tag:theconversation.com,2011:/fr/topics/john-hewson-3417/articlesJohn Hewson – The Conversation2019-05-01T00:58:34Ztag:theconversation.com,2011:article/1149242019-05-01T00:58:34Z2019-05-01T00:58:34ZIssues that swung elections: the ‘unlosable election’ of 1993 still resonates loudly<p><em>With taxes, health care and climate change emerging as key issues in the upcoming federal election, we’re running a series this week looking at the main issues that swung elections in the past, from agricultural workers’ wages to the Vietnam War. Read other stories in the series <a href="https://theconversation.com/au/topics/issues-that-swung-elections-69985">here</a>.</em></p>
<hr>
<p>The 1993 election is known as the “unlosable election” for the Liberal Party. It highlights how the course of a campaign can shift voter opinion to produce a result few would have predicted a month out from polling day. </p>
<p>As the current election campaign unfolds, a foreboding message may resonate from the 1993 campaign. Namely, that being the clear frontrunner tends to foster complacency, and touting a “big target” invites more intense scrutiny.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/fake-news-is-already-spreading-online-in-the-election-campaign-its-up-to-us-to-stop-it-115455">'Fake news' is already spreading online in the election campaign – it's up to us to stop it</a>
</strong>
</em>
</p>
<hr>
<h2>Labor’s unlikely triumph</h2>
<p>Labor in 1993 was a triumph, comparable to Whitlam’s 1972 win. After a year languishing in the polls, Labor won a fifth term and increased its majority by two seats. </p>
<p>In his <a href="https://www.youtube.com/watch?v=IwtR6bIIYKY">victory speech</a>, Prime Minister Paul Keating declared it “the sweetest victory of all”, and “a victory for the true believers – the people who in difficult times have kept the faith”.</p>
<p>For some, these words reflected one of the great Labor speeches; for others, they reflected the hubris that would eventually envelop the Keating government. </p>
<p>To win a fifth term having recently presided over a severe economic recession and a bitter leadership challenge was unprecedented. The combination of these factors should have sunk the Keating government.</p>
<h2>Why Labor should have lost</h2>
<p>The <a href="https://en.wikipedia.org/wiki/Early_1990s_recession_in_Australia">early 1990s recession</a> was far worse than the 1974 or 1982-3 recessions that contributed to the Whitlam and Fraser governments’ defeat. And Keating appeared heartless when, as treasurer in November 1990, he <a href="https://theconversation.com/cabinet-papers-1990-91-lessons-from-the-recession-we-didnt-have-to-have-52153">remarked</a>: </p>
<blockquote>
<p>This is a recession that Australia had to have.</p>
</blockquote>
<p>A year later, he challenged Prime Minister Bob Hawke in a leadership spill and defeated him by 56 votes to 51. </p>
<p>For the nation, mired in recession, Labor seemed indulgent and power-hungry. It was no surprise that the Liberals led comfortably in the polls. </p>
<h2>Hewson’s policy platform was a ‘large target’</h2>
<p>Keen to move beyond the bitter rivalry between Andrew Peacock and John Howard during the 1980s, the Liberal party turned to John Hewson after the 1990 election. </p>
<p>Hewson was inexperienced in politics, having only entered Parliament in 1987, but skilled in his working life as a merchant banker, former advisor to John Howard and professor of economics at UNSW. </p>
<p>Hewson was a visionary who managed to unite both the Liberal and National Parties around one of the most significant policy platforms ever enunciated in Australian politics: a 650-page document titled “Fightback!”. </p>
<p>Fightback’s enduring virtue lies in its coherent articulation of reform, accompanied by detail. Its problem was that it pushed too far into the realms of a neo-liberal economic reform. With such a “large target” as Fightback, Keating was able to make the opposition the issue during the campaign.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-budgets-dirty-secret-is-the-tax-hikes-youre-not-meant-to-know-about-115457">The budget's dirty secret is the tax hikes you're not meant to know about</a>
</strong>
</em>
</p>
<hr>
<p>Fightback’s centrepiece was a 15% GST, set alongside big personal income tax cuts. Fightback also detailed the introduction of enterprise bargaining, cuts to Medicare bulk billing, the sale of government owned assets, and other commitments aimed at limiting the size of government expenditure. </p>
<p>Over the course of 1992, voters observed a colossal political struggle as Hewson worked at selling Fightback to voters, and Keating warmed to the task of dismantling its vision. This would reach a crescendo in February-March 1993, with one of Australia’s most memorable election campaigns. </p>
<p>The <a href="https://australianelectionstudy.org/wp-content/uploads/Trends-in-Australian-Political-Opinion-1987-2016.pdf">Australia Election Study</a> surveys show this election stood out because voters recognised that there was “a good deal of difference” between the parties. </p>
<h2>Different styles of leadership</h2>
<p>Arguably, this was not just about policy, it was also about the fact that Hewson and Keating had different leadership styles. </p>
<p>Hewson was committed to “policy as an end in itself” and he tended to shun the hard sell, preferring a more earnest type of advocacy delivered through public rallies. </p>
<p>Hewson’s problem was with Fightback’s complexity. According to the political journalist Laurie Oakes, he often appeared “mean and shifty” when he tried to explain the details. This was most evident when he tried to explain on television how the GST would apply to a <a href="https://en.wikipedia.org/wiki/Birthday_cake_interview">birthday cake</a>. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1101327228674035712"}"></div></p>
<p>Keating fundamentally believed that the strength of political leadership would prevail. Lampooning Fightback, Keating said: </p>
<blockquote>
<p>If you don’t understand it, don’t vote for it; if you do understand it, you’d never vote for it! </p>
</blockquote>
<p>With his superior command of rhetoric, Keating framed the campaign as one about core Australian values. Keating shied away from defending Labor’s achievements, instead making his opponent the focus. He championed Australian egalitarianism while painting Hewson as a radical. Keating once referred to Hewson as “the feral abacus”, a theorist hopelessly out of touch with average voter. </p>
<p>By the eve of the election, the parties were evenly balanced, but pundits were still predicting a Liberal win.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/discontent-with-nationals-in-regional-areas-could-spell-trouble-for-coalition-at-federal-election-115364">Discontent with Nationals in regional areas could spell trouble for Coalition at federal election</a>
</strong>
</em>
</p>
<hr>
<h2>In favour of a detailed policy platform</h2>
<p>Why did Hewson take such a political risk with Fightback? The answer can be found in Hewson’s <a href="https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;adv=yes;orderBy=_fragment_number,doc_date-rev;query=Dataset%3Ahansardr,hansardr80%20Decade%3A%221990s%22%20Year%3A%221995%22%20Month%3A%2202%22%20Day%3A%2227%22%20Speaker_Phrase%3A%22dr%20hewson%22;rec=0;resCount=Default">valedictory speech to parliament</a>. </p>
<p>In the speech, Hewson reflected on the purpose of Fightback. He said it was to convince voters “in the midst of the worst recession in 60 years” that significant change was required, that the Liberal Party was once again credible because it “stood for something”, and that it was prepared to “challenge vested interests”. </p>
<p>He also said that entering government required a mandate based on detailed policy if there was to be any hope of getting legislation through the Senate. It is worth noting how pertinent this last point is today.</p>
<p>Since Fightback, no opposition has put forward such detailed policy. Putting aside one’s own ideological preferences, Hewson’s Fightback should be viewed as positive because voters deserve to be presented with detailed policy choices rather than just <a href="https://www.abc.net.au/news/2014-05-21/hewson-i-live-in-hope-of-spin-free-politics/5465054">political spin</a>.</p><img src="https://counter.theconversation.com/content/114924/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Haydon Manning does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>All the polls suggested the Keating government would be finished at the 1993 election – until Opposition Leader John Hewson launched a 650-page policy document called “Fightback!”.Haydon Manning, Adjunct Associate Professor, Politics, Policy and Global Affairs, College of Business, Government and Law, Flinders University., Flinders UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/835652017-09-06T07:02:50Z2017-09-06T07:02:50ZCoal and the Coalition: the policy knot that still won’t untie<p>As the Turnbull government <a href="https://theconversation.com/agl-rejects-turnbull-call-to-keep-operating-liddell-coal-fired-power-station-83523">ties itself in yet more knots over the future of coal-fired power</a>, it’s worth reflecting that climate and energy policy have been a bloody business for almost a decade now.</p>
<p>There was a brief period of consensus ushered in by John Howard’s belated realisation in 2006 that a price had to be put on carbon dioxide emissions. But by December 2009 the Nationals, and enough Liberals, had decided that this was a mistake, and have opposed explicit carbon pricing ever since. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ten-years-of-backflips-over-emissions-trading-leave-climate-policy-in-the-lurch-69641">Ten years of backflips over emissions trading leave climate policy in the lurch</a>
</strong>
</em>
</p>
<hr>
<p>The resulting policy uncertainty has caused an investment drought which has contributed to higher energy prices. Now, with prices a hot potato, there are <a href="https://theconversation.com/agl-rejects-turnbull-call-to-keep-operating-liddell-coal-fired-power-station-83523">thought bubbles about extending the life of coal-fired power stations</a> and a new effort to <a href="http://www.smh.com.au/nsw/conservatives-conservation-corporates-lobbyist-couple-energises-debate-20170901-gy8oku.html">set up a Conservatives for Conservation group</a>.</p>
<p>But the Liberal Party’s tussles over climate and energy policy (as distinct from <a href="https://theconversation.com/how-climate-denial-gained-a-foothold-%20in-the-liberal-party-and-why-it-still-wont-go-away-56013">denying the science itself</a>) go back even further – some 30 years.</p>
<h2>Early days and ‘early’ action</h2>
<p>It’s hard to believe it now, but the Liberal Party took a stronger emissions target than Labor to the <a href="https://en.wikipedia.org/wiki/Australian_federal_election,_1990">1990 Federal election</a>. Yet green-minded voters were not persuaded, and Labor squeaked home with their support. After that episode the Liberals largely gave on courting green voters, and under new leader John Hewson the party tacked right. Ironically, considering Hewson’s <a href="https://theconversation.com/actions-not-words-should-earn-divestment-advocates-praise-38605">climate advocacy today</a>, back then his <a href="https://en.wikipedia.org/wiki/Fightback!_%28policy%29">Fightback! policy</a> was as silent on climate change as it was on the <a href="https://en.wikipedia.org/wiki/Birthday_cake_interview">price of birthday cakes</a>.</p>
<p>In his excellent 2007 book <a href="https://www.penguin.com.au/books/high-and-dry-9781742284057">High and Dry</a>, former Liberal speech writer Guy Pearse recounts how in the mid-1990s he contacted the Australian Conservation Foundation, offering to to canvass Coalition MPs to “find the most promising areas of common ground” on which to work when the party returned to government. The ACF was “enthusiastic, if a little bemused at the novelty of a Liberal wanting to work with them”. Most Liberal MPs – including future environment minister Robert Hill and future prime minister Tony Abbott – were “strongly supportive” of the idea. But others (Pearse names Eric Abetz and Peter McGauran) were “paranoid that some kind of trap was being laid”. Nothing came of it.</p>
<p>Elected in 1996, Howard continued the staunch hostility to the United Nations climate negotiations that his Labor predecessor Paul Keating had begun. Not all businessmen were happy. Leading up to the crucial Kyoto summit in 1997, the Sydney Morning Herald reported how a “delegation of scientists and financiers” led by Howard’s local party branch manager Robert Vincin and Liberal Party grandee Sir John Carrick lobbied the prime minister to take a more progressive approach. Howard did not bend.</p>
<p>Howard stayed unmoved until 2006 when, facing a perfect storm of rising public climate awareness and spiralling poll numbers, he finally relented. Earlier that year a group of businesses convened by the Australian Conservation Foundation produced a report titled The Early Case for Business Action. “Early” is debatable, given that climate change had already been a political issue since 1988, but more saliently the report tentatively suggested introducing a carbon price. And Howard finally relented.</p>
<h2>The carbon wars</h2>
<p>The ensuing ten years after Kevin Rudd’s defeat of Howard don’t need much recapping here (go <a href="https://theconversation.com/ten-years-of-backflips-over-emissions-trading-leave-climate-policy-in-the-lurch-69641">here</a> for all the details). But one interesting phenomenon that has emerged from the policy wreckage is the emergence of some very unusual coalitions to beg for certainty. </p>
<p>In 2015, in the leadup to the crucial <a href="https://theconversation.com/au/paris-2015">Paris climate talks</a>, an “<a href="http://www.abc.net.au/news/2015-06-%2029/australian-climate-roundtable-business-unions-policy-alliance/6579106">unprecedented alliance</a>” of business, union, environmental, investor and welfare groups called the <a href="http://www.australianclimateroundtable.org.au/">Australian Climate Roundtable</a> sprang briefly into life to make the case for action.</p>
<p>Then, after the seminal <a href="https://theconversation.com/what-caused-south-australias-state-wide-blackout-66268">South Australia blackout last September</a>, a <a href="http://reneweconomy.com.au/heavy-weather-and-the-transition-to-a-21st-century-energy-system-37345/">surprisingly diverse group</a> of industry and consumer bodies – the Australian Energy Council, Australian Industry Group, Business Council of Australia, Clean Energy Council, Energy Users Association, Energy Consumers Australia, Energy Networks Association and Energy Efficiency Council – called on federal and state energy ministers to “work together to craft a cooperative and strategic response to the transformation underway in Australia’s energy system”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/who-tilts-at-windmills-explaining-hostility-to-renewables-77762">Who tilts at windmills? Explaining hostility to renewables</a>
</strong>
</em>
</p>
<hr>
<p>It’s in this light that the new <a href="http://www.smh.com.au/nsw/conservatives-conservation-corporates-lobbyist-couple-energises-debate-20170901-gy8oku.html">Conseratives for Conservation</a> lobbying effort should be seen. Its spearhead Kristina Photios surely knows she has no chance of converting the committed denialists, but she can chip away at the waverers currently giving them comfort and power.</p>
<h2>Questions on notice</h2>
<p>Of course, there are always cultural (<a href="https://theconversation.com/who-tilts-at-windmills-explaining-hostility-to-renewables-77762">or even psychological</a>) issues, but you’d think that conservation would be a no-brainer for conservatives (the clue should be in the name).</p>
<p>There are a few questions, of course (with my answers in brackets).</p>
<ul>
<li><p>Where were all the people who are now calling for policy certainty back in 2011 when Tony Abbott was declaring his oath to kill off the <a href="http://www.sbs.com.au/news/article/2017/02/12/carbon-tax-just-brutal-politics-credlin">carbon tax</a>? (They were AWOL.)</p></li>
<li><p>Will any business show any interest in building a new coal-fired power station? (No.)</p></li>
<li><p>Is renewable energy technology now advanced enough for them to make serious money? (We shall see.)</p></li>
<li><p>Can we make up for lost time in our emissions reductions? (No, and we have already ensured more climate misery than there would have been with genuinely early climate action.)</p></li>
<li><p>Will the Liberals further water down the Clean Energy Target proposal? (<a href="http://reneweconomy.com.au/turnbulls-new-%20energy-target-%20drop-clean-%20ignore-climate-27667">Probably</a>.)</p></li>
<li><p>What will Tony Abbott say to UK climate sceptic think tank the Global Warming Policy Foundation when he gives a speech on October 6? (Who knows –
grab your popcorn!).</p></li>
<li><p>What will happen to the Liberals in the medium term? (Who knows, but Michelle Grattan of this parish has <a href="https://theconversation.com/grattan-on-friday-if-defeat-comes-what-then-for-the-%20liberals-succession-83311">some intriguing ideas</a>.)</p></li>
<li><p>Are there reasons to be cheerful? (Renewable energy journalist Ketan Joshi <a href="http://reneweconomy.com.au/bunch-reasons-optimistic-clean-energy-australia-66679/">thinks so</a>.)</p></li>
</ul>
<p>Perhaps the last word on this issue should go to John Hewson, who <a href="http://www.smh.com.au/comment/why-certain-liberals-cant-believe-in-climate-change-20161208-gt6t6n.html">noted last year</a>:</p>
<blockquote>
<p>The “right” love to speak of the debt and deficit problem as a form of “intergenerational theft”, yet they fail to see the climate challenge in the same terms, even though the consequences of failing to address it substantively, and as a matter of urgency, would dwarf that of the debt problem. The “right” is simply “wrong”. It’s political opportunism of the worst sort, and their children and grandchildren will pay the price.</p>
</blockquote><img src="https://counter.theconversation.com/content/83565/count.gif" alt="The Conversation" width="1" height="1" />
The Turnbull government is still tying itself in knots over the future of coal, as literally decades of policy turmoil on climate and energy continue to roll on.Marc Hudson, PhD Candidate, Sustainable Consumption Institute, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/771002017-05-03T07:37:22Z2017-05-03T07:37:22ZPolitics podcast: John Hewson on the budget climate<figure><img src="https://images.theconversation.com/files/167671/original/file-20170503-4133-5r3fg3.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="source">Pat Hutchens/TC</span></span></figcaption></figure><p>John Hewson, a former Liberal leader and chair in the Tax and Transfer Policy Institute at the Australian National University, describes the uncertain economic climate into which Treasurer Scott Morrison will deliver next week’s budget.</p>
<p>“I think it’s an occupational hazard for treasurers that they’re always optimistic – always try to put a better gloss than is the case,” Hewson says. </p>
<p>“I’ve been analysing and forecasting economies since the late ‘60s and I picked up most of the big turning points over that period. But I’d have to say that right now I think it’s harder than it’s ever been to say what might happen next.”</p>
<p>Hewson nominates the after-effects of the global financial crisis, geopolitical tensions, and environmental challenges as some of the factors driving his doubt. </p>
<p>There is also the matter of Donald Trump.</p>
<p>“He’s quite unpredictable and his capacity to govern in the United States is really quite limited. Although he might have been a reasonably successful property developer, it’s not easy to run a government off that skill-set in Washington and he’s finding the reality of that.”</p>
<hr>
<p><em>This podcast is co-published with the University of Canberra’s <a href="http://www.ausbudget.org/">Institute for Governance and Policy Analysis</a></em></p><img src="https://counter.theconversation.com/content/77100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>John Hewson describes the uncertain economic climate into which Scott Morrison will deliver next week's budget.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/703432016-12-31T20:33:11Z2016-12-31T20:33:11ZThe 1992-93 cabinet papers reveal the chaos behind the government’s economic statement<figure><img src="https://images.theconversation.com/files/151336/original/image-20161222-4100-ou038e.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The government was forced to respond to John Hewson's plan.</span> <span class="attribution"><span class="source">The National Archives of Australia, Author provided</span></span></figcaption></figure><p>The 1992-93 cabinet papers, released today by the National Archives of Australia, reveal a government struggling for solutions to myriad problems. </p>
<p>These were tough, lean years for Australia. The recession “we had to have” was still biting deeply into the economy and showed no signs of lifting. The rural drought was still in full sway. Business confidence was shot.</p>
<p>The Labor government was entering its fourth term in government, unsure of its direction and suffering a crisis of confidence. It appeared besieged on all fronts, not least as the John Hewson led Opposition released Fightback! in 1991 – a neoliberal plan advocating major social and economic change. </p>
<p>Initially blindsided by the Opposition’s agenda, Labor gambled by changing its leader for the first time while holding office. Frustrated at the economic meltdown that had greeted his pro-market policies, new Prime Minister Paul Keating was uncertain as to the best steps to take going forward. He did not want to reverse his reform legacy, but was searching for solutions. </p>
<p>But newly released cabinet papers show that while the Labor government was trying to reassure itself that it was “not weakening our resolve”, many ministers were clearly reform fatigued. </p>
<p>To fill this void, much policy work was going on behind the scenes, largely led by a small number of key public officials, central agency bureaucrats and tireless taskforce working groups. The minions were busy crafting an omnibus agenda for a government that had tired itself out. </p>
<h2>The issues</h2>
<p>The Keating government was preoccupied with two big issues in 1992. First, a surging unemployment rate, and especially the increasing number of long-term unemployed workers who were virtually unemployable. Second, a budget deficit then hovering at around A$5.5 billion and getting slightly worse by the month. </p>
<p>Unemployment was 10.6% in December 1991 and expected to grow to 11% by 1992 before falling slowly thereafter. Government spending was still growing by 4% per annum and had increased Commonwealth outlays to 26.2% of GDP, while revenues were weak but slowly trending upwards. These twin problems overshadowed almost all the government contemplated and did. Cabinet briefs, with anything up to six or seven listed options to “do something”, were invariably about setting out the lowest cost option in the longer-term. </p>
<h2>Scrambling for solutions</h2>
<p>In the first few months of 1992 the Keating government busied itself pulling together its major economic statement named the <a href="http://trove.nla.gov.au/work/27011447?q&sort=holdings+desc&_=1482367830659&versionId=197866735">One Nation statement</a>. It built on a series of other economic and employment packages, from Building a Competitive Australia (1991) through to Working Nation (1994)). </p>
<p>The wonderfully named “Ad Hoc Committee of Cabinet”, seemed to be making the lion’s share of the key decisions. Senior ministers on the ad hoc committee were able to indicate pending decisions even before portfolio ministers had been consulted or agreed them, or cabinet had formally endorsed such decisions. </p>
<p>The statement reflected the frenetic policy process across government that had driven its construction. It was called a “stocktake of the government’s achievements” and reaffirmation of the “further pursuit of microeconomic reform”. Even items earmarked for release separately (such as the science and technology measures) were folded into the economic statement to maximise its breadth and intended impact.</p>
<p>The nation-building package became a grab bag of initiatives, most of which were only loosely related to the main themes. It included tax cuts, science and technology measures, R&D concessions, transport and electricity shakeups (Trans-Tasman shipping), mobile and radio frequency spectrums, postal services, housing needs, regulatory relaxations, selective privatisation of government business enterprises, the establishment of a new national rail corporation, infrastructure projects especially road network improvements, heritage and environmental projects, support for union amalgamations, drought relief, urban projects and city planning, various submissions called “further proposals”, and even funding for the newly announced second Sydney airport at Badgery’s Creek! </p>
<p>Much of this activity was rebadging existing programs or tweaking them to imply the government was doing something. </p>
<p>Various assistance packages were announced but most were short term adjustment programs. Not many amounted to much in terms of dollar amounts. There was a more general interest in labour market programs, with some continual renaming of employment creation schemes as the targeted cohort changed or proved difficult to place in jobs. Job scheme programs called Jobtrain were replaced by Jobstart and Jobskills, and others were invented to target those that did not fit the eligibility criteria such as the self-employed adjustment program or SEAP. </p>
<h2>Moving forward</h2>
<p>The government would later go onto other agendas in 1992 and 1993 (social, cultural, industrial relations, regional, Indigenous, refugees, disabilities, aged care etc.) once it had released its major economic paper. But the difficult years of 1992-93 show that while the main agendas of the government’s daily business sheet remained economic matters, grand politics began to triumph over the dismally-inclined economic agendas. </p>
<p>The One Nation economic statement did not itself turn around the economic malaise or improve the immediate political standing of the government, but it did provide a circuit-breaker to allow Paul Keating to boast he still had economic credentials while he dismantled “more slowly” John Hewson’s Fightback! strategy over the remaining months of 1992-93.</p><img src="https://counter.theconversation.com/content/70343/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Wanna has received funding from the ARC for academic research on Australian governance.</span></em></p>Blindsided by John Hewson’s policy platform, the Keating government scrambled to come up with solutions to the “recession we had to have”.John Wanna, Sir John Bunting Chair of Public Administration, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/699922016-12-31T20:32:45Z2016-12-31T20:32:45ZCabinet papers 1992-93: Australia moves to make Her Majesty obsolete<figure><img src="https://images.theconversation.com/files/150246/original/image-20161215-2529-1ntc3um.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Paul Keating put the idea of a new flag, shorn of any traces of the Union Jack, on the political agenda.</span> <span class="attribution"><span class="source">AAP/David Moir</span></span></figcaption></figure><p>By 1992 Australia was in its deepest economic crisis since the 1930s. Unemployment was 11%; business failure was widespread. The political stocks of the Keating Labor government were low. A reinvigorated opposition under Liberal leader John Hewson seemed set for a return to government.</p>
<p>In December 1991, no-one could have predicted that Paul Keating would spend so much energy during the first year of his prime ministership on national identity issues. </p>
<p>By the end of 1992, Keating had done more than anyone to place on the political agenda issues of this kind that had been either dead or dormant for years: most significantly, a republic and a new flag, the latter shorn of any traces of the Union Jack.</p>
<p>But that wasn’t all. The 50th anniversary of the <a href="http://www.ww2australia.gov.au/japadvance/singapore.html">fall of Singapore</a> became an occasion for recalling Britain’s supposed abandonment of Australia, which Keating saw as aided and abetted by local lickspittles. </p>
<p>He earned from a British tabloid the sobriquet <a href="http://www.smh.com.au/lifestyle/how-not-to-greet-the-queen-famous-gaffes-20111017-1lt08.html">“The Lizard of Oz”</a> when he had touched the Queen on the back while guiding her at an event during her February tour. And he used a visit to Port Moresby for Anzac Day to <a href="http://www.keating.org.au/shop/item/anzac-day---25-april-1992">bolster the claims of Kokoda</a> to a central place in Australian war memory and historical consciousness. </p>
<p>In a dramatic gesture, Keating kissed the ground where young Australians had fought and died defending their country in 1942. Who could have envisaged such flamboyant symbolic politics during the years when Keating made his reputation as a reforming treasurer?</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=510&fit=crop&dpr=1 754w, https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=510&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/150409/original/image-20161216-26071-e0x0vn.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=510&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Paul Keating made international headlines when he touched the Queen on the back during a visit to Australia.</span>
<span class="attribution"><span class="source">Screenshot/Sydney Morning Herald</span></span>
</figcaption>
</figure>
<h2>A new oath</h2>
<p>This year’s cabinet papers release by the National Archives of Australia reveals that it was in the middle of dealing with these matters that the government elevated the oath of allegiance recited by new Australian citizens to national prominence. </p>
<p>Throughout the 1980s, the idea of increasing the value attached to citizenship had taken hold. It was an attitude that figured in the <a href="http://www.multiculturalaustralia.edu.au/doc/fitzgerald_2.pdf">federal government review</a> chaired by Stephen FitzGerald in 1988, which had suggested a revival of the citizenship ceremony and a more meaningful oath. It even proposed a text, a very long one.</p>
<p>In June 1992 Keating had publicly complained that the existing oath, which required citizens to swear allegiance to Queen Elizabeth and her heirs and successors, needed to be made more “Australian”. It should, he said, state that:</p>
<blockquote>
<p>… Australia stands for – including liberty, tolerance, social justice – those very beliefs which underpin multiculturalism.</p>
</blockquote>
<p>Keating did not yet specify whether a revised text would exclude mention of the Queen, but there had been efforts along these lines in 1973 and 1983, foundering each time on the rocks of Senate opposition.</p>
<p>When cabinet considered a submission on the matter from the justice minister, Michael Tate, in August 1992, it was clear the government was now committed – as Keating’s speechwriter Don Watson would later put it – to a pledge that “made God optional and the Queen obsolete”. </p>
<p>The existing oath “can be seen as sterile in its brevity and anachronistic in its reference to a sovereign”, the cabinet paper declared. </p>
<p>Although Tate said he had considered the possibility of leaving open the option of swearing allegiance to the Queen, he:</p>
<blockquote>
<p>… rejected this as there is no justification for some new citizens to make a commitment to Australia which is different in content from others.</p>
</blockquote>
<p>Tate and his advisers had travelled to Taree, seeking the assistance of a man many increasingly regarded as Australia’s leading poet, Les Murray. A republican who regarded the existing monarchical pledge as “hopelessly grovelling” and wanted something fit for recital by “a decent grown-up person”, Murray advised that Australia should have a “pledge”, not an “oath”.</p>
<p>Jesus had forbidden oaths, he explained, which ruled out the Christians, and they were irrelevant to non-believers. That left just a few minorities – such as Jews and Muslims – for whom the idea made any sense at all.</p>
<p>A devout Catholic who is today a priest, Tate accepted the “pledge” idea, but he had concerns about the text Murray suggested:</p>
<blockquote>
<p>(Under God) from this time forward</p>
<p>I am part of the Australian people.</p>
<p>I share their democracy and freedom.</p>
<p>I obey their laws.</p>
<p>I will never despise their customs or their faith</p>
<p>and I expect Australia to be loyal to me.</p>
</blockquote>
<p>That one was never going to get past the politicians and public servants, especially the last line with its disturbing suggestion of a barely minted “sovereign citizen” imposing obligations on the state.</p>
<p>There were other suggestions floated in cabinet. The Department of Prime Minister and Cabinet thought a reference to “territory” or “land” might be included.</p>
<p>But the spare text on which cabinet eventually agreed is still with us:</p>
<blockquote>
<p>From this time forward, (under God) I pledge my loyalty to Australia and its people, whose democratic beliefs I share, whose rights and liberties I respect, and whose laws I will uphold and obey. </p>
</blockquote>
<p>In 2013, Murray <a href="http://www.smh.com.au/national/affirmation-criticised-by-the-poet-who-wrote-it-20130124-2d9nf.html">called it</a>:</p>
<blockquote>
<p>… heavy and pompous and sort of farting with sincerity.</p>
</blockquote>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=394&fit=crop&dpr=1 600w, https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=394&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=394&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=495&fit=crop&dpr=1 754w, https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=495&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/150410/original/image-20161216-26062-xnm0v0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=495&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Poet Les Murray was called on to draft Australia’s revised citizenship pledge.</span>
<span class="attribution"><span class="source">AAP/Alan Porritt</span></span>
</figcaption>
</figure>
<h2>Passed despite concerted opposition</h2>
<p>It was not, however, a lack of poetry that worried opponents in 1992. </p>
<p>Tate’s submission predicted, accurately enough, that the proposal would attract:</p>
<blockquote>
<p>… strong criticism from those groups who may see such proposals as reflecting a tendency towards republicanism. </p>
</blockquote>
<p>Returned and Services League leaders condemned the move, as did some Liberal State leaders. Bronwyn Bishop, then a Liberal senator, <a href="http://www.crispinhull.com.au/1992/12/12/1992_12_december_leader20/">described it</a> as “a tasteless and opportunistic way to dance on the grave of the dead marriage of the Prince and Princess of Wales” – the drawing of a long bow that itself seemed a little tasteless. </p>
<p>Hewson, meanwhile, complained that the pledge would do nothing for the unemployed; the Coalition opposed the proposal when it came before parliament. And after the new pledge was introduced in 1994, some municipal councillors initially refused to perform citizenship ceremonies. They said they feared being charged with treason.</p>
<p>The controversy soon receded, as usually happens soon after changes of this kind are made to national ritual or symbolism. But Tate was being unduly ambitious when he predicted that the pledge:</p>
<blockquote>
<p>… will appeal to Australian children and teenagers who will learn it off by heart. </p>
</blockquote>
<p>That hasn’t quite come to pass, but affirmation ceremonies are held at which existing citizens can recite the pledge and receive a certificate for their efforts.</p>
<p>But here’s a modest proposal – that we revert to Murray’s more poetic, democratic and meaningful words. Perhaps then the pledge would, as the 1992 cabinet submission envisaged, help “make the concept of citizenship mean more to both native born and migrant citizens”.</p><img src="https://counter.theconversation.com/content/69992/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Bongiorno does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>By the end of 1992, Paul Keating had done more than anyone to place on the political agenda issues of national identity that had been either dead or dormant for years.Frank Bongiorno, Professor of History, ANU College of Arts and Social Sciences, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/578822016-05-08T20:06:43Z2016-05-08T20:06:43ZLessons from history in how to run a good election campaign – or how to avoid a really bad one<figure><img src="https://images.theconversation.com/files/121460/original/image-20160506-5690-1bsuyyc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Bill Shorten and Malcolm Turnbull will be working hard to prevent the kind of errors and complacency that have tripped up leaders before them.</span> <span class="attribution"><span class="source">AAP/Mick Tsikas</span></span></figcaption></figure><p>Federal elections are fecund sources of lessons for the political class. </p>
<p>From 1993 they learned not to make a big target of yourself as an opposition party. The Coalition’s <a href="http://australianpolitics.com/1993/01/15/liberal-party-video-fightback.html">Fightback!</a> gave Paul Keating hundreds of pages to work with. It helped produce an iconic moment when Liberal leader John Hewson was unable to explain to television interviewer Mike Willesee how the proposed Goods and Services Tax would affect the price of a birthday cake. Hewson never recovered.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/a11EGkZFcXk?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Mike Willesee’s famous ‘birthday cake interview’ with John Hewson.</span></figcaption>
</figure>
<p>Far better, political operatives concluded, to slip into office quietly, promising little (except the hardy perennial of tax cuts). John Howard won office with a small-target strategy in 1996, vowing to make Australians <a href="http://australianpolitics.com/1996/02/19/john-howard-comfortable-and-relaxed-enjoying-dylan.html">“comfortable and relaxed”</a>. </p>
<p>In 2007 Kevin Rudd presented himself as Howard-lite, a fiscal conservative who <a href="http://www.theage.com.au/news/federal-election-2007-news/rudd-to-move-forward/2007/11/24/1195753382042.html">advised Labor supporters</a> on election night to go home and have a strong cup of tea and some Iced VoVos. </p>
<p>Tony Abbott also made a small target of the Coalition in 2013. This had disastrous consequences when voters came to realise, in the wake of the 2014 budget, that he intended changes wildly out of line with the impression created earlier.</p>
<p>Our politics have for the last generation been haunted – some might say impoverished – by the “small-target” lesson of 1993. It has arguably acted as a disincentive to hard policy work in opposition, to the bold articulation of big ideas by political parties, and to frankness in campaigns. Detail is the enemy. </p>
<p>Labor under Bill Shorten has given the impression that it would like to do things a little differently, by revealing some policy detail <a href="https://theconversation.com/is-big-policy-a-big-political-risk-for-bill-shorten-and-labor-54814">well in advance</a> of the campaign.</p>
<p>Malcolm Turnbull, too, has tried to promote policy debate since taking the leadership in September, but has grown more cautious in the face of attacks by Labor and the right wing of his own party, as well as disappointing polling.</p>
<p>The weeks ahead will show to what extent the lessons of 1993 have been learned. But there are clearly some on the Labor side who seem willing to flirt with the idea that if you make yourself too small a target, you will lack a mandate to do anything once in office. This is the hard lesson of Abbott’s prime ministership.</p>
<p>Other election campaigns have also acted as tutorials in how to do, or not to do, federal politics in Australia. The <a href="https://en.wikipedia.org/wiki/Australian_federal_election,_1984">1984 campaign</a> seems to have particular relevance at present. It was a very long campaign – about as long as the one on which we have just embarked. An early election called by Prime Minister Bob Hawke, it was intended to take advantage of his stellar personal popularity and economic recovery. </p>
<p>Most commentators expected a crushing Labor victory. But the swing from the government was almost 2%. Its majority shrank from 25 to 16 seats in a House of Representatives that had been enlarged from 125 to 148.</p>
<p>A post-election internal Labor review identified the unusual length of the campaign as one of the reasons for this disappointing result. The enduring lesson learned from 1984 was: don’t do long election campaigns. </p>
<p>Whether this is bad news for Turnbull is not entirely clear. It is true that the polls suggest he is in a notably weaker position than Hawke was in 1984; that surely points to vulnerability. </p>
<p>But Labor’s 1984 postmortem speculated that Hawke’s extraordinary ascendancy might actually have worked against the government: that expectations of a landslide led some to clip Hawke’s wings, to discourage a Labor government from getting too far ahead of itself.</p>
<p>There were, in any case, other reasons why Labor did poorly in 1984. Hawke was off his game – one of his daughters had a drug addiction and he was suffering a painful eye injury due to a cricketing accident. And Labor’s campaign, even by its own account, lacked vision, purpose and direction, with opposition leader Andrew Peacock able to set the agenda. </p>
<p>No doubt Shorten would like this comparison, with its hint of opportunity for a smart and dogged alternative leader.</p>
<p>Some commentators have seen parallels between this year and the 2004 election, when Labor’s Mark Latham won a series of tactical victories before the election only to lose the election itself. But the comparison seems forced. Latham began to falter well before the campaign (notably over Labor’s policy in Iraq) while actually performing creditably during most of the campaign itself. </p>
<p>The wheels fell off in an obvious way only at the end, especially over forestry policy in Tasmania and in another of those iconic election moments: an <a href="http://www.news.com.au/entertainment/tv/mark-lathams-famous-overly-physical-hand-shake-with-john-howard-revisited/news-story/ae926777c1a669d8a6d145c15f2e8da0">aggressive handshake</a> with Howard on the campaign trail. </p>
<p>While it is easy enough to predict what kinds of scare campaigns will be launched against Shorten – over union power, carbon taxes and negative gearing – it cannot be taken for granted that these will have an effect comparable to Howard’s <a href="http://www.abc.net.au/news/2004-11-17/howard-latham-clash-over-interest-rates/587030">over interest rates</a> against Latham.</p>
<p>The truth is that while the lessons taken out of particular campaigns can have enduring effects, each presents a unique pattern of opportunities and dangers for the participants. Right now, in the aftermath of a budget, Turnbull will be hoping for a scenario like in 1987, when Labor ran a successful campaign in the last double-dissolution election on the back of Keating’s well-received May economic statement.</p>
<p>However, Turnbull will not get the kind of assistance that Hawke’s 1987 effort received from Joh Bjelke-Petersen’s crazed effort to become prime minister – unless, of course, there’s an unstable Labor premier lurking out there with cunningly disguised federal ambitions.</p><img src="https://counter.theconversation.com/content/57882/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Frank Bongiorno does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The recent history of elections in Australia is a varied one, with some spectacular crashes and own goals along the way.Frank Bongiorno, Associate Professor of History, ANU College of Arts and Social Sciences, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/371082015-02-12T03:24:51Z2015-02-12T03:24:51ZUniversities are (slowly) feeling their way forward on divestment<figure><img src="https://images.theconversation.com/files/71734/original/image-20150211-25700-11mukql.jpg?ixlib=rb-1.1.0&rect=2%2C2%2C797%2C594&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The University of Sydney is hoping to chart a path to climate-safe investment.</span> <span class="attribution"><span class="source">University of Sydney</span></span></figcaption></figure><p>Another Australian university has outlined plans to reduce the exposure of its investments to climate change, and is taking a contrasting approach to the Australian National University’s <a href="https://theconversation.com/anus-resources-blacklist-social-activism-or-the-shape-of-things-to-come-32803">high-profile divestment plan</a> announced in October. The University of Sydney on Monday <a href="http://sydney.edu.au/news/84.html?newscategoryid=9&newsstoryid=14575">released plans</a> to reduce the carbon footprint of its investment portfolio by 20% over three years.</p>
<p>That will see the university reduce its carbon footprint to <a href="http://sydney.edu.au/news/84.html?newscategoryid=9&newsstoryid=14576">20% below the average</a> of Australian, international and emerging markets, rather than divesting from a particular sector such as the coal industry. </p>
<p>The stated rationale for this is that “divesting entirely from all companies with an interest in fossil fuels could result in divesting from companies that are also committed to building renewable energy sources. In addition, there are many companies that do not produce fossil fuels who are nonetheless heavy emitters”. This is an approach which the London-based <a href="http://aodproject.net/">Asset Owners Disclosure Project</a> (AODP) acknowledges. </p>
<h2>Universities exposed to climate risk</h2>
<p>The <a href="http://aodproject.net/images/docs/AODP_GUI.pdf">Global University Index</a> recently released by the AODP ranks and rates 278 universities on their efforts to disclose their investments exposed to climate risk. </p>
<p>The <a href="http://aodproject.net/">Project’s</a> objective is to protect members’ retirement savings from the risks posed by climate change. It does this by seeking improvements in disclosure and raising the bar on what is considered best practice. The AODP claims to examine “how asset
owners are preparing for the repricing of climate-exposed assets and the physical impacts on climate change” (see page 20 <a href="http://aodproject.net/images/docs/AODP_GUI.pdf">here</a>). </p>
<p>This is indeed a serious issue. </p>
<p>I struggled somewhat to work out what was done by the AODP, how it was done and what the various ratings mean. All but the top five universities were rated D (meaning that their climate change risk management is “poor”, see page 5 <a href="http://aodproject.net/images/docs/AODP_GUI.pdf">here</a>) or X (no information disclosed by any means). </p>
<p>The top 12 places were taken by US universities, with Charles Sturt being the top Australian University, ranked 13th. The University of Sydney, which was ranked before it unveiled its current plans, is ranked equal-28th and scores a D rating. </p>
<p>A Vice Chancellor (who provided a comment on the basis that it would be anonymous) from a British university with a strong reputation for innovation and commitment to sustainability, but which received an X rating in the index, told me: </p>
<blockquote>
<p>this seems a rather pointless league table, when most universities aren’t in it and of those that are almost all are harangued for not meeting even the basic criteria for the table. In reality while I guess universities recognise that climate change will have investment implications, and indeed may be looking at their investment portfolio in this context, as we are, the logical link from climate change via investments to future pension funding (which is what this organisation is focused on) is fairly obscure in the strategic priorities for most universities.</p>
</blockquote>
<h2>Time for action</h2>
<p>Of course, the issue is broader than universities, although this does not get universities off the hook. </p>
<p><a href="http://www.accaglobal.com/content/dam/acca/global/PDF-technical/sustainability-reporting/tech-tp-ca.pdf">Research</a> published by the Association of Chartered Certified Accountants and the Carbon Tracker Initiative has found that companies don’t typically disclose information on climate change risk that impacts on investors. </p>
<p>Simon O'Connor, CEO of the <a href="http://www.australiansustainability.com.au/home/">Responsible Investment Association Australasia</a> told me:</p>
<blockquote>
<p>Much of the discussion around investors managing climate risk has focused narrowly on the largest of Australia’s super funds. But beyond the large super funds, there are pools of capital across the economy that need to be considering the risks from a changing climate, and subsequent shifts in policy and technologies. </p>
<p>Universities are a case in point, as are a long list of public sector pools of capital - federal, state and territory- as well as funds managed by charities, corporates and individuals. In reality, too few investors are taking this issue seriously enough, as highlighted by the responses to the AODP universities survey.</p>
</blockquote>
<p>There is no doubt that universities, like many other sectors, ought to be doing more. In the case of universities, it is ultimately likely to be students and staff who push for the leadership required to drive the significant change which will inevitably come. </p>
<p>If the AODP is to be a driver of change, I would suggest that it needs to state exactly what it is that universities should do and disclose, and to consider rewarding public commitments that are an important, not to mention difficult, step along the way. </p>
<p>The challenges are abundantly clear from the <a href="https://theconversation.com/divestment-backlash-shows-companies-need-to-improve-sustainability-reporting-33079">criticisms</a> directed at the Australian National University, including from Prime Minister Tony Abbott, over its divestment decision. The University of Sydney’s approach cleverly sidesteps a backlash from the coal industry and its backers.</p>
<p>Last year, the University of Glasgow became the <a href="http://www.theguardian.com/environment/2014/oct/08/glasgow-becomes-first-university-in-europe-to-divest-from-fossil-fuels">first in Europe</a> to divest from fossil fuels. This is not an easy decision for an ancient institution (founded in 1451) with a range of stakeholders who will inevitably have diverse views. </p>
<p>But the University of Glasgow’s commitment is not reflected in its D rating (poor) by the AODP. Points were awarded points for “actual performance”, not commitments – even, apparently, where these commitments have been made public (a form of disclosure, I would argue). </p>
<p>Given the slow pace of change in integrating sustainability and climate risk in universities, it seems unlikely that Sydney University was influenced by its AODP rating. Its approach is a good example to follow. Continued slowness by universities leaves them exposed to reputation risk as well as climate risk.</p><img src="https://counter.theconversation.com/content/37108/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carol A Adams is a former Professor of Accounting and current visiting professor at the University of Glasgow and a part time professor at Monash University.</span></em></p>Another Australian university has outlined plans to reduce the exposure of its investments to climate change, and is taking a contrasting approach to the Australian National University’s high-profile divestment…Carol A Adams, Professor, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/82892012-07-19T20:08:05Z2012-07-19T20:08:05ZJohn Hewson: tax reform doesn’t just mean lowering taxes<figure><img src="https://images.theconversation.com/files/13145/original/j858zvf4-1342667516.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Former politician and economist John Hewson speaks to ANU's Crawford School's Bruce Chapman and Daniel Connell.</span> </figcaption></figure><p>Welcome to the latest in our <a href="https://theconversation.com/topics/in-conversation">In Conversation series</a>, between former politician and economist Dr John Hewson, Australian National University (ANU) Crawford School Director of Policy Impact Professor Bruce Chapman and Research Fellow, Dr Daniel Connell.</p>
<p>Leader of the Liberal Party of Australia between 1990 and 1994, Hewson has run an investment banking business and served on the several boards, including General Security Australia Insurance Brokers, Osteoporosis Australia and the Arthritis Research Taskforce.</p>
<p>He has <a href="http://www.theaustralian.com.au/higher-education/appointments/john-hewson-a-professorial-fellow/story-e6frgckf-1226428334581">been appointed</a> an Honorary Professorial Fellow by the Australian National University.</p>
<p>The three men met fresh from this week’s ANU tax policy forum which re-examined the recommendations of the Ken Henry tax review - but tax is just one of the topics this broad-ranging discussion touches on.</p>
<p>Hewson discusses his new activist work with the <a href="http://aodproject.net/">Asset Owners Disclosure Project</a>, which rates the world’s top retirement and superannuation funds on how they are managing the investment risks associated with climate change.</p>
<p>He also revisits some of his more famous battles with his then-adversary, Paul Keating, while commenting on:</p>
<ul>
<li><p>The rise of slogan-based politics.
“There’s not a detailed medium-term policy discussion at all… In fact, our tax policies consist of "we will lower taxes”, “we will stop the boats”. We have now very slogan-like policies, no serious debate at all.“</p></li>
<li><p>The core ideas of the Liberal party.
"To me, it’s as Howard used to say, the Liberal party is a broad church, we have to keep adding pews on both sides of the room… The truth was he took the party a long way to the right, he narrowed its focus enormously under the guise of building a broad church.”</p></li>
<li><p>Pragmatism versus ideology in politics.
“There are some identifiable differences [between the parties] on a couple of key issues, but they’re not ideologically based, they are pragmatically based. It’s pragmatism that has taken over the contest of ideas.”</p></li>
<li><p>Pricing carbon.
“It was the reason why Rudd lost the leadership, it was the reason why Turnbull lost the leadership. Then the community support for the whole process of pricing carbon was lost – it was easily re-tagged as a "tax” not a “price”, so we’ve lost a lot of ground.“</p></li>
<li><p>The European crisis.
"Germans are being asked to work longer and harder in some dingy manufacturing plant in the back of nowhere so that some Greek bureaucrat can retire early on an excessive pension.”</p></li>
<li><p>Gina Rinehart’s bid for the Fairfax board and the debate over its editorial charter. “It doesn’t bother me too much if she thinks she wants to determine editorial policy. She’s a businesswoman. She might be prepared to throw her money away for power reasons, that won’t last either. But as a business proposition, unless her product, the news service, unless they have a viable market it isn’t going to survive.”</p></li>
<li><p>Editorial independence. “Me thinks some of these journalists do protest too much about editorial independence and journalistic independence. We forget that Rupert Murdoch controls about 70% of the print media in this country – no one seems to be too worried about getting his board to sign off on a charter of editorial independence.”</p></li>
</ul>
<figure>
<iframe src="https://player.vimeo.com/video/45948717" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
</figure>
<p></p><p><a href="http://vimeo.com/45948717">Watch the full interview with John Hewson here.</a></p><p></p>
<hr>
<p><strong>Daniel Connell</strong>: Welcome to The Conversation, today we’re talking to John Hewson. John is previously leader of the Liberal party and also has been involved in the economics profession for a very long time. He is currently a professorial fellow at the Crawford school. </p>
<p>The Crawford school is also the place where Professor Bruce Chapman and myself, Daniel Connell, reside and we’re going to be putting some questions to you for the next half an hour. </p>
<p>John, I understand you’ve been discussing tax reform [at the Crawford School’s tax forum]. All my life people have been discussing tax reform, and you’ve had an embattled experience dealing with tax reform. </p>
<p>Just looking at what we heard [at the forum], what was the most poignant reflection that you came away with from this discussion?</p>
<p><strong>John Hewson</strong>: One of the key things is the Henry tax review, which the Crawford discussion was based on, is really just a document to set pathways for reform over the next several decades rather than be a tax package that is to be delivered tomorrow, and which the government will be under pressure to deliver. </p>
<p>I think it was misinterpreted at the time it was brought down. There was an expectation in the electorate and in the media that he was delivering a tax package and this was something the government would be looking to implement – there were some 130 odd recommendations. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&rect=31%2C127%2C3644%2C2459&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/13109/original/gqpnrbz2-1342587812.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">John Hewson discusses the issue of tax reform with Ken Henry, architect of the Henry Tax review.</span>
<span class="attribution"><span class="source">AAP Image/Alan Porritt</span></span>
</figcaption>
</figure>
<p>But then he got criticised and the government only picked up two or three of those recommendations, but that wasn’t the purpose – it was an opportunity for Ken Henry [this week] to emphasise that point and to engage in discussion around some of his recommendations from a number of perspectives.</p>
<p>You made the point about tax reform always being on the agenda, and it has been. It’s been the victim of a lot of political abuse over the years. I think most people in the electorate have expectations of tax reforms to equal lower tax. </p>
<p>Those are very simplistic and probably unrealistic expectations. If anything, from now, looking at the ageing of the population and other demographic trends, the need for infrastructure, we probably have to look at a world where taxes have to go up rather than down. </p>
<p>But that isn’t to say that you can’t restructure the tax system and the transfer system in that context. That was really where the discussion was going today.</p>
<p><strong>Daniel Connell</strong>: Thinking about the sort of discussion that’s been going on in the United States in the last 12 months, how do you sell tax reform?</p>
<p><strong>John Hewson</strong>: Well, as I say, there’s a simplistic expectation in the electorate that it’s about lowering tax, and that their votes can be bought by delivering that. The fact is today we’re not going to get a sensible debate on tax in most countries dominated by a 24-hour media cycle and governments trying to score short-term points. </p>
<p>There’s not a detailed medium-term policy discussion at all. It’s very difficult to raise an issue like tax, which usually has winners and losers. It becomes very difficult for it to be debated. </p>
<p>In fact, [in Australia] our tax policies consist of “we will lower taxes”, “we will stop the boats”. We have now very slogan-like policies, not serious debate at all.</p>
<p><strong>Bruce Chapman</strong>: When it comes to tax reform and other economic policy, I’ve always found it very difficult because the identification of the losers and the winners is pretty clear. And the more explicit that is, the clearer it’s going to be that the losers will make a lot of noise and do a lot of complaining. </p>
<p>And I guess I’d like you to comment on how you actually can manage reform in that context. And I’m also interested in whether or not it is possible to have major reforms in economic policy without the two major parties disagreeing. </p>
<p>One example where I think there was a consensus and agreement - where we had some of our most important reforms - was the tariff restructuring in the 1980s. And there is no doubt that the Liberal party contributed to those reforms by not opposing them. But I can’t think of too many other examples…</p>
<figure>
<iframe src="https://player.vimeo.com/video/45950254" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
</figure>
<p></p><p></p><p></p>
<p><strong>John Hewson</strong>: It is important in all policy to identify the stage of analysis in designing the implementation to look at the potential winners and losers, and understand the impact of the policy, and understand that, in most cases, you’re trying to change behaviour. </p>
<p>And realistically, you need to give people time to readjust their affairs, in the case of tax for example. So you always have to have in mind not just whether or not they should be compensated but whether you should give them time or there should be some adjustment process. Policy is often lacking, particularly in that second part.</p>
<p>I guess there’s been a tendency in our debate in Australia, as emphasised in the debate [at the Crawford school], to overcompensate: “the impact is going to be X, so we’ll give you two X”. That’s unnecessary, but it comes from the fact that the hard yards in this is usually at the education stage: to tell people, this is the problem, this is why it’s important that we fix it, these are the solutions to the problem, and this is why we’re going to do this. </p>
<p>But rarely do we see that. We saw the carbon tax announced, but no explanation and no link to the science. Six months later the details were revealed. In the meantime, Tony Abbott had a daily free kick at the government being able to make all sorts of accusations about what would happen.</p>
<p>The mining tax was announced. It was changed, and then changed again in the run-up to an election campaign. No education, no assessment of the differences within the mining industry – big mines to small mines, rich mines to not-so-rich mines, early-stage mines and late stage mines. There was no discussion of the details. </p>
<p>I think that education is important as part of the analysis.</p>
<p>You do want to know as a government who is going to win and who is going to lose, and in some cases you want people to lose. I mean, the cash economy was attacked by the GST. Because for the first time, it wasn’t that you stopped people paying cash, but when they spent it you actually got some tax for the first time. </p>
<p>And you should be proud of the fact that that’s what you were about in terms of doing it – it’s a powerful argument in an electoral sense, but that’s just an example.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=788&fit=crop&dpr=1 600w, https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=788&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=788&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=991&fit=crop&dpr=1 754w, https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=991&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/13147/original/hpcq39xh-1342669578.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=991&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Paul Keating: begrudging about interest rates, says Hewson.</span>
</figcaption>
</figure>
<p>In terms of the more broad policy debate, and whether you need bipartisan support; you do need bipartisan support. But the nature of the debate has changed. My time as leader I tried to be objective and say, “this is the problem, this is what we need to do”. </p>
<p>For example, I challenged Keating in the late 1980s, early 1990s to put interest rates up. Because if he didn’t put up he’d have to put them up even higher in the end. And of course, he wouldn’t put them up and then he put them up begrudgingly, and then that little bit more, and then they went to those obscene levels in the early 90s. Then we had the recession he said we had to have. I would have argued we never really did have to have it. [<strong>EDITORS NOTE:</strong> Monetary policy is set by the RBA board; however, Dr Hewson has clarified his comments relate to the widespread belief that Keating wielded substantial influence at board level over monetary settings at the time. Read more <a href="http://www.rba.gov.au/publications/bulletin/1996/sep/pdf/bu-0996-4.pdf">here</a>.]</p>
<p>In terms of the protection debate, we did give it support throughout the Hawke/Keating years. It started in the Fraser years, in terms of reducing tariff protection. When I became leader I went for zero tariff protection. Keating then, while still supporting lower tariffs, thought 5% or 10% was a better number than Captain Zero. </p>
<p>But the point was that the debate did run, and those sort of reforms – along with deregulating the financial system and moving away from centralised wage determination or workplace focused discussion – those key sorts of reforms underwrote a tremendous productivity boom in the 1990s, which was the result of, more or less, bi-partisan support (with a bit of point-scoring around the edge!).</p>
<p>Today, the debate is “No.” Abbott is a master of the negative, he says no and he means no, and he will deliver no. So it’s very hard for the government to do very much at all.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/13146/original/7cyrqqxc-1342667577.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Tony Abbott is the master of the negative.</span>
<span class="attribution"><span class="source">AAP</span></span>
</figcaption>
</figure>
<p><strong>Bruce Chapman</strong>: Do you think it’s about personalities or have the times changed?</p>
<p><strong>John Hewson</strong>: It’s both. The fact that it’s a 24-hour media game, you know you’ve got to win today and tomorrow you can move on to another issue. You forgot what you said the day before and the media won’t remember it – that’s the way it operates.</p>
<p>It’s a hopeless environment in which to operate. The focus becomes on that little media grab – what you say at the press conference, or the 10 second television headline. So we’ve had policy debates reduced to dot points or slogans. </p>
<p>This is the policy: stop the boats, cut the tax, scrap the mining tax. There’s no real consideration as to how that will be done. The debate has just become so ridiculously simplified and it’s an insult to the intelligence of a lot of average Australians. They’re reflecting that with tremendous apathy about the political process generally, and the poor standing of politicians.</p>
<p><strong>Daniel Connell</strong>: Do you think we can lead off in a different way with the introduction of major new ideas? Do you think a situation where leaders of the political parties, who are having to be out front discussing the most controversial propositions, do you think that’s preferable? </p>
<p>Or do you think we could find some sort of stalking horse, like the Crawford school public policy process, for example, where people can essentially get ideas out, get them thoroughly explored, get the most controversial elements sort of shock-worn, do you think that’s a more effective way to go?</p>
<p><strong>John Hewson</strong>: The simple answer is that there’s been virtually no leadership on a lot of these key issues. Indeed even when there has been a policy initiative of significance, like putting a price on carbon, it was the outcome of a deal with [the Greens party] rather than a particular internal policy of the ALP. </p>
<p>It was announced in February, as I said before, yet no detail was announced until July. Where the government should have taken the opportunity to say, “here’s the science, this is what global warming is going to do, this is why it’s important that we move, the science is in, the options for dealing with it include putting a price on carbon, this is how we’re going to do it, this is the most cost-effective way of doing it…” </p>
<p>But we didn’t have that debate. The idea was out there, but there was absolutely no development of that idea, no leadership on that issue and I think that’s a problem.</p>
<p>There have been periods in our political history – say, the Thatcher years are a good example, and perhaps the Reagan era in the United States – where think tanks, university think tanks, independent think tanks maybe, were used just to “fly kites”, to float an idea. Get some analysis and get the debate going and ultimately it could be picked up by the government, but a lot of that influence has waned. </p>
<p>One of the things the Crawford school is now doing is rekindling its activity in the public policy debate, and contributing to that public policy debate in a way that governments, if they’re smart, and oppositions, if they’re smart, will see it and use it and get people to float ideas, or hold conferences, or develop research, which is where we should be. </p>
<p>I’m a great believer in politics being about a contest of ideas, as much as just scoring points on the other side.</p>
<figure>
<iframe src="https://player.vimeo.com/video/45951182" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
</figure>
<p></p><p></p>
<p><strong>Daniel Connell</strong>: In terms of major ideas in Australian politics, just this weekend we’ve seen the Labor party in NSW trying to argue very strongly that they’ve got a different core philosophy from what the Greens have got. There are obviously all sorts of strategic issues for them there. </p>
<p>Just coming to the Liberal party, what would you see as the core idea, or the core group of ideas, that are the essence of modern Liberalism?</p>
<p><strong>John Hewson</strong>: Just to make one specific point about your initial comment, and that is that there isn’t really that much difference between the parties. There are some identifiable differences on a couple of key issues, but they’re not ideologically based, they are pragmatically based. </p>
<p>It’s pragmatism that has taken over the contest of ideas. I still believe that the Liberal tradition is a focus on free enterprise and a focus on the supremacy of the individual, not asking a government what it can do for you, but asking what you can do for the government. </p>
<p>There’s none of that. It’s still there but it’s driven more by pragmatism, as I say, than ideology. To me, it’s as Howard used to say, the Liberal party is a broad church, we have to keep adding pews on both sides of the room because we’re getting more and more people joining. </p>
<p>The truth was he took the party a long way to the right, he narrowed its focus enormously under the guise of building a broad church.</p>
<p>My concept of Liberalism, is really small “l” liberalism in a lot of social policy areas, while being somewhat hard-headed, hardlined as a rational economist on the other. One of the reasons I think I became leader was I drew from both dimensions of the party – I had the economic rationalists, conservatives on one side saying, “yes, we’ve got to solve these economic problems and deal with them properly”. </p>
<p>On the other side there are a host of social issues that we should also have a position on as well, a small “l” liberal position on some of those. Although I’m a trained economist, I believe we are building a society, not just an economy, and when we lose sight of that we tend to drift one way or the other. </p>
<p>And I’ve seen the party drift, under Howard, to the right. In the [Crawford School] tax debate, one of the speakers drew particular attention to the focus of some of Howard’s policies on family-based tax rather than individual-based tax, and family-based benefits rather than individual-based benefits. It does twist the system in a particular direction. </p>
<p>It was achieved, in a sense, by stealth at the time because people didn’t notice one decision after another. And I’m not sure that Howard was conscious personally of that drift, but the consequence of it in its aggregate was a shift to the right.</p>
<figure>
<iframe src="https://player.vimeo.com/video/45951487" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
</figure>
<p></p><p></p>
<p><strong>Bruce Chapman</strong>: I know you’ve been very interested in carbon pricing issues for quite a while, could you update us on where you’re at in terms of not just the policy debate, but where the economics is and internationally?</p>
<p><strong>John Hewson</strong>: Where do you start with global warming? To me, I’m not a climate scientist, you guys aren’t scientists, how do we know we’ve even got a problem? The only reason we know we’ve got a problem is that a group of scientists – about 95% of peer group-assessed climate scientists – actually agreed on something. </p>
<p>This is very atypical because the natural process of science is to disagree, you contest each other’s hypotheses, you contest each other’s theories, you contest each other’s research. Yet here they came together to say, “this is a problem, this is an urgent problem”. </p>
<p>They might disagree about how big and how quickly we’re getting to the tipping point, and they may disagree on some of the solutions, but the fact that they agreed that there was a problem is the only reason people like us know about it. So I’m prepared to give the science the benefit of the doubt. </p>
<p>Having said that, then I look for the most cost-effective way of dealing with the issue. As an economist, I naturally think of putting a price a carbon, charging people for polluting the atmosphere. It’s a significant externality, which needs to be dealt with. It’s a cost-production they should have taken account of, whichever way you want to describe it. </p>
<p>But that’s not to say that there’s not a host of other initiatives, and some of them are by mandation. I mean we’ve seen the banning of incandescent light bulbs. We’ve seen various specifications for biofuels, mandation of biofuels. We have soil-carbon programs, soil farming initiatives which are beyond the carbon price, but that are helped and accelerated by the carbon price.</p>
<p>The thing that frustrates me most is that we had a constituency for change when Rudd came to power. He was going to ratify [<a href="http://unfccc.int/kyoto_protocol/items/2830.php/">the Kyoto protocol</a>] and get on and deal with the pricing of carbon. Howard, under his government, had moved towards an emission-trading system. So the ground was set, the constituency was there. </p>
<p>Rudd came with a very strict agenda – green papers and Garnaut reports, white papers and legislation. [He said], “if I don’t get what I want I’m going to have a double dissolution and jam it through”. It went right through to that point and when push came to shove he didn’t do it.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/13150/original/2m4kqtd4-1342670589.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A member of the ‘We Say Yes’ group supporting carbon pricing, Hewson believes community support has been lost.</span>
</figcaption>
</figure>
<p>In early 2010, we lost the opportunity to actually make the changes. Whatever you thought of the particulars of that system, at the time it was a step in the right direction. </p>
<p>Having then said that, it just became a matter of political contest. It was the reason why Rudd lost the leadership, it was the reason why Turnbull lost the leadership. Then the community support for the whole process of pricing carbon was lost – it was easily re-tagged as a “tax” not a “price”, so we’ve lost a lot of ground. </p>
<p>In that context, I’ve got involved more recently with a thing called the <a href="http://aodproject.net/">Asset Owners Disclosure project</a>. What we’re doing is fairly audacious: we’re going to rate the top 1,000 pension and superannuation funds, private endowment funds, in the world. That’s funds of about 5 billion under management or more. They control about $US60 trillion worth of funds.</p>
<p>Right now about 50-55% of those funds are invested in carbon-intensive industries. Only about 2% are invested in alternative technologies, energy efficiency industries, and so on.</p>
<p>Our aim is to do two things: to survey them, to try to force disclosure as to how they’re responding to managing the risk of climate change and how that’s reflecting in their investment patterns and how much they’re investing in carbon intensive industries, with a view to getting them to think about increasing the percentage from 2. If it goes to around 5-6%, that would be enough in terms of available investment funds, and it is investment that is going to drive the responses to climate change. </p>
<p>You can create those investment funds going into those alternative technologies, into alternative energy sources, into cleaning up coal and that technology. You don’t have to specify, if you can just get that investment shift you’re going to drive the response to climate change. </p>
<p>And it can be a private sector-based response, irrespective of what governments are out there doing – you know, scoring points on each other about carbon pricing and so on – and I think that’s quite important.</p>
<p>We’re working at two levels: one is top-down surveying the asset owners, we’re going to rate them and give them AAA sort of standing in terms of markets and in terms of their transparency and investment. But also we’re working from the bottom up, where we’re using the social media targeting 18-35 year olds, getting them in on a letter writing campaign. Because when asset owners get letters of complaint or query from their beneficiaries as to how they’re responding to climate risk, or how much investment they have in this, that or the other thing. Then I think as essentially trustees of these people’s money they have to respond, and I think you can probably embarrass them from the top-down and the bottom-up to make the sort of investment shifts that we think are required. </p>
<p>So it’s a bit audacious, a bit in their face, but on the other hand I think it will work. And I’ve had some experience with rating the top 100 companies in Australia in terms of corporate social responsibility, and some 30-40% participated in that by answering surveys and so on. </p>
<p>Once the list was out and they were graded relative to [one company] against another, they responded pretty quickly and they started putting on their letterheads “AAA rating” or whatever. So I think it will work.</p>
<p><strong>Daniel Connell</strong>: Talking about fund managers, it brings to mind the Global Financial Crisis, and the struggle that political leaders have had since 2008 to come up with a coherent response, at least that’s the way it looks from the outside. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=892&fit=crop&dpr=1 600w, https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=892&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=892&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1121&fit=crop&dpr=1 754w, https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1121&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/13157/original/t95zn5p5-1342673016.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1121&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The US is still struggling for a coherent response to the GFC.</span>
</figcaption>
</figure>
<p>What’s your rating of the way in which they’ve responded to the issue of the fund management that was involved in that crisis, and continues to be involved?</p>
<p><strong>John Hewson</strong>: Going back to the basis of the crisis: sub-prime loans. To get a sub-prime loan in the United States you had to be a financial delinquent – you had to have missed interest payments or been declared bankrupt or defaulted on your loan. And then in those circumstances, you got a bank to lend you as much as 125% of the value of a house at an artificially initial low interest rate with no recourse lending – you could hand back the keys if you couldn’t service the loan. </p>
<p>That was just a punt, nation-wide, on house prices continuing to go up, and they mostly had since the Great Depression. But when they didn’t, those loans started to be called into check. Then you had various levels of securitisation, dead instruments built on top of them – you know, securitised mortgage instruments, collateralised debt obligations and so on. </p>
<p>It was a house of cards that the authorities must have known about. I mean I was writing about my local council’s exposure in the middle of 2007. So they did know about it, but for some reason they turned a blind eye to what was an international quest for yield. And they got caught short, and didn’t realise just how interconnected the financial system was. </p>
<p>Some institutions were saved because they were too big to fail, and others weren’t. When they let <a href="http://en.wikipedia.org/wiki/Lehman_Brothers">Lehman Brothers</a> go they didn’t realise how significant an impact that would be and that house of debt-based cards came crashing down.</p>
<p>Now the political response was pretty mixed at best. One of President Barack Obama’s biggest problems is that he seems to have bailed out Wall Street at the expense of High Street and most of the industrial base of the United States. Not too dissimilar in other parts of Europe, for example, where the debt pressures are very real. </p>
<p>And you’ve had endless sort of attempts to coordinate central bank responses, regulatory responses, G20s, G8s – we haven’t moved too far in actually coming up with a sensible regulatory structure that you could overlay and say this isn’t going to happen again, or we’re going to reduce the chances of this happening again.</p>
<p>We’re still seeing elements of the crisis come to the fore. I think most of what I described of the debt mountain has been documented. But the activities of some of the bigger players, like Goldman Sachs, some of the British banks, world banks in setting, uh, <a href="https://theconversation.com/gloom-of-the-system-barclays-fallout-highlights-structural-flaws-in-financial-regulation-8116">influencing LIBOR</a>, artificially keeping LIBOR low and trading against it, making money, that’s all still coming out. </p>
<p>Some of that’s catching the authorities by surprise, so we’ve still a long way to go, is the simple answer to your question. There’s been recognition of the nature of the problem, and most of the sources of the problem, but nobody has actually taken it through to, “Oh, should we separate all investment banking from commercial banking, or should we put some sort of debt limits? Change capital adequacy requirements yet again?” – that hasn’t happened.</p>
<p><strong>Bruce Chapman</strong>: You made some comments related to this in [the tax policy forum] about Europe because we’ve now got a double-whammy - what’s going in in Europe’s economy is very frightening, I think. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=507&fit=crop&dpr=1 754w, https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=507&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/13155/original/gq6vjtpv-1342672823.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=507&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Europe’s common currency requires a level of political and economic unity that can’t be realistically achieved.</span>
</figcaption>
</figure>
<p>I’ve always been interested in why they did it in the first place – that is, a common currency – because one of the very few things that markets do, without any government involvement at all,(and which are unambiguously healthy), is set an exchange rate that reflects your terms of trade and your relative power in the world trading situation. Once you’ve got a shared currency, that’s gone.</p>
<p>Why would you do that in the first place unless it was driven entirely by the politics of getting Europe unified, potentially because of the concerns about Germany?</p>
<p><strong>John Hewson</strong>: It’s interesting, back in my International Monetary Fund (IMF) days through the early 70s, with the collapse of the <a href="http://en.wikipedia.org/wiki/Bretton_Woods_system">Bretton Woods system</a>, we used to look at issues about whether you could realistically expect a common market in Europe. That seemed to make eminent sense – the bigger the market, the better, the freer, the trade the better. The theory and practice was unequivocal in terms of the benefits of that. </p>
<p>But I could never see a common currency. It requires a level of political unity and policy coordination which I never imagined you’d get in Europe. And we haven’t had it in Europe and that’s why – it’s under so much pressure. The common market has been a reasonable success, and the European economy is the biggest economy in the world still.</p>
<p>But the common currency was at fault at the beginning because even with the countries you started with - there wasn’t that level of political unity and policy coordination.</p>
<p>One monetary policy - essentially one fiscal policy - and then they expanded it to 17 countries, bringing in a lot of marginal players, some of whom lied to get in there in terms of their economic performance. It was a prescription for disaster.</p>
<p>Now how you un-bungle that is very, very difficult because right now you have the Germans sitting there as the lenders of last resort. They complain on the one hand, but they have benefited enormously because they had an artifically low exchange rate relative to what the market would have been. So they’d done very well, thank you very much.</p>
<p>They’ve been able to integrate the two Germanys and a whole host of other things quite effectively.</p>
<p>But the pressure in Europe today, I would summarise, is that Germans are being asked to work longer and harder in some dingy manufacturing plant in the back of nowhere so that some Greek bureaucrat can retire early on an excessive pension. </p>
<p>You’ve got real issues here, cultural issues in Greece, Portugal, Spain compared to the Germans on the other. And you’ve got real economic pressure.</p>
<p>One way to get Australians to think about that is that we we have a common currency. And there’s a very significant difference between the performance and productivity of Tasmania versus Western Australia. But we can sustain the common currency because we can effectively have one monetary policy, one fiscal policy and we have a level of political unity – federation with all its faults. And so it works.</p>
<p>Europe would like to see that, but it can’t get there.</p>
<figure>
<iframe src="https://player.vimeo.com/video/45951988" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
</figure>
<p></p><p></p>
<p><strong>Daniel Connell</strong>: One final question, coming back to Australia. What we’ve been talking about, or central to it, has been quality of information. Something that most people have an opinion about is Gina Rinehart and her relationship, shall we call it that, to the Fairfax board – what’s your feeling?</p>
<p><strong>John Hewson</strong>: I think back to the Fairfax family days when they owned Fairfax, and they determined editorial policy and I didn’t hear the journalists squealing because they went off and did their job and everyone knew the editorial policy was largely determined by the family. </p>
<p>It doesn’t bother me too much if she thinks she wants to determine editorial policy. She’s a businesswoman. She might be prepared to throw her money away for power reasons, that won’t last either. But as a business proposition, unless her product, the news service, unless they have a viable market it isn’t going to survive.</p>
<p>So I think there are natural constraints on how far she can go. If she identifies herself as writing editorial policy in the interests of the mining industry, it won’t be a very popular newspaper any longer. And people will move on.</p>
<p>Me thinks some of these journalists do protest too much about editorial independence and journalistic independence. We forget that Rupert Murdoch controls about 70% of the print media in this country – no one seems to be too worried about getting his board to sign off on a charter of editorial independence.</p>
<p>So I think it’s been blown out of proportion. Probably because the government’s standing with the media is not great and anyway they can look at actually insisting – I mean imagine a charter of editorial independence to be signed off by all newspapers, it won’t be worth the paper it’s written on. </p>
<p>My final comment would be: in the 1980s, it was very trendy to have a business code of ethics in the banking community. Goldman Sachs was a market leader in this respect. I remember reading it when they brought it out, and I thought, “Christ, that’s everything they don’t do.”</p>
<p><strong>Daniel Connell</strong>: And didn’t do.</p>
<p><strong>John Hewson</strong>: And didn’t do. And as you’ve seen, they’re now paying a substantial price for that. </p>
<p><strong>Daniel Connell</strong>: Thank you John for taking part.</p>
<p><em>Many thanks to the Australian National University media unit, which kindly allowed The Conversation to record this interview in their studio.</em></p><img src="https://counter.theconversation.com/content/8289/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bruce Chapman was an economic policy adviser to prime minister Paul Keating (1994-1996).</span></em></p><p class="fine-print"><em><span>Daniel Connell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Welcome to the latest in our In Conversation series, between former politician and economist Dr John Hewson, Australian National University (ANU) Crawford School Director of Policy Impact Professor Bruce…Daniel Connell, Research Fellow, Crawford School, Australian National UniversityBruce Chapman, Director, Policy Impact, Crawford School of Economics and Government, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.