Former prime minister Paul Keating marked his 80th birthday with a wide-ranging interview in the Australian Financial Review last week, accompanied by a “Keating at 80” article series.
It was a typically breathless affair, recycling the hagiographic cliches about Australia’s long-lost Golden Era of Reform™, the virtuosity of Keating’s self-taught mastery of economics, something about the “big picture” etc. This was followed by the usual nostalgic lament that politicians have since lost the zeal and tenacity to prosecute major reforms.
Today’s pollies could certainly use a dose of Keating’s boldness — in his words, “the country is so timid”. And there was much substantive to celebrate about Hawke and Keating’s program, from the tough-but-necessary liberalising reforms like floating the dollar and reducing tariffs, to their egalitarian compliments in Medicare, welfare increases and Indigenous land rights.
But Keating was not then, and isn’t now, an all-knowing oracle, as he is sometimes deified by the press gallery. His boundless confidence empowered him not only to overcome the forces of complacency on much-needed changes but also to blow past legitimate reservations on less noble quests, such as privatisation, enterprise bargaining and an inadequate recession response, which his Labor descendants have since begun undoing. Nine’s Peter Hartcher worries Keating is only now souring his legacy, but his record was in fact always mixed.
This would be a matter for historians, if Keating did not bob up so frequently in public debate, and if his prescriptions had changed with the times. But they haven’t. He is still pushing the same barrows he was in the 1990s, for better and worse. He is not a prophet; he is a fossil.
But our media still reports his every utterance as wisdom from on high, as if taking notes from the headmaster. “Far too sensible for Canberra”, they scoff, when in actuality many of Keating’s bugbears go unheeded because the policy establishment — and his own party — are (slowly) moving on from the neoliberal orthodoxy that pervaded his era and hamstrung his better instincts.
Take the headline recommendation of his AFR interview: lower income taxes for the highest earners to no more than 39%, down from 45% plus the 2% Medicare levy.
It’s an extension of one of Keating’s most unnecessary and misguided excesses in government — cutting the top personal income tax rate from 60% to 47%. At the time, he dismissed objections from Labor’s left faction by defeatistly claiming 60% wouldn’t be complied with anyway.
Now he wants to go further. “There’s an issue that all societies should have of how much a person’s conscientious efforts and wealth should be delivered to the state,” he told the AFR. “Once you start getting the top rate over, in my opinion, 39[%], it becomes confiscatory and when they become confiscatory you just lose all that impetus to make a dollar and do clever things.”
This is a straightforwardly inegalitarian position — indeed, it would refund more to the very richest than Scott Morrison’s stage three tax cuts, let alone Anthony Albanese’s. It should come as no surprise that Sky News has repeatedly praised his intervention, as has 2GB. It’s also a highly convenient position — Keating is almost certainly in the top tax bracket himself, having recently earned $25,000 a month from consulting services to billionaire Anthony Pratt alone.
His proposal also isn’t backed by economic research. Economists Thomas Piketty, Emmanuel Saez and Stefanie Stantcheva estimate that “a socially optimal top tax rate” could be as high as 83%. Piketty’s mentor Tony Atkinson’s estimate was 65%. Saez previously estimated 73%. Australia’s is nowhere near those. We aren’t at risk of disincentivising productive work. Researchers have also found cuts to top rates across the OECD have not driven higher economic growth or employment.
Yet Keating rarely backs such claims with evidence, and is never asked to — his economic wisdom is assumedly innate, intuitive, almost divine. In actuality, his priors have hardly been updated since the ’90s, during which time the discipline has moved on.
Cutting top tax rates is also out of step with today’s economic reality. Canberra is facing a pending revenue shortfall. It needs to be raising taxes, not cutting them. The alternative approach that Keating suggests — being more “disciplined” with public spending — is callous and unrealistic at a time of rising social needs (an ageing population and rising climate costs, to name two). Even the centre-right journalist Paul Kelly, himself a nostalgic veteran, accepts this reality.
There are other issues on which Keating intervenes productively, and on which he deservedly submits politicians to his lacerating tongue, including our lack of self-assured independence in foreign policy — whataboutism on China’s repression of the Uyghur minority aside.
But his willful blindspots remain — fealty to an outmoded vision of small government and a pigheaded dismissal of contrary evidence or reasonable objection. Such blindspots contributed to Labor’s 1996 election loss and alienation from segments of the working class, something he ironically now criticises Joe Biden for.
It’s not just those from Labor’s left or the Greens, who always had their misgivings about Keating, who find his stale spectre grating. Some less starry-eyed thinkers from Labor’s right also resent their own party’s straightjacket of genuflection, with Nick Dyrenfurth once writing, “Labor needs to jettison its uncritical nostalgia for that [Keating’s] era. It holds Labor back from developing new, relevant policies”.
He might have an amusing turn of phrase — a godsend for journalists needing a quote or TV producers needing an entertaining guest. But our media’s undue deference towards him only feeds his outsized ego. At 80, Keating remains a titan of a bygone era whose time has well and truly passed.
Correction: This article originally stated Paul Keating had consulted for Richard Pratt. It has been corrected to Anthony Pratt.
Is it time to move on from Paul Keating? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
At almost the same age as Keating I have enjoyed the ‘ride’ that his presence has created.
However, equally, as I have grown up, taken the time to explore Economics as it pertains to Government, I have realised that his embracing (about 40 years ago) Milton Friedman’s ‘Neoliberal’ erroneous belief in the primacy of ‘the Market’ was instrumental in the destruction of the quality of any egalitarian/ look after yer mates/ not leaving anyone behind attitudes we may have had as a community.
I cannot forgive him that he has not had the grace to acknowledge and apologise for that, even if he has the excuse that he was following Reagan and Thatcher and that it was the ‘flavour of the month’ thing to do at the time, Economic Guru he is not!
Absolutely Ken.
i too have benefited a little from the neo lib policies, but as I have now seen the gross violations of any sense of a fair society that arise, i cringe. The destruction of our health and education and numerous other previous public services but privatisation and ‘americanisation’ can only now be fixed by some sort of revolution. It is clear that the balancing political force of yesteryear – Labor – has disappeared down the neoliberal rabbit hole, equality and political morality are struggling to survive.
The moment when Australia lost it to corporate power came to us thanks to Bob Hawke. At the end of Whitlam’s last term he warned of the risk that money would take control in the absence of vigilance [see ABC series on Whitlam] but instead of vigilance we got capitulation. We lost any semblance of balance between government power and private enterprise at a moment in history when the government [Hawke] should have held strong.
There is no question now as to where the power lies and I cannot see an incremental way of restoring government to it’s rightful position, rather than by, revolution as you say or total financial collapse of a system that is racing down a blind alley. The latter seems to be a logical extrapolation of continuous bleeding of money from the lower and middle class up to the few percent of super-rich.
By the time Keating got into power a turnaround would have been nearly impossible, even if he wanted to do it, which he didn’t. Tariff reduction and Medibank [the precursor to Hawke’s insurance scheme] were Whitlam initiated and Hawke merely followed through with them.
Credit to Keating now for opposing AUKUS but in a sense he was Labor’s Abbott, crushing his opposition with force of personality rather than leading us on to a brave new world.
Fully agree with everything you have said. I would go so far as to say he never even read the neoliberal policies just listened to advisers. If he did he might have seen how it was designed to smash Unions and create the fertile field for Politicians to spread largesse, they love that but rundown Government services and be able to blame everyone else for necessary hard decisions.
“It’s an extension of one of Keating’s most unnecessary and misguided excesses in government — cutting the top personal income tax rate from 60% to 47%. At the time, he dismissed objections from Labor’s left faction by defeatistly claiming 60% wouldn’t be complied with anyway.”
That is true. The 60% was never complied with anyway because of the ma y loopholes that exist in the tax system. There were more loopholes then. True Keating tried to tackle some of them but there was no cap on private superannuation contributions for concessional tax treatment. Negative gearing flourished. Salary sacrifice was all the rage. I never met one soul in all my 63 years that would not opt for going into a higher tax bracket through increased salary movement. This disincentive argument is a furphy. Truth is these people just want more for themselves. Who doesn’t? Question is, is it justified?
Exactly. Who would decline a salary increase just because that increase, and only that increase, is taxed at a higher rate than all the other salary you’re still getting at a lower rate?
This disincentive argument is a furphy.
Indeed it is. Who’s to say that keeping more of one’s pay will incentivise one to do more work rather than allowing one to enjoy the same net income while working less? It’s a myth, this incentivisation stuff. Anyway, a huge proportion of the work-force can’t work any harder or longer hours even if they wished to. Many are expected to work excess hours for no increase in pay, and employers are constantly trying to lower their real incomes.
The most telling thing which makes incentivisation a nonsense is this: if employers wanted to incentivise workers to do more work, and believed more money in their pockets would do that, wouldn’t they simply increase their pay? As you say, MG, has anyone ever knocked back a pay rise simply because of bracket creep?
No, incentivisation through lower taxation is simply an excuse to give a special treat to the very highly paid, so those who already have a lot can have even more of it.
Right on. There’s only so many Mercedes you can salary sacrifice.
Too right. It’s not justified. The last thing we need is any incentive for more rich w4nkers to “make a dollar and do clever things.” Look around and see the sh!thole that’s left us in.
The “clever things” they did was to make ever more shell games to con the rubes.
Well said. It’s about time someone burst the ‘Keating = oracle’ bubble. He deserved plaudits on Aboriginal issues and the republic but in economics, he’s remains a neo-liberal Tory. As pointed out, in foreign policy too, his stances have been problematic. As well as in relation to China, Keating’s deferential support for dictator, Indonesia’s Suharto and his recent hagiographic assessment of Henry Kissinger’s dubious legacy are obvious failings. Few journos and commentators are prepared to take him on, probably because of his hallowed status in the ALP and his notorious acid tongue.
Rubbish
I thought that K’s post was quite balanced Terry. There is certainly some “rubbish” among these posts but K’w was not one of them. (I am too polite to be more specific than that Terry.)
Extremely well said, thank you.
” Perhaps Mr Clark should have a yarn to Mr Rundle “Keating aside, progressive politics goes missing as the country readies for fight of its life Few in positions of power or authority are asking questions, raising doubts or voicing objections about the imperial alliance in which Australia is entangling itself.”
I do hope that Mr Clark writes a similar article about that other fossil john Howard .
Fore lock tugging Howard ( ninja turtle) at gun rally way back in the day always reminded me of a turtle when he stood on that platform in Tassie.
Read elsewhere that he has now ventured into the Dunkley by-election.
Yeah, I got an email from him yesterday looking for donations for Dunkley.
Fair call. No mention of Keating’s views on Superannuation in the article.
So I will mention it.
Keating boldly introduced compulsory Super. A masterstroke. Unfortunately Superannuation is a massive tax dodge for the wealthy. It was meant to be a win for workers to provide a dignified retirement and yet Keating argues against changes.
I respect and admire Keating and yeah he did not get everything right ( including high interest rates) but his attack dog approach, his wit and his putting down the Opposition was and remains a big part of who he was and still is.one of the best Politicians I have ever known.
The fools representing us now and prior could not shed a light on that era and including Gough Whitlam when he was PM.
your “did not get everything right” would have to count as one of the understatements of the century. If Keating got something right it was usually as a consequence of following other people’s advice or dumb luck.
Keating is chiefly beloved by the ALP rank and file because he hated the same people they hated. He had a lacerating style in Parliament and said the stuff out loud that thousands of people said at their televisions . But like all autodidacts he was a slave of intellects that were both large and wrong. His policies were simply Reagan/Thatcher with a dash of union laborism. Much better than the US/UK version to be sure. But it delivered essentially the same result.
Yep, his ability to cut the LNP to pieces was amazing but he was still the epitome of arrogance.
Superannuation was privatising the pension by gifting the finance industry a vast (and ever increasing) bucket of money they could skim a percentage off for doing very little at all.
This is the same thought process that produced the Future Fund, Disaster Relief Fund, HAFF, and I’m sure more to come.
Yes, all these things should be direct government services, operated by govt employees and paid for by us, the taxpayers.
We have been facing relatively fewer working age taxpayers vs. an increasing mass of retirees living longer….. join the dots….
No, long term demographic decline in permanent population that would seriously impact budgets in future; most nations now encourage temporary residents like Oz via NOM net OS migration of ‘net financial contributors’ e.g. students, but misdescribed as ‘immigrants’ (by ‘Australia’s best demographer’), then dog whistled by RW MSM……
Don’t know that PJK can be blamed for the Costello amendments that allowed the tax dodges for the wealthy.
And then there is all the guff spouted by the LNP about superannuation plus their policy of letting workers cash in some superannuation benefits during the pandemic. There should have been better support for working people during Covid but #30’s government gave their largesse to mates like Gerry Harvey ($30,000,000).
As an older-than-boomers retiree, reliant on two streams of superannuation (left one and preserved the benefit when I changed employers), I lead a comfortable but far from wealthy life. I always listened carefully to PJK on superannuation and have been really grateful to him.
An interesting point about compulsory super is that for nearly 20 years it was a wild west – crooks came to many workplaces signing up folks byt not mentioning the $30k comission they were earning.
Freedom of choice of fund was only legislated in the early 2000s – before that my employer had abused their super scheme as a new money spinner – wasted an entire decade of accrual before i was allowed to switch to AustralianSuper.
BTW its pretty annoying to find a positive diring the Howard years.
Howard was almost literally a stopped clock; that’s how you can deal with finding a positive or two in his poisonous legacy.
Yep, start of a wasted generation looking back to the 1950s and 19thC…..
Crikey ran a very thought-provoking piece on the flaws in super some time ago:
https://uat.crikey.com.au/2023/01/19/superannuation-system-flawed-retirees-disadvantaged/
Forseeing demographic decline in the permanent population and the two decade boomer ‘bomb’ hitting pension age and tugging on budgets with start of working age decline in permanent population.
Also Costello who helped leverage super for tax minimisation benefitting the wealthy; broader benefits won’t be seen once all retirees have had working life of contributions, within the next decade.