Because the Liberal Party is named after a philosophy, one might think the core of its historical identity is to be found in its values. This would be a mistake. The core of its identity is its conviction that it should occupy the Treasury benches and not the other mob, the Labor Party, the party of big spenders and union bosses, which supports the leaners not the lifters and so can’t be trusted with tax payers’ money. It should occupy the Treasury benches because it understands finances and is more able to provide stable, competent government in the national interest than the sectional, self-focused, inexperienced Labor Party.
This conviction formed early, in the first decade of last century when electoral support for Labor grew so fast that the two previous parties of government bundled themselves together into the Fusion Party and lost the 1910 election. To the horror of the bowler-hatted, cloth-capped working men who had never had a cheque account became ministers of state, and they did much better than was expected. Andrew Fisher’s Labor government from 1910 to 1913 was Australia’s first majority government and its first government to last a full term.
But the Liberal conviction persisted. It was behind Fraser’s determination to hound Whitlam out of Canberra in 1975; and it was the theme song of the Abbott-led opposition to Julia Gillard and Wayne Swan. The Labor government was spending like drunken sailors and the deficit was ballooning. Return the Liberal adults to the Treasury benches and all will be well.
Sometimes the Liberals were right, and Labor did not look fit to govern, such as in the mid to late 1950s under the erratic leadership of Doc Evatt. In the economic maelstrom of the early 1930s, non-Labor in government probably helped confidence. And hitting the end of the long boom in the early 1970s was a challenge Labor was ill-prepared to meet. But now? Abbott’s government is certainly doing no better than Rudd’s and Gillard’s in managing the economy.
Once Australians could expect that when the Liberals were in government we would have ministers who were financially and economically literate, with some long-term vision of Australia’s economic future. Since the Hawke–Keating era we now expect this of Labor too, but sound management of the economy is not part of Labor’s DNA as it is with the Liberals; it is not an identity issue.
So when we have a Liberal prime minister and a Liberal treasurer with poor economic literacy, then we can ask if the Liberal Party is losing its historic identity as the party of good government. Most of the current government’s claims to be better managers than Labor have focused on government finances and the size of the deficit, but so far there is no plausible road back to surplus. More worrying is the poverty of their imagined Australian economy.
Take Abbott’s endorsement of rising house prices in early June, after Treasury Secretary John Fraser warned a Senate Estimates Committee of a housing bubble in the Sydney and Melbourne property markets. Most critical comment on this focused on questions of affordability and intergenerational equity, but there are other losers from rising house prices—businesses that must pay higher prices for urban land. Does Abbott realise that high property prices hurt them too, as well as young first-home buyers and the poor? Abbott’s imagined economy seems centred on the housing sector—households that save and spend, and, though he doesn’t make it explicit, on construction, which employs more workers than any other blue-collar sector, including manufacturing, because it has a natural protection against imports. Even if building materials come from abroad, we still need people here to do the building.
Joe Hockey, his Treasurer, is the man for small business. He projects a national economy made up of tradesmen and small-scale entrepreneurs, getting up early, working hard, and having a go, like a whole lot of small traders in a market town, driving national economic growth through their individual effort and energy. These were the beneficiaries of the budget’s accelerated depreciation package, people invited to bring forward the purchase of a new espresso machine or a ute, or a better printer. The national economy projected by Abbott and Hockey feels like the pre-modern economy we imagined in primary school of busy households and the butcher and baker down the road, just next to the coffee shop where the plumber is getting his take-away morning latte.
Where in this economic picture are the large-scale businesses, which employ thousands not dozens of people? Where is the strategy to encourage capital investment in sunrise industries, or to support research and development to drive economic innovation? We know the government has given up on the car industry and is not sure Australians can still build ships. And the mining boom is over. Not only has the price of iron ore plummeted, but coal may well be heading for structural decline as the rest of the world gets serious about tackling climate change and battery technology changes the game for energy markets. With his stubborn belief that coal is good for humanity and his attack on the renewable energy industry, Abbott is backing the horse and carriage against the automobile, which will be well out of the garage and over the hill before the Liberal Party wakes up.
So what about services? In 2013–14 educational services were Australia’s fourth earner of export income, with the higher education sector making the greatest contribution. As the prices of iron ore and coal fall, couldn’t this be built up? But instead the government is accelerating the decline of our universities as it tries to shift more of the cost of higher education to students, charging them higher prices for a declining product and withdrawing government funding. This is partisan shooting of ducks and drakes when what Australia needs urgently is greater diversification in its export base. A good government would be working with its tertiary sector rather than against it.
With its shrunken imagined national economy of houses, shops, cafés and tradesmen and no long-term strategy about how to position Australia in the fast-changing global economy, can the Liberal Party any more claim a natural right to the Treasury benches? Australia is now suffering from its third bad government and third inept prime minister in a row. All bad governments are bad in their own way, letting down different constituencies and betraying different values and traditions. The Abbott government can take no comfort from the fact that its flaws are not those of its predecessors. Theirs are the flaws of a failed Liberal government, not a failed Labor one, a government that is unable to imagine, let alone govern, our complex contemporary economy and so has forfeited the Liberals’ historical claim to be the party of good government for the national economy.