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The Twilight of Exceptionalism

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The Twilight of Exceptionalism is the third in Paul Kelly's masterful trilogy on modern Australian politics, following The March of Patriots (2009) and Triumph and Demise (2014). It charts the most turbulent era of Liberal and conservative politics since Sir Robert Menzies formed the Liberal Party, tracing the crisis besetting the Coalition and how Tony Abbott, Malcolm Turnbull and Scott Morrison struggled to govern. From 2013 to 2022 Australia fought to remain a leading democracy against the challenges of the 21st century - economic performance, climate change, cultural polarisation, technological transformation and geo-strategic threats. Paul Kelly examines how the Liberal Party lost its long-standing grip on the Australian psyche as it cycled through three temperamentally and ideologically divergent prime ministers. Despite its many achievements, the Coalition in office was marked by a period of under-performance and doubts over the political system's capacity to serve the national interest. Australian exceptionalism, as initiated by Bob Hawke and Paul Keating in 1983 and carried on by John Howard and Peter Costello, has been eclipsed and slipped into a disappointing twilight. Kelly contends that Australia must rally and recover - or face a troubling phase of decline and betrayal of its finest aspirations.

764 pages, Paperback

Published July 14, 2026

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Paul Kelly

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Profile Image for Callum's Column.
230 reviews190 followers
October 24, 2026
A couple of times when I have mentioned that I am writing a review of this book, some people who lean left have commented that they have no desire to read his work because of his politics. Such attitudes, in my opinion, diminish one's political faculties. As John Stuart Mill said, "He who knows only his own side of the case, knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side; if he does not so much as know what they are, he has no ground for preferring either opinion."

Paul Kelly is one of Australia's greatest journalists and political historians. One is less informed about Australian politics over the last half-century if one does not seriously engage with his work. He has just published what may be the definitive single-volume history of the Coalition's period in government from 2013 to 2022. This book, vast in scale, is a measured critique and a not-so-subtle lament for the end of an era or, as Kelly puts it in the book's title, the twilight of exceptionalism in Australian political and economic reform.

This book is the final volume in Kelly's trilogy examining modern Australian politics. It is divided into four parts. In Part I, Kelly outlines a theory of the causes of Australia's and the Liberals' malaise. After Part I, "the book moves into three narrative accounts, each dealing with a prime minister: Part II on Abbott, Part III on Turnbull and Part IV on Morrison. [The book] concludes with an epilogue written after the 2025 election, putting the 2012–22 era into a stronger historical perspective." Parts II–IV comprise superb analysis. Part I is more debatable and will be the main focus of this review.

Part I, entitled "A Decade of Disruptions", comprises eight chapters dealing "with the ideas and upheavals that underwrote the era". For brevity's sake, this review analyses them through two overarching themes: the malaise of politics and the fracturing of centre-right politics in Australia. The latter is relatively uncontroversial, though I disagree slightly with where Kelly places the emphasis. However, I push back significantly against Kelly's explanation of the malaise. His conclusions regarding the culture wars are, I think, clouded by his ideological predispositions, which lead him not to engage with progressive arguments on their merits.

Kelly's thesis is as follows:
"The essence of the Australian dilemma over 2013–22: Prime ministers faced greater challenges but with a diminished governing and political capability. This juxtaposition became the explanatory story of the decade. It is the key to the nation's mood of frustration and aggravation. Governing in the national interest had become much more difficult…. Australia's underperformance during the Coalition's decade confirmed that the nation entered a new cycle of history."

Kelly states that "the overarching principle was… the leader's responsibility to articulate Liberal philosophy. This was how Menzies created the party; it is how he governed… The tide of Liberal history is explicit: ascendant leadership is the indispensable condition for successful Liberal government." Key to this philosophy was going beyond class conflict to "focus on home, family, industry and progress". Since Howard, however, Kelly argues that there has been a relative dearth of capable leadership and, consequently, that this erstwhile winning formula has lost traction.

Kelly's emphasis on leadership somewhat marginalises what I think is a more causal factor, namely that Liberal leadership post-Howard has been shaped by ideological divisions. The rise and fall of Abbott's conservatism, Turnbull's progressivism, and Morrison's cynical pragmatism were products of a disunited party room, where competing factions knifed each other for personal gain. In such an environment, it is unsurprising that the Liberals were unable to espouse a coherent, let alone compelling, national story. Electoral estrangement became difficult to avoid.

This period of Liberal turmoil parallels the collapse of the Liberals' predecessor, the United Australia Party (UAP), in the early 1940s, even under Menzies' leadership, after intractable internal feuds undermined its vision for the country. Subsequently, Menzies, among others, recognised that a united non-Labor party was needed to oppose the Labor Party. Indeed, this need has existed throughout most of Australia's post-federation history.

Whether weak leadership, as Kelly argues, or internal disunity, as I argue, is the greater cause, or whether both contribute, the outcome remains the same: Liberal malaise and the "fracturing of the centre-right in Australia and the extent of its intellectual disarray". Kelly also examines philosophical conservatism in Australia, positing that many "Australian conservatives quoted Edmund Burke but often failed to embody Burke's spirit, namely his rejection of conservatism as being reactionary. Burke famously said: 'A state without the means of some change is without the means of its conservation.'"

Referencing David Kemp, Kelly asserts that the primary Australian political tradition is liberalism. Conservatism has a place if it works in tandem with this tradition and imbues it with Burkean pragmatism. Kelly argues that this combination can win elections when governed adroitly, as under Menzies and Howard. However, he concludes that any attempt to reposition or rebrand the Liberal Party as a "mainly conservative party or as a vehicle for aggressive conservative populism is doomed. It will never succeed in Australia. This is the vital lesson from the 2013–22 era."

This helps explain why the Liberals have recently struggled to find electoral success. However, it only partially explains their internal divisions or their failure to respond to the economic challenges confronting them. This leads to a second theme posited by Kelly of the Liberals' decline: the eclipse of Australia's economic golden age. It was about the time that the Coalition came to office in 2013 that bipartisan support to "radically reshape the economy towards free trade, deregulation, fiscal discipline, tax reform, enterprise bargaining, competition policy and individual aspiration" was lost.

Under that consensus, Australia had experienced three decades of uninterrupted economic growth, which "justifiably became a world-beating story". According to Kelly, there "were two aspects to the long expansion: initially, a home-grown income and productivity burst from the reform age, followed by the gift of the China boom that drove massive revenues from our high commodity prices". Yet, in the years following the GFC and by the time of Abbott's first budget, wages and living standards were stagnating. This reflected weak productivity growth, falling terms of trade and an ageing population.

Further reform and fiscal restraint were needed, yet the Coalition struggled to deliver either. Kelly quotes Jennifer Westacott, who warned: "I believe a decade of policy inertia has left Australia in a dangerous position where we are sleepwalking into lower living standards." The Coalition governed as the benefits of favourable terms of trade diminished and the reform momentum of earlier decades faded. Cautious monetary policy likely further constrained growth. Consequently, economic growth and wage growth slowed, a trend that was greatly exacerbated by the pandemic.

Like Kelly's emphasis on leadership, I think this is only a partial explanation of the Liberals' subpar governance. The Coalition spent nine years in power with all these economic indicators well known, yet delivered virtually no reform. Kelly also laments the role of big government as a share of GDP yet rails against the reform agenda that Labor offered, but lost, at the 2016 and 2019 elections. The Coalition's inability to perform was particularly acute because the political and economic consensus was coming under pressure, yet they acted as if the status quo was broadly satisfactory.

Kelly transitions to assess how governing in the national interest has broken down and how "the business of politics is too de-coupled from the interests of Australia and its citizens." Like the failures of leadership, Kelly argues that there has perhaps been a failure on the part of the electorate, where "the public in recent years has deliberately declined to give most governments a clear mandate." He laments the resulting mistrust, stating: "Here is the Australian dilemma: the nation needs ambitious change, but the political system militates against this need."

According to Kelly, the primary reason for this is cultural fragmentation, stating:
"Australian politics cannot be understood without understanding the cultural changes that have transformed Western societies over the last half century. The disintegration of shared values and the erosion of social and moral norms lie at the heart of the Western malaise… Jonathan Sacks had warned: 'When there is no shared morality, there is no society.' And there is no cohesive politics. The demise of shared morality dictates a system of fractured politics and this was the world into which Australia and other nations gradually entered."

One relatively uncontroversial explanation for this phenomenon is identity-based individualism, exacerbated by the digital revolution. In Australia, "the transition from the industrial age to the decentralised individualism of the digital age constitutes a cultural revolution." One is empowered as a consumer and creator of media, and to shape one's own reality, yet at the cost of alienation and addiction. Individualised social media feeds shape "the politics we have, but [are] unable to shape the politics we need". Thus, politics seems incapable of providing solutions.

Though I agree with these aforementioned factors, Kelly curiously occludes another key explanation often advanced as a causal factor: the neoliberal turn in politics. Though neoliberal reforms have brought many positives, which Kelly keenly points out, they have also brought many negatives. Kelly overlooks phenomena such as the decline of organised labour, which weakened collective identities; marketisation, which underscored a new consumer individualism; and economic insecurity, which undermined social solidarity.

When the left and right converged on a common neoliberal policy, the distinction between the two parties increasingly had to be sought by other means. This was done through a more pronounced focus on culture. (I will analyse this political phenomenon further when I review Tim Dunlop's Culture Wars.) Kelly's decision to overlook this widely advanced argument is glaring and perhaps indicative of the lack of depth in his analysis of the causes and impacts of cultural change on Australian politics.

Individualism was coupled with the advance of cultural progressivism, which, "in the Coalition era, [saw] four overarching ideas [that] were most conspicuous." The first was identity and recognition, which was taken "onto a new plateau with a commitment to personal autonomy and identity recognition in relation to sex, gender, race and personal characteristics." The second theme concerned history and social justice, with the Western tradition described as being "deeply compromised by racism, patriarchy, sexism, Indigenous exploitation and elite privilege."

The other themes were more collectivist in nature, with the third concerning climate change. Kelly posits that "Kevin Rudd's election in 2007 gave this notion salience," defining it as the "challenge of our generation." The fourth theme was the growing belief that government "intervention, spending, new programs, higher taxes and laws – were the vital ingredient in advancing progressive agendas." These themes unsettled the Liberals, who responded by accommodating progressive concerns instead of "standing for, not any extreme conservative position, but a common-sense position."

A common-sense position, however, may be less feasible than in times gone by. Kelly asserts that Australia, and the West more broadly, is living through a new great experiment: "liberal democracy in the post-Christian age." Kelly quotes Nietzsche, who wrote: "Christianity is a system, a whole view of things thought out together. By breaking one main concept out of it, the faith in God, one breaks the whole." Moreover, as faith in God wanes, so too, Kelly suggests, does the common morality underpinning society.

Kelly bemoans the decadence of a secular, progressive society, stating:
"The dilemma is that rationality-based science has nothing to say about good and bad character. It cannot light the world. It cannot guarantee individual wellbeing, personal happiness, or human flourishing. Science devoid of a shared moral framework cannot, therefore, suffice for a good society."

For Kelly, the problem with these progressive campaigns is their shift towards rejecting the liberal order and their erosion of its underlying principles, including "the rule of law, the right to life and liberty, mutual respect and equality under law regardless of race or creed."

I think there are several flaws in Kelly's argument. Beginning with identitarian individualism, Kelly fails to distinguish between progressive movements that extend liberal rights and those that may conflict with liberal principles. For instance, many progressive movements stem from liberal principles, particularly individual autonomy and equal treatment. To suggest that these movements threaten Australian liberalism without making this distinction is, arguably, to misrepresent liberalism fundamentally. This nuance is absent from Kelly's account.

In relation to the Liberals' reaction to this movement, gay marriage is a good example of progressive change that sits within liberalism. This was a case of moderate change that was arguably consistent with Burkean methods of gradual, institutional change. Moreover, majority support establishes democratic legitimacy, and ultimately it was reform through existing institutions to recognise a specific form of identitarian liberalism. Regarding other identities, is using this nation's liberal institutions to effect change not part of the tradition of protest and reform that we extol and value?

Historical revisionism of the Western tradition can also be situated within the Australian liberal tradition. It is through the contestation of ideas in public debate, including revisionist ones, that competing ideas have been tested, which helps elucidate the principles by which institutions should be just. Kelly dislikes the "redemptive agenda based on social justice, constitutional change, curriculum redesign, truth-telling and treaty as well as reconciliation," and "the progressive assault on the foundations of Australia's European origins created a national schism, fractured support for Australia Day and undermined the narrative of Australia's achievement as a new world democracy."

This position is difficult to sustain. First Nations people were not even counted in the census or fully recognised in the Constitution until 1967. Moreover, Kelly appears to treat challenges to Australia's established national narrative as attacks on the nation itself. A liberal democracy should be able to scrutinise its origins. As great as Australia's democratic achievements were, they cannot be lauded while ignoring the decades-long exclusion of First Nations people from them. Acknowledging this is a way of bringing the nation's historical reality together with its professed liberal principles.

The third theme, climate change, is based on science, whose methods evolved from the Enlightenment that Kelly admires. Opposition to particular climate policies can be a legitimate liberal position. However, resistance to climate action based on disbelief in the science, without evidence, is not. This featured prominently in opposition to climate policy, which left the Liberals perceived to be out of step with voters, many of whom supported greater action on climate change, and was a significant reason they lost ground. More fundamentally, placing ideological commitments above empirical inquiry can be construed as anti-liberal.

The fourth theme, government intervention, can be understood as a response to a system of governance shaped by neoliberalism, in which institutions have been hollowed out in favour of private enterprise, while services have, in some areas, deteriorated. Yet, under the Liberals, government debt more than doubled, even before the pandemic, and it is a little ironic that the party of small government adopted extensive state intervention during the pandemic, only for Kelly, who endorses that spending, to bemoan progressives for wanting bigger government in more ordinary times and for equitable purposes. Kelly does not explain why intervention for equity is less legitimate than intervention for crisis.

Other changes that Kelly places under progressivism can be understood as extensions of liberal principles, like secularisation. Yet Kelly seems to think that the decline of Christian influence in society has led to a corresponding decline in shared morality. This is unpersuasive. Pluralistic democracies can and do create moral frameworks that are not grounded in religion. Secularity is a hallmark of the Enlightenment, and liberalism itself emerged, in significant part, from attempts to allow people with differing moral systems to coexist.

The Liberals have failed to develop a compelling cultural vision of modern Australia. The Liberals have lost their cultural savvy for several reasons: first, they took their power for granted; second, Labor has advanced a more modern vision based on new material conditions; and third, the Liberals were caught unprepared for the possibility that voters might be persuaded by, and come to embody, left-wing politics. Kelly's own account, by not engaging with progressive arguments on their merits, reflects the third of these failings, which contributed to the Liberals' decline.

My Substack: https://callumscolumn.substack.com/
Profile Image for Greg.
630 reviews12 followers
September 1, 2026
An absolutely outstanding analysis of Australian politics 2013-2022. It's not just a narrative history of the Liberal governments of that time but goes deeply into the issues affecting Australian society and how successive Liberal governments failed to deal with them, or even understand them.

The author is always clear, balanced, even-handed, insightful and honest. His connections with all of the major players of this era have been put to very good use.
Profile Image for Todd Winther.
Author 1 book6 followers
August 24, 2026
Perfectly fine, but Kelly needs to get out a thesaurus and stop repeating the word 'upshot' ten times every chapter.
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