Academic journal article The Economic and Labour Relations Review : ELRR

From the Tyranny of Distance to the Power of Proximity: Can Australian Workers Trade Up in the Lucky Country? the 2011 Stan Kelly Lecture, 10 November 2011

Academic journal article The Economic and Labour Relations Review : ELRR

From the Tyranny of Distance to the Power of Proximity: Can Australian Workers Trade Up in the Lucky Country? the 2011 Stan Kelly Lecture, 10 November 2011

Article excerpt

Introduction

Imagine a country that is inward looking and rarely notices the world beyond its own borders. Imagine a country with double-digit inflation and unemployment and a poor record of economic growth. Workers and their bosses are at each other's throats, the country leads the world for working days lost due to industrial disputes and productivity (and how to improve it) is rarely talked about. Industry shelters behind prohibitive tariff walls (thinking only of the domestic market), the exchange rate is fixed every morning by officials of the central bank and the Treasury and international trade is an afterthought. Shop hours are regulated, domestic monopolies run most industries, and foreign entrants (in areas such as banking) are prohibited. Tax is high (and therefore evaded and avoided); expenditure untargeted and budgets in deficit. There are few foreign tourists, or many foreign students on university campuses. There are few restaurants around and licensing laws are restrictive. This country is at the bottom of the global premiership table in terms of economic performance despite its bountiful wealth.

You don't have to imagine too hard because that country is Australia--the Australia of the past. It's the Australia that farmer Stan Kelly and his son and fellow free trader Bert Kelly (also known as 'the Modest Member') railed against because of what the old Australia and its protectionist policies was doing to farmers, exporters, workers and the whole Australian community.

Fortunately, since then, much has changed. The Australian economy has progressed from being a poorly performing (though well endowed) economy to the highly performing one that we have witnessed in recent years.

Global engagement with the world through trade and investment was a key part of this reform process. The beach-head reform was the floating of the exchange rate. As, once the dollar was floated, Australians realised they had to compete with the rest of the world and could no longer allow poor productivity performance. Accordingly, tariffs were reduced and trade was orientated towards the emerging economies in East Asia. For decades, Australia had protected its industrial sectors, whilst living off export earnings in agriculture and resources. Manufacturing was geared to domestic consumers and had little incentive to improve competitiveness. Manufacturing exports were a rarity--just a way of getting rid of excess stock when times at home were slow--now they are a core part of the business.

As a result, trade is a very important part of this Australia's economic reform story. Openness to trade is associated with higher living standards and Australia's improved position in the economic growth stakes.

On the trade side, Australians can be very grateful to both Stan Kelly and his son Bert. As we know from the story behind the tradition to this lecture, Stan was a farmer and a strong advocate for free trade as a rural representative on the old tariff board. He passed on his genes and passion to his son Bert, also a farmer and also a Member of Parliament. He famously wrote 'The Modest Member' press articles on free trade, economics and other agricultural issues and was a very persuasive advocate. I was very fortunate to have known Bert's son and family (whom I met on study leave with my own family) and I was encouraged to ring Bert up to discuss economic issues when I was studying Year 11 economics in South Australia. To a 15 year old kid, Bert was warm, friendly, accessible and insightful and generous with his time. He really lived up to his 'Modest Member' tag line but there was nothing modest about his intelligence, his analysis and his ability to make a strong case for a cause he truly believed in intellectually and practically.

But whilst Kelly and son fought hard intellectually for the free trade side of the cause (Bert as a lone voice in the Fraser Coalition Government), it took three visionaries of the labour movement to open Australia up and lock in the economic prosperity that the lucky country experiences today. …

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