by John Howard
Latham paid a high price for his misguided policy five days later. Bass and Braddon both swung heavily into the Liberal camp. There was a swing against Dick Adams, but as his margin was bigger, he survived. His outspoken public stance against Latham’s policy also helped. The ramifications were felt in other timber electorates on the mainland, such as MacMillan in Victoria and Eden-Monaro in New South Wales. Even in urban areas where the Labor policy was meant to have significant appeal, Latham’s announcement had come too late in the campaign to appear convincing to swingers interested in the environment. It had proved much harder to wear a green sleeve with a blue collar than Mark Latham ever imagined.
This remarkable component of the 2004 campaign had reminded me yet again that when faced with a difficult decision, always trust your instincts. I am so glad that as I stared at that waterfall I allowed my instincts to win out.
The Coalition won the 2004 election with an increased majority of 24 seats, but, before then, it had been a rollercoaster time for the Liberal and National parties. The unexpected election of Mark Latham at the end of 2003 had unsettled the Government. Late in that year, Simon Crean had been tapped on the shoulder and became the first leader of the ALP, since World War II, to be denied the chance of leading his party to an election. Crean had never been convincing, and his demise was no surprise to me. Most of us in the Coalition had thought that the ALP would go with the safe option of bringing back Kim Beazley, but Latham won in an upset by just two votes.
Latham started well; the Canberra press gallery liked him. They had had almost eight years of me and that was more than enough for a lot of them. They were prepared to give him a good run, overlooking many of his shortcomings. For example, when he delayed the US free trade agreement with the totally fallacious claim that it would make pharmaceuticals dearer in Australia, that was lauded as good politics, not irresponsibly playing with the national interest, which it was.
Latham was openly hostile to George Bush. He had called him one of the most dangerous and incompetent presidents ever. President Bush had had a perfectly cordial meeting with Simon Crean when he had come to Canberra in October 2003, but it was difficult to imagine that occurring with Latham. After Bush had delivered his speech to the October joint sitting, I took him around the floor of the house, and introduced him to as many MPs as possible, including, of course, Labor ones. They were mostly friendly, some more than others. I made a point of introducing him to Latham. Bush enjoyed the encounter; Latham averted his eyes. The American President won that body language encounter hands down.
Unpredictable, Latham sometimes wrong-footed the Government. He built a convincing narrative of the boy who had grown up in a housing commission estate in Green Valley, in the western suburbs of Sydney, losing his father at an early age, going on to university and caring for his widowed mother. He made great play of the 22-year age gap between us yet, as time went by, Mark Latham, for all his protestations of modernity, would reveal old-fashioned class prejudices and attitudes increasingly out of place in contemporary Australia. He thought of Australia, particularly Sydney, as composed of ‘insiders’ and ‘outsiders’, roughly equivalent to the North Shore on the one hand, and Sydney’s west on the other. His class bitterness spilled into Labor’s policy on private schools, with a hit list of so-called wealthy schools which would lose funding under a Latham Labor Government. It frightened many private-school parents who were anything but wealthy. Latham failed to understand just how aspirational middle Australia had become.
On 22 March 2004, speaking to Mike Carlton on Sydney Radio 2UE, Latham declared that, if he won the election, he would hope to have Australian troops ‘home by Christmas’.2 It was a careless, ill-disciplined comment which immediately called into question his judgement more generally.
It raised more questions than it answered. For instance, to which troops was he referring? Was it all of our forces? Did it include the naval vessels in the Gulf which had been acting under direct UN mandate for years? Did it include the detachment guarding our embassy in Baghdad? If so, who would look after our diplomats — the Americans?
Bit by bit, over the months ahead, Latham answered these questions after a fashion, but the damage had been done. The incident raised doubts in people’s minds about his fitness for the Lodge. It was something of a turning point for him. Until then he had enjoyed a charmed existence, with many in the Canberra press corps cheering him on.
On the eve of the 2004 election the children overboard affair resurfaced in the circumstances described in Chapter 32, and as no stockpiles of WMDs had been found in Iraq, my critics gave ever-increasing voice to the claim that I was untrustworthy. I decided to take this head-on by running my campaign on the theme of trust. Announcing the election for 9 October 2004, I asked a series of rhetorical questions. Who do you trust to keep interest rates low? Who do you trust to keep the budget in surplus? And so it went on. It was an effective approach which worked because it was based on reality. We had managed the economy well, and I had found a pithy way of telling people that. Latham never found an answer and, as the campaign progressed, doubts about him grew.
There was a tinge of personal aggression in his style which bothered people, particularly some women. His infamous bullying handshake with me, three days out from the poll, may have shifted votes. I knew it was coming, because he had done the same thing before the start of our Leaders’ debate at the beginning of the campaign, but it had not been properly captured on camera and therefore was not televised. The latter one was well and truly captured. Weeks after the election, NSW Premier Morris Iemma told me that his wife, Santina, when attending a children’s birthday party near their home in Beverly Hills, the day after the election, could not find a single woman at the party who had voted for Latham. Beverly Hills, an inner suburb of Sydney, was anything but staunch Liberal territory.
Mark Latham’s amazingly rapid implosion after the 2004 election stunned us all. It certainly disappointed many in the media. There had been much sentiment that ‘Latham became an alternative Prime Minister during the campaign’. A spectacular example of this had been Geoffrey Barker of the Australian Financial Review. Writing on the day of the election he said, ‘Win or lose Mark Latham is the future of political Labor. A win will cement his place in Labor history as the man who crashed through to end the long Howard government incumbency. A loss will be judged an impressive first tilt at high office yet to be attained.’ That was only the half of it. Barker went on to say, ‘[Latham] made himself the emotional representative of many Australians, giving them hope for a (slightly) easier and better quality life. That is the key to political success.’3
Most thought that Latham would have about a year from the election defeat in which to present an effective alternative to the Coalition. Labor had no stomach for another leadership stoush. Beazley, the obvious alternative to Latham, clearly thought that he would have at least this time up his sleeve before the opportunity of taking over from Latham arose. Latham’s sudden resignation on 18 January 2005 meant that Kim Beazley had to step up to the crease earlier than anticipated. He had not appeared all that well through much of 2004 and I don’t think that his health was fully restored when he resumed the top job.
From Kevin Rudd down, Labor figures began to ridicule Latham, but many of them, admittedly not including Rudd, made him Labor Leader. One who remained conspicuously silent was Julia Gillard, formerly a close Latham supporter.
Latham’s clumsy handling of the old-growth forest issue in 2004 illustrated a dilemma the Labor Party faced during the Coalition’s time in office, namely that its active party membership, especially in inner-city areas, was increasingly at odds with its hitherto traditional support base, particularly on issues such as asylum-seeker policy and the environment. Tension of this type was apprehended years earlier by the late Kim Beazley senior, with his memorable cry from the heart, ‘When I joined the Labor Party it contained the cream of the working class, now it has the dregs of the middle class.’
37
THE HUMAN DIVIDEND
Social policy reform and progress were the quiet but impressive achievers of the Howard Government. Economic management and national security were such major preoccupations of the Government that there was less focus on other areas.
Yet the accomplishments on the social front were formidable. Tangible symbols of those were the reduction to 3.9 per cent in the unemployment level, a 33-year low, and the equitable, as well as efficient, distribution of the fruits of economic growth. Work by the Organisation for Economic Cooperation and Development (OECD) showed that the distribution of social benefits in Australia was so progressive — and the level of taxes paid by the poor so low — that Australia distributed more to the poorest 20 per cent of the population than virtually any other developed country.
Before we won office in March 1996, I had delivered guarantees about the social security safety net and the maintenance of Medicare but, in addition, I had foreshadowed more emphasis on individual choice in social and educational services.
As Prime Minister, I frequently reminded Australians that good economic policy was not an end in itself; that economic changes made no sense unless there was a human dividend. The clearest human dividend was, undeniably, reduced unemployment, so important to enhancing human dignity and making inroads into poverty.
Australia’s 33-year low in unemployment, delivered by my Government, was largely attributable to strong economic growth. Specific changes to labour market policy, the introduction of work for the dole, coupled with a broader preference for work over welfare, also played a part. WorkChoices accelerated the fall in unemployment, because it made some who were without work more employable.
I wanted to change the culture of welfare dependency, as much as was consistent with fairness to the genuinely underprivileged. I did not want a social welfare system as harsh as that in many parts of the United States. A constant theme of mine was that Australia had struck the right balance between the laissez-faire insensitivity of the Americans, and the paternalistic approach of so many European countries. I always opposed the introduction of any time limit on the payment of unemployment benefits. Some people found it impossible, no matter how hard they tried, to find a job. Those people were entitled to continued support, so long as they met their community obligations through work for the dole or related activities.
Another goal of mine was to involve the charitable organisations of Australia, mainly religious, not only in the provision of services but also the giving of advice to the Government. Nobody understands better than a Salvation Army officer just how hard life can be for those in poverty. In addition, they know better than anyone in politics or the bureaucracy the value of the charitable dollar.
That time-honoured Liberal principle of choice was applied wherever practicable. Private health insurance was withering on the vine when we came to government. The limited private health insurance rebate introduced in 1996 failed. It was the introduction of a non-means-tested 30 per cent rebate, as part of the New Taxation System, which did the trick. Very quickly, the percentage of the population covered privately rose from somewhere near 34 per cent to approximately 44 per cent, where it has remained ever since.
Abolishing Labor’s restrictive new schools policy led to rapid growth of low-fee independent schools. As a consequence some 34 per cent of Australian children in primary and secondary education are now in non-government schools. There is no country in the world which has embraced freedom of choice in education more faithfully than Australia.
Finally, and importantly, my Government rebalanced the taxation system towards a greater recognition that it costs money to bear and raise children. It had long been my view that a taxation system which did not recognise this adequately was without social vision. To me taxation fairness for families has never been a welfare issue. Debate on this rages today with the inaccurate and socially purblind description of family tax payments as ‘middle-class welfare’. I return to that subject later in this chapter.
We also acted, in various ways, to encourage more philanthropy in Australia. A body called Community–Business Partnerships, chaired by me and including leading and generous business figures such as the late Richard Pratt, David Gonski and Rob Gerard, devised ways of bringing about that cultural change. Largely from David Gonski’s recommendations there were changes to the tax laws which contributed to a lift in charitable donations. Between 1997 and 2005 there was a 58 per cent increase in real terms in donations.
In 1996, in a world first, we effectively privatised employment services by abolishing the Commonwealth Employment Service (CES) and replacing it with the Job Network, where potential providers bid for contracts to provide services to the unemployed. They were remunerated on the basis of positions filled. A striking feature of this new system was the entry into it of agencies associated with some of the major religious charities, including Anglicare, Wesley Central Mission and the Salvation Army. There were also quite a number of for-profit private providers; some of them were extremely successful.
It has been an innovative and significant reform. On an anecdotal basis, both employers and employees preferred it to the old CES. Certainly its operation coincided with unemployment steadily falling to a 33-year low. There was residual hostility from public sector unions and the ACTU, but the Rudd Government retained the system, although under the cloak of a major review and a rebadging exercise.
I always believed in work for the dole. It seemed to me perfectly fair that an able-bodied person receiving unemployment benefits should be required to do an appropriate amount of work in return for those benefits. Whenever I had raised the issue in earlier years, I would be told that it was not practical and, in any event, it would be a breach of our obligations under the International Labour Organisation conventions.
In February 1997, I resurrected the issue and said that for people who had been out of work for six months, the Government would examine introducing some kind of work for the dole system on a pilot basis. I said, ‘What I’ve got in mind is to pilot both voluntary and compulsory schemes in regional and rural areas of Australia where there are high levels of unemployment.’ The reaction was predictable. Speaking for the Labor Party, Martin Ferguson said that it was ‘a Mickey Mouse scheme’. The ACTU threw up its arms in disgust, as did some, but not all, welfare groups.
The reaction of the public was totally different. Some of the most enthusiastic support for work for the dole came from lower-to middle-income working people who resented unemployment benefits being paid to people who did not try at all hard to find work.
The scheme altered community attitudes. The Labor Party’s opposition weakened, although many within the broader labour movement still remain bitterly opposed to it. I will therefore be surprised if any ALP government dumps it.
To me, the right balance is a relatively regulation-free hiring and firing system for staff, supported by a fair unemployment benefit which can last indefinitely, provided the recipient gives something back in return for the benefit and continues actively to seek work.
The problem with the European approach (except Britain) is that the severity of unfair dismissal laws, and associated termination requirements, reduce the hiring propensities of firms. To many, it is not worth the risk, given the cost involved, in letting someone go who is unsatisfactory. As a consequence, firms hire fewer people. This problem does
not exist with the Americans. They, however, have an unemployment benefit system which can result in people being without any means of support. Regrettably, this does tip some unemployed Americans into crime.
Illicit drug-taking and the high youth suicide rate troubled me.
I did not need any encouragement to embrace a zero-tolerance approach to illicit drugs. I had no patience with the argument that because tobacco and alcohol were legal, then the logical thing was to legalise marijuana use. Of course we could never eliminate the consumption of tobacco and alcohol, although Australia has done a better job than most countries in curbing cigarette smoking. I refused to accept the argument that a tough and effective policy could not make inroads on such terrible habits as heroin and cocaine taking.
Major Brian Watters of the Salvation Army had attracted me with his uncomplicated views on drug abuse. A special body called the Australian National Council on Drugs was established, and I appointed Brian Watters as its chairman, with Mick Palmer, the AFP commissioner, as deputy chairman. Most police advice, both federally and state, was that progress could be made only if there were sufficient commitment from governments and adequate funds.
The council advised on the implementation of the National Illicit Drugs Strategy, which I had launched in November 1997. Very quickly financial backing for this strategy from the Commonwealth grew to $600 million. It tackled the problem in three areas, augmenting or cooperating with what the states were doing: more resources for law enforcement, additional education about the consequences of drug abuse and, importantly, more money for rehabilitation services. I had been struck by the frequency of talk-back callers relating their desperate experiences as parents in failing to find sufficient rehabilitation support for their drug-dependent children.