The Hawke government was not such a great economic reformer, really

There seems to be an air not only of nostalgia but almost euphoria surrounding the 20th anniversary of the election of the Hawke government. It is even suggested that the government's economic reforms are the principal cause of our present prosperity today. Is this going too far?

The need for economic reform was surely obvious. In particular, the end of exchange control and the floating of the dollar, as well as trade liberalisation, were long overdue. What was surprising was not so much that they were introduced. Rather it was that they had not been introduced by the previous Fraser government. After all, Malcolm Fraser had enjoyed the mother of all mandates, including the luxury of a Senate majority! He could have enacted all the reforms he wished. Notwithstanding the proposals of his youthful reforming minister, John Howard, Fraser just would not, or could not, grasp the nettle. Was he afraid of reviving the divisions in the country that had surrounded his use of his Senate majority to bring down the Whitlam government? Or was he just an unreconstructed agrarian socialist?

The other surprise was that these reforms were introduced by a Labor government. Not that Labor had never dipped its toes - ever so tentatively - into the waters of economic reform. It was, after all, the Whitlam government which introduced the Trade Practices Act and the Industries Assistance Commission, as well as adopting at least one significant measure aimed at trade reform.

In any event, Bob Hawke proved to be a good chairman of the Cabinet and he certainly had talent around him - Bill Hayden, Peter Walsh and Paul Keating to name just three. And he also had that rarity: an opposition which voted on principle and did not see its role as just obstructionist.

That said, the government's economic record was patchy. There was too much reliance, at least in certain sectors, on the tools of a centralised command economy. This was most evident in health and tertiary education, where the highly successful and decentralised models of the Menzies era had been replaced by inferior and doomed utopian models. These involved interference in the detailed management of both sectors and were, at least initially, based on the assumption that government revenues were a bottomless pit. Perhaps the worst aspect was the belief that government is better at spending peoples' money than the people themselves!

The Hawke government had an essentially bandaid approach to these sectors. Probably the better (but only partially successful measure) here was HECS (the Higher Education Contribution Scheme), which replaced the impossible and socially unfair policy of so-called 'free' tertiary education. This had meant not only that the rank-and-file blue-collar workers were paying for the education of the rich, it also meant that that the facilities of the universities were being seriously run down, with staff underpaid and overworked.

In another area, much is made of the government's privatisations, which were surprising, to say the least. (Ben Chifley must have turned over in his grave when that centrepiece of Labor's crown jewels - the Commonwealth Bank - was knocked down.) And for what? The proceeds were dissipated on current expenditure. It seems that only governments (and corporate executives) can sell off capital accumulated over time to spend it as if it were income. The ordinary citizen, of course, instinctively knows better. (Imagine if everybody sold their houses and spent all of their savings this year. We could all throw ourselves on the government. The only problem is, there would not be nearly enough money to go around to look after all of us.)

Privatisations are more than justified to encourage competition, investment in the industry concerned, better management, and when there are superior alternative investments, but they are entirely inappropriate if they are undertaken principally to fund current expenditure. How do you maintain that expenditure when you run out of capital to sell?

In addition, the presence of a publicly owned, or better, a mutually owned institution in an oligopoly can induce more competitive behaviour, including sound pricing. A pity, then, that we have lost so many such institutions - especially in insurance and banking, where the presence of a mutually owned corporation could have provided real competition outside of continual cost cutting with little apparent benefit for the public.

The Hawke government wrapped privatisation in the attractive argument that government should only do what they can do best. This in the abstract is a sound principle, but it was applied selectively. It certainly did not apply in, for example, health and tertiary education. More serious was the government's tepid approach to labour market reform, which had the unintended consequence of entrenching the then high level of unemployment. Nor did the government tackle the burning issue of welfare reform, except to provide that the future aged - and then only those working - would be guided towards independence through superannuation.

Behind the proposition that a government should restrict itself to those things that a government does best is the truth that a government, any government, will never find it easy to acquit itself in the truly demanding task of performing just its core functions. So why should it take on more? It should certainly not take on, or keep, those things that individuals, families and business can do better. Rather we need limited government, government which allows us and encourages us to face our individual responsibilities and thus confirms our independence. And the last thing a community needs is a government which makes any of us dependent - unless of course there are exceptional circumstances justifying the provision of a safety net, or where a core function of government is involved, such as defence, law and order, or the maintenance of a sound currency.

In assessing the work of the Hawke government, it can be said that as it did some of the things Malcolm Fraser failed to do, it deserves credit. But it did not go far enough in lifting the yoke of excessive government from Australians. In this respect too much credit is given in some quarters to the Hawke government for the current health of the Australian economy. Much more of this is the result of the prudent husbanding of national revenues over the past few years. And much also is the result of the simple fact that can be seen all across the nation - Australians have for some time been working harder, more effectively and for longer hours. In other words, while the impact of the reforms of the 80s should be acknowledged, this should not be exaggerated. To a far greater degree we are reaping the results of the change to more prudent budgets and the peoples' own hard work. This is not to denigrate the work of the Hawke government, but to place it in its proper context.