Andrew Peacock
This extract is part of Australian Liberalism: The Continuing Vision
I regard the major challenge for the Liberal Party as the need to create the environment most favourable for enabling all Australians to reap the greatest benefit from change. This kind of positive approach is what Liberalism is all about. As Professor Samuel Huntington recently expressed it, 'A successful revol- utionary need not be a master politician; a successful reformer always is'
The principles of Liberalism have not basically changed since they were first developed by the great liberal democratic movements of Europe and America over two hundred years ago. They will still be valid in another two hundred years because they are grounded firmly in a respect for the individuality, self- reliance, ingenuity, humanity, and resilience of each man and woman in society. These key elements of Liberal philosophy are:
Liberals believe that the driving force of a dynamic society is the diversity and richness of individual personalities. Very much in the liberal- democratic tradition, President Kennedy expressed this notion in the following terms:
I believe in human dignity as the source of national purpose, in human liberty as the source of national action, in the human heart as the source of national compassion and in the human mind as the source of our invention and our ideas...Liberalism...a faith in ma}is ability...reason and judgement...is our best and our only hope in the world today. Individuals generate change. They constantly have new ideas, a desire to create, innovate, build. They have objectives, too, and their determination, great or small, to fulfil those objectives drives the community forward. Liberalism's commitment to the free ex- pression and free play of diverse views and approaches provides it with a better chance of finding the most imaginative solutions to the complex problems of economic and social change. With its tolerance and encouragement of diversity, Liberalism is without the weakness of those other philosophies which display rigidity and over-simplification in the face of constant and complex demands for change. Less flexible philosophies are so often unable to produce the kinds of creative policies necessary to cope with a dynamic environment. As Sir Robert Menzies wrote, "Dogma is a comfortable thing. It saves thought"
Social and economic change: Liberalism provides the best framework for absorbing structural changes in society and the economy. The guiding principles for turning change to our advantage are our commitment to a tolerant and just society, our commitment to economic growth, our commitment to a limited but sensitive role for government, and our commitment to balanced and decentralised institutions.
No one is in any doubt that Australia is passing through a period of substantial adjustment. Our traditional social structure has undergone dramatic modifications. Likewise, our economic system is hav- ing to change radically. People are confronting change from inside and outside their own society. Change from within derives from new expectations about the economy, society, the institutions of government. Change from outside a society is equally important; in Australia's case, it may be even more important than internal change. The barrier of geographical isolation has been largely removed by technological advances. Changing trade patterns, and changing social values in other parts of the world have a major and growing impact on Australia.
If we ignore such change, we limit our own opportunities and those of future generations. If we accept and build on it, we have the chance to join the leaders. Instead of talking, as too many people do, about whether we adjust, we should talk about how we adjust. If we leave it too late, we shall find ourselves having to adjust not on our own terms, but on those of other people.
...The social changes taking place in Australia are placing considerably more pressure not only on a community sometimes reluctant to embrace those changes, but on government and community re- sources. For example, there has been substantial change in the structure of families. There has been a dramatic increase in female participation in the work force, and many people have talked about this increase making it considerably more difficult to achieve the target of full employment. But women have added enormously to the capacity of the economy to innovate and develop. Instead of dictating that, say, only one family member should work, there is a need to find a way of ensuring that this greater demand for female participation can be met by more jobs. We welcome the increased participation of women in the work force, but our society must also respect and value the contri- bution of the many women who have chosen, and will continue to choose, the more traditional family role.
There are further substantial social changes taking place in Australia; the ageing of the population and the evolution of a multicultural society. In addition, Aus- tralia is having to come to terms with rapidly changing internal and external pressures on the economy. Competition from the newly industrialised countries, especially those within our region, is now a reality we cannot escape. These countries have adopted outward looking, trade-oriented industrialisation strategies, and many are already upgrading their economies with high-technology industries. They are going to bring home to Australia the reality of its economic position, the nature of its opportunities, tasks, and problems during the coming decades. The Asia-Pacific region includes the fastest growing economies of the world. Australia can be a partner in that growth.
Manufacturing industry in Australia has taken the brunt of the very substantial growth in competition from within our own region. As a result, there has been a tendency for a dual economy to develop: efficient export-oriented resource and agricultural sectors exist alongside an often domestically oriented, import- competing manufacturing sector which is losing its competitive edge. The burdens of adjustment are falling on a manufacturing sector unable to cope, and being passed on to a work force often lacking geographical and occupational mobility. The impact and implications of the changes in the structure of the economy are even wider than this. This new style of growth away from import-competing industries to the resource and service sectors has hit the economic base of some areas harder than others. One tempting response might be to redistribute the gains in the front- runner States to compensate the other States. In other words, we might unfortunately opt for a levelling-down, rather than a levelling-up, process. The levelling-up process is far more constructive; instead of holding back the front-runner States, it helps the other States to do better. It is concerned not with compensation for lack of opportunities, but with the challenge of creating more opportunities.
Liberalism and economic growth: Australia has developed as a mixed economy, with emphasis on the private sector and a limited role for government. Liberalism emphasises the central role of private enterprise and we make no apology for that. Firstly, we believe that it is the best way to generate economic growth and so ensure that the community can reap the greatest benefit from economic and social change. Secondly, we believe it maximises individual freedom, a priority of Liberalism. To Liberals, private enterprise and economic growth are not ends in themselves. Rather, they are the means of achieving a better society, one which is better able to absorb change, promote individuality, and care for those in need.
If people ever had any doubts about the value of economic growth, the world-wide recession must have dispelled them. For many, the dignity of work has been replaced by the indignity of the dole. A significant proportion of the population, particularly the youth of this country, is now experiencing the social trauma of rejection. Changing work patterns, including part-time work, can only touch the edges of this major community tragedy. The reality is that the only road to permanent jobs is sustained economic growth.
We must never forget the public sector welfare depends on economic growth, which in turn depends on productivity in the private sector. The private sector is the engine of real growth for real community benefit. These links are obvious enough - they are inexorable - but they are too often forgotten or taken for granted. It is the total community which benefits from a strong, profitable private sector. Too often these days, economic life is seen as a 'zero-sum' game. One person's profit is wrongly seen as another person's loss. In fact, profits are the basis of the investment and growth which will make everyone better off. Successful enterprise requires individual qualities of vision, daring, and determination, but these qualities will not be elicited if they are not spurred on by incentives.
...A fundamental part of a successful future for Australia is a much higher level of awareness that we must gear our cost structure to world markets. Growth is now a competitive race. No longer will our natural wealth insulate us from our widespread apathy. Australian industry can cope and prosper if we adopt new attitudes, and become more sensitive to the concept of cost competitiveness.
While managers must be constructive and imaginative, employees must understand the importance of wage levels to the competitive position of an industry. We all need to face up to the possibility of wage differentials opening up between mature industries and new growth industries. It must be recognised that the often abused term, 'the capacity of the economy or an industry to pay' really means the capacity to sell. In other words, we must adjust to change.
A more competitive cost structure will ensure that manufacturing industries can cope better against imports and have the opportunity to compete on the world market. It means that the export-oriented and labour intensive service sectors, such as tourism, will also be able to compete. It means that domestically oriented service industries do not impose cost pressures on the wealth-creating; export-oriented sectors. Australia must also be prepared to invest for the post- industrial, knowledge-intensive economy. New growth sectors such as financial services and consulting operations know no frontiers. They cannot, in the long run, be kept out of Australia. If Australia does erect artificial barriers and ignore opportunities, then Australia will suffer.
Where there is progress, there are costs. For example, a move to make Australia a financial centre for Asia means opening up Australia to large-scale capital movements and, therefore, to potential exchange rate instability. However, if we are to achieve greater growth, the challenge we must meet is to find imaginative solutions to the problems growth creates. The alternative is mediocrity.
The role of government: We see government's role as creating a climate in which change is seen as an opportunity, rather than a threat: this is the great challenge of leadership and government. A Liberal government is one which encourages the community to accept the inevitability of change, the need for change in areas such as industrial relations, and the need for a greater awareness of the value of enterprise, effort, and economic growth.
There is little doubt that the most difficult function of government is its role as the major channel for the redistribution of the national income. Liberals take a clear view of the distribution process. Firstly, although there are excellent social reasons for governments to intervene in the distribution process, it will be counterproductive if this intervention damages the machinery of wealth creation. Government intervention should not undermine the incentives which drive work and creativity. Excessive taxation on rewards for enterprise, for example, will undermine those incentives. The trend in Australia has been to divert more and more resources into the welfare area. In 1972-3, 21 per cent of Commonwealth Government outlays were directed to welfare; by 1982-3, the level was 29 per cent. I am not saying that this is necessarily a bad thing, but social welfare is only a product of community wealth. A society which is genuinely sensitive, caring and humane will make changes and adapt to the demands of its needy without jeopardising the longer term livelihoods of all Australians.
Secondly, government must act to ensure that no powerful interest group - for example, big unions or big business - is able to dominate to the detriment of those in the community who are politically unorganised and vulnerable. In the wage-bargaining process, for instance, powerful unions should not be able to assume a position of bargaining dominance which overwhelms business and weaker unions. In the same way, big business should not be able to take advantage of excessive market strength. At a time when economic summits and bodies such as EPAC (Economic Planning Advisory Council) are fashionable, the interests of the politically unorganised are being ignored. This is a dangerous development. Australia has never been a corporate state run in the sole interests of large, organised groups. Liberalism would ensure it never could be. Our priority is that the burdens and benefits of change reflect community priorities and not the strength of pressure groups.
Thirdly, governments have a responsibility to the community to ensure that those in genuine need receive adequate care. Dignity for, and protection of, the unemployed, the elderly, the handicapped, and the socially disadvantaged is our definition of a civilised society. Liberals will always attach the highest priority to this function of the redistribution process: it is central to the Liberal philosophy. A truly liberal society, however, will avoid creating needless and unproductive dependence on welfare. It will address the cause of need, not just the symptoms. We must provide support, but the greatest challenge is to attack the causes. Australians have a right to expect positive opportunities such as jobs, not compensation for a lack of opportunities.
...Conclusions: Modernisation does not just apply to technology; it applies to attitudes as well. Australia's future will be assured if we take a positive approach to change, if we focus on the generation of community wealth, if we do not try to redistribute the fruits of growth before we have created that growth. Australia must not step back from these realities. Liberalism must not step back from the consistent application and promotion of our basic principles. This is not just what Liberalism is about; it is what leadership is about. This is the positive approach, the Liberal approach. Australia can benefit from change, we can create a diverse and compassionate society, we can play a constructive role in regional and global affairs - we can achieve all these things if we build on the Liberal values I have outlined in this lecture. These achievements are within our control and our grasp. If we fail now we fail Australia for generations ahead.
Deakin Lecture 1983 (Copyright Alfred Deakin Lecture Trust)
