Glebe, New South Wales. The Australian variation of the democratic idea is currently under attack from a number of interesting points. The key to the drama was the result of the Federal election about 20 months ago. As I mentioned in a previous column, in that election the Labor party was returned to power for the first time in 23 years. Under the provisions of our Constitution, the Labor party formed the Government because it had a majority in "the people's House"—the House of Representatives. However it did not have a clear majority in the Senate. The Liberal, Country, and Democratic Labor Parties combined held enough seats to defeat the Government if they so desired. That they did so desire is borne out by the record—42 out of 43 new Bills introduced by the Government were rejected; some (including the Health Insurance Bill and the Petroleum and Minerals Authority Bill) were twice rejected.
Whilst the constant blocking of these bills was something that libertarians could applaud, it was a source of great frustration to Gough ("this government has only one thing going for it and if I were you I wouldn't waste his time") Whitlam and his Labor government. The Constitution does provide a solution to this problem. The Prime Minister can call on the Governor-General to dissolve both Houses of the Parliament and put the issue to the people in a general election. If the Governor-General considers there is sufficient reason to do so he will comply.
For some time both the Government and the Opposition threatened to force the dissolution, but it was the Liberal-Country Party Opposition that finally decided that the climate of opinion was right and so made the move. The instrument it chose was to block an Appropriations Bill—or at least it threatened to do so unless Whitlam called for the dissolution. This Whitlam did and the Governor-General granted. The Bill was then passed to ensure that there would be enough money around to pay for the election. Thus our democratic system arrived and passed its first crisis point.
The second arrived soon after with the record number of candidates nominating for the election. For instance, in New South Wales, there were 73 candidates chasing 10 seats. This large number was only a problem because of our proportional voting system. What it meant was that the ballot paper in New South Wales had to carry 73 names (it measured about 24 inches by 10 inches) and each voter had to assign a preference to each one of those names. Any ballot paper filled out incorrectly (e.g. not all preferences assigned, or assigned incorrectly) was informal and did not count. This led to a number of consequences: a high informal count; a high "donkey vote" (voters who number the paper straight through from 1 to 73—remember also that voting is compulsory for people over the age of 18, and candidates' positions on the paper are chosen by ballot); the virtual elimination of independent and minority party candidates (as they have to campaign over the entire state area); long queues at the polling booths and many short tempers; and finally a long wait for the election results—five weeks in this case—as the preferences are assigned. The main point made was that our system became quite unsatisfactory under these conditions even for those people who believed in it.
Crisis number three lies in the future because the result of the election was to put us right back to where we started from: the Labor Party is the Government with a majority in the House of Representatives, but again does not have a majority in the Senate. This means that we face the possibility of another dissolution. Crisis four lies in the make-up of the Senate: Labor has 29 Senators, the Liberal-Country Parties 29, and the balance of power is held by two independent members (one of whom comes from the small state of Tasmania, and the other being an ex-Premier of South Australia). Thus these two men hold an immense amount of power—the very thing the democratic system was formed to avoid. It is, however only a negative power—they can only say yes or no to bills proposed by others and cannot themselves directly initiate bills.
As these crises are over technical points of democracy they are not a source of worry to libertarians. However, since the general public likes to think so highly of democracy as an ideal it will be interesting to see how they cope with these attacks. In addition, any display of the shortcomings of the democratic ideal does help to make the public more susceptible to an alternative such as libertarianism.
Now that the election is over we are going to continue at an accelerating rate down the road towards complete socialism. There are at least four separate aspects to this trend.
First, we have just been through one of the most severe credit squeezes in our history. This cannot be seen as a return to economic sanity on the part of the Government. Coming hard on the heels of a long boom—particularly in the real estate and building industries—it caught many people and companies with their proverbial pants down. Consequently, many companies are sailing very close to the wind and only need a small push to send them into bankruptcy. The net result of the squeeze may well be a temporary slowing down of inflation. It is also a chorus of cries from individuals and companies for government action.
At this point the second aspect of the trend enters: union demands for wage increases. Gone are the good old days of demands for $4 and $5 per week increases. Today it is $40 and $50. For instance, the shop assistants union recently demanded a $44 raise. They got $26.80. The finish of one round of demands is the signal for the start of the next one. The 400,000 strong Metal Trades Federation of Unions, which received a $14 a week raise on April 8, and which is traditionally regarded as the pacesetter in Australian pay awards, is today threatening strike action to back up its demands for a further $14 a week raise. For the already hard pressed businesses, such a raise and those which will inevitably follow it could be the final blow. Keeping pace with the wage raises are price raises which also impose severe hardship on many businesses.
These two aspects have led to cries for price and wage controls, or wage indexation, and to a relaxation of the severe credit restrictions. The latter the government has done by reducing the Reserve Bank deposit requirements. It is indicative of the hopelessness of the Liberal-Country Party Opposition that, even though it is "for individual rights and free enterprise," it has led the rush of people crying for government controls—in particular for a prices and wages freeze (a complete turnaround from last year when it campaigned—successfully—for a "no" vote in the price and wage freeze referendum).
Aspect three is the fact that we must be reaching saturation point as far as taxation is concerned. Australians are already among the highest taxed people in the Western world. In addition there are not many areas for new taxes to be introduced. On the other hand the government has no intention of restricting its activities or its spending, and we all know that the bill has to be paid somehow.
This brings me to aspect four: inflation. During the election this was running as high as 15 percent. Both it and other forms of taxation have been an extra burden to business and individuals, and have resulted in the whole vicious wage-price circle as well as the cries for government action. Journalist Peter Samuel put it very well: "Inflation has a major political impact in producing an environment in which there is widespread support for direct controls and harassment of business.…Inflation produces, therefore, a kind of automatic socialization, in the sense that an automatically increasing proportion of national resources are garnered for government use." Seen in this light inflation is not an unwanted necessity for modern government but a carefully nurtured political tool. Its use for paying the bills may well be only a secondary one. Whitlam probably knows as well as von Mises did how to control inflation. For political reasons he has no wish to do so. It is of more use to him to blame, say, price rises for it and so set the scene for a prices freeze.
There are some possible connections to these trends. Bob Hawke, a committed socialist and a clever one, is at the same time president of the Federal Labor Party and the Australian Council of Trade Unions. The Labor Party is traditionally the working man's party and is strongly backed by the trade unions.
Further, if the government is intent on expansion and refuses to curtail its spending, it must get additional money from somewhere. If we are approaching the tolerable limits in taxation and inflation, that only leaves one alternative that I can see: the nationalization of some or all industries. However that is something that the Australian public would not ordinarily accept. So we have to be pushed into such a corner that it appears as the only way out for us. All the various threads will then come together in the achievement of the ultimate goal of socialism. The politicians will have their power, the misguided idealists their utopia and with a bit of luck I'll be in the United States.
This article originally appeared in print under the headline "Foreign Correspondent: Australia".