Liberals must take lead from Menzies to recapture power in time of inflation: Angus Taylor

Angus Taylor will argue the Liberals need to unite behind the agenda that won the party its first election in 1949.

Angus Taylor says Liberal governments were all formed after the last three high inflation periods since the 1940s. Picture: NCA NewsWire / Martin Ollman

Opposition Treasury spokesman Angus Taylor will map out a path to government for the ­Coalition on the back of the cost-of-living crisis, claiming Australia’s post-war political history shows inflation changed governments.

In an economic speech to the Sydney Institute on Monday night, Mr Taylor will argue the Liberal Party needs to unite behind the Menzies-era agenda that won the party its first election over the Chifley Labor government’s handling of the 1940s inflation, power shortage and housing supply crises.

Claiming the Albanese government risked being punished for a failure to focus on the core economic problems, Mr Taylor says the Coalition has to reposition itself as standing for private home ownership, freedom and choice of individuals, fiscal discipline and supporting enterprise as an alternative to Labor’s big-government remedies.

He will also declare that the Coalition will make lifting the ­nation’s crisis-level productivity drain an economic priority, claiming future prosperity will be imperilled without reform. Citing Reagan and Thatcher models as emerging from the last global inflation and productivity crisis, Mr Taylor says the values of centre-right governments provide solutions then and could do so again.

He says Liberal governments were all formed after the last three high inflation periods since the 1940s and the electorate rejected big economic interventions by Labor governments that failed to address the crisis they faced and which were ultimately rejected at the ballot box. “The more you examine recent Australian history, the more the political and economic impact of periods of high inflation and big government become clear,” Mr Taylor says in an extract of his speech.

There have been three significant periods of high and persistent inflation since World War II including the post-war reconstruction from 1946-47 to 1949-50, when inflation rose to almost 10 per cent under the Chifley Labor government.

The second was under the Whitlam Labor government when inflation rose from 4.7 per cent to 17.7 per cent between ­December 1972 and March 1975.

The third period was under the Hawke and Keating governments, with the 9.6 per cent inflation peak in 1986 followed by another spike in December 1995.

All these periods inevitably led to a change of government, Mr Taylor says, with Australians rejecting Labor’s big-government remedies to economic problems.

“Each of these events precipitated eras of smaller government, greater freedoms, with a stronger focus on enterprise and productivity reform,” he says.

He said the example of Menzies’ election agenda should stand as an example for the modern Liberal Party if it wanted to return to government. He cited the high inflation period after the war that was also marked with labour supply shortages, aggressive unions, power shortages and a housing supply crisis amid booming immigration.

Angus Taylor wants the Liberal Party to look to the agenda of founder Sir Robert Menzies for inspiration on tackling Labor and inflation.

“Menzies’ pitch resonated with Australians ready to move on from the era of big government during and following the Second World War,” he says.

“His win in 1949 began 23 years of stable government, unprecedented growth and widespread prosperity. Those years saw productivity gains driving real wage increases never seen before and not seen with that breadth and duration since.

“Aspirational Australians were able to get ahead. History may not repeat but so much of this story is still relevant today.

“Moving to today, inflation is stubbornly persistent, with core inflation higher than almost every advanced country in the world.”

Mr Taylor accused the Albanese government of presiding over a “an unprecedented” free fall in labour productivity while proposing rapid population growth without plans to address the shortfall in housing supply, services and infrastructure.

“The economy is shuddering to a halt with negative growth per person last quarter,” he said.

“What is also notable is voters only gave governments a small window to get on course when economic troubles hit.

“When governments fail to address real threats to Australian’s economic security – be it housing, prices, energy and jobs – voters will act.

“Through history we’ve learnt inflation changes governments.

“If governments get distracted from dealing with the core issues impacting Australians’ daily lives, voters will make their views loud and clear.”

Mr Taylor said inflation economics was now different from most people’s experiences of the past two decades. “It doesn’t matter what your income is, everyone feels the pain, and the gradual loss of hope about past aspirations,” he says in his speech.

He said the Liberal Party must be grounded in a set of core values that promoted business enterprise rather than government as the driver of opportunity and prosperity, fiscal discipline to take pressure off prices, lower taxes, productivity reform to make life easier for people and business and backing aspirational Australians.

“That creates opportunities for all Australians, not just Labor’s preferred constituents,” Mr Taylor says.

“Robert Menzies understood this in 1949. Malcolm Fraser understood it in 1975. John Howard understood this in 1996, just as Tony Abbott did in 2013.

“Peter Dutton understands it now. This is the Liberal Party’s DNA.

“These values are the pathway back to a low-inflation, high-growth, aspirational economy.

“And under Peter Dutton’s leadership, I’m confident it is the pathway back to government.

“Not because that is a goal unto itself but because it is essential to supporting Australians to live the life they want to lead.”