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Henry Ergas: ‘The Wealth of the Nation’, Menzies’s Economic Legacy

Perhaps the defining aspect of the Menzies Era was that Australia experienced an extended and in many ways unique period of economic growth. Unemployment was kept to virtually zero, home ownership expanded rapidly, and the middle class, the backbone of Menzies’s forgotten people, made up an ever-increasing proportion of Australian society. This growth was underpinned by an extraordinarily high rate of private investment, large levels of immigration, and the historic baby boom of family formation. Arguably, it created the modern prosperous country in which we live.

This legacy, and its paramount importance, raise key questions about how that growth was sustained and to what extent Menzies’s policies were responsible for it. In this episode we unpack the economic policy of the Menzies Government and the context which defined that policy. Menzies tirelessly pursued the goal of national development, driven by the imperatives of national survival and national maturity, as much as any economic reasoning. He provided stability and confidence, ended rationing and Labor’s planned nationalisations, and maintained that private initiative was a moral good as much as an economic one. Menzies simultaneously maintained a larger role for government than modern Liberals would countenance, while rejecting the Deakinite legacy of direct government control and keeping spending constrained to a greater extent than John Howard. The simple characterisations which people are prone to make of Menzies’s approach overlook a myriad of complexities that are essential to understanding what really occurred.

Joining us to provide his unique insights into these issues is Henry Ergas AO. Henry is an economist who spent many years at the OECD in Paris. He has taught at a number of universities, including Harvard’s Kennedy School of Government, the University of Auckland and the École Nationale de la Statistique et de l’Administration Économique in Paris, served as Inaugural Professor of Infrastructure Economics at the University of Wollongong and worked as an adviser to companies and governments. He is best known as an opinion columnist with the Australian and along with Jonathan Pincus he wrote a chapter on Menzies’s economic legacy in the book Menzies: The Shaping of Modern Australia.