The Dries Have It: The Past And Future Of Economic Reform

An unfortunate consequence of the ideological makeup of Australian historians is that one of the most important political and intellectual movements in 20th century Australia is still poorly understood and underappreciated.

Every factional nuance of the Labor Party and union movement has its own dedicated history.

By contrast, the Dries – the parliamentary and extra-parliamentary grouping that drove free market thinking in the Liberal Party; that laid the foundations for the deregulation of the 1980s and ’90s; that held the Liberals to their private enterprise beliefs during those reforms against the attraction of populism; that seemed to flame out with the failure of Fightback! at the

1993 election but whose program has been vindicated by decades of bipartisan economic change – has been largely ignored.

At best the Dries receive a perfunctory paragraph in political histories, dismissed either as Margaret Thatcher copycats or the ciphers of business interests.

Over Christmas one of the leaders of the Dries, Jim Carlton, passed away. You can read Malcolm Turnbull’s comments commemorating Carlton’s life.

Carlton should be seen as one of the pivotal figures in Australian political and economic history. This importance is not necessarily obvious from his CV.

Carlton entered parliament in 1977 as member for the Sydney seat of Mackellar. He was the minister for Health for a short time in the Fraser government before it lost power. He was shadow treasurer under John Howard during the 1980s, and left parliament in 1994.

Yet it was his role in building the Dry movement, and establishing a parliamentary group, the Society of Modest Members (along with the other core members of John Hyde and Peter Shack), that assures his long-term significance.

In the late 1970s and early 1980s the Dries were opposed to the Keynesian post-war consensus and advocated the monetarist approach to macroeconomic policy expounded by Milton Friedman. They opposed the high tariff barriers that Australia placed between itself and the world. They called for the industrial relations system – one of the most restrictive in the developed world – to be dismantled, and wages to be set by the market rather than judges.

The Dries had a love-hate relationship with the Fraser and Howard governments. They were disappointed in Malcolm Fraser’s failure to kickstart necessary reform; a failure made more politically bitter by the fact that the Labor Party under Bob Hawke filled the gap. It is a sign of the ideological success of the Dries that their view about the Fraser government – as a “missed opportunity” for reform – has become the dominant one in the modern Liberal Party, rather than more common idea of Fraser as a welcome return to the stable, middle-of-the-road government of the Menzies years.

It was thanks to Dry pressure that Fraser and his treasurer, John Howard, instigated the Campbell committee into the Australian financial system and gave it the philosophical direction that shaped the deregulatory movement for two decades later. Hawke and Keating would not have been able to do what they did to the financial sector without these foundations.

Howard was affiliated with the Dries under Fraser and then during the Hawke years. Yet Howard never fully signed up to the Dry program, in part by temperament, and in part due to a conscious effort at striving for the political mainstream.

Indeed, the Dries operated as a counterculture within the Liberal Party – albeit an extremely influential one. This idea that the political mainstream would be influenced by the political margins was part of the Dry identity. Carlton’s Society of Modest Members was named after Bert Kelly, the Liberal member for Wakefield between 1958 and 1977, whose quasi-serious, quasi-comic “Modest Member” columns were a fixture of the Australian press for decades. Kelly was a gadfly urging conservative governments to pursue tariff reduction and market liberalisation.

In 2011 the Society of Modest Members was revived within the federal Liberal Party, as an attempt to recapture the intellectual ferment of the era of Kelly, Hyde, Shack and Carlton. This reconstituted group was, like the original society, an implied critique of the prevailing orthodoxy within the Liberal Party. Free market Liberals believed that Tony Abbott needed some prodding if he was to bring about market-oriented economic reform, and needed an internal bulwark against big spending promises like paid parental leave.

Yet the new Society for Modest Members seems to have come to little, and Abbott’s term in office is likely to be seen as another missed opportunity. The original Dries were first and foremost an intellectual movement. Turnbull’s success depends on whether today’s Jim Carltons are preparing the ground for future reform.