Liberal project successes, followed by stall and setback (on David Kemp’s Consent of the People, 1966-2022)

The Consent of the People: Human dignity through freedom and equality 1966-2022 concludes David Kemp’s epic five volume 2,504 page political history of Australia with particular reference to liberalism.

The full set takes us from the pre-liberalism of the late 18th century, when ‘liberal’ ideas and institutions were yet to be linked into the ideology of liberalism; through liberalism’s highpoint in the 19th century (volumes one and two); the twentieth century’s dismal first half when racism, protectionism, war, economic depression and utopian socialism broke liberalism but not democracy (volumes three and four); to the defeat of socialism after World War II covered in the later parts of volume four; to the story of volume five, which covers the revival of the liberal project in the 20th century’s final decades followed by stall and setback in the early 21st century.

The 40 years after Sir Robert Menzies retired as prime minister in 1966, having been in office since 1949, saw a liberalisation in which liberals were one influence among many. Kemp’s idea of ‘liberal project’, a policy agenda, is useful in understanding how Australia became a more liberal society despite ideological liberals not being numerous or always highly influential. Many people had reasons for overturning the ‘Australian settlement’ of the 1900s: white Australia, high tariffs, and a highly-regulated labour market.

In Australia’s division of political labour for the most part the people outside government calling for more liberal social policies and more liberal economic policies were different.

Liberal social policies were often promoted by single issue movements, at their core people trying to improve their own lives and not advance general philosophical ideals, although sometimes attracting support by appealing to broader principles (see Jon Piccini’s book on human rights in Australia).

Liberal economic policies were promoted by a broad coalition of politicians, bureaucrats, economists, business interests and think-tanks. In the think-tanks especially classical liberal philosophy was explicit, but in the other groups support for market mechanisms owed more to utilitarianism than freedom. The aim was greater and more efficient economic growth.

As in the immediate post-World War II period the Liberal and Labor parties provided the alternative governments. But ideologically party competition changed in the 1960s. Declining support for socialism within Labor and its increasingly university-educated and socially-liberal MPs and voters meant that attitudes to ‘liberalism’ were less of a divide between the two main parties. The Liberal Party often struggled to find a clear direction. Labor governments took the lead in ‘liberal’ reforms.

Through the period covered by this volume Kemp was directly involved with or closely observed many of the political events described, including as an adviser to Liberal prime minister Malcolm Fraser and as a minister in John Howard’s government. In a preface he says that, ‘conscious of the risks of a self-serving narrative’, he originally wanted to finish his history in 1966. His publisher persuaded him otherwise. Kemp in this book and the earlier volumes in his series consistently supports liberalism while being open about the Liberal Party’s failings. My own potential bias is similar; I worked for Kemp for a couple of years as a ministerial adviser.

Kemp recounts his participation in establishing the Alfred Deakin Lecture in 1967, as one of a group of Liberals ‘troubled by the contradictions they saw between Menzies’ statements of liberal principle and … prominent policies of the Liberal Party’. Prime Minister Harold Holt’s speech did not impress.

In December that year Holt disappeared while swimming at Cheviot Beach. His replacement as Liberal leader was John Gorton, whose policies Kemp describes as ‘nationalist more than liberal’. Gorton’s personal life attracted criticism; from a policy perspective what most upset Gorton’s Liberal colleagues was his ‘lack of regard for the federal distribution of government authority’, using conditional grants to the states to ‘restrict their freedom of action’.

Gorton’s willingness to use Commonwealth power gave him something in common with Gough Whitlam, who became Labor leader in February 1967. Whitlam’s later drama-filled government enraged the anti-Labor forces in Australian politics, obscuring his role in ending the old Labor Party which the Liberal Party was established to oppose in 1944. Kemp sees Whitlam as ‘more liberal and more democratic than the socialist left of the Labor Party’. Extraordinarily, given Whitlam’s subsequent near-sainthood to the Labor left, in March 1966 they unsuccessfully tried to expel him from the ALP over state aid for church schools.

In the October 1969 election Whitlam attacked the Liberal Party for declining into ‘illiberalism’, citing invasion of privacy, suppression of freedom of speech, and denial of freedom of conscience in military service – a reference to the selective conscription introduced in 1964 to fight the Vietnam War. Labor secured 50.2 per cent of the two-party preferred vote but fell short on seats. The government was returned to office, but Gorton was damaged by the narrow electoral escape.

In March 1971 the Liberal party room divided equally on a confidence motion in Gorton’s leadership. Gorton made a casting vote against himself, and Billy McMahon won the subsequent leadership ballot.

McMahon has been called Australia’s worst prime minister (the story is well told in an excellent biography by Patrick Mullins). Kemp rates McMahon as ‘highly intelligent and a hard worker’ but his political manoeuvring ‘overwhelmed any inclinations to stand on principle or act with discretion.’

The problem was not just McMahon personally. Some Holt, Gorton and McMahon era decisions advanced the liberal project, but Kemp argues that the post-Menzies Liberal Party was intellectually complacent. It failed to investigate or demonstrate the ‘relevance of liberal values to either long-standing or new issues.’  The government was ‘lurching from decision to decision rather than being purposefully driven.’ The federal election of December 1972 ended the long post-war Liberal government and brought Whitlam to office.

Kemp quotes Whitlam locating his reforms in the Enlightenment ‘tradition of optimism about the possibility of improvement and human progress through the means of human reason.’ In an earlier volume Kemp, like others, argued that the 19th century utilitarian philosopher Jeremy Bentham was influential in the Australian political culture, describing him as the ‘father of policy analysis’ in thinking about how institutional reform could improve social outcomes. Kemp sees Whitlam as Benthamite in this regard.

Whitlam established expert commissions to analyse problems, followed by legislated reform. He worked fast. Before his term the largest number of bills introduced into Parliament in a year was 169; Whitlam’s government introduced more than 200 in each of 1973, 1974 and 1975. Kemp’s earlier volumes identified a ‘humanitarian’ thread to liberal reform. Although Whitlam cut tariffs his main liberal contribution was in this humanitarian tradition.

In social welfare Whitlam’s government introduced the Medibank universal health care scheme, income support for single parents, higher aged pensions and other benefits, expanded federal support for aged and child care and increased spending on education including free tertiary education, among other reforms. He introduced Aboriginal land rights, anti-discrimination legislation, and no-fault divorce. Conscription and remaining White Australia policies were abolished. According to Kemp, ‘in his emphasis on equal opportunity and human dignity for all, Whitlam had become of the most persuasive voices for central elements of Australia’s liberal project.’

One big Australian history counter-factual is Whitlam winning in 1969, when the post-war economic boom was still underway, on seats as well as votes. His agenda would have been ambitious at any time, but deteriorating economic conditions, including the 1973 oil crisis, ended the high GDP growth that could have helped fund additional social spending. Instead deficit-financed spending exacerbated the inflation triggered by increasing oil prices.

Public sector pay increases fuelled private sector wage inflation in a centralised system where wage changes in one industry flowed through to others. Labor could not control its union affiliates, with waves of strikes in support of large wage increases. A December 1973 Constitutional referendum to give the government control over wages and prices failed. Simultaneous high inflation and high unemployment, ‘stagflation’, began. How to end it would be a central political issue for the next 20 years.

The Whitlam government survived an election in May 1974 with a reduced majority. Economic issues provided the motivation for bringing the Whitlam government to an end, but scandals triggered its demise, especially the so-called ‘loans affair’, in which the minister for minerals and energy, Rex Connor, sought a $4 billion loan for energy development outside of Loan Council legal processes.

In October 1975 Liberal leader Malcolm Fraser used his Senate numbers to refuse to pass the Budget appropriation bills until Whitlam called an election, on the grounds that the government ‘no longer [has] the trust and confidence of the Australian people’. The deadlock was broken on 11 November 1975, when Governor-General Sir John Kerr dismissed Whitlam, appointed Fraser as caretaker prime minister, and called an election for 13 December 1975. Fraser and the Liberal Party won in a landslide.

The dismissal, as it became known, remains the single most controversial event in the history of Australian federal politics. Australian democracy survived this stress test. Labor left office peacefully, large street protests did not lead to serious violence, and a quick and decisive election restored democratic legitimacy in the eyes of most voters. But a successful democracy needs the key political players to accept the processes for resolving disagreements, and Fraser’s strategy risked this consensus.

The way Fraser come to office and his stern demeanour made him appear as the hardman of Australian politics. Kemp however argues that he too was part of the humanitarian thread of liberal thinking, with his policy legacy including accepting Vietnamese refugees, support for multiculturalism, extending Aboriginal land rights, and ‘passionate opposition to racism’.

In a thread of liberal thinking rarely later discussed outside the legal profession Fraser established, following a Whitlam initiative, the Ombudsman and the Administrative Appeals Tribunal. Freedom of information laws followed later. These were significant changes recognising the rise of the ‘administrative state’. As government grows bureaucratic decisions affect citizens’ lives more, and these reforms offered remedies for adverse outcomes.

On economics, Fraser was, as Kemp puts it, ‘Menzies’s disciple’. He curbed growth in government spending but did not challenge protectionism or the wage fixing system. As Kemp documents, serious alternatives to Australian Settlement economics only gained momentum in the later years of Fraser’s prime ministership, with the rise of the Liberal economic ‘Dries’ and a lively free-market policy community, including a revived Institute of Public Affairs (the IPA had influenced Menzies in the 1940s) and the Centre for Independent Studies.

Yet Fraser would not have acted much differently had the intellectual environment changed earlier in his term. After he left office he was a critic of ‘economic rationalism’, as Australia’s economic reform philosophy was called before ‘neoliberalism’ became the fashionable terminology.

With the policy tools of an earlier era Fraser never ended stagflation, but won two more elections, against Whitlam in 1977 and Bill Hayden in 1980. Fraser thought he could repeat this victory in 1983, but Labor changed leaders to the more popular former union leader Bob Hawke. Labor won decisively, securing 75 of the 125 House of Representative seats. Fraser’s government had a stronger direction than the three short Liberal prime ministerships after 1966, but Kemp quotes the Valder review of the party’s defeat as saying that ‘too often we were seen to be inconsistent, too pragmatic, and finally too expedient’.

The Hawke government, to the surprise of most, introduced radical reforms at odds with Labor and Australian policy history. Trade protection was significantly reduced, the dollar was floated, wage fixing become more decentralised, national competition policy was strengthened and government-owned industries were privatised, among many other microeconomic reforms. Then Treasurer Paul Keating was the driving force. As Kemp observes, however, Keating did not use the language of economic liberalism. The goal was economic prosperity, not economic freedom.

Labor combined this ‘deregulation’ with policies that were innovative but lacked a market element. An Accord with the unions moderated wage demands in return for social benefits and compulsory superannuation from 1992. In higher education a national income contingent loan scheme for student fees, known as HECS, was a world first. The Liberals criticised both, superannuation for its compulsion, and the HECS-financed student fees for not creating a financial link between students and universities. But both were part of a public/private hybrid system of financing social services and benefits that the Liberals had long supported over state-dominated provision.

Labor remained in power for thirteen years, under Hawke until 1991 and then Paul Keating until 1996. In the Liberal Party thirteen years of opposition saw several sets of ideas compete for dominance.

The ‘Wets’ were the closest successors to Fraser’s philosophy, combining social liberalism with resistance to free market ideas. Ideologically they were not far from where Labor seemed to be in 1983, but without the union ties. This combination of views did not survive as a serious force beyond 1990, when its lead figure, Ian Macphee, left parliament after losing preselection to this book’s author.

Dry ideas had strong parallels with Labor’s agenda, moving the political centre in a free market direction. On the Liberal side the Dries peaked under leader John Hewson (1990-1994). His Fightback! policy was the most detailed reform agenda ever produced by an opposition. As Kemp notes, initially it was sufficiently popular to undermine Hawke’s leadership, but Labor when led by Paul Keating turned its proposed GST into a political liability. The Liberals lost the 1993 federal election, dealing the free market movement a blow from which it never recovered and introducing the era of ‘small target’ politics.

The ideological winner in this intra-Liberal contest was John Howard’s pragmatic blend of fiscal responsibility, economic liberalism and social conservatism. He defeated Paul Keating in the March 1996 federal election and remained in office until November 2007. Howard supported continued ‘Dry’ economic reform and a conservative welfare state, using policies such as ‘Work for the Dole’ to encourage the unemployed to work and diverting the taxed profits of a mining boom to households with children. Restrictions on opening new private schools were lifted. Howard pushed back against the ‘black armband’ view of Australia, which highlighted the original dispossession of the Indigenous population rather than the country’s strengths and successes.

Conservatives had always been part of the anti-Labor coalition joined under the Liberal brand in 1944, but before the Howard years leading Liberal MPs did not typically describe themselves as ‘conservatives’. Kemp suggests that self-identification changed because Australia had become less conservative, lifting conservative anxieties. The Liberals and their longtime National Party coalition partner faced rival conservative independent candidates and parties, most prominently One Nation, whose voters they wanted back. Howard popularised the idea of a ‘broad church’ Liberal Party, including many different anti-Labor philosophies and interests.

Howard struggled to keep the humanitarian thread of big-l Liberal thought in his broad church. His policy response to refugees arriving by sea, including boat turnbacks and indefinite detention on Pacific islands, offended humanitarian sensibilities. While popular in the electorate, Howard’s refugee policy turned social liberals away from the Liberal Party, including Malcolm Fraser, diluting their general influence and leaving ‘conservatives’ as a larger share of remaining Liberal supporters.

The fifteen years following Howard’s defeat in 2007 saw four prime ministers – Kevin Rudd and Julia Gillard on the Labor side (2007-2013), Tony Abbott and Malcolm Turnbull on the Liberal side (2013-2018) – who did not see out a full term.

The complicated politics of climate change were a key factor in this instability. Some on the Liberal and conservative side were sceptical about whether climate change was happening. Both major parties accepted but struggled with the need for policy change.  Turnbull supported an emissions trading scheme at the cost of his leadership, with the Liberals instead choosing, in a throwback to pre-1980s economic policymaking, ad hoc government interventions to reduce emissions.

The idea of an emissions trading scheme was one of the last vestiges of the ‘economic rationalist’ era, which looked for market-based solutions to public policy problems. The demand driven higher education system was another, introduced by Labor in 2012 and scrapped by a Liberal government at the end of 2017 for budgetary reasons. The National Disability Insurance Scheme, starting in a trial phase in 2013, also had echoes of this earlier era of politics in giving its beneficiaries choice over service providers. It has survived to date.

Scott Morrison, who took over from Malcolm Turnbull as prime minister in 2018, led the Liberal Party through to its May 2022 election defeat. From early 2020 Morrison’s government was consumed with the COVID-19 pandemic. A wage subsidy scheme and other COVID-related measures produced record budget deficits. International borders were closed to all but a small number of people with special permission.

The Liberal election post-mortem for the 2022 defeat resembled those written after the 1972 and 1983 losses. While ideological flexibility was needed in responding to COVID-19 the Morrison government never had much of a guiding philosophy. The Liberals were again, as Kemp said of the governments leading up to the 1972 defeat, ‘lurching from decision to decision rather than being purposefully driven’.

This has been a common problem for the Liberal Party and its predecessor organisations; perhaps an inherent weakness. From the unlikely political marriage of the Protectionists and Free Traders in 1909, the major centre-right parties were united more around what they opposed than what they supported. As Labor reformed itself from the 1960s, sometimes becoming more liberal than the Liberals, the motivation to oppose them shrank and constructing a differentiating agenda become more difficult.

As Kemp’s 50 year old but still insightful article ‘A leader and a philosophy’ argued, the Liberals need leaders who can be the ‘expounder of a philosophy or ideology which commands. common consent and adherence in the party’. The two most successful Liberal leaders, Menzies and Howard, have parallels in using periods of opposition to formulate ideas, drawing on their own backgrounds and the intellectual debates of their eras. Both also learned, after periods of unpopularity on their own side, to stay in touch with their MPs and the party organisation. But recruiting high-calibre people who can fill these leadership roles has become more difficult.

The Liberal May 2022 election review commented, as had the Valder report forty years earlier, on the problems caused by a declining membership. This was partly due to organisational failures, but also to the changing sociological foundations of politics. Kemp’s first book, Society and Electoral Behaviour in Australia published in 1978, had identified early signs of the changing class basis of politics, with more blue collar workers voting Liberal and more educated middle class people voting against the ‘conservative’ parties. In his recent book Kemp identifies the Australia Party, formed in 1966 in opposition to the Vietnam War, as an early ‘knowledge elite’ party, although Whitlam’s middle-classing of Labor was the more significant political transition of the 1960s.

In the mid-1970s a disgruntled former Liberal minister, Don Chipp, formed the Australian Democrats. It was an important centrist/centre-left party in the Senate for thirty years until being effectively replaced by the Greens in 2007, another middle class ‘knowledge elite’ party from further on the left. The Teals, for now a loose movement rather than a party, took several upper middle class seats from the Liberals at the 2022 election, wiping out the ‘modern Liberal’ (ie more socially liberal) group within the Liberal party room. Whether the Liberals can retake those seats is a key factor in whether that thread of liberal thought can be revived in the Liberal Party, or whether the party evolves into a more clearly conservative organisation.

Kemp sees successes for the liberal project. He suggests that ‘Australia became perhaps the most liberal nation in the world’. Despite the stall and partial reversal of 1980s and 1990s economic liberalisation, the Australian economy is much more market oriented than it was in 1966 or, according to international surveys, most other countries.

Many of the legal and customary constraints on personal life choices of 1966 are long gone. That three of the ‘modern Liberals’ who lost their seats in 2022 were openly gay men, one of whom while in office married his male partner under legislation passed (albeit not without significant internal opposition) by a Liberal government, would have been an unthinkable situation in 1966. The remaining official discrimination on the grounds of race or gender is in favour of rather than against the targets of discriminatory laws in 1966.

But Kemp ends with pessimism. ’By 2021’, he writes, ‘it seemed that Australia’s liberal project was facing its greatest challenge since the first half of the twentieth century.’

Kemp sees dangers in ‘utopian single issue’ movements on climate change, identity politics, and health during the COVID-19 pandemic. He fears this leading to the ‘centralisation of power, oppressive solutions, social and economic disruption, and restriction of democratic accountability’. In the Benthamite way of Australia, the principal agents of illiberalism are technocrats rather than the populists of the United States and Europe.

Kemp rightly classes changes to campaign finance law as an issue. While presented as reducing corruption or promoting political equality, in practice these laws protect incumbent parties and technocrats from challenges to their power. Presuming the Liberal Party continues to fade as an effective force, these laws will make reconstructing the party system more difficult.

To be a little more optimistic, while advocates of illiberal policy ideas significantly outnumber supporters of liberal ideas, unlike in the 1930s and 1940s there is no comprehensive illiberal ideology like fascism or socialism threatening Australian society. Single issue movements can achieve their goals then lapse or lose influence. COVID-19 measures suppressed personal freedom more severely than in any previous time in Australia’s democratic era but were eventually lifted.

Readers of the full set of Kemp’s histories will see parallels between the early decades of the 20th and 21st centuries – a flourishing of liberal ideas late in the previous centuries, followed by economic downturns, the rise of illiberal political ideas and movements, conflicts the political system struggles to handle, repression of personal freedom during a crisis, and organisational weaknesses on the centre-right. It turned out OK in the long run last time. Hopefully it will again.

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