The Australian Moment

The Australian Moment (2012) by George Megalogenis is a book that recaps the fate of Australia from the early 1970s until 2012. In 360 pages it Megalogenis explains why he believes Australia is now doing so well. It’s a shorter book that Paul Kelly’s epic books and is well worth reading. Megalogenis attempts to provide an economic and political analysis of why Australia now looks to be performing so well.

The book starts by looking at Australia towards the end of the Liberal period of office that started in 1949. Megalogenis derides the Menzies and later coalition governments and states that it essentially did nothing, which is largely true except for over doubling the population, massively increasing tertiary education, presiding over the construction of the Snowy Mountains Scheme, the construction of Canberra, being involved in two wars and presiding over superb growth rates and approximately 3% unemployment. Some might suspect all that was something. It’s a needless cheap shot that shows where Megalogenis stands. Some years ago in a journalism forum at Melbourne University Megalogenis stated that he thought that journalists were with a large majority centre-left types. In the book on a number of occasions he confirms it is certainly where he stands. It is certainly arguable that the rigid, regulated economic system of the post war period could have been far more flexible and may have been better but it’s also hard to ignore that during the period the West and Japan saw fantastic levels of economic growth. The system worked very well.

The Oil Shock, Stagflation and the collapse of the Bretton Woods agreement led to the end of the post war boom. But at the time it didn’t look that way. The idea that high inflation and a reduction in economic growth might be the future didn’t occur. The new ALP PM Gough Whitlam took little interest in economics and made speeches about how the dealing with more leisure was going to be a major issue. Instead his government was consumed by dealing with inflation and deficits. The book makes clear that Whitlam’s ministers were not up to the job of running the government and were at times fairly comical. While their final removal involved trickery the behaviour of the government during the extraordinary Khemlani Affair was quite something.

Whitlam’s government took a considerable step towards the liberalisation that was to come by reducing tariffs unilaterally by 25%. The description of this in the book provides interesting detail. It was, apparently, largely designed to be a step to reduce inflation rather than the beginning of deregulation.

Megalogenis also extensively explores immigration in the book which is clearly a matter close to his heart. In the section on Whitlam he does some impressive mental gymnastics to avoid the conclusion that Whitlam’s treatment of the Vietnamese was heartless and possibly driven by racism. There is also a reference to ‘Balts’ in the section that possibly deserves some explanation given the odd step by Whitlam of recognising the annexation of the Baltic Republics into the Soviet Union. Had it been a Liberal PM no doubt the verdict on the refugee issue would have been harsher.

The section on Fraser is good and Megalogenis goes into the problems within the Fraser government due to its recognition of the failures of the post WWII economic setup but the failure to take steps to do much about it. The massive increases in wages of around 13% per year in 1980-81 to 1982-83 and subsequent jump in unemployment to 10% represented the very end of the post WWII system in Australia. Interestingly, the then head of the ACTU, Bob Hawke, had been involved in these substantial pay rises as he had been for similar jumps in the early 1970s resulting in Keating saying that Hawke had almost broken the Australian economy twice before he came into office.

The remarkable Hawke government is then given extensive treatment. The major reforms of embracing deregulation in the floating of the dollar is studied and the accounts where Keating claims credit for everything against those of everyone else are amusing. It’s almost a wonder Keating didn’t claim to have inspired Kylie Minogue during the 1980s. But the combination of Keating and Hawke did indeed work very well. The former ACTU boss also managed to avoid explosive wages growth that would lead to inflation from happening. The current account issue and Keating’s famous ‘Banana Republic’ comment are well written up.

The Australian changes of the 1980s are contrasted with those in the UK & US. In the US inflation was contained earlier than in Australia where it wasn’t until the late 1980s and the very high interest rates brought inflation under control. There was some truth, as Keating insensitively said about ‘the recession we had to have’ . The experience could, with hindsight, have been better managed.

Megalogenis exhibits a sizable crush on Paul Keating which balloons to amusing levels when he described the 1993 election as the last serious election as the ‘It was the last argument that the media didn’t try to trivialise by asking each leader if they knew the price of milk’ . During the 1994 election campaign the ultimate price of milk trip up question was asked when Hewson was asked what the GST on a cake would be. The 1993 election was interesting, but because a cunning politician managed to sacrifice pretty much everything, including his own credibility on the budget, and torpedo a clever but politically utterly inept leader primarily by running a successful scare campaign.

Megalogenis has an interesting chapter on housing where he argues that Australia has too much of its wealth in housing. It’s certainly a plausible argument. What’s less clear is why Australian housing has risen so much over the past 40 years. Megalogenis, as is his tendency, suggests that it has been driven by Federal Government policy and in particular the first home owner grants and the ability to write off interest payments off tax on investment properties. Megalogenis didn’t do his research here. According to the Reserve Bank of Australia, most countries have similar taxation laws for housing.

The section of the Howard government is weak and biased. Megalogenis can hardly bring himself to give Howard and Costello any credit for bringing in a GST that was opposed by the ALP and for balancing the budget for over a decade. Indeed, on the budget Megalogenis states “In the 21 years between 1987-88 & 2007-2008, Labor and the coalition delivered twelve surplus budgets between them, and another two were in balance.” Almost all the surpluses were in the coalition years.

Megalogenis has a strange section on his odd Generation W idea, and it’s really quite funny, Generation W. The W stands for ‘Why on earth didn’t the editors shred this?’ The W actually stands for Generation ‘Wogs and Women’ for people born after 1964. No end date is given although apparently growing up in the 1970s was required so perhaps it ends it in 1974 or so. Megalogenis wisely pans the labels Generation X and Y before launching into his own strange generational adventure. This idea of his, which he launched in his previous book The Longest Decade becomes more stretched and silly here.

When Megalogenis returns to an ALP government he then credits their brilliance as being the reason Australia avoided the GFC. The fact that years of budget deficits allowed the government movement and that Australian exports to China suffered little detriment are given little regard.

The book would have been better if more figures and more graphs showing growth, current account, budget deficits global comparisons had been included. The book doesn’t provide as good or as detailed a political view of the events as Paul Kelly’s books but it is considerably shorter. The other weakness with the book is the repeated use of overly simplistic causal relationships between events. For example housing price bubbles are caused by more than just two government policies. Megalogenis wants to turn history into a neat tale which unfortunately it isn’t. But the book is worthwhile reading in order to learn more about Australia’s recent political history.

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