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April 3, 2005
Yesterday afternoon I read Kim Beazley's speech to the Australian and Melbourne Institute's Sustaining Prosperity Conference. Beazley has been developing the much needed economic narrative that would map out the ALP's pathway to economic credibility through the pathway of reform.
This is an important speech in the campaign to establish the ALP's economic credibility at a time when the Australian economy is on the slide. If it is to help re-establish the ALP's economic credibility as enlightened reformers, then the campaign needs to go beyond the 'bash the Howard Government' style of tactics of the parliamentary tacticians to developing good policy.
Beazley's economic narrative comes in two parts. The first celebrates the Hawke-Keating ALP Government as the party of economic reform. Beazley says that this tradition of economic reform is an enlightened one:
"...a story of how in government in the 80s and 90s, Labor rose to the historic challenges it confronted, abandoning its own prejudices to pursue an aggressive program of economic reform... There was urgent work to be done. And though it was often tough, we set aside our own ideological prejudices. In the face of rigid opposition--from our supporters, as well as our opponents--we achieved structural changes that over two decades, turned our economy around. It was what the times required."
Okay we can give him that. It was the social consequences of the economic reform that were badly handled.
The second part of the Beazley narrative highlights the lack of economic reform undertaken by the Howard Government since 1996. John Howard, says Beazley:
"...has failed to abandon his own prejudices to make the changes that could have moved Australia forward to its next stage of growth. Instead of embracing a clear-eyed approach to reform, he has spent the balance of his prime ministership distracted by his own personal obsession, a culture war in which he has sought to recreate the imagined Australia of his childhood. And while he has enjoyed the dividends of Labor's past reforms, he has neglected and sometimes even weakened Australia's longer term economic prospects."
It is the ALP that stands free of prejudice and bias to do what is best for Australia's national interest. That claim ignores Howard's introduction of the GST, and the ALP's opposition, even though Keating had argued for the GST on rational economic grounds.
This kind of economic enlightenment narrative places the onus squarely on the ALP to identify what the times require, to put its bias and prejudices to one side, and then devise good policy that address the problems. The ALP now has to show that it understands the reform agenda and that it has the courage and will to further the reform agenda with good policy.
It's a big promise. Does Beazley deliver on this over and above identifying the warning signals that signify economic decline? Yes and no.
He does take some steps. Taking his guidance from the economic enlightenment signpost of the Hawke and Keating Governments---a clear-eyed, far-sighted approach---Beazley says that it is necessary to get Australia's reform priorities right:
"Today's economic challenges are different to those we faced in the 80s and 90s. Our greatest economic need is to restore strong productivity growth. Because it's only by restoring strong productivity growth that we can simultaneously achieve higher growth rates, low inflation, rising real incomes and improved international competitiveness."
He then asks: "how do we generate the next wave of productivity reforms"? He answers by returning to a familar argument:
"The scope for productivity gains from the old reform agenda of deregulation, privatisation and industrial relations reform is largely exhausted. There's still some unfinished business - in particular, in electricity and water - but with the large-scale structural changes mostly behind us, we won't repeat the windfall productivity gains of the 90s. Labor believes in labour market policies that help people to work smarter. That means investing in the know-how of Australian workers, not returning to a 19th century world of dog-eat-dog industrial conflict."
That is a quick dismissal of the need to ensure that the Australian economy is an ecologically sustainable one; too quick given all the warning signs of an ecological stress in Australia. We can infer that Beazley's embrace of the economic enlightenment presupposes a 1980's understanding of the economy, and it does not include an ecological enlightenment. It is at this point that we encounter the bias and prejudices of the neo-liberalism entrenched in the ALP. It is a limit-horizon of the ALP beholden to a conservative understanding of the economy disconnected from ecology.
What Beazley does say is that to improve productivity of capital, we need long term investment in the nation's infrastructure; and to improve productivity of labour we need long term investment in skills and training. And there it more or less ends.
It ends at the current point of the public debate. So Beazley is basically only restating what we already know. He is not breaking new ground about how the much needed reforms are going to be tackled. What we do not know is how the ALP's understanding of reform differs from the Business Council, ther Australian Financial Review, the OECD, etc? Does it have its own voice?
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Perhaps he's foreshadowing a return to the knowledge industry model/knowledge nation?