Hawke’s reforming vision lost to Albanese’s ‘flat-earth’ ambitions

Labor Prime Minister Bob Hawke giving his ALP policy speech at the Sydney Opera House in 1987.

When Anthony Albanese attacked Gary Banks, the inaugural chairman of the Productivity Commission, in such a gratuitous and dishonest manner last week, my mind drifted back to a speech made in parliament by the then prime minister, Bob Hawke, on March 12, 1991.

Entitled Building a Competitive Australia, it was Hawke’s last major economic statement to parliament.The Labor Party replaced him with Paul Keating in December that same year.

It revealed a quality of economic thinking a world away from what we are treated to by the current Labor government. Hawke spoke as a man who understood some of the policies needed to strengthen the Australian economy in an increasingly competitive world environment.

I have often argued that pursuing economic reform was akin to participating in a never-ending foot race. One never reaches the finishing line but you keep going, otherwise your competitors will surge past you. Although he would have been horrified at the thought of channelling me, the former prime minister understood the relevance of that metaphor.

He knew that higher protection had well and truly entered the Australian psyche. It was not surprising therefore that the major component of his March 1991 speech was a significant reduction in tariff protection for Australian industry.

Former prime ministers John Howard and Bob Hawke.

In his speech he rejected the views of the so-called new protectionists because they were proposing in effect the same discredited policies that had isolated our national economy and caused the damage that the then government claimed to be addressing.

With remarkable relevance to the current debate, Hawke said “our own self-interest is served by a steadfast refusal to return to the days of protectionism”.

I had said, before I became prime minister, that the most courageous policy decision taken by the Hawke government was the dismantling of tariff protection. That action defied Labor’s trade union origins. High protection had been an article of ALP faith since its formation.

Not that Hawke, as a trade union leader, had been beyond rhetorical forays against institutions involved in protecting Australian industry.

He once described the Industries Assistance Commission (predecessor to today’s Productivity Commission) as the “industries assassination commission”. In office, however, he embraced reality on many economic issues. This is something that has totally eluded the member for Grayndler.

In his speech Hawke opined that the most powerful spur to greater competitiveness was further tariff reduction. In other words, further reducing protection would make industry more competitive. He expressed the view that past policies of protection had resulted in inefficient industries that could not compete overseas, higher prices for consumers and higher costs for our efficient primary producers.

Jim Chalmers and Anthony Albanese

In doing so, he was expressing the economic reality of the time. He was strongly supported by John Hewson, then opposition leader, who had long argued for less industry protection and other economic reforms.

It is an economic reality that is still with us.

The Future Made in Australia industry policy announced by Albanese last week is of a piece with the so-called new protectionism fiercely derided by Hawke more than 30 years ago.

Our current Prime Minister wants us to believe that subsidies and incentives for certain enterprises are a world away from tariff protection and will be totally free of harmful consequences.

That argument has not impressed Banks and other economic commentators. Nor would it have impressed Hawke in the early 1990s.

The Prime Minister and his Treasurer, Jim Chalmers, have claimed that their new policy is all about building foundations. If they were serious about stronger foundations, they would reform and not further tighten our industrial relations system.

They would lighten, not increase, the regulatory burden on risk takers. Instead of a blizzard of cliches – with a faint nautical ring – such as “an island of reliability and ingenuity in a sea of global economic uncertainty”, they would give us changes that directly lifted productivity.

Instead of beating his chest in falsely claiming that US President Joe Biden’s Inflation Reduction Act is an exercise in economic reform, he would call it for what it is: a massive increase in government spending.

Gary Banks

I have long said that Hawke is the best Labor prime minister Australia has had. He knew that higher protection had retarded, rather than advanced, the Australian economy. His government and the Australian people were fortunate that the then Coalition opposition supported him in the dismantling of industry protection. Once again, the bipartisanship of the Liberal and National parties had matched the nation’s need.

If I may paraphrase Albanese, Hawke knew that the world was round. The present Prime Minister is a flat-earther with the best of them.

John Howard served as the 25th prime minister of Australia, from 1996 to 2007. He is the second longest serving prime minister in Australian history.