From the oil price shocks and stagflation of the 1970s to the economic reforms of the 1980s, the first episode of George Megalogenis’s documentary Making Australia Great: Inside Our Longest Boom told a fascinating story.
It showed how Bob Hawke and Paul Keating’s decisions opening Australia’s economy to the world have underpinned the prosperity of the last two decades.
It’s a story Labor people know well.
But many Labor supporters are not as familiar with an important prequel to this story – Ben Chifley’s embrace of reforms to the international trading system back in the 1940s.
The Chifley Government’s actions on this front contributed to Australia’s first long economic boom during the 1950s and 1960s.
It’s important to appreciate this aspect of Labor’s history because it shows that our support for an open economy and trade liberalisation has a long lineage and is fundamental to our achievements.
With the end of the Second World War, Chifley recognised the need for Australia to be part of a new multilateral trading system designed to open up global markets.
This new system would replace the old British-imposed system of imperial preferences which locked Australian exports into Commonwealth markets.
Chifley realised that Britain’s parlous economic position following the War meant Australia could not rely on its traditional export markets.
His vision for post-war reconstruction included developing manufacturing and looking to alternative markets – initially in America and, over the longer-term, in Asia.
That is why the Chifley Government supported America’s push to reconstruct the global trade system, the third pillar of the Bretton Woods reforms which reshaped the international economic order.
But Chifley was only prepared to support the reforms on Australia’s terms.
His objectives were to ensure that the new rules were coupled with domestic and international policies to promote full employment and that they would also allow commodity-exporting countries like Australia to industrialise and diversify their economies.
Australia played a central role in the negotiations between 1946 and 1948 which established the rules-based international trading system.
As Professor Ann Capling’s research has shown, our negotiators secured modifications to the American proposals to ensure the system would promote employment growth in the world’s industrial countries and production and productivity in the developing economies.
Chifley’s stance was politically contentious at home.
The Liberal and Country Party Opposition wanted to preserve the imperial trading system as did sectional interests in agriculture.
Elements of the labour movement were also wary about the shift to an open trading system.
Yet Chifley persuaded the Labor Cabinet and Caucus to endorse the agreements, including the General Agreement on Tariffs and Trade negotiated at Geneva in 1947, which secured significant tariff concessions for Australia’s major exports.
Chifley’s recognition that to create jobs Australia would need to expand its export markets and his insistence that Australia would enter the new trade system on its own terms have stood the test of time.
The conservatives inherited the economic benefits in the 1950s and 1960s, but neglected the reform imperative, presiding over an increasingly uncompetitive industry structure which Hawke and Keating tackled.
And Chifley’s recognition of the importance of Asia laid the ground for future Labor initiatives such as the creation of APEC by the Hawke Government and the Gillard Government’s Australia in the Asian Century strategy.
There are lessons from Chifley’s legacy for contemporary debates on trade.
Labor needs to maintain its support for open markets because expanding international trade means growth and jobs.
Labor is not motivated to pursue trade liberalisation by some abstract economic theory.
We pursue trade liberalisation because it delivers concrete benefits for the people we represent – more jobs for workers and lower prices and more choice for consumers.
We also support trade liberalisation on our own, progressive terms.
That means insisting on high quality trade agreements that maximise local employment.
And it means trade agreements must be supported by policies which have at their heart the expansion of opportunity – investments in education, innovation and infrastructure to ensure more people prosper in the globalised economy and to create the jobs of the future.