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The Domestic Politics ofGlobalisationTom ConleyPublished online: 09 Jun 2010.

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Australian Journal of Political Science, Vol. 36, No. 2, pp. 223–246

The Domestic Politics of Globalisation

TOM CONLEY

Grif� th University

This article provides a domestic-focused account of the impact of globalisationon Australia. The overriding aim of government in recent years has been toeducate the population about the imperatives of globalisation and the need foreconomic liberal policy change. Labor succeeded in breaking down Australia’sprotectionist policy structure but both Labor and Coalition governments havefound it dif� cult to manage globalising policy change. The Howard governmenthas continued Labor’s efforts to sell globalisation but has often diluted itsmessage through its policy choices and rhetoric. It has been less concerned withmaintaining the consistency of its message. This re� ects the continuing need forgovernments to manage what can be called the domestic politics of globalisa-tion. Contrary to the arguments of global determinists, domestic politicscontinues to shape policy and the impact and trajectory of globalisation.

Introduction

Whether we like it or not, and I think we should like it, the globalised economyis with us forever. (Howard 2000c, 3)

The concept of globalisation increasingly dominates debate about the Australianpolitical economy (EPAC 1995; Catley 1996; Capling, Considine and Crozier1998; Wiseman 1998; Latham 1998; Tanner 1999; Bryan and Rafferty 1999).Whilst earlier political economy analyses in Australia downplayed the extent towhich the international context shaped the policy process, by the mid-1990s manytreated globalisation as a clear imperative forcing economic liberal policy change.For economic liberals, Australia had to economically discipline itself or suffer theconsequences of global punishment. Alternative policy responses were simply notviable given the ‘reality’ of a global economy: Australia had to shift from aprotectionist past to an economic liberal, globalised future. Not just economicliberals, however, see globalisation in an economic determinist way (Bryan andRafferty 1999; Catley 1996). Global determinist arguments in Australia re� ect aninternational literature that focuses on global developments in � nance, trade andproduction and often makes the effects of the world political economy on policyappear overwhelming (Drucker 1989; Reich 1992; O’Brien 1992; Ohmae 1995;Strange 1996; Cerny 1996; Keohane and Milner 1996; Greider 1997; Friedman1999). These analyses downplay social, cultural and economic differences betweencountries and the continuing importance of domestic political struggles. Although

Tom Conley is an Associate Lecturer in the School of Politics and Public Policy at Grif� th University.

ISSN 1036-1146 print; ISSN 1363-030X online/01/020223-24 Ó 2001 Australasian Political Studies AssociationDOI: 10.1080/10361140120078808

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many developments in the world political economy occur beyond the control ofsmall countries such as Australia, it is in the domestic arena that interpretations areconstructed and policy choices made, explained and justi� ed. To understand theeffects of globalisation we need to analyse the often cross-cutting pressures of theinternational and domestic arenas. While care needs to be taken not to overstate theextent of domestic policy capacity, it is necessary to ‘bring the domestic back in’to analyses of globalisation to maintain a balance between international- anddomestic-level variables.1

This paper provides a domestic-focused account of the impact of globalisation onAustralia. The argument takes as a framework the idea that globalisation is bestunderstood as both a material effect and an ideological construction. A fundamentalbut neglected aspect of the effect of globalisation is the way that it shapesperceptions of economic policy possibilities and is used to explain and justifydif� cult policy decisions (Conley 1999). Globalisation is more than an empiricallymeasurable, exogenous variable to which domestic politics must react; it is also anincreasingly dominant construction—an ideology—that provides support for policychange. The view of globalisation as a ‘natural’ process, divorced from humanagency, underplays the importance of political strategy—of calculation—and theway that state and societal choices continue to shape the effects of globalisation onthe nation-state and on particular groups. Globalisation has been more than aconstraint on policy; conceptually it has provided a basis for domestic politicalstrategies to recast the role of the state.

Despite assertions of declining policy autonomy and capacity, domestic politicscontinues to shape policy choices, perceptions of policy possibilities, and theimpact and trajectory of globalisation. Both Labor and Coalition governments havesupported economic liberal globalisation but, like many governments throughoutthe world, have found it dif� cult to manage globalising policy change. In response,policy makers have expended much energy attempting to educate the public aboutboth the inevitability and the bene� ts of economic globalisation and about the needfor continual adjustment to the global economy.

There have been, however, important differences in emphasis between Labor andthe Coalition in dealing with globalisation. The Howard government has faced aremarkably different environment than Labor, with two factors standing out. First,Labor had already made many of the most important structural changes and,second, the Coalition has not had the ‘advantage’ of an Opposition that has beenarguing for faster and more comprehensive reform. The Howard government hasbeen less enthusiastic about globalisation than was Labor in government, disap-pointing many economic liberal commentators. At the same time, its continuationof domestic liberalisation has led to extensive reaction on both the Left and Rightof the political spectrum. The Howard government has continued to sell the bene� tsof economic globalisation but has often diluted its message through its policychoices and rhetoric. In other words, the Coalition has been less concerned aboutmaintaining the consistency of its rhetoric. This re� ects the continuing need forgovernments to manage what can be called the domestic politics of globalisation.Resistance to the globalisation project remains and the Coalition has faced

1 This plays on the phrase used by a group of scholarswho argued in the mid-1980s that it was necessaryto ‘bring the state back in’ to political and sociologicalanalyses. (See Evans, Rueschemeyerand Skocpol1985.)

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THE DOMESTIC POLITICS OF GLOBALISATION 225

competing claims from its wide-ranging constituency. Notwithstanding rhetoricabout the inevitability and irreversibility of globalisation, the government is awareof the ongoing need to balance economic and political imperatives.

Labor’s Globalisation Project

This process of modernisation, of adaptation to the changing world economy isnot something that has some future cut-off point. It must be a continuing process.There is no point at which we can say, reform is � nished—because there is nopoint at which the world will stop changing. (Hawke, Keating and Button 1991,1.1)

Over its 13 years of of� ce, the Labor government increasingly saw economicliberalism as the most appropriate response to the combination of world anddomestic political economic pressures. The initial and comprehensive liberalisationof � nance, the shift to macroeconomic restriction, the turn to tariff liberalisationand support for free trade, the gradual but eventually substantial liberalisation oflabour relations, the corporatisation and privatisation of state enterprises andfunctions, the streamlining and targeting of social security arrangements, thedecreases in taxation for business and the wealthy, the myriad of other micro-economic reforms—all were argued to be fundamental components of effectiveadjustment to global economic changes and to building a more competitiveeconomy and productive society. As economic liberal policies were adopted,particularly in � nance and trade, pressures for further economic liberal policychanges intensi� ed. But, in making economic policy choices and developing anoverall strategy of governance, the government also needed to maintain electoralsupport and manage political opposition.

To persuade the population about the need for economic liberal restructuring, thegovernment increasingly utilised a rhetoric of globalisation which involved threecore messages: � rst, Australia’s economic structure and the policies of the pastwere no longer sustainable; second, if globalisation were embraced by liberalisingthe economy, Australians would bene� t; and, � nally, there was no choice—developments in the world political economy would force adjustments onAustralia.2 The rhetoric was a form of societal education which attempted to justifyand instil in the population an understanding of constant and often painfuleconomic changes. Reshaping expectations was not a task performed solely bypolicy makers. Business and � nancial actors who stood to bene� t from policychange and academics and commentators who were convinced of the intellectualvalidity of economic liberal prescriptions were equally vocal in their efforts toeducate the public (Conley 1999; Marsh 1991; Sklair 1997).

In the context of electoral competition and the need for policy differentiation, theLabor government was undoubtedly aided by an Opposition which argued for amore comprehensive and radical economic liberalism. The Accord (at least ini-tially), industry plans, social policies and the more gradual embrace of economic

2 The phrase ‘rhetoric of globalisation’ is used to encompass earlier conceptualisationsand evocationsof the ‘imperatives’ of the world political economy, such as internationalisation, interdependence,integration, or, simply, the world. Rhetoric is not being used here in the sense of ‘just mere rhetoric’,counterposedto ‘genuine action or scienti� c fact’ (Billig 1989, 132). Rather, it is used in the wider senseof language designed to persuade.

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liberalism also helped to differentiate the government’s policy program. Althoughthe government asserted that the pace of change and the choice of accompanyingpolicies could be varied, it also stressed, nevertheless, that there was no real choiceabout the economic liberal direction of policy.

Undoubtedly, international factors—particularly in the context of Australia’sstructural economic problems—were fundamental to policy change in Australia.But it is clear that a whole range of factors played important roles. In addition tothe constraining nature of the world political economy, the impact of protectionistpolicy legacies, the experience of other countries, the dominance of particulareconomic ideas, the effect of technological and societal changes, and perceptionsof the power of major economic actors, all played a part in determining thetrajectory of policy change. Essential also were political calculations about howbest to manage policy change whilst maintaining electoral support. Policy changeswere not made simply because economists, bureaucrats and politicians changedtheir minds, as some commentators seemed to think (Pusey 1991; see also Stretton1987; Battin 1997), but economic ideas did provide a framework both to guidepolicy and to frame the problems that Australia faced (Painter 1996, 293).

The dominant diagnosis was that Australia’s economic problems resulted from alack of (world) market discipline. Pivotal to the applicability and acceptance of‘new’ ideas was the perceived failure of the old ones. Economic malaise providedan opening for ideas diametrically opposed to protectionist ones (see Hall 1993).In earlier times, the world economy and conceptions of economic vulnerabilitywere seen to provide the rationale for polices of external protection and comprehen-sive domestic regulation (Castles 1988); by the 1980s the position had reversed:protection and restrictive regulations were seen as enhancing Australia’s vulner-ability to the world political economy. The alternative idea that the state should bemore strategically interventionist in response to Australia’s structural woes came upagainst the association of industry policy with protectionism.3 The associated ideathat Australia could embark on a corporatist and compensatory welfarist, but stillopen-trading, regime along western European lines encountered the view that thedays of such regimes were numbered in a globalising world.

Economic liberalism also had political appeal for policy makers: the idea that thestate should, could and would be less responsible for economic outcomes (Millerand Rose 1990; Rose 1993, 1996). Acting within the protectionist policy structure,policy makers continued to be pressured to make what were increasingly seen asineffective interventions and to be constrained by societal expectations that the statewould intervene to protect citizens and economic actors from the vagaries of theoutside world. By the mid-1990s, however, supporters of economic liberalism stillhad to face the fact that considerable opposition to the globalisation projectremained.

The 1996 Election

At various times during the 1980s and 1990s, both Hawke and Keating believedthat the Australian community had embraced the challenges of globalisation andaccepted the need for ongoing policy change (Keating 1986, 2325; 1991, 19).

3 Hawke labelled supportersof interventionismas ‘new protectionists’(see Hawke, Keating and Button1991, 1.7).

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Responding to assertions that the community was suffering from reform fatigue,Keating (1995a, 9) claimed:4

Now if governments say, ‘Look we think we have had enough change, and wedon’t want to burden you, the public, with more of it’, the public would say,‘Well thank you, we will have somebody else’. They want change. So much ofwhat we do these days, as a nation, is we manage change. Australia is nowworking differently, within different structures, we think differently, we havelearned the need for change.

Labor’s maintenance of of� ce provided some justi� cation for such hopeful asser-tions. But it is dif� cult to know the extent of acceptance given that the electoralalternative up until the 1996 election was an Opposition that offered a morecomprehensive and rapid embrace with economic liberalism. Although signi� cantsections of the population supported economic liberal policies, many did not. Pollstaken over 1993 by Australian Economic Analysis and Saulwick showed that aboutthree-quarters of the voting population continued to support tariff protection(Manne 1994, 18). A 1995 study by Bean showed that, whilst considerable supportexisted for tariff cuts among university graduates and urban professionals, ‘two outof three people without degrees believe that manufacturing needs stronger protec-tion against imports’ (Dusevic 1995, 7; Stevens 1996, 1–2). Many in Labor’straditional electoral constituency were obviously not enamoured with Labor’sglobalisation project.5 The danger for Labor was the possibility that eventually itwould face an Opposition that did not make itself an easy target.

Despite bipartisan support for the economic liberal policy direction, domesticpolitical pressures have not lessened in importance and have continued to shapeeconomic policy. In the lead-up to the 1996 election, Howard insisted that therewere no great ideological differences between the two parties and promised therewould be no radical overhaul of Labor’s social policies. While some commentatorscriticised him for not providing a substantive economic liberal program (Milne1995, 9; West� eld 1996, 33, 37; Megalogenis 1996, 3), Howard wanted toconvince voters that there were no major changes on the horizon and that it wassafe to vote Liberal. In a series of so-called ‘headland’ speeches, Howard (1995b,c, e, f) made it clear that the Coalition had moved on from its policy stance of the1993 election but did not supply policy detail to provide Labor with a substantivetarget. Tax reform was shelved with Howard (1995a) denying reports he had leftopen the possibility of a Goods and Services Tax (GST). Medicare was here tostay; welfare would be dealt with fairly and radical plans for industrial relationswere put aside (Steketee 1996, 23). Howard (1995d) argued that a Coalitiongovernment would get on with the unions and the Coalition’s spokesman on labourrelations, Peter Reith, guaranteed work conditions (see Shires 1996, 11; Davis1996, 11). Overall, Howard decided that an alternative ‘relaxed and comfortable’rhetoric was more appropriate for an insecure public, weary of constant change.Keating’s (1995b) emphasis, by way of contrast, was on the need for the � rmsmack of strong leadership:

4 For a reiteration of this assertion, see Keating (1995b).5 Over late 1995 and early 1996, the government was alarmed by its low standing in the opinion polls,

despite the fact that the ‘economic aggregates’ suggested that the economy was doing well (Henderson1995, 2).

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The essence of good government is not in the listening or in the talking but in thethinking and the doing.

In his fourth headland speech, Howard (1995e) defended British Australians andoffered solace to those who did not concur with Keating’s Asian vision. Aus-tralians, Howard stressed, did not need to choose ‘between our past and our future,our history and our geography’. Appealing to the cultural nationalism of Aus-tralians, he warned against the ‘rising tide of American monoculture’ which poseda challenge to ‘our distinctive Australian cultural identity’. Instead, Howard arguedthat he wanted ‘a renewal and renovation in the symbols and structures of ournational institutions’.6 The Liberals also attacked Labor’s ‘politically correct’, ‘bigpicture’ agenda of Asia, multiculturalism, Mabo and support for particular interestgroups (see Shires 1995b, 7). Despite being attacked as backward-looking, Howardobviously believed that there was considerable support for such an approach. Forthe Coalition, there is no contradiction between economic liberalism and culturalconservatism or between economic globalisation and political nationalism.

Particularly important was the Coalition’s stance on industry and trade policy.Opposition industry spokesperson John Moore argued that further tariff reductionsshould be linked to progress on microeconomic reform. Missing the point, Keating(cited in Shires 1995a) argued that Moore ‘doesn’t seem to understand that the veryreduction in tariffs induces competition in the economy which produces productiv-ity and then brings on microeconomic change’.7 On APEC and trade liberalisation,Howard (cited in Dwyer 1995, 4) pilloried Labor’s support for unilateral tariffreductions: ‘The proposition that Australia might � nd herself to be some kind oftheoretical martyr to the goal of APEC without having obtained in return responsesfrom the other countries of the region is not something that commends itself to me.’

The Coalition’s electoral strategy struck a chord with those who did not want tobe told that the restructuring of the 1980s and early 1990s was only the beginningof a never-ending process of adjustment—a view encapsulated by Keating’s(1995b) ominous portrayal of global economic competition as ‘a long-distancerace—a very long distance race … Like the modern marathon it gets faster andfaster. But unlike the marathon it has no � nish line.’8 The Coalition’s moremoderate rhetoric satis� ed many of those wanting a change of government and, inparticular, the removal of Paul Keating as Prime Minister. The election delivereda landslide victory to the Coalition, with Labor’s share of the working-class votealmost matched by the Coalition’s (McAllister and Bean 1997).

Although persuasion is integral to government, the most appropriate form ofpersuasion changes over time. By the mid-1990s, the Labor government had steeredthe state away from its traditional strategy of protectionist intervention towardsfacilitating adaptation to the world political economy. As the economic liberalpolicy structure was set in place, Labor may have been wiser letting policy changesdo the talking and reverting to a more comprehensive rhetoric of social protection.

6 Howard’s soothing rhetoric was attacked by Keating who argued that ‘in trying to be all things to allpeople, he only succeeds in standing for nothing to anyone’ (cited in Gordon 1995, 2).7 It is interestingto note the AustralianChamber of Commerce and Industry supportedMoore’s position

whilst the BCA opposed it (Shires 1995a).8 Interestingly, ensconced in of� ce, Howard (1999b, 2) argued: ‘Doing well in a globalised economy

is a race that never � nishes’, suggesting that there are only so many cliches that can be employed todescribe globalisation.

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Incessant emphasis on the need for continuous change and endless adaptation felldarkly on many in the electorate. Rather than claiming credit for policy change andextolling the virtues of globalisation, it may have been better for Labor tore-emphasise its earlier argument that the world economy had forced its hand. TheCoalition rightly realised that public education about globalisation and policychange was more appropriate in the aftermath of electoral victory.

The New Coalition Government

Despite the promises of moderation, it was still expected that the new HowardCoalition government would quicken the pace of change. For many economicliberals there was un� nished business in the areas of industry and competitionpolicy, industrial relations, privatisation and social welfare. The Keating govern-ment’s continuing connections to the unions and commitment to social welfare satuneasily alongside its commitment to economic liberal reform. Whilst Labor’sglobalisation project had met the imperatives of domestic politics head-on, Howardand the Liberal Party had not only championed many of the policy changes enactedby Labor in the 1980s and 1990s but had also argued that Labor had been eithertoo slow on the uptake or had not gone far enough (Howard 1986; Liberal Partyof Australia 1991; Williams 1994, 1, 10). In his victory speech, Howard (1996)provided hope to those who wanted a renewal of earlier Liberal policies:

whilst I will seek at all times unity and a common point of view we have not beenelected to be just a pale imitation of the government we have replaced.

An early indication of this was the government’s use of the ‘Beazley black hole’to foster acceptance of budget cutbacks and the need to divide electoral promisesinto core and non-core promises.9 After these initial measures, however, theCoalition disappointed many commentators by its lack of zeal on economic reform.Howard (cited in Ellicott 1997, 1) argued that ‘the next 20 years ought to be aboutsome of the non-economic issues. … The greatest challenge that any society facesare human and social challenges and moral challenges rather than economicchallenges.’ After the massacre at Port Arthur, Howard expended considerableenergy on gun reform. Howard (cited in Burton 1997a, 1) rejected calls forwidespread and rapid economic reform, arguing that economic reform should bedealt with on a case-by-case, ‘sensible’ basis. He called this his ‘rotting strut’theory of reform:

You’ve got a jetty or a pier protruding in the water, and if you want to get ridof it there are two ways. You can bring a bulldozer onto the beach and push itover; or you can wade in and get the most rotten plank in it and pull it out, andthen the waves and everything will bring it down. Sometimes, if you bring the

9 Assertions about the severity of Labor’s budget ‘black hole’ were reminiscent of the newly electedHawke government’s pronouncementsaboutFraser’s budgetdeceptionin 1983.Immediatelyupon takingof� ce, the government was told that the budget outlook was signi� cantly worse than the Frasergovernment had admitted during the election campaign. Instead of a de� cit of $4.5bn for 1983–84, the� gure was revealed to be $9.6bn.Labor’s campaignpromises would have added another$1.8bnand JohnStone, Secretary to the Treasury (cited in Edwards 1996, 196), argued that without policy change, ‘[s]ucha de� cit would be equivalent to 61

2per cent of GDP, the highest in Australian post-war history’. Labor

immediately abandoned key elements of its election policy platform.

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bulldozer on, people will lie down on the beach and stop the bulldozer altogetherand it takes you ages … to get them out of the way. Meanwhile the pier juststands there and nothing happens.

The government, however, sent out mixed messages about the impact ofglobalisation on Australians. Its equivocation is well illustrated by two quotes fromHoward on consecutive days in 1997:

But I have got a message for the battlers of Newcastle and, indeed, the battlersof Australia—that you have a government that listens and understands and issympathetic to the human and social consequences of industry restructuring; thatunderstands the pressure that globalisation of the Australian economy is imposingon particular economies. (Cited in Gordon 1997b, 1)

It’s no good being frightened of change. Globalisation is with us and will be withus forever and people who imagine that somehow or other we can hold back thetide of globalisation don’t understand the modern world as we come to the endof the 20th century. (Cited in Gordon and Henderson 1997, 2)

Such comments can be dismissed as typical political duplicity but they indicate thecontinuing need for governments to manage the domestic politics of globalisation.The aim was to show concern for the consequences of globalisation but maintainthe theme of inevitability and irreversibility. The Coalition’s method of ‘selling’globalisation and economic reform differed markedly from its predecessor.10 WhilstLabor’s task was to force change against the wishes of many in its own constitu-ency, the Coalition’s was to maintain its new working-class support—the votersdesignated as ‘Howard’s battlers’. Consequently, it was more cautious about itsglobalisation rhetoric and more willing to mix its message. More consistent was thegovernment’s emphasis on individual responsibility, the family and a traditionalview of Australian nationalism.

Pragmatic Globalisation in Practice

In terms of policy, the government’s equivocation about the pace of change isdemonstrated by its decision to place a moratorium on further tariff cuts in thesensitive automotive and textiles, clothing and footwear (TCF) sectors. Tariffliberalisation had been an article of faith for Labor and the 1991 tariff cuts in themiddle of the recession had included these sectors.11 This decision had broken theback of protectionism in Australia as it proved Labor’s globalising resolve in theface of economic adversity. During 1996 and 1997, tariffs attracted widespreaddebate (see Bita 1996a, 4). Howard signalled that unilateralism on tariffs wasending: ‘I think the lower tariffs in Australia should be matched by equally fairtreatment from other countries’ (cited in Dwyer 1996, 1). Whilst generally

10 For an account of Labor’s selling of globalisation, see Conley (1999).11 The 1991 statement, Building a Competitive Australia, cut remaining tariffs substantially.The generallevel of assistance was to be reduced from the 10% and 15% levels declared in May 1988, to a generalrate of 5% by 1996; motor vehicle tariffs were to be reduced from 35% to 15% by 2000 (in annualincrementsof 2.5%); textiles, clothing and footwear tariffs were to be reduced to a maximum tariff levelof 25% in 2000, with quotas being terminatedby March 1993, two years earlier than planned; and � nally,general agriculturalassistancewas to be reduced ‘in line with the pace of tariff reform in manufacturing’(Hawke, Keating and Button 1991, 1.6; see section 5 of the document for details of the measures).

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supportive of cuts to tariffs, the Treasurer, Peter Costello (cited in Stutchbury 1996,3), also argued that tariff cuts should be in step with trading partners: ‘What we’reessentially saying to the East Asians is “we’re playing our part, will you play yourpart too?”.’ Industry Minister John Moore concurred (Field 1996, 10). He alsocriticised the ‘economic correctness of Treasury’ and the Hilmer Report on nationalcompetition reform. But belying this criticism he supported the Treasury line bycontending that the most important element of industry policy was the ‘revival ofeconomic reform’ and ‘� scal consolidation’ (cited in Henderson 1996a, 25).Howard (cited in Henderson 1997a, 25) attempted to shift the focus from directassistance by arguing that ‘industry policy is low in� ation, low interest rates,industrial relations reform and other microeconomic reform’.

The Industry Commission argued that the government should continue to cuttariffs regardless of what other countries did and that manufacturing should beencouraged to adapt to changes in the international environment. In its draft reporton the automotive industry, the Commission recommended that tariffs be reducedto 5% by 2004 (see Henderson 1996c). The report was praised and attacked alongthe usual lines (Wood 1996, 1; Bita 1996b, 2; Hawes 1996, 2). The SouthAustralian and Victorian State governments applied much pressure, with the lattertaking out full-page advertisements in major newspapers on behalf of the auto-motive industry.12 The Labor Party also called for a freeze on car tariffs (McKenzie1997b, 4; see also Lewis 1997a, 4).13 As the time for a decision grew near it wasevident that the government was divided on the issue with Moore and Costelloleading opposed camps. Car industry executives lobbied the Prime Minister hardand were involved in the � nal negotiations (Short 1997a, 2).14

The government’s decision was to freeze tariffs at 15% until 2005 when theywill drop to 10% (Lewis and Dwyer 1997, 1, 8). It ignored the Industry Com-mission’s majority recommendation and instead followed the more measured lineof the minority report of the industry representative, Ian Webber (Industry Com-mission 1997a). Howard was swayed by the fact that popular support for tariffreductions was low.15 More speci� cally, he was convinced by the danger to theLiberal’s position in marginal seats and threats from car companies that futureinvestment could not be guaranteed if tariffs were to go below 15%.

The next battle on tariffs was over the TCF industries, which, like the carindustry, had long been the recipient of extensive protection. Moore (cited inHenderson 1997b) criticised the existing schedule of tariff reductions implementedby Labor in 1991. Again the Industry Commission recommended a continuation of

12 See the advertisement in the Australian, 31 May—1 June 1997. Earlier, Premier Jeff Kennett hadreleaseda policy document entitled ‘The Case for a New IndustryPolicy’ (Syvret 1997, 8; see also Olsen1997, 15). South Australian members of Cabinet, Amanda Vanstone and Robert Hill, were especiallycritical of the Industry Commission (see McKenzie 1997a, 2).13 Former Industry Minister John Button also came out in support of a freeze (Bita 1997, 4). On the sideof further cuts was former Labor Prime Minister Gough Whitlam (1997, 15), who argued that Australiashould resist a return to protectionism.14 It is worthwhile noting that no one in the government supported the Industry Commission majorityposition, with Costello arguing for a 1% a year decrease in tariffs between 2000 and 2005 (Short 1997a,2).15 Surveys undertaken in 1997 ‘suggested that at least eight out of 10 people think import tariffs protectjobs and are prepared to pay higher prices to support this. Many also think Australia is too far out infront of other countries’ (McKenzie 1997c, 34).

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cuts—to 8% by 2008 (Henderson and Hannan 1997, 2) and again the States andindustry pressured the government for a pause. Howard contended that tariffprotection would save jobs, a claim dismissed by the Treasurer, the Trade Minister,Tim Fischer, and the Industry Commission (Henderson 1997c, 2; Industry Com-mission 1997b). Ignoring the fact that tariffs were not increased, the decision tofreeze TCF tariffs for � ve years was seen by economic liberals as a victory forprotectionism (Mitchell 1997; Lewis 1997b).16

In response to two major reports on industry policy which had encourageddemands for assistance, the government released a statement entitled Investing forGrowth (Department of Industry, Science and Tourism 1997).17 The statementincluded a 4% growth target, increased funding for research and development,appointments of a strategic investment coordinator to advise on major productsneeding assistance, expert incentives and a body to promote investment in Aus-tralia. Most signi� cantly, it ignored demands for a $1bn fund to boost investment.The tax concessions provided did not make up for the 1996 Budget cuts.Notwithstanding earlier rhetoric, it modi� ed concerns that the government washeaded in a comprehensively interventionist direction. The Asian economic crises,it was argued, had lessened the attractiveness of interventionism. Indeed, tohighlight the point, Howard argued that industries affected by the crisis would notget assistance (Dwyer 1998a, 1). Rhetoric returned to the theme of adjustment withthe government using the Asian crisis to justify the need for further economicreform, especially the introduction of a GST (Grattan 1998b). Howard (1998, 2)argued that the Australian economy had been ‘� re-proofed’ by its de� cit reductionprogram (see also Grattan 1997b, 14; Hordern 1998; Hartcher 1999, 26). Notsurprisingly, after the election the government stressed the negative impacts of thecrisis and its undoubted impact on policy (Barker 1998a, 1, 13).

The government also argued that its changes to industrial relations had helpedAustralia to weather the Asian crisis by making the Australian economy more� exible and productive. As noted above, the Coalition had gone to the 1996election with a relatively moderate program compared with that of 1993. The mostmoderating element of its promises was the ‘no disadvantage test’ which meant that‘take-home pay, including overtime, penalty rates, and leave loadings, could be noless than the relevant awards’ (Singleton 2000a, 138). Changes to industrialrelations would have been more extensive if not for the Senate. The Democratsforced the government to keep to its promises. The eventual legislation limited therole of unions in ‘the wage-� xing process’ and placed ‘signi� cant restrictions onunion recognition and entry and bargaining rights at the workplace’ (Singleton2000b, 142). The failure to more extensively and rapidly liberalise industrialrelations led to criticism from both business and economic commentators. The H.R.Nicholls Society contended that the legislation was a betrayal and a ‘stealthy anddeceitful abandonment of the Coalition’s most solemn commitments’. It suggestedthat the government should have been prepared to go to a double dissolutionelection. Howard’s response was to argue that ‘you’ve got to live in the real

16 The economic liberal press in Australia, particularly the Australian and the Australian FinancialReview, were critical but support came from the regions and from economic nationalist papers such asthe Melbourne Age and the Adelaide Advertiser.17 The two reports were Review of Business Programs (1997) and Information Industries Taskforce(1997).

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world … you’ve got to live with the reality of the Senate’ (cited in Grattan 1997a,9). Undoubtedly, the waterfront dispute made the government appear harsher thanthe reality of its legislation and provided a glimpse of what a less restrictedCoalition policy might look like. In one of the less cautious events of its � rst term,the government succeeded in unifying support against radical labour reform.

The government’s failure to embrace radical reform led to mounting criticismfrom economic liberal commentators. Kelly (1997a, 11) attacked the government as‘slow-ahead’ on economic policy and questioned Australia’s ability to prosper in aglobalising economy (see also Henderson 1997d). Other commentators comparedthe government with the ‘wasted’ Fraser years (Editorial 1997a, 20). Despite thevehemence of the economic liberal critique, perhaps the most important criticismof the government came from another direction altogether.

Hanson and the Reaction Against Globalisation

Exacerbated by a news media eager for political con� ict and sensationalism, therise of Pauline Hanson provided an obvious focus for discontent about globalisa-tion. The popularity of her political party, One Nation, in Queensland causedimmediate concerns for the National Party which stood to lose the most from apolitical grouping aiming for its traditional ground. It also created concerns forLabor as Hanson’s brand of populism appeared to appeal to many working-classvoters. Hanson’s Right-wing attack on the globalisation project was more effectivethan Leftist protests, which had been unable to mobilise popular support despite theextent of public antipathy towards economic liberalism. Critics within the unionmovement had been marginalised by the union leadership’s co-optation to theglobalisation agenda. And, in general, Leftist opponents of globalisation have nothad the simple and vestigial message that Hanson generated. Indeed, progressiveanti-globalisers were deeply concerned that they were being touted as ‘Hansonites’.Hanson effectively appealed to the ‘old’ Australia, and her policies, in the main,re-embraced the protectionist policy structure that had once enjoyed bipartisansupport.

Howard’s failure immediately to criticise Hanson and his defence of her right tospeak out on issues attracted much criticism from business � gures and mediacommentators (Kelly 1997b). Cautious about alienating his supposed new constitu-ency of ‘battlers’, Howard (cited in Gordon and Emerson 1997, 1) argued thatHanson ‘was articulating the fears and concerns of and the sense of insecurity thatmany Australians feel at a time of change and instability’. Such a response waspilloried by the media who reminded Howard of his assertion that Australiansshould feel ‘comfortable and relaxed’ about their past, present and future (Gordon1997a, 1–2).

Eventually, after a barrage of criticism—some of it from key Liberal Party� gures—Howard (1997, 15) declared that Hanson was

wrong when she suggests Aboriginals are not disadvantaged. She is wrong whenshe says that Australia is in danger of being swamped by Asians. She is wrongto seek scapegoats for society’s problems. She is wrong when she denigratesforeign investment, because its withdrawal would cost jobs.

But again Howard offered his empathy to the supporters of Hanson by arguing thattheir support was in part an understandable response to Labor’s ‘politically correct

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agenda’. On some issues, it appeared that Howard was competing with Hanson totake credit for policy directions. He argued that immigration did not create jobs andsuggested that the view that there was a bene� cial link between the two wasthinking mired in the 1950s and 1960s. Refusing to accept that the government hadresponded to Hanson’s call for lower immigration, Howard insisted that hehad thought of it � rst (Gordon and Dore 1997, 1, 6). On the issue of Aboriginalaffairs and refugees, it appeared that the government increasingly saw a hard-lineapproach as an electoral advantage.

One Nation’s success was seen by many in the National Party as a warning thatthey had to repudiate economic liberalism. Queensland State leader Rob Borbidge(cited in Burton 1998, 4) declared that the rise of One Nation ‘was a reactionagainst economic rationalism, a reaction against political correctness and a lot ofthose theories that have been rammed down the throats of people by academicssitting in front of computers’. The problem with this view was that the FederalNational Party had been a keen supporter of many of the policies that Borbidgewould nominate as economic rationalism. In the ensuing efforts to hold on togovernment, the Queensland Nationals indicated that ‘they were willing toimplement key One Nation policies on Aboriginal Affairs and gun control’(Emerson 1998, 4).

In the lead-up to the 1998 federal election, the Coalition continued to be caughtbetween arguing vehemently for an economically liberal globalised future forAustralia and showing concern for those who were being left behind by policychanges and international competition for Australian industries.18 But the over-riding theme continued to be ‘there is no alternative’. As Howard (cited inShanahan 1998b, 19), noted: ‘Everyone would like to go out and graze for a fewyears but we can’t, we have no choice … We are going through globalisation.’Bureaucratic policy makers also spent considerable time attempting to educate thepublic, business and their political masters about the bene� ts of globalisation andthe dangers of reaction. Reserve Bank Governor Ian McFarlane urged the govern-ment to maintain its resolve in the face of Hansonism and continue with micro-economic reform. Governments, he argued (cited in Dwyer 1998b, 10), needed to‘explain to the general public the bene� ts which � ow from these changes’. Manycommentators argued that such educative efforts needed to be more widespread. Asone noted: ‘given that the broad substance of reformist economic policies can’tsensibly be challenged, explaining their rationale must be improved’ (Grattan1998a, 19). The attempt to sell liberalisation re� ects a widespread view that if thecommunity is educated about the bene� ts of free trade it will be supportive.

Foreign Minister Alexander Downer (1997) argued that increasingly the majordivision in societies was between ‘globaphiles’ and ‘globaphobes’. Australians, hedeclared, needed to realise the bene� ts of trade liberalisation: ‘If we start tosuccumb to the forces of globaphobia we will be left economically, strategically

18 In the lead-up to the 1998 Queensland election, senior Liberal � gures attacked Hanson but theQueensland Liberals still decided to recommend that their preferences be directed to One Nation(McGregorand Niesche1998,1, 4). In the election,almost a quarterof Queenslandersvotedfor Hanson’sOne Nation and the party garnered 11 seats out of 89. The areas that voted for One Nation accordingto 1996 census data had ‘low numbers of migrants, few people with a university education and a largerthan average indigenous population’ (Gunn 1998, 25). Preferences gave One Nation 8 of the 11 seatsit won at the election (Kelly 1998, 26).

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and socially isolated—cut off in every sense from the world around us. That bleakfuture is not viable.’ Globalisation was ‘irreversible’, Downer asserted, but fortu-nately, ‘it is good for all Australians’. Costello (cited in Dwyer 1997, 5), alsostressed the importance of embracing the forces of globalisation when he arguedthat those who wanted to isolate Australia from international trade were advocatingisolation ‘not from negative forces but from positive forces’. He contended that theCoalition’s reforms had been underestimated by critics and had contributed to astronger Australian economy. Costello (cited in Dodson 1998, 10) also criticisedLabor for not supporting the Coalition in its reform agenda:

When Labor deregulated the � nancial system we supported it, we could haveplayed economic Hansonism, but we didn’t. The Labor Party was opening uptariff walls, we supported them, when the Labor Party privatised, we supportedthem, when Keating went for tax reform, we supported it.

The government’s foreign policy White Paper, In the National Interest, argued thatglobalisation, along with the continuing rise of East Asia, would be the ‘two mostprofound in� uences on Australian foreign and trade policy’ (Downer and Fischer1997, v). The government contended that ‘lower tariffs make Australian � rms morecompetitive’, but this case was less convincing given the decisions on tariffs.19 Thedocument reasserted Howard’s earlier claim that ‘Australia does not need to choosebetween its history and geography’ nor reinvent its ‘identity’ (Downer and Fischer1997, 8). For some commentators, this message was contradictory (Kelly 1997d, 8).But, as noted earlier, for Howard there is no contradiction between economicglobalisation and a conservative Australian nationalism.

For Hanson and other critics of economic liberal policy change, economicnationalism was of most concern. Globalisation and the government’s policyresponse was leading, it was argued, to a decline in Australia’s economic sover-eignty. Alongside trade issues, foreign investment attracted increasing concern.After making much of the level of foreign debt in Australia during the 1996election campaign, the Howard government aimed to keep a lid on popularconcerns about increasing foreign investment and debt (Grattan 1996, 14). Howardmused in 1997 that there was merit in the idea of protecting ‘national champions’from foreign takeovers. In relation to the restrictions on foreign media ownership,Howard pointed to ‘a belief that there is some national bene� t in having a powerful,fully Australian-based media company. … If you are to have a presence in theregion and a presence around the world then you need a very, very strong domesticbase’ (cited in Editorial 1997b). At the same time, however, the governmentemphatically rejected Hanson’s criticism of foreign investment. Costello argued‘we are not going to walk down the isolationist path which tries to throw outforeign investment and job creation in this country’ (cited in Dore 1997, 4).Howard also backed foreign investment arguing that ‘[t]hose who deride andcriticise foreign investment are doing Australia in the eye’ (Butler 1998, 53).

Notwithstanding its support for foreign investment, the government resisted callsfrom the United States that it disband the Foreign Investment Review Board

19 The Department of Foreign Affairs and Trade (1997) also put out a document entitled TradeLiberalisation:Opportunitiesfor Australia in an attempt to sell the bene� ts of freer trade. It is interestingto note that in late 1996 Howard ordered economic policy departments to compile evidence of the gainsto Australia from tariff liberalisation (Henderson 1996b, 4).

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(FIRB). The government does not want to lose its discretionary powers overcontroversial foreign investment, which the FIRB’s ‘national interest’ test allows.20

There was also pressure from APEC, which involved a commitment by Australiato have unrestricted investment � ows by 2010. But the most contentious issue wasthe OECD’s proposed multilateral agreement on investment (MAI). The MAIattracted most attention because of its potential rami� cations for policy in a varietyof areas hitherto considered the domain of domestic policy. Especially importantwere potential limitations on business assistance policies and efforts to imposeconditions on foreign investors.

The MAI attracted opposition from both the Left and the Right of the politicalspectrum in Australia. Protest in Australia occurred later and was less extensivethan in Canada and France where concerns about US economic and culturaldomination are longstanding. But the major problem for the development of acomprehensive MAI was effort by OECD countries to ‘carve out’ or ‘reserve’particular investment restrictions from the agreement. US demands to insert labourand environmental protection clauses into the agreement threw negotiations intoturmoil in mid-1997. This came on top of Canadian and French demands that mediaand culture be excluded entirely. Negotiations, however, continued.

Over the � rst few months of 1998, the campaign against the MAI gatheredmomentum. Businesses receiving government assistance became concerned at thepotential for restrictions on incentives. Programs such as the Factor F scheme forpharmaceutical companies and the Partnerships for Development scheme forinformation technology companies would have been illegal under the agreement(Forman 1998a, 25). In response, Australian negotiators submitted 29 reservationsincluding the Foreign Acquisitions and Takeovers Act, foreign aid contracts,government procurement, concessions (including natural resources), research anddevelopment incentives, the Banking Act, the Single Aviation Agreement withNew Zealand, existing foreign investment limits on airlines and airports, invest-ment restrictions on real estate and � sheries, � lm concessions, and media owner-ship (Barker 1998b, 6). The government, however, continued to support thenegotiations and criticise its opponents who now included the Democrats (Lees1998, 18).

Although negotiations had been suspended in April 1998, in June the Parliamen-tary Joint Standing Committee on Treaties recommended that ‘Australia not signthe � nal text of the Multilateral Agreement on Investment unless and until athorough assessment has been made of the national interest and a decision is madethat it is in Australia’s interest to do so’ (Joint Standing Committee on Treaties1998, ix). Illustrating the growing concern about the MAI, the Committee receivednearly 800 submissions (Forman 1998b, 4). In its report, the Committee criticisedthe Treasury for being contemptuous of concerns about the MAI and attacked

20 Apart from some outright restrictionsand limitations in areas such as banking, civil aviation the mediaand uranium, proposals are generally not rejected unless they are contrary to the national interest, whichas many writers point out is a reasonably nebulous concept (see, for example, Gunther 1995, 18). The‘not contrary to the national interest’ test replaced the ‘economic bene� ts’ test in July 1986 and appliesto proposals to acquire existing or set up new businesseswhere assets of greater than $50m are involved(Foreign InvestmentReview Board 1996, 40, 52). The change meant that proposals would be ‘examinedwithout the need to demonstrate economic bene� ts or to provide Australian equity participation and[would be] approvedunlessjudgedby the Governmentto be contraryto thenational interest’(Departmentof Treasury 1987, 6, cited in Gunther 1995, 18).

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Industry Minister Moore and his department for not preparing a submission. Thereport indicated that Coalition backbenchers were less than happy with thegovernment’s handling of the negotiations. But as fervour against the MAI wasreaching fever pitch, the French announced they were pulling out of the negotia-tions. In October 1998, the OECD abandoned the MAI whilst resolving to continueworking on developing an international agreement to cover foreign investment. Thecessation of negotiations solved a major dilemma for the government by takingforeign investment off the immediate political agenda.

The Consolidation of Pragmatic Economic Liberalism

Increasing criticism of the government for its lack of reforming zeal eventually hadan impact. At the � rst Cabinet meeting after Howard’s long break for illness, thegovernment announced that a second-term Coalition government would introducea GST (Short 1997b, 1, 5). The 1998 election campaign was dominated, notsurprisingly, by debate over the need for major tax reform and whether thecompensation offered by the Coalition would be enough to convince voters thatthey would not be worse off. The momentum of the reaction to globalisation tooka battering in the 1998 federal election where One Nation failed to win a singleseat, even in Queensland. Hanson was denied a voice in Parliament. Nationwide,however, the party gained 8% of the vote (14.5% in Queensland) and the reactionagainst globalisation has continued, encompassing groups on both the Right andLeft of the political spectrum.

Buttressed by victory, Howard (cited in Shanahan 1998c, 1) stressed that reformmust continue: ‘the idea that we could close down or slow down the reform processis simply not an option’. Although not necessarily an economic liberal reform,major tax reform had been the missing element in the globalising agenda of the1980s and 1990s. In the process of negotiating the GST through the Senate,Howard argued that debate should focus on the national bene� ts of a GST ratherthan on individuals who would lose from the changes (Henderson 1999a, 1–2).Costello (1999, 12) argued that tax reform is ‘our greatest reform challenge’ andwas vital in an ‘uncertain world economy’. The GST and other aspects of taxreform were argued to be essential for improving the competitiveness of exportersand to increase productivity in the economy generally (Howard 2000d). As theauthor of the government’s Review of Business Taxation, John Ralph (cited inHenderson 1999b, 21), argued: ‘We may remain an island geographically but wewill not be able to hide from the forces generated by globalisation.’

Outside of the tax agenda, the government continued on its pragmatic path inindustry and trade policy. In industry policy, the appointment of key ‘dry’ NickMinchin as Industry Minister appeared to be a signal that the government wasmoving away from interventionism. But ad hoc support to business has continued(Toohey 1998; Lewis 1998, 7). The government invested $70m (including a $40mtax-free loan) in Okalahoma-based Syntroleum for the development of environmen-tally cleaner, synthetic fuels and chemicals. The assistance is the third allocation offunds under the Invest Australia framework announced in the Investing for Growthstatement and was recommended by Minchin (Gluyas 2000, 31–2).21 The Treasurer

21 The � rst allocation was $40m to Visy Industries and the second is an outstanding offer of $100m toComalco.

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(cited in Taylor 2000, 21) stated that the government would ‘consider suchprojects in the context of an expanded strategic investment coordination process,including … the option of targeted investment allowances’. In early 1999, thenTrade Minister Tim Fischer admitted that four infrastructure projects that hadreceived tax breaks worth $91m would probably have gone ahead without assist-ance (Edwards 1999, 2). The government’s assistance to the workers of NationalTextiles created fears among members of the government that a costly precedentmay have been set.22 Two days later, the Prime Minister stressed that there wouldbe no more rescues, inviting accusations of nepotism and exposing the dangers ofad hoc assistance (McGregor 2000, 1). In the pig industry, the governmentpreferred a $6m adjustment package for producers to leave the industry rather thanthe small tariff increase surprisingly recommended by the Productivity Commission(Pearson 1999a).23 In mid-2000, the Commission sparked renewed debate aboutwhether Australia should continue unilaterally to reduce tariffs by recommendingthat all remaining tariffs should be removed (Productivity Commission 2000).Eager to avoid criticism of its earlier decisions, the government excluded the carand TCF industries from the Commission’s terms of reference.

Industry and trade policy have always been inextricably linked, especially inAustralia, but recent agreements to restrict export assistance measures through theWorld Trade Organization (WTO) have made industry assistance problematic.24 Inthe case of Howe Leather, the WTO ordered the government to recover assistancegiven to the company. A decision against US industry tax breaks for exportshighlighted the government’s need to review its case-by-case encouragement ofmajor investment projects where signi� cant exports will be involved. Contrary tothe government’s attitude on the environment and the UN, Minchin (cited in Taylorand Pearson 2000, 3) argued ‘Obviously, we are not going to continue with formsof assistance that don’t meet WTO standards.’ The government has continued tosell the bene� ts of trade liberalisation at home and abroad but its task has beenmade more dif� cult by the Howe leather saga, US decisions to impose tariffs onAustralian lamb and the failure of the Seattle meeting of the WTO to agree on arenewed liberalising agenda (Pearson 1999c, 1, 8; McGregor, Maris and Dore 1999,1). APEC seems to have fallen by the wayside after its irrelevance during the Asian� nancial crisis and the failure of members to agree on Early Voluntary SectoralLiberalisation at the 1998 meeting in Kuala Lumpur.

The failure of the WTO’s Seattle meeting to reinvigorate the multilateralliberalisation process has been popularly attributed to the widespread protests thattook place. Although the protests were important, the real reasons for Seattle’sfailure lie in continuing disputes between the United States and the European Union

22 See the reports in the Australian 10 February 2000.23 After some dif� culty getting its legislation through the Senate the Productivity Commission replacedthe Industry Commission.24 WTO (GATT) measures relating to investment include the General Agreement on Trade in Services,Agreement on Trade-Related Aspects of Intellectual Property Rights, Agreement on Trade-RelatedInvestmentMeasures, Agreement on Subsidies and CountervailingMeasures, PlurilateralAgreement onGovernment Procurement. All entail considerable restrictions on domestic policy discretion in relationto trade and foreign investment. The more extensive dispute resolution mechanisms of the WTO givethese measures an additional salience for policy, although there are still many ways that policy makerscan get around restrictions. Bias towards national economic actors and subsidies to attract investmentremain prevalent in all countries (World Trade Organization 1996, 69–73).

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over the agenda for the mooted ‘Millennium Round’ and between the developedand developing world over the issue of trade and labour standards (Bayne 2000).The Seattle protests and those that took place at the World Economic Forummeeting in Melbourne in September 2000 do provide, however, an indication of agrowing and organising anti-globalisation movement in the developed world thatgovernments must consider when selling policy change. Trade is probably the mostvisible and contentious aspect of globalisation today and governments continue toface protectionist sentiments despite the substantial efforts to reduce trade barriers.

The reluctance of many countries to embrace agricultural trade liberalisationincreased the attractiveness of the view that Australia should also be less willingunilaterally to lower its tariffs.25 With an eye to domestic constituencies, Howard(cited in Pearson and Lewis 2000, 4) has been willing to criticise other countries’trade policies:

It makes my blood boil as the Australian Prime Minister that we can be called toaccount in relation to the subsidy that we give to the Howe leather company andbe in breach of world trade rules, but the Europeans and the Americans are nevercalled to account for the massive subsidies they give to the wheat industry and tothe other primary industries … It shows the world is still loaded against Australiabecause we are an agricultural country. (See also Howard 2000b)

Similar in� ammatory rhetoric has been aimed at the UN committee system and atinternational negotiations to lower greenhouse gas emissions, illustrating that thegovernment is selective about what aspects of globalisation it supports.

Re� ecting the government’s pragmatic stance on trade issues, Howard (cited inDodson 2000, 19) noted ‘I’m not hog-tied to any particular approach’. TradeMinister Mark Vaile has also signalled that the government will increase its effortsin regional and bilateral trade negotiations (Maris 1999, 4). The possibility thatAustralia might enter into preferential trade agreements caused considerable con-cern among economic liberals as it did when the Keating government � irted withthe idea in 1995 (Conley 1999, 204; Sheridan 2000, 36). Overall, the Howardgovernment has been less concerned with maintaining a consistent position on tradepolicy. Whilst it is undoubtedly supportive of freer trade, it has been willing to setaside ideology for domestic political bene� t. The argument prevalent during theLabor years that Australia needed to take a purist, multilateral approach toengender freer trade has found the Coalition less receptive.

Economic Liberalism and Social Conservatism

Throughout his second term, Howard (1999a, 2000e) has maintained that hisgovernment was not only concerned with economic matters but social issues aswell. The goal of a ‘strong, fair and decent Australia’, Howard (1999a, 5) contends,‘is best met through a mix in public policy which combines liberalisation ineconomic policy and what I would describe as a “modern conservatism” in socialpolicy’. He also has continued to argue that globalisation is unequivocallybene� cial for Australia and that government must educate the population about

25 In a 1999 report, the AustralianBureauof AgriculturalEconomicsarguedthat some areasof agriculturewere more protected than they were before the culmination of the Uruguay Round (Pearson 1999b, 12).

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globalisation: ‘Part of the task for all of us is to fully explain the practical bene� tsof globalisation for Australia.’

Promoting his idea of a ‘social coalition of government, business, charitable andwelfare organisations and other community groups’, Howard aims to shift responsi-bility away from the state and to foster alternative forms of adjustment to themarket than welfarism. He argues that ‘the social coalition is � rmly rooted innotions of mutual obligation’ and is given substance in the ‘work for the dolescheme’ (Howard 2000a, 11).26 Whilst acknowledging government’s obligation tosupport those in genuine need, Howard (1999a) stressed that ‘those in receipt ofsuch assistance should give something back in return, and in the process improvetheir own prospects for self reliance’ (see also Howard 2000d). The Prime Minister(cited in Kerin 1999, 8) attacked what he called ‘a welfare culture’, whereingenerous welfare payments contributed to higher levels of unemployment because‘incentives to remain on welfare are greater than incentives to go back to work’.For the government, social policy reform means welfare reform and an increasingstress on private provision. The rhetoric of greater self-reliance has been aconsistent theme of the government—the continuing privatisation agenda, the shiftin funding from state schools to private schools, the provision of incentives forprivate healthcare, the tightening of welfare bene� ts and a focus on welfare fraud,the increases in higher education fees and the admittance of full fee-payingstudents, and the privatisation of employment services. Such policies aim togradually undermine public services without reneging on election commitments.

While Opposition Leader Kim Beazley (2000, 15) attacked the social coalitionas simply ‘another excuse to wind back the responsibilities of government’, it isimportant to note that, in government, Labor sponsored this shift. Singleton (2000a)argues that the major difference between the incoming and outgoing governmentwas Howard’s ideological emphasis on self-help, but individual responsibility andthe limitations of government were important themes of the Labor years. Labor’sconsistent ideological message was adjustment to globalisation and the market. Theconstant stress on attitudinal or cultural change intimated that, although the role ofgovernment was important in encouraging change and facilitating adjustment, the‘real solution’ to the problems thrown up by ‘new global economic realities’ laywith Australian economic actors and the wider community. Keating (1983) stressedthat Australians needed ‘to give greater attention to the economic limits onprogrammes of reform’. The private sector was increasingly argued to be the onlylegitimate creator of economic growth and praise for the market was accompaniedby a downgrading of the role of the public sector. As Keating (1988, 2–3) revealed:

the reality is that the public sector could never be the driving force in generatinggrowth and wealth and all that we have done has been predicated on this centralthesis. … A fundamental principle of our policy is that in the end the market isthe best allocator of resources.

26 It is interesting to note that Howard did not bother to apply the various euphemisms associated withthis scheme and gave it its popular title. It is also worthwhile noting that business has been less thanenthusiastic about the ‘social coalition’ (see Henderson 2000, 26). The principle of mutual obligationhas been given a policy platform through the McClure Report. See the reports in the Australian 17 and18 August 2000. Whilst the report recommends an expansion of mutual obligation beyond the ‘workfor the dole’ schemeto includesingleparentsand the disabled,it does not recommenda punitiveapproachto welfare recipients. It is possible, however, that its principles could be pushed in this direction.

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It seems clear, then, that the Howard government’s social policies, whilst differingin emphasis from Labor’s, should be seen as part of a continuum of state attemptsto recast its responsibilities for economic outcomes and to generate an ethos ofself-regulating adjustment to globalisation and the market. It cannot be expectedthat the message will always be consistent because governments continue to faceelectoral as well as economic imperatives.

Conclusions

Whilst early decisions to maintain tariffs in the motor vehicle and textile, clothingand footwear industries seemingly sullied the Howard government’s globalisingcredentials, they did not represent a retreat. In many other areas of economicpolicy, the government has willingly embraced further liberalisation. Despite earlyequivocation about emphasising globalisation and recent attacks on the environ-mental and human rights aspects of global governance, the Howard government hasmaintained efforts to educate the population about the need for continuousadjustment to the world economy and greater individual self-reliance. It hasreinforced themes of policy modesty and the view that the state can do little to dealdirectly with unemployment and poverty (Short 1996, 2). Australia, Howard (citedin Shanahan 1998a, 7) argues, ‘needs a new style of government, one which actsstrongly within the realms of the possible, one with a disposition towards individ-uals � nding their own solutions. … Only in this way will we have the strength toface the future, to face the challenges of globalisation.’

The increasing shift to economic liberal policies has been both an economicstrategy to open Australia to the world economy and a political project that hasaimed to lower expectations about the role of the state and to establish anacceptance of the need for continuous adjustment to the world political economy.Through persuasion—the rhetoric of globalisation—and coercion—economic lib-eral policy change—the state under Labor and Coalition governments has brokendown Australia’s historical protectionist policy framework and strengthened theability of the world political economy and the market to regulate the allocation ofresources, socio-economic outcomes and policy possibilities. Globalisation, there-fore, has been more than a constraint on policy, it has also been a dominant andpersuasive construction, effectively used by policy makers and other powerfulsocial actors to support and frame claims about the need for a new economic liberalpolicy structure in Australia.

Whilst governmental persuasion prepares and smooths the ground, it is policythat alters the terrain by coercing change. But despite the wishes of many economicliberals to set an economic liberal policy structure ‘in stone’, domestic politicscontinues to shape policy. As recent protests illustrate, resistance to globalisationpersists. An acceptance of economic liberal globalisation cannot be forced in anyabsolute or � nal way. The belief that turning inward and retreating to earlierAustralian responses to deal with economic vulnerability would be catastrophic forAustralia’s future prosperity, does not mean that protectionist impulses will notcontinue to in� uence the Australian policy debate. The protectionist rationaleremains and the temptation (and continuing potential) to use the state apparatus toinsulate the domestic political economy from the outside world has not beenremoved. Any political economic governing project needs a coalition of supportersand an appropriate persuasive ideology to prosper. In the domestic political arena,

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economic liberal globalisation still has to provide a story about the good of thenation-state—that open borders and the dominance of the market mechanism arethe best way to advance national interests.

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