The ‘Third Way’ debate is gathering momentum in Australia for many different reasons than it is in other countries. Why is this so? Well, it comes down to our history as a colony of Britain and the experiences of our respective labour movements. The Third Way is controversial because some in the Australian Labor Party (ALP) argue, with some justification, that the ALP invented it.
Coping with Globalisation: Australian Economic Policy and the Third Way?
I.  Introduction

The ALP leadership, past and present, has argued that the policies that the Hawke -Keating Labor Government of 1983-96 provided the basis of Tony Blair’s New Labour platform in the UK in 1997. As Paul Keating recently recalled saying to Tony Blair “Our way was not the third way, but the only way” (see Keating, 1999). In some ways selling “The Third Way” in Australia has been like trying to sell “The Joy of Sex”. To quote Paul Keating: “We were more interested in doing it than finding a label for it” (see Keating, 1999). Keating and others in Australian Labor circles argue that Australia provided Blair with the Third Way or variants of it, not the other way around. After all, Blair was a regular visitor to Australia, has strong personal relationships with several Australian political figures. Blair’s program for modernisation, it is said, was provided with a successful model in the Hawke-Keating government - one of the few successful social democratic governments that survived a political and intellectual era dominated by the right in most industrialised democracies. During the time that Bob Hawke was Prime Minister in Australia, Mrs. Thatcher dominated the British political landscape, the Reagan-Bush administrations were in power in Washington and Helmet Kohl dominated politics in what was then West Germany. In addition free market economics had become influential again in universities, think tanks and amongst government officials. 

However, it is not all one-way traffic. Some younger politicians believe that the ALP should adopt Blair’s political philosophy and shape it according to their own political agenda. 

This paper is divided into four sections.

The first section briefly discusses the origins of the Third Way debate with particular reference to the work of Anthony Giddens. 

The second section explains the origins of the Third Way debate in Australia and its effects on Labor and non-Labor politics in Australia. 

The third section of the paper looks at some of the specific Third Way economic policy issues, which have been more prominent in Australia. 

The fourth section of the paper looks briefly at some of the future scenarios for the Third Way and Australia. The section discusses a number of themes that could be important to how much influence the Third Way is likely to have on Australian public policy in the new millennium. 
II. What is the Third Way?

The Third Way project aims to build a coherent political philosophy and program in the wake of the ‘Left’s’ loss of credibility since the fall of the Berlin Wall and the failure of the ‘Right’ to integrate social policy with economic policy. The Third Way’s main intellectual architect is Anthony Giddens of the London School of Economics. Giddens’s book The Third Way  (see Giddens, 1998) and his associated writings have influenced Tony Blair and his initiation of the ‘New Labour’ political program. In his book Giddens talks of the need for a renewal of social democratic thinking in the face of new policy ‘dilemmas’ such as: globalization, individualism, the terms ‘left and right’ themselves, political agency and the challenge of ecological problems (see Giddens, 1998; 27-28). Whilst Giddens does nor present a policy blueprint to deal with the ‘five dilemmas’ in detail, he does provide what he calls ‘Third Way values’  (Giddens, 1998: 66). These include:

•	Equality
•	Protection of the vulnerable
•	Freedom as autonomy
•	No rights without responsibilities
•	No authority without democracy
•	Cosmopolitan pluralism
•	Philosophic conservatism

In order to promote Third Way values, Giddens provides broad outline of what he calls a  ‘Third Way program’ (Giddens, 1998: 70) to reform public policy by better understanding the interaction between the state, individuals and civil society. The Third Way program consists of the following elements:

•	The radical centre
•	The new democratic state
•	Active civil society
•	The democratic family
•	The new mixed economy
•	Equality as inclusion
•	Positive welfare
•	The social investment state
•	The cosmopolitan nation
•	Cosmopolitan democracy

Whilst space does not allow a full discussion of the Giddens thesis (which is debated at length in The Third Way and its Critics – see Giddens, 2000), it is important to have some regard to the whole Third Way concept. The Third Way in the Australian context and its economic policy elements to be discussed in the following sections need to have regard at least implicitly to the origins of the Third Way concept as devised by Giddens and adopted rigorously by Tony Blair and New Labour.
III.  Origins of the Third Way in Australia
This section looks briefly at the origins of the Third Way in Australia. First, it examines the influence of Australia in Tony Blair’s political development. Second, it examines the influence of Blair’s success to date on the Australian Labor Party. Finally it looks at the Third Way on the Australian political scene as a whole.

Tony Blair has close links to Australia. This has been highlighted by his biographer John Rintoul and by Australian academic Andrew Scott in his comparison of the modernisation process in British and Australian Labour parties (see Rentoul , 1996 and Scott, 2000).

 Not only did Blair spend some of his childhood in Adelaide but he also had important Australian friendships whilst at Oxford University in the 1970’s. The three Oxford friends were Kim Beazley now Federal Labor leader, Geoff Gallop, Western Australian Labor Leader and Peter Thomson, a mature age student of theology. Whilst the two Western Australians have remained close to Blair, given their common vocation as professional politicians, it is claimed that Thomson has had a greater influence on Blair’s political and religious philosophy (Rentoul 1996, 41-48). Rentoul describes the importance of Thomson in influencing Blair’s views on the concept of community, which was derived from the Scottish philosopher John Macmurray. Blair’s political philosophy including his ideas of community and social cohesion is an important part of the Third Way. According to Rentoul and Scott, these developments came in part from his friendships with the three Australians at Oxford. 

Later, as a politician in the early 1980’s, Blair continued to be influenced by his Australian connections. Blair visited Perth, Western Australia in 1982 just before being elected to parliament in 1983 in British Labour’s second crushing defeat by Margaret Thatcher. Blair gave a lecture to Gallop’s political science class at Murdoch University, which Rentoul says was an early sign of Blair’s interest in modernising the British, Labour Party. Blair’s lecture, which was later published, noted the Labour Party’s angst between traditional policies and the need for an acceptance for a mixed economy.
Blair said:

“ The Labour Party sits uneasily, squashed between the traditional Clause IV part socialism and the acceptance of a mixed economy” (Rintoul pages 88-89). 

Rentoul suggests that Blair’s later campaign to remove Clause IV in order to modernise the Labour Party can be traced to his lecture in Western Australia in 1982. Blair’s reference to  the mixed economy is important given that the Australian Labour Party went through similar arguments over its preferred stance on the mixed economy in the early 1980‘s as well. The 1980 'Labor essays' series, in fact, included a paper on the mixed economy by two economists who were active in the ALP (see G.C. Harcourt and P.Kerr, 1980). This was part a process where Australian Labor  revised its  policies and performance in the late 1970s which enabled it to govern at a federal (and state) level for most of 1980s. The ‘new mixed economy’ is also part of the Third Way program (Giddens, 1998:70)

 After Blair's 1982 Australian visit, Australian Labor was elected under Bob Hawke and successfully won re-election throughout the 1980s and 1990s. By contrast, UK Labour languished in Opposition after the SDP split. The success of the Australian Labor Party in government was constantly compared to the British Labour party after the latter's electoral support had collapsed in the 1980’s (Scott, 2000: 3). This prompted regular visits by British Labour figures to Australia by Blair and Brown (thought by Neil Kinnock to be the ‘future generation’) in 1990, Blair again in 1995 followed by John Prescott (as documented by Scott: 2000; 4). During this period, Australia was competing for attention with Sweden and later the USA as possible ‘models’ for UK Labour. However, Australia, too was looking overseas ‘models’. For instance in the late 1980s, the Australian union movement was involved in its own ‘modernization’ program after visiting various Scandinavian and Western European countries in 1987 (see ACTU/TDC, 1987.)

While Blair continually learnt from the success of the Hawke – Keating Government in Australia, defeat came to the ALP in March 1996. This bought new circumstances. Whilst Blair’s New Labour were preparing for government, the ALP were picking up the pieces of defeat after 13 years (as the longest serving federal Labor Government in Australia’s history). Like the UK Tories, Australian Labor had a large ‘it’s time for a change’ factor going against it in the 1996 election. 

Unlike the experience of British Labour in 1979-83, Australian Labor did not split asunder after its 1996 defeat. New Leader Kim Beazley performed credibly in opposition and the ALP regained many seats in the 1998 election and came within a whisker of returning to office. In fact the ALP won the two-party preferred vote but lost the election (which is based on Australia’s unique system of preferences). Australian Labor also performed well at State level, winning government in Queensland, Tasmania and Victoria and being re-elected in NSW in March 1999. 

During Australian Labor’s opposition years, there has been debate about the ALP’s future policy direction. The left of the political spectrum (including within the ALP) has argued that Beazley should distance himself from the Hawke -Keating ‘modernisers’ and return to more ‘traditional’ policies. The right of the political spectrum has been critical of Beazley for standing for nothing or at worst running a ‘populist’ agenda. In addition, there are new generation/old generation questions involving the ‘Young Turk’ MPs Mark Latham and Lindsay Tanner. Tanner is from the left faction of the ALP and Latham is from the right. Neither held office in the Hawke - Keating government. Both Latham and Tanners are published authors and are active in the policy arena both within the ALP and in the mass media. Latham’s book Civilizing Global Capital deals closely with Third Way themes such as social capital and civil society (Latham, 1998). Tanner’s book Open Australia (Tanner, 1999) takes on a number of policies sacred cows particularly with reference to trade and industry policy. Whilst Tanner is less associated with the Third Way than Latham, his view, particularly on trade policy, have put him at odds with some ‘traditional’ left wing Labor views.

Of course, in discussing the Third Way in Australia it is important not just to look at one side of the political ledger. The Third Way and Tony Blair’s success is affecting non-Labor politics in Australia as well. Scott in fact draws some of the parallels between John Howard and Tony Blair in their own electoral role strategies (Scott, 2000 :121). Scott notes that some political observers thought that Howard’s cautious electoral strategies in 1996 (presenting as small a policy target as possible) was influential for Blair’s successful strategy in 1997. Both these strategies where in contrast to their own parties unsuccessful campaigns in the previous elections. 

So to what extent can Australia claim to be the originator of the Third Way? In terms of Third Way philosophy, Australia would find it hard to make an explicit claim. For instance, Giddens, makes no mention of Australia in his The Third Way. The book’s preface says “ The idea of forming a Third Way in politics has been widely discussed over recent months - not only the UK but also in US, Continental Europe and Latin America” (Giddens, 1998). The sequel The Third Way and its critics only mentions Australia in reference to international comparisons of tax and poverty rates (Giddens, 2000: 90-100). Most of the international links in the Third Way are across the Atlantic or to Western Europe. But some in the ALP argue that Tony Blair is just doing to Labor what the Hawke - Keating government already did in government as part of the modernising process. Furthermore, they argue that all political parties need to go through modernising and repackaging process if they are going to grow and develop. In fact, it could be easily argued that there is a continuous modernising policy 'boomerang' between the Australian and British labour parties. As outlined by Scott (2000), the Blair’s ‘modernisation’ is similar to what occurred to British Labour under Gaitskell and Wilson in the late 1950s and early 1960’s. In turn, Australian Labor went through its own modernising under Whitlam in the late 1960’s, drawing on parallels of Wilson and Gaitskell. 

But Blair has had an impact in Australia on both sides of politics. Successful politicians always get noticed particularly when success occurs in Britain and the US. Australia is a small country with close ties to both Britain and the US so success will always gain some political currency in the domestic political system. Blair has influenced Australian Labour just as Thatcher has influenced Australian Conservatives and in doing so has affected the political position of all political parties. 

However, Australia has taken notice mainly because of Blair’s political success. With the exception of Latham (1998) and Tanner (1999) cited above, there has not yet been a serious discussion of the Third Way as a social movement or political philosophy.

This has occurred, to date, for a number of reasons. Firstly, there is the reluctance of Australia, in these republican times, to look particularly to the UK for ideas or leadership. Secondly, there is the challenge that the Third Way presents to the orthodoxies of left and right in Australian public policy. Thirdly, there is the public association of the Third Way with Mark Latham’s own policy platforms and the associated impact of political rivalry between and within ALP generations. Fourthly, there is the reluctance of Australians to embrace wide-ranging philosophies as such instead of judging practical policies on their merits. As the earlier Keating reference implied Australians are political ‘doers’ rather than ‘labellers’. Accordingly, Australian political parties are not so concerned with Tony Blair’s philosophy as with the electoral success of his policies. This will determine whether there will be ‘Third Way’ elements in the electoral platforms of the Australian parties in future elections.
IV. Selected ‘Third Way’ Economic Policy Issues
(a)  Macro Economic Policy  

The centrepiece of macroeconomic policy under the Hawke-Keating Government was the prices and incomes Accord with the Australian Council of Trade unions (ACTU). The ACTU and the ALP signed the original Accord in 1983 when Labor was still in opposition. It was forged as an alternative economic strategy to the conservative policies of the day. However, the Accord also had its origins in the failure of the Whitlam Labor government to survive beyond three years (1972-75). During the term of the Whitlam government there was a noticeable lack of co-ordination between the ACTU and the Labor government and the key players vowed that this would not re-occur when Labor returned to the Treasury benches in 1983. 

The formation of the original Accord was greeted with suspicion from all quarters. This was partly because of the Whitlam government experience but also because of the difficulties faced by Wilson and Callaghan in the UK in the 1960s and 1970s. The latter events affected Tony Blair and New Labour’s attitudes to the British unions. However, the Accord proved to be remarkably durable and lasted the entire 13 years of the Hawke-Keating government.

The stages of the Accord are shown in the table below:

Accord Mark 1	Election of Labor Government sees implementation of the Prices and Incomes Accord.	
Accord Mark 2	From mid-1985 it is clear that a severe Terms of Trade decline has drastically reduced Australia's national income. The Accord is re-negotiated to discount wage increases for the price impact of the currency depreciation, compensated by income tax cuts	
Accord Mark 3	June 1986- wage adjustment is discounted as agreed and superannuation of up to 3 % of wages is introduced	
Accord Mark 4	March 1987-continuing national economic difficulties required complete revision of the Accord with respect to wages system. Two-tier wages system introduced: first tier to protect weaker groups against continuing inflation, second tier to promote productivity and efficiency. Union movement explicitly embraces cause of national wealth creation, in addition to traditional concern regarding equitable distribution    	
Accord Mark 5	February-May 1989 - Award restructuring introduced as thorough overhaul of Australian system of industrial awards. Restructuring of the regulatory infrastructure. Career paths, training equity and efficiency are key goals.	
Accord Mark 6	March 1990-April 1991-Enterprise Bargaining agreed - logical next step in award restructuring, to implement facilitative (enabling) provisions of restructured awards at workplace level	
Accord Mark 7	February-March 1993 - "Putting Jobs First" commitment to continue enterprise bargaining plus "safety-net" wage adjustments for the weaker and lower paid. Commitment to low inflation and continuing workplace reform. Commitment to discuss maternity payments.	
Accord Mark 8	June 1995 - March 1999* "Sustaining Growth, Low Inflation and Fairness" -setting new targets for employment growth, underlying inflation rates and including three additional "safety net" wage adjustments	
Source: ICFTU-APRO (1997:3) *expired in March 1996 with the change in government.

Whilst space does not permit a full explanation of all developments of the Accord agreements, a common theme is how the Accord partners adjusted the arrangements according to the economic policy imperatives of the day. For instance, the terms of trade collapse in 1985 caused the re-negotiation of the Accord to discount wage increases for the price impact of the currency depreciation. Similarly, Accords 4 and 5 were a response to the need for skill development and productivity improvement to assist Australia’s international competitiveness. Accord Mark 8 set explicit targets for job creation and committed the unions to a low inflation environment. All these agreements combined economic policy objectives with social policy needs.
In essence, the Australian labour movement went through its own ‘modernisation’ process in terms of economic policy when Labor was in government. The ACTU executive and leadership proved its capacity to understand the government's economic objectives. The economic literacy of Australia’s trade union officials greatly assisted the Hawke-Keating government. In some respects, ACTU Secretary Bill Kelty was the ‘moderniser’ of the ACTU in Australia in the 1980s in the same way that Tony Blair has been the modernising leader of ‘New Labour’ in Britain in the 1990s.

However, the Accord should not be regarded as being about economic policy alone. It was directed at industrial and social objectives as well. Nor should it be seen as a capitulation to ‘neo-liberal’ economic policies or a ‘selling out’ of the trade union constituency. The Accord provided a clear alternative to the pre-dominant Reagan-Thatcher policies of that era. It was also an alternative to centrally planned strategies that were causing the collapse of Eastern Europe and the like. The Accord focussed on a number of economic objectives including the reduction of unemployment, wages and prices stability and improved productivity and international competitiveness. It was not the ‘fight inflation first’ policy nor was it similar to the policies imposed by the IMF on the Callaghan government in Britain in the late 1970s.

Did British Labour learn from the Accord? Certainly, many British Labour and TUC leaders and researchers visited Australia to study the Accord (Scott, 2000: 239). New Labour campaign director Peter Mandelson admired the “close but nonetheless disciplined and carefully presented relationship with the trade unions” (Scott, 2000: 4). But is the Accord a forerunner to the Third Way? It certainly was not explicitly so. Tony Blair is not working with the John Monks like Bob Hawke and Paul Keating worked with Bill Kelty. The relationships are different and the circumstances are different. Of course, the ALP did not have a ‘winter of discontent’ to live down. However, the Accord did provide a model of how to manage a prices and incomes policy in an open economy. It also provided an explicit understanding of the mixed economy combining market competition with optimal forms of government intervention at the macroeconomic level, as noted in the Third Way program (Giddens, 1998:70).

(b)  Globalisation and Trade Policy

As noted above Giddens regards ‘globalisation’ as one of the five dilemmas facing social democrats (see Giddens,1998:28-33). Globalisation has also pre-occupied Australian public policy makers in the latter half of the 1990s. Much of the discussion on globalisation in Australia has focussed on trade liberalisation. The Hawke-Keating governments concentrated largely on multilateral trade negotiations through leadership of the ‘Cairns Group’ of agricultural trading nations. This continued under the Howard government, particularly when former Deputy Prime Minister and National Party leader, Tim Fischer, was Minister for Trade. However globalisation also includes other dimensions such as the liberalisation of investment, organisational change in ‘global’ corporate structures, and the emergence of the information age. The Hawke-Keating government not only participated strongly in the multilateral trade round under the GATT and its successor the WTO, but it also implemented a voluntary reduction of trade barriers. Tariffs on imports were reduced and various subsidies and quotas phased out. Similarly, investment was liberalised as one of the first acts of Paul Keating as Treasurer was to allow the entry of foreign banks into the Australian financial system.

The Hawke-Keating government also championed regional economic ties through the formation of the Asia Pacific Economic Co-operation (APEC) (See Hawke in Harcourt, 1999).The Howard government has largely retained the preference for an open economy with a minimum of protection (although there were signs that the government and the opposition had second thoughts about the continuation of tariff reductions (see Latham, 1998: 385)).

The globalisation debate has attracted political controversy in Australia. It has been a rallying point for the far right. As USA has Pat Buchanan, and France has Jean Marie Le Pen, Australia has our very own Pauline Hanson, leader of the One Nation party. Hanson and her party have opposed free trade, immigration and any form of internationalist policies. However, the far left have also been suspicious of globalisation. Witness the demonstrations in Seattle last year. Latham has written that globalisation has provided “an alibi” for the left to return to policies aimed at replacing or modifying capitalism (Latham, 1998; 389).

The neo-liberal right has unashamedly supported globalisation and sees it as consistent with deregulation at home. The issue of globalisation and labour standards is a case in point. The left has typically opposed free trade and deregulation of the labour market. The right has argued for both trade liberalisation and labour market deregulation. However, as shown in Gahan and Harcourt (1999), labour market deregulation does not necessarily ‘fit’ with trade liberalisation. You can have a variety of forms of labour market institutions no matter what trade regime you may have in place. 

The Hawke-Keating government opposed the incorporation of social standards in trade policy. The Howard Government also thinks that trade and labour issues do not mix. For the most part, neither party has grappled with modern forms of global governance as thought necessary by Third Way thinkers (see Giddens, 1998: 144-47).

(c)Labour Market Reform

Labour market policy was an important part of the Accord. The industrial and political wings of the labour movement agreed on macroeconomic policy objectives in order to make social gains for working Australians and their families. But part of the’pact’ was industrial peace. The ACTU and its affiliated unions eschewed the strike weapon and practised wage restraint in the stronger sectors in order to receive social wage gains directly from government. This did occur. Industrial disputes fell to record low levels in contrast to the British experience of the 1960s and 1970s (see ICFTU-APRO, 1997: 8). 

The Australian labour market underwent a number of changes over the Accord period (see table). The wage system was at first centralised, with full indexation of wages for price adjustments. It underwent a number of transformations and eventually consisted of decentralised bargaining underpinned by an award safety net. Most of the change was managed in order to promote economic efficiency and the protection of the ‘most vulnerable’ groups in the labour market (cited by Giddens,1998:66 as a Third Way ‘value’ ) The Australian experience was different to that of Britain and New Zealand who undertook radical deregulation of the labour market. This occurred without producing outcomes in economic performance that were superior to Australia’s (see Gregory, 1999).

The Howard government has chosen to favour more individualist employment arrangements since it came to office in 1996. Some echoes of past industrial conflict have returned in the form of a major dispute on the Australian waterfront but for the most part industrial disputation levels have not returned to the high levels of previous decades.

For the most part, Australian Labor’s experience with the labour market has been different than British Labour. Blair has restored the national minimum wage and signed the social charter but has not worked as closely with the unions as Australian Labor did. In opposition the ALP has continued to have a relationship with the trade unions but there has been some disagreement over the use of individual contracts. 

However, the Third way approach to the labour market has mainly concentrated on education and training rather than on industrial relations reform. In Australia, the award-restructuring phase of the Accord developed career paths and skills for low paid workers in the award system. This policy development is perhaps a forerunner of the Third way emphasis on education, training and the development of knowledge capital in the labour market. 

Labour market policies have taken place in the industrial context of Australia’s unique system of awards and industrial tribunals. As noted by Isaac (1993), labour market reform has taken place in Australia for over a century of wage fixing. The institutional framework of Australian industrial relations enables constant change and reform. Hence there is no ‘regulation’ or ‘deregulation’ choice as is sometimes (superficially) put by neo-liberal economists who naively believe that the labour market functions like any other market. There is no need for social democrats to embrace the neo-liberal view of the labour market and accordingly, Australian Labor has not done so. The Third Way enables governments to continue innovation in labour market policy as was done by the Hawke Keating government and the ACTU within the framework of the prices and incomes Accord.

(d)  Social Welfare and the Social Wage

The ‘Social wage’ was one of the cornerstones of the Accord. In return for money-wage restraint to meet its macroeconomic objectives the Government gave several commitments to the ACTU in the form of tax cuts. Direct (PAYE) income taxes were reduced and several taxes brought on fringe benefits tax and capital gains. Whilst these taxes were brought in to target higher income earners and reduce the rate of tax avoidance the latter group also benefited from a reduction in the top marginal rate of income tax. Apart from tax cuts the Accord also introduced universal health coverage (Medicare), superannuation, childcare, family payments and labour market programs (such as Termination Change and Redundancy provisions). The Social wage gave gains to workers through the provision of public goods rather than directly via the pay packet (see Gaynor and Harcourt, 1991). A key element of the social wage was to target social welfare more efficiently and equitably. This was done particularly by one of the left’s senior minsters Brian Howe (who later became Deputy Prime Minister). 

The use of labour market programs was a response to the 1991-92 recession, which was part of the ‘Working Nation’ measures. The traineeships, which were in effect, government subsidies to employers to take on unemployed workers were a highlight of the working nation programs as they addressed long-term unemployment in particular. The Working Nation measures applied the principle of mutual obligation (‘no rights without responsibilities’) to long term unemployed people through the ‘Jobs Compact’. As noted by Heraghty (1999,72) there are similarities between the Third Way approach to welfare and the principles on which the Working Nation policies were devised.

A further example of an Australian labour market program with Third Way elements is the Community Development Employment Programs (CDEP) which operated in remote Aboriginal and Torres Strait Islander communities. CDEP was designed so that communities could use social welfare expenditure to provide community-based work for local recipients. This was particularly important in remote parts of Australia with minimal alternative labour market opportunities.

On election, the Howard government further targeted social welfare and tightened labour market programs. A key reform of the Howard government has been ‘work for the dole’. Howard often refers to the concept of ‘mutual obligation’ as justification for the work for the dole scheme. The Howard government has also privatised government employment agencies as part of the ‘Jobs Network’ reforms.

How do these measures of both governments relate to the Third way on social welfare? The targeting of social welfare was necessary from an egalitarian point of view but still retained a strong role for government. The work for the dole scheme was not a Third way concept but Howard may have invoked Blair to make it more saleable to the electorate. Whilst some Hawke-Keating Government social welfare measures such as the universally paid family allowance supplement are clearly not Third Way type programs other have Third Way elements. For instance, as noted by Latham, the Third Way concepts of rights, responsibilities and risk – sharing were implicit to the superannuation reforms of the Hawke-Keating government (Latham, 1998; p393-4)

In conclusions, both the Labor and Coalition governments have made changes to the welfare system and have adopted labour market programs. There are clear links between the Third Way concepts of mutual obligation in ‘Working Nation’ and other labour market programs like CDEP. There are also links between the risk-sharing/responsibility values of the Third Way and the Hawke-Keating Government’s superannuation reforms.

(e)  Education and the Information Age

Education is one area where Third Ways concepts of investing in human capital have been having a major impact on the Labor opposition and perhaps even the Coalition Government. The need for investment in human capital is warranted for reasons of both economic efficiency and the need to reduce social inequality. Education is believed to be especially important to Australia in the information age. Whilst in the past, Australia has relied on mining and agriculture its future will also depends in knowledge based industries.

Investment in human capital is regarded as a means of reducing inequality in Australia particularly in regional centres and the impoverished outer suburbs of the capital cities. Both political parties mention education and knowledge-based industries in their public statements. A major theme of Beazley’s electoral platform has been the ‘Knowledge Nation’. The Howard government too has concentrated on the importance of the information age or the ‘new economy’ to Australia’s economic future.

Policies on education are part of the Third way agenda. All political parties will adopt many of these policies given that human capital is regarded as the major driver of economic growth in the information age. The endogenous growth theories of the 1980s and 1990s are now beginning to influence the political agenda (see Dowrick, 1994). However, there are differences in how the education system should deliver these contributions to economic growth. The ALP has called for higher rates of investment in public education whilst the coalition has argued for more private sector involvement in the expansion of education. The Third Way is likely to have more influence as Australia develops more knowledge-based industries in the information age.

(f)  Microeconomic Reform.

Whilst most of the 1980s reforms of the Hawke-Keating government were macroeconomic in nature (the floating of the exchange rate, introduction of the Accord and financial deregulation) microeconomic reform was also important especially after the terms of trade shock of 1985-86. The microeconomic reform agenda involved privatisation, deregulation and the introduction of competition policy into all sectors of the Australian economy. It was combined with the reduction of tariffs and the opening up of the Australian economy. On microeconomic policy the Labor government acknowledged the importance of market forces even if macroeconomic policy, industrial relations and social policy objectives were delivered through the Accord framework. As Paul Keating has explained:

"Now we brought a new word into the Labor lexicon - competition. Competition is our word, not their word. We set up the Competition Commission because we were tired of paying twice as much as we should be paying for cars, for telephones, for clothing, for electricity. In all these things, by cutting tariffs and by lifting domestic competition, we created a lower price structure and therefore, people's wages went further." (Keating, 1999:3)

The Coalition in opposition and later in government had a policy of taking privatisation further; selling part of the telecommunications utility, Telstra and applying market based solutions to government employment agencies. It is claimed that privatisation has caused a backlash amongst both Labor and conservative voters. For instance the Coalition's rural constituency have expressed disquiet about the effect of privatisation on rural services in telecommunications transport and financial services. 

In opposition the ALP has opposed the further sell-off of Telstra and distanced itself from some of the policies associated with the Hawke-Keating ‘s microeconomic reform agenda.

Left-wing critics like Scott argue that microeconomic reform alienated the ALP’s traditional voters and call for more government intervention in industry. Others, such as Michael Thompson, argue that working class voters supported microeconomic reform because of the benefits they received in lower prices and improved economic welfare. Neither has produced substantial evidence to support these contrary views.

The Howard government has continued support for microeconomic reform but has attempted to counter balance this with infrastructure and other government programs aimed at rural and regional Australia. Its counterparts at the state level have also privatised public utilities. But the coalition's main energies in microeconomic reform have been in tax and the labour market where there is clear disagreement between the major parties

Belief by social democrats in the benefits of markets for allocative efficiency is part of the Third Way. It was supported by the Hawke Keating Government and extended by the Howard government. There is a clear connection between the Third Way values of the ‘new mixed economy’ and the policies of the Hawke Keating Government on microeconomic reform.
V.  The Future of the Third Way in Australia.
The future of the third way depends on a number of themes.

The first theme is the information age or the new economy, which is affecting economic policy throughout the world. Will the new economy put Australia (along with the US, Europe, and other advanced industrialised countries in Asia) on a high growth track, which would change the parameters of economic policy? This may shift the political divide between social democrats and neo-liberals on economic policy to social policy where the ideological divisions are less clear-cut (see: Giddens 1998). Alternatively the information age may not bring the predicted high growth prosperity for all but will actually provide a new series of inequalities (see US Department of  Commerce, 1998).

The second theme is generational. To what extent will The Third Way are conducive to generational change in Australia? This refers to the new attitudes of generation’s X (and generation Y & Z) in Australia and generational change in the political parties themselves. Will the Third Way be the rallying point for generational change in the Labor or the Coalition or will change the information age change the political process altogether? Will the ALP have its debate about its philosophy and platform in similar fashion to Blair’s clause IV debate in Britain or did in fact Hawke and Keating do their modernising in government whilst the British Labour party was in opposition?. Some of these issues on generational change are taken up in the new volume of Labor Essays (see Glover, D and Patmore, G 1999).

The third theme of the future is electoral failure. Will Blair and Brown eventually face an electoral backlash like Keating did in 1996? There were some signs of disquiet on the left about the future electoral appeal of the Third Way. But it may be too early to draw much inference from these results. This is the challenge for British Labour and will affect the ALP’s response too. Australian Labor will have to determine whether it wishes to combine its own traditions with some of the more successful aspects of the Blair and Clinton programs. This will also have political impact on the Australian conservatives. Will John Howard successfully adopt the best parts of the centre left agenda from Blair and Clinton and move his government to the centre away from economic issues and onto social issues?

Lastly the final theme goes to Australia’s relationship to the rest of the world. Most of this paper talks of the relationship between the UK and Australian Labor and to a lesser extent the USA. An important question is whether Australia will in future become closer to Asia in terms of its own defence and political ties. It is also apparent that in the Third Way debate that there is much to be learnt from non-UK / Europe as foreign influences on Australian economics and politics need not be solely Anglo-American.
VI. Conclusion.
In conclusion, the Third Way debate is relevant to Australia because of the close links between the political traditions of two countries particularly on the social democratic side of politics. This paper has explored these links with regard to key economic policy issues. The paper highlights certain Australian characteristics of the Third Way debate, which includes:

The important personal and philosophical influences of Australia on Tony Blair;
The influence of the Hawke-Keating Labor government on British Labour;
The modernising policy 'boomerang' between the British and Australian labour parties;
The influence of Third Way politics on all political parties in Australia;
The similarity of some economic Third Way values and program to some of the economic policies of the Hawke-Keating Labor government.

The future of the Third Way in Australia will depend on how the information age transforms our economy and how effectively the political parties respond to the demographic and international developments that will affect Australia. All Australian political parties will be watching how effectively Tony Blair's New Labour fares in its attempt at re-election under the Third Way banner. But the Third Way's shelf life ultimately depends on the capacity of Australia's own homegrown politicians to turn the Third Way into policies that win elections.
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