One of the paradoxes of the Howard era of liberal reforms is that they appear to have been partly unsuccessful. The scope of government measured by aggregate public spending has declined, in Australia, since the mid-1990s. Yet taxation, welfare state transfers and public provision have all been subject to long-term increase – since 1974, when the enthusiasm for cutbacks and altered expectations took hold. This anomaly suggests that the ‘possibilities of politics’ have not been extinguished by economic rationalism; however the resilience of the democratic impulse nonetheless coincides with the unarguable dismantlement of past institutional achievements associated with the ‘Australian settlement’, particularly the system of compulsory arbitration and centralized wage-fixation.

This paper documents and explores both sides of the implied conundrum. It notes the long-term expansion of anti-liberal, extra-market modes of governance (which Australia shares with all other rich societies). But it cautiously concludes this will not be sufficient to out-weigh the effects of the renunciation of specifically antipodean state experiments. This conclusion has implications for theoretical understandings of politics just as controversial as the divisive politics that characterized the 1996-2007 era.