01/10/2026
Can you imagine Australia without Medicare, the age pension, or with 50% tariffs on imported goods such as cars, clothes and shoes?
Institutions we take for granted now took many decades of agitating, fighting vested interests and staring down passive resistance to be created. This is the realpolitik of economics.
Economic reforms have changed institutions and systems to significantly improve wellbeing for Australians. They are less glamorous than scientific and technological innovations, but our standard of living would be very much worse without them.
To some extent ideas are cheap. They are the fun part of reform. The heavy slog of realising ideas can consume lives and test the dedication of even extraordinary people.
These struggles show that reform has never been easy, but persistence pays off.
𝐓𝐡𝐞 𝟑𝟎-𝐲𝐞𝐚𝐫 𝐛𝐚𝐭𝐭𝐥𝐞 𝐟𝐨𝐫 𝐌𝐞𝐝𝐢𝐜𝐚𝐫𝐞
Before 1975, health care was largely fee-for-service with some private insurance coverage. Most uninsured people were low-income and people with chronic or severe problems.
Between 1937 and 1953, there were four failed attempts to introduce a universal health plan. However, it was fiercely opposed at every turn by the medical and health insurance associations. They fought at both the emotional and political level and managed to forestall a national health insurance scheme by three decades.
The final successful push to introduce a universal scheme came from research work at the Melbourne Institute of Applied Economic Research at the University of Melbourne. An alliance with sympathetic media created enough heat that Gough Whitlam, then deputy leader of the opposition, supported it behind the scenes.
After the Coalition won the 1969 federal election, the reform plan was opposed by all other federal members of parliament, including Labor. However, Labor’s Bill Hayden and Whitlam continued to make it official Labor policy.
Labor won the 1972 election, but medical bodies still resisted the reform. One set up a A$2 million “fighting fund”. The General Practitioners Society asked GPs to distribute letters that included the line: “The control of our country has fallen into the hands of socialists.”
The argy-bargy between Hayden, the doctors, private insurers, hospitals, bureaucrats and state governments could fill volumes.
The sticking points were about money, profits and control – not what was in the best interests of the population. The legislation was eventually passed in 1974.
Successive generations of health department officials had simply believed that reforms to the health care system were not possible.
𝐆𝐚𝐫𝐧𝐢𝐬𝐡𝐢𝐧𝐠 𝐰𝐚𝐠𝐞𝐬 𝐭𝐨 𝐬𝐮𝐩𝐩𝐨𝐫𝐭 𝐜𝐡𝐢𝐥𝐝𝐫𝐞𝐧
Before the mid-1980s, financial support for children following divorce was either agreed privately or determined by court order. Although courts typically struck very low rates of payment, compliance was estimated to be only 30%. Custodial parents often lived in extreme poverty.
The problem at the time was easy to articulate: why should children suffer because their parents had decided to separate?
Labor’s Minister for Social Security Brian Howe intended to solve this problem. He appointed experts Bettina Cass and Meredith Edwards to build an evidence base and implement a solution.
Edwards proposed that employers deduct payments directly from workers’ wages, along with income tax. The child payment portion would be transferred to the custodial parent.
As strange as it sounds, it was opposed all along the social security chain of command. It was considered an “impossible reform”, according to Edwards.
The department of social security was openly hostile. At first, it did not take the review seriously, then it kept putting up different arguments for why it could not be done. Finally, it moved Edwards and her team out of the building as they posed a “safety risk”.
Undeterred, the team never took no for an answer and worked out solutions for each “unsurmountable” barrier.
The tax office was also antagonistic to assisting the child support unit, saying it wasn’t their job and it would cost too much to run.
The child support scheme officially began in 1988, meaning it’s now been in place for almost two generations.
𝐃𝐢𝐬𝐦𝐚𝐧𝐭𝐥𝐢𝐧𝐠 𝐭𝐫𝐚𝐝𝐞 𝐛𝐚𝐫𝐫𝐢𝐞𝐫𝐬
By the 1950s, Australia was the second most protectionist country among advanced economies, with an average tariff rate of about 30%.
By 2017, Australia had close to the lowest tariff rates in the world, with an average tariff of less than 1%. How did this come about?
The Australian journey to a low-tariff environment was driven by the intellectual force of academic economists. It was eventually taken up by successive Australian governments.
The arguments from economists such as Max Corden and Dick Snape were that Australia’s high level of import tariffs were lowering the average standard of living of the Australian people by forcing people to pay high prices for imported goods.
Economic evidence was used to considerable effect. Work done by politicians, backed by evidence from economists in academia and the public service, eventually disarmed manufacturers. Evidence made manufacturers focus on long-term issues rather than just immediate effects. Economic analysis was used to set out clearly the trade-offs of not making a change.
The business media was often brought in as an ally.
It took many reports by the Productivity Commission and its predecessors for the export and household sectors to appreciate how much tariffs were undermining their standard of living.
The main opponents to tariff reform were the NSW Labor right and the Business Council of Australia. However, the National Farmers Federation and the Australian Mining Industry Council eventually understood the (positive) implications for their exports and exerted their muscle.
By the 1980s, the broad arguments were largely accepted by both major parties and the labour movement. As a trade economist, Corden advocated for a gradual simplification of tariff rates and then reduction of import barriers. The Button Plan in the 1980s, and later plans from the Bracks and Green Reviews in the 2000s, had programs to help affected businesses refocus their markets or close in an orderly manner.
Interestingly, tariff reforms were not traditional Labor issues. But they were adopted by then Prime Minister Bob Hawke and Treasurer Paul Keating, who realised that some of the party’s mantras were undermining the party’s goals of social and economic justice.
𝐖𝐡𝐚𝐭 𝐝𝐨 𝐰𝐞 𝐥𝐞𝐚𝐫𝐧 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞𝐬𝐞 𝐞𝐱𝐚𝐦𝐩𝐥𝐞𝐬?
There are none so blind and belligerent as vested interests. We’ve seen this more recently in the vocal pushback to the federal government’s recent tax reforms.
Australia has entrenched economic and social problems, from unaffordable housing to wealth inequality.
No government, from any party, can fix those problems in one or two terms. History shows it takes persistent work over decades. At times, change can feel impossible. But that’s what health officials once said about setting up Medicare too.
✍️ by Beth Webster, Director, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne
👉 Read more from The Conversation AU: https://theconversation.com/au
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