In power,Keating was a gift. Now,at 80,he’s a tragedy

Political and international editor

Paul Keating in power was a very great gift to Australia. Most Australians have enjoyed a generation’s worth of prosperity they think was normal,natural,inevitable. It was not.

Keating marked his 80th birthday with an interview published inThe Australian Financial Review this week where he lamented that Australia “is so timid”.

Illustration by Jim Pavlidis

Illustration by Jim PavlidisSupplied

In his years as treasurer and prime minister,no one ever accused Keating of timidity. Often,his methods were ugly. He is a self-described bastard. At one point he was the most unpopular man in the nation. But he was boldly ambitious for Australia and the country is vastly better for it.

Checked your superannuation balance lately? Yes,Keating created the compulsory superannuation system and its $3.5 trillion in assets,in partnership with then ACTU chief Bill Kelty. But that is a mere fraction of the wealth Keating midwifed for Australia.

Australia was falling slowly and inevitably into genteel poverty when Bob Hawke won the 1983 election with Keating as his treasurer. In the ’80s,Singapore’s founder Lee Kuan Yew famously foretold that Australians would become “the poor white trash of Asia”.

It was a shocking indictment that such a blessed country,enjoying First World living standards,could surrender itself to avoidable failure. It was an era where economists wondered whether Australia might need emergency IMF support merely to stay solvent,a time when Keating warned that Australia could end up a “banana republic”.

Paul Keating,who turned 80 in January,“was boldly ambitious for Australia and the country is vastly better for it”.

Paul Keating,who turned 80 in January,“was boldly ambitious for Australia and the country is vastly better for it”.Louie Douvis

Keating’s reforms reversed the national trajectory. By the late 1990s,US economist Paul Krugman had anointed Australia a “miracle” economy. The OECD hailed it as “a model” for others to emulate. In 2010,the front page of France’sLe Monde declared that “Australia astonishes”.

The economy withstood enormous global shocks that shattered other countries – the Asian financial crisis,the US “tech wreck” recession,the global financial crisis – and continued to prosper. Without Keating,this would not have happened.

Ultimately,Australia achieved a world record for any developed country – 30 years without a recession. Beyond a generation of prosperity,Keating gave Australia a sense of possibility and a tutorial in success. He wrenched the Labor Party out of an ideological fixation on redistribution at the expense of growth.

Labor,he said in 1981,was full of people wanting to spend money:“What’s wrong with trying to create it?” He was right,and the Labor Left and Centre Left factions hated him for it. The essence of the Keating reform program was to open Australia to market forces. Which sounds simple. But the county was locked into a century-old economic fortress. It was comfortable for each player yet ruinous for the whole.

Bob Hawke and Paul Keating in 1985. “In truth,Keating was nothing without Hawke.”

Bob Hawke and Paul Keating in 1985. “In truth,Keating was nothing without Hawke.”David James Bartho

At one point Keating was opposed by every major section and institution of the Australian system,he later confided,except for the Canberra press gallery,which he cultivated intensively and relentlessly.

“Australia,like a bunny in the headlights,was caught in a near-terminal bout of stagflation,” as Keating put it to theAFR two years ago.

“Every important price in the economy was set on the cabinet table – the rates of[currency] exchange,the rates of interest,wage rates through centralised wage fixing,prices through tariffs.”

He dismantled the lot. He allowed the foreign exchanges to set the price of the Australian dollar. He allowed the market to set the price of money in the financial system. He created enterprise bargaining to allow bosses and workers to negotiate worker wages flexibly at the company level instead of the national. He abolished high tariffs.

Keating,pictured in 1992,was in his own words,the “Placido Domingo of Australian politics”.

Keating,pictured in 1992,was in his own words,the “Placido Domingo of Australian politics”.Peter Morris

Where America had Reagan and Britain had Thatcher,Australia had Hawke and Keating. One big difference is that where Reagan and Thatcher reshaped their economies in ugly clashes with the unions,Hawke and Keating did it in co-operation with the union movement.

But they forced a reluctant Australia into a transformational pro-market reform program nonetheless.

The Howard and Costello governments that followed consolidated by further reforming the tax system. But that was the end of ambitious Australian economic reform. Everything since has been mere housekeeping or tinkering.

The sense of possibility,the tutorial in success,have been lost. The economic oomph of the reform years has been exhausted. Australia now limps along in what a former secretary of the prime minister’s department,Martin Parkinson,has called “a slow-motion recession”,a permanent state of sub-par growth. No longer any sort of “miracle”,Australia is just ordinary.

On 10 December 1992,former prime minister Paul Keating gave a speech on Aboriginal reconciliation which addressed issues faced by indigenous Australians.

One of the ingredients of Keating’s success was his towering ego. In his own words,he was the “Placido Domingo of Australian politics”,casting himself as the operatic virtuoso with all the other singers in lesser roles. The ego sustained him through all the combat.

He is an illustration of the adage that one’s greatest strength can also be one’s greatest flaw. His ego is an envious one that cannot share credit. He trampled others and dismissed their efforts.

In his need to be the great diva singing solo,he never was able to acknowledge the vital work of two other leaders. In truth,Keating was nothing without Hawke. As treasurer,he was only able to impose painful change on the country because the folk hero Hawke kept winning elections,keeping Keating in a job.

But Keating could not see Hawke,his enabler and ally,as anything other than an obstacle. As treasurer,Keating spent years furiously denouncing Hawke in obscene terms to others in Labor,to the press gallery,to anyone who’d listen,until finally,he challenged openly in the party room and succeeded at the second attempt.

After that,the pair that had been named the duo “made in heaven” by Labor pollster Rod Cameron would not speak to each other for many years. When Hawke was dying,Keating left it to the older man to initiate a reconciliation in his last days.

Similarly,Keating never has been able to bring himself to credit John Howard for lending bipartisan support from the opposition benches to some of Keating’s most important reforms.

More than mere egoism,Keating appears to have an obsessiveness,with shades of an autocratic tendency. He confessed to biographer Troy Bramston that he had “the crazy gene”. Not news to the former Labor national secretary Gary Gray,who dubbed him “Captain Wacky”.

As PM,a livid Keating once tried to order the Defence Department to deploy tanks to Parliament House to break up a truckies’ protest blockade. Gratefully,defence protocols and quick interventions by Kim Beazley prevented a potential national embarrassment.

The tragedy of Keating,however,is in his retirement. In the 1990s,he developed the view that a growing China had an inherent right to expand its “strategic space” in the Asia-Pacific and that the US should allow it. At the time,China commonly was envisioned to be a beneficent power.

The former PM has some advice and criticism for the government on how it deals with the rise of China.

But China under Xi Jinping has changed. It has become ever more repressive at home and expansionist abroad in Xi’s quest to impose dominance and extinguish liberty. The world has revised its view of China accordingly. Keating,however,has not.

The same dogged determination that was an asset in driving economic reform has become a liability in Australia’s effort to defend its sovereignty. Keating has emerged in recent years as Australia’s foremost apologist for the Chinese Communist Party,demanding that Australia appease Beijing,withdraw from AUKUS and break with the US.

He routinely sides with the Chinese Communist Party against the Australian Labor Party. Even to the point of publicly insulting Penny Wong,Richard Marles and Anthony Albanese.

Increasingly frantic to win the argument against the facts,Keating has fallen to repeating party propaganda. He said last year that China “has no record of attacking other states”. This is simply wrong. It attacked India in 1962 and Vietnam in 1979,for instance.

But so what? Does anyone care what a retiree PM says? When Beijing delivered a suspended death sentence to Australian citizen Yang Hengjun this month,a professor of Chinese studies at UTS,Feng Chongyi,said China’s regime would have been encouraged by Keating. Beijing wanted to subdue Australia by dividing it from the US:“This is a false expectation but the voices of Paul Keating and Bob Carr keep fuelling it,” Professor Fengsaid.

Keating doesn’t want Australia to be timid in economic reform;he shouldn’t wish his country to be timid in defending its sovereignty. He is an authentic national hero for his time in power. It would be a tragedy if this is lost to memory because of bloody-mindedness in retirement.

Happy birthday,Paul.

Peter Hartcher is political editor.

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Peter Hartcher is political editor and international editor of The Sydney Morning Herald and The Age.

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