Date created: 28 November 1996

Last modified: 18 November 1997

Maintained by: John Quiggin

When two reformers face off

This should be the election of the decade. For the first time, Australians are faced with a choice between the two men who have dominated the policy debate for more than fifteen years and have driven the program of microeconomic reform that has transformed our economy and society. Microeconomic reform began with Mr. Howard's appointment of the Campbell Committee in 1979, but it was Mr. Keating who implemented financial deregulation. The same pattern has been repeated on a number of issues since Labor gained government. Mr. Howard pushed privatisation when Labor was still campaigning on the socialist objective, but it was Mr. Keating who actually sold the great Australian icons, Qantas and the Commonwealth Bank, as well as accepting knockdown prices for less well-known assets like the Commonwealth Serum Laboratories. Mr. Howard argued for enterprise bargaining when Labor was still selling the Accord Mark 1, and eventually Mr. Keating delivered much of what Howard wanted. After a string of elections in which one or both parties haveput up show ponies and stand-ins as nominal leaders, the two real leaders are finally going head to head. The debate between the purist approach to reform represented by Mr. Howard and the pragmatic commitment of Mr. Keating should be at the centre of the election campaign.

Even more, according to the beliefs propagated by Mr. Howard and Mr. Keating alike, this election should be about dividing up the proceeds of microeconomic reform and deregulation. Having gone through a decade or more of pain in the name of competitiveness, the electors should now be facing the pleasant choice of allocating the benefits of higher productivity between the competing demands of improved public services, lower taxation, increased leisure and simply storing up savings against a rainy day.

In reality, both candidates are running away from reform and deregulation as hard as they can. Mr. Keating is posing as the defender of public enterprise and Mr. Howard as the friend of socialised medicine. Meanwhile the Nationals are daily announcing exemptions from the Hilmer competition reforms. And, of course, each party is accusing the other of still being secretly committed to reform. Mr. Howard gleefully quotes stories suggesting that Keating would sell Telstra, while Mr. Keating pounces on any resemblance between the Howard platform and the discarded Fightback manifesto of 1993.

More importantly, it is painfully obvious that there are no proceeds of reform to divide. For the average voter, microeconomic reform means little more than harder work for less pay, and constant fear of the sack. Meanwhile, both sides are dancing around the reality that the Budget is massively in deficit. The options we face are to continue accumulating debt, to cut public services that are already stretched to the limit or to violate the shared Howard-Keating dogma that taxes must never be raised. Increasingly, however, it looks likely that both sides will dodge these choices and rely on asset sales to cook the books.

After fifteen or more years of Howard-Keating government, it is obvious that the electors are heartily disillusioned. The dominant feeling appears to be the desire to give Keating and Labor the well-deserved hiding they escaped in 1993. As the day of decision draws closer, however, the lack of enthusiasm for Howard and the Liberals becomes ever more apparent. Independents and minor parties such as the Democrats and Greens will do well, but in the absence of any serious prospect of forming a government, or even an opposition, they cannot to provide a real alternative. Many in the electorate would no doubt like to put both major parties equal last. The recent jailing of Albert Langer for advocating precisely this course of action shows just how intolerant the major parties are of any challenge to their duopoly.

What Australian democracy desperately needs is some genuine choices. First, should we raise taxes and improve the provision of services like health and education or should we continue cutting taxes and cutting services ? Opinion polls have repeatedly suggested that the majority of Australians would prefer better services, even at the cost of higher taxes. But neither of the major parties is offering us this choice. Mr. Howard's promised of no new taxes and no increase in existing taxes leaves him no room to move. The Labor alternative of no increase in the tax burden is more rational, but does not address our basic problems. Once the absurd pretence that the Budget is in surplus is abandoned, both parties are effectively locked into large cuts in services.

Is the massive expansion of financial markets an inevitable and desirable consequence of globalisation or a parasitic growth on the real economy ? There is a strong case for the latter view and for the corollary that action should be taken to tax international financial transactions, as suggested by Nobel prize-winner James Tobin. But we will not hear any discussion of this from either of the contenders.

Most importantly, is full employment the central goal of economic policy or a second-order distraction from the main game of increased competition, level playing fields and the winding back of the public sector. Unemployment is consistently the most important issue of concern to ordinary Australians, but the major parties have done their best to ignore it. Labor's Working Nation program accounted for around 2 per cent of total government outlays, and is scheduled for steady cutbacks in addition to those that have already taken place. Mr. Howard's program for full employment appears to begin and end with the repeal of unfair dismissals legislation. Only the large-scale creation of real jobs in potential growth areas like health, education and community services can generate a real reduction in unemployment.

Whatever answers are given to these questions, an open debate about the real issues would be preferable to the shadow boxing and evasions that have characterised the current election campaign.

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