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Liberalism and the
Australian Federation

A. A. Staley and J. R. Nethercote

No ideas have been more important to Australia’s political development, both in the colonial era and in the period since federation on 1 January 1901, than Liberalism and liberal values. They were the motivating force in the campaigns in the various colonies for self-government during the nineteenth century. They provided the philosophical foundations for the federation itself and, more especially, the Constitution upon which it is based. Liberal ideas, though they have been challenged, have been predominant in the public policies of the federation throughout its first century. At the beginning of the second century of the Australian federation, liberal ideas in their classical sense are again to the fore, some of them on a bipartisan basis.

Liberalism’s significance in Australia’s development as a nation derives from the force of the ideas it embraces and its long periods in office throughout the first century of the federation; indeed, the Liberal Party and its forerunners have been in office, in toto, for two-thirds of the period. Liberalism in Australia has thus never been only a matter of political ideas and values; it has been an example of values in action. Australian Liberalism is not in the least a theoretical philosophy whose purity is untainted by contact with the ordinary workings of government and politics; on the contrary, it is a philosophy fashioned by frequent action in government. Its roots are as much in experience as in theory.

In Australia, Liberalism has virtually never been defined in ideological or even doctrinal terms. It has always, as illustrated in the essays in this book, embraced a range of values central to the political, social and economic life of the nation. Prominent among these values are constitutionalism, representative and responsible government, bicameralism and federalism – this latter value is perhaps the most distinctive value in Australian Liberalism for it expresses, in a practical way, an opposition to concentration of power and a desire for its dispersal to other democratically based governments.

Whether in the political, social or economic spheres of life, Australian Liberalism has supported and advocated the rights and freedoms of individuals, especially when threatened by collectivist views and organisation. Individual liberties, the right to vote and participate in political life, to hold and voice opinions, to seek and take advantage of opportunities to prosper, to make choices about life and its course, are at the heart of Liberalism, in Australia no less than elsewhere. Toleration is a key instrumental value in fostering an environment in which these liberties can be realised.

Liberalism in Australia has always recognised responsibilities for those who are disadvantaged. Similarly, it has, from its inception, understood that measures may be required to allow citizens opportunities to develop their abilities and skills. In the economic field, Liberalism stands for private enterprise, competition, choice and the mixed economy in which private ownership is maximised. Australian Liberalism has been internationalist both in terms of diplomacy and trade, key vehicles in the quest for, and maintenance of, peace and prosperity.

Australian Liberalism derived from ideas which developed in Europe, Britain and North America from the seventeenth century. Liberalism as an identifiable political idea emerged early in the nineteenth century. As Dr Chandran Kukathas states in his essay in this book, it was members of Spain’s Cortes who, in the years 1810 to 1812, sought to establish constitutional government in place of unrestrained monarchy, who were first described as liberals (liberales). In the course of its development, liberalism came to embrace a diversity of views. According to one political philosopher, however, most forms of "liberalism" hold as fundamental a "belief in the supreme value of the individual, his freedom and his rights" and "recognition of the supreme value of freedom, usually glossed as the ability to secure that to which one has a right, together with the view that government must be so limited as to grant freedom to every citizen, perhaps even that government is justifiable only to the extent that it maximises freedom, or to the extent that it protects the free individual from invasions of his rights".

It was, thus, consistent with the historical heritage of liberalism that Robert (later Sir Robert) Menzies, founding Leader of the Liberal Party and Liberal Prime Minister from 1949 to 1966, laid much emphasis on freedom, on what he called the "real freedoms":

To worship, to think, to speak, to choose, to be ambitious, to be independent, to be industrious, to acquire skill, to seek reward. These are the real freedoms, for these are of the essence and the nature of man.

Towards the end of his political career Menzies returned to these themes of freedom and individual activity and growth:

We have been human, with a sense of human destiny and human responsibility . . . we have stood for freedom. We have realised that men and women are not just cyphers in a calculation, but are individual human beings whose individual welfare and development must be the main concern of government.

We have no doctrinaire political philosophy. Where government action or control has seemed to us to be the best answer to a practical problem, we have adopted that answer at the risk of being called socialists. But our first impulse is always to seek the private enterprise answer, to help the individual to help himself, to create a climate, economic, social, industrial, favourable to his activity and growth.

In economic matters the nature of liberalism is less clear than in the political domain. Liberalism has frequently been associated with laissez-faire policies. In Britain, for example, although it was a Tory Prime Minister, Sir Robert Peel, who repealed the corn laws and so reduced the price of bread, it was the Liberal Party which was the great advocate of free trade and remained so even after support for tariffs had won increasingly large political support: it will be remembered, indeed, that the young Winston Churchill left the Tory Party precisely because it was wavering on the free trade issue.

Liberalism, however, also has very strong traditions of intervention in the economy and in industry. This was especially so in Victoria in the pre-federal period. It was Alfred Deakin, Attorney-General 1901–03 and Prime Minister 1903–04, 1905–08 and 1909–10, who told his Morning Post readers in London that:

A Colonial Liberal is one who favours State interference with liberty and industry at the pleasure and in the interest of the majority, while those who stand for the free play of individual choice and energy are classed as Conservatives.

This approach to economic development gained the ascendancy in the first decade of the federation, an ascendancy – indeed, a bipartisan ascendancy – which stood at the core of Australian public policy for more than seven decades, atrophying only as the long post-war boom waned. The purpose of interventionist policy was promotion of growth and with it the material prosperity of Australians. These goals have remained central to Liberal economic policy in Australia – concern about wealth creation has always distinguished Australian Liberals from their political opponents. As Sir Robert Menzies observed in a major speech after he had retired from politics:

[I]t is not sufficient to cut up the existing cake into neat slices; we must make bigger and better cakes as the years go on, and those who will make them will be free men and women, fashioning their own future by their own efforts and in their own way, earning their own rewards, and so helping to build a better and more prosperous community.

Elsewhere, Menzies, who expressly rejected the laissez-faire approach, made clear his view that government action was a pragmatic rather than a doctrinal matter:

[O]ur first question is not whether the Government could do this thing, but whether private citizens could. If the answer is that they could, our answer is that they should. We deal with each case on its merits, without dogma or prejudice.

Interventionism lost its force as it came increasingly to be recognised in the different circumstances of the 1980s that the goals both of wealth creation and its distribution within the community on a fair and equitable basis were better secured by competition and market-based means. Markets, nevertheless, remain a means to an end: it is as foolish to believe that the private market should do everything as that government should do everything.

Although opponents of Australian Liberalism, especially those on the left, have frequently supported interventionism, they have usually done so on a notably more ambitious scale and in a decidedly more direct form. Thus, when a Labor Government in 1911 created a national banking institution, the Commonwealth Bank, it brought it under the direct control of the Treasurer. Liberals, whilst accepting in that era that there was a place for a government instrumentality within the banking system, distanced it from immediate political control by creation of a board of directors. At a later stage in history, another Labor Government, headed by J. B. Chifley, who also held the office of Treasurer, sought to bring the entire banking business of the nation under the wing of government. This particular policy was aggressively and successfully challenged by the Liberals of the day, now organised under the flag of the Liberal Party itself. The grounds for the challenge included several tenets of classical liberalism including support for free enterprise, a general dislike of monopoly, even (perhaps especially) a government-owned monopoly, and a respect for private property. (Eventually it was under Labor governments that banking was deregulated and the Commonwealth Bank privatised.) Similar considerations led the Liberals to oppose the Chifley Government in its bid to have Australia’s civil aviation needs met only by a government-owned airline. (Again, it was under Labor governments that Qantas was privatised.)

Liberals have likewise had a similarly pragmatic (and limited) view of regulation. The current climate has recognised that, while regulation in its historically restrictive sense is often an impediment to growth and performance, there will be occasions (as in telecommunications) where a measure of reregulation is essential in the interests of fostering competition.

Central as economic prosperity (broadly defined to include labour market practices and development of an educated community) has been to Liberalism in Australia, Liberalism has always supported as well an active interest in welfare. It was not a coincidence that the Commonwealth old age pension program was introduced by the Deakin Government in 1908. Menzies, in a 1964 speech already cited, observed that his Government had greatly aided social justice: "We have not just kept the ring and allowed victory to go to the strong . . . [w]e have insisted upon the performance of social and industrial obligations; we have shown that industrial progress is not to be based upon the poverty or despair of those who cannot compete". And, in 1996, the Prime Minister, John Howard, expressly linked Liberal welfare measures to the Australian ethic of the "fair go":

It is our tradition which has had a "fair go" for all as one of its driving forces and which has strengthened the social security safety net through such advancements in social policy as the extension of child endowment, pensioner medical services, health services, pharmaceutical benefits, housing, invalid and other pensions, mental health care, family allowances, and many other initiatives.

Liberal approaches to welfare have not differed substantially from those of their adversaries in terms of necessity or desirability. Differences have arisen more over methods of financing (on which Labor’s preference for tax-funding has prevailed), the importance of self-responsibility and of persuading individuals to seek to provide for themselves, the centrality of the family in meeting community welfare needs effectively, and the value of private and voluntary organisations in the provision of services, instead of preferential reliance upon government bureaucracies.

Liberalism in Australia has always attached special importance to federalism. This partly derives from its commitment to constitutional government. It also derives from its belief in strong parliamentary government in which effective bicameralism is a primary feature: in Australia, bicameralism is entrenched through election of the Senate on a State basis. But the importance of federalism runs deeper. With federalism there is division of power, and Liberalism is always suspicious of concentration of power. Federalism also promotes self-government by reserving many crucial decisions in everyday life to legislatures and governments which are more clearly answerable to the communities whom they represent and for whose general affairs they are responsible.

That Australia is a federal and not a unitary nation is a major consequence of Liberal leadership of the federal movement, as Professor Greg Craven shows so clearly in his essay about the making of the Constitution (Chapter 5). That it has remained a federal nation is major testimony to underlying public support in Australia for this major Liberal doctrine. A unitary state, favoured by Labor during the making of the Constitution (in spite of its general absence from the conventions), and throughout most of the twentieth century, has made little progress with the Australian community. There has been a profound liberalism in the resistance of Australians to augmentation of the constitutional powers of the Commonwealth and to their augmentation at the expense of the State governments. Australians, instead, have preferred to place their trust in the government of the federation within the established framework of the Constitution, through agreements between the Com-monwealth and State governments, and judicial adjudication of disputes by the High Court.

Liberalism has placed its stamp upon Australia’s international relations as well as upon its domestic development. From the nation’s birth in 1901, Liberals have seen it as significant that the Australian voice should be heard internationally. Initially, this goal was accomplished not only by participation in Imperial Conferences but through the unusual vehicle of Alfred Deakin’s anonymous letters to the London Morning Post. The fierce advocacy of Australian interests during the First World War ("the Great War") by the first Nationalist (and former Labor) Prime Minister, W. M. Hughes, is well known; but his wartime and post-war activity in Europe was as equally concerned with finding markets for Australian goods (and shipping to get the goods to market).

The inter-war years saw both the Bruce-Page and Lyons Governments striving to secure markets for Australian production (in a world in which international trade was virtually stagnant). With the coming of war, a new Prime Minister, Robert Menzies, assumed a familiar role of asserting a place for Australia in the counsels of war and maintaining markets for its produce. He also established Australia’s international representation, as Michael Keenan shows in his essay (Chapter 10). In the period after the Second World War, Coalition governments shaped new relationships for Australia through the ANZUS alliance, the Colombo plan, trade with Asia generally and Japan in particular. The Fraser Government’s interest in international relations not only brought maintenance of the post-war policies of all governments but strong and practical interest in the fighting and ending of apartheid in South Africa and in peace-keeping in the Middle East.

Mainly for reasons of space, it has not been possible for this book to cover all fields of Liberal contribution to Australian development during the twentieth century. It is possible here only to provide a brief indication of other aspects of national life where Liberalism has made an impact. Such coverage would include strengthening the rights of citizens in relation to government through what is described as the "new administrative law" – the Ombudsman, freedom of information and merits review of administrative decisions. It would include fostering of multiculturalism, not least through creation of the Special Broadcasting Service by the Fraser Government. Dr Will Sanders has elsewhere reviewed the steps taken during the post-war Menzies Government to restore full citizenship to Aborigines; a landmark in this direction of policy was the highly symbolic referendum of 1967 to authorise inclusion of Aborigines in the census and to remove the prohibition which prevented the Commonwealth enacting laws in relation to Aborigines. The Fraser Government continued this policy concern through enactment of land rights legislation. It was during the Gorton and McMahon Governments that the Commonwealth first articulated a direct interest in environmental matters. Removal of discrimination against women gained momentum under the Holt, Gorton and McMahon Governments (including, within government, removal of the so-called "marriage bar" on permanent employment, and progressive introduction of equal pay). Most recently, it was Liberal policies which provided a participatory as well as a parliamentary framework for consideration of the republican question leading up to the 1999 proposals to alter the Constitution so as to replace the Queen/Governor-General arrangement with a President.

This tour d’horizon does no more than to illustrate the diverse range of public policy activity which has been affected by Liberal interest and, often, initiative.

Notwithstanding the central significance of Liberalism to Australian federal government and the course of the nation’s development during the twentieth century, it has been a relatively neglected field in Australian political studies. This is true even of the chronicles of journalists who are often, because of their intimate proximity to the political process, of greater significance. Where Liberalism has been the subject of research and study, it has often been in the hands of those influenced by and favourable to its interventionist tendencies. One reason for this disposition has been Alfred Deakin’s place in Australian political development. Deakin was a major and increasingly the central figure in the movement to federation and, after 1 January 1901, its active realisation in executive, parliamentary and, eventually, judicial terms. Deakin’s role was not, however, at an end. Through his Morning Post accounts he placed his stamp on subsequent as well as contemporary interpretations of Australian nation-building. Thereafter, his disciple, Walter Murdoch, and his disciple’s disciple, J. A. La Nauze, both authors of major biographies, perpetuated the Deakinite conception.

It was not only Deakin’s arch opponent, George (later Sir George) Reid, who fell victim to this angle on Australian development; it was also the policy of free trade and minimal interventionism which suffered a bad press. It has been in the past generation, as research on the origins and making of the federation has expanded beyond the readily accessible perspective bequeathed by Deakin and exploited by his admirers, that both a broader but also a deeper view has emerged.

Sir Keith Hancock’s characterisation in 1930 of the Liberal side of politics as the parties of resistance, in contrast to their rivals, "the party of initiative", was misleading in relation to the former and flattering to the latter. This was unquestionably the case at the time when he wrote for, by any measure, the Bruce-Page Government was far more fertile in terms of ideas and initiatives than the rival Labor Party then occupying the Opposition benches. After the first decade, and the entrenching of the so-called Australian Settlement – White Australia, protection, government paternalism, centralised conciliation and arbitration, imperial loyalty – few governments had such an enduring impact on Australian government and public policy until its unravelling in the 1980s and 1990s than did the Bruce-Page ministry.

The Hancock dichotomy has been misleading in a more serious way. It implies a superiority in those governments and parties which do good works – good works financed invariably by the public purse – the world of public sector patronage. It is not only that the works of government may not be good, or that big public spenders may not have admirable motivation. The more important consideration is that, as far as possible, people, as individuals and in their communities and their private associations, should have the opportunity to make their own lives, fortunes and futures.

In very recent decades the literature about Liberalism and its various organisational manifestations has been growing, though it still has some distance to go before it rivals that devoted to its major challenger. But because it addresses the governing philosophies of Australia, and the Party which, together with its forerunners, has for so long provided the government, it is a more important literature.

This volume, which itself has benefited from growing interest in Liberalism and several recent significant works, provides a comprehensive (though by no means exhaustive) survey of the field. The succeeding three chapters demonstrate the richness and diversity of Liberalism as a field of ideas about the conduct of government and the practice of politics as well as a source for principles of public policy. The ideas articulated and advanced under the rubric of Liberalism are further examined and analysed in the final four chapters of the book, there focusing on economic and industrial development, welfare, federalism and international relations and security.

These essays demonstrate the observations made above about the pragmatic character of Australian Liberalism, that it is not, as Menzies said, a "pre-determined abstract theory" but "an attitude of mind and faith". Within the scope of Liberalism there is much room for discussion and debate about what are appropriate measures in particular circumstances: as Menzies has observed, a function of Liberalism is reconciling security and progress.

The central essays in this book review the practical development of Liberalism in the context of the various governments throughout the life of the federation. The first two of these essays show the decisive Liberal role in the creation and establishment of the Commonwealth. After an essay about Alfred Deakin and the Australian Women’s National League, three essays examine Liberalism’s approach to the three national crises of the first half of the twentieth century – the Great War and subsequent reconstruction; the economic and political crisis occasioned by the Depression which devastated few countries as much as Australia; and the onset of a second global conflagration in 1939.

With the return of peace in 1945, the challenge was one of managing prosperity. At a time when the reputation of capitalism was at a low ebb as a consequence especially of the Depression, Menzies mustered political opinion and support behind doctrines of the mixed economy in contrast to those of public ownership and monopoly favoured by the Chifley Labor Government and epitomised in the crusade to nationalise the banks. Menzies’s retirement heralded an era in which the Liberal Party had to address new issues at the same time as revitalising its parliamentary leadership and electoral organisation so moulded by the comfortable years of politics in an increasingly prosperous community.

When Malcolm Fraser brought the Liberal Party back to office in the wake of the turbulent years of the Whitlam prime ministership, it was not to resume government in the relatively stable conditions of the preceding two decades. The domestic agenda was more active; old subjects of interest from welfare provision to labour relations were demanding fresh attention, while a growing list of other matters, some evident in the late 1960s, likewise demanded a place in political discussion and action.

As the twentieth century drew to a close, the public policy framework was extensively challenged. Interventionism increasingly lost favour as governments looked to market and competitive forces to achieve goals formerly sought through public programs and expenditure.

The Howard Government, and, earlier, the Liberal Party in Opposition, has been a dominant force in fashioning the succeeding public policy framework. Apart from leadership during the 1980s and 1990s in building a public policy framework for privatisation and deregulation, achievements in office after 1996 have prominently included dismantling the centralised system of conciliation and arbitration (the Workplace Relations Act 1996) and major reform of the tax system, including new arrangements for Commonwealth-State financial relations.

Under the Australian Settlement, the nation had looked for cohesion, security and identity by closing itself off from much of the world, limiting so much of its extra-national interests to the other dominions of the Empire and, to a degree, the United States of America, the other great predominantly English-speaking democracy. The world of the early twenty-first century, by contrast, had to be engaged and the means of that engagement has been mainly provided by market liberalism in economic matters, and the tolerance which has historically been a key feature of liberalism wherever it has been practised.

 

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