Thursday, April 11, 2013

The Australian importance of Margaret Thatcher - did it exist?

One of the interesting but not unexpected things about the death of Margaret Thatcher was the polarised nature of the responses, for she has become an iconic figure to left and right. I probably have a somewhat iconoclastic view of her.

Back in 2006, I did a short background series on trends in public administration. If you are interested, the posts were:

I said that my View of Mrs Thatcher was probably somewhat iconoclastic. In the posts, I do refer to Thatcherism as the label attached to the approaches that were emerging. I also try to briefly put Mrs Thatcher in a broader context. However, I don't discuss her ideas, nor do I place great weight on her in an Australian context.

Leaving foreign policy aside and focusing on domestic policy, Mrs Thatcher was first and foremost a British politician dealing with an economy that had become a basket case. She articulated views on the role of the state in life. She became a major symbol to those who had certain if opposing views about the role of the state. But she never (to my knowledge) really articulated a coherent view about the way that the state should work within the bounds that she had set. That was left to others.

In an Australian context, she had some influence on views about the role of the state, but almost no influence on public policy or public administration that I can discern. The changes that took place in Australia were locally driven, although they did take place to some degree within a frame set by global trends of which Mrs Thatcher was a part.

So when I listen or read about the opposing and sometimes heated local responses to Mrs Thatcher, I do wonder. Maybe I'm wrong. Can you point to a single example where Mrs Thatcher's ideas had significant local influence?    


Legal Eagle said...

Nope, I can't either think of any area either, Jim. I don't feel the same passion about her (either negative or positive) as other people do, perhaps because I see her as a person who didn't have much importance to me or to Australia.

Anonymous said...

Leaving foreign policy aside

That just reminds me of the Monty Python "what did the Romans ever do for us" sketch.

Too funny - and all of course achieved with no effect whatsoever upon little ol' us.


Jim Belshaw said...

I am glad you are struggling, too,LE. :), kvd!

Anonymous said...

And I'll thank you not to refer to me as an invertebrate :)


Evan said...

I think the neo-liberal agenda largely came from tendencies within Australia.

Reagan may have influenced it a little perhaps but I don't think Thatcher did.

Anonymous said...

Really? What about the privatisation of airlines, Banks, telephones, railways, energy suppliers - for a start?

Jim Belshaw said...

Hi Anon and my apologies for slowness. On privatization, how do you think Mrs Thatcher influenced Australian events? Or de-regulation for that matter? These are not trick questions. I'm interested in your thinking.

Jim Belshaw said...

Just a further follow up comment anon. Dates are very important in tracing influence as well as channels. This is a link to a Reserve Bank paper that gives privatisation dates - At national level, privatisation and also deregulation including the large scale reduction of tariff barriers began under the Hawke/Keating Governments.

Jim Belshaw said...

And kvd, aren't you an invertebrate?

Winton Bates said...

"Can you point to a single example where Mrs Thatcher's ideas has a significant local influence?"

With greatest respect, JIm, I think that is the wrong question. A better question would be: How much of the Hawke-Keating-Howard reform agenda in Australia would have proceeded in the absence of the example set by Margaret Thatcher, Ronald Reagan and Roger Douglas?

In my view we would have had trade liberalisation and not much else. I think John Howard almost managed to sound the right note in the AFR (Review section) today:
"The 1980s saw a high watermark in worldwide support for the free market agenda. ... There were variants of the free market agenda in different countries , but its philosophical inspiration was the joint project of Thatcher and Reagan."

The inspiration that Mrs Thatcher provided was in setting a practical example of what could be done. The philosophical inspiration came from Milton Friedman and Friedrich Hayek, among others.

Jim Belshaw said...

Hi Winton. In a way, you have made my point for me in joining Reagan, Thatcher & Douglas. My point addressed just MT. If you look at the links to my previous writing you will see explicit recognition of the broader stream of thought and especially the NZ model, Even then, things are not clear cut.

I suggested that Mrs Thatcher articulated a role of the state. This included the role of markets. I noted that this did not really cascade down into an articulated structural view. That was left to Douglas and the NZ Treasury.

The first privatisation in Australia (AICD) occurred under the Hawke Government in 1989/90. By the time that Mr Howard came to power, the total process at Federal level was well down track. Was Mr Keating influenced by Mrs Thatcher? Only he could answer that.

In a way, the high watermark in Australia of what might be called Thatcherism came in the 1992 Hewson campaign. In NSW, Nick Greiner came to power in 1988, Geoff Kennett in Victoria in 1991. Both espoused views of the state and markets that have been classified as Thatcherism. Now I need to introduce some new dates.

Maggie Thatcher became PM in 1979. She inherited an economy in trouble. Her responses were influenced by the Friedman school.

In New Zealand, Roger Douglas became Finance Minister in 1984. Like the UK, the NZ economy had become a basket case. The ideas that he espoused were to become very influential in Australia in structural terms, beginning with NSW and Victoria. This was partly o matter of ideas, but also the movement of advisers from NZ into those two states. The Federal Treasury was more resistant.

It always gets very difficult to trace influences, especially when so many countries and players are involved, more so when you are dealing with key individuals who are also part of a broader movement in ideas. This has become a very long comment. I will pause here.

Anonymous said...

Trade liberalisation was on wheels in Australia in the 'sixties after the Vernon Report's work on effective protection. It got a kick start with the work of Alf Rattigan and Gough's uniform tariff reduction of 25% in July 1973. This to some extent flowed into microeconomic reform, influenced by the likes of Roger Kerr in NZ and the visit of Milton Friedman to Australia in 1975. What Maggie did, under the tutelage of Keith Joseph (and her economic adviser Alan Walters), was to start questioning the role of government in so many areas of economic activity that had so long been taken for granted. Terms like 'modern mixed economy' were recognised for what they were: creeping socialism. Instead of wasting so much time discussing 'market failure' the new focus was on government failure and rigidity inherent in the highly-unionised public sector workforce. Paul Keating listened. Financial reform in Britain, Australia and NZ went hand in hand with this, including the 'big bang' in the City of London)acceptance of independent monetary policy (where Australia and NZ were actually ahead of Britain)and flexible exchange rates.

Winton Bates said...

Jim, I agree with most of that, but I'm not sure I would accept Paul Keating's opinion about the effect of Thatcherism on policies adopted in Australia.

And, in my experience the federal Treasury was not resistant. They were more inclined to say that they had always advocated free markets.

Anonymous said...

I tend to agree with both Anon and Winton, but I'd take it a little 'tighter in' than their responses. You've been careful to quote the overall timelines involved, but I would like to propose some items which I've always thought significant:

1) March 1983 Thatcher appointed Ian McGregor to the Coal Board - famous mostly for the job he did with the steel industry. Scargill was the almost clownish, and definitely unrealistic, leader/spokesman of the unions.

2) Our own 'Accord' negotiated during 1983 by Hawke, resulted in a September 1983 agreement, whereby the ACTU basically traded off ad hoc industrial turmoil against negotiated improvements; i.e. benefits as well as wage increases. Is there any sentient being who does not appreciate the significance of that one thing?

3) The defining event for the breaking of union power in the UK started in about March 1984. I am not suggesting this as a high point for Thatcher; but most certainly it was very significant both for the UK and the rest of the world.

Now I've always found it hard to think that Hawke was operating in an international vacuum; I think he was well aware of the (by then) movement against unrealistic union demands, and I think he (or people in his group) figured out how to move the union movement 'past' the traditional role of confrontation between 'the bosses and the workers'.

So, when anyone suggests little old Aus somehow miraculously navigated the turmoil of the 1980's without reference to events in the UK, and the US, and NZ I think they discount the intelligence (and effectiveness) of Hawke and his ministers. And I say that as a basically 'rusted on' Liberal voter.

Jim re your invertebrate: sorry for sluggish response :)


Anonymous said...

Submitted without benefit of latest comments of both Anon and Winton. But a brief read doesn't affect my view of timelines as noted by Jim.

We have different interests, though, obviously.


Jim Belshaw said...

Hi all, and thanks for participating in the discussion.

First, anon, thank you for mentioning Roger Kerr. For the life of me, I couldn't remember his name! I don't remember MF's visit to Australia in 1975, although I was in the Treasury at the time. I do know that his thinking had an influence, including on me!

In my own mind, I think of the second half of the seventies as “getting the economic fundamentals right.” That was the constant refrain. No one really knew how to break out of stagflation, but it was accepted that it couldn’t happen unless the economic fundamentals were right. Part of my role at the time was graduate recruitment for Treasury, and this issue came up all the time in campus interviews.

Now one of the reasons that I made this point is that policy making in Canberra is a continuum. Anon drew this point out very clearly when he traced the history of action over barrier protection, Policy is affected by the perceptions of individuals and the way those perceptions translate into institutional and political positions.

Individuals are affected by ideas, so Des Moore or Alan Moran, for example, were clearly influenced by the new ideas in administration and public policy and indeed campaign for them today. However, the way that individual ideas and actions translate into institutional approaches and policies depend on a range of interactions and here the past is important as is institutional power.

From my perspective as someone involved in policy making at a moderately senior level, the economic models and principles that we were using and that I was in some cases opposing, were formed during the 1970s. The Hawke Government was important because it opened things up, created flexibility for a brief period. Yet the economic analysis that under-pinned policy in the central coordinating agencies was the same.

The challenge that I tried to pose from 1983 in industry policy development was met by and had to be fitted within the orthodoxy. I actually accepted the central tenants of the orthodoxy, but argued that it ignored the dynamic elements.

New Zealand is important because the New Zealand model did have a clearly discernable influence. This was the channel through which certain ideas flowed.

I said that Treasury was resistant to new ideas. The problem with the central coordinating agencies lies in their control function. They may espouse views about the role of the state, the need to free markets etc, but they like to control.

Consider program budgeting, the precursor to the current approach to input-output, measurement and performance indicators. I was a strong supporter because I saw it as a way of integrating apparently separate approaches into a coherent whole. It didn’t work that way. Under Finance/Treasury it was twisted into a control device based on existing structures.

In early 1991, my then consulting group started a major study called the public sector reform project. Our aim was to measure the spread of the then new ideas in public policy and administration with a special focus on the New Zealand influence. We started by looking at the top conceptual structures and then the way they translated into on-ground action in the agencies we were especially interested in at Commonwealth and state levels. It quickly became clear that those approaches were being distorted by the need to control. They had the capacity to free, to allow for innovation, but they also had the capacity to control, and that was what was happening. Indeed, that is what has happened.

We have a funny dichotomy at the moment. We have a set of ideas about the role of the state and of markets that centres on the idea of competition, of a limited role for government, of allowing market freedom. Yet in the public policy sphere, those same ideas have morphed into a more rigid and controlled system that now extends its influence into the private sphere.

And where does Maggie Thatcher fit into all this? Blowed if I know!