Economics: Super Seduction
Interview: Bono and Me
Unions: The Eight Hour Day and the Holy Spirit
Technology: From Widgets to Digits
Education: Dumb and Dumber
Health: No Place for the Young
History: The Work-In That Changed a Nation
Review: Dare to Win
Poetry: Labor's Dreaming
The Locker Room
Morals Beat Hasty Retreat
Uncounted Cost Of Asbestos
Voting Farce Expands
I Beg To Differ
Labour and Labor
this article first appeared in the summer 2004/2005 issue of Dissent magazine http://www.dissent.com.au/
What went wrong on 9 October? What lessons are there in the result, for labour and Labor?
What follows is a personal view.
For what it is worth, I went to Canberra in 1980 for my first job - as a young graduate in the Economics Division of Prime Minister's department - and joined the public sector union. Amongst other things I wrote briefing papers on 'Prices and Incomes Policies' for the PM. In January 1983 I transferred to the Department of Industrial Relations to work in the National Wages Policy Division, where submissions were prepared for national wage cases. In February of that year Malcolm Fraser called an election; Bob Hawke became Prime Minister with Labor's victory in March; and the National Economic Summit Conference was held in April 1983.
I worked on the Commonwealth submission to the 1983 National Wage Case, and on subsequent cases until switching sides mid-way through the 1986 wage case and starting work as ACTU Research Officer in March 1986. Eighteen years on, after many wage cases, submissions, policy papers, and committees, I am still with the ACTU.
Through this experience I have witnessed the relationship between organised labour and political Labor at close hand, from both sides. The Australian Labor Party was born as the political wing of the broad labour movement. The industrial wing is the Australian union movement. This essay briefly recounts the recent history of this relationship and outlines some issues for the path ahead. It is offered as a contribution to the debate the broad labour movement must have on the way forward.
A Potted History of our time
A split labour movement helped keep Menzies in power for a quarter century after World War II.
A fractious relationship between the union movement and the federal ALP dogged the Whitlam government. There are many reasons why Whitlam's government lasted only three short years, and this was one of them.
The Accord years were different. Several critical policy initiatives in the early years of the Accord - including deregulation of the financial and foreign exchange markets - came from left field but the relationship between political and industrial labour held, and communication on policy development was deep and extensive.
A key to this was the concept of the 'social wage'.
Restraint on increases in 'industrial wages' was the counterpart for gains on the social wage, notably including Medicare, childcare, superannuation, industry restructuring and development, education, and social security reform.
The point was that the real living standards of workers and their families depended on both. Through the eighties much was achieved economically and socially. These were heady years.
Increasingly after 1993 the Accord relationship frayed. The phones were silent more often. In truth, the darkness began to set in a little earlier, at the turn of the decade. After seven years of growth and hope and prosperity, the early nineties were characterised by recession then slow recovery, crippling unemployment, leadership tensions in the parliamentary Labor party, policy fatigue, staff burnout and turnover, and deep ructions with the arbitration commission. Some of these reflected growing pains for a maturing nation, but they were painful nonetheless.
In Canberra the view grew that the Accord had essentially been about wage restraint and with spreading enterprise bargaining the industrial wing no longer possessed bargaining coin of any denomination. The counterpart but latent message was that 'social wage' was the gift and the sole discretion of the political wing.
In influential Labor quarters the view was also growing that unions were social dinosaurs, more political baggage than boon here as for 'New Labour' in the UK and 'New Democrats' in the US, and best ditched in the modern quest for middle ground support.
Neo-liberal rhetoric about J-curves and the replacement of fiscal policy by monetary policy as the 'swing instrument' of macro-economic management had served a purpose in the late eighties, but by the mid-nineties events had shown it to be empty. It was a hard landing after all, following the boom of the eighties.
An ostensible nation building program in 1992 - the 'One Nation' package - had served the purpose of demarking Keating from Hawke. But there was a lack of conviction amongst the new Prime Minister's economic advisers regarding the intrinsic merits of the program. 'Planning' had for years been pilloried by the federal bureaucracy, and a lack of prior planning meant that 'One Nation' money could not be spent on infrastructure until the recession (and thus the counter-cyclical need) had passed.
In fact long before Dick Morris and 'triangulation', the view had formed at the highest level of government in Australia that the macro economy managed itself in the modern world, and the best option for government was to entrust it to autopilot. All a government could usefully do was promote competition and remove market impediments. 'Working Nation' would ease labour market frictions and mismatches, but job creation was a goal honoured in the policy breach. Industry policy was dead [except in the arts and communications]. Fiscal policy could be tightened by cutting spending or relaxed by cutting taxes. The economy runs itself, so politicians should talk about anything else.
Accordingly the bureaucratic and media dogs were let loose on the 1993 Kelty-Fox Regional Development report, encouraged to bark and to savage it, while Labor's political leadership stayed silent or damned the Report with faint praise. [Its key ideas were picked up in the 1996 Labor election policy package, when the best photo opportunities were provided by the Prime Minister's opening of new road and rail projects initiated under the One Nation banner, but by then all was lost.]
The heartland of the labour movement was hurting from economic recession, and nagged by the thought that Canberra was in cahoots with the elites and no longer listening to them. Attempts by the ACTU to link the tariff reduction program to its ostensible benefits - jobs growth, and lower unemployment - were dismissed by the Prime Minister's office on grounds of political psychology (being seen to be weak) without consideration of the economic merits.
One popular 'analysis' announced the end of certainty, asserting that (white Australia and protectionism having been ditched) the last vestige of the federation settlement - industrial arbitration - was an anachronism and swinging in the historical breeze. A wannabe biographer (then inner circle adviser) to the Prime Minister shared this view, and - against ACTU advice - salted the PM's speeches with welcoming references to the imminent end of the award system. 'Danger Man' was interposed in the lines of communication between Canberra and the ACTU to distance the chief from his erstwhile allies, and charged with cruelling the unions.
In the dying years of the Accord (post-1993) the political wing denigrated the maritime unions, promised to open the legal gate for non-union agreements while leaving restricted and conditional access for union collective agreements and, in so doing, gave tacit support and encouragement to union-busting firms. Late in the piece and reflecting the depths to which the relationship had deteriorated, former Prime Minister Hawke was resurrected as industrial advocate for the ACTU in the Weipa dispute, much to the chagrin of then current Prime Minister Keating in Japan for an APEC meeting.
Redfern and the republic were wonderful and visionary and warmed the hearts of true believers, but were pulp for victims of economic restructuring and xenophobes alike in 1996, waiting on their porches with baseball bats at the ready. They had been waiting long before Hewson flashed across their screens and gave them pause three years earlier. They had waited all through the Downer-Costello comic interlude.
The '93 election was, with hindsight, simply a stay of execution; the smell of political death was all about in '96 and Labor was smashed.
Since that time communication between the industrial and political wings of the labour movement has been haphazard, intermittent, and limited essentially to matters of industrial legislation.
Even there the road has often been rocky. Former ACTU President Martin Ferguson described then Minister Reith as 'an honourable man' and committed Labor to supporting government legislation entrenching archaic, inefficient and unfair junior wage provisions in awards. Without that support the government's legislation would not have passed the Senate and award restructuring would have flowed to junior wages too, and given us simple, coherent, fair minimum wages for young workers.
Industrial legislation aside, over the past decade consultation on policy development has been routine at best, between the two wings of the labour movement. Political Labor has perfunctorily gone through the motions of talking with unions in formal ALAC sessions. Industrial labour has bitten its tongue on Labor policy in public.
Without a substantive policy development role, some union leaders have indulged in the politics of party personalities and endeavoured (wholly in vain as it turns out) to influence the political wing's parliamentary leadership decisions.
Labor's apparent rebound result in the 1998 election really reflected deep public opposition to the GST. But it gave rise to the 'zero target' strategy, which killed off development of a Labor vision, of something for voters to vote for in the subsequent election.
Labor's 1998 tax package had been influenced by the 'five economists' plan to freeze award wages, and featured a 'working families' tax credit that delivered nothing to low income singles or middle income families, and promised a tax on four wheel drive vehicles. [Beazley's advisers believed minimum wage increases cost jobs.] Post election wisdom held that the tax package was too complex and scared swinging voters.
So, for the future under Beazley, there would be nothing visionary. No nation building infrastructure. No public hospital program. No industry policy. Simply hot air - spaghetti and meatballs - and the promise of book-keeping rectitude.
Then, when the Tampa arrived and tipped Labor into an abject political bog, there was simply nothing with which the party could gain policy traction and extricate itself from the mire. Howard's government had a vision - in reality, just a big new tax - but it paired this with deftness and decisiveness in playing to paranoia and fear, driving the wedge at every opportunity and harvesting Hansonist sentiment.
Beyond this, economic recovery (built on Labor reforms) was, by this time, well entrenched, and claimed by the government as its own.
The recent past
After the 2001 loss, incoming ALP leader Simon Crean inexplicably fell for Howard's sucker punch, and whacked himself in the solar plexus. Instead of standing on his digs and declaring long and loud the intrinsic worth of labour, he embarked on a strategy to inoculate political Labor from the Tory charge that it was simply the puppet of unions. Hawke and Wran were engaged to terminate the 60/40 rule governing affiliation in some states of unions to the ALP.
The rule changes were effected, but the strategy did not work. Crean made enemies of natural friends in the union movement, and won no new friends amongst 'New crew' apparatchiks in the parliamentary party. The effort required to secure the rule changes sucked energy from federal Labor's policy development and drew the limelight away from Crean's policy announcements.
What has it delivered? Howard flogged the union bogey mercilessly during the 2004 campaign, and in the aftermath the Murdoch and Fairfax press still pumps out the same asinine and self serving crap alleging union control of the policy agenda.
Having had total and loyal support over six years for his own leadership from Crean, Beazley sat as backbench baggage in the policy cart for two years declining to get into harness and help pull the cart along. Several Labor frontbenchers relentlessly and surreptitiously slipped sand in Crean's bearings then predicted a train wreck for the party under his leadership.
Liberal Party federal director Brian Loughnane's hindsight about Labor's chances under Crean is irrelevant. Latham's leadership gave Labor oxygen and a fresh impetus from late 2003, but the federal parliamentary party's processes of policy development continued to keep industrial labour out of the loop.
Over the past decade household debt and foreign debt have ballooned, while public debt has shrunk to minuscule levels.
Financial deregulation accounts for some of the former and privatisation much of the latter. The 'twin deficits' thesis, that public debt sucks in foreign debt and thus that government can redress a nation's foreign indebtedness by running domestic budget surpluses, is patently bunk.
Megacorps do dominate the world economy in this age of global capitalism, and accordingly national governments have limited leverage over domestic economic conditions. But voters believe governments affect the economy and government policy can and does influence economic developments to a considerable degree.
The esteem in which politicians are held in the Australian community is extremely low on any comparative measure. Politicians are perceived to by self-serving, lying, duplicitous, manipulative creeps and not to be trusted. Howard is emblematic of this type, so truth overboard revelations simply confirm the archetype. So too do (what seem to be) bully-boy handshakes. On their own, revelations such as these do not shift many votes.
What does shift votes is the perception that one party will put a skyrocket under interest rates when the household is mortgaged from the ridge cap to the footings. Union members have mortgages and personal debt. It is how most of them build their lives.
The ostrich posture is no response to a political fear campaign about debt and/or taxes. Neither is it possible to run an effective counter to such a campaign during the election period unless a solid base for it in community expectations has already been established.
There simply was no collaboration on most of the policies affecting the social wage that Labor took to the 2004 election. A few examples serve to illustrate this:
-Tax and family policy
Costello's May 2004 budget gave no tax cut whatever to the 75% of wage earners with incomes less than $52,000 a year. Labor promised a tax cut for all those who missed out; but was jammed by fiscal rectitude on the one hand and the need to deliver more than a sandwich and milkshake on the other. Policy room was shortly constricted further by a promise not to touch Costello's top marginal rates and thresholds.
Clearly, given the need to rebuild services the amount available for tax cuts was constrained, but low paid full-time workers desperately needed some tax relief. The ACTU never knew for sure how much the ALP had earmarked for tax cuts, but an informed guess of $1.7bn was used as a working parameter.
With this, ACTU figuring showed it was possible to deliver an income tax cut to all workers earning less than $52,000 a year. For all full-time workers between the minimum wage and $52,000 the tax cut was $10 a week. Single income earners with no dependents would benefit. Two-income working families would get relief not provided by Howard. EMTRs would fall for low paid workers.
The delivery mechanism was a tax credit, and the key to the proposal was means-testing the tax-free threshold. This reduced the dollar value of the May tax cuts for higher income earners without changing the top marginal rates and thresholds set in the budget. Higher income earners would keep $27 a week out of Costello's $48 a week tax cut. No low paid workers lost out.
The detailed proposal was forwarded to relevant shadow ministers. No response was ever received. As happened in the run up to the '98 and 2001 elections, no discussions ensued. Insofar as it was anything more than wage restraint alone, the Accord was clearly dead in body and in spirit.
In the result Labor's family-tax package 'Rewarding Hard Work' promised a tax cut of $8 a week for most workers delivered as a tax credit, and a complex change to family tax payments. The total cost to budget of the tax cuts was $2.7bn. Taxpayers with incomes over $80,000 would receive a further $4.80 a week tax cut, but those with incomes between $56,000 and $80,000 would get nothing.
There was a substantial group of low-income earners left worse off under the proposed changes to family tax benefits. For example a single income family with three kids, one under 5 and two aged between 5 and 12, with the wage earner employed on the federal minimum wage, was $931 a year worse off under Labor than the coalition.
The low-income losers under the Labor package were single income couples with children, and single parent families. The ALP response to this group was (1) the $600 of Howard cash they would lose was 'not real' and (2) the package would improve the incentive to work. Those of us who argue for Safety Net wage increases in the national wage case each year were flabbergasted.
Helen Clark, Bill Clinton, Tony Blair all won elections promising redistributive tax justice - promising to raise taxes on high income earners and cut taxes for low paid workers to improve the return from work. Over the past twenty years in Australia high-income groups have had tax relief in spades. Over the past ten years low paid full-time workers in particular have had it in the neck. Labor's family tax package fell well short of rectifying the situation.
Labor never lost a chance to make the point, repeating it loud and long throughout the last three-year term, but on 9 October the voters returned 'the highest taxing government in Australia's history' with a handsome majority.
The essential details of the Labor package were not known to the ACTU until after the policy's release. In the interests of gaining economic authority and credibility for the package however, the full details were provided to Access Economics, the Melbourne Institute, and NATSEM.
- Industrial Relations
There was good consultation between Labor and labour on the elements of Labor's industrial relations policy, resulting in shared understanding of the issues. From this came substantial agreement and acceptance by labour of Labor's IR legislation package.
Regrettably, this was seriously undermined in public perception, by Access Economics' endorsement of the coalition IR policy. The vehicle was an Access report commissioned by the BCA on Labor's IR proposals. This was a shallow, shoddy and intellectually dishonest piece of work that reflects poorly on the professionalism and product quality of this high profile consultancy firm. But this same firm - that would willingly torpedo Labor's IR policy - was relied on by Labor to give credibility to its economic policy! The same might well be said of the Melbourne Institute.
Retirement income adequacy is core union business. It is core ALP business too. A child of the Accord, superannuation was conceived in direct bargaining, nurtured in the award wages system, and taken to the verge of maturity through the SGC. At 9% it does not yet provide for retirement income adequacy.
In this respect Labor's policy taken to the election was tentative and hesitant, and fell well short of ACTU policy. Labor delivered one speech on super during the campaign, promising '65 at 65', but there was no clear indication of how this might be achieved. After this speech nothing further was heard from Labor about superannuation.
More disturbingly, the ALP promise - born out of concern for fiscal rectitude - to use $800mn of unclaimed super to retire public debt, was hatched wholly without consultation with the industrial wing of the labour movement.
Medicare Gold was a creative step in the right direction, but not a policy to deliver affordable universal health care for today's working families today.
ALP policy on schools was redistributive, identifying 67 loser schools. Predictably of course, the 9,000 plus winners got no profile in the press coverage.
This was an electoral debacle.
Environmental concerns are here to stay. Climate change, greenhouse, renewable energy, Kyoto protocols, biodiversity, natural heritage, sustainable production. So too is job security. Organised labour can never ignore or reject the interests of its constituent members.
In truth a large majority of both union members and environmentalists are blackberries - red when they are green, and green when they are red. There is an extensive overlap of common cause and common purpose, and a shared commitment to the common good.
Labor and labour have been managing industry restructuring for decades - in primary and resource industries, and intensively in manufacturing across traditional heavy engineering sectors, high tech vehicle manufacturing, clothing and footwear and more. In NSW the state Labor government negotiated a restructuring package with the forestry workers.
This is difficult territory, but both the industrial and the political wings of the labour movement have extensive experience in it. On this occasion the industrial wing did not know what was coming and got it second-hand when it did come.
An $800mn industry-restructuring package is a huge commitment and should have been a major electoral plus on both the south and the north islands. How formulation of this policy and the tactical aspects of its release could be so bungled is an indictment on both wings of the labour movement.
- Economic policy
Over the past three years there was no substantive consultation or dialogue between the ACTU and the federal parliamentary Labor party on broad economic policy.
ALP economic policy was essentially shaped by the Government's policy position and rhetoric, tempered by grabs of populism - zero net public debt, bigger surpluses than you, public-private partnerships, highest taxing government, don't sell Telstra (just bits of it), national competition policy, free trade agreements, current account deficits don't matter, forget industry policy, markets fix problems, governments make problems.
Investing in infrastructure for growth, regional development, that investment drives savings not vice versa, using superannuation for our future and more jobs? - these were not Labor's themes.
Including core labour standards and environment clauses in trade agreements? - anathema for Labor. Arguing the case that budget surpluses in perpetuity slow national development? - too hard. Labor articulating the case for activist government ? - don't be stupid.
Through all this, the ACTU has gone quietly. Policy adopted by its Congress has been forwarded to the federal parliamentary Labor party with no public fanfare and promptly been ignored by them. The oft-repeated conservative lie - that Labor requires permission from the unions to make policy - is fanciful but ceaselessly repeated in the hope of making it a well-known fact.
The most incomprehensible aspect of Labor's 2004 policy pastiche was the readiness to be redistributive on schools but not on tax. The silliest aspect was Labor's pandering to fourth estate preoccupations with fiscal rectitude to the neglect of political common sense. Howard didn't do it and it didn't hurt the Tories.
Few remain in labour's political or industrial wings, from the team that won victory in 1983. Twenty years on, the lessons of the Accord are not first-hand knowledge for today's incumbents in either wing.
Many have sought to diminish it as simply a mechanism for restraining the growth of money wages, but at its best the Accord was more than that. Its real strength was in its being a process for policy development; the Accord was never an inflexible adherence to a suite of immutable policy positions.
As an agreement to restrain wages in the unionised sector of the economy, the Accord is rightly now dead and will not be resurrected. The tragedy for Australia's working people is that Accord's collaborative beating heart was interred along with the raiments of wage restraint.
The course travelled in Australia by Labor and organised labour over the past three years has been a continuation of the same dry track we have been stumbling along together for most of the preceding decade. There has to be a better way.
Where to now?
While there will be changes at the margins, many unions will remain affiliated to and active within the Labor party at federal and state level for years to come.
But detailed policy development is a matter for the parliamentary team and the shadow cabinet in particular at any point in time, subject to broad parameters set by Party conferences from time to time.
For the parliamentary team of political Labor, there are essentially two policy alternatives.
In one direction is the 'zero target' option. Here the Party promises to be good and diligent bookkeepers, and otherwise give voters nothing to vote against. The strategy is to wait until the incumbent Tories become so dysfunctional that they stink to high heaven and get turfed out. Ultimately victory will come, but as the Menzies years show that may be a generation away yet.
In the other direction the Party develops a coherent suite of alternative policies that give voters something to vote FOR. Bookkeeping rectitude is an essential element in the policy bag, but not the sole item there. [The degree of collaboration with organised labour in developing the policy package is important, but a second order issue.]
The choice between these two broad approaches is a matter for Labor's parliamentary team.
For organised labour there is simply no choice. Unions must articulate cogent reasons for workers to join them, or die.
A union movement that fails to advocate its cause, that fails to agitate for change, that does not fight for a better world, has no future.
Industrial labour in Australia is facing its gravest challenge in living memory. Howard is gleeful with a majority in both houses. The Tories see the coming engagement as the crusade of individualism against collectivism.
Whatever its views and policy positions regarding the national interest, the union movement will have to focus sharply on maintaining good order in its own house and fight first and hardest for the immediate interests of its own membership. The industrial wage must be the foremost concern.
Wages. Leave. Hours. Superannuation. Minimum standards. Industrial law. Organising. Job security. Financial security.
On broader social wage issues - tax, health, education, environment, economic management, and the like - biting our tongues has not worked. The union movement must speak its mind on these issues and ventilate its policies.
To claim that the past three election results would have been different had Labor engaged more collaboratively with labour in developing its policies, is to draw a very long bow. The principal lesson to be drawn for the broad labour movement is how extraordinarily hard it is to win office.
A close working relationship between the political and industrial wings of the labour movement is in the best interests of working Australians and their families, and did deliver the country its longest and most stable period of progressive government.
But unions must work with the world the way we find it, not the way we wish it were. If parliamentary Labor declines a closer affair and prefers estrangement to engagement, industrial labour must accept that reality and get on with core business.
Senior Research Officer
Australian Council of Trade Unions
All views, opinions and errors in this article are the author's alone, and should not be taken to reflect those of the ACTU or any other person or organisation.
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