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the ‘crash through or crash’ model of Keating, given that politicians
seem to be very focused on polls.
Tony Abbott’s statement that Hawke had a Labor heart but a
Liberal head earned a lot of scorn from the public. Was this a fair
comment, or do you think it ignored some facts about earlier
Labor governments?
Among Labor party adherents, there’s what’s known as the Labor
‘tradition’. They like to argue that between successive Labor
governments – going back as early as Chifley, through to Whitlam,
Hawke and Keating – there is a continuity of Labor tradition.
Now, at the time of the Hawke government, many Labor
adherents were questioning that because Hawke and Keating shifted
economic policy very much in a pro-market direction. They did that
for a number of reasons. One was that by the time Hawke came to
power in 1983, Australia was not doing as well economically as it
was prior to the mid-1970s. We have the end of the long economic
boom, the rise of stagflation. Governments all around the world are
in trouble.
The Whitlam government at that time floundered in terms of its
economic performance. What occurs in the Hawke government is
a conscious change of direction. They start to develop policy that
moves very much in a pro-market direction.
An example would be, the floating of the dollar in December
1983. Other examples would be the year after that, when Keating
introduced financial reforms, which included allowing foreign
banks to compete with domestic banks in Australia. It also included
the reduction of tariff levels over time, so that domestic Australian
industries could compete on a more even playing field within the
domestic Australian market with overseas products. There was also
privatisation. For instance, the Hawke government privatised the
Commonwealth Bank and various other government organisations.
These reforms opened up the Australian economy to overseas
competition, without the protections that had previously existed.
As for Abbott’s comment about Hawke having a Labor heart and
a Liberal head, there is some truth in that, because Hawke is pushing
these pro-market reforms. It’s also Keating who is very much
important in these same reforms, and certainly the subsequent
reforms after the dollar float.
So, it was also Keating with the Liberal head – if by Liberal head
we mean a set of policy frameworks that are about opening up
Australia to overseas competition, allowing the economic market
to determine social and economic outcomes more than the
government or the state.
In terms of the Labor heart, Hawke did this within a wider
framework that was more in accord with Labor tradition. That was
the deal the Labor government had with the Australian Council of
Trade Unions, known as the Prices and Incomes Accord.
This accord was basically a deal between the government and
the unions, whereby the government said, if we keep inflation low
and if we introduced significant social reforms, such as Medicare, in
return unions will engage in wage restraint. They will not engage in
strike activity, which had plagued the 1970s when Hawke was leader
of the ACTU. They will abide by centralised wage decisions. They
will also accept award restructuring and eventually also enterprise
bargaining was included within that process.
That accord remained in place through the Hawke and Keating
years. During that time, there was a decline in real wages for workers
and the compensation was supposed to be in terms of social
policy & reform
services. That decline in real wages also had the effect of increasing
the profit share of corporations.
So again, that was moving in a non-Labor direction. If you look
at the most recent electoral campaign of the Labor party under Bill
Shorten, they kept talking about the big end of town and how the
Liberals are concerned with the big end of town. To reduce real
wages and to extend profit share is in fact to benefit the big end of
town. That’s what occurred under the accord.
But, at the same time, the fact that the accord reduced industrial
activity – strikes – in Australia, and allowed corporations the sort of
industrial relations certainty that they didn’t have in the 1970s, that
also aided development and economic growth in Australia.
Keating’s argument for this, and I’m sure Hawke would have
agreed, was that although these looked like anti-Labor policies
in the traditional sense of the word, the only way that the Labor
government could engage in generous redistribution of wealth,
which is a traditional Labor party principle, was if there was a
growing economy. You see the current Labor party also talking
about this with its reforms to negative gearing and capital gains
tax concessions.
Hawke has been described as a great democratiser of the university
system and, more broadly, education in Australia. How would you
describe the university system prior to the Hawke government?
It was quite different. Whitlam introduced free university education.
He abolished fees in 1974. The Hawke government changed that in
1989 by introducing the HECS system.
I was at university from 1985 onwards and was the beneficiary –
at least in the first part of my university education – of the no-fee
system. I remember turning up to Sydney Uni on the day that you
would enrol and signing up for courses. All you had to pay was
$250, which was your union fees, because student unionism was
compulsory then. You would pay whatever library fines you had and
then you could enrol. That was all you had to pay.
That was a really positive system for people who otherwise may
not have been able to afford to go to university. On the downside –
and this was a very small minority – there were people who I knew
at uni who had been there for some time because financially you
were able to. Most people just took full advantage of the fact that
they had free education, which was, in social democratic terms, a
very positive thing.
The Hawke government introduced HECS in 1989 because the
participation rate in universities was increasing. It was believed that
free education was not financially sustainable over time.
The HECS system that was introduced was, I think, one of the
fairest systems they could have come up with if they were asking
students to contribute to the cost of their education. It wasn’t of
course full fees, it was student contribution to the overall cost of
a student’s education. That student component could be taken
out through a HECS loan or paid upfront. In that context, I think,
the fact that you could defer payment through a loan, rather than
the government and the universities demanding that students pay
upfront, was a compromise between the Whitlam ideal of free
education and the more free-market ideal of full upfront fees.
HECS was really a position in the middle. To its credit, the
Labor government introduced that under financial necessity, but
it introduced the system which at least allowed students to defer
payment of fees until they started earning money or at least started
paying tax through the earning of money. n
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