Background to the 1990 and 1991 Cabinet records

By Professor Nicholas Brown,  The Australian National University

Political background

Going into 1990 – certain to be an election year – the polls and the press were unflattering to the Hawke government. The people, as Paul Kelly puts it, were 'unhappy, sullen and restless' with policies that had promised national rejuvenation but delivered anxiety. The government seemed unable to shake a 'mood of gloom' that had shadowed it through much of 1989. Its economic management was tainted by recourse to punishing interest rates, reaching 18.5 per cent that year. Publicly aired divisions in Cabinet over core areas of policy – from environmental management to the pace of industrial reform – conveyed an image of scarcely contained tensions. The Labor 'brand' was also tarnished by scandal and dispute in two major states, Western Australia and Victoria. And a drawn-out strike by airline pilots through late 1989 confused battle lines: the government was intransigent, but were the pilots (demanding a 30 per cent pay increase) simply an unrepresentative elite as their skills were ridiculed and their places taken by the Air Force in an ugly confrontation? Prime Minister Bob Hawke ended 1989 conceding his Cabinet needed to lift its game. February, however, saw a rallying to the cause. The signing of Accord Mark VI refreshed the image of 'consensus' between government and the Australian Council of Trade Unions, moving further into the practices of enterprise bargaining. Sweetened by a wage-tax deal and awards-based superannuation, the agreement offered the promise – as Treasurer Paul Keating assured – of 'wage increases already in the pipeline', and tax cuts as well. That month also saw the Reserve Bank cut its official cash rate by a 'modest' 0.5 percentage points, but this was still a sign of easing.

These moves were sufficient to revive the government's fortunes and encouraged Hawke to call an election on 16 February for 24 March 1990. Once campaigning began, weaknesses emerged in Opposition policy under the leadership of Andrew Peacock. The choice was judged by the Weekend Australian to be between 'two disappointing opponents – an often smug government and an often confusing Opposition'. Polls suggested that a quarter of voters remained undecided until the last days of electioneering. The election poll saw Labor returned, but with a majority reduced from 16 to eight seats in the House of Representatives. While the swing against it was more than 6 per cent, that to the Liberals was less than 1 per cent, with 3 per cent against the Nationals. The Democrats did well, and an Independent (Ted Mack for North Sydney) entered the chamber. Some analysts saw the first signs of the end of the 'rigid two party system', or at least that the public seemed more prepared to savour alternative perspectives.

Delivering Labor an unprecedented fourth term, this result was a significant personal victory for the Prime Minister. In campaigning, Hawke had emphasised the importance of national leadership, of 'reason and realism' in policy, and budgetary responsibility: 'anybody who tells the people of Australia that the future lies at the end of an easy road is not fit to be your prime minister'. More pragmatically, the voting revealed the wisdom of strategists' advice to give environmental issues prominence, capitalising on the 'green vote' the party had courted in its previous term. Leaving politics, Peter Walsh – Finance minister in the previous Cabinet, who despaired of the compromises that game had brought – warned against any further courting of special interest groups. The question of how unified a new Cabinet would be on this issue was already in the air.

Early in this new term, Treasurer Paul Keating advised Cabinet that they now had the benefit of being re-elected 'unencumbered by costly and unnecessary campaign promises'. The message was that Labor had a confirmed mandate to entrench the program of structural reform and reconstruction it had begun in 1983. Its priorities now needed to shift emphatically to micro-economic objectives of boosting productivity, efficiency, flexibility and competitiveness. The stage had been set over the three previous terms through bold ventures: the floating of the dollar, the Accord process, the programs of deregulation and the phasing out of protection. Entering its third term in 1987, the government more precisely coordinated its attention to micro-economic priorities in a substantial reorganisation of its portfolios and committee processes. Now the focus needed to turn to the workers, employers and institutions that had increasingly to play their part in transforming the world of work in the Australian nation. This was to be a core focus for the next years. In the process the government was to make a decisive break with many policy orthodoxies of the past. Cabinet submissions and memoranda coming not only from economic departments but also from welfare and service portfolios narrowed in on the bargains to be transacted over workforce participation, workplace culture, transformation and investment.

From early in its fourth term, however, the Treasurer's image of an 'unencumbered' government raised two problems, which would endure for 1990–91.

The first was that the narrative of disciplined micro-economic reform did not lend itself to the political excitement that had surrounded the government's early years. A defining characteristic of the Hawke government's fourth term was that the ideas of policy integration driving it to that point had now to be translated into more specific policies of bedding-down productivity and flexibility. Efficiency, however, was a hard story to sell, once the big gestures of national renewal were said to be in place. Stung by the Financial Review's reception of his first budget for this new term as 'uncharacteristically featureless … with no big surprises and modest objectives', Keating ridiculed a media addicted to 'the Punch and Judy show' of high politics and incapable of understanding the steady, fine-grained management of this next stage of reform. While the government, through its fourth term, would lay over this management a number of broad, synthesising policy themes – among them 'social justice', 'new federalism', 'sustainable development' and 'better cities' – these connections did not galvanise the interest that had energised the media or the electorate to that point.

It was not that the issues lacked importance. Marking the Labor Party's centenary in 1991, Hawke declared that his government was making 'the most concerted attack in the history of the nation on the living standards of the poor, the aged, and low and middle-income families'. At the same time, the 'Building a Competitive Australia' statement committed the government to an accelerated winding-back of industry assistance and protection. These approaches saw an expansion in the inquiries, agencies, projects and consultations deemed necessary to support such goals. But 'process' rather than 'program' began to dominate images of the government, allowing critics from both within and outside Cabinet to question directions, priorities and visions.

The second problem was that the criteria of 'costly and unnecessary' policy became more exacting as the depth of the economic challenges became apparent through 1990. A deregulated economy – and particularly an untethered financial and property sector – had over-heated through the late 1980s and entered sudden meltdown in late 1989. Unemployment began a steep rise from 6 per cent at the start 1990 towards a peak of 10.8 per cent by late 1991. Over the same period, gross domestic product fell by 1.7 per cent. By November 1990 Keating unguardedly conceded Australia was in recession, famously adding that it was 'a recession we had to have' to defuse the accumulated pressures of growth and investment. That sense of inevitable correction, however, had not been factored into the government's planning, and reflected – many argued – a mismanagement of the 'levers' the Treasurer proclaimed to master. A projected, and proudly cultivated, budgetary surplus of $8.1 billion was revised for Cabinet to $2.6 billion by December 1990. Keating advised ministers in early 1991 that, for the medium term at least, 'discretionary spending will need to be severely constrained and the surplus carefully husbanded'. Even with that discipline the figure was down to $1.7 million by mid-1991. The Treasurer then warned colleagues of a deficit of $3 billion for 1991–92.

These circumstances increased the pressure to restrain spending. They also stirred those, again within and beyond the government, who believed that the dogma of steady retreat from interventionist, stimulatory public policy surely now needed questioning. Against such rumblings, the Minister of Finance, Ralph Willis – in milder language than Peter Walsh, his predecessor – counselled Cabinet in February 1991 that 'we must not fritter our reputation away now' by relaxing control over outlays, even amid a 'significant deterioration' in activity across the economy. By then the government was far from 'unencumbered' by the pressures of responding to events.

In dealing with these problems, Cabinet reflected a rise in the factionalism that had become a more open agent in the third Hawke government. One of those who lost out in the selection of new ministers in 1990, Barry Jones, complained of being a victim of the rising arts of 'geography, simple arithmetic and bastardry'. Among the new faces and changed roles in Cabinet the tensions of the past were compounded by a relative lack of experience (the Right's Ros Kelly replacing the more savvy Graham Richardson as Minister for the Environment), by distinct ambitions for their portfolio (the socialist left's Brian Howe replacing centrist Neal Blewitt in Health), by jockeying for place (the threats to Willis in Finance), or simply by the strain of personal relationships among figures now eight years restless in each other's company. Hawke has conceded his attempts to revive his ministry in 1990 lacked finesse in managing personalities. More vital business was being transacted outside the Cabinet Room – as when a special ALP National Conference convened in September 1990 highlighted the bargains being struck over contentious decisions such as the privatisation of Qantas (the government maintained a bare 51 per cent share of the national carrier) and Australian Airlines (100 per cent). And more Cabinet business was being canvassed in public, most graphically in July and August 1990 when divisions over the extent of competition to be introduced into telecommunications services become a front page chronicle, including the leaking of large slabs of submissions and briefing papers to appear as 'The Telecom Papers' in the Financial Review.

Hawke grew openly tired of the 'loose remarks' by 'yappers' in Cabinet, but dealing with them was in itself complicated by factionalism and one of its related, but transcendent, dimensions. With the retirement of Lionel Bowen, Paul Keating became Deputy Prime Minister as well as Treasurer in April 1990. His eye for the leadership was already keen. By the end of 1990 his jockeying for succession was a matter of open, avid speculation. In May 1991 his backers broke the secret of the Prime Minister's retreat from his agreement to ensure Keating's transition to the top job in the current term of government. Some of them, such as John Dawkins, later conceded their intent to make Cabinet unworkable.

All of this was destabilising. The government had commenced its fourth term with the promise of 'an ambitious and far-reaching legislative program' and acted upon it. In two years Parliament passed more acts than any of its predecessors since Federation: 144 in 1990, 204 in 1991. But determined implementation was not the same as reform momentum, and leadership lobbying often made Cabinet a poor cipher for deals done elsewhere. Morale within the government and in Labor caucus was observed to be flagging amid uncertainty about core messages and constituencies, and a ruck for scant resources for new policy. There were also reviving Opposition fortunes under the leadership of Dr John Hewson. In November 1990 the Morgan Gallup Poll recorded Labor at 32 per cent as preferred government, trailing the Opposition by 18 per cent. In July 1991 Keating challenged Hawke, losing by 44 votes to 66. In November 1991 Hewson launched the Liberal's Fightback!, an ambitious manifesto of tax reform, spending cuts and micro-economic reform that seeming at first to out-flank whatever was left of Labor reformism and to trump it for public attention. On 19 December, in his second challenge, Keating narrowly defeated Hawke – then Australia's second longest serving prime minister – for the leadership of the party, 56 votes to 51. Assuming office with a 'cohesive and comprehensive plan to get the country cracking', Keating also had to respond to entrenched divisions in his Cabinet about what such a plan should comprise, and in a summer of deepening drought that underscored a pervasive sense of national vulnerability.

As the memoirs, biographies and political accounts of this period have established, these policy issues deeply tested concepts of 'Labor values' and loyalties. Hawke's own account of his fourth term is titled 'making history', deflecting arguments that his government was 'paralysed' in this period with an itemisation of those areas in which 'I put my stamp on the wider reconstruction of the Australian economy'. Cabinet records themselves reflect little of the tensions of the times – certainly less than the papers of 1988–89, perhaps reflecting an attempt to reimpose process and discipline on a group that could lapse by the latter half of 1991 into 'sullen … acrimonious fatigue'. Departments knew their roles and their limits. And Cabinet papers give little sense of what was said by ministers in discussion – for that we need to wait for the release of the relevant Cabinet notebooks. But they still give an arresting account of a time of deep questioning.

Economic settings and priorities

Returning to its offices in April 1990, the new government confronted an economic downturn that Keating conceded by May could be 'somewhat more severe than expected', and both 'longer and deeper' as a reflection, in part, of the preceding 'lengthy period of monetary tightness'. He assured colleagues that the gaol of Labor's previous term, to secure a rising budget surplus, was still in place. But 'we are starting this year's budget round from a much weaker position' than in 1989. A 'slowdown' was evident across the economy, significantly reducing revenue and spurring welfare expenditure. A 'step-down' in options for assets sales was a further constraint: where was money to come from? There was, Keating counselled, 'no alternative but to continue the hard slog' of restraint. Cabinet was advised in June that forward estimates for outlays were running at a 3.7 per cent real growth whereas the Budget had been framed around a figure of 1.8 per cent. By February 1991 it was evident that the current financial year would be 'only the third time since 1974–75 that actual growth in outlays will be more than twice the inflation rate (9.8 per cent compared to 4.2 per cent)'. Willis made the appeal that 'while each component of the deterioration is defensible, together they present us with a difficult fiscal situation'. He added: 'I think it would be prudent to assume that between now and the next election we will not be able to afford any net increase from our policy decisions if we are to achieve the desirable restoration of public savings'.

The culling of programs was imperative. Of policies under consideration in June 1990, 51 were judged 'unavoidable', but 55 were 'deferrable', and 113 'dispensable' – Foreign Affairs and Trade, Administrative Services, Employment, Education and Training, and Social Security being the portfolios hardest hit. Departments were encouraged to nominate one core initiative to be favoured on the basis of its contribution to economic development. Submissions were couched in terms of minimal cost, with all funding to be ideally found within existing allocations. Members of Cabinet were encouraged to achieve a level of inter-departmental policy coordination in advancing goals such as the Prime Minister's own overarching 'social justice strategy' as an end of micro-economic reform. But there remained in coordination comments on such proposals a questioning of any initiatives that seemed only to duplicate responsibilities that were best left with the specific agencies that already had charge of set processes and clear criteria against which outcomes could be assessed.

If the scrutiny was hard, it was tempered by frequent reminders that recovery would – eventually – come to an economy that was, as a result of reforms to cost structures to that point, assured of a strong return to health: competitive, open, efficient. It was also framed by reminders that Australia was far from alone in enduring pain. Keating reminded Cabinet in early 1991 that the risks and uncertainties surrounding the world economy were greater than usual: 'indeed, the OECD recently declined to issue updated forecasts for this reason'. Not least among the demands for money, and the contributors to a pervasive sense of insecurity, were the consequence of global events such as the collapse of communism in Eastern Europe and the Iraqi invasion of Kuwait in August 1990, followed by Australia's commitment to the 'First War'. The world itself was changing fast, and throwing up new sources of insecurity.

The message, then, was to stay on message. Hawke's March 1991 economic statement on national competitiveness made no concessions to economic uncertainty in up-grading commitments to the next round of tariff cuts, projected to fall from a general level of 10–15 per cent to 5 per by 1996. Nor should there be any relaxing in priority areas of industrial reform. The automotive sector was to continue on the path of rationalisation in order to achieve international competitiveness, with the government endorsing an Industry Commission report in 1991 that favoured a phasing out of protection at levels now likely to 'impose more than gradual adjustment pressure' on the sector. Cabinet agreed that 'the reduction in the tariff must be sufficient to ensure production ceases if it has little prospect of becoming viable'. For the textile, clothing and footwear sector, the point was sharper: the current program of tariff reform was judged to be 'providing little restructuring pressure' and needed to be 'accelerated'.

'Pressure' was a recurrent theme in 1990–91. Accounts of Cabinet discussions record concerns raised by some ministers on the Left at the impact of such reductions on employment, and the need for compensation support for valued industries. But pressure was not be relaxed. Having established the principles and structures of reform, the government had now to ensure that target groups moved through them. John Button, as Minister for Industry, Technology and Commerce, advised Cabinet in April 1990 that Australian industry in general was at that time less well placed to accommodate reductions in protection than it had been just a few years previously, as a result of its exposure to currency and market instability. The burden of micro-economic reform, he added, needed to deal as much with contextual factors affecting competitiveness – transport, taxation, investment – as with the behaviour of enterprises themselves. But support was hard to find. Already one of Button's cherished victories in the previous government lost out when Cabinet cut the research and development tax concession from 150 per cent to 125 per cent in February 1991.

The Prime Minister's personal stamp on the need to foster a wider, supportive context for micro-economic reform was to focus on the duplications across levels of government that dulled the edge of productivity and drained budgets. In July 1990 Hawke announced a special Premiers' Conference to push the micro-economic agenda further into areas of services and regulation. Cabinet approved a program of 'encouragement' – laced with 'persuasive pressure' – that the Commonwealth might bring to the states in 'activities to reform pricing structures, rationalise workforces, improve profitability and manage their assets more efficiently'. 'Electricity generation, the railways, urban transport, water supply and land development reform' were among the priorities identified for this 'new federalism'. The Commonwealth's program of driving industrial change in the ports, initiated in 1989, was identified as giving particular 'weight' to these negotiations. Many commentators were impressed by the scale of this approach, and it accorded well with the priorities of the new, energetic Liberal Premier of New South Wales, Nick Greiner, and Queensland's new Labor Premier, Wayne Goss. Hawke's 'new federalism' was to guide states in making 'fundamental budgetary adjustments' under the ethic of identifying scope for collaboration in the roles and responsibilities between governments. As Ken Wiltshire observes, the initiative led to 'one of the greatest mobilisations of [Australian] officials in peacetime' to service a projected three Special Premiers' Conferences over 18 months. The first two (October 1990, July 1991) proceeded with remarkable harmony in identifying priorities for cooperation, the third (November 1991) only stumbling at the predictable hurdle of tax sharing arrangements and the premiers' request to access 6 per cent of national revenue. These connections developed by 1992 into the agenda of the Council of Australian Governments. Yet the venture was also one Paul Keating added to his list of Hawke's abnegation of true national leadership, and which he sapped as Treasurer and then from the backbench: he preferred instead to consolidate the discipline of centralisation, and, in time, the stricter calculations of national competition policy.

Competition was crucial. It underpinned the drive to reform the telecommunications sector as one of the government's central – and symbolic – goals. In March 1990 Cabinet began considering a series of papers to determine how Australia could best catch up with the international pace of innovation in such services, including the emerging phenomenon of mobile phones. There was no question of the need to introduce a substantial element of price competition as a stimulus to 'greater efficiency among the carriers and their customers'. The question was how to 'ensure that the objective of universal service continues to be met' while guaranteeing that the sector was open to pressures on innovation and to securing the best returns to government on the sale of licences and the possible privatisation of public assets, Telecom, OTC (Overseas Telecommunication Commission) and AUSSAT. The issues were complex, and the minister in change, Kim Beazley, took Cabinet through a series of submissions aimed at establishing a 'level playing field' that would underpin 'community service obligations' (CSOs) to users, avoid unnecessary duplication in infrastructure, but keep the sector attractive to private competitors over time. Beazley sought to defuse Caucus concerns at the privatisation of such crucial services in a model which merged Telecom and OTC to create a 'strong national carrier' and in time to spur 'full and vigorous competition across the network'. In a debate which quickly became public, Keating and the Treasury vigorously rejected 'anything which stops short of full network competition'. 'The consideration of reform options', Keating insisted, 'should not be distracted by CSOs' which the government could address by other means. Beazley's 'megacom' would only become 'entrenched in an indefinite monopoly' that would 'severely handicap growing dynamism'. By September Cabinet had endorsed the Beazley plan, but a Special National Party Conference was required to endorse it, and only adding additional consumer protections. The scars of this debate went deep, and lasted.

In the lead-up to the 1990 election, Cabinet's Expenditure Review Committee had identified wage restraint engineered through Accord processes as 'a particularly important policy variable over the coming period', where outcomes needed to be 'modest' and closely watched. In November, Cabinet welcomed the unions' agreement to replace the first wage increase under Accord Mark VI with a tax cut of equivalent take-home value. It judged, however, that the prospect of any further use of wage-tax trade-offs would need to be weighed carefully. Again, economic uncertainty was coupled to a desire to move beyond the rigidities still built into industrial relations processes towards a flexibility premised on increasing productivity and more industry-specific negotiations. In a controversial decision in April 1991, the Industrial Relations Commission (IRC) declined to endorse Accord Mark VI's pursuit of a more decentralised enterprise bargaining model on the basis that 'the 'parties … have still to develop the maturity necessary for [such a] further shift of emphasis'. For the first time, the government and unions jointly rejected a Commission decision, with Cabinet in May archly contemplating the need to 'revise' the role of the Commission. But by August, Cabinet was informed, the ACTU itself was exercising its own pressure, making it 'clear that the future of the Accord rests substantially on progress on legislated superannuation'. A commitment on that issue, it was agreed, must feature in the next Budget – but no actual level should be set.

Keen to catch when the economy hit 'the bottom of its current cycle', the Treasurer was also alert to managing expectations of recovery. By May 1991 there were signs of 'pick-up', but the priority remained 'using fiscal and monetary policies to avoid the excessive domestic demand growth of some recent periods' while underlining 'the importance of continuing reform to strengthen the supply response of the economy and to expand our production capacity and opportunities'. 'That does not mean keeping the economy comatosed', Keating assured colleagues, but it did mean crafting a narrative that would temper the engines of recovery. That pick-up, in comparison to the 1982–83 slump, was much slower to come, more patchy in its spread, and marked by a pronounced reluctance to invest in stimulus. Within a month, however, Keating was on the backbench. Crafting that narrative fell to John Kerin, who succeeded him as Treasurer. Kerin's 1991–92 Budget speech conceded that the past year had been one of 'lost jobs, squeezed profits, and dashed hopes'. Later in the year, Kerin suggested that unemployment might stay around 10 per cent into 1993. It fell to Kerin to shoulder the extent to which the recession was not simply a cyclical turn but was beginning to introduce significant structural shifts in patterns of employment and activity. And it was not until early 1992, with Keating as Prime Minister, that a decision was made to tentatively institute expansionary fiscal policies.

Employment and industrial relations

As the turn towards enterprise bargaining suggested, the transformation of workplaces and the relationships within them was central to the Hawke governments' agenda, and a field in which its objectives for its fourth term were distinctly articulated. As Minister for Industrial Relations, Peter Cook explained that the government's focus on the 'macro concerns of securing responsible aggregate wage outcomes' and reducing disputation was now shifting to the priority of 'facilitating greater labour market flexibility', in which the specific needs of industries, enterprises and workforces could be advanced, and consumers guaranteed the benefits of reform. The legislative framework for structural and award reform had been largely established, but the new area for 'accelerated' change was, Cook advised in December, in 'the workplace … where Australia's productivity performance is ultimately determined'. Influence in that space was a matter of negotiation, education and communication. In 1990 – building on initiatives in the textile and metals sectors – Cook identified building and construction, export meats and food processing, tourism, hospitality and road transport as the next priorities for an attention that reflected this finer-grained approach.

Since late 1989 the Financial Assistance to Promote Union Rationalisation Scheme had worked towards the 'rationalisation' of smaller unions; the Australian Best Practice Demonstration Program, established in 1991, expanded this emphasis on 'sharing success stories' of the management of change in workplaces. Such programs were to help articulate the 'New Workplace Culture' Cook presented to Cabinet in March 1991. Nestled in a family of interventions, this concept aimed at breaking out of the 'stilted' terms in which micro-economic reform was customarily understood. Instead, the government should promote the 'concrete realities' of change in localised workplaces by mounting 'demonstration projects' to inspire those who have 'so far failed to take up the challenge' of increasing productivity. Some departments were sceptical: Treasury and Finance routinely questioned why public subsidy should support training that would be of advantage to private enterprise, and questioned how outcomes were to be, or could be, evaluated. In time, the success of these initiatives was tracked in areas ranging from training and accreditation measures to occupational health outcomes.

In May 1990 Cabinet approved the introduction of the 'Newstart Allowance' (effective in 1991), linking the income support of those without work for more than twelve months to an 'activity test' that would vouch for their purposeful search for employment, or preparedness to 'accept suitable labour program opportunities'. Penalties applied to those who 'breached' their obligations to accept such opportunities. Introduced at a time when Cabinet was still inclined to see levels of unemployment as reflecting a decision by many to opt-out of the growth of the 1980s, Newstart payments were set considerably below poverty thresholds and single pension levels. Unlike the latter, allowances were not linked to average weekly earnings. The premise of the policy was to 'signal greater contact between the Department of Social Services and Commonwealth Employment Service with the job seeker to verify entitlement'. Such 'contact' would assist in itemising personal, social or locational disadvantage; it would also 'encourage “dependent” spouses of income support recipients to active job search'. This scrutiny of workforce participation was further shifting to the responsibilities to those out of work to prove their entitlement.

Inducements to the work-shy were to be coupled to rewards for the work-keen, especially those in the more 'fragile' labour markets emerging from economic transformation. In July Dawkins as the Minister for Employment, Education and Training gained Cabinet support for a revision of youth wage rates aimed at securing the 'replacement of age by competency as the basis for wage fixing', and seeking to encourage a 'a greater efficiency, diversity and availability of training options' for young people at work. Cabinet weighed the possibility that 'some employers will argue that training is unnecessary and inappropriate', but endorsed the higher principle of encouraging skills acquisition. Reform, Dawkins advised, necessarily involved the balance of 'competing objectives', including 'equity and wage justice for young people in the workforce; encouragement of a greater commitment to training at entry level by employers; and greater efficiency, diversity and availability of training options'.

Soon, however, the recession turned attention not so much to those who had jobs, but to those who didn't – and for whom a pattern was emerging: a rising trend of long-term unemployment in an increasingly post-industrial economy. Addressing this concern, Dawkins outlined to Cabinet in February 1991 the emerging profile of those out of work. Some of the hardest hit were older workers who in many cases had scarcely found a steady job since the retrenchments of 1982–83. Manufacturing and construction were among the sectors with the highest levels of job loss, explaining why men had been affected more severely than women. The most marginal sections of the population, especially recently arrived immigrants and Aboriginal and Torres Strait Islanders, were also the most vulnerable to losing their jobs. So far, however, sole parents – although already enduring high unemployment – had not deteriorated in their relative position. New patterns of workforce participation were confirmed in these impacts, as a deregulated, casualised and service-driven economy gave its own accents to a 'new workplace culture'. A year into the recession, particular concern was focused on teenage unemployment, which had already increased by more than twice the overall rate and was trending towards 23 per cent by mid-1991 and 25 per cent by 1992. As Dawkins conceded, initiatives in education and training of the kind advocated in 1990 would have little immediate impact on this group. But at least the lessons of the 1982–83 recession pointed to the need to more actively offer opportunities for the jobless to acquire 'basic skills, language and literacy, and to buttress apprentice and trainee intakes'.

Social policy

An equivalent search for a new 'culture' in the relations between government and citizens defined initiatives in health and social policy. The government continued to unfold a 'social justice strategy' premised on bridging productivity and equity goals, and increasingly complementing the range of micro-economic reforms already noted. In 1990–91 the concept was to become one of the touchpoints balancing those objectives of increasing efficiency with principles of access. It could also become divisive, as ministers resented deals made in its name, and initiatives which threatened to strip resources from their portfolios for its higher cause. 'New Federalism' was buttressed by it, and so were initiatives from environmental protection to industrial relations. These fusions produced an increasing interest in more precisely judged assessments of the effectiveness with which the government's policies engaged with the conditions in which people lived through a time of such transition, and with the promise – as Towards a Fairer Australia, a joint statement between Hawke and Howe put it in 1991 – of 'getting ready for recovery'.

An October 1990 submission from Howe, for example, secured an expanded role for the Australian Institute of Health, established in 1987 and including 'welfare' in its remit in 1990, in defining and collating national statistics on the concept of 'wellbeing'. This concept was gaining international traction, seeking to move beyond strict calculations of economic utility to assess instead the performance of health, welfare, community and housing services as they intersected in determining the more subjective elements of quality and function in recipients' lives. A similar aspiration drove a review of major programs in aged and disability care, to ensure 'better integrated and more flexible service delivery', and even – in August 1991 – the inauguration of a National Food and Nutrition Policy, requiring 'consideration of local food production, transportation costs, retailers' policies on what food is made available, and local government decisions … on land use and food markets'. Such syntheses, however, did not mask the tension at the core of coupling micro-economic objectives to welfare goals.

In health, this tension was particularly evident in debates over the public provision of services. Cabinet was determined to resist any dilution of the standing of Medicare as a universal system (which functioned as a vital legitimator of the Accord's 'social wage'), but signals of accountability in its provision were still sought. Howe's August 1990 suggestion of a $2 co-payment for visits to medical practitioners was at first rejected by Cabinet, although he rallied support in ways that intensified factional tensions over the trade-off between Labor principles, financial pragmatism and an emerging idea of the 'price signal' as a tool in social policy. Towards a Fairer Australia sold the initiative as an 'efficiency' that would be transacted in a cut in the Medicare rebate to doctors of $3.50 per visit, and the invitation to bulk-billing doctors to recover the same amounts from patients if they chose. The co-payment did not survive Keating's coming to the leadership: it was – for a time – a bridge too far in the new bargains of social policy, and in the compromises of cost-cutting.

The rising costs of the health system, however, were undeniable, and demanded response. In August 1990 Cabinet resumed its attempt to restructure the pharmacy industry, judging that 'without decisive action … we run the risk of having to endure again a long dispute with a profession which will attempt to defend its current over-remuneration' with spurious claims of patient interests. This time the government made progress in gaining a more competitive pharmacy sector. Doctors, too, were judged to be motivated essentially by a desire to 'maintain income levels', to 'lack accountability', and to be complicit in maintaining the opacity of hospital 'powers and structures'. Reconciled to the political, let alone the constitutional, impossibility of any form of 'civil conscription' of such professions, Cabinet chaffed at these issues, a reliance on micro-economic instruments only compounding the resentment of actors who could not be brought to market.

The sensitivities of managing this process were particularly evident in the area of aged care, where the government continued an unprecedented program of intervention aimed at gaining efficiencies in funding, monitoring compliance in provision, while also recognising the diverse indicators of wellbeing to be served. In October 1990 Cabinet authorised a comprehensive review of Health, Aged Care and Disability Service provision, seeking 'better integrated and more flexible service delivery'. By August 1991 this inquiry had revealed that the current two-tier system for hostel care was a disincentive to institutions to cater for the highly dependent. Howe sought budgetary provision to restructure personal care subsidies to encourage such provision, including an increasing attention on the needs of those with dementia. His arguments faced staunch opposition from several departments, which insisted that assets tests must contribute something to meeting the bill. Still, in September Cabinet endorsed Howe's negotiations of a pooling of all Commonwealth and state health resources for aged care, with the Commonwealth to set national policy objectives and the states to cooperate in the distribution of resources through regionalised and case-mix models. This agenda was ambitious, although as welfare analyst Peter Saunders noted at the time, sophistication in analysis did not necessarily compensate for the 'punitive' emphases of rationalisation that could emerge in delivery.

'Targeting' in social services took many forms. The increasing availability of computerised information, especially following the introduction of tax file numbers in 1988, facilitated the 'matching' of data from a range of government agencies to profile personal assets, residence, income and the overpayment of benefits. No longer, Cabinet was informed in May 1990, did the Department of Social Security need to rely on 'voluntary compliance' in tracking appropriate use of welfare programs. Abuse of services which enabled people to stay outside the workforce needed to be matched to better provision to assist people into jobs. An increase in the supply and availability of child care was identified as 'imperative' in the same meeting, and became the subject of several submissions. By August 1991 Cabinet had determined to 'give priority to work-related users, disabled users and children at risk', while also taking account of particular needs in outer-urban areas with 'little or no existing community infrastructure'. Strict criteria of need, again, needed to be balanced with expansion in provision. Finance sought to identify 'the point at which the costs of providing fee relief exceeds the total public benefits', judging that 'a good case can be made for providing lower subsidies for school aged children' whose parents were already 'relieved (at Government expense) of meeting any child care costs during school hours'. This was a blunt judgement: presumably it was also of value that those children were being educated? Cabinet agreed that fee relief for after school and vacation care would be paid at the lower rate made available to parents who were not in work.

Running through these discussions was an increasing attention to the spatial dimensions of disadvantage, reflecting Labor's re-engagement with physical planning as an integral dimension of social justice strategies. Micro-economic priorities gave this analysis a distinct inflection: in contrast to the social access issues that had taken the Whitlam government into the field of urban and regional planning, workforce participation was fundamental to these 1990 initiatives. Nurtured by both Hawke and Howe, the 'Better Cities' program came first to Cabinet in March 1991, after much interdepartmental preparation. The program sought 'to underpin policies relating to micro-economic reform, structural adjustment and environmentally sustainable development' through a selection of demonstration projects in 'nodal regions' that would engage all levels of government and address social need. Social rental housing was identified as the most 'cost effective' area in which the coordinated investment of public funds through the Commonwealth State Housing Agreement could address the depth of housing and location-related poverty in Australia, and in turn feed into the 'enhancement of access to employment, education and training'. A National Housing Strategy would replace the pre-occupation with issues of tenure and provision with a focus on the capacity of spatial planning to meet personal, economic, educational and occupational needs.

A submission in August gained more than $800 million over five years to commence the 'Building Better Cities' program, with priorities identified in health, child care and schools. Kept at a 'no frills' level, interventions sought wherever possible to leverage public–private partnerships. Factional 'trade-offs' – accentuated by leadership tensions – helped gain this support, although Cabinet debates still rehearsed familiar concerns that such an undertaking ran the risk of duplicating work already under way and distorting the discipline of the market. There was also the warning that 'previous Commonwealth attempts to seek a greater role in urban planning suggest the need for considerable caution', taking 'due account of limited Commonwealth functions and powers', and broaching the basic issue of states' rights and responsibilities. The extent to which such reservations were justified is a big topic: the Better Cities program advanced through extensive and innovative intergovernmental agreements in all states and territories, which ranged from decontaminating or revitalising former industrial sites for housing, improving rail and traffic connections and waste water treatment, to establishing recreational facilities. Even its advocates, however, noted that the tight selectivity of projects restricted what could be achieved. Through careful courting, Keating was won over to these policies on becoming Prime Minister, but they did not survive the election of the Howard government in 1996.

Rural Australia

Urban and suburban Australia had a place in Labor policy to be revisited with the new imperatives of micro-economic reform. This was much less the case for rural Australia, where the pressures of both reform and recession gained in intensity in 1990–91. Building a Competitive Australia established the principle that the agriculture should be subject  to exactly the same market pressures as manufacturing. Exemplifying these pressures was a series of Cabinet submissions dealing with a crisis in one of the emblems of that constituency, the wool industry.

The Australian Wool Corporation had cultivated a complex system of interventions from the 1970s, seeking stability in prices and coordination in promotion, research and development. By the 1980s analysts worried at the extent to which these practices had insulated the industry from market signals, particularly through the setting of a reserve floor price. The floating of the Australian dollar in 1984 added to these concerns. A series of good seasons and an increase in flocks through the late 1980s then met a sharp decline in export markets, particularly in the USSR and China. An unsold stockpile of 188,000 bales in July 1989 passed 2.45 million bales by April 1990: the reserve price stood at $8.70 a kilogram. John Kerin, as Minister for Primary Industries and Energy, argued to Cabinet in May 1990 that 'there is a limit to which a prudent industry should go on taxing itself, and borrowing, to make itself into its own customer'. He gained Cabinet approval for one of most radical reconstructions of a portfolio responsibility in this government.

Kerin favoured direct intervention into the wool marketing system, should its leaders not respond to 'pressure' to reform. There was little sign they would. By September 1990 he argued that 'we have to put in place arrangements which will allow the industry to face up to its enormous adjustment problem'. An inquiry initiated by Kerin warned of 'chaos' if the floor price was simply abolished. Instead, he proposed statutory reforms to support the Australian Wool Corporation 'trade its way out' in an orderly disposal of stocks, and then establish new agencies with separate responsibilities for aspects of the industry, including the repayment of debt. The view from Finance was blunt: there was no justification for 'market support in the modern world trading environment'. Prime Minister and Cabinet agreed, noting that such medicine was particularly deserved by an industry that 'has shown very little inclination to accept the realities of a market situation'. Kerin's argument that growers should receive payments to 'ease the shock of transition' was countered by Finance that 'price falls … are part and parcel of the farming enterprise': why should the wool sector be any different? In September 1990 Cabinet agreed to suspend rather than terminate the floor price, and to offer 'a strictly limited scheme of income support' calculated with reference to the demonstrated need of individual farmers.

By April 1991, when wool prices had held up better than expected, a further submission secured the abolition of the floor price by July. The path to that point, as agricultural economist Bob Richardson noted, had been an 'untidy affair', and several issues remained unresolved. But in that April submission, Kerin broadened discussion with a reflection on the wider context of 'the present crisis in rural Australia'. Average farm income was predicted to fall by over 50 per cent that year, accelerating a trend evident for at least a decade. At the same time, the faltering of any progress in securing an easing of international barriers to Australian primary exports in the Uruguay Round of World Trade Organization negotiations was eroding confidence in markets, in the sector, and between the sector and government. By May these reflections were coupled to the early signs of severe drought in south-east Australia. Reminding Cabinet of the findings of Drought Policy Review Task Force, released the previous year, Kerin explained: 'the farm sector is in a worse, less resilient, situation than prior to the 1982–83 drought. If a serious drought comes on top of current difficulties … there will be far reaching consequences in terms of rural unemployment and consequential adverse economy-wide effects'. It was 'imperative' that the government reframe its drought policy.

As Kerin summarised its core recommendations, the Task Force had called for 'a fundamental shift in attitudes to drought management away from a crisis management and disaster approach': drought instead should be seen as 'a natural, recurring feature of the Australian climate'. It followed that the role of government was to assist farmers manage such risk through 'self-reliance' rather than to compensate them for its occurrence. Revisions to the Rural Adjustment Scheme established three categories of assistance: the first, to farmers who sought to drought-proof their properties; the second, for those needing short-term financial assistance; the third to help those 'with no long-term prospects to leave the industry'. The criteria of assessing these categories were debated, particularly given Cabinet concern that funds under the first category were being inappropriately applied by states administering the scheme. As calls on the scheme increased, Simon Crean – who took Kerin's place when the latter became Treasurer in July 1991 – advised Cabinet in October of the need for at least $30.6 million to meet urgent calls (the total expended for 1990–91 was $62.4 million; for 1991–92 $157.3 million): 'I see no need to restate in detail the difficulties facing the rural sector'. Crean added: 'there is very little prospect of a significant recovery in agricultural commodity prices this financial year'. While promising to be not as widespread as that of 1982–83, 'the fact that [this drought] comes on top of already depressed prices means that the combined effect is depressing farm incomes in 1991–92 to the lowest on record'.

Again, the framework of Cabinet discussion was that a more than cyclical process was underway, and that a more than iterative policy response was required. In March 1991 Cabinet was 'disposed to consider' a submission foreshadowed by Kerin proposing softening the pace of scheduled reductions in agricultural assistance for 'smaller, import-competing rural industries' that had a vital role in assisting regional areas resist 'dislocation' amid rural downturn. But by 1992 the scrutiny of such industries would be sharpened further still to priorities of productivity improvement and efficiency.

Indigenous issues

In some areas of policy, however, expectations could not so readily be corralled. Through 1989 the preliminary reports of the Royal Commission into Aboriginal Deaths in Custody began changing the terms in which the conditions endured by Aboriginal and Torres Strait Islanders were discussed. At the same time, Gerry Hand, as Minister for Aboriginal Affairs, secured the establishment of the Aboriginal and Torres Strait Islanders Commission as a representative body: constituted in 1990, its first elections were held in early 1991. Succeeding Hand after the 1990 election, Robert Tickner ensured that the visibility of Indigenous issues continued to build pressure for reform. As the delivery of the final report of the Royal Commission approached, Tickner advised Cabinet that the government faced a 'critical' moment in the development of Aboriginal affairs policy – one in which 'some action, albeit minimal' might be sufficient to 'reassure the community that the government is serious' about these matters. 'Aborigines and Torres Strait Islanders', he explained, 'are experiencing for the first time the opportunity to determine funding and policy directions'. More pointedly, he cautioned that 'a new generation of Aboriginal and Torres Strait Islander people (70 per cent are under 30 years of age)' were looking for 'a continuing Government commitment to deliver social justice'. There were expectations, then, to be managed. Indigenous affairs became a particular area in which the government's ideals of social justice, and of Commonwealth and state cooperation, would be put to the test.

Already Cabinet had been reminded that Aboriginal health in particular required a series of comprehensive policy initiatives. Prior to the election, a joint Health and Aboriginal Affairs submission confirmed that Aboriginal and Torres Strait Islander health was 'the worst by far of any group in Australia'. This 'appalling status', despite some improvement in infant mortality and the incidence of tuberculosis and leprosy, prompted ministers to agree on establishing 64 community controlled health services to provide accessible and culturally appropriate care. There remained evidence of 'a crisis of frightening and complex proportions'. In December 1990 Cabinet was advised, for example, that there was a chronic 'deficiency in information on the efficiency and effectiveness' of existing programs in addressing these needs. A kind of circularity entered discussion when Treasury and Finance responded that until the question of priorities for such programs was established, their performance could not be assessed.

Released in April 1991, the 339 recommendations of the Royal Commission broke through some elements of this impasse. The Commission demanded, as Tickner argued, 'basic data to drive integrated planning and policy'. Anticipating the report, Cabinet had already agreed that a Council for Aboriginal Reconciliation be established as an 'educative and consultative' body to build support for such responses. Here was a momentum Tickner was determined to seize: 'a real formal recognition that Aboriginal Australians have been dispossessed of their land … without any formal treaty' must be a priority for the government, and the nation. 'All Australians [must] … understand their history and the place of Aboriginal Australians in that history' in ways that generated 'compassion and empathy, but not guilt'. The Council – to comprise 25 prominent Australians, half of whom would be Indigenous – was also to have a role in advising ATSIC on the 'development or delivery of socio-economic development programs' which would dispel, rise above or by-pass entrenched racism in Australia. In August 1991 Cabinet agreed on first priorities in 'law and justice, health worker training, [and] Aboriginal participation in developing, interpreting and using health indicators'. Symbolically, Cabinet also agreed to 'move quickly on legislation against racial vilification and to the proposed accession to the Optional Protocol to the International Convention on Civil and Political Rights'.

It was not until 1995 that provisions on racial hatred were added the Racial Discrimination Act (1975); the protocol, however, was ratified in September 1991. In December Cabinet tasked the Attorney-General with preparing a response to a report from the Human Rights and Equal Opportunity Commission that found that 'racist violence against Aboriginal and Torres Strait Islanders is serious and widespread'. By that time the appointees to the Council were being finalised, under the chairmanship of Patrick Dodson, and including a bi-partisan span of Australians who would learn a great deal from each other, and implement programs that began to shift attitudes. But still the need for careful management of expectations ran through many submissions on Indigenous affairs.

In May 1991 Cabinet was briefed on the progress of the case Eddie Mabo – after years of perseverance – had brought before the High Court. The justices, Cabinet was advised, were 'likely to be sympathetic to arguments in support of recognition of some form of land rights' in the form of native title, but the nature of those rights, and the 'fiduciary relationship' they might establish between the government and Indigenous peoples was unclear. On that basis, Cabinet agreed that the Commonwealth should not seek to participate in the case: to do so would send unhelpful signals. Judgement in Mabo v Queensland (No. 2) was not delivered until June 1992: it then presented an opportunity for Prime Minister Keating to place his stamp on national leadership in this area. For the time being, the government was seeking to keep the politics as bay.

Environmental policy

In the area of environmental management Cabinet was similarly seeking to craft a new angle, but also to manage already deep divisions among ministers over politics and principle. The last year of the third Hawke government had been characterised by unprecedented Cabinet conflict over the tension between economic development and environmental protection, the latter being driven by calculations of building new areas of electoral appeal that seemed justified by the 1990 poll. The new term saw a determination to bed-down processes that would avoid such division in the future, and to restrain expectations of environmental policy. A June 1990 discussion paper on 'environmentally sustainable development' advocated 'a recognition that economic growth and a well-managed environment are fundamentally linked'. The concept also became part of the social justice vocabulary, encompassing the social indicators of 'sustainability'. But the balance of social, economic and environmental considerations was rarely easily struck.

A Treasury paper, also tabled in June 1990, argued that there was still insufficient clarity in the government's 'policy goals' on environmentally sustainable development. Treasury proposed its own guidelines to guide Cabinet consideration in this area:

Evidence should be provided of a significant environmental problem which, otherwise, would not be adequately addressed (eg by private action). Proposals should set down clear goals against which effectiveness can be evaluated. Goals should be in terms of the environmental problem being addressed. Proposals should canvass a range of feasible instruments for achieving these goals, including, where appropriate, regulatory measures, property (or access) rights, pricing of community-owned resources, tradable emission rights, taxes/charges and subsidies.

Market signals were judged the best mechanisms for assessing policy aims and effectiveness, and – as a further paper argued in December – 'the attitudes of the general public', ascertained through consultation, could be most effectively discerned in, and managed through, such signals.

The regulation of logging the forests of south-eastern Australia provided a test case for these principles. Confrontation between conservationists, timber workers and the community had been intensifying in that area for years, in particular over the highly charged issue of felling old-growth forest for wood chips. The Greiner government was elected in 1988 on a platform favouring such logging. The Commonwealth sought to balance the centrality of this industry to an economically troubled region with its own carefully cultivated environmentalist credentials. In June 1989 both governments collaborated in establishing a Joint Scientific Committee to determine what areas should be reserved from logging on 'representative' ecological grounds. As summarised for Cabinet by Alan Griffiths, Minister for Resources, in October 1990, the Committee also established that beyond those areas 'multiple use forestry – including logging under careful management prescriptions – can proceed'. This initiative was presented as an objective and 'genuine attempt to resolve long-term issues': 'a model for practice elsewhere'. This methodology would, Griffiths advised, enable the government to honour a 'wood supply guarantee to the industry', including the preservation of jobs, while presenting an argument for conservation satisfying Treasury's criteria. Yet disputes quickly developed around the robustness of the scientists' methods, the patchwork of harvesting they seemed likely to bequeath, and no greater local security. Cabinet was advised in December that this process had fallen short of a cure for conflict. The Department of the Environment contended that 'ad hoc', 'uncertain', 'inefficient' and 'imbalanced' forest policy processes were sapping 'community confidence', deterring investment and distracting attention from closer attention to micro-economic issues of 'industry restructuring, modernisation and value-adding'.

It would not be until 1992, that December 1990 submission observed, that Cabinet would be presented with a new model to address these issues: that model would emerge in the Regional Forest Agreement process, centring on practices of stakeholder bargaining. But through 1990 and 1991 the forest issue continued to nag and rumble in Cabinet. Treasury wondered if conflict in the south-east – or at least the capacity of operations in those forests to generate conflict – might be minimised if cutting was confined to two months each year. This suggestion seemed to miss the larger point.

'Sustainable development' did not lack attention: interdepartmental working groups were directed in December 1990 to ensure that 'the attitudes of the general community are reflected in [environmentally sustainable development] deliberations'. Officials worked assiduously at this task, the objective becoming a core reference point for a diverse range of policy. Cape York was identified for another trial of a model of 'conflict resolution in a region of world conservation significance' – but part of the driver here was the prospect of the development of a commercial space port. Cabinet approved the joint nomination of Heard and McDonald islands in the southern Indian Ocean as UNESCO World Heritage sites, while noting that the prospect of a 'sustainable fishery' around the islands warranted further discussion. Ministers also agreed in August 1990 that 'legislation be introduced to ban all mining and related activities in the Australian Antarctic Territory', conceding that such law was 'essentially symbolic given that current estimations have it that mining and related activities are unlikely to be attractive in less than 30 years'.

If 1988–89 had seen environmental issues, including the emerging awareness of climate change, become more prominent in Cabinet discussions, 1990–91 saw economic considerations setting clearer boundaries to that debate. In December 1991 Cabinet agreed to lift export controls on all minerals except uranium, but including mineral sands, keen to end 'the over-regulation of mining [that was] adding to the industry's costs'. It also agreed to push hard for the liberalisation of international coal trade, seeking enhanced market access that would build on the rapid development of the Australian coal industry since the 1960s, spur local producers to more competitive processes, and 'integrate the sector's policy settings more closely into the mainstream'. While keen that Australia take an active part in the UN's Convention on Climate Change and the Fourth International Negotiating Committee on Climate Change, especially in offering technical advice to other, vulnerable nations, Cabinet was already wary of 'uncertain science' on the issues and the politicisation of their discussion by developing countries. A series of submissions through 1991 from Gareth Evans, as Minister for Foreign Affairs, and Ros Kelly as Minister for the Environment – and sometimes both – spelt out that 'maintaining our willingness to contribute our “fair share”, and strengthening our capacity to enunciate this in practical ways, is very necessary to reinforce Australia's credentials' given likely 'criticism of [our] “special pleading” on fossil fuels'. When it came to meeting emission reduction targets, Australia should 'not proceed with the adoption of measures which have net adverse economic impacts nationally or on Australia's trade competitiveness'. Already Cabinet was developing the case for Australian exceptionalism that would become more central to later governments' positions on international commitments: 'low population density, population growth due to immigration, heavy reliance on resource based industries' and 'extended domestic and international transportation links', all meant that Australia had distinct interests to protect.

When a series of policy areas, and expectations, intersected, the demands on Cabinet could escalate dramatically.

In June 1991 Cabinet returned to the vexed issue of whether uranium mining should be allowed in Kakadu National Park in the Northern Territory. Established in 1979, World Heritage listed in 1981, Kakadu was area of extensive uranium deposits, which had been mined at a small scale since the 1950s. Since 1978 parts of Kakadu had also been recognised in land rights claims by the Jawoyn people. The question of whether mining should be allowed within the park had been handed to the Resource Assessment Commission, a body created in 1989 to handle the intractability of such claims. Reporting in early 1991, the Commission highlighted the case for all interests, but gave unexpected attention to its significance to the Jawoyn elder's claims. Arbitrating the issues remained a matter for government decision. An extensive Cabinet submission surveyed these complexities. For the Department of the Prime Minister and Cabinet, 'the most crucial consideration … relates to the handling of Aboriginal issues'. The area proposed for mining had been identified as 'sickness country' and 'the current position of the three senior custodians and the majority of the Jawoyn is one of clear opposition to mining'. Treasury argued instead that 'if a decision is taken not to allow mining', the 'investment and business community' would see the outcome as an indication of government preferences, and 'heighten international perceptions of sovereign risk, to our national economic detriment'. Views on these issues within Cabinet were polarised by the political tensions around the table, but the majority of ministers favoured mining. As Hawke has recalled, he staked his 'prime ministerial authority' on forcing through a decision to protect the area, endorsing the position of Jawoyn elders. Snide asides in Cabinet coordination comments regarding what could be deemed consultation with selected elders and who could be judged representative heightened simmering questions of the Prime Minister's judgement and leadership priorities. On paper, Cabinet agreed that mining and exploration not proceed in Kakadu, but those wider questions were far from resolved as several ministers made clear in public that Hawke had not reflected Cabinet's view.


Through 1988–89 the Hawke government had bedded down a shift in immigration policy that eased aside the ethos of multiculturalism and brought economic goals of attracting 'a high proportion of skilled, entrepreneurial and youthful immigrants' more centrally into the determination of immigrant intake, and the politics of immigration policy. Moving from Indigenous Affairs to Immigration after the 1990 election, Gerry Hand further refined this emphasis. In 1989 ethnic lobbies had been assured that intake within annual 'planning levels' would be determined, on an individual points basis, across three categories: humanitarian, social and economic. Seeking to increase the flexibility available to him, and to avoid irregularities within those aggregated categories of eligibility, in June 1990 Hand gained Cabinet support to focus more specifically on a skill and age profile tailored to ensure the 'economic effects [of immigration] remain positive'. Environmental strains and global uncertainty were also invoked to support a reduction in the overall intake from 140,000 places in 1989–90 to 126,000 in 1990–91 and 111,000 the following year. Hand also gained Cabinet approval to move to a three-year program of intake levels, enabling the government to make 'a more comprehensive response to concerns over investment and economic and social infrastructure planning requirements'. One area in which flexibility was justified, Hand noted, was in offering limited financial assistance to attract skilled immigrants from Eastern Europe. This group, he judged, was likely to be looking for places to resume careers as the Soviet Union collapsed, but perhaps needed encouragement to think of Australia. Cabinet approved a 'revolving fund' for this purpose.

Receptiveness to this 'valuable pool', however, contrasted to Hand's main, growing concern. The Prime Minister's gesture to offer refuge to Chinese students in the wake of the Tiananmen Square massacre in June 1989 had compounded the problem of the increasing number of applicants for refugee status within Australia. As Hand informed Cabinet in October 1990, there were 90,000 illegal entrants or residents in Australia in April that year, up from 60,000 the previous July. Of them, some 12,600 had been in the country for more than five years. If the government wanted to balance its immigration program to advance economic goals, and to address inefficiencies in the use of resources as well as gaps in accountability and compliance, the extent of such abuse needed to be addressed.

Endorsing a series of submissions through 1990, Cabinet established guidelines – as Hand informed parliament in October – for reinforcing 'the first and long held Migration Principle: that the Australian Government will determine who will be permitted to enter Australia for permanent stay'. Setting aside the recommendations of a parliamentary joint committee, Hand insisted that tolerance of illegal immigrants on the grounds of 'innocence' or length of residence risked encouraging 'frivolous claims' that further distorted the immigration system, drained government resources, and 'put at risk' both the reality and perceptions of the government's capacity to control its borders. Judicial review of individual cases, he argued, was ineffective: the courts were 'taking a very positive stance on asylum'. 'Community compassion' was trending in the same direction. Legislation was required to implement an 'enhanced strategy to curb illegal immigration and to make it more difficult for illegal entrants to establish a case to remain'. Otherwise, Australia faced the equivalent to the 'total breakdown' in systems threatening in Canada.

The warning was dire, but several departments wanted a harder line, arguing that even the limited amnesty Hand proposed would only dilute the intended effect of policy. Australia had already introduced 'options' of discretionary detention to deal with Cambodian refugees in 1989. 'Processing centres' at Villawood and then at Port Hedland – established in 1991 – began to 'accept' 'illegals'. By 1992 mandatory detention was legislated by the Keating government. In language that would become central to political debate for many years, Hand insisted in October 1990 that there should be no leniency for those who sought to avoid the 'queue' of people applying to enter Australia under formal immigration processes.

Foreign affairs and security

The framing of immigration issues, and the focus on the illegality of individuals within and beyond borders, reflected a number of global developments which Cabinet judged to require policy repositioning. The Minister for Foreign Affairs, Gareth Evans, began 1990 pondering the 'unpredictability' of China in the wake of Tiananmen, and the challenge of determining what should be Australia's 'correct relationship' with the elderly, potentially unstable leadership of that nation. As for Eastern Europe, amid the unravelling of communism, Evans returned from a visit convinced that while 'socialist pluralism' had reached an impasse in Gorbachev's Soviet Union ('the people have political circuses on TV but less bread, let alone cake'), in Eastern Europe a 'once docile population, now able to resist unpopular political and economic measures', was extracting a part-benign, part-resigned regard from Moscow. The assessment was up-beat regarding 'the unhindered march from communism to political pluralism in country after country'. It was now safe, for example, to begin a carefully limited sale of uranium to Russia. And there were welcome signs elsewhere. In South Africa the 'pillars' of apartheid were gradually coming down. Under the Australia–New Zealand Closer Economic Relations Trade Agreement duties were removed from all trans-Tasman trade – although Cabinet did mull over whether New Zealand was likely to be the longer-term prompt to further micro-economic reform Australia needed.

The world was edging towards greater openness, but that process brought its own vulnerabilities. In June 1990 the Cabinet Security Committee was briefed on a decline in the incidence of 'terrorist attacks relevant to Australia'. This trend in itself reflected the fact that several groups had lost 'traditional support from the Soviet Union and Eastern Europe'. In their place, however, was a rising threat from 'Iran and allied Islamic groups' such as the Abu Nidal Organisation. Particularly active in Asia, these groups tended to 'conduct attacks in ways and places which reduce the risk of danger to themselves' by choosing objects of symbolic and destabilising value: diplomats, officials, aircraft and so on. Such threats required additional investment in ASIS, but for the time being the direct threat to Australia seemed low, and security was expensive. Cabinet judged there was no need to keep the ADF at a high level of readiness to respond to terrorist attacks on Australia's oil rigs and gas installations. While refining its procedures of warning and response should a threat to commercial aviation be identified, Cabinet also decided that the costs of a continued provision of Australian Protective Service staff at airports should be recovered from airlines. It was – for a range of reasons – economically and diplomatically useful to accept Iran students to study at Australian universities, but ASIO still advised the presence of such students needed careful 'monitoring'.

In these calculations, a central aspiration was to ensure that Australia was seen as actively engaged in the dynamics of global, and regional, change. Australia should, as Evans argued, assume a heightened role of international citizenship in addressing the needs of others while advancing its own interests. In these terms, Cabinet agreed in October 1991 to allocate at least $42 million to support 'a substantial Australian involvement in the United Nations peacekeeping force in Cambodia (UNTAC)', including the deployment of around 500 personnel to support communications and transport services in preparation for an internationally-monitored election. Arising from a sustained and impressive Australian-led diplomatic initiative, this commitment – which commenced in February 1992 – would 'raise Australia's regional and international standing; promote regional acceptance of Australia as a natural partner in future South East Asian security; and enhance our long-term relationship (including trade and investment) with Cambodia and Vietnam'.

The other side of such engagement was a rethinking of the military capacities Australia needed in a post-Cold War world. Defence faced continuing strict financial discipline: no real growth in its budget in 1990–91; 1 per cent only for three years after that; an expectation that asset sales would be required support major equipment development. A 1990 White Paper, The Defence Force in the Community, recommended a greater reliance on commercial and civilian resources in supporting a military oriented more to territorial self-reliance than expeditionary reach. As Minister for Defence, Robert Ray, assured Cabinet colleagues that his department and forces would accordingly become more 'innovative and creative' in using assets attuned to a new age of 'command and control' warfare. But those assets were scarce. It was also the case, he argued, that Australia's 'regional outlook for the 1990s included the prospect of serious instability in PNG, possible leadership transition difficulties in South East Asia (including Indonesia); and the likelihood of a significant withdrawal of US forces in Asia'.

A way to address some of these concerns was presented before the year was out. In August 1990, the Prime Minister led his Cabinet into an early commitment to support a US-led blockade of Iraq, in response to Saddam Hussein's invasion of Kuwait. Cabinet agreed to supply two guided missile frigates and one replenishment tanker to a multi-national naval force, patrolling the Persian Gulf. Coming under a United Nations Security Council resolution, this was a manageable commitment that promised significant dividends in diplomatic engagement. And with it Hawke's personal popularity as leader soared. 'The situation in the Middle East', Cabinet was advised, 'has the potential to disrupt global economic activity': it was a necessary campaign. Coming under UN authority, but with the protection of US forces, Australian assets had optimal security and a manageable expenditure of resources while also appearing as a 'strong partner' in applying 'international pressure' to a tyrant. Cabinet was advised that US President George Bush might have a broader range of objectives in 'restoring security and stability in the Persian Gulf' than Australia necessarily endorsed. But for the time being Cabinet was comfortable that Australian forces would be acting within the terms of UN resolutions and the assurance that 'strategy will rely on air and maritime power with the widest practicable international representation'. Ministers were also keen to manage the costs. Given 'the considerable military experience and training values which will accrue', Finance argued that 'the funding requirements for Middle East deployment be absorbed within the existing Defence allocation'. That was a little too mean. In February 1991 it was agreed that 'the Defence budget be supplemented by $68.8 million ... for the additional one-time costs associated with Operation DAMASK' – the Gulf deployment. As much as possible, however, imposts should be subsumed within existing allocations.

The 'First Gulf War' locked down several marked transitions in international security soon after the end of the Cold War, particularly in terms of a new preparedness for international (essentially Western) intervention in 'peripheral' states. The consequences, ranging from effects on the health of personnel to the mobilisation of anti-Western feeling, would be enduring, but were not foreseen at the time. Amid that change, one legacy of a previous age moved closer to resolution. In October 1990 Cabinet was advised of the delicacy of approaching the government of the United Kingdom for a contribution to the final rehabilitation of the British atomic tests sites at Maralinga. The cost of such works was calculated at $93 million, of which the British might be asked to pay $64 million. Anticipating the response that 'the relatively recent growth of Aboriginal land rights movements was something which could not have been envisaged … and for which [the UK] has no responsibility', Cabinet agreed that a moral or political rather than a legal approach might be more effective. By 1993 an ex gratia payment of £20 million (then about $44 million) was accepted from the UK government as a 'significant contribution' to enabling the Maralinga Tjurutja people to return to all but 120 square kilometres of their traditional lands.

A changing society

Drawing on an extensive series of interviews in the early 1990s, the social researcher Hugh Mackay noted 'the big angst' felt by many Australians as they moved into a profound 'age of redefinition' in their jobs, their roles, relationships and communities. The micro-economic focus of the fourth Hawke government was a significant part of this process. 'Unencumbered by costly and unnecessary campaign promises', the government began its fourth term – which many ministers had been far from confident of winning – seeking to consolidate gains so far. But as recession arrived with what Keating's adviser Don Russell recalled as an 'audible snap', it also became clear that they were marking out the features of a decisively changing society and economy. Historian Frank Bongiorno has recently observed that the 1980s, as a distinct period that ended with Keating's defeat of Hawke in December 1991, was a transformative decade in complex ways. The big headline items for the government in that term are familiar enough. In themselves, these issues fomented fundamental divisions in Labor between those who held to traditions of public ownership of vital services and the advocates of privatisation and market efficiency. In many – but not all – instances Cabinet submissions on these questions were an anodyne reflection of major skirmishes in Party conferences and fractional deals done elsewhere. But these submissions still rehearsed the terms involved in shaping this agenda for government and society.

As the debate over telecommunications reform graphically demonstrated, there were deep tensions in Cabinet between 'social and equity gaols' of guaranteed service provision and Treasury's firm line that 'administrative' solutions could never achieve the effectiveness of 'market mechanisms' in recognising emerging aspirations and values. But this debate was only one dimension of the ways in which telecommunications was seen as exemplifying aspects of social change. Kim Beazley, as Minister for Communications, presented Cabinet a discussion paper in December 1990 which offered a vision of 'convergence' in information and entertainment systems which 'will see … these services … become little more, conceptually, than electronic books, magazines and newspapers', as open to individual choice as those items, and no longer defined by the 'scarcity' that underpinned the dominance of suppliers in the past. The excitement of innovation was palpable. Urging the introduction of pay television as a 'catalyst to local production', in August 1991, Beazley addressed equity issues in these terms:

Pay TV will provide a low cost choice to consumers for quality in-home entertainment and education and information services. Its introduction will be financed by higher income groups, as was the case with telephony, automobiles, radio, TV, VCRs, CDs, etc, and lower income groups will reap the benefits of improved economic welfare over time.

This was an engaging prospect: 'Pay TV is part of an evolution of in-home entertainment services in the western world that is increasing economic welfare by expanding the range of choice in these services. Australia is now the only major English-speaking nation that does not yet have Pay TV services'. Its achievement would be another matter.

And there were undersides to these transformations. Cabinet's Security Committee noted in July 1990 that drug related crime had readily adapted to 'the explosion in popularity of cellular mobile telephones' and transformed its operations accordingly. Here was a pressing area for new powers of interception. And the use of illegal drugs was itself another side of new cultures of choice. In February 1990 Cabinet agreed to establish the Australian Sports Drug Agency as a statutory authority, initially with an educational emphasis rather than sanctioning powers. The proud traditions of sport were being distorted by a sub-culture of performance enhancement: there needed to be a reaffirmation of core values.

In several areas the government was conscious of the need to rectify the image of stringency it had developed in the electorate. Higher education was one. As Minister for Education, John Dawkins was keen to address community sentiment that his reforms of 1989 has sacrificed 'quality' in the university sector to 'quantity'. 'Extreme pressure', he observed, 'is now being brought to bear on the Government through extensive media coverage' on this issue. Conceding that levels of funding per full-time university student were still below those of 1983, he urged Cabinet in July 1990 to affirm the mantra of the 'clever country' by supporting 3000 additional places in higher education by 1993, with significant increases in capital funding and increases in research funding. In 1991 Dawkins introduced a new series of 'quality assurance' measures 'to reward good performance in the higher education system'. Access and equity considerations were to be central to these assessments, including 'from the point of view of examining the potential for alternatives to traditional delivery modes to improve quality of provision and, in the longer term, to reduce costs'. The sting, clearly, was still in the tail. A lean system was to become both more accountable, and leaner.

Progress in secondary education was harder to make: as Dawkins reported to Cabinet in October 1990, the states had 'unsurprisingly' resisted significant parts of the government's National Schools Strategy, leaving the government with the option of a 'catalytic' rather than a 'leadership' role in the process of improving outcomes in areas ranging from literacy to environmental awareness. His push for a national curriculum was also encountering resistance. Cabinet declined to endorse his proposed National Strategy to Strengthen Science and Mathematics Education – the money, it seemed, and the convincing rationale, were not there.

Into 1991 the government was still pursuing reforms that recognised the dynamics of social change, and contributing significantly, selectively, to them. The promise that deregulation and privatisation would deliver a mix of choice, efficiency and equity was still to be proved. A 'soft-landing' to recession was still to arrive, and there were already signs that the touch-down would be in a place that was not altogether 'home' for many Australians. In retrospect, we have been encouraged to see the reforms consolidated in this period as central to the factors that made Australia so resilient to the 'global financial crisis' of 2008. At the time, Cabinet often noted that the recession of 1990–91 was biting harder into sections of society that had scarcely recovered from that of 1982–83, and that reform was a hard pill to swallow in hardship. Even in its own bastions, ministers were taking stock of the journey so far. The senior executive service that was supposed to energise and synthesize the business of policy, Cabinet was advised in July 1990, had not been as effective as intended: departments were still silos, with their own cultures and inefficiencies. Nor had the government been able to induce into the senior ranks of the public service the steady supply of 'high quality staff from elsewhere' that had been hoped. Energy seemed to be flagging, and the corrosion of leadership uncertainty continued. In mid-December the Prime Minister's core group of supporters in Cabinet asked him to consider resignation. He declined. The caucus vote against him, and inaugurating Paul Keating's succession, brought the year to a dramatic close, with a mood of sober reflection as much as anticipation.

Copyright National Archives of Australia 2019