June 01, 1996

Article at Australian Financial Review

MAGAZINE | Think Tanks: The New Social Focus

Australia's think tanks wield enormous influence over the country's politics, and yet are largely invisible. Once obsessed with economics, they are now increasingly interested in social issues.

By Wilson da Silva

WE ARE IN KENNET LAND at Howard time. In a state where the dry political Right of the Liberal Party, which for so long cooled its heels in the anteroom of power, has taken possession of the king’s chamber.

Where the Government of Victorian Premier Jeff Kennett displays such gusto for reform that it challenges notions of the Liberals as a conservative party. The place where newly-elected Prime Minister John Howard found support for his dry economic rhetoric in the past few years and from whence Federal Treasurer Peter Costello, once called “the driest of dries”, was propelled into the ascendant.

In such a place, at such a time, one would expect the director of Australia’s oldest think tank – an ideological fortress of the free market – to be a very happy man. Instead, Mike Nahan was brooding.

“Let’s face it, there will be another Labor Government, at federal and state level,” he said. There is a pause to allow for gravitas. Then, an afterthought – the institute is, after all, ostensibly independent: “Let’s hope so; we have to have changes.

​“But let’s put politics aside – and that’s a task we have to do. In the past, because our overwhelming focus was on economics, social issues were not our major focus. Now they’re going to be. The debate has moved on. These are the areas that the Left thought they had sown up.”

​Not for long, it would seem. The Institute of Public Affairs (IPA), like many of Australia’s private think tanks, is undergoing a metamorphosis. Those to the Right – the majority – are becoming more interested in the warm and fuzzy; talking about social issues and the need to carry the community with them in the reform road to economic nirvana.

This may be partly driven by the need to justify their existence. With the market economy argument now firmly entrenched and with only New South Wales glowing Labor pink in a sea of Liberal blue, think tanks of the Right must work on the next task: to ensure that their agenda – which won over Labor in the 1980s and has culminated in the rise of their favoured sons to power in Canberra – is not imperilled by a swing back to the Left.

For those on the Left, it is a time for re-grouping, for the creation of new philosophies and a new credo. One that will stand up to the harsh and unforgiving scrutiny of a society now wedded to the market economy model. For them, now begins the slow and arduous task of intellectual guerrilla warfare against the well-cashiered firepower of the Right.​

WHEN THE POLITICAL HISTORY of the late 20th century is written, think tanks will figure prominently. Their influence in the postwar years was noteworthy. In the last three decades of the century, it has been phenomenal.​

Think tanks have their modern origin in Britain’s Institute for Economic Affairs and the RAND Corporation in the United States, established after World War II to conduct research and development (hence its name) into military strategy. There were also progressive think tanks which rose to prominence during this period, with the powerful and wealthy Brookings Institution being the most visible. RAND was the brains trust behind the military and intelligence strategy of the Vietnam War. Brookings was the ideas engine that drove the U.S. Democratic Party in the postwar years, culminating in President Lyndon Johnson’s ‘Great Society’ initiatives of the 1960s – a Keynesian manifesto largely written by Brookings.

But the oil shocks of the 1970s and the concurrent rise of inflation and unemployment threw doubt onto the ideas of British economist John Maynard Keynes, which had dominated since the end of World War II. Right-wing think tanks arose, such as the Heritage Foundation in 1973 and the Cato Institute in 1977, arguing for freer economies and smaller government, ideas propelled by Keynesian critics like Milton Friedman, who in 1976 was awarded the Nobel Prize for Economics.

Old think tanks like the American Enterprise Institute, founded in 1943, shifted to the Right, and even Brookings began to distance itself from Keynes. The agenda of the think tanks of the Right came to dominate the Republicans, and the implosion of the presidency of Democrat Jimmy Carter – triggered by the 1979 oil embargo and the Iranian hostage crisis – saw the Republicans win a clear ideological majority in the public debate with the election of Ronald Reagan in 1980. Similar moves were under way in Britain, where the Centre for Policy Studies and the Adam Smith Institute, both born in the 1970s, provided the underpinnings of the economic rationalist revolution pursued by former Prime Minister Margaret Thatcher.​

By 1981, the power and visibility of right-wing think tanks was overwhelming, leading The Washington Post to marvel at “an extensive and well-financed network of think tanks in Washington and New York, national magazines, organisations that crank out research on dozens of public policy issues or spread the conservative message on college campuses, and activist legal groups that help corporations fight government regulation.”

That explosion was mirrored in Australia. And yet, until recently, they were largely unknown; newspapers referred to them within the cautious confines of inverted commas, as “think tanks”. Today, they are an industry: at least 90 intellectual humidicribs are active around Australia, both public and private, and they have a collective budget of $130 million, according to Associate Professor Ian Marsh, of the Australian Graduate School of Management at the University of New South Wales, who has studied them closely. They employ more than 1,600 people, publish some 900 reports and discussion papers, and hold almost 600 conferences, meetings and symposia.​

The RAND Corporation Headquarters in Santa Monica, California

Two decades ago there were at most 15, and they were on the whole small-time affairs. Some had been around since the 1920s, such as the Australian Institute for International Affairs, which helped develop the idea of an Australian foreign policy at a time when the country relied on Britain for its external affairs.​

But it was the late 1970s and early 1980s that saw an explosion in the number of ideas factories: new ones sprouted up while those that already existed became bigger and richer. A drive by the former Labor Government to nurture the creation of ‘centres’ – where academia and business could coalesce to tackle Australia’s economic and social agenda – accelerated the trend.

It was at this time that the Economic Planning Advisory Council, populated by business, unions and the bureaucracy, was born. Along came the Asia-Australia Institute, the Australian Manufacturing Council, the Communications Law Centre, the Institute of Health and Welfare, and the Commission for the Future. Existing think tanks, such as the Industry Commission and the Australian Bureau of Agricultural and Resource Economics, were revamped and upgraded. Most were re-oriented by Labor toward market economics: the old Industry Assistance Commission ditched support for tariffs and changed its name. The majority were newly-staffed with economic dries, and their influence grew enormously, as did their budgets.

Some of the Government think tanks had a marked influence on policy during the 1980s, particularly the Industry Commission. But private think tanks became the real engines of policy change: they were “spectacularly successful” in areas like public expenditure, a lessened role for the state, ‘level playing field’ industry policy and weakened trade unions, according to Marsh. Other researchers, such as the Australian National University’s Diane Stone, have referred to them as “a policy planning oligarchy” that “develop intimate relationships with the government, business and academic communities, and perform the central coordination of the policy making process.”​

Now, the think tanks are turning their minds to the social agenda. In part, this has been propelled by the ideas of University of Chicago economics professor Gary Becker, whose radical application of economic theory to social issues – such as family, divorce, bearing children, and even human behaviour – has ignited a fierce debate among intellectuals. But his theories have gained enough support for Becker to be awarded the Nobel Prize for economics in 1993.​

“The war is over in other areas,” says Marsh of the Australian think tanks. “They’ve done their job on privatisation, deregulation and competition policy and now they’re moving to the other major fronts of public policy: social issues. There is a strand of that New Right thinking in there and it follows the U.S. pattern. The same agendas are coming through, only a few years removed.”

MOST NOTABLE of the new conservative brains trusts to emerge is the Centre for Independent Studies in Sydney. Started in 1976 by a 25-year-old maths teacher, Greg Lindsay, with only $400 and a backyard shed, it quickly became one of the intellectual laboratories that helped trigger a renaissance in conservative thinking in the late 1970s and early 1980s. “When we started, notions of markets were such abstractions. Governments were seen as the solution to all problems,” recalls Lindsay, still at the helm today. “But around the same time, there were some people who were starting to think that Governments were part of the problem rather than the solution.”

These days the Centre for Independent Studies (CIS) has a staff of 11 and a whole floor of a commercial building in the northern suburb of St Leonards. Lindsay’s large office, with views of Sydney Harbour and the city, is several times bigger than the backyard shed where it all began.

Greg Lindsay, Centre for Independent Studies (Montalbetti-Campbell)

Staff are careful to avoid tags when talking about the CIS philosophy. Andrew Norton, editor of the centre’s journal, Policy, says a formal one does not exist. “But I think there is a consistent world view ... people would expect us to take a view generally critical of a more interventionist strategy in economic problems or social problems.” Its stable of intellectual warriors include Judith Sloan of Adelaide’s National Institute of Labour Studies (a university-based think tank with strong corporate backing), Helen Hughes, Australian National University academic and former World Bank economist, and newspaper columnist P.P. McGuiness, after whom the CIS library is named.

While its genesis was economic, it has always had a streak of social conservatism. This has firmed of late; it has begun publishing treatises on the environment, animal rights, family, welfare, the underclass, children and education. In 1994 it launched a three-year research effort entitled “Taking Children Seriously”, and went out looking for more funding. Its budget has grown as a result, rising 22 per cent to $1.1 million.

Lindsay himself is an analog for its ideological development. His views and that of the centre seem intertwined. In his blue-striped shirt and paisley red-and-blue tie, his pointed white beard and balding mane, he looks every bit the disapproving high school teacher. “Maybe the changes in divorce laws in the 1970s were not a good idea: you know, the notion that for children a good divorce is better than a bad marriage,” he says. “Well, now the evidence seems to me to show that is not the case. The problems that it is bringing on young people are far greater. If adults are letting the children down, we have got to fix these things up.”

​Early supporters of the CIS included John Bonython, founder of oil and gas giant Santos and former chairman of Adelaide’s The Advertiser, who was considered a thinker and supporter of small government. But Lindsay’s big break came in 1979 when Western Mining Corporation’s Hugh Morgan, then 38, cobbled together $40,000 to establish the centre on a solid footing.

Today, Western Mining director Donald Morley is on the board, along with Coles Myer director and former Shell Australia chief Ric Charlton, and Carnarvon Petroleum’s Michael Gordon Darling, a trustee of the National Gallery of Victoria and on the board of Sydney’s Museum of Contemporary Art. “He’s a very energetic, well-connected and interested businessmen,” Lindsay says of Morgan. “He’s an unusual guy.”

Hugh Matheson Morgan, now 55, is indeed an unusual guy. Businessmen in Australia tend to be circumspect about taking a political stance or speaking out. None of this appears to bother Morgan. If the Right has an ideological godfather, Morgan is surely a contender. He was for 10 years a director on the board of the Liberal Party’s private company, Vapold Pty Ltd. He is a board member and one-third shareholder of the conservative trust The Cormack Foundation, which last year donated $800,000 to the Liberals. He is a founding member of the H.R. Nicholls Society, the New Right ‘supper club’ begun in 1986 and which advocates drastic reductions in the role of trade unions. And he has spoken out on such contentious issues as Aboriginal land rights.

​Morgan has also been on the board of the Institute of Public Affairs since 1987, an ‘old guard’ think tank with a pro-business line rather similar to the American Enterprise Institute. Started by conservative thinker Charles Kemp in 1943 to argue the case against the Chifley Government’s drive to nationalise banks, its ideas were quickly adopted by Bob Menzies in the formation of the Liberal Party. But the institute itself languished following Kemp’s departure. In 1982 Liberal apparatchik Rod Kemp, son of the IPA’s founder and now a Liberal Senator and Parliamentary Secretary to the Federal Minister for Social Security, led a reinvigoration. And like the American Enterprise Institute (also founded in 1943), it shifted to the Right; conservative intellectuals like John Stone, Des Moore and Dame Leonie Kramer, and more recently the CIS’s Helen Hughes, were brought in. They wrote papers, spoke at seminars, penned newspapers columns and generally agitated for economic reform.

​At the other end of the continent, the Australian Institute of Public Policy was born in Perth under John Hyde. It too began to fire laissez-faire volleys from the Right. But like the CIS, Hyde’s group turned its conservative brain-power to tasks of a non-economic nature: the environment, Aboriginal affairs and social welfare. When it merged with the IPA in 1991, along with it came the social agenda.

That agenda has blossomed since the merger. But unlike the CIS, the IPA is reconsidering its social conservatism and, ever so gently, opening a pathway to libertarianism: a ‘live and let live’ philosophy. “In the past, we would have been strongly against permissiveness on both gambling and drugs ... more moral authoritarians. Some of us still are,” says Nahan, an American from the mid-west state of Michigan “Now, we’re going to be a bit more liberal in allowing individuals to choose, or families to choose. Now, the really heavy debate is the social underpinnings of reform: issues of community in a globalised economy, of how you deal with and provide social services and welfare in an era of tight budgets and ageing populations.”

Mike Nahan, Institute of Public Affairs (Montalbetti-Campbell)

​Nahan says many on the Right are increasingly seeing a fundamental conflict between economic liberalisation and social conservatism. Take the Right’s historic resistance to high levels of immigration: how can one advocate free flows of goods and capital while arguing for restrictions on the movement of people? Or drugs: should the State interfere with the buying decision of consumers who choose to smoke marijuana, when it doesn’t do so with tobacco?

Just such a debate is consuming the Liberal Party in Victoria, where Premier Jeff Kennett – who has admitted his children have been known to inhale the substance – has expressed an open mind on the issue of decriminalisation. A expert panel commissioned by Kennett advocated as much, and there is evidence to suggest his stance was a winner for the Liberals with the 18-24 age group, which swung strongly to the Right in the March 30 State election. The Nationals, in coalition with the Liberals in Victoria, have been aghast at Kennett’s stance: a recent party conference condemned decriminalisation. The tension between the rising libertarian sentiment among the Liberals and the traditional social conservatism of the Nationals (along with sections of the Liberal Party) may explain why Kennett later promised the issue would be put to a conscience vote in the parliament. According to commentators, this virtually guarantees its defeat.

Some have likened the IPA to the Liberal Party’s policy development arm. While Nahan struggles to position his institute as independent, he admits that links to the Liberals are not illusory: “There’s always been this kind of strange relationship to it.”​

But it was another Melbourne think tank, the Tasman Institute, that helped steer the Kennett Government along its aggressively libertarian path. Tasman’s seminal work on Project Victoria in the early 1990s provided a manifesto which Kennett and his hawkish Treasurer, Alan Stockdale, have implemented since attaining government.​

Jeff Kennett became the 43rd Premier of Victoria in 1992

​“Passage from concept to policy recommendation to actual implementation is never straight-forward,” says Porter. “But we’ve usually been there at the conceptual stage and the policy design stage.”

These days, however, such reform cannot take place without one eye on the social aspects, an area the Tasman Institute has also been edging into, adds Porter. “The climate of ideas and policy has changed. The problem is implementation. The quality of Thatcher’s privatisation was very bad ... benefits to the community were not apparent. The hard issues are, say, how to do electricity reform or transport reform in ways that are sensitive to people.”​

The best funded of the new think tanks to emerge in the 1980s, with an annual budget of more than $5 million, was the Business Council of Australia (BCA). Established in 1983, it has been an advocate of business interests as well as a think tank. It too has been getting warm and fuzzy. “Economic reform has always encompassed social issues,” says BCA senior economist Kate Graham. “What we’re seeing now is not a walk away from economic debate, but a move to involve people. We’re at a point where we can’t arrive at these reforms without taking people with us.”​

Along with social issues affecting business (such as education, work and family, and management-employee relations) the BCA’s most recent studies – particularly its Australia 2010 series – have delved into such traditionally non-business issues as population growth, social cohesion, and the role of Government. When contacted, Graham was searching the Internet for the text of last year’s ABC Boyer lectures, delivered by social scientist and Left commentator Eva Cox. “The increase in middle class welfare has to be looked at,” says Graham. “The area does concern us.”​

Ideologically, the BCA was supportive of the New Right agenda in the 1980s, but – as a lobbyist – sought the part of moderate broker between business and government. “They don’t have an identifiable ideology. But they’re certainly a lobby group,” says John Nieuwenhuysen, the newly-appointed chief executive of the Committee for Economic Development of Australia (CEDA) and former director of the Bureau of Immigration Research.

As a think tank, the Melbourne-based CEDA is intriguing. Founded in 1960, it has no overt ideological bent; members come from both sides of politics, although it is largely made up of business people, bureaucrats and academics like Marsh.  Rodney Adler of FAI, James Strong of Qantas and Boral’s Tony Berg share the membership register with John Hewson, Fred Chaney and Dame Leonie Kramer as well as one-time Labor cabinet minister Susan Ryan and former Australian Council of Social Service head Julian Disney. Its reports tend to be cautiously pro-market, although some critics charge that it does not diverge greatly from the line taken by the Federal Government of the day. A past chief executive was Fred Argy, former head of the Economic Planning and Advisory Council under the Hawke Government.​

John Nieuwenhuysen, Committee for Economic Development of Australia (Montalbetti-Campbell)

While the mainstay of its preoccupation remains matters economic, it too has started delving into social issues: housing, income distribution, social change, full employment and Aboriginal self-government. “For the most part, CEDA doesn’t take a stance. It encourages informed debate,” said Nieuwenhuysen, his bushy white eyebrows accentuating the point. He pauses. “But to be honest also, the incidental benefit of CEDA is the network. People come to hear ideas, but also to meet one another. It’s networking, it’s contacts and communication, which also part of economic development.”​

Nahan dismisses CEDA as a think tank. He even sees it as bit ‘Leftie’. “I wouldn’t call CEDA a think tank. I think it’s more a network for businessmen who like to participate in public debate, but don’t like to say tough things. They often approach them, then wimp out. Fred Argy is from the Left, John Nieuwenhuysen is from the Left. I don’t feel the breath of competition from CEDA.”

IN SYDNEY'S CHINATOWN, squeezed between a Chinese video shop and a branch of the Commonwealth Bank, is what might be termed the true Left of think tanks: the Evatt Foundation. It is here that the social democratic agenda, rejected everywhere except New South Wales, is workshopping its future, licking its wounds and wondering just what went wrong. But these days even the Evatt Foundation, which has been operating since 1979, does not like the tag “Left”. It prefers to be known as a ‘progressive’ think tank.

Interestingly, while the Right is wandering into issues that were once the preserve of the Left, the Left is now seeking to colonise and appropriate what was once the preserve of the Right: market economics. “What we’re trying to do is build a new politics,” says executive director Peter Botsman, who has kicked life back into the think tank since arriving eight years ago. “We need to come up with real solutions to the problems that are around, like unemployment and what are the competitive industries going to be in 10 years time, and how do we develop them.​

Peter Botsman, Evatt Foundation (Montalbetti-Campbell)

“We’ve got a desert economy. We’ve got a big resources sector and a big financial services sector, and nothing in between. Free market economics will just say there’s a desert there. ‘We’ll do nothing.’ The question for us is, how do you get the flowers to grow in the desert? The Asians are the ones that show us how to do that, because that’s what they have had to do.”​

Everything about the Evatt Foundation is just a little different from the other think tanks. Botsman may wear a stripped blue shirt and a grey double-breasted suit, but he prefers an ochre tie with abstract floral patterns. His hair is long, curly and unruly. He wears casual brown loafers, one of which he positions to one side of the coffee table during our interview. Computers at the Evatt office are Apple Macintosh; the others have IBM compatibles. His bookshelf is lined with titles ranging from Reinventing Government and Marxism After Marx, to The Work of Nations by U.S. Labour Secretary and former Clinton campaign advisor Robert Reich, with whom Botsman has developed a close friendship.​

Under Paul Keating as Treasurer, Botsman fought running policy battles with the Labor Government, particularly over the economics of privatisation. But Keating as prime minister turned to the Evatt Foundation for ideas, culminating in the infrastructure initiatives of “One Nation”, the employment white paper known as “Working Nation”, and the native title response to the High Court’s Mabo decision.

Think tanks on the Left like Evatt are few and far between. Some nominate the Women’s Economic Think Tank (WetTank) established in 1990 by a group of leading feminists around social studies lecturer Eva Cox of the University of Technology, Sydney. Cox has mounted some powerful arguments against the free market orthodoxy, and WetTank, like Evatt, has made economics its target. Then there is the Australian Institute in Canberra, largely moribund since its formation in 1975 but now reactivated and focussing on environmental issues and the emerging ‘green economics’. Its chief warrior is Clive Hamilton, an economics lecturer and former advisor to the Indonesian government.

Another think tank considered somewhat to the Left is the National Institute of Economic and Industry Research (NIEIR) in Melbourne – although its founder, economist Peter Brain, objects to the ideological tag. The institute, which operates a successful forecasting consultancy for government and big business clients, uses a detailed economic computer model partly based on Keynesian principles. Built up since the 1970s, it now has 250,000 independent equations. But it does differ in assumptions from the Orani model preferred by neo-classicist economists of the New Right and economic purists at the Industry Commission.

The model had been housed at the once influential Institute for Applied Economic and Social Research at the University of Melbourne. But in the early 1980s, under new director Peter Dickson, the Orani model was brought in and the research effort turned away from the Keynesian model, known as the IMP. So Brain, then deputy director, and a handful of colleagues quit to start NIEIR in 1984  as a private economics laboratory. Now based in a converted retirement home in the inner-northeastern suburb of Clifton Hill, it has had representation on its board from leading economists, financiers like John Atwell, academics like CEDA’s John Nieuwenhuysen and even the ACTU’s Bill Kelty.

​Brain prefers to see his institute as linked in to the real world, operating on real world assumptions, rather than following any particular ideological groove. “Look, I was taught in the 1960s that there was not any one given [economic] paradigm, there was brisk competition between paradigms. Maybe these days that’s changed, there’s one paradigm, everyone subscribes to it and economists are quite happy and you don’t have to think ... If things don’t turn out the way you say they do, then the world must be wrong.

“I guess the more Right-wing people would say that ... if we get the purity of the [economy] right, Utopia will dawn. We say there’s no Utopia, it’s going to get worse and worse, but we can ameliorate it if we understand what is going on. And if we don’t try and disguise it with the Valium of ideological prescriptions.”​

Peter Brain, National Institute of Economic and Industry Research

While NIEIR may or may not be a Left think tank, it does focus on economics. And it is in economics where the Left is opening up a battle front, mounting guerrilla ambushes at the core of the market economy model. Perhaps it is a search for weak points that could help bring it undone, or at least into a state of postmodern disrepair and confusion as occurred with Keynesianism.

Just such a retort to the neo-classicist dries may be the East Asian economic miracle, says Botsman. Countries like Singapore, Taiwan and South Korea have had Government direction and encouragement of industry – following the Japanese MITI model – operating alongside a market economy. This has generated economic dynamism as well as job growth. “I think the policy framework under Labor and under the Liberals was all wrong. The level playing field is lunacy,” he says.​

NIEIR is also looking at East Asia, and Brain alluded several times to the policies of Asian Tiger economies in our conversation. Professor Glenn Withers, head of the Federal Government’s revamped Economic Planning Advisory Commission, says there is indeed interest in the Asian model, even among the driest of international economists. “The World Bank made a very unusual confession recently, which was that good intervention policies may well have helped in some of those East Asian countries.”​

Despite the shock of losing so much of the economic debate, and now losing government around Australia, Botsman says the Left is not in retreat. “In the long term, I know that the conservatives don’t have any answers to the problems we face. That’s not just being smart or being political. I think their policies are inadequate to the challenges we face: economically, socially, industrially, environmentally.”

Gerard Henderson doesn’t think the Left has been annihilated. The director of now liberalist and somewhat eclectic Sydney Institute (it was, until its split in 1989, the NSW cousin of the IPA) says there is a role for a social democratic movement in society, even if its central ideas appear a little shop-worn these days. “The Left that believed that every answer lay in the Government, that Left is dead. That doesn’t mean that Labor is dead, or the group that the Evatt Foundation appeals to.”

The Left may not be dead, but it is at the crossroads. The question is whether it will gain ground in the marketplace of ideas over the coming years, or merely crumple into introspection. Whether it can actually amass enough intellectual ammunition to mount a sustained assault on the laissez-faire hegemony of the Right.

One phenomenon is worth noting: the local resurgence of ‘progressive’ think tanks like Evatt, WetTank and the Australian Institute has also been evident overseas. New think tanks have started up and old ones have been revitalised: in Britain, UNISON and the Institute for Public Policy Research; in the United States, the Economic Policy Institute, the Progressive Policy Institute and the Institute for Women’s Policy Research.​

Their emergence, and their concentration on issues economic, suggest interesting parallels with the rise of think tanks of the Right during the 1970s and 1980s. While the Right is getting wetter, the Left is getting drier. The clash of these two political weather systems over the next few years may well ensure that think tanks remain influential puppet masters of policy into the next century.

This was the cover story of The Australian Financial Review Magazine in June 1996