title: Hard Labor: The Political Economy of Economics Policy Reform in Australia
Creators: name: Barry, Sean
Publisher: name: Griffith University
Year: 2017
Subjects: subject: Economic policy reform
subject: Political conditions
subject: Economic imperatives
subject: Labor governments
subject: Reform program

description: In the closing decades of the twentieth century, a growing consensus emerged about the tailored economic principles that might promote economic growth. There has been less understanding, however, and no consensus, about the political processes conducive to achieving successful economic reform. The obstacles on the path to successful reform are numerous. Consequently, factors conducive to policy success are vital for understanding the process, and enhancing social learning for policy actors. This dissertation compares instances of economic reform by federal Labor governments in Australia since 1972, to determine factors that contributed to the success or failure of those reforms. To do so, it uses, and assesses the robustness of a multi-hypothesis framework. The research situates itself within a political economy theoretical framework. This framework recognises the inseparability and interdependence of political and economic factors. The study draws on economic data and political evidence to examine the actions, circumstances and background of governments and leaders in the relevant periods, using a comparative historical approach and a framework derived from the political economy of reform theory. It utilises a framework encompassing a number of hypotheses about reform, condensed into five ‘clusters’ of: economic conditions, political conditions, role of ideas, economic team, and reform program. This framework is a modified version of one developed by John Williamson and Stephan Haggard in The Political Economy of Policy Reform. This study applies the framework for analysis qualitatively to the three representative case studies of economic reforms. The first case study examines the 25 per cent across-the-board tariff cut by the Whitlam Government in 1973. Australia had lived behind a ‘tariff wall’ for most of the century, and this reform sought to promote efficiency and innovation by encouraging competition, as well as reducing consumer prices. The second case study explores the Hawke government’s float of the Australian dollar in December 1983. Australia’s approach to its fixed exchange rate had undergone various modifications over the years, but none had allowed the economic flexibility necessary for a country with such a high rate of resource and primary industry exports. The last case analyses the minority Gillard government’s decision to implement the Clean Energy Future Package. It was a significant economic and environmental policy initiative encompassing multiple purposes, including reducing greenhouse gas emissions, decreasing reliance on fossil fuels, and promoting new industries. The research challenges presumptions that economic reform is driven solely or primarily by ‘economic imperatives’ (such as economic crisis), at least in the Australian context. It finds the landscape of the political economy of policy reform is far more complex. Instead, the political conditions, role of ideas and economic team all influenced the subject reforms to varying degrees. All governments used favourable aspects of the political conditions to pursue reform, exploiting opportunities in their political honeymoons, building social consensus ex post to enhance durability and visionary leadership to support change along the path to reform. These aspects were notable in the earlier two reforms, but largely absent in the third case study and this contributed to the failure of that policy program. All three reforms reflected evolving ideas about the policy prescriptions necessary in the circumstances. The Hawke government’s float of the dollar was a paradigm shift as defined by Peter Hall, which assisted with the durability of the change. The Gillard government’s reform was technically a paradigm shift, but lacked the durability necessary to be a true shift. The governments introduced the reforms during windows of policy opportunity and the most successful program (Hawke) held valence (emotional appeal) within the community, the Gillard reform lacked that support and Whitlam’s valence weakened as economic conditions turned against the government. Of vital importance in all reforms was the role of the economic team. Coherent economic teams supported the executive and the governments, and that assisted the development and introduction of the reforms, and improved the prospects their durability. It is not possible to unequivocally isolate factors sufficient or necessary for reform to take place in all circumstances. As scholars have recognised, however, there is still considerable value in identifying and exploring a range of contributing factors, even if not all are decisive. This research provides new insights into the political conditions that have been conducive for the pursuit of successful economic reform in Australian conditions. It also demonstrates that the use of a conceptual framework encompassing multiple reform hypotheses provides a richer, more nuanced understanding of reform decisions. This is a viable and useful approach for research in this area of interest, particularly when comparing multiple cases.