Much as it often seems that the principal endeavour of Australian politics is the identification and plumping of new and juicy topics over which to brawl like a pack of cage-starved circus weasels, there is one thing — quite a big thing, really — which used to be a major fissure in Australian politics, and now just pretty much isn’t.
Protectionism.
If you had to Google “protectionism” just now: Don’t feel bad.
Tariffs, protectionism and free trade — terms that nest under the national umbrella question of whether it is a good idea to protect Australian widget-makers by taxing the bejesus out of near-identical widgets imported from another country — are just not things the Australian Parliament has fought about in earnest for decades now.
The last time anyone in a major party had a serious crack at arguing for the preservation of tariffs, it was left-wing Labor senator Doug Cameron arguing at Labor’s 2000 national convention for “fair trade” and a “social tariff”, while the majority of his party fondly pelted him with rhetorical beer cans.
See former Labor PM Paul Keating, for instance, who observed that year with customary asperity: “In the international division of production we have to be at the front of the wave. We have to be on the board with our toes hanging over the front! If we are up the back just sloshing about waiting for the next wave — which is where Doug Cameron and co are — the likelihood is it will go straight over the top of us.”
Cameron is pretty much still where he was on the board. But the Labor Party — even despite the fact that it’s now led by Cameron’s long-term friend and NSW Left ally Anthony Albanese — hasn’t budged.
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We used to brawl about tariffs
It was not ever thus. We used to fight about tariffs in Australia. In fact, for the first decade of our federation, it was THE fight. The definitional fight! At Federation, we abolished tariffs and taxes between colonies — the janky, sclerotic system whereby train travellers would be frisked at the border for luxury frocks and finery, or forced to declare dutiable booze.
But international tariffs — those we hung on to. And those we fought about, viciously and for the greater part of our first decade.
The major parties at our first federal election in 1901 were the Protectionists (Barton, Deakin, and so on), the Free Traders, and the Labour Party. Each had about a third of the vote. Short-lived minority governments were the norm.
In our first decade, we swore in nine prime ministers, in an all-consuming and ongoing dust-up that rent state from state, drove countless double-crossings and dirty tricks, and burned through even more prime ministers than we did in the Disposable Decade of Rudd/Gillard/Rudd/Abbott/Turnbull/Morrison.
So thick and confounding was the gun smoke emitted by this national shootout, in fact, that the calendar year of 1904 saw both the world’s first Labour government (under Prime Minister Chris Watson, who lasted from April to August) followed by surely the world’s first and only Free Trade/Protectionist minority government, led by the genial Free Trader George Reid, which lasted a smidge longer than Watson’s Labour government but succumbed to its own internal inconsistencies after 321 days.
Alfred Deakin (front row, second from right) and his contemporaries brawled on tariffs.
(Supplied: Australian Parliamentary Library)
The Protectionist Alfred Deakin returned for his third go at the prime ministership after that, shrewdly expanding the High Court and appointing some leading Free Traders to the bench, whereupon the remainder of them grumped off and restyled themselves as the Anti-Socialist Party.
The short story?
The Protectionists won the argument. For many decades, Australia maintained punishing tariffs on imported goods, which by the early 1930s rose to an average of 37 per cent. For an island continent, the idea of protecting Australia products and jobs against the depredations of cheap imports was too strong. Plus, it gelled nicely with our national commitment to restricting the importation of non-white new citizens, another longstanding policy of the Protectionists.
But the short story doesn’t always match the long story.
(One is put in mind of the brilliant old anecdote, almost certainly apocryphal, of British PM John Major hosting Russian President Boris Yeltsin and asking him how the Russian economy was going. “Good”, Yeltsin is fabled to have replied. When Major asked him to elaborate, Yeltsin replied: “Not good”.)
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Both parties have stuck to our guns
In the long story of our Federation’s tussle with the question of trade barriers, it’s not the Protectionists who win. It’s the other guys.
Not because Australia ever again voted in an election fought explicitly between parties named for their stance on tariffs.
And not because we found ourselves at the point of a gun wielded by avaricious trading partners.
Australia relinquished its tariffs because its political leadership — in a pattern sustained across multiple governments of both political stripe, and on the advice of economists and national institutions like the Tariff Board and the Productivity Commission — decided that it was better for Australia to have an open economy than a closed one.
(For a good summary of how this evolutionary thinking unspooled in the Labor Party, see this engagingly-written article in the Australian Journal of Politics and History put together by keen young Harvard student Andrew Leigh, now assistant competition minister in the Albanese Government)
Gough Whitlam cut tariffs by 25 per cent across the board in 1973, suddenly and without prior notice, which engendered understandable spluttering from unions, employers and the opposition, but his successor Malcolm Fraser — who disagreed with Whitlam on many things — did not reinstate them.
And after Bob Hawke laid out a schedule of tariff cuts in 1991, the pattern of trade barrier removal continued not just through the subsequent Labor prime ministership of Paul Keating (unsurprising) but through the ensuing prime ministership of John Howard and through subsequent governments who have signed free trade agreements and paid attention to multilateral principles of free trade and whose opponents have resisted – for the most part – making partisan hay from the hardship that is undeniably occasioned by the dismantlement of protective trade barriers. Sure, these wounds were periodically dressed with a thick and calorific salve of industry assistance, but this is a short column, and I want to get to Donald Trump.
Because after many years of not fighting about free trade, and being terribly grown-up and principled about the whole thing, Australia has of late encountered first one and now two giant trading partners who absolutely want to fight about it.
And in these circumstances, our existing free trade agreements with both those nations (we signed one with the US in 2005, and one with China in 2014) don’t mean much at all.
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Out of our hands
When Doug Cameron argued that free trade hurts workers at home and enriches the unworthy, the Labour leadership tousled his hair and ignored him. But when Donald Trump takes up the tune, we’re suddenly obliged to snap to attention, anxiously reassure each other that it’s probably just a negotiating tactic, and ask if anyone’s got Greg Norman’s mobile number.
There are plenty of reasons, Australians may reason, why our nation might be exempted from the threatened next round of Trumpian tariffs, on stuff like aluminium and pharmaceuticals.
We are not a gateway to America for either opioids or asylum seekers. We have a trade surplus with America. A TRADE SURPLUS! Our biggest exports to the USA are (and here I reproduce faithfully the US Embassy’s exact assessment: Financial services. Gold. Sheep and goat meat. Transportation services. Vaccines.
In the last week, I’d querulously add, we have provided a significant stimulus to content providers in the crucial US showbiz sector by means of our SA export, Bianca Censori. Will that be enough to save us?
It’s out of our hands. For all our careful obedience to international convention, it seems our fortunes may be vulnerable to the prioritisation of American workers, as judged by a man well-known for not paying them to build his skyscrapers.
All of a sudden, world leaders are recalibrating their approaches. “WTO negotiator” gigs have dried up on Seek. Gold coaches are booming.
Here’s something interesting, though. So far, the Australian domestic accord on free trade has held. Across the Morrison and Albanese governments, through the unilateral offences committed by our partners — the Chinese tariffs on Australian wine and lobsters and barley, the threat of US steel tariffs in Trump Mark 1 and the shadow of further sanctions to come — the consensus between Australia’s major parties has held. Sure, there’s been generalised grousing about who’s not been tough enough and who’s failed to “just pick up the phone” and whose idea Kevin Rudd was, but the siren call of retaliatory tariffs has been resisted all round.
For a Federation-born squalling and brawling over this very issue, a bilateral commitment to free trade is one policy consensus that appears to be holding. Is it holding? Will it? Can it?
