The Money Men Chris Bowen (the red fox clan .txt) 📖

were merged, but full competition and deregulation was only to be introduced from 1997 onwards.

The Hawke–Keating micro-economic agenda was an ambitious one. It represented a fundamental change of approach on the part of the Commonwealth, one that future governments, including Keating’s, would take further. The importance of this micro-economic reform in setting up Australia for the nearly quarter-century of uninterrupted economic growth that has followed it should not be underestimated. Such growth would have been simply impossible without the clearing of the economic arteries that these reforms represented.

In Accord

Few policy areas caused as much political grief to both the Whitlam and Fraser governments as wages policy. It was against this background that the Prices and Incomes Accord entered into by the ALP and the ACTU was so important. Voters and businesses were looking for an assurance that a return to a Labor government would not involve substantial and unsustainable wages increases. The Accord amounted to an agreement between the alternative government and the peak union body as to a coordinated and sensible approach to wages policy.

Primary credit for the Accord’s conception and implementation goes to Hayden, Willis and Hawke on behalf of the ALP, and Cliff Dolan, Crean and Kelty on behalf of the ACTU. An Accord had first been endorsed by the 1979 ALP National Conference. The ACTU finally officially endorsed the Accord in February 1983, during that year’s election campaign, and following Hawke’s ascension to the leadership. This was an important element of Hawke’s message of ‘Recovery, Reconstruction and Reconciliation’.

The Accord predated Keating, and he was at first sceptical as to whether it would be effective. In fact, Keating wobbled during the 1983 election campaign by admitting during a 2UE radio interview that he was unsure whether the Accord would work. This was only a small segment in a long interview, though, and represented the treasurer’s honest—and understandable—doubts. The admission was seized upon by the Liberal government, but it had limited, if any, political impact on the election campaign.

Keating quickly became a convert to the Accord in office, making it a key lever of economic policy. Under Keating’s tutelage, the Accord became much more than a simple wages and industrial relations policy. For the first time, prices and incomes policy rivalled fiscal and monetary policy as a lever in the hands of the treasurer. This was remarkable given the Constitution ascribes only very limited powers in the field to the federal government. The Accord became a mechanism for skirting around the constitutional inconvenience of industrial relations powers shared with the states and the existence of an independent arbitration tribunal.

The Accord had initially envisaged a restoration of wages indexation. In 1984 the unions had agreed through the ACTU that wages could be maintained ‘over time’—that is, wages growth in the short term could be less than inflation—in return for tax cuts that would favour low- and middle-income earners. This connecting of wages and tax policy was a new frontier, one appropriate for the times. It represented a major breakthrough in the fight against wages inflation. It also represented a new level of involvement in the Accord process for Keating,who used it to pursue his economic policy objectives.

The evolution of the Accord and Keating’s personal engagement with it were symptomatic of a number of factors. Keating had seen the potential for using wages trade-offs in his attempts to engineer low-inflation economic growth, and thus the Accord required his personal involvement. It was also the case that Keating was growing increasingly close to the new ACTU secretary, Kelty. This was the result of, and in turn the cause of, Keating’s greater involvement with the Accord. Finally, his engagement with the Accord also assisted Keating’s ultimate goal of assuming the prime ministership. His work on the Accord’s redistributive elements exposed him to senior union officials, who became more and more comfortable with the idea of his ultimate ascension to the most powerful office in the land.

The Accord was not only important in bringing down inflation without cruelling economic growth. Keating and Kelty also used it to trade off immediate wage increases for employer contributions to the nascent national superannuation system that Keating would attempt to finalise during his prime ministership.

Ultimately, the Accord became a weapon of micro-economic reform. Keating knew that there was less and less room for personal tax increases, and that the ease of tax–wage trade-offs was likewise lessening. He also knew that a more decentralised bargaining regime would encourage workers and unions to work towards productivity-enhancing workplace changes to get pay rises that could not otherwise be justified. Thus, the Accord eventually ushered in enterprise bargaining as an important micro-economic reform. In doing so, it sowed the seeds of its own demise. A more decentralised enterprise-bargaining system ultimately meant that the centralised wages deals at the heart of the Accord could no longer be delivered. But the Accord was right for its time.

Afterwards

Hawke and Keating had a tempestuous yet highly productive relationship as prime minister and treasurer. Hawke was sympathetic to Keating’s economic aims; in fact, he later cheekily, and inaccurately, claimed to have educated Keating on economic policy. It would have been impossible for Keating to have engineered a reform program such as the one described here without the strong support of his prime minister. Keating’s two most substantial defeats on economic policy—the dropping of Option C during the 1985 tax summit and the adoption of a less-than-highly-ambitious telecommunications reform agenda—occurred when Hawke did not back his judgement. All the economic successes came when the two were working together. Likewise, Hawke needed an ambitious and highly intelligent treasurer to drive the reform agenda of his government.

By 1991, however, Keating judged that the productive period of their partnership had come to an end. Impatient and rightly worried that Labor’s political capital was severely diminished after four election wins and a crowded eight years of reform, Keating wanted a chance to put his own imprint on the government. He also rightly judged that the Labor Party stood a