“Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people’s ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”

The above quote is from Donald Horne’s 1964 book “The Lucky Country” (full details below). He meant that Australia effectively rode on the back of Britain. Britain provided manufactured goods and in turn purchased Australian primary produce, such as meat and metals. There was never any fight for democracy in Australia and virtually all law was adopted from British law.

In his 1930 book “Australia” (details below) Sir Keith Hancock was similarly scathing of Australian society. He considered it a highly socialistic society with an unhealthy dependence upon Britain. Australia was extremely protectionist, with around half of government revenues coming from customs duties.

There was uproar in Australia when Britain joined the EU (then the European Economic Community) in 1973. The cosy trading relationship was thrown into disarray and Australian leaders finally had to think about Australia’s place in the world.

But in 1983 things began to change, with the election of Bob Hawke as Prime Minister, who was in power until 1991. His government undertook many economic reforms, including; opening Australian industry and finance to global competition, labour market reform, floating the Australian dollar, dismantling tariffs, sale of state-owned industries; ending subsidisation of loss-making industries, and much more.

This was a remarkable transition for Australia’s economy, particularly given that Hawke was from the traditionally left wing Labor Party.  Hawke was followed as Prime Minister by his erstwhile Finance Minister, Paul Keating. Keating continued the Hawke reforms until he lost to John Howard in 1996.

John Howard, of the Liberal Party, was elected Prime Minister and served until 2007. He also continued with the reform agenda but the heavy lifting had already been done by Bob Hawke.

Then the plot unravelled with the election of Kevin Rudd, of the Labor Party, in 2007. Australia was at the peak of one of the greatest mining booms ever known. This reactivated the “Lucky Country” syndrome as both State and Federal politicians began handing out the pork.

So Australia reverted to the socialist dependency derided by Donald Horne and Keith Hancock. It remains this way today. Since Rudd, there have been four Prime Ministers (including Rudd for a second time). They have reversed a number of the Hawke government achievements.

This procession of socialist-inclined governments has led to ever increasing deficits, public calls for an increased nanny state (e.g. anyone with any disability, and carers, to be supported by the state) and ever more spending. Today, the total labour force in Australia is about 12 million, of which about 2 million are directly employed by the state. Countless more (4 million?) are indirectly state-employed.

Here’s an example of wasteful government spending. In Sydney, we have the publicly financed “West Connect” road project. “Publicly financed”, of course, means financed by offshore lenders. The total cost will be more than $20 billion dollars – and that number increases every month.

If the project were to provide a useful benefit, it would have been put out to tender and built privately. But unfortunately, no non-government entity was interested. It appears that the global experience of more freeways and more roads leading to more traffic and more congestion is not understood by Australian politicians.

It is difficult to see how it will be paid off, but it will, of course, lead to ever increasing government debt. Australians, and their politicians, believe that “mother knows best”. Keith Hancock and Donald Horne would not be surprised.

In conclusion, Australia is an economic basket case. It has squandered the reforms of the Hawke Era and the fruits of the mining boom. It is, as Donald Horne stated so long ago, “a lucky country run mainly by second rate people”.

Foreign investment in Australia is largely in residential real estate, a bubble waiting to burst. There is very little investment in productive enterprises and the technology sector is barely visible.

Beware – this is a fragile economy that will not withstand any significant exogenous shock. The “Lucky Country” it is not.


It is worth noting that Australia started its European-influenced life as a British penal colony. Exploited convicts and corrupt jailers were the start of the Australian experiment. It was not a country that was considered part of the free world. This has had a profound effect on the Australia Zeitgeist.

Australia is not really part of Europe or of Asia. Today most Australians, including me, would consider us to be closer to Asia than Europe or the US. This leads to a social dichotomy whereby Australians of European extraction are not really part of the western world but more connected to Asia. “Stuck in the middle” – as it were.

Here it is from Stealers Wheel


The Lucky Country

Donald Horne

Penguin (2009), first published in 1964.

Buy it here


Sir William Keith Hancock

First published by E. Benn 1930

More here