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The 1983 Alfred Deakin lecture



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THE-1983 ALFRED DEAKIN

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BY THE HONOURABLE ANDREW PEACOCK, M.P.

JULY 28/ 1983

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The Liberal Approach to Change ■

The Honourable Andrew Peacock

Andrew Sharp Peacock, born in Melbourne on February 13, 1939, was educated at Scotch College and Melbourne University.

A law graduate, he has worked as a barrister, solicitor and company director.

He was a Young Liberal from age 17, President of the Young Liberals 1962-63, and President of the Victorian Division of the Liberal Party 1965-66.

Andrew Peacock entered Federal Parliament in 1966. At a by-election he won Kooyong, the seat vacated by the late Sir Robert Menzies.

Since his election to Parliament, Mr Peacock has been Minister for the Army, External Territories, the Environment, Foreign Affairs, Industrial Relations and Industry and Commerce. He has also been Minister Assisting the Prime Minister and Minister Assisting the Treasurer.

Between 1972 and 1975, Mr Peacock was Opposition Spokesman on Manufacturing Industry, and on Foreign Affairs and External Territories.

Andrew Peacock was elected Parliamentary Leader of the Liberal Party on March 11, 1983.

THE LIBERAL APPROACH TO CHANGE

Foreword

The following lecture is presented by Andrew Peacock four months after becoming Leader of the Federal Liberal Party and the Opposition. It is not intended as a definitive statement of Opposition policies. It is

an outline of the underlying philosophy and principles which will be the discipline and framework for the development of Liberal Party policies in a changing environment.

The Liberal Approach

Australia is a country with the potential for a great future. What I would like to talk about tonight is how we must act to guarantee that future. How we can best do it within the framework of Liberal philosophy. We must not

just passively assume it will happen, regardless of how we think or what we do. Australia will achieve a richer and more secure future if we think and act according to the Liberal approach; an approach which has the capacity to make Australians beneficiaries rather than victims of change.

The ability to make change work for a nation rather than against it is the crucial yardstick for measuring the worth and relevance of a political party.

There is a need at this stage to spell out to the Australian people the essence of Liberal philosophy. There is also a special need to emphasise again the importance of understanding change. Change is an everyday concern - the only certainty is that at the end of this century Australia will be very different from what it is now. In general, there

is a lack of understanding in the community and Government about the opportunities presented by change.

As Federal Leader, I regard the major challenge for the Liberal Party as the need to create the most favourable environment for all Australians to be able to reap the greatest benefit from change. This kind of positive approach is what Liberalism is all about. Which is why Alfred Deakin was among the most effective Liberals Australia has ever known. He had a rare intellectual

capacity, and the vision to perceive the most fundamental needs and opportunities of the future. But he also had the dedication of purpose and the political skill to give practical substance to this vision. The change that

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occurred under his Leadership was significant. But it occurred without the social upheaval that has so often marred less thoughtful and less sensitive attempts at reform. As Professor Samuel Huntington of Harvard recently

put it: "A successful revolutionary need not be a master politician; a successful reformer always is".

Four years ago in delivering the Sir Robert Menzies Memorial Lecture, honouring another great Australian. Liberal Prime Minister, I took the opportunity to spell out what I believe to be the fundamental principles of

Liberalism. Those principles have not basically changed since they were first developed by the great liberal democratic movements, of Europe and America over two hundred years ago. They were principles which Alfred Deakin

passionately believed in. They will still be valid in another two hundred years, because they are grounded firmly in a respect for the individuality, self-reliance, ingenuity,

humanity and the resilience of each man and woman in society.

These key elements of Liberal philosophy are:

. The right to individual freedom and choice in all aspects of human endeavour.

. The encouragement of enterprise, effort and excellence, and support for their diffusion throughout the community - coupled with this, the recognition of everyone's right to be appropriately rewarded for effort.

. As an extension of that, a strong commitment to private sector growth in the economy- free of unnecessary Government regulation.

. A just and fair society which encourages the innovative and protects the weak, which tolerates diversity of race and life-style, which protects individuals under the law.

. An approach to Government which takes equal account of the interests of all Australians, with no commitment to powerful pressure groups.

. The building of a strong, outward-looking Australia which accepts its international responsibilities.

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These principles are at the heart of Liberalism and very much attuned to progressive and democratic change. Far better attuned than alternate philosophies which see personal fulfilment more in terms of State action than

individual freedom. Liberals believe that the driving force of a dynamic society is the diversity and richness of individual personalities. Very much in the liberal democratic tradition, President Kennedy expressed it in the following terms: .

"I believe in human dignity as the source of national purpose, in human liberty as the source of national action, in the human heart as the source of national compassion and in the human mind as the source of our invention and our ideas ... Liberalism ... a faith

in man's ability ... reason and judgement ... is our best and our only hope in the world today."

It is individuals who generate change. Individuals constantly have new ideas, a desire to create, innovate, build. They have objectives - and their determination, great or small, to fulfil those objectives drives the community forward. Because of its commitment to the free expression and free play of diverse views and approaches, Liberalism has a better chance of finding the most

imaginative solutions to the complex problems of economic and social change. With its tolerance and encouragement of diversity, Liberalism is without the weakness of those other philosophies which display rigidity and over-simplification in the face of constant and complex demands for change. Less flexible philosophies are so often unable to produce the kinds of creative policies we need to cope with a dynamic environment. As Sir Robert Menzies wrote: "Dogma is a comfortable thing. It saves thought".

The difference between the Liberal belief in individualism and the collectivist approach of some other philosophies is not just a superficial one - it is of real substance. In 1975, Gough Whitlam summarised the collectivist view of the future as:

"The quality of life depends less on the things which individuals obtain for themselves from their personal income and depends more on the things which the community provides for all its members from the combined resources of the community". .

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The collectivist view is the basis of a different approach to most problems. In the end it results in a different society - a society which looks to Government as the first rather than the last port of call; a society which looks to Government as not just the problem solver, but the provider as well. The collectivist view breeds a system based on the politics of dependency - not one based on the dignity derived from individual effort.

In summary, to paraphrase the'words of John Kennedy, the collectivist philosophy leads to a society in which people look to what the community can do for them rather than what they can do for the community. These are the contrasting philosophies which will be applied to the changing economic and social face of Australia. The choice

is very clear, with profound implications for the prospects for social change and economic growth in this country.

Social and Economic Change

Liberalism provides the best framework to absorb structural changes in society and the economy. Our commitment to a tolerant and just society, our commitment to economic growth, our commitment to a limited but sensitive role for Government and our commitment to balanced and decentralised institutions - these provide

the guiding principles for turning change to our advantage.

Xo-one is in any doubt that Australia is passing through a period of substantial adjustment. Our traditional social structure has undergone dramatic modifications. Our economic system likewise is having to change radically. As

in Alfred Deakin's time, so today, people have to cope with change from inside and outside their own society.

Change from within derives from new expectations about the economy, society, the institutions of Government. Change from outside a society is equally important. In Australia's case, it may be even more important than

internal change. The barrier of geographical isolation has been largely removed by technological advances. Changing trade patterns, changing industry structures, changing alliances, changing social values in other parts of the world - all have a major and growing impact on Australia.

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If we ignore such change, we limit our own opportunities and those of future generations. If we accept and build on it we have the chance to join the leaders. Instead of talking, as too many people do, about whether we adjust, we should talk instead about how we adjust. If we leave it too late, we shall find ourselves having to adjust not on our own terms, but on those of other people.

The world-wide changes which have taken place since World War II could not have been predicted. There has been unparallelled growth in prosperity in industrialised nations. Expectations of improving living standards remain, despite the current recession. There has been widespread

decolonisation and the emergence of the so-called 'third world' as a potent international political force. Furthermore, the world has moved into the nuclear age which has created a unique and over-bearing tension in international

affairs. A continuing, rapid technological revolution has opened up new frontiers. Micro-electronics, space technology and the introduction of robots and computers, have all changed enormously our home and work environments, and will continue to do so. There has been the rapid development of Asian market economies and the shift in international balance of economic power from the old world to the newly

industrialised countries of North and South Asia and to the Middle East. There is no evidence that the pace of global change is slackening. Indeed some observers would argue that it is quickening. One thing is certain, Australia is being confronted with change that is rapid, multi-dimensional

and unpredictable.

The social changes which are taking place in Australia are placing considerably more pressure not only on a community sometimes reluctant to embrace those changes, but on Government and community resources. For example, there has been substantial change in the structure of families. Single­ parent families nearly doubled in the 1970s to make up over

13% of all families with dependent children.

There has been "a dramatic increase in female participation in the work-force. More and more women have chosen to enter the work-force, both to meet their growing economic needs and expectations and to achieve greater personal fulfilment. That in itself has had an important impact on the labour market. Many people have talked about the' growing participation rate making it considerably more difficult

to achieve the target of full employment. But women have added enormously to the capacity of the economy to innovate and develop. Instead of dictating that, say, only one family member should work, there is a need to find a way of

ensuring this greater demand for female participation can be met by more jobs.

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While we welcome the increased participation of women in the work-force, our society must also respect and value the contribution of the many women who have chosen, and will continue to choose, the more traditional family role. They, after all, amount to about one-quarter of Australia's population over the age of 15. Too often, in our haste to embrace change, we have forgotten those who wish to

continue a traditional lifestyle.

A further substantial social change taking place in Australia is the ageing of the population. The proportion of the population of retirement age is accelerating. This means a declining proportion of adults are paying taxes. A growing economy can best generate a large enough tax base to meet this change.

Another major change in Australia has been the evolution of a multi-cultural society. Australians no longer need to be reminded of the way our migrants have enriched our community, of the catchcry unity with diversity and diversity within unity. Australia will continue to benefit enormously

from its growing multi-culturalism, but only if it is handled within the framework of respect for the individual, regardless of race, creed and ethnic origin.

In addition to these social changes, Australia is also having to come to terms with rapidly changing internal and external pressures on the economy. Competition from the newly industrialised countries - especially those within our region - is now a reality we cannot escape. These countries have adopted outward-looking, trade-oriented

industrialisation strategies. Many are already upgrading their economies to high technology industries. It is these countries which are going to bring home to Australia the reality of its economic position - the nature of its opportunities, tasks and problems during the coming decades. The Asia/Pacific Region includes the fastest growing

economies of the world. The Western Pacific Basin alone now generates nearly 20% of the world's GDP, compared with just 16% in the mid 1970s. Australia can be a partner in that growth. We can turn it to our advantage.

It is manufacturing industry in Australia which has taken the brunt of the very substantial growth in competition from within our own region. As a result there has been a tendency for a dual economy to develop; efficient export- oriented resources and agricultural sectors exist alongside

an often domestically-oriented import-competing manufacturing sector which is losing its competitive edge. The burdens of adjustment are falling on a manufacturing sector unable to cope, and being passed on to a work-force often lacking

geographical and occupational mobility.

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The impact and implications of the changes in the structure of the economy are even wider than this. This new style of growth away from import-competing industries to the resources and service sectors has hit the economic base of some areas harder than others. One tempting response might be to redistribute the gains in the front-runner States to compensate the other States. In other words, we might unfortunately opt for a levelling down rather than a levelling up process. The levelling up process is far more constructive. Instead of holding back the front-runner States, it helps the other States to do better. It is concerned not with compensation for

lack of opportunities but with the challenge of creating more opportunities.

These changes, and the many others I have not mentioned, require approaches of greater social tolerance, economic growth, a clearer role for Government and balanced and sensitive institutions. I should like to look at how Liberalism provides each of these solutions.

Tolerance and Acceptance of Diversity

Any philosophy which believes in the sanctity of the individual must believe in guaranteed civil liberties, and in tolerance of the different social preferences of individuals. The alternative is to force individuals into stereotyped patterns of social behaviour which are unimaginative and unprogressive. Tolerance enables

individuals to experiment with new ideas and modes of social behaviour in the search for a better society. But tolerance also means that those who wish to adhere to a

traditional social structure are able to do so. Those beliefs are the essence of Liberalism.

A Liberal society does not demand homogeneity and social uniformity. On the contrary, it relishes diversity. A truly fruitful society is one which promotes a zest for differences. A society which accepts and encourages those

differences as a natural expression of individual identity will be more creative, progressive and interesting. This central belief in the capacity and freedom of the individual gives Liberalism a continuing relevance in a constantly changing world. This contrasts with the strait-jacket effect of the collectivist philosophy. As Franklin D Roosevelt

said:

"Eternal truths will be neither true nor eternal unless they have fresh meaning for every new social situation".

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There is no doubt Australia will be enriched culturally and will benefit materially from the diversity of different cultures and the diversity of new ideas and attitudes those cultures bring with them. It is the Liberal

achievements of economic growth and tolerance which have allowed'successful integration of those different cultures. Sustaining this growth is a key element in Australia continuing to be able to absorb future changes.

Liberalism and Economic Growth

Australia has developed as a mixed economy with real emphasis on the private sector and a limited role for government. Liberalism emphasises the central role of private enterprise, and we make no apology for that. Firstly, we believe that it is the best way to generate economic growth and so ensure that the community can reap the greatest benefit from economic and social change. Secondly, we believe it maximises individual freedom: a priority of Liberalism.

To Liberals, private enterprise and economic growth are not ends in themselves. Rather they are the means to achieving a better society. One which is better able to absorb change, promote individuality, and care for those in need.

If people ever had any doubts about the value of economic growth, the current worldwide recession must have dispelled them. For the unemployed, the dignity of work has been replaced by the indignity of the dole. A significant proportion of the population, particularly the youth of this country, are now experiencing the social trauma of rejection. Changing work patterns, including part-time work, can only touch the edges of this major community tragedy. The reality is that the only road to permanent jobs is sustained economic growth. Not only is economic growth the way to reduce unemployment. Growth also generates the capacity to provide welfare services, effective national defence and greater freedom of choice for individual Australians.

We must never forget that public sector welfare depends on economic growth, which depends in turn on productivity in the private sector. The private sector is the engine of real growth for real community benefit. These links are

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obvious enough, they are inexorable - but they are too often forgotten or taken for granted. They are part of the reality that it is enterprise and effort which flourish in a strong private sector; it is a strong private sector which lifts productivity and creates profits; it is largely expectation of profits which stimulates investment; it is investment which generates growth; it is growth which generates both permanent jobs and community wealth to assist those in need.

It is the total community which benefits from a strong, profitable private sector. Too often these days, economic life is seen as a zero-sum game. One person's profit is wrongly seen as another person's loss. In fact, profits

are the basis of the investment and growth which will make everyone better off. Successful enterprise requires individual qualities of vision, daring and determination. But these qualities will not be brought out if they are not

spurred on by incentives. We all have a duty to this and future generations not just to recognise the central role of reward for enterprise and effort - we have a duty to promote it.

One clear challenge for the future if we are to achieve high rates of growth is to strengthen the commercial development of invention and innovation in Australia. One approach currently in favour is to identify certain 'sunrise' high technology industries in which Australia, and the Government in particular, should invest. The argument

often used to support this approach is that because a technology is advanced, Australia must invest in it. This unproductive and uncommercial approach will not encourage growth. Not only are the investment criteria misplaced, but, more importantly, it involves the Government in picking winners and losers - something at which Governments are notoriously bad. This is the proper role of the private

sector - the entrepreneurs in small or large companies who risk their own money, not taxpayers' funds.

The opportunities for technological development are best promoted not through Government direction, but through the private sector - using the scientific, engineering and business talent available in Australia. That talent can be upgraded through the promotion of a technological culture.

It is a culture which would place much higher premium on technological achievements and direct more economic and high quality human resources into technical areas.

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If we wish to turn technological change to our national advantage, we need to avoid a situation where students are treated as second class citizens merely because they have chosen to be in the 1 technical' rather than the 1 professional1 stream in our education system. We should instead be raising the intellectual calibre and social status of those who choose 'technical1 careers. We must, in addition, give greater emphasis to directing retraining to 'technical1 areas.

In the quest for growth, Australia has much to learn from the success of Japan. This does not mean that we can directly transplant Japanese management and production techniques to Australia. This is neither possible, nor desirable in many areas. However, there is a growing awareness in Australia that Japanese workers are often better managed - that it is this which explains their success rather than any radically different culture or work ethic. There is also an increasing realisation that

Japanese factory productivity is not built only on more advanced plant and equipment. A significant factor is that the Japanese just do simple things but do them very well and improve them all the time. Lastly, there is an

increasing awareness that in the total economy, Japan's productivity is actually lower than that of the United States and major European countries. The Japanese overcome this by focussing heavily on a highly productive, innovative export-oriented sector. The rest of the economy pitches

its wage and other cost pressures to ensure that exports remain competitive.

The lessons for Australia are obvious enough. There are companies in Australia which have adopted many of the Japanese approaches and they will be successful in the long term. It is these companies which have emphasised people-management and communication. They have created a total environment which encourages improvement. They have tried to take the fear out of change. They have succeeded in convincing themselves and their workers that technological progress is merely one more form of change. Unfortunately,

on the factory floor new technology has often been projected as something awesomely different from other everyday change.

These Australian manufacturing successes are relatively few at the moment but they are growing. It does, however, appear that quality management may be one of Australia's scarcest resources. This can be overcome by retraining - inside or outside the company. Another requirement is to raise the

status of factory floor engineering. All these improvements are within our control - we can have no excuse for not achieving them.

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A fundamental part of a successful future for Australia must be a much higher level of awareness by companies, employees and governments that we must gear our cost structure to world markets. Growth is now a competitive race. No longer will our natural wealth

insulate us from our widespread apathy. Australian industry can cope and prosper if we adopt new attitudes, and become more sensitive to the concept of cost- competitiveness.

While managers must be constructive and imaginative, employees must understand the importance of wage levels to the competitive position of an industry. We all need to face up to the possibility of wage differentials opening up between mature industries and new growth industries. It must be recognised that the often abused term 'the capacity

of the economy or an industry to pay1 really means the capacity to sell. In other words, we must adjust to change.

A more competitive cost structure will ensure manufacturing industries will cope better against imports and have the opportunity to compete on the world market. It means that the export-oriented and labour­

intensive service sectors, such as tourism, will also be able to compete. It means that domestically-oriented service industries do not impose cost pressures on the wealth creating export-oriented sectors. Australia must

also be prepared to invest for the post-industrial, knowledge-intensive economy. New growth sectors such as financial services and consulting operations know no frontiers. They cannot, in the long run, be kept out of Australia. If Australia does erect artificial barriers

and ignores opportunities, then Australia will suffer. In these industries, direction and permanent protection will be job destructive, and hinder growth.

Where there is progress, however, there are costs. For example, a move to make Australia a financial centre for Asia means opening up Australia to large-scale capital movements and therefore to potential exchange rate

instability. To take another example, a more competitive and innovative Australia requires a more competitive and innovative banking and transport structure. This would disrupt traditional areas in which the companies and the employees involved have been cocooned. However, if we are to achieve greater growth, the challenge we must meet is to find imaginative solutions to the problems growth creates The alternative is mediocrity. ;

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The Role of the Government

In the search for these solutions, Liberals believe that the proper role of Government is to create a .

framework for the economy and society as a whole so that the opportunities change offers can be grasped. In particular, we see the Government's role as creating a climate where change is seen as opportunity, rather than a threat. This is the great challenge of leadership and

government. A Liberal Government is one which encourages the community to accept the inevitability of change, the need for changes in areas such as industrial relations, and the need for a greater awareness of the value of enterprise, effort and economic growth.

There is little doubt that the most difficult function of Government is its role as the major channel for the redistribution of the national income. Liberals take a clear view of the distribution process. First, although there are excellent social reasons for Governments to intervene in the distribution process, it will be counter­ productive if it damages the machinery of wealth creation. Government intervention should not undermine the incentives which drive work and creativity. Excessive taxation on rewards for enterprise, for example, will undermine those

incentives. The trend in Australia has been to divert more and more resources into the welfare area. In 1972/73, 21% of Commonwealth Government outlays were directed to welfare: by 1982/83, the level was 29%. I am not saying that is necessarily a bad thing, but social welfare is only a product of community wealth. Welfare policies must not

destroy growth. They are the fruits of a wealthy society. A society which is genuinely sensitive, caring and humane will make changes and adapt to the demands of its needy without jeopardising the longer-term livelihoods of

all Australians.

Second, Government must act to ensure that no powerful interest group - for example, big unions or big business - is able to dominate to the detriment of those in the community who are politically unorganised and vulnerable. In the wage bargaining process, for example, powerful unions should not be able to assume a position of bargaining dominance which overwhelms business and weaker unions. In the same way, big business should not be able to

take advantage Of excessive market strength. At a time when Economic Summits and bodies such as EPAC are fashionable, the interests of the politically unorganised are being ignored.

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This is a dangerous development. Australia has never been a corporate state run in the sole interests of big organised groups. Liberalism would ensure it never could

be. Our priority is that the burdens and benefits of change reflect community priorities and not the strength of pressure groups.

Third, Governments have a responsibility to the community to ensure that those in genuine need are adequately cared for. Dignity for, and protection of the unemployed, the elderly, the handicapped and the socially disadvantaged is our definition of a civilised society. Liberals will always attach the highest priority to this

function of the redistribution process. It is central to the Liberal philosophy. A truly Liberal society, however, will avoid creating needless and unproductive dependence on welfare. It will address the causes of need, not just,

the symptoms. We must provide support, but the greatest challenge is to attack the causes. Australians have a right to expect positive opportunities such as jobs, not compensation for a lack of opportunities.

Institutions

A further important aspect of Liberalism's framework to handle change is its approach to Australia's institutional structure. A society cannot progress efficiently if political power is over-centralised. That

is particularly true of a society which emphasises the rights and needs of the individual. Australia has inherited and built on European and North American institutions developed over the last, two hundred years to protect the individual against Governments' propensity for power. Power is devolved to a range of institutions which offset and limit the power of central government. Recently,

however, there has been a tendency for power in this country to become more centralised. In particular, Federal Governments have acquired power at the expense of the States. If we are to build a progressive Liberal society, that trend must be resisted.

Australia's Federal system is a recognition that · political decision-making must be as close and relevant to individuals as possible. If it is not, if political power is concentrated in Canberra, then the danger of a central Government overlooking and being insensitive to the needs of the community becomes very great indeed. Deakin made the case for Federalism very clearly:

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"A true Federal Constitution" he told Parliament, "well organised and delicately balanced, provides for fostering .. the political judgement of every one of its citizens, paying due regard for his needs. That is only possible under a Federal form of Government bringing the whole of the people

into touch with the agencies that most directly affect its own destinies, national and local". On another occasion Deakin warned that we must take care not to "bind ourselves

to a chariot ... ruthlessly driven, by consenting to the transfer of operations to appointees of a central Government

Without an effective devolution of political power, there would be no checks and balances. That simple fact is being forgotten. By way of contrast, it is interesting to note the demands for devolution which have evolved in ' unitary states where political power has become too centralised. Spain and Britain, for example, have both experienced demands for a greater devolution of political control. Australia's institutional structure does not

leave political power solely in the hands of the Executive, whether State or Federal. Parliaments, made up of the community's elected representatives, must be able effectively to balance the propensity for power of the Executives. Unfortunately, the power of Parliament has,

over the years, been eroded and, more recently, there has been a tendency to favour some of the features of a Corporate State at the expense of community representatives. New ways of enhancing the power of Parliament must be

considered. ■

In Deakin's time, to be a Liberal was to be a reformer and, as I have argued, reform remains central to Liberal philosophy. We must always be prepared to reform and update our institutions. As Liberals, we believe in an

institutional structure which accommodates and even encourages constructive change. For example, we support constitutional amendment where we perceive a need. Indeed, Liberal Governments have been responsible for the great majority of constitutional amendments in Australia. We

have, and will continue to change institutions when there is a shared perception between the community, parliaments and governments that there is a need for change. "A State without the means of some change", wrote Edmund Burke,

"is without the means of its conservation".

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International Relations

Perhaps no area of human activity is as changeable as international affairs, with its complex interaction with Australia's economic and social goals. That is something Alfred Deakin recognised so well. He lived at

a time when the British Empire was supreme and most, but by no means all, Australians had an emotional attachment to the Empire. Deakin shared that attachment. But he did not ignore the changing demands of the new Australia. He argued with some passion, and to the annoyance of British Ministers, that the Empire neglected Australia's

interests in the Pacific. More dramatically still, he argued that the relationship between the Mother Country and her colonies and dominions should not be inflexible. He wanted an Empire not governed from Westminster, but as a partnership of free nations. In the spirit of that independence, he established Australia's first national, as opposed to imperial, defence policy.

Since then, our foreign policy has had to change beyond recognition. Who would have thought, for example, in 1945 that by 1983 Japan would be one of Australia's closest partners? Yet we have successfully forgotten the trauma of the past and developed a relationship to our mutual advantage. We have retained our security by maintaining close ties with our traditional friends,

in particular, the United States. But we have built on that foundation with a constructive regional policy and, more recently, by our recognition of the fast growing political and economic importance of developing countries.

The international environment is so volatile that we cannot predict with any accuracy the foreign policy challenges we may confront in the years ahead. But like Alfred Deakin early this century, we must remain prepared to accept the need to make imaginative and visionary changes in order to pursue our national interests. I take just two examples of the sort of visionary initiatives we need to consider. First there is the concept of a Pacific

community. I have already mentioned that our trade and foreign policies are becoming increasingly woven around the Asia/Pacific Region. So are the trading and foreign policies of other countries in the area. Consequently, the region as a whole - and Australia - must look towards building up these ties. How that is done will depend on the natural evolution of those relationships, but there

will also be a role for imaginative and constructive initiatives by future Australian Governments. Ours is the

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region of the future. We must recognise that and build on it. I do not envisage the early emergence of a Pacific equivalent of the European Community, but I do believe that co-operation between Governments and the private sectors of the Asia/Pacific region will lead to a revolution in trans-Pacific relations.

A second area where change is needed is in international trade. There is now widespread agreement that international economic growth would benefit from closer co-operation on trade barriers, interest rates and currency movements. But the problem is more complex than that. If we are to maximise the opportunities for international economic

growth, there must be a global recognition of the nexus between trade and finance. The international debt problem which threatens international economic stability cannot be solved unless debtor countries earn foreign exchange from

exports. Trade ministers must keep markets open so debts can be repaid. Australia can play an innovative role in promoting a growing international recognition of this trade/finance nexus. If that link is not recognised, then our own economic performance will suffer, not just that of the countries directly involved.

Because of our growing sense of national pride and self-confidence, Australia is assuming a larger role in world affairs. We are no longer a Dominion providing resources for the Empire. We represent a responsible,

independent and stabilising influence in the region. By a consistent approach, based on tolerance, we can play a constructive role. We did that, for example, in helping to bring about a settlement in Zimbabwe. Through

international bodies, in particular, we can continue to act in those areas which are critical to international stability: North/South issues, arms control and, as 1 have already mentioned, international trade and finance. Australia alone cannot solve these problems, nor should we try to. Our influence will not be dramatic, But it can

act slowly and persuasively.

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Conclusions

In the months ahead, we in the Federal Liberal Party and the Opposition will be reassessing our policies. This review will be within the framework and discipline of the basic Liberal philosophy and principles outlined in this Lecture. The policies will be geared to creating opportunities from the inevitable social and economic

change in Australia in the decades ahead. These policies will evolve with change - however, the underlying principles will remain the same.

It is the Liberal framework which can best provide wider social and economic opportunities. It will do it through the Liberal emphasis on the strengths and rights of the individual This leads to an emphasis on effort, enterprise and excellence - the very traits which will move Australia

forward and allow us to make change an opportunity, not a threat. Liberalism does believe in the central role of the private sector. It is the private sector which is the

engine of productivity and growth. A more cost-effective economy gives greater scope for a more compassionate society. And it is a fair and just society which is the basic aim of Liberalism.

The reality is that public welfare and services depend on private sector growth. The reality is that the creation of permanent jobs in either the private sector or the public sector depends on private sector growth. It is the response of the private sector to the opportunities of change which will drive Australia forward. An article of faith of Liberalism is to ensure dignity and support for the socially

disadvantaged. In turn the Liberal Party focuses on the causes of need, not just the symptoms. Australians want and deserve an approach which creates opportunities, not just one which compensates for the lack of opportunities.

We Should never forget that Liberalism has been the great reforming philosophy of this century. It is the foundation on which the social equity and cultural diversity of Australia has been built. It has been successful because

it has reflected the basic Australian values of individualism and reward for effort, combined with social justice. These basic aspirations of individual Australians are often submerged under the pressure of rapid and complex change.

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As the Leader of the Federal Liberal Party, I see it as the responsibility of myself and all members of the party not just to re-state but to promote our basic principles. It means promoting an ethos of respect for

enterprise and individualism» It means rejecting the concept of the State being the supreme entrepreneur and the perpetual problem solver. It means rejecting the threat of a corporate state of big powerful pressure groups which ignores the interests of the politically unorganised and socially disadvantaged. It means promoting Federalism, not centralism.

Modernisation does not just apply to technology - it applies to attitudes as well. Australia's future will be assured if we take a positive approach to change, if we focus on the generation of community wealth, if we do not try to redistribute the fruits of growth before we have created it. Australia must not step back from these realities. Liberalism must not step back from the consistent application and promotion of our basic principles. This is not just what Liberalism is about, it is what

leadership is about. This is the positive approach, this is the Liberal approach. Australia can benefit from change, we can create a diverse, and compassionate society, we can play a constructive role in regional and global affairs - we can achieve all these things if we build on the Liberal values I have outlined in this lecture. These achievements

are within our control and our grasp - if we fail now then we fail Australia for generations ahead.

Alfred Deakin Lectures

1. THE LIBERAL TRADITION IN AUSTRALIA. Alfred Deakin: His Life and Our Times, by the Rt. Hon. HAROLD HOLT, P.C., C.H., Prime Minister of Australia 2. PROBLEMS OF AUSTRALIAN UNIVERSITIES, by Dr J.A.L.

MATHESON, M.B.E., M.Sc., Ph.D., F.I.C.E., M.I. Struct.E., M.I.E., Aust. F.A.C.E., Vice Chancellor of Monash University.

3. THE CONDUCT OF AUSTRALIAN FOREIGN POLICY, by Professor J.B.D. MILLER M.Ec., Head of the Department of International Relations, Research School of Pacific Studies, A.N.U. ,

4. CO-OPERATIVE FEDERALISM AND RESPONSIBLE GOVERNMENT, by Professor G. SAWER, B.A., Ll.M.(Melb.), Professor of Law, Research School of Social Sciences, A.N.U.

5. TOWARDS 2000: CHALLENGE TO AUSTRALIA, by the Hon. J.M. Fraser, M.A. (Oxon.), Member for Wannon, House of Representatives.

6. AUSTRALIAN ECONOMIC POLICY, by Professor RONALD F. HENDERSON, M.A., Ph.D. (Cantab.), M.Com. (Melb.), Director Institute of Applied Economic and Social Research, University of Melbourne.

7. THE LIBERAL WAY: NOW AND TOMORROW, by the Hon. P. LYNCH, B.A., Dip. ED. (Melb.), Deputy Leader of the Federal Opposition.

8. MINING AND AUSTRALIA, by Mr R.T. MADIGAN, O.B.E., M.E. , Ll.B., F.S.A.S.M., M .Aust.I .Μ.M., Chairman, Hammersley Iron Pty. Ltd.

9. IS PARLIAMENT IRRELEVANT? by the Hon. D.J. KILLEN, M.P., Member for Moreton, House of Representatives.

10. URANIUM: FOR GOOD OR EVIL? by Sir FRANK MACFARLANE BURNETT, Emeritus Professor of Microbiology, University of Melbourne.

11. COMMAND AND CHOICE: ISSUES FOR GOVERNMENT INTERVENTION, by W.P. HOGAN, Professor of Economics, University of Sydney.

12. THE DILEMMA OF THE LAW IN AN AGE OF VIOLENCE, by the Hon. Mr Justice M.D. KIRBY, Chairman of the Australian Law Reform Commission.

13. INDUSTRIAL RELATIONS: CLASS CONFLICT OR COMMON GOALS? by the Hon. A.A. STREET, Minister for Industrial Relations

14. AUSTRALIAN LIBERALISM AND THE NEED FOR CHANGE, by KATHARINE WEST.

15. INTERSTATE RIVALRIES - A HISTORIAN'S VIEW, by Professor GEOFFREY BLAINEY, University of Melbourne.

16. THE FUTURE OF THE FEDERAL COMPACT, by the Hon. Sir RUPERT JAMES HAMER.

17. THE LIBERAL APPROACH TO CHANGE, by the Hon. Andrew S. Peacock, Ll.B., M.P., Leader of the Opposition.

The Alfred Deakin Lecture Trust

The Alfred Deakin Lecture Trust was established in 1966 to organise and finance the delivery, printing and distribution of the annual Alfred Deakin Lecture. The Trust was established on the initiative of the Melbourne

University Liberal Club with the assistance of the Liberal Party of Australia (Victorian Division) and with the blessing of the family of Alfred Deakin.

The Lecture is a Memorial to Alfred Deakin, a past student of the University of Melbourne, a founding father of the Australian Federation, Prime Minister, and one of the most articulate exponents of the Australian liberal democratic tradition.

Each Alfred Deakin Lecture is open to the public and the Lectures, it is hoped, are making a lasting contribution to the study of politics and life in Australia.

Board of Trustees

CHAIRMAN

Mr Roger D. Harley, B.Sc., Dip. Ed.

Teacher

SECRETARY

Mr Alan Sandbach, Ll.B

Solicitor

TRUSTEES

The Rt . Hon. J. Malcolm Fraser, P.C., C.H., M.A. The Hon. Andrew S. Peacock, Ll.B., M.P. Mr Alan R. Stockdale, B.A., Ll.B. Mr Colin G. Polites, Ll.B. Mr W. Severn Clarke, B.A., B.Sc., M.B.A. Professor David A. Kemp, B.A., Ll.B., Ph.D. Mr David Whiting, Ll.B., B.Com. Mr Simon Frazer, B.Sc., Dip. Ed. Mr Robert Clark, B. Com., Ll.B. Miss Janise E. Sibly, B.A. Mr Giuseppe D. Simone Dr Peter Mac Isaac, M.B., B.S. Mr John A. Obrienm, Ll.B. Mr Christopher Murphy Mr Darren Ker Mr Toby Knight Mr Richard Allsop

All communications should be addressed to the President, Melbourne University Liberal Club, Box 79, Union House, University of Melbourne 3052.

National Liberary of Australia card No. ISBN o 909888 13 2