THE HON JOHN HOWARD MP
ADDRESS TO THE 'AUSTRALIA UNLIMITED ROUNDTABLE'
Building a Stronger and Fairer Australia: Liberalisation in Economic Policy and Modern Conservatism in Social Policy
4 May 1999
It is very appropriate that this year's Australia Unlimited conference, focussing as it is on ideas that can shape the Australian economy and Australian society into the next century, should have as its Special Guest the acclaimed biographer of John Maynard Keynes, Lord Robert Skidelsky.
For it was Keynes who more than sixty years ago made that well-known and well-founded observation in his General Theory of Employment, Interest and Money that "soon or late, it is ideas, not vested interests, which are dangerous for good or evil".
At the outset, let me express a view on one aspect of the ongoing discussion of ideas that are relevant to Australia's current circumstances and our future.
There seems to be an iron law of politics in Australia that a good deal of the commentary on public policy issues must be disproportionate in its focus on negativity. I am sure that this conference does not fall into that category. But, in some analyses there does exist a tendency for what appears to be a streak of almost permanent professional pessimism.
For example, with Australia's economic circumstances so strong and our prospects so encouraging, there is a trend in some analyses to seek to focus on social problems in a very narrow way, and to depict a 'crisis of confidence' in Australian society as a whole.
Such analyses are seriously flawed and misread the mood of modern Australia.
Of course there are serious social problems in our community – as there have been throughout our history - and I will focus on some of them tonight including unemployment, crime, drug abuse, and family breakdown, as well as the most effective means of addressing them.
But it is also true that Australia has good reason to be optimistic about its future. There are fewer limitations now on what Australia can achieve than at any time in the twenty five years I have been in public life.
Our economy is stronger and more competitive than it has been for decades.
We have maintained an open, tolerant and harmonious community and we have successfully stared down tendencies to extremism.
We need to recognise that we are better placed now than we have ever been to tackle the social problems which our community faces.
We are also less preoccupied with rationalising our role in regional and wider international affairs.
In particular, we have stopped fretting about the definitional category which most accurately describes our engagement with Asia.
We no longer agonise over whether we are 'in', or 'part of', or 'enmeshed with' Asia.
We are just being ourselves in Asia – that is, a strong, stable and engaged middle power openly espousing the great liberal democratic values we share in common with many nations but doing so in a way which recognises that countries do not need to be cultural and political mirror images to work closely and effectively together.
More generally, there is a gathering belief among us that there is 'an Australian way' of managing our affairs, both domestic and international – a way that is practical and effective, and that draws strength from the unique intersection of our history and our geography which contributes so much to our opportunities and responsibilities as a nation.
As we approach the new millenium, our priority should be to recognise these many strengths and build on them in a practical way that advances Australia's interests.
One of the challenging political issues of our time is the appropriate role of national governments in a period when internationalist trends are becoming stronger. It is an issue which goes to the central question of how governments can most effectively manage their twin responsibilities to advance their country's economic interests in an increasingly competitive global economy and, at the same time, fulfil their wider responsibilities to their societies.
No national government can successfully pursue its economic priorities in isolation from its social policy concerns. There is a clear interdependence between the two. A nation's economic progress depends ultimately on the condition of its society – its stability, its cohesiveness, its fairness and its avenues for individual self-fulfilment and equality of opportunity. In turn, the strength of any society depends critically on the capacity of its economy to provide growth, incentives and jobs, and to fund assistance programmes for those in need.
The successful management of our domestic economy and the strength of our Australian society therefore depend on many of the same requirements.
Our society cannot function effectively or fairly without habits of trust, transparency, responsibility, self-reliance, co-operation and respect for individual dignity. The same is true of our national economy.
The rights, freedoms and responsibilities of individuals are the firmest foundations for a strong sense of community. The same is true of a strong, competitive and dynamic economy.
Economic growth is a necessary but not sufficient condition for a strong society. That is why the Government which I lead takes careful account of the social implications of economic policymaking just as we do the economic consequences of social policy initiatives.
Policy mechanisms or fashions are never ends in themselves. In defining the right approach to both economic and social policies, we should always remember that it is the goals of national policy which are the critically important determining factor, and not the mechanism for implementing policies or the ideologies that may support them.
Our goal in national policymaking is undeniable. We seek a strong, fair and decent Australia.
Striving to achieve this goal instructs and defines our approach to specific issues in social and economic policymaking. We believe that achieving real progress towards our goal is best met through a mix in public policy which combines liberalisation in economic policy and what I would describe as a 'modern conservatism' in social policy.
This is unsurprising given the philosophical roots of the Coalition which I lead. We represent both the classical liberal as well as the conservative political traditions in Australia. Our priorities in economic and social policy reflect this broad perspective.
The processes of economic globalisation are dynamic, ongoing and desirable. Reaping the benefits of those processes for Australia brings many advantages. It makes us a stronger nation because it can give Australians expanding opportunities, more dynamic growth and higher living standards.
But governments, business groups and the wider community need to recognise that these processes of globalisation can be disconcerting and unsettling for individuals who are adversely affected by the changes they inevitably cause. Such Australians can feel left behind, resentful and envious.
A fair and decent society needs creative policies to minimise the impact of these outcomes and to provide positive alternatives.
Part of the task for all of us is to fully explain the practical benefits of globalisation for Australia. We also need to ensure that we help those dislocated by its effects to search out solutions rather than to be consumed by resentment.
The point is that liberalisation in economic policy and a modern conservatism in social policy are not only appropriate to Australia's national interests as we enter the twenty first century. They are mutually reinforcing as well.
The values and priorities we bring to social policy issues provide important 'points of anchorage' in a period of rapid and ongoing economic change.
Economic policy liberalisation and a modern conservatism in social policy share important common values and objectives. One complements and derives strength from the other.
Both recognise the role of markets and of government, as well as the limitations of each.
Both reject the controls of the corporate state over people's lives.
Both promote opportunity, incentive and responsibility over dependence and welfarism.
And both support the full realisation of individual potential as well as the reality of social obligation.
These aspects are highlighted in the issue which is the major focus of both economic and social policymaking – and that is the issue of overcoming the problems of unemployment.
Liberalising our economy brings greater investment, more jobs and broader opportunities for advancement. In turn, these gains are complemented, and made more accessible, by the priorities of our modern conservative approach to social policy, particularly with its emphasis on a new social coalition, a modern safety net and higher standards of education and training – issues to which I will make further reference later in my remarks.
Our broad policy framework, therefore, is one built on economic policies that maximise the advantages for Australia to be gained from globalisation and social policies to manage the areas of dislocation.
This policy framework relates directly to the nature of the opportunities and challenges which Australia currently faces.
They include opportunities opened by the realities of technology change, digital networks, software revolutions and the expanding frontiers of the knowledge economy and services sector more generally.
They include other opportunities that flow from remaining world leaders in sectors such as mining and agriculture and from enhancing our strength in manufacturing and value-adding industries across the board.
There are also the challenges we face in enhancing fairness in our society at the same time as we strengthen our economy. They include the realities of declining but
still–too-high levels of unemployment, the pressures on families and young people, the changing nature of work, the ageing of the population, the special difficulties facing areas of rural and regional Australia, and the scourge of drugs and violent crime.
A nation which tries to address such opportunities and challenges with a centralised inward-looking economy that is fearful of its engagement with the wider world, that has an inflexible and uncompetitive economic infrastructure and that is dependent on a declining and outdated skills base will be incapable of reaping the benefits of the forces of global economic change. More than that, such a policy framework will accentuate unfairness, division, alienation and need in society because national wealth will diminish and the capacity to address growing inequities will decline.
Over the past three years, the Federal Government has adopted a fundamentally different approach.
It is one that avoids the extremes of laissez-faire indifference to the social costs of economic change on the one hand, and welfare dependence on the other.
It is an approach founded on a belief that a market economy and a compassionate society are not only compatible but also desirable.
It is an approach that constitutes 'an Australian way', reflecting Australia's unique history, values and circumstances as well as hope for the future.
It is an approach that is embodied in the broad policy architecture which we have established on two mutually supportive foundations.
Liberalisation in Economic Policy
The first is our commitment to liberalisation in economic policy. Our purpose in this regard is to establish a flexible, competitive and dynamic economic framework capable of maximising for Australia the benefits of global economic change.
This commitment to economic liberalisation has entailed a broad range of activism and reform.
It has entailed a difficult but ultimately highly successful process of fiscal consolidation that has underpinned the achievement, despite the Asian economic collapse, of the best set of macroeconomic fundamentals in Australia for a generation – low interest rates, low inflation, rapidly falling Commonwealth debt, high jobs growth, high productivity and high levels of investment.
It has also entailed the achievement of a faster pace of microeconomic reform that is making Australia increasingly competitive in the global economy. This has been achieved through greater competitiveness, privatisation, benchmarking and – as the waterfront dispute demonstrated – strong political will to achieve better practical outcomes in Australia's national interest.
Our commitment to economic liberalisation is also reflected across a wide range of other policy areas.
There has been the fundamental reform of workplace relations to free enterprises of unnecessary and inflexible centralised controls.
There has been the dramatic development of Australia as a great share-owing democracy.
There has been the far-reaching and innovative reform of Australia's financial system to further enhance its strengths and to underpin Australia's strategy to become a world centre for financial services.
There has been the sensible, balanced approach to resource development and environmental protection where the national interest has clearly been asserted over narrow sectional interests.
There has been the renewed focus on standards of literacy and numeracy in our schools, and on apprenticeship schemes and training opportunities.
Perhaps above all, there is the commitment to comprehensive, generational reform of the Australian taxation system to make it fairer, more effective and more internationally competitive. The implementation of this reform is the single most important item of unfinished business in building an economic framework that will enable Australia to reap the maximum benefit from the opportunities presented by economic globalisation.
The Parliamentary passage of the legislation embodying the Government's mandate on tax reform from the last election is now entering its critical final phase.
It constitutes a clear and historic choice.
One option is to stick with a tax system which is generally acknowledged to be outdated, complex, unfair, uncompetitive, inefficient, and in the long term unsustainable.
The alternative is a new tax system that can help to gear up the Australian economy to meet the challenges of the twenty first century as well as provide a more realistic basis for the provision of government services that can meet our society's needs into the future. Furthermore, it constitutes the single most important change in Commonwealth-State financial relations for over half a century and removes many of the distortions and inefficiencies that have bedevilled good policymaking for too long.
This is a choice between optimistic realism and backward-looking inertia.
History will judge harshly those who take fright, who retreat from this inevitable challenge into a world of unreality and who condemn the Australian economy and Australian society to further years of disadvantage, unfairness and uncompetitiveness under a taxation system that is failing all Australians.
I am hopeful that these outcomes will not occur, but they represent what is at stake.
A Modern Conservatism in Social Policy
The other pillar of our policy architecture, which complements our commitment to an activist promotion of liberalisation in economic policy, is a commitment to what I would describe as a 'modern conservative' approach in social policy.
The stand-alone description 'conservative' does not do adequate justice to our goals and priorities in social policy, nor to the scope of the beneficial reforms we have instituted. We are not about a simple reassertion of traditional social attitudes as they prevailed in previous times. Instead, we seek to relate some enduring values to the task of addressing current problems in our society in a relevant and practical way.
Our approach supports the social institutions, such as the family, which uphold those values – values that include independence, personal responsibility, tolerance, respect for individual dignity, self-reliance, maximising individual potential and upholding an obligation to other members of the community. But we do so in a way which recognises that the modern circumstances facing families are different to what they were in previous times, that financial relationships between family members are different, and that the increased independence of women has had, and will continue to have, important implications in the evolution of policymaking on social issues.
Our modern conservatism in social policy seeks to achieve a more productive balance between poverty alleviation and incentives to avoid poverty. Our aim is to build a modern social safety net which is not founded on expanding the welfare state but on lessening welfare dependence and broadening the choices available to individuals, families and communities.
Our focus – whether it be in health policy, or the anti-drugs strategy, or homelessness, or youth suicide, or family breakdown, or any other social problem – is on tackling problems at their source rather than simply living with and trying to ameliorate their consequences.
One of the defining characteristics of our modern conservative approach is our use of the leadership role of government to actively forge a new social coalition to address modern social problems in a modern way.
We believe that Australia's capacity for compassion is not measured by the size of government. Our approach does not entail any winding back of government support for individuals and families in need, but it does call for a broader community partnership.
Our purpose is to build a new social coalition of government, business, charitable and welfare organisations, and other community groups - each contributing their own particular expertise and resources, in order to tackle more effectively the social problems that directly or indirectly affect all members of our society in one way or another.
This approach rejects an older view that governments could fix all society's ills if only they allocated more resources. It is a recognition of modern realities. It upholds the responsibilities of government, but acknowledges their limits. It promotes the view that a community most effectively addresses its social problems when all groups, working with government, co-ordinate their strategies and complement their particular strengths.
Another defining aspect of our modern conservatism in social policy lies in our strong support for the principle of Mutual Obligation.
Just as it is an ongoing responsibility of government to support those in genuine need, so also is it the case that – to the extent that it is within their capacity to do so – those in receipt of such assistance should give something back to society in return, and in the process improve their own prospects for self-reliance. This is the principle that underpins the Work for the Dole Scheme which we have successfully introduced and expanded over recent years.
Our modern conservative approach in this area contrasts with that which may be appropriate to other forms of conservatism.
For example, the philosophy of an older conservatism built on 'noblesse oblige' would advocate government support for those out of work until such time as they found employment of their choosing without providing a coherent set of incentives and assistance to encourage such an outcome.
The philosophy of laissez-faire libertarianism, on the other hand, would take a different course advocating that the minimisation of government support is the most effective incentive for encouraging self-reliance.
Our modern conservative approach, however, takes a different approach to both these perspectives. We recognise the obligation on government to support those in need but we also provide real incentives and assistance to avoid welfare dependence.
We have also extended the principle of Mutual Obligation to another dimension as well. It is that those who have done well in our society, and who benefit from a strong and stable sense of community in our society, should be encouraged to lend a helping hand to their fellow citizens who are in need. This principle underpinned our recent significant initiatives to enhance corporate and individual philanthropy.
Our commitment to a modern conservatism in social policy is also reflected in the greater recognition we have given (through taxation and other reforms) to the costs of raising families and in the more genuine choices we have given families in education, health care and the balancing of work and care of children. It is reflected as well in the significantly enhanced recognition we have given to the unique role that carers play in our society.
Our 'Tough on Drugs' strategy encapsulates many of the themes that characterise our broader policy approach to social issues. It includes an active partnership with relevant community and charitable groups working at first hand with the problem of drug addiction; it provides enhanced assistance programmes to address the immediate consequences of drug abuse for individuals; it allocates additional resources for law enforcement authorities to curtail the supply of drugs; it focusses on the root causes of drug abuse; it encourages individuals to be responsible to help themselves out of their drug addiction; and it sends a clear message on the unacceptability of drug abuse through our support for approaches such as zero tolerance of illegal drugs in our schools.
Our commitment to a modern conservatism in social policy is further reflected in the enhanced focus we have given to areas of practical disadvantage for Aboriginal and Torres Strait Islanders, particularly in areas of health, housing, employment and education.
It is also reflected in our fundamental reorganisation of the way in which social and labour market services are delivered to the community. This has been achieved through streamlined, better co-ordinated government operations and through increased involvement of the private sector and charitable organisations in arrangements such as the Job Network.
In fact, the Job Network is at the forefront of global reform in this area. It is yet another very good example of an outcome that reflects 'an Australian way' – one that enhances choice, improves outcomes and is appropriate to Australian values and priorities.
Priorities for the Future
Let me turn very briefly to priorities in public policymaking in the near future.
The changes that have resulted from our commitment to economic policy liberalisation and a modern conservatism in social policy have changed the public policy landscape in what I believe will be an enduring way. And it will be enduring because those changes are delivering practical and beneficial outcomes to Australians.
But the process needs to be ongoing. The challenges flowing from economic globalisation will continue to increase and diversify. Our economy and society will only continue to benefit from them in terms of growth, jobs, investment and a sense of national community if our economic infrastructure meets world-class standards and if social dislocation and individuals' legitimate fears of change are addressed in a practical way.
That is why the processes of economic liberalisation must continue to be pursued and why the modern conservatism in social policy must be further strengthened.
What does this mean in practical terms?
It means that the generational challenge of tax reform must be met.
It means that the process of freeing up workplace relations from the dead hand of inflexible centralised controls needs to continue.
It means that the deregulation of small business needs to be taken further.
It means that fiscal responsibility and sound financial management need to be consolidated.
It means that contestability and competitiveness in the development of our economic infrastructure and the provision of many social services need to be further expanded.
It means that the idea of Australia as a global centre for financial services needs to be transformed into a reality.
It means that the modernisation of the social safety net and the new social coalition of which I have spoken need to be consolidated.
It means that the principle of Mutual Obligation needs to be further strengthened and greater personal responsibility fostered.
It means the interests of families need to be kept at the centre of national policymaking and that the choices available to them in health, education, aged care and other areas need to be expanded.
It means that the interests of Australians in rural and regional areas continue to need special focus.
It means that Australia's record as one of the most democratic, tolerant, open and fair-minded communities in the world needs to be further enhanced by ensuring that all Australians, irrespective of race, colour, beliefs, gender or country of origin have an equal right to fulfilment of their talents and potential.
It also means that our institutions and skills base need to adapt to the new frontiers of economic globalisation, particularly in the area of maximising intellectual capital.
One of the key driving forces of economic globalisation in the period ahead will be the knowledge economy embracing sectors from innovation and research to science and development, from communications and information technology to education services.
This challenge to maximise our intellectual capital calls for a coalition of interests working together – governments, workplaces, schools, universities, training organisations and community-based groups.
Our goals need to be clear.
We need to encourage world-class standards of literacy, numeracy and information technology expertise in our schools and communities.
We need to expand Australian exports of educational, legal, technological and other value-adding sectors of the information and knowledge industries.
We need to develop a leadership role for Australia in biotechnology and its applications.
We need to build on our world-class reputation in medical research.
We need to continue to develop training opportunities to accommodate the pace of technological change in the labour market.
And we need to promote new commercial linkages between industries, universities and other research organisations, particularly in new technologies.
Announcements in next week's Budget will assist progress in some of those areas. But more broadly the Government is looking to working with the coalition of interests to which I have referred to ensure that Australia's intellectual capital is maximised.
Conclusion
May I conclude by noting that the Government's economic and social policy framework which I have outlined tonight has clear goals for national achievement over the course of the next decade.
Our purpose is to help build an Australia which is a global leader in economic achievement, innovation and new technologies. It is also to strengthen the tolerance, fairness, optimism and sense of common purpose that have always characterised Australian society.
These goals are within our grasp.
But they will not be achieved through inertia, luck, inwardness or timidity.
They will only be achieved through realism, competitiveness, boldness and a keen sense of Australian values. That is the course to which I am firmly committed because it is the course that will build a stronger economy and a fairer society for all Australians.