Four years of Labor: what went wrong?

The smell of death is hanging over Labor. Mark Gillespie looks at how they got themselves into such a mess

Federally Labor’s popularity has slumped to record lows. At the same time, in every state Labor has either been dumped or is fighting for its life. This is a complete turn around from 2007 when the
Liberals were in absolute disarray.

Labor pundits put this down to inept leaders who can’t sell the government’s message. “All leaders of any substance have been capable of telling a story,” argues Paul Keating. Labor’s problems, however, are much deeper than their leadership or style of communication. Rudd and Gillard’s approval ratings plunged for same reason that Paul Keating was swept from office in 1996.

Labor’s working class support base feel betrayed by a government that constantly pushes pro-business, pro-market, “growth at any cost” policies and ignores their concerns. Numerous surveys show that people want governments to invest in schools and hospitals and think that privatisation and deregulation leads to job loses and insecurity.

Labor ignores these facts at their own peril. Queensland Labor’s popularity dropped almost overnight after it announced its plan to privatise $15 billion worth of state assets. The final nail in NSW Labor’s coffin was its attempt to privatise electricity generation in the face of massive opposition.

Not an aberration
So why does Labor persist with this pro-business agenda when it obviously hurts and alienates its own support base? Some will argue Labor has moved away from their roots. But there is a long history of Labor turning on its supporters once in office.

The Scullin Labor government was swept from office in 1931 after implementing savage wage cuts and austerity in the name of maintaining “investor confidence”.

In 1949 the Chifley Labor government ran a vicious red scare campaign against striking coal miners and used troops to break their strike. Labor’s betrayals aren’t aberrations but a result of deeply flawed politics.

The parliamentary road
Labor was established in the 1890s by the trade union movement to fight for a better lot for workers.
The unions funded the party and supplied the bulk of the personnel. To the extent that workers identified their interests as being in opposition to the employers and saw the need to organise separately, this was a step forward.

But the strategy for advancing workers interests was to utilise parliament.

This turn to parliament came in the wake of some serious defeats where state power was used to smash strikes and was more a sign of desperation than of strength.

While it was right to challenge the capitalist class politically, the problem with the parliamentary strategy is it separates the political struggle off from the economic struggle—where workers have power—into a domain where they have no power.

When elected, Labor governments don’t take power, they take office. The real levers of power, the economy, the media, the state institutions and so on, remain firmly in the hands of the capitalist class.
Rather than challenge capitalism, right from the beginning Labor accommodated and set out merely to manage it in a more compassionate way.

Managing capitalism continues to be its goal, guided by what its MPs call “Labor values”.

But managing capitalism means accepting all the rules of capitalism, in particular the need to compete and to maintain a strong national state.

This isn’t such a problem when capitalism is expanding and firms are making good returns and governments run surpluses year after year. In these circumstances capitalism can deliver workers moderate reforms.

But what happens when the system moves into crisis, when profit rates fall, unemployment grows and government surpluses disappear? Those wanting to manage the system end up being the doctor applying the medicine trying to nurse it back to health, rather than being its gravedigger.

The Whitlam government was elected at the end of the post-war boom and initially introduced reforms like free tertiary education. At the time such reforms were both affordable and beneficial to capitalism.

But once the 1973 recession hit they rapidly retreated from any progressive reform agenda. Indexation was introduced to restrain wage demands while Bill Hayden replaced Jim Cairns as treasurer and implemented a budget so austere that even the Liberals left it unaltered after Whitlam’s dismissal.

The 1973 recession was the beginning of a global slowdown in profit rates. The solution imposed from the top was neo-liberalism—productivity gains and trade-offs to make us work harder and longer, alongside privatisation and deregulation.

When the Hawke Labor government came to power in 1983, the economy was once again in a deep recession. Hawke Labor took up neo-liberal economic reform with enthusiasm.

Their goal was to make Australia more competitive by opening it up to market forces. They floated the dollar, destroyed free tertiary education, privatised government assets, cut corporate tax, cut tariffs, revived uranium mining, watered down Aboriginal Land Rights, destroyed national workplace awards and when necessary, smashed unions.

Paul Keating often boasts about the prosperity the Hawke and Keating governments created, but it was all concentrated at the big end of town. The share of GDP going to wages during these years fell from 61.1 per cent to 55.4 per cent, while the share going to profits increased from 18.1 per cent to 23.2 per cent.

Labor’s traditional blue collar support base was decimated as thousands of full-time jobs in the steel industry, on the waterfront, and other sectors were slashed. Casualisation grew significantly while the average working hours increased from 38.24 to 41.1.

Labor was crushed in the 1996 election receiving its lowest primary vote since 1906.

Continuing the tradition
The Rudd and Gillard governments have continued this tradition of managing capitalism and both have actually held up the Hawke and Keating years as a positive model.

One of their claims to fame is the “scrapping” of WorkChoices, but the changes are very moderate with plenty of flexibility for employers. Individual contracts remain in a different form, bargaining continues at the enterprise level, industry-wide agreements are banned, union access to work sites and to industrial action remains restricted, exemptions from unfair dismissal laws still exist, while special laws still apply to construction workers.

Their other great promise was to tackle climate change but their “solution” has been to be as inoffensive to the interests of capital as possible. They’ve adopted a market based system—with plenty of exemptions and compensation for big business—that allows industry to pass on the costs to consumers. At the end of the day, it will do little to cut emissions.

The Gillard government doesn’t even try to sell the carbon tax as a social reform, but rather as an “economic reform” in the Hawke-Keating tradition, designed to give business “certainty”.

On the few occasions when Labor has stepped outside of parameters laid down by business interests they’ve quickly retreated. Rudd’s Resource Super Profits Tax, for example, which was more about redistribution across capital than to workers, was quickly gutted once big business flexed its muscles with a $22 million advertising campaign against it.

Labor, too, initially broke the mould on refugee policy (in however a moderate way) but quickly reverted back to the xenophobic status quo as soon as the press barons began highlighting breaches of “border security”.

So long as Labor continues to work within the limits of capitalism it will continue to disappoint its support base.

Wayne Swan is currently planning cuts to bring the budget into surplus by 2013, while Julia Gillard recently told a business leaders’ forum at APEC that the future workforce, “will need to be a workforce that is highly adaptable, highly resilient because the pace of change will stress people”. These measures will hardly win back the heartland.

Where’s the hope?
In 2007 Kevin Rudd was able to harness much of the growing discontent with the Howard government and raised people’s hopes that a Labor government would be different. While Rudd was careful not to raise hopes too high, consistently calling himself an “economic conservative”, he nonetheless articulated concerns about WorkChoices, climate change and other issues. Hundreds of thousands of people were mobilised, particularly by the union movement, to help Rudd get over the line.

All that enthusiasm has been squandered. Labor’s strategy of managing capitalism has demoralised its support base. Some will break to the left and vote for The Greens but the initiative has been captured by Tony Abbott with most people shifting their support to the Liberals in the polls. Just as the Hawke and Keating governments laid the basis for 11 years of Howard, Rudd and Gillard are laying the basis for a right-wing Abbott government.

How can things be turned around? The worst thing we could do is fall in uncritically behind Labor thinking they’ll somehow stop Abbott. This will just allow Labor to move further to the right and deepen the demoralisation.

The hope is in the struggles outside of parliament. When the Qantas workers made a stand against outsourcing, the public began to rally to their side. This gives us a glimpse of the potential and we should not underestimate how rapidly things can transform if a section of the movement decides to fight. In the US, for example, hope was fading and the Tea Party was on the rise until the Occupy Wall Street movement burst onto the scene, and the US labour movement rallied behind it. This movement is putting pressure on Obama from the left.

In Greece, too, workers are not accepting the betrayal of PASOK (equivalent to Labor) and their resistance has already brought down one prime minister.

It’s the movements outside parliament, not relying on Labor politicians, that are the key to challenging the system.


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