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Throwing the switch to Vaudeville: What you see is not necessarily what you get

By Nicholas Gruen - posted Friday, 29 October 2004

They say power corrupts. Maybe yes, maybe no, but it sure changes things. Looking at how much power and the pursuit of power has changed our politicians, it’s a wonder we don’t all mark our ballot papers “undecided”. Look at our last few Prime Ministers and then at the Opposition Leader. It’s always the same story. What we hoped or feared was never what we got.

Gough Whitlam was a disciplined Opposition Leader - but his Government dissolved in indiscipline. Malcolm Fraser lectured us endlessly about the need to reduce protection - while he was increasing it. Bob Hawke reversed Whitlam’s form. He was a wild man and a heavy drinker before he went for the top job. Those who put him into the leadership did so with their hearts in their mouths. Would he be up to it? Would he be stable? Would he split the party? But Hawkie - the only really good Prime Minister in my lifetime - gave us the best years of his life. He was up at the crack of dawn every day for a round of golf and the amber fluid never passed his lips. And it paid off. For nearly a decade he united us by appealing to our better side and keeping us focused on building a better future.

As Treasurer, Paul Keating could pick up the backlog of economic reform advocated by his department and left to him by Fraser’s timidity. Just add Labor rhetoric, mix in the Accord and Bob’s your uncle - well your PM. In a typically memorable expression Keating said that when the time came, he’d “throw the switch to Vaudeville”. He did that as PM, becoming the first of a new breed of culture warriors. He moved on to Aborigines, the Republic and Asia but some of us wondered whether he was growing in the job, or just a serial enthusiast leaving his old enthusiasms to wither on the vine.


John Howard too has undergone a metamorphosis. Like Keating his political identity was forged as Treasurer - though much less successfully owing to the economic illiteracy of his boss, Prime Minister Fraser. He carried the Treasury brief for economic reform into Opposition. But now into its ninth year, the Howard Government which so successfully ran on its economic record has only three substantial economic policy achievements to its credit. Freeing up the labour market (as much as permitted by the Senate), slashing Government expenditure and introducing the GST. But all three were announced during Howard’s first term. And fiscal discipline has long gone. Howard’s fistful of dollars was first seen in the Fraser years, and last excused as greasing the wheels of tax reform. Now it’s a political way of life. Howard lives off the economic fat of the land, watches the dividends of past economic reform roll in as government revenue, and recycles it to marginal voters packaged up into munificent but mysterious multiples of $100. $100 annually for pensioners, $200 for self funded retirees, $600 for children and, I almost forgot, $800 for apprentices.

And since he became leader, Latham’s got hold of that switch and thrown it too. Like Bob Hawke, he’s a new man. As he put it, “no more crudity”. But there are deeper changes. In 1998 before becoming leader, Latham published his blockbuster Civilising Global Capital. A “third way” manifesto, it called for a more entrepreneurial state to move beyond the “passive welfare” of welfare to tackle locational disadvantage and social disengagement. Yet after his ascension to the leadership, these enthusiasms were displaced by new ones.

Some of this is understandable. It’s alluring to us pointy-headed economists who flatter ourselves about our cool heads and warm hearts, but his proposal for a major reworking of consumption taxes would have been electoral suicide. His book also calls for banks to adopt social obligations, for wage restraint from executives and for extensions of reciprocal responsibility. Latham spoke of the desirability of across-the-board wage restraint or a “macro-wages policy”, income security and lifelong learning accounts. None of this has turned up in Opposition policy.

More recently in his short tenure as Shadow Treasurer, Latham floated a proposal for governments to encourage low income households to save by matching their own savings with government contributions. Latham didn’t just forget the whole thing. By election time, the Howard Government had actually established a matched savings scheme for low wage-earners, offering them up to $1,500 for $1,000 voluntary contributions to their superannuation. Latham raised legitimate objections to the policy. But he didn’t propose to refashion it in the image of his previous utterances. He wanted it abolished to fund other election priorities - like $800 million for old growth forests.

Latham’s Civilising Global Capital has no discussion of the environment, despite its relevance to the book’s theme. By 2004 the switch had been well and truly thrown.

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First published in the Courier-Mail on October 27, 2004, under the heading 'Throw the power switch for change of direction'.

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About the Author

Dr Nicholas Gruen is CEO of Lateral Economics and Chairman of Peach Refund Mortgage Broker. He is working on a book entitled Reimagining Economic Reform.

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