1992-1993 Cabinet Papers Show Keating Government had a Neoliberal Lie at its Core

Bob Hawke has the degrees but Paul Keating has the wisdom. That aspect of Keating, the self-educated working class intellectual from western Sydney, is one I, a fellow Westie, have long had a soft spot for although this does not prevent me adopting a critical disposition toward much of his, economic, policies.

The release of the 1992-1993 Keating government cabinet papers, that is departmental submissions to cabinet, provide an opportunity to reflect upon the basic contours of the Keating government. There are many aspects to the cabinet papers that are of interest, not least of which is the cabinet submission that led to the mandatory detention of asylum seekers coming to Australia by boat. That decision, not the Tampa, underpins the current Australian approach.

What I would like to concentrate on here is the overall economic framework of the Keating government.

Many have long supposed that the reason Keating lost big time in 1996 was because of his expansive social agenda, which sought to contribute to a change in Australian conceptions of selfhood or nationhood, as expressed most clearly in the government’s policies on Indigenous affairs and Reconciliation, the Republic and more deeper engagement with Asia.

This is an analysis that I do not share. That is, I don’t think that the famous whack of the baseball bats was delivered to such effect in 1996 because these social policies were perceived to be odious by the electorate. I think, rather, that the baseball bats came out because of the economic framework of the Keating government. I think that the 1992-1993 cabinet papers well illustrate that economic framework.

Please allow me to explain.

Paul Keating became Prime Minister when he defeated Bob Hawke in a party room ballot for the Labor leadership. That ballot occurred in the depths of the 1990-1991 recession, which was especially deep and nowhere more so than in the traditional industrial heartlands of the Australian Labor Party.

Keating at the time, apparently, was bucking the economic rationalist or neoliberal line that he so assiduously pursued as treasurer. Whilst Bob Hawke and John Kerin, with critical support from the “socialist left” faction of the ALP, were sticking to the neoliberal treasury world view, for example announcing tariff cuts in the midst of the recession, Keating was calling for more expansive fiscal and monetary policies to stimulate the economy. Even on the matter of counter cyclical policy Hawke was rigidly wedded to the treasury free market framework, which has market based economies automatically adjusting to a full employment equilibrium after shocks.

Corporate Australia, however, wanted some Keynesian stimulus, but not a permanent break from the neoliberal order, and it was this that delivered, to no small degree, the Labor leadership to Keating. One can see this in the corporate media’s, especially the Canberra press gallery’s, strong support for Keating, something key Hawke backers such as Robert Ray had noted and even Hawke himself expressed in caucus prior to the vote.

The underlying reason for this Hawke shows no evidence of having grasped.

A similar dynamic was at play regarding Fightback! and the 1993 election. Keating and others noted how Hawke was not able to respond adequately to Fightback! reserving his avenue of attack to exposure of numerical holes in the Hewson budget bottom line.

Hawke could do only this because he was wedded to the neoliberal free market framework that underpinned Fightback!. A philosophical-ideological attack was precluded. Molotov cocktails might take out a panzer or two but they won’t stop a panzer army.

Paul Keating in his first term announced the One Nation economic policy, which was his strategy to fight the 1990-1991 recession and win the 1993 election. The Government, or the Labor Party I can’t recall which, produced a document called “Poles Apart” which sought to demonstrate that Labor and the Liberals were poles apart, that is that there existed an electoral chasm separating a rabidly neoliberal set of policies from an expansive social democratic set of policies.

But this was a lie. You can see this from the 1992-1993 cabinet papers. Greg Jericho, Australia’s finest economic commentator in the media, demonstrates this in a great analysis of both the period and the cabinet papers.

Jericho writes

Keating himself was no less grandiose. He told the media on its launch on 26 February that it was “a statement which I think will lead to a turning point in our economic history and our social history.”

The cabinet papers reveal concern about One Nation raising expectations about continued infrastructure spending, rejection of assistance for the textile, clothing and footwear industry affected by continued tariff cuts, Keating did not want to reverse the Hawke recession era cuts, continued desire to pursue industrial relations reform toward enterprise bargaining, which strikes at the power of the organised working class, sentiment for more privatisation and so on.

Jericho quotes Keating to great effect

Asked by a journalist on 10 July if the unemployment rate of 10.8% meant he had to admit his economic policies had failed, he responded: “Do you mean the ones that have taken Australia from an industrial museum to give it a future, or do you mean the cyclical ones?”

That quote is highly revealing. It showed Keating’s commitment to neoliberalism to be undiminished, as reflected in the above slew of policies, but nonetheless he wanted to, temporarily, pursue, mild as Jericho points out, counter cyclical Keynesian fiscal and monetary policies.

In that period, namely 1990 to 1993, this was corporate Australia’s preferred policy outcome and neither Hawke nor Hewson, the “feral abacus” as Keating dubbed the latter, pursued it.

The Keating government had a lie at its core.

It presented itself as reversing the neoliberal line that had governed policy from 1983 but Keating was no way committed to this, to the contrary neoliberal reforms, opposed by the public particularly Labor’s traditional working class constituency, were to continue. That became clear to all and sundry after the 1993 election as Keating’s second government, ie from ’93 to ’96, tacked further to the neoliberal right. The cabinet papers from these years are the next in line.

It is this lie, and the sheer brazen arrogance which accompanied it, that made for the collective unleashing of the veritable baseball bats not the social agenda.

The opposite analysis has largely seen Labor adopt a timid, indeed vulgar, approach to social policy since 1996 but to little electoral effect. The ALP in 1983 was elected on a robust programme of Keynesian social democracy, which it immediately discarded upon entering office. Keating, effectively, repeated the dose in 1992-93.

Neoliberalism, not Mabo, led to the defeat of Paul Keating in 1996 and the undiminished commitment to it continues to sully the Labor brand.

Just an aside by way of conclusion.

Some suppose that the One Nation economic package forms the etymological roots of Pauline Hanson’s One Nation party. I tend to think that the more appropriate roots can be found in John Howard’s One Australia policy of the 1980s, which was widely lampooned. But in the depths of the 1990s recession, and Keating’s duplicitous approach to the economy, the One Australia set of policies gained traction and it is this traction, I believe, that led to the 1992 cabinet decision on mandatory detention a matter to which we shall return.