Tuesday, 8 January 2013

Sorry Keating, you were the lesser reformer

The galling truth for Paul Keating is that his predecessor Bob Hawke and successor John Howard were the greater reform prime ministers, writes Peter Reith.

The annual release of archived cabinet papers is a good time to reflect on what was said and decided by cabinets of yesteryear.

Past cabinet decisions are not just about history; the debates often reflect longstanding values of continuing relevance. For example, a cabinet debate in the 1980s about the constitution could provide an insight into a similar debate on federalism in 2013 because the essentials of the discussion have not changed greatly.

The formal documents include not just the cabinet decisions but also cabinet submissions and cabinet notebooks, described here by the official archivist:

Meetings of Cabinet and Cabinet committees are usually attended by officials of the Cabinet Office. Their role includes the recording of proceedings so that minutes accurately reflecting the decisions made or conclusions reached can be prepared. These records of proceedings are referred to as the Cabinet notebooks.

The papers provide lots of information and the gist of what was said and why: so the release of the documents is a valuable source to better understand how our system works. Of course, often the notes are not the only means by which the public hear what is happening on the inside. The conventional wisdom is that the public hear less about cabinet decisions from governments that are united and more from governments that are divided.

Paul Keating was no shrinking violet when it came to public controversy; in a way it was one of his better characteristics because public debate is vital in any democracy. Obviously the release of the papers that reflect continuing debates (e.g. on the GST) encourages former ministers and their opponents to continue their fights of days gone by.

That is fair enough, especially if former participants have mellowed enough to scrub the spin and try to describe what actually happened. This was certainly not the case with Paul Keating this year. He claims to be the great reformer of our time but the truth is that while he made some good contributions as treasurer, as PM he walked away from positions he had earlier championed. The galling truth for Keating, as prime minister, is that Hawke as PM did more to implement reform than Keating.

James Massola for the AFR said last week that the Hawke-Keating reforms were "the likes of which Australia has not seen since (paywalled)". This opening comment on his piece about Paul Keating was as over the top as Paul Keating putting the argument to Massola (AFR p4 2-4 January 2013) that "Australia did not need the GST eventually introduced by the Howard government". This was an absurd comment.

Keating promised income tax cuts to match Fightback and legislated the tax cuts before the election. He won the 1993 election by hypocritically opposing the GST. After the election he proved he could not match Fightback because he had to abandon the tax cuts. That measure alone was a key reason he lost in 1996. The truth is that Keating had been passionate about the GST (and many admired him for that passion) but the sole reason for dumping the tax was because Hawke did a deal with the ACTU in a motel room in Canberra.

The absurdity of Keating's claim is compounded by the then existence of the wholesale sales tax (WST). Much of the proceeds of the GST were to abolish the WST. Keating could not find the money for the income tax cuts so he could hardly find the money needed to abolish the WST. Australia would be a lot worse off if we still had the dilapidated WST; income tax would be higher, savings would be discouraged, tourists would not be paying GST, business would be loaded up with the costs of the WST, and black economy participants would be laughing all the way to the bank.

Keating also showed how he has lost the plot when he said that productivity is languishing because of the failures of the Howard government. Of course, there are many factors that impact on productivity performance but a flexible labour market is a key element. Paul Keating, who has privately attacked Hawke for his dealing with the unions on the GST, was every bit as spineless when he caved in to union demands to scuttle Keating's labour market policy blue print announced by him at the Institute of Company Directors in April 1993.

Rather than any useful reform, Keating introduced the unfair dismissal laws that have been a major disincentive for employment ever since. There was a lot of talk by Labor about labour market reform but the real reform only came when the Howard government was elected in 1996 and we secured passage of the Workplace Relations Act that came into operation in mid-1997.

John Howard was every bit and more of a reformist than Keating. He had a better record than Keating on labour reform, the GST, fiscal policy, the independence of the Reserve Bank and many others. And John Howard has been very fair in giving Keating and Hawke their due; as one example, he has publicly acknowledged the benefits to Australia of floating the dollar.

It's time that Paul Keating congratulated John Howard for some of his 'signature' reforms like the GST and the labour market. Surely one way to promote reform is to praise those reformers who have succeeded.

No comments:

Post a Comment