Neoliberalism, Inequality and Politics: The Changing Face of Australia

By Western, Mark; Baxter, Janeen et al. | Australian Journal of Social Issues, Spring 2007 | Go to article overview

Neoliberalism, Inequality and Politics: The Changing Face of Australia


Western, Mark, Baxter, Janeen, Pakulski, Jan, Tranter, Bruce, Western, John, van Egmond, Marcel, Chesters, Jenny, Hosking, Amanda, O'Flaherty, Martin van Gellecum, Yolanda, Australian Journal of Social Issues


The 1980s and 1990s saw the most profound transformation of Australian public policy since World War II and one that fundamentally reworked a framework in place since Federation (Castles et al 1996; Kelly 1994). This transformation was underwritten by two principles: liberalism--the view that citizens are autonomous individual actors whose interests are best served when they are free from coercive government interventions into individual action (Yeatman 2000); and marketisation--the belief that free markets are arenas which best enable individual autonomy and produce efficient economic outcomes (Marginson 1997). These principles define 'neoliberalism' or 'hard liberalism' (Argy 2003).

How these policy, changes have affected Australian society is a deeply contested issue. For advocates, neoliberal policies produce improved economic outcomes, greater efficiencies in arenas in which markets operate, reduced public expenditure, diminished reliance on state-provided social welfare and increased individual choice. For critics, neoliberalism increases inequality, corrodes quality of life and produces an atomised society in which individuals are culturally disconnected from one another and from fundamental social institutions (Pusey 2003; Saunders 2002: 8-12, ch. 2). This paper introduces a comprehensive research project that intervenes in this debate by examining relationships between neoliberalism and social mobility and socioeconomic inequality, gender relations, and politics. In this paper we outline the substantive and theoretical arguments behind the project and present some evidence on the issues.

Neoliberalism in the Australia

Before the 1980s Australia had an internationally distinctive approach to public policy. based on some particularly high levels of government economic regulation but limited government ownership. Distinctive elements were tariff policy and import controls to protect domestic manufacturing, centralized wage determination according to cost of living and 'relative wage justice' principles, compulsory conciliation and arbitration of industrial disputes, and regulated immigration to minimise unemployment and protect wages (Castles 1993; Kelly 1994: ch. 1; compare also Grabowsky and Brathwaite 1986). The result was a set of interlocking labour market and public policy institutions that maintained high employment levels and real wages, compressed earnings dispersion and provided centralized legislative mechanisms for setting minimum pay and working conditions in occupations and industries according to 'reasonable' expectations about living standards rather than profitability or employers' capacities to pay. In the 1980s this approach was reappraised in favour of one emphasising deregulation and marketisation. The neoliberal reworking of public policy has its origins in the 1970s but began in earnest under the first Hawke Labour government, to be continued by subsequent Labour governments (Kelly 1994) and accelerated with the election of John Howard in 1996 (Harris 2001). The changes can be seen most starkly in four public policy areas.

Economic Policy: Neoliberal economic policy is reflected primarily in the rejection of Keynesian macro-economic demand management. In the post-war period to the 1980s, national governments typically used fiscal policy to attempt to smooth the business cycle. Since the 1980s, Federal governments have eschewed this tactic, instead depending on the Reserve Bank to control inflation and unemployment by setting official short-term interest rates. Currency stability, full employment and "economic security and welfare of the Australian people", interpreted as price stability, are the Bank's central objectives under the Reserve Bank Act.

Industrial Relations Policy: In industrial relations policy in Australia neoliberalism has primarily involved dismantling conciliation and arbitration and replacing it with individual agreements or agreements that are collectively negotiated at the enterprise level. …

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