Too Much Luck. The Mining Boom and Australia’s Future by Paul Cleary Black Inc. Melbourne, 2011

The Sweet Spot. How Australia Made Its Own Luck—And Could Now Throw It All Away by Peter Hartcher Black Inc. Melbourne, 2011

Are Australians the Homer Simpsons of the South Pacific—lazy, beery, stupid, lucky? Or are they sensible Jiminy Crickets who in the end will always let their conscience be their guide? These conflicting faces of Australians are summed up in new rival manifestos by two respected journalists—Too Muck Luck by Paul Cleary of The Australian and The Sweet Spot by Peter Hartcher of The Sydney Morning Herald. As their titles and subtitles show, both re-engage with but ring the changes on Donald Horne’s polemic of the early 1960s, The Lucky Country.

Cleary’s Too Much Luck is closer to Horne in spirit. For Cleary the ‘lucky’ mining boom has been almost a total disaster. There is no questioning its massive and sensational scale. Australia’s 361 mining complexes, operating 24 hours a day on a scale never before seen, produce 1 billion tonnes of minerals each year—enough, Cleary says, to fill 3,000 of the world’s biggest bulk carriers. The prices they get have tripled since the boom began in 2003. But Australian governments have misused the revenues and failed to plan for the future. The last Coalition government spent the windfall on tax cuts and middle-class welfare. The current Labor-Greens-Independents alliance has wasted it on a populist cash splash, pink bats, school halls, and a demagogic national broadband network. Both governments, in Cleary’s words, “pissed it up against the wall”.

Worse still, the boom corrupts the politics (Big Dirt, Cleary says, assassinated the Labor leader, Kevin Rudd); it distorts the economy (the Dutch disease or the Gregory effect); it raids the food bowl (fracking); it damages public health in mining communities (asthma, heart disease, diabetes); and it undermines the environment (the Olympic Dam mine in South Australia will leave behind a toxic lake and radioactive tailings that will remain active for 10,000 years.). It has made no lasting contribution to Aboriginal welfare, and the effect on the sensationally paid workers is, according to Cleary, catastrophic: they splurge their huge wages on booze, binges, drugs, and prostitutes. Broken marriages and high debts are commonplace, although “reliable data are yet to be produced.”

In any case it is all a fool’s paradise. The minerals are non-renewable and they are being run down one by one. Most of them will be exhausted in the lifetime of someone born this year, although black coal may last a little longer. For a glimpse of the future, look at Mt Lyell. This is how Cleary ends his book: “The state of Tasmania was paid enormous royalties for almost a century, but its leaders never thought to save for when mineral prices collapsed, or for when the ore ran out. Mt Lyell and Tasmania are harbingers for what Australia as a whole might look like 100 or even 50 years from now.” (Italics added.)

Cleary devotes his final chapter to what should be done about the resources curse. He wants the resources industry more heavily taxed and regulated. But his principal remedy is establishing a state-controlled sovereign wealth fund to preserve savings for future generations when the good times fizzle out. “We should do this immediately, while the dollar is high.” He will not convince the anti-socialist sceptics and does not demonstrate that a sovereign wealth fund is a better way to go than investing in infrastructure, freeing up the labour market, cutting government spending, and legislating fiscal responsibility.

If Cleary revives the argument of Donald Horne’s The Lucky Country—that Australia is a nation of lucky second-raters—Peter Hartcher sketches an entirely different country. Yes, there has been luck, but the real story is how Australians, through sweat and enterprise, transformed a hard and inhospitable convict dumping ground into a prosperous liberal democracy which is the envy of the world. Their real luck was not in finding minerals but in inheriting British traditions of justice and liberalism. Hartcher does not put it so plainly, although in a moving paragraph in his acknowledgments he emphasises his debt to his forebears, including at least one convict who settled here in the middle of the 19th century. Convicts in New South Wales, he reminds us, had more rights than free servants in England, and they played a role in building a free society. Visiting New South Wales in the 1830s, the great naturalist Charles Darwin thought nothing good could come of such a wretched colony indelibly stained by convictism. Yet in less than 100 years after the first fleet arrived, Australians were enjoying a free, prosperous, enterprising and expansive society.

But the rot set in with federation. Again Hartcher does not put it so bluntly, but it is there between the lines. There was no overwhelming public desire for federation. The imperial government in London wanted it and most Australians reluctantly fell into line. The people who voted No in the referenda simply did not welcome new layers of Commonwealth bureaucrats and politicians—a politicians’ federation, you might say. They dimly foresaw and feared a host of new centralising institutions like the High Court and a Commonwealth Taxation Office. They worried about Australia-wide protectionism, centralised wage-fixing and restrictive immigration. They felt that federation could wait for a few generations while the states and private institutions grew in strength.

They were not entirely wrong. Federation helped turn Australia into a closed shop and a stagnating economy. One of the follies of the Howard years was the unconvincing ballyhoo surrounding the centenary of federation. The celebration was a flop. Fortunately, in the second half of the 20th century Australia began to retreat from the illiberal restrictiveness of the so-called Australian Settlement and the Lucky Country. Australians gradually resumed the prosperous years of pre-federation Australia—and only left-wing reactionaries look back to old days of state socialism.

Hartcher concludes that there is a universal lesson in this story. The world is looking for a model to help guide it out of the global financial crisis. Free-market, low-tax, low-benefits Hong Kong will not serve. It tolerates a high level of poverty and limits political rights. Nor is high-taxing, high-benefits, socialist France a good model. Its economy is too sluggish (“sclerotic”) and it produces huge race riots. The successful model, there for all to see, is Australia. It is both rich and free, combining a market economy, liberal politics, and a safety net.

Two illustrations flesh out his argument. One is the queue outside a men’s toilet at the Sydney Cricket Ground during a 2007 cricket test. Lined up and patiently waiting were the prime minister, the leader of the opposition, and the cardinal. No one thought it remarkable. The second is the list of Australia’s 10 richest billionaires. Six of them started life with nothing.

The moral is: liberal democracy works. It will keep working as long as Australians recognise that the sweet spot, their real wealth, is their wits, not their pits. If Cleary fears a revival of the Lucky Country with all its dreadful limitations, Hartcher has drafted its obituary.