The decline of liberalism in early 20th century Australia (a post on the third volume of David Kemp’s history of Australian liberalism)

The first volume of David Kemp’s history of Australian liberalism told the surprising story of how, between 1788 and 1860, a penal colony became an early liberal democracy. In the second volume, covering 1861 to 1901, the new national constitution federating the six colonies gave Australian democracy deep legal foundations.

While democracy was strengthened, by 1901 liberalism was weakened. Liberal political movements were divided between protectionist and free trade versions. Both were challenged by utopian socialist ideas and a militant union movement. The unions acquired direct political influence as Labour MPs won seats in parliament (Labor does not drop the ‘u’ until 1912). Kemp’s third volume, A Democratic Nation: Identity, Freedom and Equality in Australia 1901-1925, chronicles further liberal troubles in the first quarter century of federation.

In the first federal election, in 1901, the late 19th century protectionist-free trade contest still dominated. The Liberal Protectionists won 32 seats, the Liberal Free Traders 26 seats, Labour 15 seats and others 2 seats. Labour held the balance of power. Kemp argues that competition for Labour’s support shaped the policy direction of the two Liberal parties.

Like the two liberal parties, early Labour was divided on free trade versus protectionism. Labour’s free traders saw that tariffs increased prices for working class voters, but its protectionists supported tariffs to shield workers from international competition.

Kemp suggests that Free Trade leader George Reid’s attempts to get Labor free traders onside in the battle over protectionism, a top priority for him, was one reason why he supported Labor’s policy of an explicit exclusion of ‘coloured races’ from Australia.

In the end, Parliament legislated the governing Protectionist policy of the dictation test. This required a prospective migrant to write 50 words in a nominated European language. The British government had objected to an express racial ban, partly because it would have offended Japan. Unwanted overseas arrivals were instead given a test in a language they did not speak.

The White Australia policy itself was justified using a range of reasons – fear of racial conflict (one reason why, as I noted in my review of Kemp’s first volume, the United States was not seen as a good model for Australia to follow), a desire to protect local workers from migrants willing to work for low wages, and belief in the inherent superiority of Europeans. Most MPs voted for it.

Reid’s efforts to keep Labour onside contributed to another decision with long-lasting illiberal consequences. In 1904, when Reid was prime minister in a minority government, Parliament passed the Commonwealth Conciliation and Arbitration Act. Both business and unions supported the Court of Conciliation and Arbitration, which could set wages and conditions. It also prohibited strikes and lockouts in disputes referred to the Court.

The Court was less successful than hoped in reducing industrial conflict. Unions did not always respect its decisions and strikes remained common. From a liberal perspective, the arbitration system’s shortcomings went beyond its limitations in resolving specific disputes. The Court’s decisions affected parties not before it as well as those in dispute. Sitting far away from the detailed information and incentives that guide market behaviour, the Court made economic decisions that it wasn’t competent to make.

Reid’s efforts to use Labour to support free trade did not succeed, and so by early in the post-federation era most of what the journalist Paul Kelly would later call the ‘Australian Settlement’ was in place. The combination of restricted migration, wage arbitration and tariffs wasn’t very liberal, but it had internal coherence. Migration restrictions and arbitration pushed up wages, and tariffs let employers pass on these costs to their customers. In Kemp’s words, ‘protection was compensation for the costs of social policy to industry.’

The Conciliation and Arbitration Act’s consequences were political as well as economic. Kemp notes its specific purpose of increasing trade union membership; in this at least it worked as planned. In 1901 six per cent of Australian workers were union members, a proportion that rose to a quarter by 1914. Labour’s organisational base was growing.

In many areas of policy, the Protectionists and the moderate parts of Labour were not necessarily too far apart. Labour supported early Protectionist governments. But Labour’s practice of the party organisation controlling MPs was anathema to Alfred Deakin and other leading Protectionists. It offended their idea of how a democracy should work and limited the scope for a deeper Protectionist-Labour political alliance.

Instead the increasing influence of socialist ideas prompted a combination that would have seemed surprising a decade earlier. Competition between Protectionists and Free Traders had dominated late colonial and early federation politics, but both were parties of private enterprise. The Protectionists were more willing to intervene in economic and social life than the Free Traders, but they were not socialists.

Despite personal rivalries and ideological differences, Protectionists and Free Traders realised socialism and Labour posed a threat they needed to counter together. By 1909 they had established a parliamentary ‘fusion’ of the two forces, known as the ‘Liberal Party’. Many more organisational and name changes were to come before the current Liberal Party was formed in 1944. But from 1909 the two-major-party system Australia still has today was in place.

The most spectacular post-1909 reconfiguration of anti-Labor forces occurred when Labor split over conscription during World War I. The Liberals joined with former Labor leader Billy Hughes in the Nationalist Party, keeping ‘old’ Labor out of power from 1916 to 1929 (mostly under Andrew Fisher, Labor had been the governing party several times between 1908 and 1916). This coalition of political forces included elements of the Protectionist-Labour alliance that had earlier proved impossible, diminishing the Free Trade thread of liberal thought.

Although Australia was far from the battlefields of World War I, its strong identification with Britain dragged it into this catastrophic conflict with major policy consequences. Kemp explains that the war ‘produced dramatic intrusions not only on economic liberty but on personal and civil liberties as well.’ Extraordinarily, the Commonwealth tried, unsuccessfully in the end, to prevent publication of the Queensland Parliament’s Hansard because of the Premier’s attacks on conscription.

In their early 20th century pattern of mostly going against what we would now think of as the liberal position, the Liberals supported conscription. According to Kemp, they thought that conscription was the fairest way a democracy could spread the burden of defending the state. A democratic egalitarian idea trumped the individual freedom to decide whether to fight.

Disagreements on the Labor side, not liberal opposition, stopped conscription. Unions feared that coloured labour would take the place of soldiers at the front, and anti-British Irish Catholics resisted involvement in a British war. Labor was in power but its inability to resolve internal differences on conscription led to two referendums. On both occasions the referendums were lost, triggering the dispute that led Billy Hughes into coalition with his former opponents.

The emergence of the party system is one of several developments in Australian democracy covered in Kemp’s third volume. There were also important changes to the franchise and the voting system.

Under the Constitution, anyone could vote in a state election could also vote in a federal election. That meant that women in South Australia and Western Australia voted in the first federal election in 1901. In 1902 the Commonwealth Parliament extended the federal vote to all British subjects, male or female, aged 21 years or over who had resided in Australia for at least six months, while restricting the rights of non-white people, including Indigenous Australians.

The decentralised nature of non-Labor politics created many problems in meeting the challenge of the union-backed Labor Party, one of which was non-Labor candidates standing against each other. First-past-the-post voting systems, which Australia used for its early parliaments, split the non-Labor vote, potentially electing Labor candidates with minority support. In 1918, preferential voting was introduced for House of Representatives elections, letting voters preference between non-Labor candidates.

Kemp argues that the organisational problems of liberals and conservatives also led to compulsory voting, a low-effort way of getting their supporters to the polling booths. Although the 1924 compulsory voting law began as a private member’s bill, the government of prime minister Stanley Melbourne Bruce (Nationalist Party, still the post-Billy Hughes non-Labor party) let it pass.

This combination of preferential and compulsory voting makes Australia’s governments unusually reflective of its people’s political choices. But Kemp suggests that compulsory voting was also part of the ‘transformation of independent citizens into subjects of the administrative state’. It fits a pattern of individual choice coming second to other considerations.

Australian liberalism in the early 20th century faced significant challenges. Domestically socialist ideas had gained support and, through the unions and Labor, had a strong organisational base. War inevitably led to increased government control of economic, political and social life. These factors contributed to decisions by Liberal politicians that may not have been made, or made in the same way, in their absence. Arguably, these decisions helped avoid sustained periods of Labor rule. This would have produced a greater loss of economic liberty and political checks and balances, if Labor had succeeded in its then goal of abolishing the Senate.

While these setbacks were blocked, even among self-described liberal political movements liberalism was diluted in Australia’s first quarter century. The second volume of Kemp’s history was called A Free Country. The title of this one, A Democratic Nation, reflects a shift in ideological priorities.

(This post is cross-posted at GoodReads.)

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