Why Australians like to think their country is exceptional

Why Australians like to think their country is exceptional

Why Australians like to think their country is exceptional

Luke MalpassStuff political editor
Sep 2, 2016 – 12.15am

Is Australia exceptional? What is it, that makes Australia, well, Australia? A new book, has sought to answer that question, but in a pointy-headed manner. It's not Crocodile Dundee and barbecues that make the country, but a set of institutions, peculiar to the nation, that have underpinned its development and continue to reflect and shape the nation.

But what, exactly is exceptionalism? In the United States "exceptionalism" tends to refer to the institutions that perpetuate wealth creation, protect civil rights, and enshrine democratic processes in a way that makes a nation more successful and more desirable to live in than its neighbours. The Australian version is somewhat more ambiguous. Is our current exceptionalism – 25 years of uninterrupted growth, low debt and a massively improved standard of living an exception to what has been the rule for much of the country's history. And, if that is the case, are we in the process of it reverting to the mean?

And is this reversion being driven by one of Australia's defining characteristics: the vague sense that somehow the government should sort things out so they are fair? The recent federal election was about fairness; and just to be sure we have an industrial relations tribunal that has to arbitrate over how adults treat each other in the workplace.

We like to think of ourselves as lucky, blessed, different. It's all summed up in the word exceptional, but exceptional carries a price, too - of order, obedience and control.

Or does exceptionalism relate to a different characteristic altogether, our preparedness to toe the line? One of Australia's great modern historians, the late John Hirst, used to tell new students from abroad that "Australians are a very obedient people. I advised them to keep this secret because Australians imagine themselves to be the opposite of obedient".

Yet according to William Coleman, a reader in economics at the Australian National University, "Australia seems to be following a 'special path' of its own laid down more than a century ago."


In his new book, Only in Australia: The History, Politics and Economic of Australian Exceptionalism, Coleman argues Australia isn't about fairness or obedience, but about five great institutions that make up public life: a regulated labour market; a tax/transfer system that is characterised by direct income taxes (income tax, company tax) that are highly means-tested; a facade of federalism that hides what is, in reality, a highly centralised and often unitary state; a lofty prominence bestowed on an "official family" of senior bureaucrats and "independent statuary authorities"; and a strong and compulsory set of electoral systems.

According to Coleman, these "phenomenon make themselves known in everyday life". They shape the public and the public, in turn, shapes them.
Peculiar model

In laymen's terms, we have a market economy but we also have a state that's happy to intervene where it picks and chooses. A great example of this is sport. What other developed country has an "anti-siphoning list" of sports considered too important for people to pay for?

It is Australia's peculiar model of political economy and the paradoxes that this throws up that make the country exceptional.

Legend has it Australians rejected the establishment of the old country but replaced it with hero worship of events such as the Eureka Stockade and rebels like the outlaw Ned Kelly. Hulton Archive

We are a trading nation that relies on being internationally cost competitive, so for the past 30 years governments have mostly supported bringing down tariff barriers. At the same time, since we pride ourselves on being fair we operate an industrial relations system founded on the notion of a conflict between capital and labour, in which a government tribunal presides indirectly – at the very least – over wage, salary and working conditions in the country.

We have come to think of ourselves as a low tax nation, yet we spend enormous amounts of money on middle class and corporate welfare. And we expect our governments to hand out cash for all sorts of projects and to many individuals.

Australia also has what public policy critic J R Nethercote calls – in an aptly titled chapter of the Coleman book – "Australia's talent for Bureaucracy".

Overlaid over all of this, Australia has also has extraordinary luck. At a crucial time in history, a gold boom and soaring global wool demand struck at the same time. This attracted people, ideas and capital to the new nation. It's these happenstance of history that prompted Donald Horne to argue that "Australia is a lucky country run mainly by second rate people who share its luck". The same thing happened with the rise of China and the most recent mining boom.

The Treasury in Canberra reflects what William Coleman argues is one of Australian life's institutions: a lofty prominence bestowed on an 'official family' of senior bureaucrats and 'independent statuary authorities'. Jeff Chan

Enter Only in Australia with it's aim of a thoughtful discussion on the nature on Australian exceptionalism, and the lingering question of whether the particular strain of exceptionalism exhibited by Australia will help or hinder the nation's progress in the coming years.

The Australian Moment

When the Hawke government was elected in 1983, it heralded a period of macro and micro economic reform that was peculiarly Australian, and extremely successful. Most of the reforms involved taking away protection and privilege, unique to Australia. The Hawke government set up the tripartite accord between business, unions and government that, ironically, represented a corporatist approach to deregulating Australia's uncompetitive markets. Politically, this gave the government cover for its actions, and practically it meant reform progressed at a pace that made them resistant to being unwound. Next door in New Zealand – where there was no senate, weaker unions and nothing like the accord – the blitzkrieg of reform that mostly took place between 1984-1987 (plus a little in 1991-1992) was never as institutionally supported as the Australian reforms and was easily unpicked to large degree from 1999 onwards.

The Australian deal was different. In return for wage restraint, unions and the finance sector got compulsory superannuation, and as a cherry on top, industry super funds, which provide lucrative sinecures for union and business-group types and control over large swathes of $1.7 trillion of Australians savings. Meanwhile, the financial services sector gets to clip the ticket – 9.5 per cent of every wage and salary in the country is poured into superannuation – which workers usually leave to someone else to invest. As Only in Australia notes, despite Australia only having 0.3 per cent of the world's saving, it possess 7 per cent of the OECD's pensions assets.

The great Australian deregulation also had its own quirks. Despite the last industry support being withdrawn for manufacturing, the car industry still is not deregulated – importing second hand cars virtually remains illegal – ostensibly for safety but probably to protect incumbent car dealer networks. And there also is an odd affection for agricultural producers to remain in Australian hands.

RBA governor Glenn Stevens sees inflation returning to target "over time" Louie Douvis
The official family


Australian myth-making has it that the new egalitarian society rejected the hierarchies of the old country and subsequently began a hero worship of anti-establishment events such as the Eureka Stockade and rebels like the outlaw Ned Kelly. While reading Only in Australia you can't help but agree with Hirst's warning – that Australians are in fact an obedient people who defer to authority (and perhaps have a bit of a collective glass jaw).

Greg Melleuish in his chapter on Australian secularism points to a slight disdain – especially among those with intellectual pretensions – for the material wealth and gain that has been at the heart of the Australian project. Perhaps this helps explain Australia's "talent for bureaucracy", which with its checks and balances and careful employment of intellect to regulate society is seen as a useful counterweight to the unrestrained ambition of the private sector (and some of its vulgarity). This bureaucracy is the "official family" of Australian public life. Coleman claims it is a key part of Australian exceptionality and, to some degree, constitutes a "state within a state".

It is an unusual feature of Australian Society that the nation's top mandarins enjoy status, prestige, power and extremely generous salary and retirement benefits. The names of top public servants are regularly in the papers (only recently Sydney's Daily Telegraph led with the $800,000-plus salary of Martin Parkinson, Secretary of the Department of Prime Minister and Cabinet). These are the high-profile people who are looked up to; their career movements are reported in the media.

The Australian Financial Review's own Rear Window column, regularly updates us on such movements within the public service as well as in and out of the private sector. In fact, Australian bureaucrats are ripe for study in public choice theory – this is the sub-branch of economics, the main insight of which is that public servants are motivated by the same things as everyone else: status, money and power. Why be politicians, when you can be a public servant?

Historian John Hirst used to tell new students from abroad, 'Australians are a very obedient people..[but] imagine themselves to be the opposite of obedient.' Ray Sparvell

At its extreme, the probity and position of the Reserve Bank governor has almost become above reproach, from markets, politicians and the media alike. Although secular, the RBA effectively behaves as an old-fashioned high priesthood. It presides over the rituals – the succour given through interest rates decisions, it has its own liturgy in the RBA board minutes and delivers its own sermons and encyclicals. In fact, the utterances of the Reserve Bank Governor are picked over for clues and significance in a manner enjoyed only by other Reserve bank bosses, the US president or the Pope. In Australia, the Reserve Bank rarely answers questions, although Glenn Stevens has given once a year interviews to The Australian Financial Review.


In fact, the only time Reserve Bank bosses face something approaching the music, is when questions arise in Senate Estimates hearings. This reinforces and supports Coleman's thesis that the "official family" does constitute, by its very nature, a "state within a state". There's no suggestion this is somehow not above board, but it does suggest that Australian elites think technocratic rule is preferable to, and produces better results than, democracy.

Indeed, so trusted is the RBA and so "independent" that there are regularly calls made by more quasi-non-governmental organisations to be set up in the same manner. Suggestions range from a "tax RBA" to an "infrastructure RBA". This serves to underscore the suspicion, that, far from being particularly egalitarian, Australia bureaucracy can be elitist. This is Coleman's state within a state – a vast network of quangos and tribunals and committees inhabited by ex-politicians and lawyers. But as John Nethercote observes, "we take a hesitant pride in this, since it runs counter not only to the archaic and cherished image of ourselves as ungovernable, if not actually lawless".

The Fair Work Commission and the Human Rights Commission are two good examples. The commissioners enjoy salaries of $300,000-plus for what would be, in many other economies, make-work jobs. The Fair Work Commissioners, for example, have to decide whether someone getting drunk and abusive at a work Christmas party is grounds for dismissal. Or whether "defriending" someone on Facebook constitutes workplace bullying. In most other developed countries such judgments are not the work of governments. Australia is rather fond of setting up these sort of professional busybodies. The Turnbull government is about to establish a new one: a tribunal to rule over bank complaints.
Sporting chance

One of the strongest critiques in Only in Australia comes from economist Richard Pomfret and concerns sport, and the degree to which it is both elevated and financed by Australian governments. Also how the economics of sport itself is regulated.

Sports derive much of their revenue from economic rents. The competitions in Australia are, in effect, closed cartels, and mostly operate outside the legal frameworks set for other sorts of markets and businesses. Equalisation policies and / or salary caps operate in the Australian Football League and the National Rugby League. Similar arrangements are also in place for cricket and rugby union.

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"In the closed cartels characterising Australian professional team sports, leagues restrict entry of new clubs, engage in price fixing, and impose restrictions on the labour market that are anti-competitive and would be illegal in other sectors", Pomfret writes.

It's also remarkable that in a country that regards itself as putting fairness at the centre of public order, it allows an AFL with "regulation … internal to the league … supported by non-application of public regulatory policies such as competition policy". The AFL is also exempted in large part from corporations law and has "virtually tax-free status", Pomfret says.

One of Australia's defining characteristics is seen as the vague sense the government should sort things out fairly. Alan Porritt

In some ways sport represents the most interesting parts of the Australian exceptionalist story: that is the intersection of competing interests with fairness. In one way, the AFL and the NRL basically rip-off players whose marginal value on the labour market is greater than they are being paid – you wouldn't need the salary cap otherwise. It does this in order to make things fairer between teams and "fairer" for the spectators or the supporters of more poorly performing clubs who, it's perceived, cannot keep up.

In Melbourne in particular, the AFL is the plaything of big egos, big money and corporate interests who enjoy the power and status that comes with control. Keeping costs down means the AFL is extremely successful in collecting economic rents from both players and governments. The governments even build the AFL new stadiums.

This collection of essays is a must read for anyone interested in how it is that some of Australia's institutions have developed, and more importantly been sustained. It's a mixture of political science, social history, as well as dry economic analysis. The only thing missing were some good cartoons.

The question the book begs is which version of Australian exceptionalism is going to get up? The chance for everyone to have a go, or a redistributive, equalising Australia. Fortunately, or not, an acquiescent Australian public will almost certainly let the government sort it out.

Only in Australia: The History, Politics and Economic of Australian Exceptionalism, edited by William Coleman, published by Oxford University Press. Luke Malpass is a leader writer and an opinion editor at the AFR.

Australians often like to think theirs is a unique way of living - one the rest of the world should be invited to see or experience.

Australians expect governments to come to our rescue and hand out cash for all sorts of projects. Lindy Percival

Despite what we like to think, <i>Crocodile Dundee</I>, barbecues and a surf lifestyle don't shape the country but our own peculiar set of institutions.

Expert coverage of Australia’s public sector.