the Kennett Government and the neo-Liberalising of Victoria

320 Pages·2016·1.51 MB·English

Crisis Management: The Kennett
Government and the neo-Liberalising of
Victoria

Peter Craig McIntosh

BA (Hons)

Faculty of Higher Education
Swinburne University of Technology
Lilydale, Victoria, Australia

Being a thesis submitted in fulfilment of the
requirement for the degree
Doctor of Philosophy

March 2010
ii

Crisis Management: The Kennett Government and the
neo-Liberalising of Victoria

Thesis Abstract

This thesis is testing Regulation Theory’s expectations of capitalist evolution
from a Fordist to a post-Fordist accumulation regime in relation to the
establishment of neo-liberal political-economic governance practices by the
Kennett Government in Victoria between 1992 and 1999.

The thesis will test the veracity of Regulation Theory’s expectations and
uncertainties about a post-Fordist institutional fix to the boom/bust cycle of
capitalism. Through a series of interviews with strategic participants in Victoria’s
political-economy of the time, and with a catalogue of the neoliberal actions,
policies and approaches of the Kennett Government, the two arms of
Regulation Theory (the regime of accumulation and the mode of social
regulation) will be tested and interpreted against the implementation procedures
undertaken by the Kennett Government in its attempt to establish a neo-liberal
revolution in Victoria. This will involve two different approaches to match the two
arms of Regulation Theory. The first will entail an analysis of the Kennett
Government’s neo-liberal policies, actions and political strategies supported by
the second approach which will draw on a critical discourse analysis of Premier
Kennett’s speeches in the form of his Address to the State Council of the
Liberal Party (this is a series of addresses given throughout a year to the party
hierarchy which catalogues the achievements of the political year against the
background of the political philosophy that informed the decisions that were
made in that year).

This first stage analysis will demonstrate the government’s attitude and role in
facilitating the putative development of a new regime of accumulation (in this
case neo-liberalism). Secondly, the interview material (together with the Kennett
Addresses) gathered from a number of key players in Victoria’s political
economy from inside and outside the government (including government
ministers, backbenchers, political advisors, past Premiers, Union leaders,
iii

bureaucrats and business people) will be used to measure the extent to which
the second arm of Regulation Theory, the mode of social regulation, was able
to offer support to the regime of accumulation process in an attempt to
successfully embed (or otherwise) a new form of capitalist accumulation
practice in Victoria.

If an accommodation between the two arms of Regulation Theory can be shown
to have occurred through this research and during the time of the Kennett
Government’s term of office then there will be tentative support for its ability to
explain the embedding of post-Fordist capitalism in a regional Australian state.
In anticipation of equivocal or tentative results, consideration was also given to
the agency affect of Premier Jeff Kennett, as an alternative explanation for the
outcome of this experience of neo-liberal governance.
iv

Acknowledgements

The fact that I have finished this thesis is a tribute to a number of people who
continued to show faith in me, who were inspired in their guidance, who opened
a door and who were around for most but not all the journey.

Kay Lipson whose faith was tested but was always willing to show more.

Janet Gregory who gave me the faith and the opportunity to believe that I
could to finish.

Steve Theiler who was unwavering and had all the faith, support and
friendship I needed.

Jason Bainbridge who supplied the genius moment.

David Hayward who opened the door to the theory.

Danika Benison who nearly made it to the end.

In addition a number of people helped me organise my administrative life
through the progress of the last stages of this thesis and their help was
essential and greatly appreciated. Everarda Cunningham who put “her hand” in
“her pocket” to help me finish my interview transcriptions; Dominique Hecq who
dealt with the bureaucracy; Ann-Maree Watkins who had a magician’s touch
with the formatting tools; and Nadine White who, with great humour and grace,
helped me whenever I asked.

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Table of Contents

Introduction ............................................................................................................................. 1 
The Rise of the Kennett Government ....................................................................................... 2 
Jeff Kennett ........................................................................................................................................ 7 
The 1992 Election Campaign ................................................................................................................. 9 
Political Rhetoric: Creating the Discourse of Crisis ................................................................... 12 
Report of the Victorian Commission of Audit .............................................................................. 13 
The Execution of the Revolution ....................................................................................................... 15 
Concluding Remarks .................................................................................................................... 17 
Chapter 1 ................................................................................................................................ 20 
Literature Review and Historical Context .................................................................. 20 
Introduction .................................................................................................................................... 20 
Political Organisation in Australia .......................................................................................... 21 
The Neo‐liberal/New Right and its Antecedents ........................................................................ 27 
The Regulation Theory Literature and its Concomitants ............................................... 34 
Fordism/post­Fordism ................................................................................................................ 37 
Neo­liberalism as a Fit for post­Fordism .............................................................................. 39 
Regulation Theory, the Regional State and Urban Sociology ........................................ 41 
The Local State in Australia ....................................................................................................... 48 
Regulation Theory, Capitalist Relations and the Australian Federation .................. 51 
Victoria and the Shift to Neo­Liberalism (and a putative post­Fordism) under the 
Kennett Government .................................................................................................................... 55 
Chapter 2 ................................................................................................................................ 63 
Regulation Theory .............................................................................................................. 63 
Introduction .................................................................................................................................... 63 
Regulation Theory ........................................................................................................................ 64 
Flexible Specialisation ................................................................................................................. 67 
The neo­Schumpeterian Approach ......................................................................................... 69 
Post­Fordism, Neo­Liberalism and the Regulation Theory Approach ....................... 73 
A Reconstructed Theoretical Approach to the Regional State ...................................... 76 
Applying Regulation Theory to the Regional State ........................................................... 77 
Critical Discourse Analysis: the Theoretical Context ....................................................... 82 
Charisma and Politics .................................................................................................................. 87 
Chapter 3 ................................................................................................................................ 89 
The Methodology for Uncovering the Neo­Liberal Revolution in Victoria ..... 89 
The Critical Discourse of the Kennett Era ............................................................................ 89 
Methodology .................................................................................................................................... 90 
The Analytical Framework: Critical Discourse Analysis .......................................................... 90 
Operationalising the Key Theoretical Constructs ....................................................................... 94 
The Regime of Accumulation .................................................................................................... 95 
The Mode of Social Regulation.................................................................................................. 98 
Social Institutions: the Activities of the State Apparatus ........................................................ 99 
Selection Criteria for Informants .......................................................................................... 102 
Concluding Remarks ................................................................................................................. 106 
Chapter 4 .............................................................................................................................. 109 
Crisis ...................................................................................................................................... 109 
Introduction ................................................................................................................................. 109
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Kennett’s Inaugural Parliamentary Speech: “Change” ................................................. 110 
Kennett’s Early Valorisations of Capitalism ..................................................................... 113 
The Liberal Party State Council Speeches ......................................................................... 131 
114th State Council Saturday 21st November 1992: more “Change” ...................... 133 
First Term Budget Cuts: Stockdale’s “Crisis” .................................................................... 145 
Stockdale’s Financial Rhetoric: Victoria’s Two­Stage Process ................................... 151 
First Stage: ‘Restoring’ Victoria’s Finances ................................................................................ 151 
Second Stage: ‘Restoring’ Victoria’s Finances ........................................................................... 153 
The First Stockdale Budget (1993­94) ............................................................................... 157 
Concluding Remarks ................................................................................................................. 159 
Chapter 5 .............................................................................................................................. 163 
Consolidation ...................................................................................................................... 163 
Introduction ................................................................................................................................. 163 
The Unions ............................................................................................................................................... 168 
Trades’ Hall.............................................................................................................................................. 169 
Education and Teachers ..................................................................................................................... 176 
The Politicians ............................................................................................................................. 183 
The Bureaucrats ......................................................................................................................... 188 
Business ......................................................................................................................................... 190 
The Political Culture .................................................................................................................. 196 
Privatisation: The secret state and the interference with the Auditor‐General and the 
Director of Public Prosecutions ...................................................................................................... 196 
The Secret State ..................................................................................................................................... 198 
The Auditor‐General ............................................................................................................................ 205 
Kennett’s State Council Addresses ....................................................................................... 208 
Fourth Anniversary Address: One Victoria: The Next Four Years .................................... 208 
126th State Council Address ............................................................................................................ 211 
Concluding Remarks ................................................................................................................. 214 
Chapter 6 .............................................................................................................................. 216 
Collapse ................................................................................................................................. 216 
Introduction ................................................................................................................................. 216 
The Regional Revolt and the Urban Question .................................................................. 219 
Urban Politics in the Regional Context ........................................................................................ 228 
Bread and Circuses .................................................................................................................... 231 
The “Brand” Melbourne’s Gambling Magnet .................................................................... 233 
Charisma and the Kennett Revolution ................................................................................ 240 
Kennett’s Agentic Disruption to a Mode of Social Regulation .................................... 243 
Concluding Remarks ................................................................................................................. 250 
Conclusion ........................................................................................................................... 251 
Theoretical and Methodological Outcomes ...................................................................... 254 
Contributions to Knowledge .................................................................................................. 256 
Findings ......................................................................................................................................... 258 
Crisis ........................................................................................................................................................... 260 
Consolidation .......................................................................................................................................... 263 
Collapse ..................................................................................................................................................... 265 
Bibliography ....................................................................................................................... 269
1

INTRODUCTION

Kennettism: the (neo) Liberal Leader
Returns as a Neo-Liberal

‘We have now introduced reforms that no other Government in Australia has
tried’ (Jeff Kennett in an Address to the 116th State Council 27 November
1993a, p. 4).

In the Australian political economy in the last twenty years there has been a
distinct shift in the way that governments have responded to the neo-liberal
capitalist accumulation practices that have become the preferred means of
accumulation strategy adopted by business. In the mid 1980s the
Hawke/Keating governments “opened” up the regulated parts of the Australian
economy by floating the Australian dollar, inviting in foreign banks and created
a more competitive financial sector. Despite these fundamental shifts to a more
market-based economy, in those divisions overseen by government, there has
not been a government in the Australian federation that has pushed the neo-
liberal market philosophy as strongly or to the extent that the Kennett
Government did in Victoria between 1992 – 1999. This appeared to be a
popular government with a charismatic leader, albeit one who polarised
opinions. The thorough-going reform programme that the Kennett Government
introduced embraced the neo-liberal ideology fully and enthusiastically. This
truly was a revolution in governance practices (Costar and Economou 1999) in
the Australian context. However in a surprising result the government was
thrown out of office, against all expectations, after only its second term. This
seemed to spell an end to Australians preparedness to accept such extreme
and far-reaching reform; but explanations for the “shock” loss of the Kennett
Government were not convincing. It appears that the electorate was resisting
change but how did such a popular leader then lead a reformist government to
such a defeat and how can this be explained?
2
The electorate produced a hung parliament in the 1999 electoral defeat of the
Kennett Government. This was built around the key votes of three independent
regional members. This meant that the incoming minority government had to
make much broader and specific accommodations to both the city and the
regional electorates. These negotiations with the citizens and their institutional
representatives re-established an ensemble of norms and practices that were
disrupted by the previous administration. The Kennett Government in its
determination to revolutionise the role played by politics in the establishment of
a new regime of accumulation has on-going contemporary relevance for our
understanding of this role in relationship to the rest of the political economy and
the importance of establishing a negotiated settlement with the citizens and
their institutional representatives outside the reciprocal spheres of business and
centrist politics. Its contemporary relevance continues to resonate in the
outcome of the 2010 Australian Federal election campaign which had uncanny
parallels with the 1999 outcome of the Victorian election.

The approach taken in this thesis will make use of third generation Regulation
Theory which will look at the specific local mode of social regulation in Victoria
under the Kennett Government and introduce a mechanism for unpacking and
explaining the sorts of results and resistances that the electorate demonstrated
it supported in response to the Kennett Government’s attempts to revolutionise
the role of government in relation to husbanding a new regime of accumulation.
The application of Regulation Theory in this instance will demonstrate the
theory’s contemporary relevance in being able to deal with the dynamics of
reformist governments that are resistant to on-going democratic consultation
with the electorate, its institutions and its norms and practices.

The Rise of the Kennett Government
The Kennett Government was elected in 1992 to govern the regional state of
Victoria in the federated Australian system of government. It came to power on
a voter tidal wave of dissent over the perceived failure of previous Labor, social
democratic governments to manage the state’s finances in a way that
3
conformed with the recent economic and ideological shift to neo-liberalism
(Bourdieu 2005, p. 10). This break with Fordist, welfare state (see Burrows &
Loader 1994 and Sennett 2006) approaches to governance, where the state
was expected to intervene in the economy and regulate it in a broadly
redistributive sense, had taken root throughout the Anglophone West. The
Kennett Liberal Party used, what appeared to be in retrospect, a Trojan horse
technique that was pioneered by Milton Freidman and the Chicago University
economics department in Chile in the 1970s (Klein 2007) to establish free
market neo-liberalism; that technique was the identification and prosecution of
the notion of an economic crisis bordering on catastrophe1.

It has been a time-honoured tradition in Australian politics, over the past 30
years, that when a new government, from the other side of politics, comes to
power they “discover” a budget deficit “blow-out” apparently caused by the
outgoing government’s financial mismanagement. As a result, incoming
governments either declare a moratorium on their election promises or use the
crisis as an excuse to cut or curtail spending programmes. In the case of the
1992 election of the Kennett Liberal Party to government, this apparent climate
of crisis was used for the implementation of a much more extensive and radical
agenda than had ever been seen in the Australian political economy, and a
programme that had not been indicated by the Liberals prior to their election win
(see for example Hayward 1999a & 1999b and Lavelle 2000). Victoria’s new
Liberal Party Treasurer (at the time) Alan Stockdale wasted no time in
prosecuting the chimera (see Moore 2001; Hayward 1993a, 1999a ahead) of a
budget crisis. On 3rd October 1992 Stockdale declared that Victoria ‘...is very
sick, much sicker than Mrs Kirner or Mr Cain2 ever admitted and the problems
require immediate and painful treatment’ (Stockdale 1992a).

1 Albeit in Victoria’s case not resulting in the wide spread death of its citizens. Although there
were a number of deaths associated with the corrupt implementation of the ambulance
despatch system known as Intergraph (Harkness 1999, pp. 208 – 211).
2 John Cain (8/4/82 - 10/8/90) and Joan Kirner (10/8/90 - 6/10/92) were consecutive Labor
Premiers of the state of Victoria prior to the 1992 election of the Kennett Liberal Government.