The Book of Paul
Lessons in Leadership and Paul Keating
Greatness may be calling: Bob Hawke and Paul Keating in 1990. © Peter Morris/Fairfax Syndication
In July this year, Paul Keating appeared on the ABC’s Lateline program to discuss politics and the media. The following month, Julia Gillard went on the show. In September, it was John Howard’s turn to face Tony Jones. The revelation in these three interviews was the response of viewers. The footage of Keating on the ABC’s website received four times as many clicks as that of the last Liberal prime minister or the present Labor prime minister.
Comparisons between leaders can be unfair to the incumbent because the one with the job has yet to receive the clemency of political nostalgia. But there was something in the interviewer’s voice that betrayed what many of my colleagues who cover federal politics think at the moment: We miss Keating.
Jones signed off by telling Keating he wished they had more time, because there was “as usual, much more to talk about”. The wrap-up for Howard was almost as gushing: “Always fascinating to talk to you. We’re out of time, sad to say.” The prime minister, by contrast, was farewelled with a backhander: “Julia Gillard, I’ve learnt not to pursue those questions without getting the same answer over and over and over again, so, we’ll leave you there. We thank you so much for taking the time to join us tonight.” At the time of writing, Tony Abbott had yet to break his Lateline duck for 2011. The Opposition leader appears determined to go through the political year without completing a single sentence, and facing Jones – one of the best in the business – would risk breaking that vow.
The longing for Keating on the Labor side, and for Howard on the Liberal, is understandable. Gillard could do with a little of Keating’s daring; Abbott needs a lot more of Howard’s reliability. Australia has never seen two leaders less able to articulate their respective parties’ values. Gillard mocked Labor’s bleeding hearts with her calculated assault on the High Court after it struck down the government’s asylum-seeker swap with Malaysia. Abbott delivered the equivalent insult to the Liberals’ reform-minded old guard when he rubbished economists. The party of compassion and internationalism poses as the neighbourhood bully while the party of the market reverts to its pre-deregulation inferiority complex, when it didn’t trust industry to make money so covered its back with taxpayer funds.
Australia is in an unusual position as the last rich society standing. Our unemployment rate is almost half the developed-world average, and public debt is about one-tenth the size as a share of gross domestic product. The United States, Japan and Great Britain – nations we have variously looked up to, been terrorised by or relied upon – would kill for what we have achieved and for the opportunity that the Asian century offers us. Yet we share their lack of confidence in the future, although our problems are minuscule by comparison. Think of the shenanigans on Wall Street, and in the US Congress; the bungled response to the Japanese tsunami that almost sent the Fukushima nuclear reactor into meltdown; the sovereign debt crisis in Europe; and the riots without apparent motive in Great Britain. Is Gillard’s carbon tax, which gives back to lower- and middle-income households more than it takes through higher prices for energy, really on the same scale? If you follow Abbott, and subscribe to his people’s revolt, the carbon tax is the worst thing that ever happened to a nation.
The constructive question to ask now is: What type of leader is capable of snapping our political system out of its remorseless trudge toward mediocrity?
The answer is in the ABC’s numbers: Paul Keating. By this I mean the prime minister, not the treasurer, even though the consensus of his political peers – Labor and Liberal – is that Keating was a better treasurer than prime minister. Keating the treasurer was a politician of his era; a sharply dressed economist with a poet’s ability to make the business cycle sound like a symphony. Keating the prime minister was at least a decade ahead of his time. He imagined Australia as a great nation, but the aftermath of the early-1990s recession was not the moment for that conversation. Now, after 20 years of uninterrupted economic growth, and as the twentieth anniversary of Keating’s successful leadership coup against Bob Hawke on 19 December 1991 approaches, the debate is long overdue.
Earlier this year, the Economist devoted its cover story and 16 pages to the Australian miracle. “Imagine a country of about 25 million people, democratic, tolerant, welcoming to immigrants, socially harmonious, politically stable and economically successful,” the lead article began. “Australia could become a sort of California – and perhaps a still more successful version of the Golden State.”
Indeed we could. I suspect the national apprehension of the past few years is drawn, in part, from the recognition that greatness may just be calling us. But this generates an uncomfortable thought: we’d have to work for it. And we don’t really feel like paying for the big transactions, from securing the water supply before the next drought to giving every Australian child the backstop of an Asian second language. So, leader and public are at a stand-off; the public blame the leader for failing to inspire, while the leader wishes the public would stop whingeing.
The traditional path to rehabilitation after an election defeat had been the humanitarian endeavour. Gough Whitlam was Australia’s ambassador to UNESCO and then chaired the council of the National Gallery of Australia. Malcolm Fraser established CARE Australia. Jeff Kennett, the former Victorian Liberal premier, helped set up the national depression institute, beyondblue. Paul Keating headed straight into the bunker of the legacy wars, lobbing grenades at the prime ministers on either side of him on history’s page: Bob Hawke and John Howard.
Commentator and cult hero, Keating has maintained his raging presence in the public mind through selective media appearances. Hawke and Howard are playing a similar game, but they have eight election wins between them to prop up their egos. Keating’s voice is the more compelling because it comes with a tinge of insecurity. Keating’s battles with Hawke and Howard are about authorship. With Hawke, it is over who owns the copyright for the Australian economic miracle. With Howard, it is about Australia’s future.
Keating privately jokes that it would take a psychiatrist to unravel the relationship between Hawke and himself. Their very public feud in government almost sucked the air out of the nation in the late 1980s and early ’90s. Last July, as Julia Gillard was enjoying her brief electoral honeymoon before Kevin Rudd, or someone close to him, began leaking against her, Keating exploded into print against Hawke:
I have declined repeated requests to “get it all down and set the record straight”. And not only have I not written a book, as prime minister I did not respond to the book you yourself wrote after you left office; the so-called history of the Hawke government. In it, as you know, you treated me shamefully while attempting to diminish my motivations and larger schematic […] But you are not happy to leave it. You want to retrace the ground for a second time in a major book, only this time a book written by your wife.
Keating concluded with a tantalising threat:
[…] if I get around to writing a book, and I might, I will be telling the truth; the whole truth. And that truth will record the great structural changes that occurred during our years and my own as prime minister, but it will also record without favour, how lucky you were to have me drive the government during your down years, leaving you with the credit for much of the success.
Keating’s new book, After Words (Allen & Unwin, 640pp; $59.99) – his second, following Engagement: Australia Faces the Asia–Pacific (2000) – is not on the Hawke–Keating years. It is a collection of speeches Keating has delivered since he left office in 1996. Take note, Don Watson; Keating is saying ‘I can write’.
One of the speeches extracted in the book is Keating’s launch of my 2006 book The Longest Decade: “Would I write a better book? Well, of course I would. I write better than George and I know more.” I had listed his achievements, in order of importance, as the end of centralised wage fixation; universal superannuation; engagement with Asia; native title and competition reform:
[George] did not mention in this list, one of the greatest reforms, and that was the setting into place and the maintaining of, during the recession, the tariff cuts announced in early 1991. Announcing a policy is one thing; sticking with one under stress is entirely another […] Nor did he mention in his five examples, the establishment of the APEC leaders’ meeting […] To these I could have added, the development of Working Nation, the first case-managed, work-obliged job-subsidised program of any kind in the western world, to deal with long-term unemployment. Or reform of the electricity market creating an interstate grid down the east coast of Australia for the very first time. Or the first standard gauge railway across the continent, closing the gap between Adelaide and Melbourne.
In the five years since, I’d shuffle my list slightly. Super would go ahead of the change to wages policy, because of the role our national savings pool played in getting us through the GFC. I’d place native title equal third with engagement with Asia, but with asterisks against both. Reconciliation at home and greater respect for Australia in the region are ideas that endure but, unlike the first two, have yet to be fused into the nation’s institutional habits.
The reflex conservative critique against Keating is that he was too soft as prime minister; he was wasting his time with native title, and with Asia, because Indigenous Australians and the despots in the region should be more like us, not the other way around. This sentiment is never expressed in direct language, because it jars. The conservative case is made another way, by reference to the dark-skinned asylum seekers who travel from one side of Asia to the other before jumping on a boat to Australia. ‘Stop the boats, end the waste’ is a variation on the theme. Australia, so the theory goes, commands respect from a position of strength, not through appeasement.
Howard also imagined an Australian greatness, but without the same sense of danger that was implied by the Keating project. He hastened slowly because he needed to carry old Australia with him. This created a tension that Howard could never resolve. The policies he pursued were radical while the message he gave to the people was that change was being resisted. But the colour and the content of the immigration program shifted so dramatically on Howard’s watch that he undermined the very thing he thought he was nurturing.
Howard was, like Keating, a ‘big Australia’ prime minister. A late convert, perhaps, but the numbers speak for themselves. The overseas-born population increased by 1 million in Howard’s final two terms, according to the Australian Bureau of Statistics. China and India supplied 300,000 new Australians between them. Add the previous Asian wave from Vietnam, the Philippines, Malaysia and Hong Kong and a remarkable thing was happening under Howard – the British were being relegated to second place on the immigrant ladder. In 1996, the United Kingdom accounted for 6.4% of the total population, while the six Asian nations mentioned above were almost half that figure. By 2008, the latest year for detailed breakdowns, the British-born had slipped to 5.4% while the Asian-born had risen to 5.2%. Last year the lines almost certainly crossed in favour of the Asians.
The catch is that support for the regular immigration program began falling in Howard’s final term; that is, after he secured the backdoor by stopping the boats. The proportion of voters who thought the intake had gone ‘too far’ jumped from 30% to 40% between the 2004 and 2007 elections. The figure jumped again to 53% in 2010. Keating sought to change the face of Australia, in part, by explicitly rejecting the old parochial values of nudge-and-wink xenophobia. Howard had twice as long in office to prove the alternate case, that Australia could modernise without letting go of the past. The Howard method turned out to be the more divisive. By favouring stealth over direct persuasion, Howard satisfied no one. New Australia kicked him out of his seat of Bennelong, while old Australia wondered what had happened to the nation.
The volatility in federal politics over the past few years feels unusual, but it is not unique. Australia had six prime ministers in nine years between the late 1960s and mid 1970s. The fourth PM in that sequence, Billy McMahon, became the shorthand for national failure. Book-ending that period were the rise of Japan, which had replaced Great Britain as our top export market in 1967, and the introduction of colour television to Australia in 1975. The US was on its knees and revolution was in the air in the developing world.
Swap China for Japan, digital technology for colour television, and the global financial crisis for stagflation, and the forces at play conform to a familiar pattern. We have a mining boom; a disruptive new media format that is broadcasting the world’s troubles into our homes; and a breakdown in the capitalist order.
Over the past seven years, there have been three prime ministers and seven Opposition leaders, with the likelihood of even more to come. Which one of them is McMahon? All of them, in fact. John Howard ceded the dignity of his office with his final year spendathon; Kevin Rudd lost it in 2010 and Julia Gillard has lacked authority from about the second week of her elevation. The issue of climate change has clearly had a hand in the defenestration. But there would have been another topic if the globe wasn’t warming. This is an anxious age. In political terms that translates to an anti-incumbent cycle in which voters keep switching the channel until they find a program that speaks to them. As each leader falls, the media gets a little nuttier in its hysterical search for a new messiah.
And yet, modern Australia is nothing like the frightened nation of 40 years ago. The community has passed virtually every character test of this phase of globalisation. We missed the Asian financial crisis of 1997–98, the tech wreck of 2000–01 and the Great Recession of 2008–09. Nevertheless, we can’t shake the feeling that our luck will run out. The future is, in one respect, out of our hands: the global economy still marches to the beat of the American drum and, until the US finds its rhythm, Australians will worry with some justification that our growth party is about to end.
So wouldn’t an Australian leader be better off biting their tongue on the policy front at the moment? That is, wouldn’t the Keating method make more sense in a period of relative political calm, when voters are more likely to be persuaded? Tony Abbott has been pursuing office on a promise of stability. His campaign against the carbon and mining taxes borrows from Paul Keating’s anti-GST manual of 1993. The Opposition leader revels in citing Keating’s advice that “if you don’t understand it, don’t vote for it and if you do understand it, you’d never vote for it”. Abbott is not pretending to be Keating; he is just reminding Labor that both sides have engaged in scare campaigns to pinch an advantage in the polls.
The Keating legacy cuts both ways. His voice can still inspire, but the example of the Fightback! election haunts the system to this day. The hair-splitting negativity of opposing reform has been the default setting for all alternative prime ministers since Kim Beazley in 1998.
Keating’s sweetest victory of all in 1993 marks the last occasion that Labor secured a primary vote of 44.9% at the ballot box. Even his losing vote in 1996 of 38.8% seems like another world ago. In opposition, Labor disowned the Hawke–Keating economic reforms because it saw political profit in arousing the victims of deregulation. John Howard then found a way to crack Labor’s moral compass by forcing it to accept his border protection policies. Keating has felt isolated in retirement, in part, because Labor let go of his vision.
In an interview with me in 2005, Keating made the prescient observation that Labor could never win the asylum-seeker debate if it tried to outflank Howard from the right. Keating said that Australia would pay a price for “Tampa, for the detention policy, for the whole thing”:
[The Indonesians] hold us in contempt for these policies, but it is a quiet contempt, and so do, by the way, many European states. Like a lot of bad things, they don’t come costless. When a prime minister gives up the role of healer and binder and gets into the role of segmentation and dark-heartedness, then communities lose the guidance that a good government should give them.
Keating is in some ways a traditionalist. He gives the impression that he would prefer an honourable landslide defeat on principle to just falling short on a compromise. When the first fractures of the new millennium were apparent after the Tampa affair, Keating used a speech in honour of wartime Prime Minister John Curtin to consider the electoral implications. He saw four basic divisions, which cut across traditional party lines:
The first group – the Hansonites at the extreme end – want to isolate both the economy and the society from the outside world […]
The second group – the anti-globalisation demonstrators and elements of the Democrats and the Greens – want to internationalise social issues but nationalise the economy […]
A third group believes the reverse … They are all in favour of internationalising the economy, giving free rein to the free market, but they are damned if they think foreigners and international bodies like the UN should have anything to say about social policies here in Australia.
A fourth group – and it’s obviously the one to which I belong – believes that for a country like Australia, with a small population tucked away in a corner of the Asia–Pacific, economic openness, social inclusiveness and engagement with the outside world is the only way in which we can hope to prosper.
Labor in the post-Keating years had taken the second and fourth groups for granted and sought power by persuading the first group that it was a safer alternative to the Coalition. Keating would have preferred a direct pitch to the third group on the economic policy, while keeping the second and fourth groups on side on social as well as economic policy. A variation of this majority did, in fact, emerge for Labor in 2007 but it splintered again in 2010.
It should not be forgotten that Keating was a polarising figure in office. Labor’s blue-collar base was grumpy in his final term, and is one explanation for why the party’s primary vote has been more often below 40% than above it since. But there are two ways of looking at this. Keating, and Hawke, wanted to build a new base of upwardly mobile workers, taken directly from the Liberal small-business community. They were meant to cover for the defection of the “blue collars with red necks”, which was Keating’s colourful term for the so-called Howard battlers. But Labor in opposition abandoned the deregulation cause in favour of the voter in the middle, which in Keating’s construct is closer to the Hansonite in group one than the cosmopolitan in group four. This sanctioned the drift of Labor’s tertiary-educated base to the Greens. Modern Labor conducts itself as if compassion is just another piece on the electoral chessboard to be sacrificed in defence of the queen.
But the evidence is that compassion yields more votes for Labor than faux displays of toughness. Remember how obvious Keating’s reconciliation agenda seemed just three years ago, when Kevin Rudd delivered the apology to the Stolen Generations?
Keating the prime minister never had the luxury of a positive approval rating. That is precisely why his approach makes sense today, when the public cuts down its politicians at the first sign of artifice. Keating doesn’t draw his beliefs from party polling, and would rather argue his corner than change the topic. He would never play the vulnerable off against the mainstream. Keating the prime minister pushed into areas of social policy that even Hawke had thought untouchable. To Keating, reconciliation and the republic were more than worth the fight, even in the aftermath of a deep recession, because Labor governments never have the luxury of waiting for public opinion to settle. The leader Keating most resembled in the Lodge was Gough Whitlam.
Keating’s most interesting speech remains the one he gave without a script, and supposedly off the record, to a room full of journalists at the National Press Club in December 1990:
We’ve got to the stage where everyone thinks politicians are not worth two bob, where everyone disparages us every time we get an increase in salary. But politicians change the world; politics and politicians are about leadership. If you look at some of the great countries or the great societies, like the United States, our problem is we’ve never had one leader like they’ve had. The United States had three great leaders: Washington, Lincoln and Roosevelt. At key times in their history that leadership pushed them on to become the great country that it is.
The language of national greatness does not yet exist in the Australian lexicon because we have never wanted our leaders to succumb to hubris. But the old playbook of the humble leader, paying tribute to the battlers by broadcasting their prejudices back to them, is useless today. Julia Gillard and Tony Abbott grated at the last election precisely because they aimed for that part of the electoral map that lacked belief: the disengaged.
Here’s the first paradox of Keating: no one on the Labor side today actually shares his reinforcing beliefs in markets and in multiculturalism. They might be for one or the other, but not both. Gillard – despite her annoying habit of announcing regional solutions to the asylum-seeker issue before she’s picked up the phone, or checked with the lawyers that the plan is legal – understands how a budget is put together. She is an economic rationalist by comparison to most of her colleagues. Rudd isn’t, but he was for a ‘big Australia’. Rudd has a bit of Keating and Whitlam in him, but as prime minister the conservative Queenslander exercised a veto over his cosmopolitan self. Despite his attempts to argue the moral high ground on asylum seekers, it was Rudd who blinked when the boats came back in 2009.
Keating and Hawke were the only Labor prime ministers to pursue an open economy and society in tandem, and were rewarded with five consecutive election wins between them. The present generation of Labor politicians needs reminding that Keating gave his Redfern speech before the 1993 election, when unemployment was approaching 11%. Hawke shed tears for the Chinese students at Tiananmen Square before the 1990 election, when interest rates were at 17%. Rudd abandoned his emissions trading scheme when he was leading in the polls and the economy was recovering.
The Liberal Party has yet to produce a prime minister who thinks Australia’s future is with competition and people. Robert Menzies was for protection and White Australia. Malcolm Fraser retained the first hang-up but discarded the second when he accepted the Vietnamese boatpeople. John Howard took credit for the Hawke–Keating economic reforms but sought to close the debate on national identity. At each point in their history, the conservatives have been frightened about something, and that fear has held Australia back. Our system delivered change in spite of this, because it could enlist Labor governments in crisis. But the government of Rudd and Gillard fell for the conservative trap of thinking on behalf of voters who wanted to stop things.
Here’s the second paradox: the only figure in the parliament who shares Keating’s worldview, and has the confidence to express it, is Malcolm Turnbull. But he didn’t join the post-Keating Labor Party. He judged that the Liberal Party after Howard would be more likely to satisfy his ambition. But Turnbull fell as Opposition leader at the end of 2009 because he wanted to have it both ways – by calling himself a Liberal while pushing for Labor’s ETS. Turnbull wasn’t political enough; Rudd was too political. Both men are seeking redemption, but their parties are reluctant to reset the political clock. But a reset is necessary on some level to correct for the chaos of the present.
Howard’s Australia – the meanness of spirit and the excesses of middle-class welfare – left us craving something more meaningful. But no leader since on either side has managed to weave a plausible narrative to make us feel better about ourselves, while also quietly lifting a dollar or two out of our pockets to invest on behalf of our children. It would take a leader like Keating – someone who can see both sides of the budget, who has a heart and who isn’t cowed by an opponent’s calculated negativity – to carry Australians beyond the insecurities of the present day.