Money Finance News ‘Divisive’: Former RBA governor turns on neoliberalism
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‘Divisive’: Former RBA governor turns on neoliberalism

bernie fraser neoliberalism
Former RBA governor Bernie Fraser says neoliberalism has hurt Australian society. Photo: AAP
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Former Reserve Bank governor Bernie Fraser has called for a radical rethink to policy-making, saying the way to a fairer, more equal society is with a pragmatic approach.

Mr Fraser, the RBA governor from 1989 to 1996, said Australian society had become “less fair, less compassionate and more divided” and “more devoid of trust in almost every field of human activity” in recent decades, despite 27 years of solid economic growth.

The problem was an adherence to ideologies such as neoliberalism, which made for bad government policy-making, the economist told the Australia Institute’s revenue summit in Canberra on Wednesday.

“The problem in my mind is that all ideologies are inevitably divisive, very damaging to both economies and societies,” he said.

They frustrate the development of good policies that are necessary to develop good societies.”

Neoliberalism has been the backbone of government policy in much of the Western world for decades.

Among other things, it backs increasing the economic control of private interests, and decreasing the power of the public sector. Proponents favour limiting subsidies, expanding tax bases, open markets, deregulation and privatisation of previously state-run businesses.

But Mr Fraser said the low-tax, high-individuality approach of neoliberalism failed many.

“Favouring the market system ahead of the state system, and individual interests ahead of community interests, can lead to profoundly unfair social outcomes,” The Guardian reported him as saying.

“Those unable to afford access to decent standards of housing, healthcare and other essential services have to settle for inferior arrangements, or go without.”

He said the best way to achieve what most governments aim for – a society where everyone winds up better off – is through a more pragmatic approach.

“An approach that picks the best out of the market system, lets the market work where it does work,” he said.

“It’s also necessary to be prepared to have the government step in with spending and other activities that get compensated for where the market is failing.”

To make such an approach work, Australia needed to have open and honest debate about policy and the implications of ideologies, Mr Fraser said.

That had not occurred for at least 20 years. But the current quality of public and parliamentary debate was the worst he’d seen in 50 years, he said.

“Instead of focusing on facts and research information and honest debate and presentation of those things, all that’s been replaced by assertions,” he said.

Pressure from lobbyists to back up those assertions, and budget modelling done by people eager to support one conclusion, were also part of the mix.

The state of the public service did not help, Mr Fraser said.

“Public service, unfortunately in my observation, is only a shadow of what it used to be in terms of providing expert, independent, forthright advice on all aspects of fiscal policy.”

-with AAP