In the lead-up to the federal election, Red Flag is running a series of pieces analysing the four major political parties – Labor, Liberal, National and Greens – and One Nation. This article by Tess Lee Ack on the Liberal Party is the first installment.

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The Liberal Party has been the Australian ruling class’s party of choice since World War Two, governing in coalition for 47 of the last 69 years. Its project is to maximise the profits of big business and restrict the wages and rights of workers – hence the party’s trademark hostility to unions. 

However, there have always been sharp differences about how to achieve these objectives; internal conflict and ideological divisions have dogged the party. While they could usually be contained when winning elections, at certain points the tensions have boiled over. The conservatives have faced three existential crises: in 1940, when the collapse of the United Australia Party government led to the founding of the Liberal Party; in the 1980s and early 1990s, when Labor successfully implemented a neoliberal program, sidelining the Liberals; and the recent period in which the hard right has attempted to take over the party.

The most recent turmoil has to be seen in the context of international politics, in particular the crisis of neoliberalism and the rise of the far right, the increasing disengagement from official politics and disenchantment with traditional parties. But while these developments are important, the divisions in the Liberal Party have longstanding roots. 

Beginnings

Liberals date their origins to the founding of the modern party by Robert Menzies in 1944-45. But their roots lie further back, with the formation in 1909 of the Commonwealth Liberal Party (CLP) in response to Labor’s growing influence and electoral success. The CLP was cobbled together from groupings of parliamentarians, mainly businessmen and landed proprietors. Alfred Deakin’s Protectionist Party and George Reid’s Free Trade Party united in a marriage of convenience based on hostility to Labor and a shared commitment to private enterprise, individualism and states’ rights. Beyond that, there were deep-seated differences, as the appellations “protectionist” and “free trade” indicate. The Reidites represented the harder laissez-faire or “classic liberalism” end of the conservative spectrum, compared to the Deakinites’ somewhat more moderate “social liberalism”. These differences have persisted as currents within the modern Liberals. 

The ALP had grown organically from labour organisations and unions; it was a genuinely national mass party with roots in the organised working class. The CLP had no such mass structure or organisation. Its parliamentarians rejected any form of organisation that might constrain them. Sovereignty was to remain firmly in the hands of the parliamentary wing; the function of largely autonomous state branches was limited to support and fundraising. 

The naked promotion of ruling class interests is not generally conducive to electoral success – the vast majority of the population will not vote for an honest bourgeois politician who says, “I’m here to serve big business, not you”. So, to boost its electoral appeal and win office, the CLP presented as a “party for all persons”. In his book The Liberals, published in 1994, Dean Jaensch described the CLP as an organisation with “no clear and binding ideology, pragmatic, flexible, responding to perceived popular mood”. Keeping Labor out of office was its overriding concern.

Following Labor’s election victory in 1910, the CLP spent three years focusing on party building, which paid off with a narrow (one seat) election win in 1913. Labor returned to office the following year, but expelled its leader Billy Hughes over the conscription plebiscite in 1916. Hughes’ short-lived National Labor Party merged with the CLP to form the Nationalist Party, which won office under Hughes in 1917.

A new and significant player emerged in 1920 in the form of the Australian Country Party, forerunner of today’s Nationals. The Nationalists lost their majority in 1922 and formed a coalition with the Country Party, once its demand to dump Hughes was agreed to. This coalition held office until 1929, when it collapsed internally. But the pattern for a long term political alliance between urban and rural conservative forces was set. Despite their small numbers and constituency, the rural parties have exercised a disproportionate influence. Few conservative governments since have won office in their own right; and even when they have, the coalition has usually been maintained. 

The United Australia Party

Labor benefited from the Nationalists’ internal problems to win the 1929 election, but soon imploded under the impact of the Great Depression. The party split and lost another leader, Joseph Lyons, to the conservatives. The new United Australia Party (incorporating the Nationalists) formed a minority government under Lyons in 1931, and was re-elected in coalition with the Country Party in 1934 and again in 1937. Jaensch describes United Australia as a “loose confederation of feuding factions”, riddled with internal strains. Despite this instability and serious policy differences, it won elections in these years, mainly because of the disarray in Labor, and with financial support from big business. Menzies briefly succeeded Lyons as prime minister in 1940, but the United Australia/Country Party government collapsed amid bitter internal conflicts, and a revitalised ALP held government until 1949.

In 1943, United Australia won only 12 seats. This abysmal result led to soul-searching about how to broaden the base and electoral appeal of the conservatives. As Norman Abjorensen wrote, United Australia “was run, organised and funded by a cabal of business figures in Melbourne who called the shots, selected the candidates and largely dictated policy”. This was a problem insofar as it put constraints on the parliamentary wing, which had always jealously guarded its “independence”. 

In the Communist Manifesto Marx and Engels summed up the role of government under capitalism: “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie”. As such, governments may need to balance the conflicting interests of different sectors of the capitalist class. They cannot be (or be seen to be) beholden to any particular section.

The party needed a steady source of income and an organisation that could mobilise for elections, both of which required a larger membership. It was also necessary to broaden the conservative base beyond the capitalists themselves and the wealthier urban and rural upper middle classes. Menzies set out to reform the party organisation. In radio broadcasts in the early 1940s, he pitched an appeal to those he called “the forgotten people”, praising the middle class as “the backbone of Australia”. 

Golden years

Menzies initiated two conferences that led to the foundation of the Liberal Party in 1945. At the first, on 13 October 1944, he argued: “What we must look for … is a true revival of liberal thought which will work for social justice and security, for national power and national progress, and for the full development of the individual citizen, though not through the dull and deadening process of socialism”. 

He was the driving force, writing the party’s platform and moulding its attitudes and philosophies, as well as its structure. State branches were to remain largely autonomous and bear responsibility for fundraising, recruiting and election campaigns. The aim was to build a mass organisation that could compete with Labor, but one that allowed MPs complete freedom of action.

The Liberals won office in 1949, beginning the longest period of conservative rule in Australian history. By 1950, it had become a mass party, with nearly 200,000 members and more than 1,500 branches nationwide. But the party’s membership base, like its MPs, remained narrow: upper middle class, drawn from professional, managerial and business occupations, mostly Protestant, white and overwhelmingly male. Menzies’ success was due largely to external factors: the postwar boom, the Cold War and the Labor split of 1955. 

The 1950s and 1960s were years of unprecedented economic growth and prosperity. Living standards rose, and there was virtually full employment. The postwar boom was an international phenomenon, but that didn’t stop Menzies from taking the credit. The Cold War created global paranoia about the threat of communism. Menzies played on fears aroused by the Chinese Revolution in 1949, the Korean War and the Cuban missile crisis in 1962. A mass campaign foiled his attempt in 1951 to ban the Communist Party, but he whipped up hysteria about Russian spies in the Petrov affair of 1954. The 1955 split and the emergence of the right wing Democratic Labor Party damaged the ALP’s electoral fortunes and gave Menzies more opportunities for red-baiting. In all these circumstances, it would have been hard for the Liberals to lose an election. The conservative parties were further assisted by a gerrymandered electoral system, from which the Country Party benefited. 

Within the Liberals, the old tensions festered between the hardliners (ideological descendants of the Reidites) and Menzies, who, for all his rhetoric about free enterprise, implemented pragmatic economic policies largely in keeping with the Keynesian economic theory favoured by most Western governments in this period. The hardliners were appalled by the expansion of the social welfare system and the public sector that occurred on Menzies’ watch. They chafed at the disjunction between their classical liberal ideology and the Liberals’ practice in government. 

The academic Bruce McFarlane noted that periods of Liberal government have been characterised by “ad hoc government intervention in the economy. True this was often to meet the demands of powerful pressure groups … Australian firms are not committed to rugged free enterprise … [but] to demanding subsidies, protection, tax concessions, and an assured market. This … eroded the Liberal Party’s free market principles”. Electoral success, and Menzies’ domination of the party, muted these tensions, but they didn’t go away.

Instability

In 1966, the Liberals dominated Australian politics, holding government federally and in all states except Tasmania. But Menzies’ retirement ushered in a period of ideological confusion, faction fighting and ineffective leadership. The party went through four leaders in eight years, and, as Jaensch comments, the perception of the party was that it was “continually convulsed by internal brawling”. 

This decline came against a background of a changing society. Opposition to the Vietnam War was growing as part of a broader radicalisation, including the rise of social movements for women’s rights and against racism. The unions were strong and had important victories. The postwar boom was tapering off, and the Liberals had no agreed strategy for Australian capitalism. Meanwhile, Labor had regenerated from the split (albeit on a more right wing basis, to make it acceptable to the capitalist class), and under Gough Whitlam offered an electable alternative government. 

Edward St John, a dissident Liberal MP who resigned to sit as an independent in 1969, compared the Liberals at this time to a dinosaur which “lacked … the capacity to adapt itself to the changing environment”. By the 1972 election, its image was that of “a tired government, slowly awakening to the need for a new image and new policies, but scarcely competent to produce either”.

Labor’s election victory that year deepened the tensions between the “social” and “classical” liberals. In 1974, for the first time since 1946, the party platform was rewritten and updated. The section on “The philosophy of Liberalism” tried to steer a middle course between the competing tendencies, and as a result satisfied no one. A further problem was that Labor’s move to the right meant that differences of ideology and policy between the major parties were becoming more difficult to distinguish. 

Labor’s win in 1974 further intensified the Liberals’ internal conflicts. The hardliners railed that the party had compromised its distinctive principles, especially in foreign policy and on moral issues, by trying to match Labor’s “progressiveness”. Their opponents argued that Labor had read the electorate and the political climate more accurately, and that the Liberals were out of touch. 

Following the dismissal of the Whitlam government, Malcolm Fraser won three elections, but the divisions remained, leading to a full-blown crisis in the 1980s. Fraser was identified with the hard right of the party, known as the “dries”. But he not only alienated the “wets” in the party; he also failed to deliver the dries’ “economic rationalist” program of small government, low taxes and monetarist policies, in no small part because of working class resistance. Much to the consternation of employers, Fraser failed to rein in the unions, and in 1978-81 the strike rate soared. A serious recession followed the strike wave and put even more pressure on the government. 

Decline and crisis

Meanwhile, Labor in opposition had courted business. The centrepiece of its strategy was the Prices and Incomes Accord, sold to the employers as a way to deliver stability and industrial peace, and to the union leaders as a way for workers to get wage increases without the need for strikes. Under Bob Hawke, Labor won the 1983 election and implemented a neoliberal program of privatisation, deregulation, welfare cuts and attacks on workers’ rights. The Accord delivered for the bosses and disciplined the unions. It didn’t deliver for workers: Labor presided over the greatest transfer of wealth from workers to employers to that point in Australian history.

The rug had been well and truly pulled out from under the Liberals’ feet; they had lost the confidence of the capitalist class and were consigned to the political wilderness for more than a decade. Under Hawke and then Paul Keating, Labor enjoyed an unprecedented 13 years in government. By the mid-1980s, plagued by weakened electoral support and financial problems, party membership was in serious decline. 

Another internal review in the wake of Fraser’s 1983 defeat favoured the economic agenda of the dries, much of which Labor was already implementing. New leader Andrew Peacock continued without success to straddle the warring tendencies. As a scathing editorial in the Financial Review put it: “Peacock: more wet than dry, and in any case featherless”.

Cutting across the divisions between wets and dries regarding economic policy was a third tendency: social conservatives with a foothold in both camps. They were primarily concerned with defending traditional conservative positions on issues such as the monarchy, the family, reproductive rights, sexuality, cultural homogeneity and a racist, triumphalist view of Australian history. As more progressive attitudes on these questions have gained ground, defending socially conservative positions has become more central to the hard right agenda.

In 1985, John Howard, a social conservative who had emerged as the leader of the dries, replaced Peacock as leader. But the disunity continued. Prominent wets were leaving the front bench and even crossing the floor, and the Coalition with the Nationals (formerly the Country Party) was in tatters. The history of the Coalition is one of the Liberals usually capitulating to the Nationals’ constant demands for protection, investment allowances, tax concessions, export subsidies and so on, which are the antithesis of the “free market” they profess to support. But all politicians are ultimately opportunists. As Jaensch observed: “The Liberal leaders were willing to give up anything to retain government and were willing to subordinate party, policies and even principles to do so”. It is also the case that the Nationals are seen by the social conservatives as an ally against their more progressive colleagues.

Howard’s agenda, summed up in his 1988 “Future Directions” policy document, combined all the economic shibboleths of the dries with extreme conservatism on social questions. The Sydney Morning Herald commented that it had “nothing to do with future directions at all. It isn’t even a past direction. It is nostalgia … [a] mixture of old and new right directions”.

That year, Howard made a speech opposing Asian immigration, which was poorly received by party moderates and employers, and contributed to his ousting as leader in 1989. In 1990 the Liberals made up some ground, but fell short. John Hewson was then installed as leader. Though a social moderate, on economic policy Hewson was a creature of the dries and as such was warmly received by business. The Labor government’s support was waning, and the Liberals went into the 1993 election full of confidence. But Hewson’s hard right economic agenda allowed Labor to mobilise its working class base, and Hewson lost the supposedly “unlosable” election. The following year, Jaensch wrote:

“The party now faces a policy vacuum; its leader is being stalked by those in the party who think they can do better; membership levels have collapsed, while those who remain are bitter and angry; the internal relations of the party are strained almost to the point of civil war; and ideological divisions are endemic.”

The Howard years

This humiliation provoked another crisis. New leader Alexander Downer’s tenure was brief and disastrous, and in 1995 Howard returned to the leadership, his agenda little changed other than by a certain muting of anti-Asian sentiment. There was no saving Labor this time, and the Liberals comfortably won the 1996 election. The capitalists were happy with Labor’s transformation of the Australian economy, but they wanted more. The unions had been weakened by the Accord, one result of which was the decline of rank and file organisation, but they could still mobilise significant forces. The employers looked to Howard to crush the unions as Fraser had failed to do. They also wanted to transform the political landscape by rolling back the surviving gains of the 1970s.

This dovetailed neatly with Howard’s social conservatism. He initiated the “culture wars” – an offensive targeting the rights of Indigenous people, women, migrants, refugees and LGBTI people, including a crusade against a “black armband view of history” and “political correctness” and the promotion of a strident Australian nationalism focused on traditional conservative values such as patriotism, reverence for the flag and the monarchy, the “Anzac tradition” and so on. The project involved popularising right wing social positions and – especially following the 9/11 attacks and the subsequent “war on terror” – building a consensus about the need for strong borders and law and order. The latter issues enabled him to stare down the moderate voices within his own party, and to wedge Labor.

By whipping up the conservative base and appealing to socially conservative Labor voters, Howard diverted public discontent about his economic agenda and sowed divisions by attacking progressive social policies and scapegoating particular groups. He painted a scenario of a struggle between “battlers” and “elites”, a characterisation intended to undermine class consciousness and thus disarm the only force capable of resisting the neoliberal attacks. 

Economic prosperity gave Howard a lot of political space. He squandered wealth from the mining boom on measures such as tax cuts and subsidies to cultivate a layer of better off workers and self-employed people who would be loyal to the Liberals. 

The culture wars helped restore the Liberals’ electoral fortunes. Howard won three more elections and remained in office until 2007, the longest period of any Liberal leader since Menzies. By now there was broad consensus in the party around neoliberalism, and the categories of “wet” and “dry” (regarding economic policy) were becoming less distinct. As under Menzies, the economic hardliners who might ideologically deplore Howard’s middle class welfare measures accepted them as the price of electoral success.

The culture wars for a time also helped to restore the capitalist class’s confidence in the Liberals. The mining and pastoral industries – concerned that the limited native title rights granted by the High Court’s Mabo and Wik decisions might constrain their untrammelled exploitation of Aboriginal land – benefited directly from the “bucketloads of extinguishment” that resulted from Howard’s demonisation of Indigenous people. Howard continued the neoliberal offensive started by Labor and delivered for the employers in a range of ways, for example with the introduction of a GST, a raft of anti-union laws and direct attacks such as the attempt to smash the waterfront union in 1998. 

Emboldened by his successes, in 2005 Howard launched WorkChoices, designed to further erode workers’ rights and living standards. The attack was so great that the unions were stirred to action, mobilising huge numbers in the “Your rights at work” campaign. In addition, there was growing opposition to the treatment of refugees and his government’s social conservatism. There was concern at the big end of town that the culture wars had gone too far and were causing social tension that was destabilising and bad for business. Tellingly, Rupert Murdoch – previously a Howard supporter – opined in April 2007 that the right wing Labor leader Kevin Rudd would make a good prime minister. Responding to the 2007 budget with a naked appeal to business, Rudd proclaimed: “The foundations upon which our long term economic stability is built is [sic] a conservative fiscal policy”.

The Liberals lost government later that year and Howard lost his seat, but many of his policies remained in place. On his watch both the Liberal base and the wider political climate had shifted to the right.

Abbott crashes and burns

Tony Abbott, an ardent supporter of Howard’s social conservatism, became leader in 2009. He set out to mobilise the most right wing layers of the conservative base and savaged the Rudd and Gillard Labor governments, particularly on the issues of asylum seekers arriving by boat and measures to tackle climate change. With the Labor Party suffering its own leadership problems and having disappointed its working class supporters, Abbott prevailed in 2013. 

Abbott’s 2014 budget was a bosses’ wish list and a naked class war offensive – breaking every election promise with savage attacks on health, education, welfare, pensions, jobs and wages. The cuts were justified as necessary to rein in the deficit, though these claims were undermined by the budget’s generous tax cuts for business and the wealthy. While warmly welcoming the budget, the Business Council of Australia ominously warned that it was “just the start of a strategic change agenda”. 

However, it soon became clear that the government had overreached. Such was the level of opposition, which brought many thousands into the streets around the country, that the business community and its apologists in the media were forced into a retreat. News Corp’s economics editor Jessica Irvine wrote: “In its hubris, the Abbott government has proved … inept at pushing through its agenda”, while her colleague Terry McCrann argued it “should move away from a reality and even more an impression of crisis after crisis in the Senate … [and] give up on trying to get the [budget] ‘nasties’ through”. Treasurer Joe Hockey whined: “Everyone is against me … they’re abandoning the argument for good reform … The business community is weaker than it has been over many years, as a voice” – to which Australian Industry Group CEO Innes Wilcox responded tartly, “It’s not the role of business to be cheerleaders” for the government. 

Some of the more draconian measures failed to get though the Senate. This undermined the business community’s confidence in the Liberals’ ability to push through their agenda. Within the party, there was deep concern that Abbott’s unpopularity would fatally damage their electoral prospects. After 30 consecutive negative Newspolls, Abbott was unceremoniously dumped in favour of Malcolm Turnbull in 2015.

Turnbull was much more to the taste of the business class: a millionaire merchant banker, he was one of them. And he was even more committed to unbridled neoliberalism than Abbott, whose proposal for a remarkably generous maternity leave scheme (a product of his socially conservative views on the family and an economic philosophy derived more from social than classical liberalism) cut against the business imperatives of deregulation and slashing spending. Furthermore, Turnbull’s more progressive stance on a range of social issues was seen as more acceptable to the electorate. 

But a section of the Liberal Party saw things differently. As Katharine Murphy wrote in the Guardian in 2017: “The factional blocs are … being refashioned. The left and right of the Liberal Party – once known as the wets and the dries – used to battle over economic ideas. Now Abbott wants to redefine the right of the party in terms of his social conservatism, not economic philosophy”. Turnbull was hated by the social conservatives who now formed the hard right of the party, and who undermined him at every turn. His response was invariably to capitulate, so, after a brief honeymoon period, the polls headed south again. Losses in the 2016 election and in subsequent by-elections left the government with a wafer thin majority and portended electoral disaster. 

Turnbull was dumped, but the hard right failed to get their candidate up, leaving the supposedly more moderate Scott Morrison to restore the Coalition’s fortunes. With rats increasingly deserting the sinking ship, it is a task beyond him. In the months leading to the 2019 election, the Liberals have been tearing themselves apart. A senior female minister correctly described the perception of the Liberals as a bunch of “homophobic, anti-women climate change deniers”, and shortly after announced her decision to retire. As well as MPs, members are deserting the party in droves, recent estimates putting party membership as low as 40-50,000. 

The remaining active members of the party are mostly older and more conservative, while hard right activists have been assiduously recruiting. In Victoria, for example, former members of Family First and right wing Christian groups have taken over the party’s administrative committee. Such a base favours the prospects of the right, and the more “moderate” wing of the party has no strategy to counter them.

What next?

The crisis now gripping the Liberals is potentially the most profound in its history, and one which differs from past crises in its primary focus. As Katharine Murphy wrote in 2018: “Once upon a time, the Costello-ites – the group of Liberal MPs associated with the … Institute of Public Affairs – were considered to be the right of the Liberal Party, with the core definitional questions grounded in economic philosophy”, whereas now, “social conservatism, not dry, market economics, is the frontline of the battle of ideas”. 

In November 2018, the IPA’s John Roskam expressed his constituency’s disquiet over developments within their favoured party, questioning whether the Liberals could continue to exist as a single “broad church” party. He wrote: “Issues of national security have fractured into an argument about asylum seekers and the level of immigration”, while on economics, “the Liberals have largely replaced the notion of fiscal restraint and smaller government to enter into a contest with Labor as to who can impose the most effective regulations. Added to all of this is … the debate [about] the nature of the country’s traditions and values, the so-called ‘culture wars’”. 

The hard right are engaged in a struggle for the soul of the party: they seek to refashion it in their own image, united around their core values of racism, bigotry, misogyny, law and order and climate change denial. This is apparently more important to them than the agenda of the capitalist class. For example, a central plank of their program is further cuts to immigration, which is definitely not favoured by business. Similarly, business wants a policy on climate change – sufficient at least to provide more investment certainty, and as long as profits are not threatened.

The image of the Liberals as a “broad church” was always somewhat rose coloured, given the viciousness of the infighting that’s taken place throughout their history. In the recent period there has been a qualitative change in the divisions plaguing the party, but they are as deep and bitter as anything that’s gone before, so a split cannot be ruled out. Much depends on the fallout from the 2019 election. It’s possible that some shoddy compromise will be worked out again. But if history is any guide, this will only shore up further problems for the future.