What's 'new' in Labor's policy debate?
By Sue Boland
An internal Labor Party debate became public when the federal member for Werriwa, Mark Latham, made several bitter criticisms of ALP policies immediately after Labor's October election defeat.
Latham described the ALP's election manifesto, based on industry assistance, as "a way of allocating more money to more programs of the old kind".
The debate goes back to the 1996 election and the recognition that the ALP's most spectacular loss of votes was among people on incomes below $20,000.
People on low incomes no longer saw Labor as a party of equity and social justice after 13 years of pro-big business, anti-worker policies that resulted in the biggest shift of wealth from wages to profits in Australia's history.
This shift was achieved by keeping wages down, cutting public services, privatising services, cutting public sector jobs, cutting corporate taxes and giving massive handouts to big business.
Tactical argument
None of the protagonists in the debate call for these policies to be abandoned, despite knowing that the economic misery they created was what caused the ALP to lose government in 1996.
The argument is about tactics rather than fundamental policy changes, indicating how few ideological differences separate the left and right factions.
Lindsay Tanner, member for Melbourne, confirmed this in 1995 when he said, "The right has absorbed the left's social agenda and the left is gradually absorbing the right's economic agenda".
The issue is to what extent a Labor government should intervene in the free market. Support for the market itself is unquestioned.
Some of the questions include privatisation and competition policy, the extent of industry assistance, whether tariff reductions should be slowed and how the welfare state could be trimmed.
In order to win back voters, the ALP has to differentiate itself from the government. However, it is in fundamental agreement with the Coalition on cutting labour costs, maintaining low youth wages, cutting corporate taxes and further privatising government services, even if it differs on how to achieve these aims.
All of these policies hurt working people — the people the ALP wants to win back. That is why it is looking for a way of repackaging the policies.
Pragmatism
The Queensland election, when One Nation won 23% of the vote, fuelled the debate. A large proportion of One Nation voters were former ALP voters.
The vote for One Nation reflected disenchantment with policies of the major parties such as privatisation, cuts to government services and inaction on unemployment. Labor responded by toning down its free market policies before the federal election.
Political commentators in the big business media responded to this electoral pragmatism with alarm.
Ross Gittins, in the Sydney Morning Herald on October 12, criticised the ALP's campaign for throwing out "Labor's policies of economic rationalism" and replacing them with "a little protectionism, a bit of industry policy, an attack on the Industry Commission, some government spending and a retreat from enterprise bargaining ..."
The Herald editorial on October 8 advised Labor leader Kim Beazley "to look to [British Prime Minister Tony Blair] for the policy direction New Labor should pursue ..."
'Third way'
Social democratic parties around the world are implementing policies which sacrifice wages, jobs and social welfare for "the good of the nation". But people are increasingly suspicious that these policies benefit only a wealthy minority.
As the real content of these policies is exposed, there is a possibility that a large number of people will reject these policies and the system itself. Some are looking to the left, others to far-right populist parties.
This is why the talk amongst social democratic parties about a "third way" between the "old left" and the "new right" is being promoted so urgently. It is a search for new methods of selling old policies.
Latham, an advocate of the "third way" in the ALP, describes the approach as one which "has moved beyond the methods of both the old Left, based on Keynesian economics, open-ended welfare and centralised government control, and the new Right, with its Thatcherite belief in 'no such thing as society'" (Australian, October 8).
Both Latham and Tanner argue that globalisation of the world economy restricts what social democratic governments can do.
They imply that there is nothing fundamental a government can do to protect its citizens from the market, other than small attempts to ameliorate its most unfair aspects.
While Tanner argues for more government intervention than Latham does, he warned in July that the ALP risks taking a "trip down memory lane" if it falls back on traditional mechanisms for "fixing" the economy. Tanner explicitly rejected the ALP's electoral platform as being "old Labor" and too protectionist.
Market rules
Tanner has argued that some government entities should be privatised if their "products are not used by everyone". He says that things like government-owned insurance companies should be privatised while the water supply should remain government-owned. He also indicated in 1996 that Labor should rethink its approach to indirect taxation.
Latham goes further than Tanner in glorifying the free market. He calls for:
- abandoning regulatory and industry policies;
- radical tax "reform" to increase government revenue and lower business taxes, to be replaced by an indirect tax on expenditure;
- abandoning positive discrimination programs;
- welfare "reform" focused on only two outcomes: moving people into work or into new skills.
Latham argues against "open ended welfare". Presumably this would mean that unemployed workers would be ineligible for welfare after a certain length of time, as in the USA.
He also advocates requiring welfare recipients to repay benefits when their circumstances improve, in the same way that HECS is levied on university students.
While Tanner and Latham are in different factions of the ALP, and while their argumentation on some issues may differ, in the end they both agree that governments must implement neo-liberal austerity to keep Australia "competitive" within the globalised economy.
Appearances count
Beazley responded to Latham at the Queensland ALP conference. He said that the ALP didn't need to follow the paths of Blair and Clinton because "much of the 'third way' is simply catching up with what Australian Labor did in the 1980s and '90s".
Beazley is right. The British Labour Party did learn from the Hawke-Keating ALP how to shift a social democratic party with a left wing further to the right.
There isn't a big gulf between Beazley and shadow treasurer Simon Crean on the one hand and Latham and Tanner on the other. They agree even on the specifics of "mutual obligation" welfare, where welfare is regarded as a privilege rather than a right. This was part of the ALP's election platform.
However, Beazley and Crean know that in order for the ALP to win back voters, it has to appear to look after the interests of workers. Hence its opposition to the GST, to further reduction of tariffs in the car industry and to the sell-off of the remainder of Telstra. These policies were pure electoral opportunism.
The ALP's support for industry assistance does reflect a difference between Labor and the Coalition about how to defend big business. The ALP argues for more subsidies to help Australian businesses compete on the world market, whereas the Coalition argues for fewer.
The ALP presents industry subsidies as a plan for fighting unemployment. Crean and Beazley say that subsidies and tax breaks will be given to businesses only if they guarantee to provide jobs.
Jobs and profits
In the end, neither industry subsidies nor free market policies will provide jobs. Unless workers fight for policies such as a shorter working week with no loss in pay and for the nationalisation of industries that threaten to close down or lay off workers, workers' jobs will always be subject to the wishes of the owners of corporations.
Corporations will always decide the number of employees, what to produce and where to produce it on the basis of what guarantees them the highest rate of profit. If they can increase profits by sacking workers and making the rest work harder, they will do that. If they can make more profits by closing down a plant and investing elsewhere, they will do that.
The clearest example of how industry assistance fails to protect workers is the BHP steelworks. The Labor government poured hundreds of millions of dollars in subsidies into BHP, which supposedly guaranteed to save jobs. The result was the sacking of thousands, and now the closure of the steel plant in Newcastle.
The"third way" of Blair is simply the repackaging of neo-liberal views. The ideas of Latham, Tanner, Beazley and Crean are tired and failed ideas which have been around for over a century and are now being repackaged as "fresh and exciting".
The secretary of the Queens Beach (Queensland) ALP branch, Steve Davis, a former meatworker, accuses Latham of accepting that "the economy exists to serve the imperatives of business, not the needs of people ... The unemployed are victims of an inadequate system ... All that Latham has given us is survival of the fittest dressed up in warm and fuzzy terminology."
These comments are a neat summary of Latham's views, but could also be used to describe those of Tanner, Crean and Beazley.