There is now a broad consensus in Australia that economic goals can be more fully realised through competition and free markets then by artificially stimulating the economy.
Economic policies that promote a high level of government intervention run counter to conventional wisdom.
The idea that deregulation and privatisation are in retreat is narrow. It ignores what is happening in Eastern Europe, in China, Indonesia, Taiwan, India, South America and most of the rest of the world.
The market economy has delivered better health systems and medical treatments, technological advances that have improved quality of life, and superior transport and communications infrastructure.
A market economy allows individuals to make choices they believe are in their best interest. It gives us freedom of choice. The market economy is the agent of innovation and creativity.
But society is more than just the sum of its market outputs.
A social dimension gives society a soul. We fight for good economic policy so we can meet our social objectives, not so we can pat ourselves on the back for having a great spreadsheet. Good social policy is our end-goal.
The next challenge for the centre-right of politics in Australia is to contemporise and evolve the social contract.
The social contract that exists in Australia consists of the ties that bind each Australian. It determines that as a people we seek to advance certain social priorities. The social contract ensures that apart from valuing economic achievement, each individual in our community values each other individual - their health, development, education and well being.
The social contract advances the idea that there exists in our society a contract between citizens where each member of our community is supported by the rest of the community. It provides for tolerance of one another's differences — whether they be race, religion, gender, philosophy or sexuality - and that we welcome, embrace and are enriched by that diversity.
To give the social contract currency, we respect each other's rights to privacy, security, property and freedom from interference.
Government is a key partner in the social contract. In this partnership government has an obligation to provide for the needy in terms of clothing, housing, health and sustenance. Government also has a responsibility in this relationship to ensure every Australian has the opportunity and capacity to fully participate in the community.
But the social contract in Australia is at risk. Its capital has been exhausted.
As a nation we are enjoying unprecedented economic prosperity and yet there exists a sense of pessimism in the community — an attitude that society is on the decline. Many in our community feel they are missing out or are being left behind.
One in seven Australian adults depend on government income support as their main source of income. It is alarming that Australia has one of the highest incidences of children growing up in families with neither parent in the workforce compared to other developed countries.
Our social capital has been run-down on a number of fronts.
Many Australians in the labour market feel vulnerable about their future employment prospects in a globalised economy. This insecurity is more pronounced among the 40 and 50-somethings in the workforce who fear being forced into a financially unsustainable early retirement because they lack the skills to participate in the new economy.
Youth suicide and intravenous drug use continue at appalling and unacceptable levels, as does the occurrence of family break-up.
We are surrendering community cohesion. Communities in Australia still rally together in times of crisis — floods, bush-fires and other disasters — where acts of selfless generosity by complete strangers inspires the rest of the nation. But how often do we see this strong community network in action in normal circumstances?
Dislocated communities have become fertile ground for dysfunctional behaviour. It is difficult to comprehend that serial killings such as the "Bodies in the Barrel Case" went unnoticed for nearly a decade. Ten human beings vanished without trace and their connection with the community was so tenuous that their disappearances were scarcely noticed.
Social capital has been eroded by the public's lack of confidence in government and our system of democracy. Mal Colston's self-serving career punctuated by the conduct of Noel Crichton-Browne and Keith Wright before him, together with scandals such as the Travel Rorts Affair and allegations of electoral rorting by the Labor Party in Queensland, have shattered public confidence in the political process.
How can Australians have faith in the electoral system when they can't even have faith in the accuracy of the electoral roll?
The media have also been complicit in undermining our trust in politicians. The current debate over petrol prices is a case in point. If the Government decided to freeze the excise indexation scheduled for January, the media would accuse us of being populist, making policy on the run and lacking leadership. But because we have decided to be economically responsible, the media's spin is that we are out of touch and not listening to the public.
It is why the "every man for himself" mantra is becoming part of the social mainstream in Australia.
As a result we have shaken the norms and traditions that Australians have always believed would "pull Australia through".
It is this cocktail of social discontent that created the conditions that gave rise to the emergence of Pauline Hanson as an electoral force. The Hanson juggernaut was able to harness the electorate's frustration by pointing the finger at minority groups.
The fact that Hanson was able to get away with pointing the finger at different groups in our community should not be surprising. The politics of Australia in the last twenty years, as practiced by Labor governments, has been the politics of division — pitting employees against employers; rural and regional Australia against metropolitan Australia; the education rich against the low-skilled; the "social elites" against the "battlers"; private education and health against public, and those with political influence against the so called "silent majority".
The wedge politics and political correctness as practiced by Labor may be politically savvy, but it has lacerated the relationships between people and corrupted our social contract.
All this needs to change.
We must rejuvenate the social contract's meaning and value in contemporary Australia.
Education is at the core of a revitalised social contract.
George Orwell's premonition that technology will enslave mankind has not materialised. Instead, technological advancements have liberated classes of people and created a plethora of social and economic opportunities.
But not everyone has enjoyed the benefits of the technological revolution. Some have been left behind. In the new economy the information rich are the wealth accumulators while the information poor seldom enjoy personal fortune.
Pivotal to addressing the dynamics of disadvantage is to cultivate the educational opportunities and life long learning capabilities of every individual.
Life long learning theorists persuasively articulate the importance of continual learning to give individuals the tools to continue a lifetime of upgrading skills and education. The foundation for life long learning begins in a child's formative years with strong literacy and numeracy skills.
Children who become alienated from the education process are unlikely to later develop the knowledge, skills and learning habits that are necessary for life long learning.
Life long learning empowers individuals, giving them job skills, job mobility and therefore job security. Adults who are passive and inert learners risk being estranged from the labour market.
That is why Work for the Dole, Green Corps and Job Network are so important. These programmes ensure that the skills base of those who are temporarily out of work doesn't become stagnant and gives participants the opportunity to develop new skills and gain additional experience.
In a rejuvenated social contract the government's role is to provide the best learning opportunities to the individual, and in return the individual has a responsibility to the community to capitalise on those learned skills. The spin-off to this social partnership is a highly skilled workforce to drive economic growth and create more employment and opportunities.
In this partnership there is a clear nexus between education, knowledge and skills, product innovation, technological advancement, market demand, high productivity, new jobs and sustained economic growth. Like the cycle of nature, each stage nourishes the next.
Australia's capacity to efficiently mobilise knowledge and skills towards economic activity will determine our place in the new global economy.
A failure to adequately invest in education limits technological advancement and forms a barrier to economic growth.
Australia has grown from a resource and agriculture economy to a knowledge intensive marketplace. Already, approximately 40 per cent of our workforce is in the services industry. This is where Australia's future lies.
A highly skilled economy will increase production, attract investment and open up opportunities for further growth. A growth economy is the only environment in which semi-skilled workers will get the chance to move into new industries — such as the information economy — and secure their future.
As Treasurer Peter Costello wrote in the current edition of Options: "Economic growth is still the best poverty-buster we have yet discovered."
If we are going to give people the opportunity to participate in life long learning, we need to develop an obsessive pursuit of the best education system in the world. Education is one of our most significant national investments.
We already have the foundations to develop an information and skills rich economy. But we can't allow ourselves to settle for being among the world leaders in education investment — Australia needs to be the pace setter!
Education is one of the few exceptions to the principle of market forces.
Relying on the principle of market forces with respect to education will only serve to mainstream our education system and produce a one dimensional labour market.
We can't allow our education system to become too narrow. A broad, multi-dimensional education system will make our labour market more specialised, diverse, adaptable and multi-skilled.
Education strategies need to be viewed through the prism of the social contract to give it relevance and practicality in the next century.
If we are serious about re-positioning Australia to reach its full potential then we need to embrace an education strategy that reduces student to teacher ratios and improves student access to education at institutions with the best possible facilities.
The education curriculum is like an over-dressed character from Verdi's Aida. It needs to be stripped to the waist and re-dressed. A flexible curriculum that doesn't perpetuate the reckless assumption that all individual learning needs are uniform is essential for the next stage of Australia's development. We need to move away from the one size fits all approach which has crept into our education system.
Labor's Knowledge Nation platform is ambiguous, abstract and glib. Beazley's propensity to play the class-card in the recent debate over schools funding demonstrates Labor's lack of direction in education policy. It is now political folklore that Labor's best thinker, Mark Latham, quit the shadow education portfolio when Kim Beazley's staff completely re-wrote his policy during the 1998 federal election campaign.
A world class education system that is only accessible to certain sections of the Australian community due to financial or geographic factors, undermines the efficacy of the social contract and works as an anchor to economic growth. We need to bring everyone with us.
Nowhere is educational disadvantage greater in Australia than in indigenous communities. Indigenous Australia is being held back primarily because a sub-standard knowledge and skills base excludes the majority from participating in the real economy.
The late Charlie Perkins recognised this in the 60s when he called for special resources to provide for tertiary education of indigenous Australians. He recognised the empowerment that comes with education.
But an improved and more accessible education system will only produce economic and social dividends if we remove the conditions that have led to passive welfare dependency on indigenous communities.
On some Aboriginal communities petrol sniffing is a prosthetic for hope. We need to demonstrate to those afflicted that hope is found, not in the bottom of a jar of petrol, but in the chance, presented early in life, to access an education. We need to prove to them that early education and skills training is a springboard to opportunities.
In the current edition of Options Noel Pearson writes that: "The safety net as a permanent solution for able-bodied people, is not just undesirable, it is destructive".
According to Pearson the answer is not an increase in government funding but the development of a social partnership between government, indigenous organisations and communities and individuals.
Pearson believes mutual obligation programmes go to the heart of the solution, offering the two-fold advantage of skilling individuals and rebuilding communities.
These measures will bring indigenous Australians into the real economy, providing them with opportunities and the capacity to make an economic and social contribution.
When people are unable to make a contribution and are receiving welfare benefits, they feel isolated and excluded from the rest of the community. Conversely, when people feel they are making a contribution it builds a sense of community — a feeling that we are all part of a team creating a better society.
Communities are the foundation on which the social contract is built. The social contract can only work when each member of a community is supported by the rest of the community.
The power of community has helped us through some of the darkest moments in our nation's history — Cyclone Tracy, the Ash Wednesday bush-fires that swept through South Australia and Victoria, the floods that put over a third of New South Wales under water last month.
But our innate sense of community has taken a back seat to the new dogma of "every man for himself".
How do we re-build the importance of community in Australia?
We re-build communities by focussing on the things that unite us. Australians do not live in a Hobbesian world. It is incredibly simplistic — and politically inept — to ignore all the natural groupings of individuals that form to defend common needs and interests and beliefs.
We re-build communities by reconnecting people and building a sense of belonging. Studies have demonstrated that in communities where you know your neighbour the incidence of burglary and other crime decreases dramatically. The message is — neighbours that know each other work better.
There are encouraging signs that "communities" are making a comeback.
The recent establishment of community banks in some parts of Australia is an instance of community support in action. The economic revival of the town of Broken Hill as a tourist destination has brought a community back from the brink.
Many Australians say today that we need strong leadership. None of us would disagree. But, we need to define what that actually means. We do not need leadership that will make sweeping reforms but ignore its social responsibilities. Instead, we need the kind of leadership that will not limit us but which will encourage us to create the kind of Australia we want.
We know we won't get that kind of leadership from Kim Beazley.
At a time of radical global change, we need the kind of leadership which will encourage us to make a realistic appraisal of our situation and to explore creative ways of improving it. We need the kind of leadership which will encourage us to recognise that the best solutions are those in our own hands, not the ones imposed on us by manipulative bureaucrats, noisy minorities or myopic idealogues.
The mark of a true liberal is to believe we can shape our own destiny free from the historical determinism of socialism. It is the essential difference.
I'm not asking you to follow me into unchartered waters. These aren't new and untested ideas. As Robert Kennedy once said: "Neither fate, nor nature, nor the irresistible ties of history, but the work of our own hands, matched to reason and principle, will determine our destiny."
The catalyst to the social contract is the premise that good economic policy determines a nation's capacity to meet its social objectives and ability to preserve the traditional Australian values of compassion and egalitarianism. Creating equity in education will provide all Australians with the opportunity for progress. Australia can only reach its full potential if all Australians have the opportunity to reach their full potential.