In the course of a fairly unremarkable piece by Michelle Grattan last week, there’s one very important sentence. Referring to shadow treasurer Joe Hockey, who has created something of a storm by calling for an end to “the age of unlimited and unfunded entitlement to government services and income support”, she says “He’s a small l liberal but he’s an economic ‘dry’.”

It’s important because a wide range of commentators simply assume that such a thing is impossible: they take the wet/dry division on economic policy to be equivalent to the liberal/conservative or left/right division within the Liberal Party. Time and again, “wet” and “dry” are used as names of factions, rather than a policy difference that cuts across factional lines.

The dries are the free-marketeers, and it’s a common prejudice on the left to think that that’s necessarily a conservative or right-wing position. But the history of the Liberal Party repeatedly falsifies that view, and without appreciating that history it’s very hard to understand what Hockey is up to.

In the 1980s, one of the sharpest policy debates within the Liberal Party was over needs-based welfare. Bob Hawke and Paul Keating were reorienting Australia’s welfare system by targeting payments towards those genuinely in need, rather than funding universal entitlements that mostly benefited the middle class. The free-marketeers in the opposition supported the idea, the wets opposed them.

That debate intersected with the party’s leadership contest, between John Howard (on the right) and Andrew Peacock (on the left). Most of the time Howard lined up with the dries and Peacock with the wets, but not invariably — sometimes Howard supported classicly “wet” policies, while several prominent dries were in the Peacock camp, and Peacock eventually backed the very dry John Hewson to succeed him.

Once in government, Howard abandoned the dry position, at least on this issue. Middle-class welfare again became all the rage, and in his last major speech as prime minister, the campaign launch for the 2007 election, Howard dwelt with particular pride on that aspect of his record.

If Hockey’s remarks this week are to be taken at face value, he is repudiating that Howard legacy — as is Malcolm Turnbull, whojoined the debate yesterday.

Yet Hockey is unmistakably on the party’s left. Turnbull is harder to classify, since he initially won preselection with the support of the right, but he too should probably now be put on the left. Tony Abbott, their rival, has always been firmly on the right, and he is now the stoutest defender of Howard’s big-spending approach — even proposing to extend it with a maternity leave scheme that would give more money to wealthier families.

Hockey knows that the majority in the party room preferred him to Abbott in the 2009 leadership ballot, but if he wants to rekindle his leadership ambitions he needs to highlight some of the policy differences between them. A bit of sharp rhetoric on needs-based welfare might have seemed like a good place to start.

But whether there is more than rhetoric to it is a serious question.

From the fact that Hockey is still unwilling to attack the private health insurance rebate, one of Howard’s more egregious boondoggles, it might be concluded that his dry credentials are fairly thin. In the unlikely event that the party room is serious about change, Turnbull seems a more viable option.

Every now and then, the Liberal Party tries to think of itself in philosophical terms, dedicated to smaller government and the free market. But most of the time it remembers that it is in fact a class-based party, committed to furthering the interests of its well-off supporters, and the dries are put back in their box. You can bet on that being the case this time as well.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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