no different a way to their equivalents in the Labor Party, that if they control the party's destiny then the return to office will be assured. The question about the factionalism is whether or not it is simply seen by the voters as part of the normal parrying that political parties indulge in when in opposition, or whether it gives the appearance of a rotting carcass. It also depends on the performance of the government. In Western Australia, for example, the Liberal Party looks a likely thing for the next state election because of Labor's 'Burke' problem, to which we referred earlier. This is despite the West Australian Liberal Party hardly being one big happy family. And what of the impact of factionalism and division on the federal Liberals? It appears generally to be very little - except perhaps in the state of Tasmania, where the blood-letting has been so per-

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sonalised and constant that it can be said to have handicapped any chance the Liberals had of winning House of Representatives seats in the 2001 election, despite Labor having performed poorly elsewhere in Australia. But if we look at the number of federal Liberal MPs in New South Wales, Victoria, Queensland, Western Australia and South Australia, the paradox of strong federal performance alongside weak state performance holds true. As mentioned, Queensland is the most remarkable example of this - three state MPs but sixteen of twenty-seven federal members. John Howard has suggested that the state Liberals need to recruit from outside party ranks if they are to regain office. He told the Liberals' National Convention in June 2003 that the fact is that if we are to win back state office from well entrenched state governments, you need people who've got local community appeal, irrespective of their previous association with the Party because as the years go by, incumbency becomes more important, it becomes more important where the ideological intensity of the debate is less significant. And that is particularly the case, it's the case with all politics now, but it's particularly the case at a state level. State politics is less ideological; it's more about the quality of service delivery and management than it is about ideological differences. So that means that more and more getting rid of incumbents is harder and harder and that's been demonstrated around the place.8

The bottom line, however, is that it seems the federal Liberal Party can prosper without strong state performances. The voters are clearly differentiating the federal Liberal Party from the state parties. Even in New South Wales, where the Liberals have been out of office for eight years and look like staying out for at least another four, the impact of having a strong Liberal Prime Minister gives the party machine energy and capacity to deliver at federal election time.

Finally, there is the question of whether or not the current paradox really matters. We suggested that state politics seems to have rhythm about it that means one major party or the other will be in office for eight to ten years and then it will turn over because governments

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Table 6.1 State governments by party in office, 1983 to 2003* New South Wales Labor government (in office since 1976) 1983-1988 1988-1995 Liberal-National government 1995Labor government Virtoria 1983-1992 1992-1999 1999-

Labor government (in office since 1982) Liberal-National government Labor government

Queensland 1983-1989 1989-1995 1995-1998 1998-

National government (in office since 1968) Labor government National-Liberal government Labor government

Western Australia 1983-1993 Labor government 1993-2001 Liberal-National government 2001Labor government South Australia 1983-1993 1993-2002 2002-

Labor government (in office since 1982) Liberal government Labor government

Tasmania 1983-1989 1989-1992 1992-1998 1998-

Liberal government (in office since 1982) Labor-Green Accord government Liberal government Labor government

' We have not included the Northern Territory or Australian Capital Territory here. Labor was elected in the Northern Territory for the first time ever in 2001, and the small Parliament (seventeen seats) and the voting system of the Australian Capital Territory make a meaningful comparison between it and the states difficult.

become tired or arrogant or scandal prone - or an unfortunate combination of all three. If one looks at each state since 1983 - the year Bob Hawke won federally for Labor - then this observation appears to hold water. Table 6.1 illustrates the point for New South Wales, Victoria, South Australia and Western Australia. Tasmania seems to be falling into the pattern at a later point, and in the case of Queensland it's too early to tell, but if we assume that the Beattie Labor government is re-elected in 2004 then the rhythmic cycle might be said to be establishing itself in that state.

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Patience is a virtue, they say, and for the state Liberals it is an aphorism that should be writ large on the walls of their various headquarters. It is better than hitting the panic stations and chopping and changing leaders, as has been the party's wont to do when it is out office. The rhythm that appears to have become natural in this 'administrative' political sphere will again deliver eight to ten years of government for the Liberals when the voters tire of Labor's management of their schools, roads and hospitals.

Chapter 7

Alter Howard?

When John Howard is leader of the Liberal Party no more, he will leave behind him an extraordinary legacy. John Howard's imprint on the Liberal Party's philosophical and political outlook and modus operandi at the federal level can be legitimately compared with that of Menzies. At the beginning of the 21st century there is no debate, literally, about the party's future ideological bent - it is decidedly socially conservative and economically free-market, and its social liberal wing is all but mute. Its political practice continually involves the protection of its new territories and the One Nation sympathisers. John Howard has shown a preparedness to tap the fear in the Australian electorate about the continent's physical isolation and consequent mythical vulnerability. Howard ruthlessly and emphatically portrays his opponents on the left as being 'out of touch with ordinary people'. The extent to which Howard has captured the hearts and minds of senior members of the Canberra press gallery is evident in these two citations from Dennis Shanahan and Paul Kelly of the Australian newspaper. Shanahan, writing after Howard's fearbased 2001 election campaign, said that Howard had the opportunity to take the Liberal Party to a place that would make it a 'greater party than that envisaged by Robert Menzies'.1 In John Howard, Shanahan told his readers, the Liberal Party has a leader 'who appeals to rural voters, blue-collar workers, older Australians and those living in and around rural towns', and what makes the Liberal Party's transcendence into a party that can represent more of Australian than ever before is that Howard is a 'creature' of the Liberal Party. Howard understands the Liberal Party's 'mechanisms and power perfectly'.2 84

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Shanahan's colleague, Paul Kelly, is equally smitten with Howard these days. Writing just as the dust was settling on the war in Iraq in early 2003, Kelly noted that Howard is getting stronger in his third term, when leaders are supposed to weaken. It is time to assess the new governing model in operation because the keys to Howard's success are obvious but too often unremarked. They are a conviction leadership, defined as a leader with beliefs that the public respects; a policy unity within the cabinet on the main issues (Iraq, refugees, economic and social policy) unmatched over time by any federal cabinet since that of Menzies; containment of the leadership issue (Howard vs Costello) from the public arena; the rise of Howard as a war leader (Afghanistan and Iraq) with its igniting of patriotism; the return of national security and foreign policy to the agenda; ongoing economic growth and prosperity; and an Opposition moving to the Left to find its philosophical moorings. This is another world from Howard's first term in 1996-98.3

High praise indeed! And just in case the munificence of Shanahan and Kelly towards Howard might be said to be in some way reflective of the views of Rupert Murdoch (the proprietor of the Australian and, like Howard, a strong supporter of the US-led war in Iraq) on the Australian political landscape, then here's a colleague of equal measure to Shanahan and Kelly, Michael Gordon, who writes for the Fairfax-owned Melbourne Age. In Gordon's view, 'the political warrior [in Howard] who once dominated his public persona has largely given way to the statesman. Partly this is because of the backdrop of insecurity. Partly it is the political cycle, with no election due for two years. But it is also Howard giving the public what he senses they demand'.4 It is worth observing that the Canberra press gallery once treated John Howard with the same contempt that his Labor counterpart, Simon Crean, has received since he became Opposition leader at the end of 2001. For Howard, the sanctification by the Canberra gallery has come just when he needed it most - in his third term as Prime Minister and in the year of his sixty-fourth birthday, just at the time

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What's Wrong will) the Liberal Party?

in the political cycle when leadership speculation begins to take root seriously in the corridors of Canberra's Parliament House. Howard has been able to take advantage of a set of circumstances that he has partly manufactured - a series of events that enable him to play on insecurity in the psyche of the Australian people. The Tampa crisis, entirely manufactured by Howard and his government, got the Liberals out of a political black hole that saw it heading to a defeat in the 2001 election. Then along came the events of September 11, the Bali bombings in 2002, and the war on Iraq in early 2003: all events where governments could shine and opposition parties get drowned out; all events where John Howard could demonstrate to the electorate that he is a strong leader prepared to take tough and unpopular decisions to protect the security and interests of Australia; and all events where Howard was able to demonstrate to his One Nation sympathisers that he is not a hostage to Asia and that he wili do what it takes to secure the 'way of life' that these voters believe is under threat from Asians, asylumseekers and any other group that does not fit the Anglo-European stereotype. In times of international crisis, particularly where Australia is seen as directly involved through participation in armed conflict or where it faces a threat (as some argue it does today, in the form of terrorist attack), fortune favours the strong leader. John Howard falls into that category in the public's mind. Howard is a familiar face to Australians - he has been their Prime Minister for seven years, and they have known him for more than twenty. To the Australian public, Howard remains an earnest and dogmatic leader who believes in his cause and prosecutes it with vigour, even when it's not popular. This is the man they want as leader of the nation in turbulent times. In the electorates that turn elections these days - those in middle Australia and in regional areas - Howard's message of security and familiarity has definite resonance. John Howard is on their side when it comes to protecting their version of Utopia. And in being such a leader, Howard has provided the expectation for many voters in these electorates that the Liberal Party is now their home. This has major implications for future Liberal leaders.

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Despite John Howard's announcement on 3 June 2003 that he intends to stay on as Liberal leader indefinitely, he of all people knows that 'every dog has its day' and the end for him is near. It may be in a year, or two years, but it will come. As that wonderful antihero of the British political drama series House of Cards, Francis Urquhart, says of the demise of Margaret Thatcher, 'Nothing lasts forever'. There is also the danger of Howard being too hubristic and wanting to hang on to leadership for too long, and in Costello being forced to wait - history is littered with examples of such conduct leading to periods of electorally damaging instability for parties. As Griffith University's Paul Williams points out: It's expected that political parties intent on building for the future must groom their leadership heirs well in advance. But a party with a leader waiting too long in the wings can be as damaging as having no prepared successor at all. Too long a wait can breed resentment between the incumbent and the heir apparent, and between their respective power bases. Resentment can quickly turn to friction and, before long, a divided party results.5 Williams cites the infamous Kirribilli Agreement between Hawke and Keating, which came unstuck and led to trench warfare for the Labor Party through most of 1991, until Paul Keating finally defeated Hawke in December of that year. On the conservative side of politics, Joe Lyons' failure to act on a musing to Robert Menzies that he would stand down as Prime Minister in 19366 helped sow the seeds of the destruction of the United Australia Party by the time Menzies eventually became leader in 1939.

No doubt John Howard, who is a cautious and astute reader of the lessons of political history, is acutely aware of how a managed transition needs exquisite timing if it is to strengthen a party that has been in office for as long as the Liberal Party has at the federal level.

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Until 1990, when John Hewson took over the leadership of the Liberal Party, the federal body had been embroiled in leadership tensions for approximately seventeen of the then forty-six years of its existence. Two periods, 1966 to 1975 and 1981 to 1990, were particularly debilitating for the party in this sense. The cult of personality in the Liberal Party would be responsible for these tensions, as would the lack within the party of the institutional structure of factions, which keeps the Labor Party in some sort of leadership balance for many years. The issue of the 'cult of personality' stems from the very formation of the Liberal Party. After all, this was a party that had been the creation of an individual who then dominated it from 1944 until 1966 - Robert Menzies. It was Menzies' leadership that regrouped the dispirited and directionless handful of MPs remaining in the United Australia Party after the 1943 federal election and lured them into the Liberal Party. It is also true that, from the 1949 election victory that saw the Liberals in office until 1972, Menzies dominated the leadership of the federal party in a way that discouraged factionalism. The Menzian practical view of leadership vested enormous prestige and power in one individual. The personal traits of the leader in this setting were all-important. If the leader was popular, acted with guile and won elections, then he was adjudged a success by the Liberal Party of Robert Menzies and gained respect within it, which provided him with extraordinary powers of patronage and leverage. Skill in policy formulation, while important, was a secondary consideration. And to be deeply ideological was downright stupid. The demise of leaders such as John Gorton, Bill McMahon and Billie Snedden was based on their capacity, or lack thereof, to stamp their authority on the federal Liberal Party and to command respect among their colleagues - in other words, to be perceived to be electorally successful. In generic terms, what are the characteristics that a successful leader of the federal Liberal Party will possess? According to Howard-government minister and former academic David Kemp, the Liberal Party can be fairly accurately characterised as a 'leadership party'. In Kemp's view, the office of leader of the federal Liberal Party is one that has attached to it an 'authority of extraordinarily broad scope'.7 But he notes that the party also 'takes a very instrumental view of the leader - he is elected by the party room to do a

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job - to ensure effective government and electoral victory. If he falters he may be dismissed and replaced'.8 The federal Liberal leader's position, according to Kemp, 'is compatible with a party which locates the policy making function in parliament'. This is important because it means it's easier to 'secure the commitment of people' to decisions, and enables a greater degree of policy coordination than in Labor. In Kemp's opinion this 'monocratic' form of organisation works when a leader can be found to make it work. Kemp cites other characteristics of Liberal Party leadership. A Liberal leader must not be autocratic, for if they are, they risk 'creating an oppositional group' that will prove distracting to a leader who should be focused on policy and on fighting political opponents. Therefore, Kemp argues, there is 'a strong pressure on the leader to seek accommodation and to attempt to give voice to as wide a range of party concerns as possible'. But policy 'success remains essential'. In fact, as long as the position retains authority it can be 'a source of decisive movement in national policy'.9 To these fundamental attributes it might be added that the personal idiosyncrasies of a leader in the Liberal Party are also tolerated to the extent that those very individual characteristics don't affect the party's standing in the opinion polls. But the moment they do, as John Gorton discovered in 1971, these personality features will become the focus of attacks by a leader's rivals. It was Gorton's perceived lack of mental discipline, as well as his alleged inability to be interested in or take command of parliamentary and bureaucratic policy development, that helped to undermine his leadership.10 John Howard fits the Kemp prescription. He has won three elections for the party and is now in an unassailable position as leader. Howard dominates the Liberal Party and has used that authority to push a policy platform that has shifted the party substantially to the right in a clear and unambiguous way. He has unified the party behind him for a length of time that has not been achieved since Menzies' day. Of course, it is questionable whether, given the complexity and sophistication of debates and issues confronting Australia in the 21st century, such comprehensively passive unity is actually desirable. In my view, however, Howard is utterly flawed in one area. Whereas Kemp recommends 'accommodation' on the part of the leader towards the various philosophical strands of the party, on

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only a few occasions has Howard allowed this to occur. One notable example was on the issue of Northern Territory mandatory-sentencing laws where the liberal wing threatened to cross the floor of Parliament if Howard did not seek to override the Territory laws in some way. This flaw could become a fatal one if the party's electoral fortunes start to look grim. The Liberal Party, at the end of the day, is only interested in keeping a leader if that leader is able to give its members the hope that they will win elections. And John Howard, like Menzies and Malcolm Fraser, enjoys the support of his party primarily because he has done just that. The challenge facing future leaders of the Liberal Party will be no different. The electoral challenge Howard is leaving his successor is formidable. John Howard, as noted, will leave a legacy for his successors that is both a gift and a headache. It will be a gift in that he has presided over an expansion of the Liberal Party's voter reach at the expense of the National Party, Labor and One Nation. But it will be a headache in that having pursued the strategy of voter expansion to make the new territories more or less permanent and to keep the One Nation sympathisers on board, Howard has shifted the Liberal Party well to the right of the political spectrum. The party he hands over to his successors is one that bears little resemblance to the one that Menzies envisaged in 1944 - it no longer 'walks down the middle of the road'. The easy way to retain the electoral attention of Howard's expanded voter base of blue-collar voters, lowerincome white-collar voters, and rural and regional voters is to assume more of the populist conservatism that Howard has engaged in over his term of office. Pandering to these voters' fears and keeping them chronically insecure about social and national change has been Howard's strategic trump card. This will prove a headache if the party's liberal wing decides to take the opportunity to reassert itself when Howard departs, and will cause pain to any leader whose inclinations are more liberal than conservative, or who depends for support on the liberal wing of the parliamentary Liberal Party.

That future leader still might well be Peter Costello. Prior to the 2001 federal election victory and the international events that have

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played to Howard's strengths, the liberal wing of the federal parliamentary party was talking up Costello's candidacy for leadership of the Liberals. Until Howard's announcement on 3 June 2003 that he would remain leader, it had been assumed that Costello would be the next leader of the Liberal Party and might even lead it into the next federal election, due in late 2004. It was not so much an assumption as a fact, after Costello's would-be rival, former Industrial Relations and Defence Minister Peter Reith, retired from politics and was dispatched by his political patrons to a secure European banking job. But now a real rival to Costello is in the wings - the right-wing warrior about whom we spoke in the previous chapter, Industrial Relations Minister Tony Abbott. None of this is to say that others might not emerge from the ruck in a post-Howard context - most frontbenchers have the 'fieldmarshal's baton in the rucksack', as Paul Keating was fond of saying. The former Liberal leader and now long-serving Foreign Minister, Alexander Downer, is one who is spoken of in these terms and who has his supporters in the federal party. Yet it seems unlikely that the end of John Howard's premiership will result in a'knock 'em down, drag 'em out' struggle of the type that marked the Hawke-Keating battle of 1991. John Howard wants to ensure that his party is as powerful as possible when he leaves. The best way to achieve this is to have a Menzian transition to his deputy - that is, no race for the leadership, just a formal vote by the party to formalise the transition. As from Robert Menzies to Harold Holt, so from John Howard to Peter Costello or Tony Abbott. If Howard manages this it will be for the first time since that previous transition in 1966. And it could be argued that John Howard would love nothing more than to leave office having anointed his successor and seen him into office with none of the grasping and unseemliness that goes with a formal party-room ballot, in which anything can go wrong. But politics is rarely simple, and in the case of John Howard it never is. Howard is a cultural warrior and he has managed to turn Australia in the direction he wants it - into a decidedly European outpost with strongly British traditions, joined at the hip with the US, and just happening to be in Asia. This is also a nation that has no need to apologise for its past sins, and one in which the principle of mutual obligation underpins each and every transaction

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between the individual and the state, regardless of circumstances. Personal responsibility is the hallmark of John Howard's view of society. This description of Australia gels with the Liberals' expanded constituency, and John Howard wants to ensure that his political legacy and the Liberal Party he has transformed remain as they are for as long as possible. He has spent the best part of his adult life painting this canvas and now that it is complete he wants the party faithful to revere it and hold it aloft as the unifying picture of the 21st-century Liberal Party. Yet the man it has been widely assumed that Howard wants to protect this painting and what it represents is on the record as being more than a little uncomfortable with key aspects of it. Peter Costello supported the 'Yes' case in the 1999 republic referendum, walked in the 2000 Indigenous Reconciliation march, despite a request from Howard not to do so, and has rightly focused the nation's attention on our need to engage with nations in the Asia-Pacific region. The distinction between Costello and Howard on reconciliation, for example, is quite pointed. Costello told a journalist during a doorstop interview in December 2000 that the important thing is to keep that sense of goodwill and to ensure that there's unity and the debate doesn't polarise between extremists on the left and extremists on the right. And to make sure that we go forward, particularly with practical reconciliation. There's still so much to be done in areas of health and housing and improving living standards for indigenous people. That this is where a Government can make a very direct contribution.11

Note he does not rule out the possibility of a government one day tackling the need for symbolic as well as practical reconciliation, through a formal apology. And he wants the issue to be one where unity and not division prevails - a contrast to the current situation where Howard's point-blank refusal to consider a formal apology is the constant source of friction between his government and indigenous leaders. On Asia, Howard has used the tragedy of the Bali bombings to his political advantage by stressing his commitment to achieving

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greater security for Australia. He has argued the case for pre-emptive strikes on countries in the Asian region if Australia felt its security threatened, and suggested that the death penalty would be an appropriate punishment for the perpetrators of the bombing. Costello focused on the need for greater and continued Australian involvement in Asia. Speaking only days after the Bali bombings, Costello spelt out this unambiguous message: Australians are enmeshed in the rich tapestry of Asia, as Asia is an increasingly important influence on Australia. Moments of crisis highlight our common destiny. In 1997 it was a financial crisis. Today it is a human tragedy. At these points of crisis we must not withdraw. We must heighten our engagement and our cooperation. We must work together. Australia stands ready to do so.12 This is an interesting contrast in approach, to say the least, and if Howard supporters, and the conservative advisers that assist him the devising of the strategies to keep the current voter base, look at Costello's rhetoric and presumably inclinations on some of these totemic issues, might they feel a little panic coming on? Certainly, Costello has made it clear that he will speak out on issues of social policy now that Howard is staying on as leader. And the hints he has been giving are that he's likely to be more liberal than Howard. Costello told the Herald Suns Michael Harvey that he wants to focus on the middle-aged jobless, broken families, victims of drug abuse, and the disabled, rather than Howard's beloved home-owners.13 In other words, why is it assumed that John Howard wants Peter Costello, with this track record, to be his successor? There is a risk that Costello might return the party to the 'middle of the road'; that he might formalise a government apology to the indigenous peoples of Australia for past wrongs; that he might set in train once again the process for delivering an Australian head of state and ridding the nation of the Queen of England from our constitution; that he might re-engage with Asia by breathing new life in to the Hawke-Keating trade grouping, APEC, through reassuming a leadership role for Australia. However, against this is the fact that Peter Costello is a man not only of patience, but also of caution. Like

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Howard he is deeply political and a creature of the Liberal Party since his early 20s. Costello wants a long innings at the top of the Liberal Party and he is not about to throw it away by shifting the party radically away from the canvas painted by Howard. Peter Costello has waited a decade to assume the top job. That he has done so without making any real effort to topple Howard, or at least undermine his authority, since the latter has been Prime Minister says much about Costello's caution and strategic conservatism. Over the past seven years, Costello has been given cause to plot his ascension and to let his supporters assist that cause, most notably after the infamous leaked Shane Stone memo incident in the first week of May 2001. Stone, a former Chief Minister of the Northern Territory, is the federal president of the Liberal Party. He penned a memorandum to John Howard reflecting, he said, the views of federal Liberal MPs that met after the Liberal Party was defeated by ALP in the Territory election of February that year. (It was the first time Labor had ever gained government in the Northern Territory.) In the memo, Stone noted that the Howard government was viewed by the electorate as 'mean, tricky and out of touch'. Much of the blame for this state of affairs was laid at the feet of Peter Costello. There was speculation that the memo had leaked from the Prime Minister's office. The reaction of Costello (who was in Washington, DC, at the time the criticism was published in the Bulletin magazine) to the memo's contents was one of considerable anger - understandably. His supporters wasted no time calling for Stone's resignation as party president; New South Wales MPs Joe Hockey and Bruce Baird were prominent voices.14 Yet by the end of the week, Costello told journalists that Stone had apologised to him for putting the criticisms of him and the government in writing, and that so far as Costello was concerned it was the end of the matter. And it was. The memo had no impact in the lead-up to the October 2001 election. (Naturally, Costello, like most politicians, appears to keep a dossier in his mind of the slights and hurts he has suffered in his political life, and of who is responsible for each and every one of them. In February 2003 he complained publicly that Stone had not consulted him about his decision to seek another term as Liberal Party president.)

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As Costello ruminated on the events of 2002 and looked out at the twenty or so months leading up to the next federal election, it must have crossed his mind, and the minds of his supporters, that this was the home straight in the race for the leadership. But if they had such thoughts they did not last long, for on 2 January 2003 the well-informed political journalist Steve Lewis, of the Australian newspaper, had a story splashed across the front page in which a number of marginal-seat Liberal and National MPs were urging John Howard to stay on as Prime Minister at least until after 2004 election: The Coalition MPs - several holding knife-edge marginal seats - are for the first time calling on Mr Howard to defer any retirement plans to steer the nation through its current difficulties. This also reflects the widespread view among Liberals and Nationals that Mr Howard's perceived leadership strength is their best chance of holding tight marginals at the next election.15 Once again, Costello and his supporters sat tight and did little to alter this perception. In short, Peter Costello and his supporters, widely assumed to be almost the entire liberal wing of the party (Costello allegedly refers to himself as LOM, meaning Leader of the Moderates), have been prepared to play a waiting game. They have done nothing that impacts on the unity of the Liberal Party federally. Costello's caution and obsession with party unity has a point when one considers the Liberal Party's history from 1983 to 1996. During that time the party was perceived as divided and faction-ridden, and the record bore out that perception. There were seven leadership ballots and four leaders (two of whom, Howard and Peacock, were in that position twice during the period). It was also an interval in which the party lost five successive federal elections. Costello knows that division is death in politics. So are the liberals in the party pinning their hopes on someone who might end up disappointing them? The liberal wing wants to see the republic back on the agenda - or at least being talked about again. Some of that wing's most insightful and capable members MPs denied promotion by Howard, such as Victorian Petro

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Georgiou (whose electorate borders Costello's), Bruce Baird, and Senator Marise Payne of New South Wales - would like the leadership of the party to soften the hardline policies towards asylumseekers. Others believe that the underpinning of welfare policy mutual obligation - needs to be softened or become more flexible. And most would like to see the right-wing warriors such as the Finance Minister, Senator Minchin, and Tony Abbott having much less influence over moral issues and social policy. Given the positioning of the Liberal Party in the electorate, it will require courage on the part of Peter Costello to deal with at least some of these issues. He will have to explain to MPs who hold marginal seats in regional Australia, and suburban areas of the major cities, where the electoral benefit lies for them in pursuing indigenous reconciliation, the republic or improved ties with Asia. Costello will need to keep a close eye on the antics of people such as Minchin and Abbott - men of considerable ambition themselves, who no doubt see themselves as the Praetorian Guard of the Howard legacy. But above all, it must be remembered that Costello seems to run a mile from an issue if he believes that it will divide the Liberal Party. He has already dashed republican hopes by telling the media on Australia Day 2001 that another vote on that subject might be at least ten years away. He has said nothing of great moment on reconciliation since his highly visible support for it in 2000 and 2001. On the other hand, it has to be said that like that other long-serving Treasurer, Paul Keating, Costello wants policy debate that is focused well-beyond the next election. In the 2002-03 budget he produced what he terms an Intergenerational Report,16 a document designed to stimulate debate on the policy options facing Australia in the future, given our ageing population. And Costello does not buy the argument of the social conservatives that policies such as maternity leave should simply be introduced to increase fertility: 'In a society like ours where there are high levels of education for women and strong career opportunities, the fertility rate is likely to remain low'.17 Costello, like Keating before him, has shown he is not averse to taking on strong vested interests and the Australian electorate's inherent caution. His tax-reform package of 1998 - A New Tax

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System™ - ranked with Keating's 1985-86 efforts as the most comprehensive in this area of highly sensitive 'hip-pocket nerve' politics. And like Keating, who implemented the recommendations of the Fraser government's Campbell Inquiry when he came into office in 1983, Costello embarked on a financial-sector reform agenda after commissioning an inquiry by senior business figure Stan Wallis. Costello's track record as Treasurer shows him to be a politician who is by instinct a reformer and who is prepared to sell his reforms to a sceptical electorate. He is a politician who understands that good policy-making requires governments to take decisions now to ensure an affordable and socially cohesive society in a decade's time. Not everyone, however, thinks that Costello is leadership material - and while comparisons can be made between him and Keating, there are major differences in style and performance that are of serious consequence. Former Liberal leader John Hewson, who promoted Costello onto the frontbench as soon as the latter arrived in Parliament after the 1990 election, believes now that some people think Costello is bone lazy and that he is rarely prepared to risk exposure in public debates a clear attempt to keep his powder dry. He speaks publicly infrequently and comments on economic and other developments infrequently. It is instructive to compare Costello's meagre output of press releases, media interviews and speeches with Paul Keating's voluminous output when Treasurer.19 Hewson is not alone in doubting Costello's breadth of vision. Keating as Treasurer would largely confine himself to economic topics but there was usually a broader context to his utterances. The impression was always given that, as Don Watson puts it, the economic reform agenda pursued so vigorously by Keating in the 1980s was essentially shaping Australia's destiny, giving it a future.20 With Costello it appears as though reform of the tax system, the financial system or whatever else he and the Howard government pursue is in the name of keeping the economy ticking over. Yes, it's reform, but it doesn't have any of the drama and deliverance that characterised the Keating efforts - perhaps because Costello is essentially in territory where Keating has been before him.

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As Hewson also perceptively notes, Costello presents little to the nation that allows any curiosity about where he might take Australia if he became Prime Minister. Again, contrast this with Keating. Keating's restlessness, fascination with culture, and determination that Australia should punch above its weight in the world wherever and whenever possible meant that when he did finally become Prime Minister in December 1991 most of the nation knew that it would be in for a fast and furious ride. With Peter Costello we observe a man who is passionate about his family and his AFL club, Essendon, but we know little else. He did demonstrate extraordinary passion when he spoke on the republic at a function in late 1999.1 sat in the front row and was compelled by the energy and commitment, as well as the logic. Yet this seems an isolated incident. Costello has never ventured to differentiate himself from the hard-right rhetoric of his Prime Minister when it has really counted. On refugees he stands shoulder to shoulder with Howard in public - his rhetoric is equally unforgiving and fear-based, yet he knows that a consequence of globalisation is massive people movement and that simply putting up the shutters to this phenomenon is no solution. So far, when Costello has been presented with the opportunity to speak on matters outside of his portfolio he has failed to challenge and inspire. For example, aside from the economy, his main message in 2001 (and again in July 2003) was to encourage the spirit of volunteerism in Australia - no doubt a convenient strategy for a politician who knows that if he is Prime Minister he will need to find cheaper ways of delivering welfare to an ageing population. Now that Howard has announced he is not going anywhere fast, Costello has the opportunity to take the gloves off and deliver a series of statements, observations and strategies that set him apart from his leader. He and his supporters are promising to do so, but the proof will be in the eating of the pudding. Costello's reticence or laziness so far, however, makes it hard to answer the question - what would a Costello-led Liberal Party's ideological mooring be? Former Prime Minister Malcolm Fraser says he doesn't know if Costello is a liberal because he's yet to 'stand up for some issues'.21 Fraser is not the only one in that boat. Although, as we noted, the liberals in the federal party see Costello

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as a saviour who would at least allow them to breathe again, and perhaps even publicly argue their case, Costello will no doubt demonstrate the caution to which we also referred - party unity and trying to win yet another election will be his overwhelming priority. He might still become Prime Minister before the 2004 election, and if so, then this will be the case. Yet even if Howard leads the party to another victory, then such caution will remain the case because Costello might then be facing the challenge of winning a fifth consecutive election for the Liberals. Costello will inherit a poll-driven party that has hit upon a highly successful formula of fear politics and social conservatism to keep it in office. Weaning the Liberals off that potent drug would be difficult enough for a leader who is decidedly liberal and daring, so in the case of the cautious Costello it is a long shot.

When John Hewson took aim at Peter Costello in referring to the observation of others that he was lazy, he also made another salient point - that a Costello leadership is not guaranteed. Tony Abbott, he noted, will fight hard to attain the top job. Unlike Costello, he already gives speeches on foreign affairs, the constitution and refugees - none of which has any direct relevance to his current ministerial portfolio, Employment and Industrial Relations, or his previous portfolio, Employment Services. Because nothing is ever certain in the highly fluid world of politics, Hewson's observation is worth dwelling upon for a moment. It might become a reality if Costello, knowing that Howard has no intention of stepping down until well after a 2004 election victory, decides to quit politics something he has never ruled out to this point. An Abbott leadership is likely to be highly destabilising for the Liberal Party. In my opinion, Abbott's personality is abrasive, his enemies legion and his ideology firmly to the right, socially and economically. Abbott is a conservative Catholic and his politics reflect that. For Abbott there is good and bad, black and white, the deserving and the non-deserving. He is the closest thing to a Thatcherite in the Howard government. Like Margaret Thatcher's blunt and thuggish minister Norman Tebbitt, who once told the

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What's Wrong with the Literal Party?

unemployed to 'get on their bikes' because there is plenty of work out there if you want it, Abbott thinks there are 'job snobs' who are refusing to take decent employment because they think it's beneath them. And Abbott readily identifies with John Howard's political strategy, which seeks to divide lower-income earners into those that are deserving (they have jobs) versus those who are not (they don't have jobs). In January 2003 Abbott commented that in his view Labor was about 'making life more comfortable on social security', and that this 'fuels the blue-collar sense that modern Labor represents the welfare class ahead of the working class. Howard, by contrast, strikes a chord with traditional working people because he understands that battlers want a hand up not a hand out'.22 Abbott is also a hit with the think tanks that most overtly support the agendas of the right wing of the Liberal Party - the Melbournebased Institute of Public Affairs (IPA) and Sydney's Centre for Independent Studies (CIS). Both these organisations champion the free market, essentially distrust government, and support the concept of 'mutual obligation' in welfare policy. Abbott is their champion. He delivered the IPA's prestigious CD. Kemp Lecture in 2001,23 on the occasion of its sixtieth anniversary, and told this group that the Howard government's Work for the Dole program ended passive welfare in Australia. This is sheer hyperbole at its best, given that it was the Keating government's Working Nation program that first tried the carrot-and-stick approach to the jobless. But Abbott may seem almost fanatical when it comes to pet issues. He delivered the CIS's Bert Kelly Lecture in 2000,24 and again his target was welfare policy. Abbott cited Pope John Paul II, a noted conservative, to support the Howard government's devolvement of responsibility for job-seekers through the privatisation of the Commonwealth Employment Service (CES), and the Work for the Dole program, which relies heavily on community organisations. At the Conservative Breakfast Club in Brisbane on 7 September 200125 he told his audience that Work for the Dole is about all Australians pulling their weight - no mention here that the capacity of some people to pull their weight is severely limited by economic, social, mental or physical handicap. (His one-time boss John Hewson was once ridiculed for making a remark that

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offended those millions of Australians who rent their homes: 'You always tell the renters in the street, the fence needs painting and the lawn needs mowing'. The line was Abbott's.) The Brisbane speech should be enough to send severe and constant shivers down the spine of any liberal in the Liberal Party. In that speech, Abbott was at pains to point out that the Liberal Party under John Howard is conservative and liberal. But when it comes to the latter the conservatives like Abbott allow themselves the privilege of carving 'good' liberalism from the 'bad'. Here's what I mean: There are good 'liberal' arguments, for instance, for giving parents more choice about their children's schooling and mothers more choice about whether they go back to work. Still, this encouragement of religious schools and recognition of stay-at-home mums is also an acknowledgment of enduring social values. The liberal argument for over-turning the Northern Territory's euthanasia law was that human beings should never be treated as disposable commodities. But for many, the chief problem was the Territory's cavalier disregard of our culture's most powerful moral and ethical commitment to the sanctity of life.26 When choice is about conservative family values - mothers staying at home - or undermining the public education system, then that's what Abbott identifies as liberalism. But if it involves life choices such as euthanasia or abortion, then there is no room for liberalism. Tony Abbott is not committed to liberal thinking in any way he is a capital-C conservative like John Howard, and if he were to be leader of the party the liberal wing would face another leader who crushes their power.

Alongside the Abbott-Costello leadership dynamic there is the question of who the next generation of Liberal leaders are. It is a question that is not easy to answer at the federal level, given the stifling of public comment and debate that is the hallmark of the Howard government. When Malcolm Fraser led the Liberal Party from 1975 to 1983, young backbenchers were vocal and even

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crossed the floor. West Australian Peter Shack, and New South Wales former McKinsey executive Jim Carlton were two who fell into this category. Both went on to have high-profile frontbench careers in the party. When John Hewson arrived in Parliament in 1987 it was obvious from his media releases and speeches in the House that it was only a matter of time before he became shadow Treasurer. But now young backbenchers are, in the main, silent. They occasionally write comment pieces for newspapers, but these invariably parrot the government line. There is little evidence that they dissent in the party room. The one exception to this is New South Wales Senator Marise Payne. But Payne was dropped to number three on the Senate ticket by the right wing of the party at the 2001 election. The Howard-government frontbench contains little in the way of younger talent. Tourism Minister Joe Hockey occupies a junior portfolio and was found sadly wanting when he was Assistant Treasurer; the collapse of HIH took place on his watch. (It should be noted, however, that a subsequent royal commission into the collapse made no findings against him.) Queenslander Mai Brough, who holds the Employment Services portfolio, is rarely heard from. At the state and territory level the picture is equally bleak. New South Wales leader John Brogden is spoken of as a future Nick Greiner - both assumed leadership of the party in their thirties and lost an election before they became Premier (presuming Brogden reaches that position). But whereas Greiner made up valuable ground on the Labor incumbent Neville Wran in the 1984 election, Brogden did not do so on Bob Carr in the 2003 election. In Victoria, there appears to be little alternative to leader Robert Doyle. His deputy and leadership aspirant Louise Asher is a former Kennettgovernment minister and a party apparatchik since her teens. In Western Australia, Colin Barnett is intellectually miles ahead of his colleagues, and one person spoken of as a future leadership aspirant is the current MP for Kalgoorlie, Matt Birney, whose politics appear decidedly conservative. Birney is vehemently opposed to plans to allow teachers to talk to students about homosexuality, for example.27 In Queensland the Liberal Party has only three MPs, so its next leader is probably somewhere in the branches, and in Tasmania there is no alternative to incumbent Rene Hidding. Only

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in South Australia does there appear to be a bright star on the horizon, former party president Vickie Chapman, who is a highly articulate and intelligent contributor to the party. The Liberal Party's culture mitigates against the cultivation of leadership talent. This is a very hierarchical party and the leader has extraordinary power, particularly if they win elections for the party. The modus operandi of most long-term and electorally successful Liberal Party leaders, from Menzies onwards, has been to crush rivals, and these days to keep the backbench strictly acquiescent. It is a strategy that does the party no good in the long term - Robert Menzies sowed the seeds for the rapid decline of his party after he retired in 1966 because he adopted this method of control. And John Howard has perfected it by stifling his backbench.

Chapters

Meeting the Challenges: Have the Liberals Been Captured? If you want to get up a big political story in the media, then the weekend before Christmas is probably not the ideal time to do it. Most politicians are heading off for their summer break, and even for political junkies it's time to delve into the Christmas novel and put the feet up to watch the cricket or dive into the surf. But on the weekend before Christmas 2002, the Australian published an article by one of its most experienced Canberra writers, George Megalogenis, that should have been compulsory reading over the festive season for anyone with even a passing interest in the future of public policy in Australia and in how the Howard Liberals might deal with the policy challenges of the 21st century. Megalogenis analysed unpublished data from the 2001 national census, along with leaked polling material obtained from both the Liberals and the Labor Party.1 His findings confirmed that John Howard's Liberals had a political strategy of populist conservatism and an appeal to nationalism attacking 'political correctness' and 'special interest groups' along the way. The Liberal Party holds twenty of the fifty lowest-income seats in Australia. These are seats that range from Cowper in New South Wales, where 67 percent of families earn less than $ 1,000 a week, through to Forrest in Western Australia, with 52 percent of families in a similar position. The Nationals hold twelve such seats, Labor has only sixteen, and independents hold two. These are also seats where no more than one-third of the adults in the electorate have post-secondary educational qualifications. Many of these seats are where the One Nation sympathisers, identified by Megalogenis as numbering around one million, reside. 104

Meeting the Challenges 1 0 5 In addition to capturing the low-income electorates, the Liberals still dominate in their traditional high-income strongholds. The party holds thirty-one of the top fifty electorates by income, Labor eighteen, and the Greens one. These are electorates such as North Sydney on the lower North Shore of that city, where 36 percent of families earn more than $2,000 a week and 57 percent of adults have tertiary qualifications. Labor holds middle Australia, in electorates where around half the resident families are earning less than $1,000 a week and around 35 to 40 percent of adults have post-secondary educational qualifications. In this group offiftyseats, Labor holds thirty and the Liberals eighteen. According to Megalogenis, a keen analyst of statistical data over the years, the clear implication of these findings is that it is leadership, 'not ideology', that's important to voters today. The voters in the bottom fifty electorates are conservative and highly suspicious of reform. They voted for Howard in the 2001 election primarily because of the issue of border protection. They felt that John Howard empowered them by standing up for Australia's interests and preventing the Tampa from coming ashore. If he hadn't done this, then the sense of these voters that they were victims, outcasts in their own country, would have been fully reinforced. Frighteningly, for the liberal wing of a Liberal Party pinning its hopes on a post-Howard environment inviting progressive politics back on the agenda, Megalogenis has this advice: 'Costello as Prime Minister may need to shed some of his more politically correct ideas, such as wanting an Australian as head of state'.2 That's because for the Liberal Party to stay in office after Howard steps down as leader it needs to be able to hold these twenty low-income seats - the new territories, as I have called them. The Liberal Party strategists, to the extent that they think beyond the next election at all, would interpret this revealing portrait of the Australian body politic as confirming that their party is in its best position since 1996, firmly on the right side of the road. This translates to a continuation of current policy in three key areas that are electorally sensitive with the new territories and One Nation sympathisers: welfare, immigration and Asia. In each of these the Howard Liberal Party has pursued a distinctively uncompromising approach that is proving an electoral success with lower-income voters, and with

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many high-income voters too. In welfare, Howard's policy interpretation of mutual obligation is that if you receive welfare, then you must deserve it by working for it in some way. Howard's immigration policy is of unrelenting border protection and harsh penalties for those who break 'the rules' in entering Australia. And on Asia, Howard has worked hard to curtail the Keating enthusiasm for a region that many voters in lower-income areas still perceive as an economic and social threat to Australia. In fact, Asia and Muslim refugees are mutually tied in the minds of many voters, an attitude summed up by a One Nation voter who told the Australian that he used to vote Labor, but now he's a Liberal Party supporter because John Howard is tough on immigration. He has to be, according to Ken Johnson, a fifty-eight-year-old sales consultant from Brisbane, because 'look what's going on in eastern Asia. It's so volatile over there ... and it's on their agenda to get into here ... So good on you, Johnny Howard'.3 While it appears that the Liberal Party is backing a political winner with its current trident of social strategies, there are dark clouds on the horizon. They may be a decade away from impacting, but they are definitely there. These are the clouds of globalisation and the tearing apart of societal cohesion, and they threaten the Liberal Party if it continues to travel down its current road of providing so much succour to the One Nation sympathisers and those in the new territories. The risk is that the gap between the Liberal Party's rhetoric and the reality on the three key issues to which we refer will widen to a point where the party has to either change direction or face a wipe-out from an electorate that feels it has been betrayed. And in the area of immigration and border protection this threat is very real.

Under John Howard, the Liberal Party has pursued an immigration and border-protection policy designed to capture the One Nation sympathisers and new-territories voters. It is a policy created with little or no regard for the reality of people-movement trends in the 21st century or for Australia's own demography, and this is where the current border-protection and immigration policies are unsustainable in the long term.

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There are 23 million refugees in the world today. In part they represent the reality of globalisation. If capital can move around the world in a relatively footloose way that it does now, then people will do the same also. The movement of people is in part because capital needs labour and in part because people will move to where they believe they can achieve a better life. As the renowned European-affairs commentator Neal Ascherson has put it: The poor world is moving into the rich world on a scale never seen before ... The realities are that this movement is in the long run unstoppable, that Europe [and we can also include Australia] is becoming dependent on immigration as its populations age and diminish, and that the distinction between asylum-seeker and economic migrant is meaningless.4

Ascherson's observations are confirmed by one of Australia's leading experts in the Asia-Pacific region, Alan Dupont. Dupont points out that intrastate violence, environmental degradation, overpopulation and labour migration from increasingly prosperous China are key factors in the pattern of movement of people throughout this region.5 Yet Australia, along with many other developed-world nations, is reacting to this mass movement of people by increased surveillance of borders, and, as the University of Sydney's Stuart Rosewarne puts it, 'a new partition within the global community, a refashioning of the international system of nation-states that signals the enhancement of the nation-state, rather than its demise'.6 In other words, those political parties that participate in policies designed to erect new barriers to entry will be successful electorally with the kinds of voters whose chief gripe is that globalisation has paradoxically threatened their sense of belonging in the world. In the Australian context, while John Howard's Liberals can do little about Australian products or companies being sold to overseas interests, although this is something the One Nation sympathiser often refers to as being a major reason for his or her alienation from the political system, they can ensure that Australia strictly regulates the numbers of people seeking permanent resettlement in Australia. And, as noted, the Liberals are being rewarded at the ballot box for standing up 'for Australia's interests'. It's one in the eye for globalisation so far as

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the One Nation sympathisers and new-territories voters are concerned. But it's also short-term politics at its worst, devolving expertise on geopolitical currents to reactionary single-issue voters. Leaving aside for a moment the mass movement of people and what this means for the policy prescriptions in the Liberal Party's future, the reality of the true needs of Australia's ageing population will one day catch up with the electorate. Consider these facts from the Australian National University's Professor Glenn Withers and his colleagues Peter McDonald and Rebecca Kippen.7 Australia would require a fertility rate of 2.2 for the population to replace itself. Australia's fertility rate is projected to fall to 1.65 by 2005. As Withers notes, this, combined with a retention of current migration intake of around 80,000 per year, will deliver Australia a population of 24.8 million by 2050, and a gross domestic product (GDP) of $1,300 billion. But if Australia were to adopt a target of 1 percent migrationrate growth a year - as the Canadian government currently does then the population would be 37.9 million by 2050 and GDP $2,017 billion, according to Withers. This would be a more desirable outcome, given that by 2050 the Australian community will use 10 percent more of our GDP to fund health and retirement incomes. Adoption of the 1 percent migration-rate figure would halve that amount of diverted GDP.8 To 'go for growth' in this sense will require policy settings that take account of both fertility and migration. Increasing Australia's intake of refugees will need to be part of that equation. It will be a hard sell to an electorate, particularly to the One Nation sympathisers and new-territories voters, who believe that greater migration equates with a loss of employment and who regard the number of refugees currently entering Australia, around 12,000 a year, as being appropriate. Even to allow those temporary refugees from war-torn Afghanistan and Kosovo to stay in Australia permanently rather than being sent back to their homelands would provide the Liberal Party with a formidable electoral challenge, but it is necessary as part of a commitment to a 1 percent migration growth rate. The flip side of the refugee debate is fixing the sources of the problem: poverty, lack of democratic institutions, and social dislocation. This requires developed-world countries such as Australia

Meeting the Challenges 1 0 9 to increase their foreign-aid budgets. Yet with the new-territories voters such a course of action is not popular. 'Charity begins at home' is a sentiment that resonates with many of these people. The Howard Liberals have embraced this opportunistic truism by cutting overseas aid budgets in a trend started under the Hawke government, leaving Australia's largesse at just 0.25 percent of GDP. Under John Howard, Australia has dropped from twelfth to fourteenth position on the OECD table of aid-giving by its member countries, and was voted eighteenth of twenty-one developedworld countries on its foreign-aid record by the US magazine Foreign Policy in 2003. Its language on foreign aid is sympathetic, and the argument presented by Foreign Minister Alexander Downer since 1996 has been that Australia must have an aid program because it will enhance security and economic advancement in the Asia-Pacific region. True enough, except that, as Alan Dupont notes, the situation in this region is highly problematic. It is going to require far more resources, not fewer, if leaders of the region, such as Australia, are going to be able to deliver on mutually beneficial security and economic aims. And if Australia wants to reduce the number of refugees in the world today, and the numbers emerging from the Asia-Pacific region to which Dupont refers, then it would seem logical for this country to increase its overseas aid contribution as a means of achieving this aim. The policy case for Australia substantially increasing its migration program and lifting its expenditure on foreign aid is impeccable, but for a Liberal Party that has tied its fortunes since 1996 to the maintenance of support in the new territories and with the One Nation sympathisers who have reacted positively to a more rhetorically and tangibly 'Australia-first' approach to the world, it's going to take astute and clever leadership post-Howard to meet that policy challenge. It will also require the Liberal Party to abandon its current cringing in the Asia-Pacific region. Once again, this policy stance has been dressed up as simply moving away from what the Liberal Party saw as an Asia-first strategy by Paul Keating, to one that is more balanced between Asia, Europe and the US. As noted earlier, though, John Howard's revealing answer in his 1998 TimeAsia interview clarifies his belief that North America, the UK and

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Europe are Australia's soul mates.9 And because Paul Keating incessantly urged Australia to embrace Asia through modernising our symbols such as our head of state and our flag, as well as strengthening security and economic arrangements, for Howard this made retreating from Asia even more essential. Howard almost said as much in a speech on 4 May 1999 at a conference entitled the 'Australia Unlimited Roundtable' (a rather ironic title given the Prime Minister's remarks about Asia): We are also less preoccupied with rationalising our role in regional and wider international affairs. In particular, we have stopped fretting about the definitional category which most accurately describes our engagement with Asia. We no longer agonise over whether we are 'in', or'part of, or 'enmeshed with' Asia. Australia is just being itself in Asia, a strong, stable and engaged middle power openly espousing the great liberal democratic values shared in common with many nations but doing so in a way which recognises that countries do not need to be cultural and political mirror images to work closely and effectively together.10

Howard also knows that for One Nation sympathisers, particularly in the light of the Tampa, September 11 and the Bali bombings incidents, Asia is seen as a threat rather than a positive hope for Australia's future. Howard, in an interview with the Bulletin in September 1999,11 outlined the 'Howard Doctrine', which gave Australia a 'policing role' on behalf of the US in the Asian region. Although the Prime Minister backed away from this particular stance only a week later, some of his comments in that interview must have given great comfort to One Nation sympathisers. Howard told the interviewer, Fred Brenchley, that Australia has a particular responsibility to do things above and beyond in this part of the world ... We have been seen by countries, not only in the region but around the world, as being able to do something that probably no other country could do, because of the special characteristics we have; because we occupy that special place - we are a European, Western civilization with strong links with North America, but here we are in Asia.12

e Challenges 1 1 1 Howard seemed to confirm his colonialist outlook when in 2002 he horrified Australia's near neighbours by suggesting that Australia would act pre-emptively against any nation if it thought its interests were being threatened. John Howard's preparedness to risk Asian, and particularly Indonesian, criticism by participating in US President Bush's 'Coalition of the Willing' against Iraq in early 2003 is another sign that the Prime Minister is sticking with the strategy that sees Asia as simply one of three major economic and geopolitical regions on the globe, the other two being North America and Europe, and that Australia's relationship with all three is equally important. As Australia's first ambassador to China, Stephen Fitzgerald, has commented, the Howard Liberal Party's approach to Asia reflects 'a hotch potch of opinion polls, populism, gut feeling and personal views'.13 Asia is, of course, still of primary importance to the foreign policy establishment in Australia, and Alexander Downer has been at pains to ensure that his Asian counterparts know that there is a difference between domestic political rhetoric and the underlying strength of Australia's ties with the region. But even Downer has mouthed the platitudes of his leader in asserting that Australia is not going to be subservient to Asia or anywhere else in the globe, and that this is what had happened in the Keating government's overenthusiastic embrace of Asia. In November 2000 Downer told an interviewer, during a discussion about the Liberal Party's election prospects in the next election, that the Howard government had 'in terms of Australia's place in the world... given a new respect for Australia'.14 Perhaps the most significant symbol of the Howard government's disengagement with Asia has been its preparedness to allow the Asia-Pacific Economic Cooperation forum (APEC) to languish. APEC was essentially an Australian-led creation, first by Bob Hawke and then by Paul Keating. It was the latter who cajoled and led other nations into the Bogor Declaration of 1995, which set the twin goals of zero tariffs for developed member nations by 2010 and for developing nations by 2020. Keating was as passionate about APEC ('APEC equals jobs' was his mantra) as Howard is unenthusiastic. With Howard abandoning Australia's traditional

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leadership in APEC, the forum seems to be drifting and of secondary importance to key players such as the US, Canada, Mexico and China. For the Howard government, a free-trade agreement with the US has become the new game in town and APEC is a distant second at best. There is no doubt that the rhetoric and actions of the Howard government will make life more difficult for Australia in Asia in the future. The perception of Australia as being an Anglo outpost losing step with the region is one that former Australian diplomat Richard Woolcott, who served Liberal and Labor governments, believes is alive and well in Asia today. Woolcott told the National Press Club on 16 April 2003,15 just as the war in Iraq was concluding, that Australia was, when Howard was elected to office in 1996, 'regarded by most of our neighbours as the odd man in'. But today 'we are again seen by many in our neighbourhood as the odd man out. This is a damaging setback, which may take years of bipartisan effort and refocused political leadership to rectify'. Howard fans would no doubt dismiss Woolcott as simply a paid up life member of the 'foreign policy club' who is out of touch with 'mainstream Australia'. But Woolcott is no Robinson Crusoe in his stance. The influential journal Asiaweek quoted Ian Macfarlane, now John Howard's Industry Minister, but in 1996 the president of the Queensland Grain Growers' Association, criticising Howard for his refusal to unambiguously dismiss Pauline Hanson's anti-Asian rhetoric. Macfarlane was characteristically blunt: 'The Asian market is very important. We cannot afford to have that growth jeopardized in any way, and I'm astounded at the silence by the prime minister.'16 By taking his stance on Asia to court favour with the One Nation sympathisers, and because of the character of his own longstanding views, John Howard is wedding the Liberal Party and federal governments of the future to a greater defence and security commitment and potentially lower economic growth. As Anthony Milner of the Australian National University puts it, 'A country at odds with its region will be dependent on heavy defence expenditure and unable to exploit fully its commercial and other potentials. To engage positively with Asia, on the other hand, will continue to be a demanding intellectual and cultural task'.17 The short-term political gain for the Liberal Party is outweighed here

Meeting the Challenges 1 1 3 by the long-term strategic implications for any party in government or formulating a policy in opposition. Blame for a more hostile region will be laid at the feet of the Howard-led Liberal Party unless his successors immediately undo the damage when Howard leaves office.

The abandonment of progressive liberalism is nowhere more evident than in the adoption of mutual-obligation welfare policies by the Howard-led Liberals. Once again, a primary motivation for these policies has been the need to pander to the prejudices of the new-territories voters and One Nation sympathisers about recipients of welfare. It is also a policy stance that reeks of a return to the notion of a deserving and a non-deserving poor. It is a policy based on attitude rather than reform, and severely threatens social cohesion. As is the case with Howard's stance on Asia, the short-term political gain for the Liberals in the electorates sensitive to these issues is likely to be outweighed by long-term damage to Australia's sense of society and will leave Howard's successors searching for a policy position that seeks to address the ramifications of implanting the concept of mutual obligation on a complex problem. At the outset it needs to be noted that mutual obligation is not an idea that Howard and his strategists dreamed up alone. The Keating Labor government's Working Nation16 labour-market programs had introduced the concept to the Australian community in 1994. Under those programs there was an obligation on the unemployed to take up training and job-search opportunities in return for taxpayer-funded benefits. But as Patricia Harris has observed, the language of Working Nation was one of 'entitlement and government support as well as responsibility'.19 She cites a passage from Working Nation that demonstrates this point: 'If you do not have the right skills to find work, we will help you acquire them'. Under the Howard Liberals the emphasis and the rhetoric has changed substantially. For John Howard, mutual obligation is unashamedly part of his brand of conservatism that emphasises responsibility and selfreliance. Once again the language bears this out. Compare the

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following statement from Howard with the Working Nation quotation cited above. In his 1999 'Australia Unlimited' speech, Howard defined mutual obligation as being a 'defining aspect of modern conservatism', and said 'those in receipt of such assistance should give something back to society in return, and in the process improve their own prospects of self-reliance'.20 Howard's current Employment Minister, Tony Abbott, is an enthusiast, naturally, of this rather cold and harsh view of the vulnerable in the community, as noted earlier. And the Howard government's flagship mutual-obligation program was called Work for the Dole, the first time a colloquialism had been used as the official title for a government welfare program in Australia. Nevertheless, or perhaps precisely because describing welfare payments with a 1930s Depression term evokes even more fear, Howard's program is a political winner. The Howard Liberals' mutual obligation carries with it a good deal more stick than carrot, and plays well in the mind-set of the new-territories electorates and One Nation sympathisers. Many voters in these areas hold a subconscious grudge against those who receive welfare. The tabloid media's labelling of 'dole bludgers' and 'welfare rorters', and the Howard government's regular publicity stunts that claim success in 'cracking down' on these individuals, comfort voters who feel that they are the only ones working hard and contributing to society. For example, the Employment Services Minister, Mai Brough, announced in June 2003 that the government was writing to 700,000 unemploymentbenefit recipients to tell them that if they didn't provide evidence that they were seriously looking for work, then their benefit would be cut. According to the excited minister, 'this will shake the tree like it has never been shaken before'.21 It sounds like a blood sport! The hallmark of the Howard Liberals' mutual-obligation strategy has been severe financial penalties for those who breach the system. In 2002 a committee headed by former Commonwealth Ombudsman Dennis Pearce found that the system of 'breaching' Centrelink clients who miss appointments with their case officer was resulting in crushing financial penalties of $250 or more being docked from welfare payments to the individual in question. Yet the first five years of the Howard government saw the number of social-security recipients rise from fewer than 100,000 to around 300,000 per year.

Meeting the Challenges 1 1 5 Not that the voters whom the Liberal Party is now trying to retain seemed to mind. An extensive study carried out by the Social Policy Research Centre (SPRC) at the University of New South Wales in 200022 confirmed the perceptions behind the political strategy of Howard and his colleagues. This study found that 44 percent of those surveyed believed that 'reluctance to work' is a cause of high unemployment, and that the financial penalties and breaching regime seem to sit comfortably with more than half the electorate. From the Liberal Party's perspective, its punishment-based mutual-obligation regime needs to be attractive to those living in underserviced regional areas and for voters in the lower-income bracket. Taking Megalogenis' analysis of the lowest-income electorates, the category in which households earn less than $1,000 a week, and in which the Liberal Party holds thirty of the fifty seats, the SPRC survey confirms that the Liberals are on the right course. Support for mutual obligation is strong in outer regional and rural electorates, and among those earning between $700 and $1,249 a week (gross). However, in a warning to the Abbotts of this world, the survey also indicated that governments ought to tailor mutualobligation policies to the group to whom it is applied, distinguishing single parents and people with disabilities into different categories to the young unemployed, for example. With such a popular political strategy in place, why should there be concern about the Liberal Party's policy approach on mutual obligation? Because the evidence suggests that it will erode Australia's social cohesion in the medium to long term. The Howard government's mutual-obligation strategy is, as noted, based on a view that it should promote self-reliance and personal responsibility, and simply get people off welfare. This is exactly what the Clinton administration sought to do when it created Welfare-to-Work programs in the 1990s, and handed responsibility back to the states and local communities. The latter is something that Tony Abbott favours. In his view the beauty of Work for the Dole is that it is community-based and is part of the devolution of central-government welfare programs to communities and private providers. (The Howard government has privatised the Commonwealth government's responsibility to find work for those in receipt of unemployment benefits.)

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The US experience is instructive, in that it is already demonstrating that social cohesion can be a casualty of the mutual-obligation regime if a holistic approach to each individual is not taken. The Joyce Foundation, a Chicago-based think tank, has found that the Clinton Welfare-to-Work reforms have indeed moved people off welfare statistics, but into low-paid, insecure jobs where childcare is problematic and employers tend to be all too ready to fire a worker who misses work due to mental or physical health problems exacerbated by poor access to appropriate medical care. And while the Liberals point to the UK Labour Party's commitment to mutual obligation, the Australians Mike Steketee has noted that the British equivalent of Work for the Dole provides for individual job-seekers to meet weekly with a personal adviser. The OECD has, on the other hand, rightly condemned the Australian privatised job-seeker experiment because most job providers do not seem to be offering effective services to help address the underlying barriers that individuals have to employment.23 The Howard government abandoned heavy emphasis of the Keating government's Working Nation programs on skilling and training for jobs, but has failed to replace it with any real alternative efforts in this area. The political strategy of the Howard Liberals in this area is contradictory. While the concept of mutual obligation seems to have no boundaries when it comes to those on welfare, if you are a selffunded retiree or a first-home buyer, both classes of voters that the Liberals have assiduously courted in recent years, then the government cannot do enough for you. Programs such as the First Home Owner Scheme, in which wealthy individuals have queued to receive a $7,000 government handout, have been politically very successful for the Howard Liberals. However, the scheme has made the lowincome housing market even more difficult to access because of the general increase in house prices caused by the heightened demand this scheme has created. The 2001 federal budget contained a $3 billion package of measures for self-funded retirees that included more tax relief and an extension of the senior's health card. The consequence of the Howard government's political emphasis on providing welfare incentives tailored for its voting groups first-home buyers and self-funded retirees being two prime exam-

Meeting the Challenges 1 1 7 pies, and family units earning between $40,000 and $45,000 a year another - has meant that for the first time in the past four decades, attacking hard-core poverty in Australia has been abandoned. Depending on which measure is used, the poverty rate in Australia has increased in the past decade and shows no sign of turning around. The reputable National Centre for Social and Economic Modelling (NATSEM) in Canberra suggests that the poverty rate was 13 percent in 2000, up from 11.3 percent in 1990.24 Even one of the Liberal Party's favourite think tanks, the Centre for Independent Studies, suggests that the rate has gone from 8.2 percent in 1990 to 8.7 percent in 2000.25 Social cohesion, which ought to be at the centre of a conservative political party's agenda, is illserved by this trend.

The Howard Liberals' political dependency on thefiftylow-income electorates in Australia, on the new territories, and on the One Nation sympathisers will severely hamper reforms in major areas of policy. This is being played out through the Medicare reforms the government proposed in May 2003. These reforms are designed to keep Medicare - a political sacred cow for both Labor and the Liberals almost since its inception by Gough Whitlam in 1975 affordable in the medium to long term. These piecemeal reforms have been forced onto the government because it has not had the political courage to deal with Medicare in its seven years in office so far. But political watchers are already measuring the Howard government's capacity to drive through its reforms in this area by what impact it will have on Howard's new-territories voters. The Australian's Dennis Shanahan has noted that having 'to fork out extra to visit the doctor or not being able to get bulk-billing will cause unrest in those suburbs where the Coalition has won voters away from the ALP: the "blue-collars" and the "aspirationals" Howard has wooed since 1996'.26 This type of commentary will only grow in ominous volume if the Howard Liberals try to continue to pander to the hip-pocket sensitivities of the new-territories voters and the prejudices of the One Nation sympathisers.

Chapter B

So Where To Irom Here?

Perhaps the easiest par t of a critical analysis of a political party such as the Liberals is to accentuate the negatives and simply posit a list of wrongs. But to satisfactorily answer the question 'What's wrong with the Liberals?' I owe it to the reader and to critics of the book's central thesis to establish whether or not the party is simply in the middle of a cycle and has moved to the 'right side of the road' temporarily, or whether it has shifted permanently. I need also to examine where the party might head in the future, where I would like it to head, and how feasible each of these hypothetical directions might be. There is no doubt that the federal Liberal Party has now moved away from the blend of liberal and conservative philosophies that were its hallmark until John Howard's second election as leader in 1995. As noted, empirical evidence suggests that electorally, the federal Liberals have radically realigned the profile of political support in Australia. In the 1996 election, the Liberals moved into Labor territory and now hold the majority of thefiftylowest-income seats in Australia. They also hold the majority of thefiftyhighest-income seats, and this dichotomy may become problematic for the postHoward party. These moves into what I have termed the new territories, and particularly into those seats where the One Nation sympathisers remain a significant force, have had a devastating impact for the federal Labor Party. As a consequence, it is vital that the Liberals continue to work in these seats to establish a long-term intergenerational hegemony over them. Labor's loss of seats such as those in the Western Suburbs of Sydney, and their eternal desire to return them to the Labor fold, is producing a tension between the progressive wing and more pragmatic wing of the ALP. The fed118

So Whepe To from Here? 1 1 9 eral Liberals are again the winners from this publicly displayed division based on old and new ideals of political responsibilities. To elaborate, the battle within federal Labor is between, on the one hand, those such as Mark Latham, MP for the western-Sydney seat of Werriwa, Wayne Swan from Brisbane, Martin Ferguson from Melbourne's Northern Suburbs, and his acolyte Julia Gillard from the Western Suburbs of Melbourne, and on the other hand, Duncan Kerr, a Tasmanian MP with a sizeable Green voter base in his Hobart electorate, former West Australian Premier Carmen Lawrence (who resigned from Labor's frontbench late in 2002 over the party's asylum-seeker policy), and inner-Melbourne MP Lindsay Tanner. The former group believes that Labor has to move its policy settings firmly to the centre or even slightly to the right in key areas such as refugees, and that Labor must focus on the bread-and-butter issues of education, health and taxation. From this group's analysis, the Keating agenda of the republic, reconciliation and a strong focus on engagement with Asia is of little influence over voters in the Liberals' new territories. The former group believe that Labor must not be seen as anything more than a paler shade of blue when it comes to border protection, ending the emphasis on indigenous land and sovereignty rights, or funding cultural diversity, all of which John Howard has hijacked to capture the hearts and minds of lower-income voters. The Labor left perceives the shifts away from the idealism and nation-building of the Keating years as nothing more than a flawed political strategy that not only undermines Labor's supposed reformist credentials, but is also a no-win game of'me-tooism' that permits John Howard to continually set the agenda for Labor to follow. Perhaps the most manifest example of this me-tooism came in the Tampa election of 2001, when Labor leader Kim Beazley took his party to the point where it essentially lined up with John Howard's scare campaign based on the demonising of asylum-seekers and a potential 'crisis' in border control if the government did not repel desperate people trying to reach Australia's coastline. John Howard now has Labor where he wants it, divided between these two powerful camps over the direction that it should take to win back its historical heartland seats. Labor is also now confronted by the reality of the Australian Democrats and the Greens taking

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votes away from it because of its conservatism on social and constitutional change. On the other hand, it fears that to articulate a progressive social and economic policy will leave it vulnerable to charges by the master politician Howard and his henchmen in the Liberal Party that Labor is 'out of touch' with 'mainstream' Australia or that it is still the captive of special and privileged interest groups. These are messages that Howard would use to reinforce the Liberals' hold on new-territories seats. A word of caution is due here. In politics nothing is static and parties renew themselves continually, and just when commentators have written them off they invariably re-emerge strengthened and empowered. After the 1993 federal election loss the Liberal Party was perceived by some commentators to be at the end of the road. Three years later it won government in a landslide. So too, no doubt, will Labor hit its straps again. And how Labor emerges from its current identity crisis will determine where the federal Liberal Party heads in the medium term. Federally the Liberal Party has moved to the right for two reasons: because of the strength and dominance of John Howard over his colleagues, and because the party's electoral success has been built upon appealing to conservative voters at both the low end and the high end of the income scale. Both these factors have also directly and indirectly coincided with, or caused, a historic crisis of identity within the Labor Party. On purely pragmatic grounds, it is unlikely that the Liberal Party will return to its more centrist roots any time soon. The party's inherent vested interest in rightist containment and electoral appeasement means its federal MPs are now more conservative as a group than any of their colleagues in the past. The likely successors to Howard, and the next generation of leaders, are either cautiously moderate, as is the case with Peter Costello, or cultural warriors in the mould of Howard, like Tony Abbott. Even prominent leaders of the federal Party's liberal wing are opportunist at best. The Education Minister, Brendan Nelson, and the Tourism Minister, Joe Hockey, fall into this category. The former is championing a package of free-market higher-education reforms that will saddle students with debts of $50,000 as they enter the workforce. The numbers man of the liberal wing, South Australian MP Chris Pyne, has been making a name for himself as

So Where To from Here? 1 2 1 the stalking horse for Indigenous Affairs Minister Philip Ruddock in the latter's strategy of forcing the only claim that indigenous Australia has to any form of legal sovereignty, the Aboriginal and Torres Strait Islanders Commission, out of existence. The liberal wing of the federal party has also abandoned the intellectual ferment that produced a raft of intellectually relevant literature on the evolution of democratic liberalism in the Australian context in the 1970s and 1980s. In those two decades the Liberal Party saw leading liberals such as former New South Wales Senator Chris Puplick produce books of essays on liberalism and what it meant for contemporary Australia. Today the only publication that emanates from the federal party is Christopher Pyne's journal Options, but it is primarily a lobbying vehicle for aspirant frontbenchers or even a former leader of the Australian Democrats, Senator Meg Lees, to churn out articles on matters such as why the remaining 51 percent of Telstra in government hands should be sold. The lack of intellectual rigor and diversity in debate in the federal Liberal Party today is a major reason why we are not likely to see a change in its ideological direction any time soon. But then the lack of intellectualism and failure to recognise that a plurality of views is critical to ensuring a vibrant, progressive, responsive form of democratic leadership in the federal Liberal Party begins in the Prime Minister's office. John Howard runs an office that contains not one individual who has spent any length of time in academia. This is a marked contrast with the office not only of Paul Keating, but also of every Prime Minister going back to Gough Whitlam. Even one of Howard's heroes, Margaret Thatcher, believed that the office of the Prime Minister should be an intellectual powerhouse that generated ideas. Her senior economic adviser for many years was Cambridge University's Alan Walters, and the intellectual high priest of Hayekian thought in the UK, Keith Joseph, was enormously influential on Thatcher in the early days of her prime ministership. Howard's office also reflects his conservative mind-set, with not one adviser in his current office that could be said to be from the liberal wing of the party. Contrast this state of affairs with the office of Malcolm Fraser, who had as economic adviser the decidedly rationalist John Rose, in foreign policy a man destined to become

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a key player in the US foreign-policy circuit, Professor Owen Harries, and as chief of staff the neo-conservative David Kemp, alongside liberals such as Petro Georgiou and Dennis White. All of these men, it might be noted, had spent time in academia and were gifted intellectually. Nor should we expect Peter Costello or Tony Abbott, or any other contender from the current Howard frontbench, to turn this situation around. This is a government that regards academia with a good deal of suspicion and sees it as a cultural and ideological enemy. Unlike Paul Keating when he was Treasurer, Costello has a staff comprising Liberal Party apparatchiks and mid-ranking Treasury and Tax Office staff. Keating, of course, had Don Russell and the now head of Treasury, Ken Henry, both PhDs, on his staff. There is none of the seconding of key academics to government policy positions that took place in the Hawke and Keating governments. Professor Ross Garnaut and Dr Bruce Chapman both spent time with prime ministers Hawke and Keating respectively. To the extent that there is intellectual discourse between the Howard government and the Australian community, it comes from like-minded think tanks such as the Institute of Public Affairs and the Centre for Independent Studies, and the conservative magazine Quadrant, edited by Sydney journalist P.P. McGuinness. These institutions do not pretend to celebrate diversity; on the contrary, they are conservative and highly critical of what they see as the prevailing 'left-wing elite' that dominates intellectual life in Australia. In this sense they share the intellectual siege mentality of the Howard government. They regularly take issue with the human-rights and social-policy agendas of liberal thinkers. The IPA has been rewarded, with one of its senior fellows, a critic of the reconciliation movement, Ron Brunton, being appointed to the board of the ABC, despite having no significant broadcasting or media-management experience. Another Howard-government favourite and CIS Fellow, South Australian academic Judith Sloan, has also been appointed to the ABC board. Symbolically, the most recent appointments to the board of the ABC are the most prominent messages of conservative intellectual containment-control Howard has sent to the Australian left in his past two terms of office. The Howard government is acutely sensitive to criticism by those in the media who have been part of the party and who, while

So Where To I n i Here?

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being broadly sympathetic to it, are also critical of the conservative bent of the Liberal Party today. The columnist Gerard Henderson, whose book Menzies' Child is probably still the most incisive examination of the Liberal Party, is regarded with hostility by Howard and members of his office. John Hewson, a former Liberal leader, whose column in the Financial Review is frequently scathing of the Howard-Costello policy framework, is seen by Howard and other ministers as embittered and disloyal. The leading liberals of the Fraser years, West Australian Fred Chaney, Victorian Ian McPhee, and the current Chancellor of the Australian National University, Peter Baume, are dismissed by the Howard government as being 'entirely predictable' whenever they criticise the current federal Liberal Party. Former Prime Minister Malcolm Fraser, who was highly successful as leader of the federal party, is called a 'socialist' by many in the party today. In a remarkable event late in 2002, Tom Hughes, Attorney-General in the Gorton government, subjected Fraser to a particularly vicious attack at Gorton's funeral. Hughes used this solemn and religious ceremony to attack Fraser's integrity while a minister under Gorton. Yet there was no support for Fraser from John Howard or the party's president, Shane Stone. Both John Hewson and I were admonished publicly by Joe Hockey, supposedly one of the key leaders of the liberal wing of the New South Wales party, for a series of critical articles we wrote concerning the Tampa episode and the Howard government's treatment of asylum-seekers generally. There is no room in the Howard Liberal Party for anything other than reverence and obedience to Howard's policies and political strategies. MPs who speak out against Howard, although this has happened on few occasions since 1996, are punished in the most direct way possible. They are denied promotion. Just ask Julie Bishop, the West Australian MP who seemed destined for a frontbench position after the 2001 election. She remains on the backbench to this day, no doubt paying a major penalty for casting doubts on Howard's tough anti-asylum-seeker stance during that election. Or ask her backbench colleague Petro Georgiou, the member for Robert Menzies' seat of Kooyong; his dissent over mandatory-sentencing laws three years ago means his considerable intellectual capacity continues to be wasted.

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Recently, the two most glaring examples of the monolithic nature of the current federal Liberal Party have been in relation to Australia's participation in the Iraq war in early 2003 and the proposed US-Australia free-trade agreement. Both these matters are of enormous strategic consequence to Australia's future, economically and in terms of our security, yet there has been little or no debate on either matter by the federal Liberal Party. In relation to the war on Iraq, Howard's decision to commit Australian defence personnel to a war without UN approval was high-risk politics, especially in the face of the largest anti-war demonstrations in Australia's history. In view of Australia's proximity to other nations in the Asian region that could be bases for terrorist activities against Australian people or facilities, the issue of joining Bush's Coalition of the Willing posed crucial security questions for government MPs to consider in far greater depth than was evident. In fact, so emotive and dominating was the issue of a war on Iraq without UN sanction that in both the UK and Canada, Howard's counterparts - Tony Blair and Jean Chretien - put the matter to Parliament for debate. Blair met with overt hostility from his own Labour backbenchers, and tough and sceptical questioning whenever he entered the House of Commons in the lead-up to the war. And his Defence Secretary, Geoffrey Hoon, faced an extraordinary series of questions from his Labour colleagues on the issue. In other words, even the notorious enforcers of'spin' at Number 10 Downing Street couldn't keep government MPs quiet on this critical matter. Across the Atlantic, Canadian Prime Minister Jean Chretien also faced a vigorous debate in the Ottawa Parliament, with members of his own ruling Liberals calling for the Canadian government to opt out of any participation in the Iraq war, be it UN sanctioned or not. It was a position that went much further than the official government line of supporting a UN-sanctioned process as a basis for declaring war on Iraq. But in Australia, although due process means John Howard must technically allow debate to be heard in Parliament, it was of no consequence to his decision to participate in the war. In the party room the only audible dissent was from two backbenchers, West Australian Judi Moylan and Townsville MP Peter Lindsay. There were certainly no hostile or even sceptical questions of

So Where To fpom Here? 1 2 5 Howard from his backbench in Question Time. Yet there is no issue of greater moment for a government and a country than to commit itself to a war. At this decisive moment, the fundamental weakness of the liberal wing of the federal party was obvious, again principally by its silence. Australia's longstanding bipartisan commitment to ensuring that the UN is the key to multilateral security arrangements was called into question by the conduct of US President Bush and his supporters, Tony Blair and John Howard. Yet still there was no dissenting group of government backbenchers in Australian Parliament. On the matter of a proposed free-trade agreement with the US, there likewise ought to be much audible discussion. Under Howard, Australia's traditional leadership of APEC has been relegated to a position of distant secondary importance to a free-trade agreement with the US. But if Australia's hard-won economic ties with Asia, its geographic home base, are going to be relegated by those of the US, there should be at least some forms of vigorous discussion in the party room of the federal Liberals. According to US Deputy Secretary of State Richard Armitage, President Bush is dead keen to push a free-trade agreement with Australia into place as fast as possible. Once again, however, not everyone in Australia is convinced that this deal is such a good idea. Professor Ross Garnaut, the key architect of Australia's trade-policy focus in recent years, regards the proposed agreement as dangerous for Australia's long-term interests in Asia. Garnaut told the Channel 9 television program 'Sunday' that a free-trade agreement between Australia and the US 'would encourage the development of preferential arrangements in other countries especially East Asia. That would be a strategic disaster for Australia to suffer preferences against it in its most important export markets'.1 And Garnaut is not alone in his view. Australia's sugar-cane growers, in a multibillion-dollar industry, don't see much benefit for themselves in such an agreement. The industry's chief spokesperson, Ian Ballantyne, has said that because of the strength of the US farm lobby, and particularly the sugar farmers' stranglehold on the Republicans and the Democrats over many years, he doubts that it is going to be easy for Australian sugar exporters to break into the US market, even with a free trade deal on the table. His colleagues

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in the Australian dairy industry echo Ballantyne's sentiments. There are supporters of such an agreement; BHP Steel is one, as are a number of economic analysts. But the point here is not whether or not such an agreement is right or wrong for the purposes of this discussion. It is simply that John Howard and his Cabinet are committed to a course of action that will have major implications for Australian investment, employment and therefore society, yet the Liberal Party is not debating the issue at all. The Liberal Party has lost the capacity for debate and intellectual challenge. The liberal wing, which once acted as the party's conscience in restraining the more unbridled elements of the right, has vanished from sight. And the backbench, particularly those MPs in new-territories seats, do not care. So long as the Howard-led party continues to win elections, this corrosion of integrity and intellectual muscle will continue. But a chink is emerging in the armour. It involves the potential tension we spoke of earlier between the Liberal Party's fifty top-income seats, and the fifty bottom-income seats. While those MPs in the latter seem unconcerned by the dominance of the right over the federal party, there are many in the former category that might see it as a threat to their long-term survival, particularly if a genuinely alternative liberal political force were to emerge. And it is to this potential that we now turn.

In the traditional Liberal Party strongholds of Sydney's North Shore and of Melbourne, there is a growing preponderance of voters that we might call 'social liberals'. If we profile them in terms of Australian columnist George Megalogenis' categories they are white-collar, higher-income voters with post-secondary education. These voters supported the case for a republic in the 1999 referendum, yet still vote for the Liberal Party, primarily these days because they regard the party as a decent economic manager. They are also the voters who feel strongly about Aboriginal reconciliation; a large number, many of whom live on Sydney's North shore, participated directly in the 2000 march of 250,000 people across the Sydney Harbour Bridge. Some of these same people attended protests against Australia's participation in the 2003 war on Iraq. As a voting group, they are likely to express some concern about the Howard

So Where To from Here? 1 2 7 government's treatment of asylum-seekers and are increasingly concerned about the environment, both local and internationally. North Sydney, the richest electorate in Australia by Megalogenis' reckoning, with 36 percent of families earning more than $2,000 a week and 57 percent of adults having tertiary qualifications, falls into the social-liberal category. Its vote for the republic in the 1999 referendum was 61 percent. Other Liberal Party electorates (with the percentage level of support for the republic in the 1999 referendum in parentheses), such as John Howard's own seat of Bennelong (54) in Sydney, Tony Abbott's Warringah (54.5) around Manly, and Bradfield (55) on the upper North Shore, held by Brendan Nelson, all fall into this category. In Melbourne they are seats such as Peter Costello's Higgins (63), Petro Georgiou's Kooyong (64) and David Kemp's Goldstein (58). The wealthy Labor electorate of Melbourne Ports (65), which encapsulates the trendy inner bay-side suburbs of St Kilda, Elwood and Albert Park, has many people of this liberal profile living within it. The electorate of Ryan (55), based in Brisbane's wealthy inner-western suburbs, and Curtin (55) in Perth both fit this profile. There is also strong evidence that some voters in these Liberal heartland electorates are what are now being termed 'downshifters'. According to the respected polling organisation Newspoll, they make up 23 percent of the population of people who are aged between thirty and fifty-nine. Defined by the think tank the Australia Institute (AI) as people who 'make a voluntary, long-term lifestyle change that involves accepting significantly less income and consuming less',2 32 percent of people who fall into these categories are on incomes greater than $60,000. It needs to be noted that blue-collar workers are just as likely to downshift as whitecollar ones, but a survey conducted by Newspoll in late 2002, and on which the AI study is based, shows that in absolute terms there are more high-income than low-income downshifters, at least within the AI's latest definition. These voters, which the AI describes as being 'anti-aspirational', have decided to re-evaluate their lives and to sacrifice materialism to spend more time with family, to gain a healthier lifestyle, or simply to change their career direction by going back to study, for example. In a political sense, these are voters who intellectually reject the Howard Liberals' materialist politics of tax cuts, First Home Owner grants and other

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'growth at all costs' policies. Equally, they will reject the ALP's forays into this style of politics. The federal Liberal Party's electoral strategy, as has been argued, is based on the conservative politics of the new territories and One Nation sympathisers. Downshifters are not part of the Howard Liberals' equation; there is nothing to offer voters who are not conventionally aspirational and who question the strongly nationalist mind-set of John Howard. Not even the 'work and family' rhetoric that the Howard Liberals have adopted in the past eighteen months is enough for the downshifters, according to the AI, because the basis of Howard's conventional delivery of conservative politics is, as always, consumerism and growth at all costs. The downshifters in the high-income bracket, those more likely to be living in the Liberal heartland seats that we identified earlier, are likely to be philosophically liberal. That is, in rejecting the consumerist and economic-growth obsession of the Howard Liberals, and to some extent of Labor, they often identify with issues such as reconciliation, the republic, Australia's destiny, and even the potentially negative implications for social cohesion of'mutual obligation'. These are the liberals that are being taken for granted by the Howard Liberal Party. As the National Public Leadership Centre's demographic study of the 2001 federal election noted in its report on voting patterns, 'In essence, John Howard traded support from those living in Sydney's inner north shore for people living in Sydney's Western Suburbs. This is a significant demographic realignment in Australian politics'.3 If we accept that the downshifting trend is now mainstream and that since 1996 John Howard has remade the Liberal Party into a conservative force attracting hard-core conservative voters in Liberal strongholds, as well as aspirational and angry voters in the 'new territories', then what shape might a genuine liberal party take to provide a new home for a core electorate that Howard is 'taking for granted'?

What is missing from the Howard Liberals is a commitment to what might be termed 'value pluralism'. Value pluralism is the

So Where To from Here? 1 2 9 essence of liberalism, according to that great 20th-century defender and renovator of the liberal project, Isaiah Berlin. It believes in universal values such as justice, liberty, equity and equality. It subscribes to the plurality of society - there is no one set of goods or needs that will fit each and every person. These basic values are equal in value - none is superior to the other. And this means they may conflict. Society works out this conflict by balancing them. George Crowder of Flinders University is the author of a recent book on liberalism and value pluralism. In Crowder's view, when value pluralism informs liberalism it enhances the latter considerably. This is liberalism that encourages diversity, tolerance and humanity. It is liberalism that will allow for generosity in society being able to accept that there are diverse forms of life and that all must be tolerated so long as they do not offend the core criteria of equality, liberty and equity. This form of liberalism will, according to Crowder, 'offer official recognition and special rights to disadvantaged minorities', and will 'tend towards redistributive rather than laissez-faire polities when it comes to issues of socio-economic justice, since neither the pluralist ideal of value diversity, nor that of flexibility or personal autonomy is likely to be well served by a regime in which the goods of the market dominate all others'.4 In essence, this philosophical framework (something that is sadly lacking in Australian politics today) could provide a basis for a genuinely attractive liberal force that provides an alternative to the materialist, populist, conservative politics of the Howard Liberals. It is a form of liberalism that the Liberal Democrats in the UK seem to be pursuing in their quest to be an alternative government to Labour and the Tories.

The venerable Economist magazine is not usually a friend of leftliberal parties such as the UK's Liberal Democrats. But its widely discussed 'Bagehot' column told readers on 28 September 2002 that the Liberal Democrats' policy proposals on delivery of public services in the 21st century are, in contrast to the other main UK parties, Labour and the Conservatives, 'both distinctive and superficially attractive'. 'Bagehot' noted that although some of the

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What's Wrong with the Literal Parly?

proposals might be impractical, the important point is that the Liberal Democrats are being bold on the most 'important domestic policy issues' of the day. The Liberal Democrats, under their energetic, perspicacious and intelligent leader, Charles Kennedy, are presenting an increasingly attractive alternative to the economic and social conservatism of both Labour and the Tories. What Kennedy and the Liberal Democrats have recognised, quite correctly, is that there is now only the tiniest sliver of daylight between the social and economic policies of the Conservatives and Labour in the UK. Both have become parties pursuing a materialist agenda coupled with social conservatism and knee-jerk populism on matters such as asylum-seekers and law and order. On all these issues the Liberal Democrats present alternative positions focusing on core liberal principles of tolerance, compassion, equity, an open society and global cooperation. Kennedy's party presents voters in the UK with an alternative that might best be described as progressive liberalism. It is bold, clear-cut and resolute in its articulation. Its does not pander to fear and xenophobia, and holds out a vision of a better future in which globalisation is turned into a force for positive economic and social change throughout the world. If Kennedy and his party were in Australia today it is likely that there would be a strong level of support for them among the Liberal Party voters 'abandoned' by Howard, and potentially among Labor voters in seats where there is a preponderance of post-secondary-education voters. Again, Melbourne Ports comes to mind, as does the inner-city seat of Sydney. Currently there is a paucity of political offerings in Australia for these voters. The Australian Democrats can potentially remake themselves into a Liberal Democrats-style party but there is much to be done to restore the party's image after it was damaged in 2002 when leader Natasha Stott Despoja resigned. The Democrats need to gain credibility with the portion of the electorate who have supported them in the past, and convince abandoned Liberals that they stand for much more than 'keeping the bastards honest'. It is not an impossible task, particularly with the likes of the current leader Andrew Bartlett, his deputy, Lyn Allison, and the cerebral economics spokesperson, Queenslander John Cherry. But the job remains to be done.

So Where To from Here? 1 3 1 Then there are the Greens. Like their counterparts everywhere except perhaps in Germany, where the pressures of being in government have seen their leader, Joschka Fischer, stand beside his Chancellor, Gerhard Schroeder, and commit German troops to Kosovo and Afghanistan, and in France, where they were part of a government, led by Lionel Jospin, that privatised a fair slice of the state sector - the Greens in Australia are an extremist hard-left political force. They are a place for disillusioned Labor voters to park their protest vote. In fairness, along with the Australian Democrats, they have been resolute in their opposition to the degrading of the human rights of asylum-seekers by the Coalition parties and the ALP. This stance has won them some electoral standing. But for many downshifters and abandoned Liberals, the Greens' perpetual outsider and protest status, and lack of rigour on a range of policy issues such as economics and welfare, means that they are likely to remain a fringe player in Australian politics. That is unless, of course, they do hold the balance of power in the Senate at some point, in which case it will be interesting to see if they shift rightwards in the way that their counterparts in Germany and France have done. So what kinds of policies might attract abandoned Liberals and downshifters (remembering that both these groups, and in particular the latter, are fiscally conservative in their newly won lives and expect governments to spend prudently)? After all, the criticism that can be made of a book like this is that it proposes no alternative position to that which is being pursued by the Liberal Party today. I therefore propose some policy ideas in three areas that are of concern to abandoned Liberals and downshifters, as well as disillusioned Labor voters. These are: eradicating the sterile and ultimately futile debate about public or private provision of key services in our community; providing accessible decision-making to a society that has largely lost faith in the existing federal-state structure; and embracing the national-identity agenda.

Schools, hospitals and roads: the state still matters? Standing at a polling booth in the leafy and prosperous suburb of Chatswood on Sydney's North Shore during the 2003 New South

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What's Wrong with the Libepal Party?

Wales state election, I met a number of abandoned Liberals. Many were intending to vote for the unsuccessful independent candidate, local Mayor Pat Reilly, rather than the Liberal candidate. These people were professional, white-collar workers, and some were downshifters (for example, one man was leaving investment banking to study psychology). What emerged from my discussions with these people was that they were tired of the downgrading of public services in their community (one of the better-off areas in Sydney for these amenities, it should be noted). They are worried about how governments in the future are going to provide community infrastructure, given the nation's ageing population. As we are all too aware, Australia, like the UK, has witnessed a twenty-year debate about who should own, build and provide key services and infrastructure. As unions and governments fight over the ideological ground of privatisation and now public-private partnerships, many communities sit on the sidelines waiting for their hospital to be built and staffed adequately, and their telecommunications to be upgraded, among other services central to a cohesive society. The left has been as guilty as the right in this debate. Demonising the private sector as crooks and profiteers who could never be trusted to run a school is as ridiculous as claims by the right that all publicsector workforces are lazy and inefficient. As Mark Leonard, director of the UK-based Foreign Policy Centre, noted recently, 'many of the thorniest public policy issues will continue to defy governments acting on their own'.5 And he's right. So when it comes to the provision of key infrastructure and services, the role of government must be to embrace the skills available in the private sector, whether they are not-for-profit or open-market based. But - and this is where a progressive liberal tradition would differ from the conservatives who believe in handing over responsibility for services and needs to the private sector lock, stock and barrel - the role of government must be to form genuinely viable, well-regulated partnerships with non-government providers. The underlying philosophical base of a liberal approach to service delivery in areas such as health and education must begin with the recognition that the policies pursued by the Howard Liberals in these areas, most recently evidenced in its Medicare and highereducation reforms, have violated liberal values of equity, fairness and equality. As Eric Aarons has noted, in the field of higher edu-

So Where To from Here? 1 3 3 cation, universities have been accepting fee-paying students who do not meet the academic standard for a course at the expense of students who do meet the standard but who cannot afford to pay fees.6 And under the 2003 reforms announced by the ambitious Education Minister, Brendan Nelson, law students, for example, will pay $8,355 a year for tuition in funded places, but the government's contribution will only be $1,509. The Liberal Democrats in the UK recently released an influential discussion paper on the issue of provision of public services in the 21st century. It argues that the way to get the best value for money in areas such as health and education is to embrace two criteria: first, the state has a duty to fund health care and education, and second, the source of the provision of those services should be flexible. To ensure that any arrangement between the state and a private-sector provider actually delivers on its aims, the paper says that the relationship between the two entities must be to provide the service or facility'whatever it takes'. In short, any arrangement must not be informed by a narrow, rigid and profit-oriented private-sector-style contract, but by the private sector acknowledging that it is providing a public service. The monitoring of such arrangements must be rigorous and accountable. The users of the service or facility must be able to seek state intervention to cure defects and to ensure that the right of individuals to decent health care, education or public transport is always being met. Again, this is in stark contrast to the Howard government's welfare 'reforms'. Here, and particularly in its privatisation of the state's responsibility to assist people in finding work and training, there is nothing that a hard-to-place job-seeker can do when the private jobprovider, who is meant to be assisting them, puts them at the back of the room because they get paid by the state for the number of people they place in work, not the number they assist. The Liberal Democrats have also broken away from the obsessive tax-cutting politics that both its rival parties in the UK engage in, as do the Liberal Party and ALP here. The Liberal Democrats argue, for example, that those who earn the most in society should pay for higher education, not the students. It's a classic application of value pluralist liberalism - equity and justice demands that those who can afford to pay for those who can least afford a fundamental right, education, should do so. A genuinely liberal force in Australia could

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also follow this lead. Sitting in a boardroom in Melbourne in 2002, I put the issue of higher taxation for high-income earners to a group of those who were in that category. All except for an investment banker (what a surprise!) indicated that they would be willing to pay more tax if they knew that the revenue raised would go towards funding higher education.

New governance The fading relevance of the historical left-right ideological battle and the necessity, if our economic and social wellbeing is to be better enhanced, for cooperation between government, business and the social sector, also call into question the central pillars of our system of governance. The two-party system, bicameral parliaments and jurisdictional boundaries need rethinking, and a progressive party that embraces new ideas to meet new challenges should be at the forefront of advocating change. The engagement of citizens with the democratic process, improved administration, a more competitive economy, and greater social and economic equality would result from a better representation of the diverse views and needs of our modern society through a focus on regional governance. We need to restructure responsibilities so that national decisions are made at the Commonwealth level and there is real local input from governmental units based on recognisable communities of interest. Conceptually, 'regionalism' has had an uphill battle since the Whitlam experiments of the early 1970s, but local councils around the nation have increasingly been constructing regional organisations to better serve their constituents. Government departments, state and Commonwealth, are also nowadays usually organised on the basis of regions. The problem is that all these regions operate in isolation and so rarely coincide to share resources and opportunities. The Australian Capital Territory government has the effective powers of a state in a jurisdiction covering two federal seats. It has one chamber and is selected by proportional representation. While far from perfect, it is not noticeably worse than any of the big states in terms of services provided or money wasted, and it is very representative of the population it serves. A break-up of the big states would produce more diversity and engage citizens who have given

So Where To from Here? 1 3 5 up on ever being heard. Above all, it would heed diversity and equity, the key components of value pluralist liberalism. But if we are to move to invest local government with greater power and responsibility for the regions, then it too must be reformed. Labor and the Liberals generally favour bigger councils because they are supposed to be more economically efficient. Last year, when releasing the 2002 State of the Regions Report7 for the Australian Local Government Association, Professor Peter Brain of National Economics noted that 'effective competition in the early 21st century knowledge/ innovation driven economy requires that the role and responsibility of local and regional government be enhanced'. As Brain correctly noted, international governments, such as those of the UK, Spain and France, have accepted that their role is to 'ameliorate unconstrained market-driven outcomes, with a key instrument in achieving this outcome being the devolution of more power to local/regional governments'. This point is underlined by the report's finding that while 'overall equality of employment improved, the regions covering 20 per cent of Australia's population with the worst employment received only 11.6 per cent of new employment created since 1998'. A general argument against any change in these democratic structures is that change causes large disruption for very small benefits. But disruption could cause benefits in itself. There is great potential for finding new ways of doing things, either technologically or in new partnerships with the private or social sectors. But state and local government have been among the institutions most resistant to change, because the shared vested interests of those intimately involved overpower the interests of the citizens that are paying the bills but are only marginally interested in the well-concealed decision-making processes. A serious reconsideration of boundaries would open up other important questions about what governments actually do and who benefits.

National identity This book argues that in the field of Australia's identity the Howard Liberals have been highly successful in undoing the strong, independent and Asia-focused approach of Paul Keating. This has included rejection of a republic, enshrining the current flag in such

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mystique and regulation that it is going to be difficult to change it to reflect 21st-century Australia and native title to our land, and above all, the development of a foreign policy based on Australia's self-interest and on strengthening the alliance with the US, in an economic and security sense, to a degree hitherto unprecedented. For the abandoned liberals and the white-collar downshifters, and for many white-collar Labor voters, these fundamental issues of Australia's identity are of vital importance. These are the issues that both the Howard Liberals and to some extent Labor have abandoned in their quest for national-identity directives aimed at satiating the desires of materialist voters. When I was chairman of the Australian Republican Movement from 2000 to 2002, an extraordinary number of people in all voter categories would ask the same question of me: 'When are we going to get another chance to vote on the republic?' Howard's Liberals see national identity in a narrow way. John Howard is fond of claiming that the things that unite us as a nation are greater than the things that divide us. In other words, a spiritual and historical reconciliation is divisive and therefore out of bounds in the national-identity debate. The same goes for the republic, for the possibility of a sustained seismic shift in our cultural and economic meshing with the region in which we live, Asia, and for a more expansive refugee migration program. This strategy is swimming against the tide of globalisation. It is providing a false sense of comfort for the voters that the Howard Liberals have captured in the new territories and for One Nation sympathisers. For 21st-century Australia, globalisation brings a challenge to explore a new type of national identity that celebrates diversity and inclusiveness. With free trade, free capital flows, and cultural and societal diversity increasing at an exponential rate, the challenge to established cultural norms has never been greater. Nor has the capacity to open up a society's borders to absorb this teeming world. For the Howard Liberals, globalisation makes problematic the politics of identity in far more negative ways than it did for Paul Keating. Keating saw globalisation as providing'new opportunities for the celebration (and commercial exploitation) of cultural diversity', according to Carol Johnson.8 The tragedy is that in pursuing such an unadventurous and exclusive style of political lead-

So Whepe To from Here? 1 3 7 ership on globalisation, Howard's Liberals are now putting Australia's international image and identity at risk. This concerns the abandoned Liberals and many other white-collar voters. As one expatriate Australian business executive now living in Hong Kong told me, she was so ashamed of Australia's conduct in the Tampa incident that for a while she told people she met that she was from New Zealand. Australia's international image and identity is of manifest importance, despite what some commentators and individuals believe otherwise. The Australian National University's Alison Broinowski has found that the perception in many Asian countries is still that Australia is 'large, rich, half empty, white, racist'.9 While the perception does not accord with reality in some respects, the fact that it continues in such large measure among our nearest neighbours should be an ongoing cause for concern. The Australian's Paul Kelly has written that under the Howard Liberals the international depiction of Australia in recent years has projected another story. From the late 1990s Australia has been unable to project its inclusive model - the result of a culture war on the domestic front. Hansonism revived the old-fashioned racist Australia; the present refugee policy is a soft power disaster for Australia, apart from whether or not it stops the boats, because it projects a uniqueness in separation; the failure of Aboriginal reconciliation at home merely guarantees resorting to the UN as a necessary - though futile response.10

The reference Kelly makes to 'soft power' is important, and is at the crux of how a genuinely liberal party would deal with Australia's identity. Rather than manipulating or endangering the identity that Australia should strive for - liberal, diverse and tolerant as the Howard Liberals have been prepared to do for domestic political advantage, a genuinely liberal party would realise the importance of such identity in influence terms. Australia is a middleranking power and it can best have its voice heard when it is perceived as liberal and tolerant. This is its soft power, to use the term coined by Joseph Nye of the Kennedy School of Government. If other nations see evidence of Australia's commitment to multilateralism,

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tolerance and fairness, then the nation will punch above its weight in global influence. Resolving the matter of the republic is also vitally important in this respect. It is confusing to the world for a nation to project an image of innovation, diversity and youth when it has as its head of state a queen living 20,000 kilometres away. And the image of tolerance and fairness cannot ring true if Australia refuses to deal with its past inhumane treatment of indigenous Australians, as well as their present plight, and while the Howard Liberals pursue a policy of unparalleled punitiveness towards asylum-seekers.

Sharing a bottle of wine with one of Australia's leading pollsters in May 2003,1 put the thesis of this chapter to him. It was perhaps too 'complex', he told me, and I might be reading too much into the support that the new-territories voters in particular have for the Howard Liberals. In other words, the shift of the Liberal Party to the right is a 'Howard phenomenon', he told me. This is a prime minister who has dominated his Cabinet and party in a way not seen since Menzies, according to this pollster. It will change once he has gone. Dispirited by this analysis, and thinking that I might have to rip up this chapter and start again, I returned to the friends I was staying with in Sydney that night, and over another drink discussed the pollsters' comments. We agreed they had some validity; the materialist voter is highly hip-pocket sensitive and if economic conditions worsen then there is no doubt that some of the new-territories voters will return to Labor. But we also agreed that it is not simply the benign economic conditions that keep these voters, along with the One Nation sympathisers, attached to the Howard Liberals. It is also that, as Troy Bramston has perceptively noted, to win government, political parties will need the support of'patio man', the voter who is seeking social conservatism and is aspiring primarily to economic assets.11 These voters share the fear of globalisation and its consequences with One Nation sympathisers, although less enthusiastically. John Howard's Liberals represent these voters a good deal better than Labor. As the Financial Review's Mark Davis said of John

So Where To from Here? 1 3 9 Howard's decision to stay on as party leader in June 2003, this 'will severely test Labor by giving the Liberal Party its best shot in holding together the middle Australia coalition'.12 And this may remain the case once Howard is gone because, unlike Labor, which has within it still the glowing embers of a globalist, Keating-style intellectually progressive momentum, the Liberals have emasculated their left to the point where the fire has been completely extinguished. This is the tragedy of the Liberal Party. Can Peter Costello put this right? The answer to this question depends on one thing is Peter Costello a genuine liberal, as he has furtively demonstrated on occasions, or is he a cautious, intellectually lazy politician more concerned with holding onto the power, and therefore prepared to continue the Howard tradition so that the Liberals continue to retain their new territories and One Nation sympathisers? The jury is still out.

Chapter 10

Conclusion On a warm June day in 2003, sitting in a taxi in Toronto, I strike up a conversation with a Somalian taxi driver. He's a refugee and he's fascinated by global politics. We discuss Australia and Canada, and the conversation turns to political parties. I make the point that John Howard is the leader of the Liberal Party in Australia. This evokes a turn of the head from the taxi driver who says firmly, 'John Howard's no liberal. Now Jean Chretien [the Canadian Prime Minister], he's a liberal'. Canada's ruling Liberal Party is indeed liberal - a centre-left party whose policy framework is based on the values of liberalism - equality, fairness and a belief in collective security. Chretien's government refused to join John Howard, Tony Blair and George Bush in the Coalition of the Willing that invaded Iraq in early 2003. As an aside, Chretien's decision on this was a good deal more courageous than Howard's, given that 80 percent of Canadian exports go to the US. But back to the prescient observation of the Somalian taxi driver. He hit the spot - the title of the Liberal Party in Australia is now a total misnomer. There is nothing liberal about the Howard-led party. It is a conservative, arrogant machine that has for the past seven years shown a cavalier disregard for the key tenets of liberalism - freedom of thought and the primacy of human rights. As I have sought to argue in this book, Howard's Liberal Party has become a comfortable home for One Nation sympathisers and the new-territories materialists. John Howard is unapologetic about this - his speech to the National Convention of the Liberal Party in June 2003 was a typically hubristic, self-satisfied effort, lacking in vision and any sense that the Liberal Party could return to the values of the past, which reached their high point in the government of Malcolm Fraser from 1975 to 1983. 140

Conclusion 1 4 1 Howard went to Adelaide just three days after dashing the hopes of the man who has provided new meaning to the old line that 'patience is a virtue' - Peter Costello. The Prime Minister is not, to use Margaret Thatcher's memorable phrase, 'for turning'. He is staying on as leader for as long as it remains in the party's 'best interests' and his colleagues want him to. In Adelaide, Howard set out his achievements in office and what he saw as being important in the future. It was a speech of a cultural warrior, complete with reference to the Liberals' great nemesis, Paul Keating. It was a speech that sought to evoke the value of egalitarianism, but that fine aim was phrased not on a philosophical basis, but in the cloying rhetoric of Australian mythology. For John Howard, a great achievement of the Liberal Party since 1996 has been to end that long seemingly perpetual symposium on our self identity that seemed to occupy the 10 years between the middle of the 1980s and the defeat of the Keating Government in 1996. We no longer naval gaze [s/d about what an Australian is. We no longer are mesmerised by the self appointed cultural dieticians who tell us that in some way they know better what an Australian ought to be than all of us who know what an Australian has always been and always will be.1 This is a statement of breathtaking arrogance - one that might have fitted very well with the speeches of British Colonial Office officials defending the Empire a century ago. But wait, there's more! Howard asserted that Australia is now at a moment in its history of unparalleled world respect, unparalleled domestic economic strength with all the social stability and tranquillity, a place in our history that other generations would envy. That is something that we are entitled to be proud of but it is also something that places an enormous responsibility on this generation of political leaders.2 Note the word 'tranquillity' - the man who told the nation in 1995 that if he became Prime Minister he would aim to make us all

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What's Wrong with ihe Liberal Party?

'relaxed and comfortable' has achieved his modest ambition. Leaving aside the fact that Howard's assertion about Australia's standing in the global community being one of'unparalleled world respect' is hard to reconcile with the beating it has taken from global bodies such as the UN or its near neighbours over its treatment of refugees or its preparedness to be joined at the hip with the US on all things, Howard's words reflect a smugness and cosiness akin to the final years of Robert Menzies. The extent to which the Howard Liberals are turning back the clock on the duty of the modern state to provide for all its citizens in core areas such as education, health and welfare was spelt out by Howard in this Adelaide address. The Prime Minister tells us that if we ever lose that spark of egalitarianism, if we ever lose that spirit of mateship, if we ever lose that sense of looking after the person who through no fault of his or her own has fallen behind, if we ever lose those components of our social structure which make Australia the nation we readily identify and others readily identify then we will have failed future generations.3

These are sentiments that, although based on the questionable assertion that Australia has historically been egalitarian, are unequivocal in their decency. Yet in the context in which they are uttered they are a sick joke. In the twelve months leading up to the delivery of this speech alone, the Howard Liberals have sought to introduce changes to the welfare system that would have imposed financial penalties of up to $987 on sole parents who miss an appointment with Centrelink. The Education Minister, Brendan Nelson, wants to 'reform' the higher-education system by ensuring that when students graduate from university they will be faced with the reality of paying massive sums of money for the course they have completed. These changes even prompted the normally conservative Law Council of Australia to issue a blistering media release on 14 May 2003, which said that because under Nelson's changes law students would have to pay more than $8,000 per year of study, law would once again become 'a career predominantly open to the privileged few'.4 This is the Liberal Party of today, but what of the party of tomorrow? The recent mutterings of Peter Costello's supporters about his

Conclusion 1 4 3 preparedness to assert a more liberal approach to indigenous issues, welfare and constitutional reform are simply that - Costello and his allies know that with John Howard's decision to stay on as leader, the possibility is now wide open for Tony Abbott and potentially others to stake their claim to the top job. Costello must continue to build support among the genuine liberals in the party if he is to stay ahead of the pack of likely contenders. The broader issue, however, is one that relates to quality and capacity of Liberals themselves. It is always dangerous for those discontented with a current situation to assert that there was once a 'golden era', and that if only that time were to return then all would be well with the world. But in the case of the Liberal Party it is fair to say that what this institution lacks today is people prepared to articulate an alternative to the current pall of populist conservatism and cultural aggression that John Howard and his henchmen have managed to create. The Liberal Party has always had within it fine minds and people who genuinely believed in the necessity for the party to be seen as progressive and compassionate. Former leaders Malcolm Fraser and John Gorton fall into this category, as do former leading frontbenchers such as Fred Chaney, Ian McPhee and Peter Baume. And the Liberal Party in recent years has had within it individuals who believed that good public policy and long-term vision were necessities for a party that is serious about power - John Hewson, former New South Wales Premier Nick Greiner, former New South Wales MP Jim Carlton, and my former employer, Finance Minister John Fahey, represent that group. But where are the successors to these outstanding contributors today? If they are within the party, most are hiding their light under a bushel. Victorian Petro Georgiou, and New South Wales MPs Marise Payne and Bruce Baird are people in the current context who best represent that questioning, dissenting tradition that has always been the strength of the Liberal Party. But all are on the backbench - no doubt punished by Howard for their preparedness to fly the flag of genuine liberalism. Their plight is a succinct statement of all that is wrong with the Liberal Party today. So what is wrong with the Liberal Party? It is no longer liberal in name, action or spirit. But things do not have to be this way. I began this commentary with a story of my own flight from the Liberal Party. I have not for a moment questioned the decision I

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took to leave the party that had intrigued me intellectually over many years. And it is not a party to which I will ever return - 1 am comfortable in the Australian Democrats (a party not without its own flaws) precisely for the reason that it unambiguously stands for the key liberal values of equality, progressive liberalism and a commitment to an Australia that is committed to genuine global citizenship. But I hope that some of the ideas and observations in this book fall on fertile ground in the Liberal Party because, like all organisations, it does include people of goodwill, decency and genuine liberal principles.

Endnotes

11ntroduction 1 M. Latham, 'Wedge politics and the culture war', 2002 Menzies Lecture, Menzies Centre for Australian Studies, King's College, London, 17 September 2002. 2 Liberal Party of Australia and National Party of Australia, Fightback! 3 vols (Canberra: Liberal and National Parties, 1991).

2 'Walking Down the Middle ol the Road' 1 A.W. Martin, Robert Menzies: A Life, vol. 2 (Melbourne University Press, 1999), p. 9. 2 R. Menzies, 'The forgotten people', radio broadcast, 22 May 1942 (republished at http://www.australianpolitics.com/parties/liberal/1942forgotten-people.shtml -visited 30 June 2003). 3 J. Brett, 'Liberal Philosophy from Menzies to Hewson' in B. Costar (ed.) For Better or For Worse: The Federal Coalition (Melbourne University Press, 1994), p. 10. 4 P. Kelly, The End of Certainty (Sydney: Allen & Unwin, 1994), p. 110. 5 For a further account of Crossroads see ibid., pp. 41-3. 6 G. Henderson, Menzies Child: The Liberal Party ofAustralia, rev. edn (Sydney: HarperCollins, 1998), p. 280. 7 M. Fraser, 'The future of the Liberal Party - a forum', Quadrant, 37, 5 (1993), pp. 12-14. 8 Kelly, End of Certainty, pp. 108-9. 9 ibid., p. 249. 10 ibid., pp. 237-9. 11 Treasury (Australia), Economic Statement May 1988: Statement Delivered on 25 May 1988 by the Honourable P.J. Keating, M.P., Treasurer of the Commonwealth ofAustralia (Canberra: AGPS, 1988). 12 Liberal Party of Australia and National Party of Australia, Future Directions: It's Time for Plain Thinking (Canberra: The Parties, 1988). 13 H. Emy, 'From liberalism to conservatism?' Quadrant 35,12 (1991), p. 13.

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Endnotes (pages 18—40)

14 Henderson, Menzies Child, p. 294. 15 M. Steketee, 'Howard hopes to succeed where Unworth failed', Sydney Morning Herald, 2 December 1988. 16 ibid. 17 Liberal Party of Australia and National Party of Australia, Economic Action Plan: The Liberal-National Parties' Economic and Tax Policy (Canberra: The Parties, 1989). 18 Liberal Party of Australia and National Party of Australia, Fightback! 3 vols (Canberra: National and Liberal Parties, 1991). 19 P.J. Keating, One Nation: Statement by the Prime Minister, the Honourable PJ. Keating, 26 February 1992 (Canberra: AGPS, 1992). 20 A. Downer, 'The things that matter', address delivered by the Leader of the Opposition to the National Press Club, Canberra, 5 September 1994.

3 A Liberal Party Obsession 1 G. Henderson, 'Yoo-hoo, what would Menzies be thinking?' Sydney Morning Herald, 19 March 2002. 2 M. Goot, 'Distrustful disenchanted, and disengaged? Public opinion on politics, politicians, and the parties: an historical perspective' in D. Burchell and A. Leigh (eds), The Prince's New Clothes: Why Do Australians Dislike Their Politicians? (Sydney: UNSW Press, 2002), p. 17. 4 Australia, House of Representatives, Votes and Proceedings (Hansard), 17 October 1988, p. 1680. 4 ibid., 31 October 1989, p. 2134. 5 ibid., 17 October 1985, pp. 2325,2349. 6 D. Kemp, 'The Liberal Party' in H. Mayer and H. Nelson (eds), Australian Politics: A Fifth Reader (Melbourne: Longman Cheshire, 1980), p. 293. 7 G. Henderson, 'A historical oversight', Sydney Morning Herald, 19 August 1996. 8 P. Keating, quoted in Australia, House of Representatives, Votes and Proceedings (Hansard), 27 February 1992, p. 373. 9 D. Watson, Recollections of a Bleeding Heart: A Portrait of Paul Keating PM (Sydney: Random House, 2002), p. 123. 10 J. Howard, 'The role of government: a modern liberal approach', address to Menzies Research Centre, 6 June 1995. 11 M. Goot, Public opinion and the democratic deficit: Australia and the war against Iraq, unpublished paper, May 2003. 12 A. Ramsey, 'Liberals' serial grub at the heart of a sorry affair', Sydney Morning Herald, 8 May 2002. 13 J. Brett,'Liberal philosophy from Menzies to Hewson', Australian Quarterly, 65, 3 (1993), p. 53 (emphasis added). 14 ibid., pp. 53-4.

Endnotes (pages 41-62) 1 4 7 4 Whither the Nationals? 1 B. Costar, 'The Nationals need to review their place in Australian politics, too', Australian Financial Review, 21 January 2002. (A longer version was published at http://www.onlineopinion.com.au/2002/Feb02/Costar.htm on 15 February 2002 - visited 29 June 2003.) 2 ibid. 3 ibid. 4 Quoted in A. Hepworth, 'Stoner grabs Nats leadership', Australian Financial Review, 1 April 2003. 5 Quoted in C. Harvey and M. Gilchrist, 'Sinclair appeals for new blood', Australian, 12 November 2001. 6 Quoted in A. Hoy, 'Strife of the party', Bulletin, 24 October 2001. 7 'Liberal MP says Govt is neglecting regions', 'AM', ABC Radio, 15 December 1999 (http://www.abc.net.au/am/s73428.htm - visited 29 June 2003). 8 ibid. 9 These are electorates ranked according to their relative socioeconomic advantage - see M. Mackerras and W. Maley,' 1999 republic referendum results: some reflections' in J. Warhurst and M. Mackerras (eds), Constitutional Politics: The Republic Referendum and theFuture (Brisbane: University of Queensland Press, 2002), Table 8.16, p. 106.

5 Assuming One Nation 1 Australia, House of Representatives, Votes and Proceedings (Hansard), 28 October 1996, p. 5877. 2 ibid., pp. 5877-8.

3 ibid., 10 September 1996, p. 3860. 4 ibid., p. 3864. 5 J. Singleton, P. Martyn and I. Ward, 'Did the 1996 federal election see a bluecollar revolt against Labor? A Queensland case study', Australian Journal of Political Science, 33 (1998), p. 124. 6 M. Goot and I. Watson, 'One Nation's Electoral Support: Where does it come from? What makes it different and how does it fit?' Australian Journal ofPolitics and History, 47 (2001), p. 169. 7 ibid., p. 183. 8 G. Henderson, Menzies' Child: The Liberal Party of Australia, rev. edn (Sydney: HarperCollins), p. 17. 9 S. Jackman, 'Pauline Hanson, the mainstream, and political elites: the place of race in Australian political ideology', Australian Journal of Political Science, 33 (1998), pp. 167-86. 10 National Inquiry into the Separation of Aboriginal and Torres Strait Islander Children from their Families (Australia), Bringing Them Home: Report of the National Inquiry into the Separation of Aboriginal and Torres Strait Islander

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Endnotes (pages 62-92)

Children from their Families, Commissioner Ronald Wilson (Sydney: Human Rights and Equal Opportunity Commission, 1997). 11 S. Wilson, 'The wedge election: the battle for Australia's disaffected voters', Australian Quarterly, 73,5 (2001), pp. 8-15. 12 National Public Leadership Centre (ANU) and Australian Development Strategies Pty Ltd, Demographic Correlations of the Two Party Preferred Vote and Swings - 2001 (Canberra: Australian National University, 2001). 13 H. Mackay, 'John Howard, the Houdini of polities', Age, 3 August 2002. 14 J. Howard, interview on 'AM', ABC Radio, 28 October 1997. 15 'Australian Prime Minister John Howard', TimeAsia 152,15(19 October 1998).

6 The Paradox 1 'State Libs must lift their game', Australian Financial Review, 5-6 April 2003. 2 A.F. Davies, 'The government of Victoria' in S.R. Davis (ed.), The Government of the Australian States (London: Longmans, 1960), p. 183. 3 ibid., p. 190. 4 B. Galligan.'The Political Economy of the States' in B. Galligan (ed.), Australian State Politics (Melbourne: Longman Cheshire, 1986) p. 253. 5 ibid. 6 See R. Baker, 'Kennett hints at a return in 2006', Age, 15 April 2003. 7 R. Doyle, 'Why the Liberals are the party of the future', Age, 8 April 2003. 8 J. Howard, Address to the 2003 Liberal Party National Convention, Adelaide, 7 June 2003 (http://www.pm.gov.au/news/speeches/2003/speech2330.htm).

7 After Howard? 1 2 3 4 5

D. Shanahan, 'Rise of a true national party', Australian, 14 December 2001. ibid. P. Kelly, 'Security in incumbency', Australian, 19 April 2003. M. Gordon , 'A Leader for the times', Age, 14 December 2002. P. Williams, 'Uneasy is the party that waits to pass on the crown', Australian, 22 April 2003. 6 See A.W. Martin, Robert Menzies: A Life, vol. 1 (Melbourne University Press, 1993), p. 189. 7 D. Kemp, 'The Liberal Party' in H. Mayer and H. Nelson (eds), Australian Politics: A Fifth Reader (Melbourne: Longman Cheshire, 1980), p. 300. 8 ibid. 9 ibid. 10 G. Henderson, Menzies' Child: The Liberal Party of Australia, rev. edn (Sydney: HarperCollins, 1998), pp. 202-6. IIP. Costello, 'Aboriginal reconciliation', Media Transcript No. 2000/111, 3 December 2000 (http://www.treasurer.gov.au/tsr/content/transcripts/2000/ lll.asp).

Endnotes (pages 93—107) 1 4 9 12 P. Costello, 'Australia's role in Asia', speech delivered at the Australasia Centre of the Asia Society annual dinner, Sydney, 16 October 2002. 13 M. Harvey, 'Costello's battlers', Herald Sun, 4 June 2003. 14 See M. Grattan,'Liberals feud over poisonous memo', Sydney Morning Herald, 3 May 2001. 15 S. Lewis, 'Stay and save us, MPs beg Howard', Australian, 2 January 2003. 16 Treasury (Australia), Intergenerational Report 2002-03, Budget Paper No. 5 (Canberra: Treasury, 2002). 17 P. Costello, 'Paid maternity leave is not a fertility policy', Options, 14 (August 2002) (http://www.pyneonline.com - visited 29 June 2003). 18 Treasury (Australia), Tax Reform: Not a New Tax, a New Tax System (Canberra: Treasury, 1998). 19 J. Hewson, 'What a time to peter out', Australian Financial Review, 21 February 2003. 20 D. Watson, Recollections of a Bleeding Heart: A Portrait of Paul Keating PM (Sydney: Random House, 2002), pp. 87ff. 21 T. Bramston, 'Who's Liberal? What's Liberal?' Meanjin, 62 (2003) p. 31. 22 A. Abbott, 'Reform with a social conscience', speech delivered at Young Liberals Annual Conference, Adelaide, 11 January 2003 (http://www.tonyabbott.com. au/speech/younglib2003.html - visited 28 June 2003). 23 A. Abbott, 'Making work pay - the trouble with the welfare state', CD. Kemp Lecture to the Institute of Public Affairs, Melbourne, 12 June 2001 (http://www.ipa.org.au/Speechesandsubrnssns/AbbottCDK2001.html- visited 28 June 2003). 24 A. Abbott, 'Mutual obligation and the social fabric', Bert Kelly Lecture to the Centre for Independent Studies, Sydney, 3 August 2000 (http://www.tonyabbott.com.au/speech/Bert_Kelly_Lecture.htm - visited 28 June 2003). 25 A. Abbott, 'Liberal business', speech delivered to Conservative Breakfast Club, Brisbane, 7 September 2001 (http://www.tonyabbott.com.au/speech/sbspeech. htm - visited 28 June 2003). 26 ibid. 27 M. Birney, 'Labor Party repeals laws banning promotion of homosexuality in schools', media release, 12 December 2001.

8 Meeting the Challenges: Have the Liberals Been Captured? 1 G. Megalogenis, 'The million voters who matter', Australian, 21-22 December 2002. 2 ibid. 3 D. Nason, 'Liberals come to senses and take right track', Australian, 21-22 December 2002. 4 N. Ascherson, 'The warning shot', Observer, 12 May 2002. 5 A. Dupont, 'Refugees and illegal migrants in the Asia-Pacific region', in William Maley et al., Refugees and the Myth of the Borderless World (Canberra:

150

Endnotes (pages 107—117)

Department of International Relations, Research School of Pacific and Asian Studies, Australian National University, 2002), pp. 9-15. 6 S. Rosewarne,'Globalisation: the new migration', Overland, 164 (2001), p. 29. 7 G. Withers, 'Population issues for Australia' in P. Duncan and R. Maddock (eds), Aspire Australia: Contributions to the Future Directions Project (Melbourne: Business Council of Australia, 2002), p. 60. 8 ibid. See also P. McDonald, 'Australia's population futures', presentation to the DIMIA Migration Benefiting Australia Conference, Sydney, 7-8 May 2002 (http://demography.anu.edu.au/Publications/popfutures.shtml - visited 28 June 2003). 9 'Australian Prime Minister John Howard', TimeAsia 152,15 (19 October 1998). 10 J. Howard, 'Building a stronger and fairer Australia: liberalisation in economic policy and modern conservatism in social policy', speech at the Australia Unlimited Roundtable, 4 May 1999 (http://www.pm.gov.au/news/speeches/ 1999/AustraliaUnlimitedRoundtable.htm - visited 28 June 2003). 11 F. Brenchley, 'The Howard defence doctrine', Bulletin, 28 September 1999, pp. 22-4. 12 ibid. 13 S. Fitzgerald, 'What comes first, defence or foreign policy? Should Australia have an East Asia doctrine?' Australia-Asia Papers, 4 (2001), p. 169. 14 A. Downer, Interview with John Faine, ABC Radio 774 Melbourne, 21 November 2000 (http://www.dfat.gov.au/media/transcripts/2000/001121_fa_dprk. html - visited 29 June 2003). 15 R. Woolcott, 'Whither Australia in the 21st century? Our place in a greatly changed world', address to the National Press Club, Canberra, Wednesday, 16 April 2003. 16 'Editorial: Australia's fear and loathing', Asiaweek, 18 October 1996. 17 A. Milner, 'Don't call off engagement with Asia', Australian Financial Review, 4 January 2000. 18 Prime Minister (Australia), Working Nation: Presented by the Prime Minister the Honourable P.J. Keating, M.P. 4 May 1994,2 vols (Canberra: AGPS, 1994). 19 P. Harris, 'From relief to mutual obligation', Journal of Sociology, 37 (2001), p. 20. 20 Howard, 'Building a stronger and fairer Australia'. 21 'Thousands likely to lose out on welfare', Sunday Tasmanian, 29 June 2003. 22 T. Eardley, P. Saunders and C. Evans, Community Attitudes towards Unemployment, Activity Testing and Mutual Obligation, SPRC Discussion Paper No. 107 (Sydney: Social Policy Research Centre, 2000). 23 M. Steketee, 'Working on a new deal', Australian, 26-27 April 2003. 24 A. Harding, R. Lloyd and H. Greenwell, Financial Disadvantage in Australia 1990 to 2000: The Persistence of Poverty in a Decade of Growth, report commissioned by the Smith Family (Canberra: National Centre for Social and Economic Modelling, 2001). 25 K. Tsumori, P. Saunders and H. Hughes, 'Poor arguments: a response to the Smith Family report on poverty in Australia', Issue Analysis 21 (16 January

Endnotes (pages 117—142) 1 5 1 2002) (http://www.cis.org.au/IssueAnalysis/ia21/IA21.htm - visited 28 June 2003). 26 D. Shanahan, 'Battlers may choke on PM's medicine', Australian, 29 April 2003.

9 So Where To from Here? 1 'Free trade pay-off?', 'Sunday', Channel 9, 16 March 2003 (http:// sunday.ninemsn.com.au/sunday/cover_stories/artide_1224.asp - visited 29 June 2003). 2 C. Hamilton and E. Mail, Downshifting in Australia: A Sea Change in Pursuit of Happiness, Discussion Paper No. 50 (Canberra: Australia Institute, 2003), p. 8. 3 National Public Leadership Centre (ANU) and Australian Development Strategies Pty Ltd, Demographic Correlations of the Two Party Preferred Vote and Swings - 2001 (Canberra: Australian National University, 2001), p. 2. 4 G. Crowder, 'Two value-pluralist arguments for liberalism', Australian Journal of Political Science, 37 (2002), p. 471. 5 M. Leonard, 'Dishonest and greedy? We still need business to do good', Observer, 21 July 2002. 6 E. Aarons, What's Right? (Sydney: Rosenberg, 2003), p. 116. 7 P. Brain, State of the Regions Report (Canberra: ALGA, 2002). 8 C. Johnson, Governing Change: Keating to Howard (Brisbane: University of Queensland Press, 2000), p. 47. 9 'Regional perceptions of Australia', 'World Today', ABC Radio, 5 May 2003 (http://www.abc.net.au/worldtoday/content/2003/s847565.htm - visited 29 June 2003). 10 P. Kelly, 'Soft option for hard heads', Australian, 8 June 2003. 11 T. Bramston, 'Politics in the suburbs and the emergence of patio man', Australian Quarterly, 74, 5 (2002), pp. 12-14. 12 M. Davis, 'Staying in touch with nation's backyards', Australian Financial Review, 4 June 2003.

10 Conclusion 1 J. Howard, Closing address to the Liberal Party National Convention, Adelaide, 8 June 2003 (http://www.pm.gov.au/news/speeches/2003/speech2331.htm visited 28 June 2003). 2 ibid. 3 ibid. 4 Law Council of Australia, 'Budget changes threaten diversity of Australia's future lawyers', press release, 14 May 2003 (http://www.lawcouncil.asn.au/ read/2003/2379870449 - visited 29 June 2003).

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Index

Aarons, Eric, 132 Abbott, Tony, 38,80,96,122,127 leadership possibility, 99-101,120, 143 mutual obligation, 114—15 ABC, see Australian Broadcasting Commission, Australian Broadcasting Corporation Abetz, Eric, 79 Aboriginal and Torres Strait Islanders Commission, 121 Aborigines, see indigenous Australians Accord, the, see Prices and Incomes Accord ACTU, 13,19 ageing population, 96,108 Aitkin, Don, 45 Allison, Lyn, 130 ALP, see Australian Labor Party Anderson, John, 42,48 ANL,9 APEC, see Asia-Pacific Economic Cooperation forum Armitage, Richard, 125 arts funding, 11,12, 33,40 Ascherson, Neal, 107 Asher, Louise, 102 Asia Asian languages in schools, 34,66 Australia's reputation in, 36, 111-12,137,142 Australian engagement in John Hewson on, 34

160

John Howard on, 61,66-7, 92-3,105-6,110-12,136 Paul Keating on, 32,40,58, 119 Pauline Hanson on, 36 Peter Costello on, 92-3,96 Asia-Pacific Economic Cooperation forum (APEC), 23, 55,93, 111, 112,125 asylum-seekers, 6,65,127,131 Labor policies, 2,119 Liberal policies, 1,96,123,138 Tampa crisis, 63-4,123 Australia Council, 20 Australia Institute, 127 Australian Broadcasting Commission, 9 Australian Broadcasting Corporation, 122 Australian Capital Territory government, 70,134 Australian Democrats, 7,59,119,121, 130-1 Australian Labor Party (ALP), 2,12, 16,61,70-1,119-20 constituency, 57 factionalism, 79-80 National Party and, 43 state governments, 69-83 Australian Local Government Association, 135 Australian Republican Movement, 136

Index 1 6 1 Australian Settlement, 8-9,11,13-14, 17,20

Bush, George H.W., 70,111,124-5, 140

Bacon, Jim, 76, 78 Baird, Bruce, 94,96,143 Bali bombings, 86,92,93,110 Ballantyne, Ian, 125,126 Bannon, John, 16,75 Barnard, Lance, 32 Barnes, Greg, 1,4,123,143-4 Barnett, Colin, 77, 79,102 Barnett, Guy, 79 Barron, Peter, 15 Bartlett, Andrew, 130 'battlers', 55, 57, 58,100 Baume, Michael, 38 Baume, Peter, 6,14,123,143 Beattie, Peter, 70, 71, 74, 76, 79 Beazley, Kim, 64,119 Berlin, Isaiah, 129 BHP Steel, 126 Birney, Matt, 102 Bishop, Julie, 123 Bjelke-Petersen, Sir Joh, see Joh-forPM campaign Blair, Tony, 124,125,140 boards, government appointments to, 7,122 border protection, 64,105-6 Boyle, Peter, 15 Bracks, Steve, 69, 74, 77 Brain, Peter, 135 Bramston, Troy, 138 Brenchley, Fred, 110 Brett, Judith, 40 Bringing Them Home report, 62-3 Brogden, John, 102 Broinowski, Alison, 137 Brough.Mal, 102,114 Brown, Dean, 6, 75-6, 79 Brunton, Ron, 122 budget reform, 26, 57 Burke, Brian, 79,80 Burke, Edmund, 4 Burr, Max, 14

Cain, John, 74-5 Cameron, Rod, 15 Campbell Inquiry, 97 Carlton,Jim,2,ll,102,143 Carr, Bob, 69, 72,102 Centre for Independent Studies (CIS), 100,117,122 Centrelink, 'breaching' of clients, 114-15,142 CES, see Commonwealth Employment Service Chaney, Fred, 6, 20,123,143 change, 10,61,90 Chapman, Bruce, 122 Chapman, Vickie, 103 Cherry, John, 130 children overboard affair, see Tampa crisis

China, recognition of, 11 Chretien, Jean, 124,140 Clinton administration, 115-16 Clinton, Bill, 70 Coalition of the Willing, 111, 124,140 cohesion, social, 17-18,40,60,106, 113,115-17,128 Commonwealth Bank, privatisation of, 13-14 Commonwealth Employment Service (CES), 100,115,133 conservatism, 50,62,120 Liberal Party, 7,68, 84,99,101, 104,143 constitutional reform, 49,99,105 consumption tax, 16,17,21 Costar, Brian, 41,42,43 Costello, Peter, 23, 77,127 Australian engagement in Asia, 93 Intergenerational Report, 96 leadership possibilities, 51,87, 90-9,105, 120, 139,141, 142 A New Tax System, 96-7 policies, 92,98

162 Costello, Peter (cont.) qualifications of staff, 122 Treasurer, 39,97 Country Party, 41 see also National Party Court, Richard, 46, 75,76,80 Crean, Simon, 71,85 Crichton-Browne, Noel, 79 Crosby, Lyn ton, 61 Crossroads group, 2,11,12 cultural cringe, 31, 32 dairy industry, 126 Davies, A.F., 72, 73, 74,75, 76 Davis, Mark, 138 debate, public Liberal Party and, 6-7, 44, 101-2, 121,123-6 political parties and, 1-2 state governments and, 76 defence issues, 70,93,112 Democratic Labor Party, 10,33 immigration policy, 61 demographics, 43,106 detention centres, 64 dissent, 76,101-2,121,123-4 disunity, 76-7, 80 diversity, 129,135 Douglas, Roger, 15 Dowding, Peter, 71 Downer, Alexander, 6,23,25, 37,91, 109,111 downshifters, 127-8,131,136 Doyle, Robert, 77, 78,102 Dupont.Alan, 107,109 economic reform, 18, 23,26,49,61, 120 economics, 8,9, 21 free-market, 9,12,14,16,21,84 education, tertiary, 10,11,21,33, 132-3,142 efficiency, 21,22 egalitarianism, 141-2 Eggleton, Tony, 19

elites, 42, 57, 58 Elliott, John, 16,19 Emy,Hugh,4,18 environment, 21,127 envy, politics of, 50, 54 equality, 129,132,140 equity, 129-30,132-3,135 Evans, Iain, 77 Fahey, John, 6, 76, 80,143 fairness, 132,138,140 Family Law Act, 11, 54 fear, politics of, 70, 84,90,99,114,130 federalism, 73,134 Feely, Nicole, 26 Ferguson, Martin, 119 Fightback!, 5,21-3 financial markets, deregulation of, 11, 13,26,97 First Home Owner Scheme, 116,127 Fischer, Joschka, 131 Fischer, Tim, 41,43,44,45 Fitzgerald, Stephen, 111 flag, Australian, 26,28,29,32, 34,40, 135 foreign aid, 53-4,62,109 foreign policy, 6,12, 99,136 Foreign Policy Centre, 132 Fraser, Malcolm, 9,60,98,101,121, 123 leadership, 90 liberalism, 7,40,143 policies, 16,33 Fraser government, 2,4-5,6,11-12, 37,140 free-trade agreement with the US, 112,124-6 Future Directions, 17-19,20,34 Galligan, Brian, 73-6 Gallop, Geoff, 79 Garnaut, Ross, 122 Georgiou, Petro, 96,122-3,127,143 Gillard, Julia, 119 Gingrich, Newt, 70

Index 1 6 3 globalisation, 3, 60,130,138 Pauline Hanson and, 36 Liberal Party, 47 refugees, 106-7,136 goods and services tax, 21, 57 Goot, Murray, 27, 58, 59,67 Gordon, Michael, 85 Gorton, John, 10,11, 79, 88, 89,123, 143 Goss, Wayne, 69, 71 government open, 33,130 role of, 131-4,134-5 small, 11,12 state, 72-3, 83

spending cuts, 14, 20 Gray, Robin, 76 Greens, 119,131 Greiner, Nick, 6, 7,69, 71, 73-4,102, 143 Groom, Ray, 6, 75, 76 Hanson, Pauline, 1,18,36, 50, 51, 58, 68 John Howard and, 52-3,54, 56, 62 Harries, Owen, 122 Harris, Len, 68 Harris, Patricia, 113 Harvey, Michael, 93 Hawke, Robert, 21, 27,82, 87,111 Hawke government, 12,15, 16,19,60, 75 Hayden, Bill, 52 Hayek, Friedreich von, 8, 21 health services, 21,33, 57,117, 132-3 Henderson, Gerard, 8,25-6, 30,60, 123 Henderson Inquiry into Poverty, 11 Henry, Ken, 122 Hewson, John, 6, 7,18, 20,27, 34, 100-1,102,123,143 Fightback!, 5,21-3 leadership, 25-6, 57,88 on Peter Costello, 97-8,99 Hidding, Rene, 77, 78, 79,102

Hobbes, Thomas, 4 Hockey, Joe, 94,102, 120 Hogg, Bob, 15 Holt, Harold, 59, 91 Hoon, Geoffrey, 124 hospitals, 131—4 House of Cards (television series, UK), 87 Howard, John, 5, 7, 21,86,120,135 appointments to government boards, 7,122 Australian engagement in Asia, 66, 67,110-12 'Australia Unlimited Roundtable' speech, 110 border protection, 106 cultural warrior, 91,141,143 dealing with criticism, 103, 123-4 decision to stay on as leader, 87, 91,138-9 Future Directions, 17,19

governmental unity, 89, 90 'Headland' speech, 34-5,37 immigration, 60-1,64-5,106,107 'incentivation', 17 industrial relations, 13 Paul Keating and, 28, 30,34-5, 37 leadership, 6,12, 23-4, 32, 54, 89, 121,140 mutual obligation, 113-14,133 National Party and, 48-9 One Nation Party and, 35, 51 Pauline Hanson and, 52-3, 54-6, 59,62 policies, 14-16, 116,125,126 Sir Thomas Playford Memorial Lecture, 29-30 social conservatism, 34 successor to, 84-103 Work for the Dole program, 100-1 Howard Policy Committee, 13 Hughes, Robert, 61 Hughes, Tom, 123 human rights, 4,12, 33,140 Human Rights Act, 33

164

Index

Human Rights and Equal Opportunity Commission, 62-3 see also Bringing Them Home report Human Rights Commission, 5 see also Human Rights and Equal Opportunity Commission Hume, David, 4 Hyde, John, 2,11 identity, national, 135-8,141 ideology, 31,105 immigration John Howard, 59-62,63-8, 79, 108-9,136 One Nation, 54,56,105-6 indigenous Australians apology to, 92-3 John Howard and, 64,68,92-3, 121,143 Labor Party and, 119 land rights, 4-5,22-3,26, 29,33, 34,119,136 Paul Keating and, 32,40,34-5, 55 Pauline Hanson and, 36, 54 individuals deserving, 17,100,113 rights of, 133 industrial relations, 8,13,14,20,21, 57 infrastructure and services, public, 131-4 Institute of Public Affairs, 8,100,122 intellectualism, 121-2,126,139 interest groups, 15,104 interest rates, 39 Iraq, war on, 36,66, 70, 85,86, 111, 124-5, 126 Jackman, Simon, 61-2, 65 Joh-for-PM campaign, 16-17 John Paul II (Pope), 100 Johnson, Carol, 136 Johnson, Ken, 106 Joseph, Keith, 121

Jospin, Lionel, 131 journalists, 84-6 Joyce Foundation, 116 justice, 129,133 Kant, Immanuel, 4 Karmel Report, 11 Keating, Paul, 19, 25,39, 57,60, 75,87, 96 agenda, 5, 32,34-5, 58,119,135 APEC, 23, 55, 93,111,112,125 Australian engagement in Asia, 109,110-11 'Banana Republic', 14 economic reform, 13,16 globalisation, 136 Liberal Party and, 25-40,141 performance in Parliament, 27-8 personal characteristics, 27, 37-8 piggery controversy, 29, 38 qualifications of staff, 121-2 Treasurer, 15, 20 Working Nation, 100,113-14,116 Keating government, 21-2 Kelly, Jackie, 55-6 Kelly, Paul, 8,84-5,137 Kemp, CD., 8 Kemp, David, 13, 29,40, 88-9,122, 127 Kennedy, Charles, 130 Kennett, Jeff, 6,69, 71, 74-5, 76,77-8, 80 Kerin, Rob, 77 Kerr, Duncan, 119 Keynes, John Maynard, 22 Kingston, Margo, 60 Kippen, Rebecca, 108 Kirner, Joan, 74 Kroger, Helen, 77,80 Kroger, Michael, 77,80 Labor Party, see Australian Labor Party labour-market deregulation, 17,26 Labour Party (UK), 116

165 land rights, 4-5,22-3,26, 29, 33,34, 119,136 Lange, David, 15 Langer, Albert, 4 Latham, Mark, 3,119 Law Council of Australia, 142 Lawrence, Carmen, 71,119 Leaders' Strategy Group, 19 leadership, 54,105 Lees, Meg, 121 Leonard, Mark, 132 Lewis, Michael, 52 Lewis, Peter, 69 Lewis, Steve, 95 Ley, Sussan, 42 Liberal Democrats (UK), 129,130, 133 Liberal Forum, 14 Liberal Party, 6, 8, 71, 80,81-4,103, 143 capture of regional Australia, 41-3, 48,65, 84, 90 constituency, 104-9,117-18, 126-7 governmental unity 44, 95,99 Labor Party and, 57, 90,119 Leaders' Strategy Group, 19 leadership, 88-9,90,101-2, 103, 140,143 liberal wing, 105, 121,125-6 Liberals for Forests, 46-7 National Party and, 41-51, 90 One Nation and, 52-68, 84,90 One Nation sympathisers, 84,86, 104,106,112,114,117,140 policies, 6,12-13,14,16,20, 29,99 refugees, 6 right wing, 80 shift to the right, 90,120, 138 state branches, 72 young talent, 11-12,102 liberalism, 13-14,101, 113,132-3, 135,140,143-4 Lindsay, Peter, 124 Locke, John, 4

Lyons, Joe, 87 Mabo decision, 22-3,26, 29 McDonald, Peter, 108 McEwen, Jack, 44 Macfarlane, Ian, 42,45,48-9,112 McGuinness, P.P., 122 Mackay, Hugh, 65 Mackerras, Malcolm, 45,49-50 McLachlan, Ian, 15 McMahon, Bill, 11,79,88 McPhee, Ian, 6,13,14,16,123,143 'mainstream' Australia, 52,54, 55, 56, 120 mandatory sentencing, Northern Territory, 90,123 Martyn, Paul, 57 Meagher, Douglas, 63 Medicare, 21,33, 57,117,132 Megalogenis, George, 104-5,115, 126-7 Menzies, Robert, 8, 24, 28,142 'Forgotten People' speech, 8-9 leadership, 84, 88,90, 91,103 monarchy and flag, 26, 29 Mill, John Stuart, 4 Milner, Anthony, 112 Minchin, Nick, 42,46, 79, 80,96 minorities, noisy, 55-6 monarchy, 26, 28, 32,40,93 Monash University, Politics Department, 4 Morgan, Hugh, 15 Morris, Graeme, 61 Moylan, Judi, 124 multiculturalism, 18,47, 58,119 multilateralism, 137,138 Murdoch, Rupert, 85 mutual obligation, 6,91-2, 96, 106, 113,115-16,128 National Centre for Social and Economic Modelling (NATSEM), 117 National Country Party, 41

166

Index

National Farmers' Federation, 15 National Party, 22, 25,33,41-51, 65 see also Country Party National Public Leadership Centre, 128 national service, 53 nationalism, 60,104 native title, 4-5, 22-3,26, 29,33, 34, 119,136 Nelson, Brendan, 120,127,133,142 Nye, Joseph, 137 Olsen, John, 16,75,76,79 Ombudsman, 33,114 One Nation Party, 1,18, 35, 50, 51 constituency, 58-9 and the Liberal Party, 52-68 opposition, 78,80 orthodoxy, 2, 3 Panopoulos, Sophie, 42,45 Payne, Marise,96,102,143 Peacock, Andrew, 5,12-13,14, 21,27, 71,80 Economic Action Plan, 19-20 Pearce, Dennis, 114 Perron, Marshall, 69 personality, cult of, 88 pluralism, 128-9 policing role for Australia, 110-11 policy, social, 12,21-2,47 political correctness, 36, 55, 59,66,68, 104,105 poverty, 11,108,113,115,117 pre-emptive strikes on security threats, 93,111 prejudice, 65,113 press gallery, 84, 85 Prices and Income Accord, 13,19 privatisation, 13-14,16-17,20,44, 100,115,133 protection, 8,11,44 Puplick, Christopher, 14,121 Pyne, Christopher, 120, 121

Qantas, 9,13 Quadrant, 25,122 Queensland National Party, 15 Quinn, Bob, 79 racism, 36,42, 54, 56, 59,61, 62,68, 137 Rann, Mike, 69, 76, 79 reconciliation, 18,126,128,136 Paul Keating agenda, 32, 34-5, 55, 58,119,135 Pauline Hanson on, 50, 54 Peter Costello on, 92,96 Liberal Party on, 62-3,92-3,122 reform, social, 32,49 refugees, 107-9 Liberal Party on, 5,6, 50,63-4, 76, 136,137, 142 One Nation on, 106 Peter Costello on, 98 Tony Abbott on, 99 regional Australia, capture by the Liberals, 41-3,48,65,84,90 regionalism, 134-5 Reilly, Pat, 132 Reith, Peter, 91 republic, 128,136,138 John Howard on, 23,28, 55, 58 Labor Party on, 119 Liberal Party on, 50, 76, 93,95-6, 135 Paul Keating on, 5,22, 26,28,32, 40 Peter Costello on, 93,96,98 referendum, 34,49,126,136 responsibility, individual, 40, 92,113 roads, 131-4 Robb, Andrew, 61 Rose, John, 121 Rosewarne, Stuart, 107 Rothwells Merchant Bank, 75 Royal Commission into Aboriginal Deaths in Custody, 20 Ruddock, Phillip, 64,121 Russell, Don, 122

Index 1 6 7 Sainsbury, Murray, 11 Santos, 16 schools, 131—4 Schroeder, Gerhard, 131 Schultz, Alby, 43, 80 Schumpeter, Joseph, 21 security, 86,109,112 September 11 attacks (USA), 86,110 services, public, see infrastructure and services, public Shack, Peter, 11,102 Shanahan, Dennis, 84,85,117 Sharp, John, 43 Shave, Doug, 79 Shooters Party, 50 Sinclair, Ian, 45 Singleton, Jeff, 57 Sloan, Judith, 122 Small Business Association, 15 Snedden, Billie, 88 Social Policy Research Centre, 115 Springborg, Lawrence, 79 stability, 29, 80,99 Staley, Tony, 28,29, 37-9 State Bank of South Australia, 75 state government Labor Party and, 69-83 nature of, 72-3, 83 state intervention, 8-9 Steketee, Mike, 116 Stolen Generations, 62-3 Stone, John, 16,123 Stone, Shane, 94 Stone, Sharman, 42 Stott Despoja, Natasha, 130 sugar industry, 125 Swan, Wayne, 119 Tampa crisis, 35,63-5, 70, 86,105, 110,119,137 Tanner, Lindsay, 3,119 tariffs, 8,11,13,16,21, 57 tax reform, 11,13,15,20,96,97 Tax Summit, 15 taxation, 11,14,17,133,134

Tebbitt, Norman, 99-100 Telecom, 9,11 telecommunications, deregulation of, 20 Telstra, sale of, 44 terrorism, 86,92,93, 110 tertiary education, see education, tertiary Textor, Mark, 61 Thatcher, Margaret, 87,99,121,141 tolerance, 129,130,138 Trade Practices Act, 11 unemployment, 20,115 see also mutual obligation, Work for the Dole United Australia Party, 87,88 United Nations, Australian commitment to, 125 United States of America, Australia's alliance with, 32,66, 70,111,125, 136 unity, governmental, 44, 90,92,95, 99 Valder, John, 12 value pluralism, 128-9,135 values, 18,101,128, 132, 140,144 Victorian Economic Development Corporation, 75 Vietnamese refugees ('boat people'), 5,60 wage-fixing, centralised, 8,11,13, 20 Wallis, Stan, 97 Walters, Alan, 121 War Crimes Special Investigation Unit, 20 Ward, Ian, 57 Watson, Don, 25, 32, 59,67,97 Waugh, Evelyn, 10 welfare Fightback!, 21

Liberal policy, 50,105,133,142

168

Index

mutual obligation, 6,96,106, 113-16 WorkfortheDole,100,115 Welfare-to-Work programs (USA), 115,116 White, Dennis, 4,122 White Australia Policy, 60 Whitlam, Gough, 10,11, 28,32-3,40, 71,117,121 Williams, Daryl, 38,63

Williams, Paul, 87 Wilson, Shaun, 64 Wilson, Sir Ronald, 62 Withers, Glenn, 108 Woolcott, Richard, 112 Work for the Dole program, 100,115 Working Nation, 100,113-14,116 Wran, Neville, 102 xenophobia, 42,60-1,64, 70,130

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