Fraser may continue to dominate

Press, 11 June 1980, Page 16

Fraser may continue to dominate

By

JOHN BRUNNER

in Canberra,

for the “Daily Telegraph”

If four years ago it had been appreciated that during Mr Malcolm Fraser’s period of office unemployment would rise still further, the standard of living of many Australians would fall and there would only be a relatively small decline in inflation, few would have given him much chance of being returned in 1980. Yet the consensus of Australian commentators is that he has little to fear at an election later this year. It is of course quite possible that the commentators will be proved wrong. Mr Fraser’s Ministers have proved themselves as accident prone as other Governments. If he can look forward confidently to a third term of office, what are the reasons? One undoubtedly is Mr Fraser himself. Few see him as a lovable man, but he does appear to offer what Harold Wilson once called the smack of firm government. Australians are curiously ambivalent towards authority — some put it down to the Irish influence. There is a strong “larrikin” tradition which delights in cutting down “the tall poppies” and contributes to the contempt in which politicians tend to be held. There is also a highly deferential attitude to authority which Mr Fraser has exploited to the full. By comparison his, in many wavs more admirable, opponent, Mr Bill Hayden, gives the impression of whining,

the occupational hazard of all leaders of the Opposition. Mr Fraser has also been successful in his ambition to get sport back on the front page of Australian newspapers. Some uneducated Brits may be surprised to learn that sport ever lost its rightful place, but in the early ’7os Australians became as obsessed with politics as anyone, a most unhealthy preoccupation in the eyes of right-thinking Liberals. Thanks in part to the antics of the sportsmen themselves Mr Fraser has managed to redirect attention from politics to sport, although he may have been ill-advised to get the two mixed up in connection with his wished-for boycott of the Olympics. Whether by his own exertions or the pressure of events he has also succeeded in lowering people’s expectations. It no longer seems odd that Australians could re-elect a Prime Minister who presided over 6 per cent unemployment, double digit inflation and lower real wages. In part this is because they can see such phenomena are commplace abroad and Mr Fraser has not been above drawing attention to the extent to which Australia’s economic problems are imported, although when the last Labour Government looked for scapegoats overseas he gave it very short shrift. The economic expectations lowered,- but not to the point of engendering despair. Bil--lions of dollars of in-

vestment projects now in the pipeline are offered as evidence of light at the end of the proverbial tunnel. Time was, back in the days when politics monopolised the front page, when en-

thusiasm for development projects was seen as the exclusive concern of the more unsophisticated premiers of the more unsophisticated States. Mainstream opinionformers used to sniff at such projects seeing them more as a threat to the environment or. a sell-out to foreigners than as a provider of jobs. Though such opinions are still to be heard, not least in Melbourne, those who hold them are back on the sidelines. The point perhaps can best be illustrated by comparing yesterday’s folk hero of the Left with today’s. Five years ago it was Don Dunstan, the Premier of South Australia, who pioneered a great deal of social legislation before making a hurried exit from politics partly because of the impossible position'his antagonism

to uranium mining had created. Today the darling of the Left is Neville Wran, Labour Premier of New South Wales, who vies with Mr Fraser for the title of King Coal (or King Alumin-

ium) in his desire to promote the development of natural resources. This is not to say that natural resource development couldn’t yet prove something of an embarrassment of riches. Any very rapid development is going to run slap up against Australia’s shortage of tradesmen and aggravate both the nation’s incipient wage inflation and its never very harmonious industrial relations. Even if all goes well, there is the effect of. a big increase in mineral exports on the exchange rate to be considered. Australians can well understand Britain’s ambivalent attitude to the North

Sea. Six years ago they were in the same position, combining an above-average inflation rate with a strong currency resulting from the last minerals boom. The effect was to bankrupt many exporting and import-com-peting industries and it has been one of Mr Fraser’s achievements to restore the competitiveness of Australian industry while making some inroads into inflation. Those economists who believe not altogether without reason, that all parity changes are self-defeating could usefully study the manner in which Australia has managed to lower its real effective exchange rate by 15 per cent. Certainly firm control of tlue money supply was part of the recipe, but so too were measures to sustain industry’s after-tax profits. Parallels with the North Sea are not confined to the effect on the exchange rate because, while much of the earlier strength of the Australian dollar was the product of a massive upsurge in exports of iron ore and coal, it also owed a good deal to Australia’s discovery of indigenous oil in the ’6os. Now of course that oil, though due to run out earlier than North Sea oil, is all the more valuable and making a major contribution to Government revenue as well as the balance of payments. The increase in crude oil prices in the past year has allowed the Federal Government to curtail its budget deficit quite drastically, thereby greatly reducing its demand for funds and enabling Australia to make do

with a rise in Interest rate; over the past six hectic months that has been small by international standards. So oil fields, which start by driving their currencies up. can end up bringing them down again if the revenue is used judiciously. Australia’s local Keynesians (one of the last surviving relics of the colonial cringe) look on with a mixture of horror and disbelief as the Government gets stuck into its budget deficit (estimated to be under 2- per cent of gross domestic product in ” 1979/80 compared with over 3 per cent the previous year). They had managed to convince themselves that such things couldn’t happen because surely we could all see that attempts to reduce the deficit merely served to depress the economy, reduce Government revenue. increase its . expenditure and leave the deficit back where it started. To date, however, these misgivings have proved little more than wishful thinking thanks to the strength of bank lending and Australia’s ’ external position. Malcolm Fraser should therefore be re-elected at the end of this year, albeit with a reduced majority. His testing time will come late in 1983, depending on how far he keeps the economy moving in the right direction, on how the public attributes blame, for any confrontation with the unions, on how the Labour party sorts out its leadership problems and on whatever wholly' unpredictable issues crop up in the next three years to throw the Government off course.