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We Need A New History of Australia

May 29, 2011

Talking to an economist this weekend about how the Australian economy was opened up I thought this part of our story has not been told. Our indigenous histories overflow from library bookshelves, every no-account politician has studies of his or her every waking thought, the womens’ movement has set the record straight. But where does an historian tell the story of Alf Rattigan?

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Alf Rattigan

He was the public servant who headed the Tariff Board in the 60s and realized the insanity of setting tariffs for steel and razor blades, of managing an economy where the inputs were priced high by tariffs and we could never become a manufacturing exporter because of these high domestic costs. In the 1960s under his leadership the Tariff Board became a crusader for economic rationalism.

His deputy Alan Carmichael would secretly meet South Australian Liberal Bert Kelly, the lone parliamentary free trader, to slip him information on the tariff rackets that granted “arbitrary and capricious favors” to pockets of industry. Kelly for his part wrote a column in The Financial Review under the heading “A Modest Member”.

Slowly journalists and politicians began to question the hand-out mentality and the cost of forcing consumers to buy artificially expensive cars and clothes and shoes. Billy McMahon began to resist Country Party leader Jack McEwen on the issue of Tariff Board independence. A free trade history of Australia would say something kind about McMahon in this period and something harsh about McEwen.

From Whitlam to Hawke and Keating and Howard a new consensus developed. The triumph of free trade came when, in the recession of 1991, Hawke refused to soften on the wind down of tariffs for the vehicle industry. It was his proudest moment as PM. His Industry Minister John Button would go into regional towns about to be affected by tariff cuts and explain why this had to happen.

Here stands the killer fact : an Australian family ended being a thousand dollars a year better off because of the cheaper school clothes and footwear made available through cheaper imports coming into our stores. And the country got a new car fleet that was newer and environmentally superior to the overpriced, clapped-out vehicles produced behind 57 percent tariff walls.

No history books will tell you that in the 1950s you couldn’t buy baby food from the super market but from pharmacies only, another bit of protection in the closed, over-regulated economy that was keeping Australia quaint.

Free trade versus protection was the defining politics of the 1890s and early 1900s and George Reid, NSW free trader lost to Victorian protectionist Alfred Deakin who was backed by the economic primitivism of the infant Labor Party. Only in the 60s did some brave public servants open up the issue and politicians begin to accept the impoverishment that came with forcing families to pay more for imports and forcing businesses that might have been viable to struggle with the high costs of the protected sectors.

They should read the story in school textbooks.

Of course, the one area we were too afraid to open up is books. To keep one Victorian printing plant alive we force Australian families to pay a third more for books than they would if bookshops could order from overseas without restriction. No example makes the impoverishing folly of protection clearer.

10 Comments
  1. Peter Pando permalink
    May 29, 2011 7:19 am

    Dear Mr Carr,

    The winding down of vehicle tariffs by Mr Hawke may have made cars cheaper, but now we have a society and economy depending upon oil-burning vehicles. Suburbia sprawling demands transport, individualism demands autonomous transport forms such as cars, and all need oil. However the government is one the one hand indirectly furthering unreasonable competition for oil through encouraging the export of commodities to hyper-busy car-manufacturers overseas, and apparently now wanting to tax petrol again through the carbon tax. In other words, the combined policies over decades of government are directing us towards having 2 cars in every garage, none of which can be used because fuel’s too scarce. It seems those in government are great on details like tariffs, but have lost their capacity to generate a viable regional vision. Although difficult, separation of Parliament from Executive must be constantly striven for as a labour of necessity to halt that trend.

  2. Cliff permalink
    May 29, 2011 11:09 am

    I well remember my wife sending me in the early 1980s an Aquascutum overcoat from England that she thought was a bargain at $100. Collecting the parcel from customs cost another $100. I heard a story, perhaps apocryphal but from a public servant who had worked on those issues, that Victorian textile, clothing and footware factories were deliberately sited in marginal electorates to increase the lobbying power of the textile companies. Button, the industry Minister, took a lot of the credit for these changes, but in effect industry policy was made by Keating and Treasury in those days, and it was Treasury’s influence, much more then the Productivity Commission’s (Tariff Board’s), I strongly suspect that caused the pendulum to swing. Another factor was the fact that a lot of Treasury (and Tariff Board no doubt) economists were educated at ANU, which had international economists of international reknown, such as Max Corden.

    I wonder what such a history as you propose would have to say about the role of the consumer movement in those changes. My guess would be that at best they were silent, at worst they opposed them. They seem to be very recent converts indeed to the idea that consumers benefit from free trade.

  3. David Thomson permalink
    May 29, 2011 11:12 am

    Bob,
    Couldn’t agree more.
    I remember, as a younger man, reading Bert Kelly’s columns, A Modest Farmer and A Modest Member, with delight. He used a lovely wry sense of humour, and a steely line of logic, to prick the balloons of the protectionists and raise the understanding of the rest of us. Great to see people of this calibre remembered for what they did. Why don’t you write the history?
    Regards,
    David

  4. May 29, 2011 1:24 pm

    Devices like the Kindle will soon take care of that publishing plant. I was in Dymocks an hour ago having a browse. There were three books that caught my eye – one local and two from overseas.

    Cost to buy in Dymocks – $140.

    As e-books from Amazon – $75.

    As much as I like my library, a change is blowin’ in the wind.

  5. Rod permalink
    May 29, 2011 1:46 pm

    Yes it did make imports cheaper but it did put a lot of people out of work , still puts us out of work today. Could have been handled a lot better.

    • Bob Carr permalink
      May 29, 2011 1:55 pm

      No, average unemployment has been much lower since we opened up the economy compared with the 70s and 80s.

  6. May 31, 2011 10:17 am

    More on Alf Rattigan and protectionism.

    http://catallaxyfiles.com/2010/10/12/mont-pelerin-commentary/

  7. May 31, 2011 8:15 pm

    Economics.org.au has put up a huge number of Bert Kelly Modest Member columns here: http://economics.org.au/staff/bert-kelly/ . We are the only group to republish him since his death. We call him our staff member because we employ his work. We have dug up many columns that were not republished in Economics Made Easy, his early 1980’s book of selection Modest Member Columns.

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