Australia tries Thatcherism - strife included

Patrick Hosking in Melbourne on a government set for confrontation after 13 years of teamwork

"Over the last 13 years we have had a co-operative society," a prominent Australian trade unionist said last week. "I now fear we are headed back to confrontation of many years gone by." The man responsible for "injecting this atmosphere of confrontation back into Australian society", as he saw it, was the conservative Prime Minister, John Howard.

Since Mr Howard's Liberal-National coalition took power in March, after 13 years of Labor rule, it has seemed at times that Australia was belatedly undergoing its own version of the "Thatcher revolution" in Britain. Never more so than in the past few days, when the combination of strikes, angry rhetoric and violent confrontation created an atmosphere reminiscent of the Thatcher era at its most divided.

Australia's elegant parliament building bore the brunt of this new mood. As MPs gathered to hear the new government's first budget, the entrance hall was a sea of broken glass, blood and paint, and its gift shop trashed and looted. News of the budget's drastic deficit-cutting measures had leaked early, provoking a rally by 20,000 trade unionists and Aborigines and, in the worst violence ever seen in Canberra, a small breakaway group from the peaceful demonstration attacked the building with sledgehammers, iron stakes, acid and paint. Chanting "Johnny, we're coming to get you", some of the demonstrators tried to reach Mr Howard's office, but police finally regained control after two hours of clashes. There were 70 injuries and 49 arrests.

The cause of the confrontation, the federal budget delivered by the Treasurer, Peter Costello, was one of the toughest in memory. Among the most visible victims of the A$4.7bn (pounds 2.4bn) in spending cuts to next June were the unemployed, Aborigines and students, with the number of places on jobless programmes to be reduced by 200,000, and further cuts in the following two years. Grants to universities were reduced, and students will be expected to pay increased fees.

But few other areas escaped the axe, with public service broadcasting, the arts, research and development programmes, health, foreign aid and childcare assistance all being targeted. Generous tax breaks for pension schemes were also removed. Financial markets welcomed the budget, calling it fiscally responsible and going some way to tackling Australia's endemic deficit.

More echoes of early 1980s Britain came too in official statistics underlining what has been anecdotally apparent for some time: industrial disputes have soared since the Liberal-National coalition took office. In its first three months, working days lost through strikes quadrupled to 320,000 compared to the previous quarter. Car-making, oil-refining, construction, coal-mining and the ports have all been hit by strikes in recent weeks, and in one particularly bitter dispute in Melbourne, mounted police wielding batons were deployed to break through a picket line at a glass factory owned by the British manufacturer, BTR.

The desire of the new government to signal an end to years of consensus Labor rule under Bob Hawke and later Paul Keating was demonstrated by its early decision to dismantle the Accord, the pact between unions and government. Mr Howard would certainly like to reform industrial relations law to reduce union power, enforce the anti-secondary picketing laws, ban the closed shop and give more flexibility to employers.

But the impression of a Thatcherite revolution is tempered by the fact that the coalition does not control the Senate, Parliament's upper chamber. Although Mal Colston, a Queensland Labor senator, defected to the government last week, Mr Howard is still two votes short of a Senate majority.

The new government also appears reluctant to stir things up in other fields - it shows no sign of reforming Australia's complex tax system, for example. Like Baroness Thatcher, Mr Howard had a non-conformist upbringing and a small businessman for a father (a garage owner rather than a grocer), but the Australian leader is more cautious. Sometimes he has to rein back the more radical right wing of his party.

And to paint the old Labor regime as having learned nothing from Thatcherism would also be misleading. It was Mr Keating who dismantled the high tariffs that had protected much of Australia's inefficient manufacturing base. He also helped to create many of Australia one-million-plus small shareholders by embracing privatisation, selling off chunks of the Commonwealth Bank and state airline Qantas, and putting in train the sale of the country's airports.

But even if the Howard government differs less from its predecessors than last week's demonstrators in Canberra might claim, the pace of deregulation is almost certain to accelerate. Its plans to privatise one-third of Telstra, the government-owned phone company, will lead to thousands of job losses, and tensions with some of the most vulnerable groups in Australia are likely to get worse. In style if not always in substance, the coalition is courting an image of confrontation rather than co-operation.