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Hawke

May 17, 2019 - 02:46 -- Admin

There used to be a joke going around shortly after Bob Hawke became Prime Minister in 1983 and was polling stratospheric approval levels of 85%, that the remaining 15% were Labor party members. If that seems shocking today, it is only because of the wave of national amnesia which has swept over the Hawke government that makes Anzac Day practically seem like a day of remembrance.

There
was some distrust and resentment within the ALP of Hawke’s hasty ascension to the
leadership on the day Malcolm Fraser called the 1983 election. There was
suspicion from the left over his close ties to business leaders like Sir Peter
Abeles, and broader resentment at the way he had snatched the leadership, and probably
the Prime Ministership, from Bill Hayden who was seen as having done much to
revive the party from the electoral disasters of 1975 and 1977.

Labor
was already leading the polls ahead of an election that out-going Hayden claimed
a “drover’s dog” could win – but not a certainty, and an unexceptional showing
in the Flinders by-election a few months before (largely due to local factors) was
used to add doubts to Hayden’s leadership (some things don’t change).

Labor wasn’t taking any chances. If the history of the Hawke government has been rewritten it is nothing to what has been done to the Fraser government that preceded it. That nice Mr Fraser was seen as part of the New Right that had brought Thatcher and Reagan to office and were setting about taking on the unions directly and excluding them from power. Even Socialist governments, like the newly installed French President Francois Mitterrand did not seem immune to this turn against the post-war consensus. The fear in Labor was that the re-election of the Fraser government would see a more direct assault on the post-war settlement that he, and his new right-wing Treasurer, John Howard, had already tried in the previous term.

Labor had taken careful lessons from the Whitlam government of 1972-5. Whitlam’s modernisation of Labor, with the side-lining of the left (especially in Victoria) and reducing the influence of the unions over policy, had broadened Labor’s appeal. However, it had meant that Labor’s ability to call on the unions to constrain the wages push in 1973-4 when the economy soured had been limited. It was not until the 1975 Terrigal conference when the Labor government had reached an agreement with the unions, led by Hawke as head of the ACTU, that Labor could start to restrain wages and government spending (quite how much Hawke had encouraged the 1974 wages push for his own position in the party has always been contentious). The new austerity was set out later in Hayden’s 1975 Budget but by then it was too late.

The Hayden
years were about reforging that relationship between the parliamentary party
and the union leadership. The justification for Hawke taking over was not only
based on his electoral popularity but that he had gained that popularity as
head of the ACTU and so could sell that union relationship to the public. The 1983
campaign slogan of Hawke Bringing Australia Together and the Accord with the
unions made that tie-up central to his election.

Labor’s
relationship with the unions is core to its case for governance, as it had been
for Curtin/Chifley, Scullin and Fisher/Hughes, and the Hawke Labor government was
a classic Labor government – and remained so. When that relationship was no
longer central to government, Hawke’s popularity fell away to Abbottesque levels
and he was dumped. Yet if the Hawke government was a classic Labor government and
Hawke himself arguably Labor’s last classic Labor Prime Minister, somehow sections
of the right and left deny that he was. Abbott’s claim yesterday that Hawke has
a “Liberal head” would find resonance on the left side of politics that accuses
him of “neoliberalism” and a betrayal of Labor values.

The crux
of this rewriting of the history of the Hawke government centres around the
word “reform”. For a government that was supposed to be known as a reforming government,
reform was something of a dirty word when Hawke came to power. The presentation
of the Whitlam government was that it had failed because it had tried “too much
too soon”. This is historically inaccurate since much of the reforms of the Whitlam
government had happened between 1972 and the 1974 election that made Whitlam the
first Labor leader to ever win two consecutive elections (while a hazy mist of
idealism has since descended over Whitlam, most of what he did was about
winning elections, which he did).

However,
when Labor returned in 1983, it wanted to distance from its only other period in
office in 43 years and present itself as a stable and cautious government that
could be proved to be enduring. It followed it through. Whitlam’s Medibank was restored
but in a watered-down form. The move towards Land Rights accelerated under Whitlam
and Fraser largely came to a halt. University fees, removed by Whitlam and kept
out by Fraser, were reintroduced. The shift to regionalism after Vietnam was
replaced with a decisive shift back to be in line with US foreign policy, especially
in response to New Zealand’s suspension from the ANZUS alliance. But again, none
of this makes it unexceptional as an Australian Labor government.

Probably
the best way to understand how a classic if rather cautious Labor government could
be seen as such a reforming one that to many was closer to a Liberal government
is by looking at what is cited as one of the major “reforms“ of the Hawke years,
the floating of the Australian dollar just eight months after coming into
office.

The collapse
of the Bretton Woods system in 1971 and Nixon’s detaching the US dollar from gold had destabilised
the global financial system and forced the world’s major currencies to float. The
result was far more volatile flows of capital globally that caused particular problems
for mid-sized economies like Australia’s. The Coalition had considered floating
the dollar when it was recommended in the Campbell report in the last years of government
but there was considerable resistance. First from the Country Party on behalf
of its rural backers, but also nervousness about the greater economic instability
that could come as had been seen in countries like the UK. It was partly to manage
this possible instability that Fraser sought some control over wages.

In line
with its general caution, the Hawke government was initially also cautious
about any immediate action. In fact, a major reason of the cautious noises
coming from the Hawke government in the early days was to reassure nervous capital
markets that nevertheless forced a devaluation within a few days of Hawke
coming to power. The caution towards floating the dollar was echoed by many in the
union leadership that saw it taking wages power out of the government that it
was now expecting to influence.

But this could not last. As nicely set out in the excellent Labor in Power, recorded in the last years of the Labor government and before the myths about it were written, within eight months of the election the Australian markets were once again facing significant capital market pressure on the fixed Australian exchange rate. Just as Parliament was dossing off for the Christmas break the capital markets struck again and in an emergency meeting, the government decided that floating the dollar and lifting exchange controls was its only option. As Hawke said, for a small country like Australia to oppose massive global capital flows was an “exercise of futility”.

The immediate political reaction was predictable. Despite having its hand forced, the government was keen to place it as all part of a bold strategy over which it had control. One of the joys of Labor in Power is watching Hawke, Keating and Treasury Secretary John Stone fight for credit over a policy none of them wanted to bring about until forced to do so. The second reaction was to renegotiate the terms of the Accord to tougher terms and here the Hawke government’s ability to wring concession from the unions put it an advantage compared to the Fraser and Whitlam governments. This ability to manage wage and spending restraint in response to economic shocks was central to the success of the Hawke government.

It
was not just the Labor government that was keen to rewrite what had happened to
be part of a bold strategy. The Liberal right were also starting to use it to distance
themselves from their failures during the Fraser years with the emerging theme
that Fraser had lacked the political courage that they had now discovered in
opposition. This boldness of the right, vicariously lived through the responses
of the Hawke/Keating government, was to continue until they returned to power
and all that boldness disappeared into the ether from which it never left.

The left were also keen to overplay the political intent of the Hawke government’s response. For an Australian left that could rarely survive apart from Labor, let alone the union leadership, the Accord between the two, and the concessions that came from it, posed a profound dilemma. Naturally it evaded the problem and looked elsewhere. Uranium mining was a big deal as was Australia’s close relationship to Reagan’s America, especially during the MX missile crisis. Naturally enough, avoiding the core question central to the left’s survival that has always been posed by Labor’s relationship with the union leadership was never going to be good for its health and the traditional left began to fade away – eventually replaced by the Greens that proved it could survive outside Labor and unattached to the union leadership. Among the remaining left these days, the usual way that dilemma posed by the Hawke government is avoided is by talking up its agenda and pretending it was not really Labor at all but “neoliberal”.

The government’s
pattern of responding to events outside its control was to continue through the
1980s. When commodity prices collapsed in 1986, Keating raised the panic level,
said Australia was in danger of becoming a banana republic and used the panic
to again renegotiate tougher terms with the Accord. The Treasurer, most politically
exposed to not seeming in control to economic events to which he was not, became
a master of talking up his strategic boldness from which insights he still
graces us today.

Yet however
much the reforming zeal of the Hawke government may have been talked up, it was
still mostly to happen later. At the time there was a clearer sense it was
merely responding to events and, combined with caution in other areas, there were
even complaints about the drift in the government. Indeed, the government survived
what were widely acknowledged decline in real wages and living standards at the
time precisely because they were seen as due to events outside its control.

Nevertheless, along with union membership Labor’s primary vote declined from that it received in the 1983 election from which it has never regained again. The declining significance of the unions means that Labor’s historical case for governance has gone. It is why the only other electoral victory Labor has had since the Hawke/Keating years, in 2007, was on a primary vote comparable to the 1975/7 disasters it worked so hard to escape from. Even more remarkable, it is quite possible on current polling that Labor will be returned to power on the lowest primary since the Lang split election of 1934 because the plight of the Coalition will be even worse. It is no wonder there is so much political dreaming about a government that was not only the last real Labor government, but the last government that could at least pull off the pretence that it was carrying out an agenda over which, ultimately, it had no control.