The record of the Australian Labor Party: high hopes and big disappointments

[This talk was presented at the A Century of Struggle — Laborism and the radical alternative: Lessons for today conference, held in Melbourne, Australia, on May 30, 2009. It was organised by Socialist Alliance and sponsored by Green Left Weekly, Australia’s leading socialist newspaper. To read other talks presented at the conference, click HERE.]
By Jeremy Smith
Why have we scheduled this talk? First, I want to mark part of the historical memory of the working class in a modest way. Second, it helps pull apart the myths of the Australian Labor Party (ALP) and Laborism. Third, it addresses a century-long debate which goes back to the Victorian Socialist Party (VSP) and the Wobblies (Industrial Workers of the World, IWW); a debate which remains unresolved. The high hopes held for Labor when it has been elected and the bitterest of disappointments felt after its failure to deliver leave for us lessons too easily forgotten. We need to remind ourselves of those lessons.
I will focus on expectations held of Labor coming into office (and the high hopes dashed). The record of the ALP’s capture of government federally suggests it is hapless to say the least, often taking power in periods of impending crisis and not in the upswings of the capitalist cycle. This talk breaks into two parts:
- From Labor prime
ministers Andrew Fisher through to Jim Scullin where hopes of protection from
poverty were confounded
- The line of continuity
from Gough Whitlam through to Kevin Rudd
which involved a process of ``modernisation’’
Labor after Federation through to the Great Depression
Labor’s success in
Labor lost power for a
short time but was elected to federal government again in 1914. Entry into World
War I tested the bid of internationalists for strong opposition to war (which
was echoed in the VSP and Victorian Trades Hall Council) and the pro-Empire nationalists.
Fisher said during the 1914 election campaign that
For a time, the
pro-Empire nationalists, led by Hughes, prevailed. Disappointment with the
Labor government’s unwillingness to protect workers in times of heavy
profit-taking (and in fact, it attacked workers who struck for better wages) ensued.
The indisputable conclusion of the war years must be that opposition to conscription
spoiled Hughes and the Labor leadership’s commitment of all-out sacrifice for
the war. It precipitated an undeclared split when Hughes and 21 others walked
out of the Labor parliamentary caucus. More than that, the fatigue from poverty
and inequality exacerbated by war effort left federal Labor with little
support.
The 1917 NSW general strike
showed the loss of faith in federal Labor. Hughes helped to form the new
conservative party (the Nationalist Party) after he walked out. Split and
deeply demoralised, Labor lost in 1917. It slid from national preeminence to
the purgatory of opposition until 1928-29. The 1920s is remembered mythically for
``prosperous times’’. However, the return to pre-war living standards was uneven
and took time. In fact, it was a period of cyclical recessions and booms, a bit
like the 1990s. There was a slump coming into the 1929 election which prompted
the conservative Stanley Bruce government to try and undo the arbitration
system as a prelude to an all-out assault on the trade union movement.
Scullin and the Depression
Labor ran in the 1929 election on a straightforward
platform: ``Before: Bruce-Page government: Slump. After: Labor
government: Prosperity.’’ Labor’s prospects seemed good at the point of their
1929 victory. Labor held all Australian governments in 1929. The federal swing
to labor had been fairly uniform (outside of
Labor soon faced problems that it had no experience
in and had not even guessed at while in opposition. Severe budget deficits, a
critical imbalance of payments and declining commodity prices on world markets
were difficulties that Labor’s leaders had not anticipated. They were naïve
economically—indeed clueless—and lacked the will to pursue socialist solutions.
They thus drifted inexorably towards the prevailing orthodoxy of monetarism. Remember
that, strictly speaking, this was the pre-Keynesian era. Whilst John Keynes was
a working economist of some note at this time, his major works setting out the
Keynesian system of public financing were yet to be penned. There were those
who believed in an expansionary approach to government spending (in the Labor
Party’s left wing for example), but the dominant economic theory of the day held
that balanced budgets were necessary under nearly all circumstances.
The Depression crashed
down on the Labor government a mere two days after its cabinet was sworn in. Without
doubt this was rotten luck. Early in the government’s term, Sir Otto Niemeyer (an
establishment figure from the Bank of England) toured
Note that all governments
retreated into protectionism during the Great Depression.
Resistance and `rats’
Of course, there was significant
resistance from within the Labor Party and amongst the union movement at large.
At the government level different plans were developed to deal with the crisis.
Joe Lyons hatched a plan of Labor’s right wing. ``Red Ted’’ Theodore drafted a more
expansionary version of Scullin’s approach. It
was evident that Labor was unable and unwilling to fulfill its election
promises.
From Labor’s left came
the Lang plan (after New South Wales Labor Premier Jack Lang). It contained
three elements: default on interest payments to British bondholders, abandon the
gold standard and reduce interest on government borrowing to 3%. There was nothing
radical about this. The gold standard was defunct. Lang had rejected ``repudiation’’
of the debt at his first election (even when the NSW peak trade union body, the
NSW Labor Council had endorsed it), so the default on interest payments did not
signal a comprehensive moratorium on debt repayments.
The Lang Plan went
nowhere. However, it marked a distinction between Lang Labor and the federal
party. Labor was devastated at the 1931 federal election.
Jack Lang
The Lang Plan set up a
lasting conflict between federal Labor and Lang Labor, which became two
separate parties. The struggle was fought out in the federal party and in
faction fighting in NSW. Was Lang a viable pole of attraction for left opponents?
Politically, he was a redemptive figure and a demagogue; the ``Big Fella’’ as
his supporters called him. But he too implemented deflationary measures, whilst
railing with fiery rhetoric against the ``money power’’ of British finance. He
also begrudgingly went along with the 1931 Premiers Plan, which included a 20%
cut in government expenditure (including the notorious 10% cut in wages). Things
came to a head in 1932 in Lang’s confrontation with the conservative
Some brief comment on
the John Curtin and Ben Chifley administrations are worth making. These were
wartime governments with wartime emergency measures. They instituted a high
level of regulation of business and finance. The private banks resisted after the
hostilities of war ceased. If there was an aim it was the ``light on the hill’’:
full employment, but not socialism. The resistance of private banks to
regulation (which was intended to contribute to the goal of full employment) led
Chifley to the botched bank nationalisation campaign of 1949. This was not a socialist
program, but the extension of regulatory powers necessary for reconstruction. They
didn’t sell it really as they were too fearful of an anticommunist backlash to
mount a serious campaign. In fact, the idea unified conservative forces
politically. The right was able to use bank workers even as their cadre (note
that bank workers were quite privileged in those days). At the same time, Labor
launched an attack on the coalminers’ union. Labor’s perceived inability to
``control communist-led unions’’ strengthened Robert Menzies new Liberal Party.
Labor lost ignominiously in 1949.
From Whitlam on: modernising neoliberalism
The early achievements
of Gough Whitlam’s 1972 Labor government can be credited to the efforts of the
social movements. An early milestone was the end of participation in the
Subsequent to these
early achievements, Whitlam funded a significant expansion of tertiary education
and did so on the back of the abolition of fees and the establishment of a living
student allowance. All levels of public education were expanded. Note that this
designed to modernise
The universal health
insurance scheme Medibank was a memorable reform. It matched insurance schemes
of other OECD countries. It was savaged by conservative government led by
Malcolm Fraser, which defeated Whitlam in 1975. Multiculturalism was a term
coined during Whitlam’s government which included the first minister for multiculturalism
in Al Grassby. In fact, the end of the notorious White Australia policy had
come earlier in response to lively student protests in the mid-1960s. Those
protests focused the perception that
The talk of modernisation
and nation-building foreshadowed Bob Hawke-Paul Keating governments of the
1980s and ‘90s. It was laced with a rhetoric of ``new nationalism’’ to
distinguish it from the anachronistic Britain-loyal Liberals of the Menzies era.
They called for a new flag and anthem, which didn’t amount to much but was
important symbolically. Its policies were offset by fierce anti-US statements
borne of backbencher frustration. At the cabinet level, however, an independent
role in international affairs was championed.
In matters of the state
and the economy, Hawke-Keating sympathiser Paul Kelly (in The End of Certainty)
sums matters up well: deregulation, once started, develops a momentum of its
own. If Kelly is right, then Whitlam was the starting point.
Whitlam started the
long process of dismantling
The Hawke-Keating years and the Accord
The key innovation of
the Hawke-Keating governments was the Prices and Incomes Accord. It was the centerpiece
of Laborism in the 1980s. Wage ``restraint’’ was supposed to be the trade-off for
a promised comprehensive improvement in the ``social wage’’ i.e. welfare,
increase health and education spending etc.. Once inflation was brought under
control, then the real purchasing power would be restored. Tax reform would be
brought in for low income earners. This was a big promise, but it was not long
before it was disowned.
Medicare [the original
Medibank was savaged by the Fraser government]—the main lasting welfare reform
of the era—came with the first tranche of ``restraint’’. There was no indexed
pay rises to compensate for the inflationary effects of the Medicare levy
introduced with the public health insurance system.
Taken as a whole, there
were few positive results in terms of the social wage early on. Over the course
of Accord Mark II (1985-7) there were in fact cuts to public spending. Over the
era of the different versions of the Accord, calculations of workers’ lost real
purchasing power vary depending on which source you consult or what period you
are measuring (and then whether you measure average weekly earnings or take
award pat rates as a guide). One reliable estimate is as follows: between the
years 1982 and 1993, 17-28% was lost across award rates. Women workers suffered
disproportionately. Look at this as a ratio of wages: profits (this is an
indicator of the terms of struggle of labour and capital). Wages as a
percentage of GDP fell from 74% when Hawke took power to 63.3% by 1990. Tax
relief was promised. But the largest tax cuts went to the top wage and salary
earners – so much for the claims that Accord would reduce the gap between low-
and high-income earners. Taxation increased overall under Hawke, despite the
fact that the government embraced economic rationalism.
It is widely recognised
in the trade union movement today that the Accord failed to meet its promises. The
few of us who forecast that outcome in the early 1980s were treated as pariahs.
Perhaps the greatest problem was the strategic and political loss, and not just
material losses in purchasing power. A clue to this was that the Accords Mark
III and IV introduced the principle of demonstrable productivity gains into the
strategy of union negotiators. Clever negotiation became the real art of union
business rather than workplace organisation and activity. This hints at the
larger effect of Accord politics. The Accord process bonded union
leaders to the government in an unprecedented fashion. The business of trade union
organising became trying to wield influence at the level of government policy
making and implementation, not shopfloor and workplace organisation and
campaigning. Grassroots workplace structures declined through neglect in many
places. Above all the
government’s relationship with unions was used to temper union militancy and
independence: the smashing and marginalisation of the Builders’ Labourers
Federation, the pilots and meatworkers as the rest of a union movement was unwilling
to break politically with the ALP and its Accord corporatism. Even the
state-based struggle of Victorian nurses in 1986 felt the straitjacket of the
Accord. This was the political cost of the long Labor period of 1983-1996 and
we’re still paying it. It left most trade unions in no condition to take
advantage what benefits could be salvaged from enterprise bargaining. The low paid
lost the benefits of centralised wage fixation.
Welfare and Indigenous rights
A promise to tackle Indigenous
issues emerged. It was symbolised in the pledge to extend Aboriginal land rights.
Hawke didn’t have the stomach to stand up to far-right scare campaign in the
mid-1980s about the supposed seizure of resources which would be locked away
under land rights. The campaign was well backed by the Western Mining Corporation
and its key ``New Right’’ leader Hugh Morgan. A treaty was pledged in its place
but nothing materialised. During the 1988 bicentennial of British colonisation,
Hawke resisted strong calls for a treaty. Hawke settled for a 10-year ``reconciliation’’
plan which may have had some merit in itself, but in this context postponed
talking on all issues. Howard would later withdraw support in his well-known
stand-off with nearly all sections of the Aboriginal movement. Of course there
was no movement on Indigenous social issues.
Statistically, decreased
inequality between households can be measured during the long Labor decade. However,
the quality of welfare, education and health enjoyed as public goods declined. To put this another way, the
ability to enjoy something closer to universal access to these as community
resources declined under the growing economic rationalisation of welfare and
the public sector. User-pays principles sacrificed the ideal of universal
access and social rights. This was sold as the modernisation of
More than anything
else done by the Labor governments, this underlying shift laid the ground for John
Howard’s right-wing government’s exercise of ``mutual obligation’’ regulation
of welfare and ``voluntary fees’’ for education and the expansion of private
health insurance.
Labor achieved what no
Liberal government dared to try: the deregulation of the finance
sector. Foreign banks were admitted and the Australian dollar ``floated’’. Major
assets were sold: the Commonwealth Bank and Qantas were the largest. Competition
was introduced for Telecom. The public
sector was infused with the principles of economic rationalism while the
ranks of the senior public service were re-staffed with the students of the neoliberal
schools of public administration.
Kevin Rudd – continuity with modern Laborism
This is a living
history so I will only offer a few comments. Two major sets of undertakings
were in the spirit of Labor’s 2007 campaign, if not spoken in fine detail of
policy statements:
The environmental crisis
and global warming. In the rhetoric before the election, it was all about the
Howard government’s failures: it was out of step and it denied the reality of climate
change when only a shrinking minority did so. Labor was short on detail, but
what else could the electorate think but that a major change of direction was
blowing in the wind? The Kyoto Protocol was signed, which looked like a good
start. Then came the Garnaut Report, by economist Ross Garnaut reporting on
scientific matters. The result was inadequate greenhouse-gas emissions targets and
little real action to reduce emissions; a disappointment to everyone alarmed
about global warming, and even to Garnaut himself. At the time of writing, Rudd’s
proposed a carbon trading scheme is in crisis and held up by the Senate. Its
design guarantees billions in free pollution permits to the worst carbon polluters.
More than 18 months since the Rudd government’s first election, there is next
to no progress in this area in which no delay is affordable.
Workchoices. A program
of staged abolition of Howard anti-worker industrial laws has been effected in
favour of ``Workchoices lite’’. Detailed analysis is available elsewhere and I
will make one general comment only. While marginally less draconian features can
be found in the Labor government’s legislation (in terms of a wider award
safety net for instance), the core Workchoices provisions that have sharply
curtailed union rights to organise are reproduced in full.
Rudd exemplifies the
character of the ALP in government. There are no vestiges of the language of
gentle social-democratic reform (much less the socialisation objective). He is
louder than any other leader about nation-building. In the past, nation-building
in
Conclusion
The test of politics is what is done when there is a crisis. At the height of the ALP’s rhetoric, the ideal of socialism was sold to working class with little conviction or substance. Labor’s true colours can be observed in its history: Labor is a national capitalist party, the nationalist party par excellence that the traditional conservatives cannot be. It is the political vehicle best placed to meet the national interests of Australian capital, especially in times of crisis.