This was the year to bring home the bacon

In an era of economic reform, treasurer Paul Keating says the 1988 budget was the one which was going to bring home the bacon

Sitting before TV cameras and microphones, a youthful looking Paul Keating uttered a remark now seen as emblematic of an era of economic reform.

It was budget day - August 22, 1988 - as well as being the first sitting day in Australia's spectacular but expensive new parliament house.

Keating as treasurer had achieved Australia's then biggest-ever budget surplus, a fact the coalition used to taunt Wayne Swan about his time as treasurer 25 years later.

In 1986, Keating famously warned that Australia was living beyond its means and risked becoming a banana republic without drastic reforms.

But now, he said, the situation was much improved, contrary to what the critics had predicted.

"Questions first, or a bit of an overview," he asked reporters at a press conference. Overview, he was told.

"This is the one that brings home the bacon," Keating famously said of his budget, adding it was the one that pulled the whole game together from 1983 when Labor won government from the coalition.

But it had come at considerable cost: government spending cuts, assets sales and a deliberate policy of forcing up interest rates - as high as 17 per cent for some home loan borrowers in 1989.

By comparison the Reserve Bank's cash rate of 2.5 per cent today is a record low, with mortgage rates around the 5 per cent mark.

Contrary to Keating's prediction of a soft landing for the economy the consequence was a severe contraction.

By November 1990 he infamously described the economic situation as "a recession that Australia had to have".

Cabinet documents for 1988 and 1989 - released by the National Archives of Australia - show the Hawke government was still intent on pursuing reforms for which it is still well-remembered, even by political opponents.

But there were plenty of bumps along the way.

In July 1987, Labor had won a historic third election victory, a double dissolution which Hawke called six months early to capitalise on opposition disunity.

This was the time of the infamous "Joh for PM" campaign, when Queensland Nationals premier Joh Bjelke-Petersen and his supporters believed him to be so popular they could easily sweep into national power.

The delusion speedily disintegrated when Hawke called the early election in May, leaving the Joh campaign floundering, with no party organisation and no candidates.

Tainted by the perception of disunity, the big casualty was then opposition leader John Howard.

All this coincided with the Fitzgerald inquiry into corruption of the Queensland police.

Launched in May 1987 with the final report submitted in July 1989, it produced stunning revelations of misconduct and dominated the headlines.

In Canberra, the new parliament house was officially opened by Queen Elizabeth on May 9, 1988 - the culmination of a process launched in 1978.

What was costed at $200 million ended up exceeding $1 billion by the time the last tradie packed up tools. Whatever it cost, the new parliament house has become a Canberra landmark.

Some enduring political initiatives date from this period.

Visiting historian Nicholas Brown believes no area showed the government's determination to bring economic issues to the centre of policy in a more enduring manner than the various education reforms.

Until 1987 taxpayers provided almost all finances for higher education.

An increasing Year 12 completion rate had not been matched by growth in university places, so Labor canvassed various reform options in a green paper in December 1987.

That culminated in the Higher Education Contribution Scheme - HECS - by which students incurred an "income-contingent loan" which they only started to repay once their salary reached a certain level.

This world first initiative has since been adopted in the UK and elsewhere.

The government also proposed a national schools strategy based on a common curriculum, unified assessment and improved teacher training. That remains a work in progress.

While this and many other issues were exciting Australia's politicians and its people, other forces were gathering on the far side of the world.

After more than four decades of Soviet domination, the eastern bloc was creaking and its end came suddenly, most dramatically with the opening of the Berlin Wall on November 9, 1989.

Source AAP

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