By the late 1970s, following the failures of Whitlamism and Fraserism, Australia was a second-rate nation. It took the economic opening of reformist Hawke-Keating Labor followed by the Howard-Costello Coalition to reverse Australia’s decline and build today’s prosperity – and hence its national security.

Old responses to new challenges

While this history lesson is repeated by rote today, its meaning is becoming lost amid the complacency about its success, the banality of modern social media and identity politics, and the re-emergence of old, instinctive responses to new challenges.

The biggest of these challenges, of course, is to decarbonise Australian prosperity. The task is to build on a new comparative advantage in renewable energy, such as for solar and wind, and in forward-facing minerals such as lithium, rare earths and copper.

As in Australia’s previous economic transformation, this will need to be delivered by profit-making businesses responding to price signals, rather than by incentive-blunting higher taxes, government intervention and price-fixing.

The regression of Australian economic policymaking has been bipartisan. Coalition governments between 2013 and 2022 failed to implement a rational policy framework to lower carbon emissions and left office without any plan to repair the post-global financial crisis budget blowout, or any attempt to articulate a co-operative and productivity-based alternative to Australia’s adversarial-based workplace regulation. Now a new Labor government’s framing of the issues threatens further regression.

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Largely accepting this framing, the ABC’s Insiders program on Sunday seemed to take it for granted that incentive-blunting income taxes must be increased to pay for more social services, including the out-of-control National Disability Insurance Scheme. More strikes under Labor’s pattern-bargaining legislation could be good because they could force wages higher, even though the Reserve Bank is now lifting interest rates to suppress wage increases not backed by productivity gains.

Blackly humorous

And, if not more taxes on energy companies, energy companies must be forced to sell gas to domestic customers at less than the world market price, reflecting what Australia’s longest-standing Asian customer, Japan, has pejoratively called a form of resource nationalism.

It has reached the blackly humorous point of demanding that gas companies supply more and cheaper gas locally – but not be allowed to actually produce more gas. Labor premier Daniel Andrews’ quasi-nationalisation of Victoria’s electricity market partially reverses one of the great pro-market reforms of the 1990s.

Any incentive-sharpening tax reform must not include lifting a consumption tax that Paul Keating tried to introduce. Labor’s proposed anti-competitive empowering of the unions further undermines Mr Keating’s plan to complete capital and product market deregulation by driving labour market productivity at the enterprise level.

It’s a reminder that, while being praised for now backing the idea that job-creating businesses need to make a profit – who would have thought? – Anthony Albanese essentially opposed the 1980s and ’90s reform agenda at the time, and is unlikely to become a modern-day champion for it.

As Jim Chalmers’ first budget highlights, today’s political debate is becoming more unhinged as it drifts further away from being able to deliver what it promises.