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Nick Richardson, “Modesty ablaze,” The Bulletin, April 30, 1996, pp. 48-49.

Last September, at a dinner in federal parliament before about 60 Coalition MPs and friends, former New Zealand finance minister Ruth Richardson made a presentation called “Freedom in action”. It detailed how necessary it has been to take drastic steps to lift New Zealand’s economic performance and included how Richardson had raised budget transparency and accountability.

The audience was impressed. But the select group of MPs had a fair idea of what they were getting when one of the number, the former political adviser to Malcolm Fraser and political scientist David Kemp, invited her to address them. The low-profile, predominantly “dry” group of Coalition MPs known as the society of modest members was already in broad sympathy with Richardson’s goals.

Within five months, a version of those goals would become part of the Coalition’s promise to the Australian electorate.

The modest members have been around since 1981, formed in recognition of C.R. “Bert” Kelly, a federal Liberal backbencher who extolled his then somewhat heretical anti-protectionism view in The Australian Financial Review under the byline of the The Modest Member, and later at The Bulletin and The Australian as The Modest Farmer. Kelly, now 84 and living in Adelaide, remains the patron of the society. The battle that he started was taken up by Liberals Jim Carlton, John Hyde and Peter Shack in the early 1980s and although the argument about tariffs has been settled, largely in line with Kelly’s view, winning government gives the new generation the opportunity to move on to other items on the dry agenda.

Unearthed: During the past few years in opposition, the society had unearthed some new champions, including Liberal senators Brian Gibson and Jim Short as well as Kemp. All three are now senior players in the new government: Gibson is parliamentary sectary to Treasurer Peter Costello, Short is assistant treasurer and Kemp is minister for schools as well as assisting Finance Minister John Fahey on privatisation. Costello and the deputy prime minister and National Party leader Tim Fischer are also members. The influence of the modest members is not too hard to assess.

Gibson, in particular, has a good working relationship with Costello, having been one of his parliamentary secretaries in opposition. A former chief executive of Australian Newsprint Mills and chairman of Tasmania’s Hydro Electric Commission, the 59-year-old Gibson has pushed for using accepted corporate practices for dealing with the budget. Last May, in a detailed submission to Costello, Gibson advocated the introduction of accrual accounting, a commission of audit to lay out mid-term economic priorities and a charter for budget honesty, which was a version of Richardson’s fiscal responsibility legislation. Soon after, during his first headland speech, Howard gave an undertaking to implement all three interrelated measures.

Under the proposals, the full picture of the government’s revenue, expenditure, assets and liabilities will be documented for every department using the same accounting method corporate Australia has used for years. The Audit Commission will report back to the government in June and is expected to recommend where some budget cuts can be made. It will also look at potential areas of fiscal responsibility legislation that could be included in a charter for budget honesty. The charter will include a pre-election statement on the budgetary position but it may also impose broader reporting responsibilities on the government and the establishment of long-term budgetary objectives. The New Zealand act also lays down “responsible fiscal management” principles for the government to follow, such as reducing debt.

In the scheme of election promises, the charter of budget honesty was probably well down the list of voter appeal. But the modest members now have a voice and it seems to be getting louder. “It’s the gravitational force out there,” says one.

Mindset: The society grew out of a need to provide moral support for those MPs in federal or state parliament who spoke against the prevailing political and economic mindset. There are still state MPs who count themselves as members and former NSW premier Nick Greiner as considered one of the faithful, even if he did not formally belong. The membership list also includes current industrial relations minister Peter Reith, National Party senator David Brownhill, South Australian Liberal senator Grant Chapman and Victorian Liberal senator Rod Kemp. There are about 40 federal MPs who count themselves as modest members, but the numbers are likely to swell with the influx of 28 new Coalition MPs this month.

One of the society’s leading figures, John Hyde, believes that the society has changed. The protectionism demon, for example, has been slain. “The organisation began as a support for those who were courageous and correct … there’s more proselytising now,” he says.

Being in government provides the society with the opportunity to advance its causes, Hyde says, “Modest members didn’t have a lot of influence in opposition,” he says. Or so it seemed. In retrospect, the society and especially Gibson were industriously pushing a new view of government financial responsibility.

In November 1994, seven members of the federal parliament bi-partisan Public Accounts Committee were invited to New Zealand for a week to look at the changes that Jim Bolger’s National Party had implemented, including the Richardson reforms. Gibson, who is on the PAC, had only a vague idea of the details of the reforms but the trip convinced him that they were worthwhile. Less than a year later the PAC had established an inquiry to look at the commonwealth’s financial reporting, following on in part from former finance minister Ralph Willis’ announcement in 1992 that commonwealth agencies would use accrual accounting for the first time in 1994-5.

The morning after Richardson had spoken to the modest members, she made a similar presentation to the PAC. When the PAC’s report, sub-titled “Towards greater transparency and accountability”, was released in November, it endorsed the adoption of accrual accounting, or “whole of government” reporting, but stopped short of supporting fiscal responsibility legislation. The Labor-majority committee decided that the New Zealand model was inappropriate and recommended instead fiscal reporting legislation. “In the model of fiscal responsibility legislation envisaged by the committee, the transparency of fiscal reports — and the informed debate these reports will generate — will be the real discipline on the fiscal performance of the government of the day,” the report said.

Cost: Labor members of of the committee were concerned about the social cost of the New Zealand legislation because it may have led to cutting government programs in search of a balanced budget. Key sections of the federal bureaucracy were also sceptical. Finance secretary Steve Sedgwick told the PAC: “New Zealand introduced the legislation because they faced a particular set of circumstances. They were in really big trouble … They begain in circumstances that were rather more desperate than ours.”

But Richardson sees no reason why Australia should not follow her lead. “The model has to represent a very attractive option for a new government,” she says. “There is economic appeal and the high moral ground.” She points out the Australian election campaign debate about the true extent of the budget deficit would not have occurred under her legislation because it would have had to have been divulged before the campaign. “The legislation moves the debate away from short-term-ism to the medium or longer-term frame,” she says. “It changes the nature of the political debate.”

It also has some quantifiable benefits, according to Richardson. Earlier this year, Bolger was able to promise $2 billion tax cuts to New Zealanders over the next two years on the basis of regular surpluses derived from widespread economic reform.

Hyde says the modest members’ current preoccupation with financial accounting is in keeping with the society’s traditional priorities. “We used to speak of fiscal and economic rectitude, but we never contemplated anything like Richardson introduced in New Zealand. To have a government forced to be honest, like a corporation, is pretty radical,” he says.

Gibson does not believe that the government’s proposals necessarily indicate that modest members are becoming more influential. “It’s a fairly informal and friendly group … to get people thinking,” he says. “I doubt if it’s going to be a major influence [on government policy].”

Kelly firmly believes that, regardless of the extent of its influence, the society has a role to play. “There’s always a need for someone to tell people what they don’t want to hear,” he says. “You need it in any government and in any party.” Almost 20 years after Kelly lost his seat, the modest members may become the voice of the faithful rather than the sound of the heretics.

(in order of appearance on Economics.org.au)
  1. Bert Kelly on Journalism
  2. Move for a body of Modest Members
  3. Modest Members Association
  4. Bert Kelly's Maiden Parliamentary Speech
  5. Government Intervention
  6. 1976 Monday Conference transcript featuring Bert Kelly
  7. Petrol for Farmers
  8. Some Sacred Cows
  9. Experiences in Parliament
  10. Spending your Money
  11. Who needs literary licence?
  12. A touch of Fred's anarchy
  13. Supply and Demand
  14. Bert Kelly on Disaster Relief
  15. Bert Kelly Wants to Secede
  16. Under Labor, is working hard foolish?
  17. An Idiot's Guide to Interventionism
  18. Bert Kelly Destroys the Side Benefits Argument for Government
  19. Bert Kelly gets his head around big-headed bird-brained politics
  20. First Modest Member (Bert Kelly) AFR Column
  21. Second Modest Member (Bert Kelly) AFR Column
  22. Third Modest Member (Bert Kelly) AFR Column
  23. Fourth Modest Member (Bert Kelly) AFR Column
  24. Fifth Modest Member (Bert Kelly) AFR Column
  25. Sixth Modest Member (Bert Kelly) AFR Column
  26. Bert Kelly on the 2011 Budget and Australia's Pathetic Journalists and Politicians
  27. Bert Kelly, Bastard or Simple Sod?
  28. Liberal Backbencher Hits Govt. Over Import Restrictions
  29. Bert Kelly feels a dam coming on at each election
  30. Bert Kelly Enters Parliament
  31. Why take in one another's washing?
  32. Bert Kelly breaks the law, disrespects government and enjoys it
  33. Gillard's galley-powered waterskiing
  34. Can price control really work?
  35. Should we put up with socialism?
  36. We're quick to get sick of socialism
  37. Time the protection racket ended
  38. Can't pull the wool over Farmer Fred
  39. People not Politics
  40. Bert Kelly admits he should have had less faith in politicians
  41. Labor: a girl who couldn't say no
  42. Why leading businessmen carry black briefcases
  43. Ludwig von Mises on page 3 of AFR
  44. Mavis wants the Modest Member to dedicate his book to her
  45. Time to Butcher "Aussie Beef"
  46. Bert Kelly reviews The War Diaries of Weary Dunlop
  47. Bert Kelly reviews We Were There
  48. Tariffs get the fork-tongue treatment
  49. Bert Kelly reduces government to its absurdities
  50. Politician sacrifices his ... honesty
  51. It's all a matter of principle
  52. Bert Kelly Destroys the Infant Industry Argument
  53. Bert Kelly Untangles Tariff Torment
  54. Bert Kelly resorts to prayer
  55. Eccles keeps our nose hard down on the tariff grindstone
  56. "Don't you believe in protecting us against imports from cheap labour countries?"
  57. Even if lucky, we needn't be stupid
  58. Great "freedom of choice" mystery
  59. Small government's growth problem
  60. Tariffs Introduced
  61. More About Tariffs
  62. Sacred cow kicker into print
  63. Modest Member must not give up
  64. Traditional Wheat Farming is Our Birthright and Heritage and Must be Protected!
  65. Bert Kelly brilliantly defends "theoretical academics"
  66. The Society of Modest Members
  67. John Hyde's illogical, soft, complicated, unfocussed and unsuccessful attempt to communicate why he defends markets
  68. Modesty ablaze
  69. Case for ministers staying home
  70. The unusual self-evident simplicity of the Modest Members Society
  71. Animal lib the new scourge of the bush
  72. The Association for the Prevention of Cruelty to Krill
  73. Repeal economic laws, force people to buy new cars and enforce tariffs against overseas tennis players
  74. Thoughts on how to kill dinosaurs
  75. Let's try the chill winds
  76. Taking the Right's road
  77. Bert Kelly: "I did not try often or hard enough"
  78. Bert Kelly "lacked ... guts and wisdom"
  79. A look at life without tariffs
  80. The Gospel according to Bert
  81. Tiny note on Bert Kelly's column in The Bulletin in 1985
  82. Why costs can't be guaranteed
  83. Hitting out with a halo
  84. Paying farmers not to grow crops will save on subsidies, revenge tariffs, etc
  85. "The Modest Farmer joins us" | "How The Modest Farmer came to be"
  86. Bert Kelly Destroys the Freeloading Justifies Government Argument
  87. Government Intervention
    vs
    Government Interference
  88. Bigger Cake = Bigger Slices
  89. Bert Kelly on the Political Process
  90. Charabanc: Part 1
  91. Charabanc: Part 2
  92. Charabanc: Part 3
  93. Relationships with the Liberal Party
  94. Tariffs = High Prices + World War
  95. Bert Kelly's Family History
  96. Bert Kelly's Pre-Parliament Life
  97. Why Bert Kelly was not even more publicly outspoken
  98. WEATHER IS USUALLY UNUSUAL
  99. How to stand aside when it's time to be counted
  100. How the Modest Member went back to being a Modest Farmer
  101. My pearls of wisdom were dull beyond belief
  102. Bert Kelly on Political Football
  103. Ross Gittins Wins Bert Kelly Award
  104. Interesting 1964 Bert Kelly speech: he says he is not a free trader and that he supports protection!
  105. This is the wall the Right built
  106. Has Santa socked it to car makers?
  107. Is the Budget a cargo cult?
  108. Will we end up subsidising one another?
  109. Do we want our money to fly?
  110. Can a bear be sure of a feed?
  111. How to impress your MP -
    ambush him
  112. The time for being nice to our MPs has gone ...
  113. Don't feel sorry for him -
    hang on to his ear
  114. Trade wars can easily end up on a battlefield
  115. Tariffs Create Unemployment
  116. Bert Kelly recommends Ayn Rand
  117. Bert Kelly's Satirical Prophecy: Minister for Meteorology (tick) and High Protectionist Policies to Result in War Yet Again (?)
  118. Bert Kelly in 1972 on Foreign Ownership of Australian Farmland and Warren Truss, Barnaby Joyce and Bill Heffernan in 2012
  119. Parliament a place for pragmatists
  120. Of Sugar Wells and Think-Tanks
  121. Bert Kelly: "I must take some of the blame"
  122. A Modest Farmer looks at the Problems of Structural Change
  123. Government Fails Spectacularly
  124. Know your proper place if you want the quiet life
  125. Bert Kelly on political speech writers
  126. Perish the thawed!
  127. Modest Farmer sees his ideas take hold
  128. Max Newton: Maverick in Exile
  129. Why no-one nails the Big Green Lie
  130. A case for ministerial inertia
  131. Why politicians don't like the truth
  132. Ominous dark clouds are gathering
  133. Better to be popular than right
  134. Crying in the wilderness
  135. Ivory tower needs thumping
  136. Bert Kelly asks, "How can you believe in free enterprise and government intervention at the same time?"
  137. Rural Problems
  138. Unholy state of taxation
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