Models of Government-Business Relations: Industry Policy Preferences versus Pragmatism

In a podcast for John’s Festschrift, I interviewed John and asked him to reflect on his career (De Percy, 2019). During the discussion, John suggested that the great ideological battles between the two major political parties were a thing of the past, and that there had been significant convergence (outside of perhaps climate change and immigration or socially divisive issues such as same-sex marriage and euthanasia) to the point where the major political parties tend to agree on the role of the state in the economy. In this chapter, I want to consider the nature of this convergence, from the perspective of the interactions of government and business since the 2007 election. I draw on Stilwell’s model of capitalism to frame the concept of government-business relations and to establish a framework for analysing the convergence of the major parties’ preferences in dealing with businesses. The empirical discussion follows with a comparison of the various Labor and Coalition2 governments since 2007, focusing on four areas of industry policy: the telecommunications industry, the automotive manufacturing industry, trade policy, and reducing carbon emissions. I have chosen these industry policies because each represented significant policy challenges for the major parties following John Howard’s 11 years in office, two involving particular industries and two having broader or horizontal impact. I conclude by examining the extent of convergence in the major political parties’ preferences toward the role of the state in the economy and argue that short-term governments face powerful policy legacies that are difficult to remake in the space of one or two electoral terms. The analysis suggests that the convergence in ideas about the role of the state in the economy is the result of pragmatism in response to rapidly changing circumstances rather than inherent ideological preferences.