THE SATURDAY PAPER
AUGUST 27 – SEPTEMBER 2, 2016 | No. 123
AUGUST 27 – SEPTEMBER 2, 2016 | No. 123
After early co-operation with Bob Hawke, Roger Neave watched as the IPA became the radical propaganda arm of the Liberal Party. By Mike Seccombe. Former IPA head: radicals ‘hijacked’ think tank
1. Appalled by transformation
2. Neoliberal economics
3. The shift begins
4. Moderate elements driven out
5. ‘Economic lunatics’
6. Pushing an agenda
7. Economic woes
8. Worrying results
It was 1974 when Roger Neave had his idea for a somewhat unusual TV series. This was still four years before he took over at the Institute of Public Affairs, the body better known as the IPA.
The concept crystallised from a couple of elements of Neave’s own life. One was his work as a TV writer. At the time he was writing scripts for Bellbird, a gentle, bucolic soap opera set in a rural Victorian town.
The other element was his previous work as an executive in British industry with the Rootes Group, which made Humber, Hillman and Sunbeam cars, among other vehicles.
A decade earlier Neave had been deeply involved in the Rootes’ effort to produce a radical new small car with an aluminium engine, the Hillman Imp.
A new factory was built, and the plan was that it would operate under a whole new model of industrial relations for Britain, in which the workers would all belong to a single union instead of a couple of dozen of them.
“Little was known about economic rationalism in Australia and the IPA was keen to promote it.”
This model, says Neave, had been the basis of German industrial success after World War II.
“It meant [union representatives] had seats on the board. They had as much influence on what was going on as top management. They worked together.”
When the concept was put to the local workforce, he says, they all agreed to it.
“But,” says Neave, “the union bosses in London stopped it.”
The bloody-mindedness of those union bosses was a major factor in the subsequent demise of the Rootes Group, Neave says.
In 1974, he thought the destructive industrial conflict he had lived through could be adapted into a drama for the small screen. Indeed, he already had adapted it to other media. He wrote a regular column for the business section of The Age newspaper setting out an instructive fictional story.
“It was about the continuing saga of a small manufacturing company providing spare parts for the motor industry,” he says. “It ran for seven years.”
The TV series, like the column, would explore the conflict between old command ideas within management and the communist influences within trade unionism, and set them against new, co-operative concepts.
Neave went looking for influential people who might help him realise plans for a TV series based on industrial relations.
He found the most influential man in the world of industrial relations, then-president of the Australian Council of Trade Unions, Bob Hawke. Hawke in turn connected him with the film and Labor figure Phillip Adams.
Things progressed well. With a co-writer, Neave produced full scripts for two or three one-hour episodes, and storylines for another four or five.
“We got as far as hiring studios in Ballarat. Then suddenly there arrived on Australian television a very similar series on the building industry in New Zealand,” he says. “It just killed ours.”
But all was not lost. For one thing, he had made a valuable contact in Bob Hawke. For another, his advocacy of a better, more co-operative model of industrial relations had impressed other men of influence. Men connected with Australia’s oldest think tank, the Institute of Public Affairs.
Appalled by transformation
And that is the point of the whole anecdote. There was a time when the IPA was not run by hard-right ideologues, radical free marketeers and social reactionaries. Once upon a time, it was run by Roger Neave. And he is appalled by what it has become since his day. So, for the first time, he is speaking out about it. He says the IPA was “hijacked”.
But first, a little context. The IPA was established in 1943, and was largely the baby of Charles Denton “CD” Kemp, or Ref, to his friends. Kemp was also a major influence – the major influence, in the opinion of some – on the policy platform of the nascent Liberal Party, established two years later.
Ref, says Neave, was a traditional liberal. He was anti-union, but “also believed it was the obligation of the rich and powerful to look after the underprivileged. Noblesse oblige.”
In those days, the IPA was “the conscience of the Liberal Party, not its propaganda arm,” Neave says.
And when the deputy director’s job came up in late 1976, Neave applied.
He was well credentialed. He had an MA in philosophy, politics and economics from Oxford. He was a good communicator. He was chairman of the Liberal Party Brighton branch and had previously stood for preselection for the party.
He got the deputy job and 15 months later, in February 1978, Neave became director.
The interview for the IPA job, he recalls, was “all about economic rationalism”.
“Little was known about economic rationalism in Australia and the IPA was keen to promote it. At Oxford I had studied its origins in the postwar German economic miracle and was an enthusiast.”
Economic rationalism was a uniquely Australian term for something known elsewhere as neoliberal economics, itself a somewhat amorphous term that originated in Europe as a “third way” between laissez faire economics and socialist state planning, but was later co-opted by hardline elements.
But it became increasingly clear there were big differences in what Neave thought was meant by the term and what other elements of the IPA thought.
Neave continued to reach out to unions in his quest for an approach to industrial issues based more on consensus. He continued to talk to Bob Hawke.
“He and I were pretty much on the same wavelength. He agreed to publish jointly with the IPA – the ACTU with the IPA – a booklet about partnership in industry,” he says.
“That booklet exists, but at the last minute the ACTU pulled out and it was published by the IPA alone.”
That, Neave says, was the end of “the IPA’s brief tryst with the ACTU”.
The ACTU’s retreat might be seen as a reaction against shifts that were happening within the IPA and other similar organisations at the time, shifts that Neave saw close up.
That year he attended a meeting in Hong Kong of the Mont Pelerin Society, an organisation that had – and still has to this day – close links to the IPA. The talk there was all about an interpretation of economic rationalism vastly at odds with Neave’s understanding.
“I was appalled,” he says. “I saw greed with a capital G. Economic rationalism was being promoted with no checks and balances…”
These people didn’t want to engage organised labour; they wanted to destroy it. They wanted capital unfettered by the constraints of government. They believed, as US president Ronald Reagan would neatly summarise a couple of years later, that “government is not the solution to our problem, government is the problem”. Their version of neoliberal economics was laissez faire, rebadged.
Such people were taking over the IPA.
“We regret to announce the resignation of the Director, Mr. Roger Neave, M.A. (Oxon.), A.F.I.B.A.,” said the IPA Review of July–September 1979.
In reality he did not jump, he says. He was pushed. A coup was staged while a couple of his key supporters were out of the country.
Moderate elements driven out
From the outside he watched as other moderate elements were driven out, and as the contagion spread into the Liberal Party itself. He soldiered on as a party member for a while, but eventually quit when John Howard became leader. The party Sir Robert Menzies named Liberal because “we want to be a progressive party, in no way conservative, in no way reactionary”, now had a leader who would proudly self-describe as the most conservative ever.
There ends the story of Roger Neave at the IPA. But the story of the IPA’s drift was just beginning.
The late 1970s and early 1980s was a time of great activity on the political right, in Australia as elsewhere in the English-speaking world. The economic theories of free marketeers such as Milton Friedman and Friedrich Hayek were increasingly ascendant.
We mention those two particularly because in 1975 they were brought to Australia and duchessed by the new Liberal government. David Kemp, son of CD, was Malcolm Fraser’s senior adviser at the time. As recounted by Professor Sharon Beder of the University of Wollongong in her 2006 book Free Market Missionaries: The Corporate Manipulation of Community Values, the visit of Friedman and Hayek encouraged the radical free marketeers to get out and sell their message.
The visit directly inspired the formation of a number of new organisations, the Centre of Independent Studies in Sydney and Centre for Policy Studies in Melbourne being the most notable. Others included a somewhat shadowy group called Crossroads, which operated through various front organisations, and later the H. R. Nicholls Society, set up in 1986 and devoted to dismantling Australia’s industrial relations system, abolishing awards and minimum wages.
A young barrister named Peter Costello was one of the latter’s progenitors, along with former treasury secretary and future National Party senator John Stone, who later distinguished himself by writing the flat-tax economic policy that became the centrepiece of the corrupt Queensland premier Joh Bjelke-Petersen’s policy manifesto when he sought the prime ministership.
The PM of the time, Bob Hawke, characterised the H. R. Nicholls group as “political troglodytes and economic lunatics”. Just a decade later, one of those “economic lunatics” became treasurer of Australia.
The constituent organisations of the “new right”, as they came collectively to be called, were many but not varied. The same names kept popping up in association with different organisations.
The men driving them were different from those who had featured in the more moderate business groups of the past. To an increasing extent, they did not come from retail or other sectors that once sought protection from the world. They came largely from the globally focused businesses of finance and resources, and they came with large amounts of money to buy influence.
“In the 1970s and 1980s there was an influx of new activists from the mining sector in particular,” says Damien Cahill, associate professor of the political economy department at the University of Sydney.
“One of the key ones was Hugh Morgan, of Western Mining.
“He was a key broker between big business and the funding of several neoliberal think tanks, right-wing think tanks, from the 1970s onwards.”
One of those think tanks was the IPA. Little more than a year after Neave was dumped, the organisation was completely remade.
As Beder said in her book: “… under the direction of Rod Kemp, David’s brother … the IPA enjoyed a corporate-fed revival. Kemp was approached to be director of the IPA by Sir James Balderstone, who sat on the boards of BHP, Westpac Bank and AMP insurance, and the IPA was relaunched with Morgan, Balderstone and other business leaders on its board.”
Morgan became treasurer. The ideologue Stone became a senior fellow soon after.
In no time flat, says Cahill, the institute went “from being a broad supporter of the postwar consensus to a critic of that model and an advocate of the radical liberalisation of the Australian economy”.
In the years since, it has set purposefully about pushing that agenda into conservative politics. Australian parliaments are now replete with former alumni. Both the Kemp brothers made the move, for example. Most recently Tim Wilson, formerly the IPA’s director of climate change policy and the intellectual property and free trade unit, was elected to the Victorian blue ribbon seat of Goldstein. James Paterson, former deputy director of the institute and communications director, became a senator for Victoria. There have been many others in between.
There is no disputing that there were aspects of neoliberalism – the opening up of markets, freer trade, reduced protectionism – that were beneficial. And it’s ironic to note that most of those really big and worthwhile reforms were actually introduced not by the IPA’s fellows in the Liberal Party but by Labor.
There’s no doubting either that the IPA and other think tanks of the new right were in tune with the times. The neoliberal manifesto of reduced regulation, smaller government, privatisation, globalisation and trickle-down economics, which held that tax cuts for rich corporations and individuals would stimulate the economy and ultimately benefit all, became dominant across the Western world.
Perhaps the ultimate, terse, exposition of the philosophy was that of Margaret Thatcher, who famously told an interviewer in 1987 there was “no such thing as society”. There were only individuals, families and markets.
People, she said, had to look after themselves.
But in too many cases, privatisation led to the transfer of wealth from public to private hands, and to reduced services for consumers. Where there were revenues to government from the selloffs, they were given to high-income earners – as treasurer, Peter Costello was a champion at this.
Globalisation has seen jobs and corporate profits shifted offshore. The hollowing out of government has diminished its capacity. Financial deregulation and a belief in the rationality of markets delivered the global financial crisis and the Great Recession.
Trickle-down economics didn’t work. Instead, wealth flowed upwards. The resulting growth in inequality is seen most starkly in the United States and Britain, but it is happening in Australia as well.
Notwithstanding its failures, says Damien Cahill, neoliberalism staggers on. But increasingly it is questioned, even by former advocates.
“Forecasts for economic growth are being continually revised down by the IMF [International Monetary Fund], There is a situation of global stagnation,” he says.
“It’s all indicative of the reality that neoliberalism has not been able to provide the economic growth in a crisis.
“Policymakers are now looking around for a new institutional architecture capable of providing that growth.”
And, it should be added, spreading it more evenly.
The inevitable result has been an increasingly angry public and an increasing polarisation in politics. Even former prime minister Tony Abbott recently lamented the “hyper-partisanship” of contemporary politics. Which is ironic, given his pre-eminent role in encouraging it.
In a recent speech Andrew Leigh, a professor of economics at the ANU before becoming a Labor politician, highlighted some measures of this polarisation, here and around the world.
“In 1960,” he noted, “just 5 per cent of Americans said they would be displeased if their son or daughter married outside their political party. By 2010, 41 per cent said they would be unhappy at such a prospect.”
Americans are now more disturbed by cross-party marriages than by interracial or same-sex relationships, Leigh said.
Other American research, highlighted in a Washington Post article by academics Jonathan Haidt and Sam Abrams, also shows the deepening ideological divide in politics.
Analysis of the voting records for members of every US congress since 1879 showed the two sides of American politics were ideologically closest just after World War II. There was no significant divergence until the late 1970s, then a radical one. The Democrats drifted slowly more progressive, but Republicans became rapidly more right wing.
Australia’s political system operates differently, so such comparisons are not possible here, but Leigh points to studies that asked Coalition and Labor voters about their attitudes to the other side. Since the 1990s, the share of people who hate their opponents has risen from under one in six voters to more than one in four.
Other studies have produced even more worrying results. A poll by the Lowy Institute in 2014 showed 40 per cent of people questioned the value of democratic government. In recent elections, ever more people have voted for fringe parties.
The reality behind all these outcomes is surely obvious. A lot of people do not believe the system is delivering benefits for them.
Last month, in the wake of the Brexit vote in Britain, the Economist magazine – hardly a left-wing publication – summed up the crisis:
“Across Western democracies, from the America of Donald Trump to the France of Marine Le Pen, large numbers of people are enraged. If they cannot find a voice within the mainstream, they will make themselves heard from without. Unless they believe that the global order works to their benefit, Brexit risks becoming just the start of an unravelling of globalisation and the prosperity it has created.”
It went on to suggest the failure of the prevailing economic model to spread the benefits made that anger inevitable and justified – if misdirected towards other targets such as “immigration, globalisation, social liberalism and even feminism”.
There is evidence to suggest that misdirection of anger has been encouraged by the right-wing think tanks and the politicians they have fostered.
Richard Denniss, chief economist for the progressive think tank The Australia Institute, provides a current example – the push to water down the Racial Discrimination Act, which has been substantially driven by the IPA.
And another: the IPA’s hostility to environmentalism and particularly towards action to mitigate climate change.
Across the broad right of politics, Denniss says, there are people who “relish participating in culture wars, who see their role as picking fights with progressives rather than delivering outcomes for society”.
Damien Cahill notes that neoliberal policies have “never been popular with the voters”.
Far better for those who push such policies that people focus on “other ostensible manifestations of chaos, disorder and breakdown, such as asylum seekers”.
He notes Trump and Brexit, and says that the right of politics has shown itself “inclined to turn to racist discourse in order to solidify their electoral base”.
He does not suggest this ugly new politics has been deliberately fostered by groups such as the IPA, only that it provides them convenient cover.
Roger Neave’s view is a whole lot darker. The reason he first contacted The Saturday Paper, he says, is that he is embarrassed about his previous associations.
He wants it known that the organisation he once ran, and the party he once belonged to, were very different in his time. Politics was different, on both sides.
Specifically, he was motivated to go public because of Australia’s treatment of asylum seekers. It was because the “surge of the right has led to the demonising of refugees. Children overboard, then we imprison them”.
“I want my pride back in being an Australian,” Neave says.
This article was first published in the print edition of The Saturday Paper on August 27, 2016 as "Former IPA head: radicals ‘hijacked’ think tank".
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Mike Seccombe is The Saturday Paper’s national correspondent.
August 27, 2016
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