Labor In Power

This article from the November 2013 edition of the IPA Review is written by Director of Policy at the IPA, Chris Berg.

When Simon Crean announced his retirement in March this year—off the back of an abortive Kevin Rudd spill—he said that of the 23 years he had spent in politics, the last three years had been the toughest.

It was an extraordinary statement. Crean had been a senior member of the Labor Party’s leadership team. He and his colleagues were in control of all the machinery of the Commonwealth government; control they had fought for more than a decade to achieve. And to top it off, Crean was Minister for the Arts— not traditionally one of the most controversial or high-stakes portfolios, but a rather pleasurable one.

No, Labor has not enjoyed being in government at all.

In retrospect Labor brought into office all the tensions which would destroy it.

In 1983, when the party last formed government federally, around half the workforce was a member of a union. When Kevin Rudd took power in 2007, less than twenty per cent were union members.

Unlike Bob Hawke—who had a decade as Australia’s top unionist before he entered parliament in 1980—Rudd was not a union man. Rather, he was a bureaucrat. Rudd came from the technocratic side of politics.

Yet he was a bureaucrat in a party of unionists. Once they had been comfortably installed on the Treasury benches, it took just a small slide in Kevin Rudd’s polls for the union power-brokers to assert themselves. They had no need for the bureaucrat anymore.

The June 2010 spill was catastrophic for Labor, not because Rudd was in any way superior to Julia Gillard, but because it confirmed the worst about the party’s bitter, union-dominated factions, who believed the office of prime minister was theirs to be given—and taken away.

So there is no small irony that immediately after the 2013 loss, factional warlords like Stephen Conroy were trying to stitch up the ALP leadership in the name of ‘unity’.

It wasn’t disunity that crippled Gillard’s prime ministership. It was the fact that she had been installed by unknown union powers outside the eye of the public who had decided to tear down a prime minister before they’d even had a chance to recontest a single election.

The Labor Party in 2011 and 2012 was united. But voters didn’t like the united government they were being offered. What pleased the factional warlords did not please the voters.

The June 2010 spill was a disaster. It looked bad because it was bad. There is no question that it will go down in history as infamously as Alan Reid’s 1963 photograph of Arthur Calwell and Gough Whitlam waiting outside in the dark as 36 faceless men of the Labor National Executive decided Labor’s election platform.

The only difference is that this time, rather than waiting under street lamps in the dark, the Labor leadership watched Lateline as union bosses revealed who the new prime minister would be.

NEUROSIS INTO POLICY

The spill was Julia Gillard’s original sin. Could have any prime minister recovered from such a badly conceived coup? Perhaps, but she never did. Gillard had no interest in reforming Labor’s malignant relationship with the union movement. Instead, she pandered to it. Just think of the numb sloganeering which was the hallmark of the Gillard leadership. The pursuit of ‘Labor values’ became the sine qua non of public policy development.

Rather than projecting confidence, the endless repetition of ‘Labor values’ suggested profound uncertainty about what the government believed. It was never clear what values those actually constituted. The phrase was nothing more than a marker around which despondent Labor supporters could rally.

It got worse. Gillard’s infamous ‘we are us’ speech at the Labor conference in December 2011 was only the most awkward instance of the ideological team-building that the ALP indulged in during her prime ministership. The ‘we are us’ speech tried to conjure a camaraderie that wasn’t there; it imagined that the union movement was still a central force in Australian society. But unions haven’t held that position for decades.

The most egregious practitioner of this rhetoric was the Treasurer, Wayne Swan. He also was the member of government who tried hardest to translate the nebulous Labor values into public policy. The June 2010 spill was as significant for Wayne Swan as it was for Julia Gillard. Until the spill, Swan played second fiddle to Rudd and Rudd’s grandiose plans. After the spill, it was all up to Wayne. He, and he alone, was responsible for Australia’s public finances.

Swan was manifestly unable to control the Commonwealth budget. Under his leadership the Treasury repeatedly over-estimated economic growth, nixing any hope that Swan had that the economy would grow its way back to surplus without any significant structural changes.

(It didn’t help that 2010 also saw the departure of the most credible member of Labor’s team—the finance minister Lindsay Tanner.)

The Treasurer’s response was two-fold. First, he tried to tax his way out of this problem. From opposition the Coalition recorded forty-three new or announced tax increases by Labor since 2007. Fully thirty-two of those date from after the spill.

Under Rudd, tax changes had the air of ‘reformism’. But under the Gillard and Swan team tax increases were solely designed to plug holes in the budget. Hence the embarrassing spectacles of tinkering with the fringe benefits tax on cars, or the bank deposit tax to cover the government’s deposit guarantee, or the increase of the Medicare levy. These were transparently desperate measures to try to prop up the Commonwealth books. By tinkering with the tax code, Swan hoped he could will the budget to surplus.

To be fair, the Treasurer was let down by the revenue forecasts of his own Treasury, which projected much higher tax receipts than occurred. But he ought not to have been. A Treasurer who stakes the budget on the imprecise art of economic soothsaying is asking for trouble.

Swan’s second response to the budget crisis was to fixate on Labor values.

In March 2012 he took a page out of Kevin Rudd’s book and wrote a four-thousand word essay in The Monthly on inequality. The essay’s hook was the then-fashionable Occupy movement, who thought that the world had been divided into the 99 per cent of masses and a wealthy elite one per cent class.

Yet, unbelievably, Swan’s take on inequality was even more simplistic than that offered by Occupy.

For Swan, the one per cent were not one per cent of the population at all. Rather the one per cent constituted three, specific people who he said held Australia back—Twiggy Forrest, Gina Rinehart, and Clive Palmer. ‘Politicians have a choice,’ Swan wrote, ‘between standing up for workers and kneeling down at the feet of the Gina Rineharts and the Clive Palmers’.

It’s not even right to call this class warfare. Three miners do not make a class. It was displacement. Swan was blaming his bungled policy development on the few prominent people who opposed the mining tax.

We saw this sort of rhetorical manoeuvre a lot. Labor in government suffered from a victim complex. Rather than taking control—being the incumbent government—they saw enemies and spoilers on all sides.

For Swan, those spoilers were the small mining companies he had failed to make a deal with.

For others, the prime spoiler was Tony Abbott and his ‘relentless negativity’—as if there was nothing to be negative about.

But for most in the government, the biggest spoiler was Rupert Murdoch and his newspapers.

Believing the government to be a victim of negative media coverage, the government’s bruisers— communications minister Stephen Conroy and firebrand senator Doug Cameron among them—pushed hard for press regulation. Happily when Conroy’s legislative package was put up in March 2013, it collapsed within a week.

Of all the legislative debacles of the Labor government, the media regulation was the most revealing.

It was intimately tied into the government’s internal divisions. The media reports which most infuriated the government were those which covered its leadership tensions.

But more than that, the media regulation debate exposed a Manichean us-versus-them mindset which had developed within the Labor Party since the June 2010 spill. The government saw no problem with using the power of the state to punish Labor’s critics.

For all that could be said about Rudd’s first tenure as prime minister, it is hard to imagine Labor putting up any policy as regressive and malicious between 2007 and 2010 as the media regulation proposals under Julia Gillard.

Certainly, arguments for media regulation took a life of their own. The Finkelstein report offered some flimsy justifications, and a cadre of journalism academics lined up with their personal bug-bears and hobby horses.

But no fair-minded observer could deny that the quest to regulate the press was a bare and brazen attack on those in the press who were critical of Julia Gillard and her government’s questionable achievements.

The irony in all this? Conroy’s failure to negotiate media regulation through the parliament was the spark for the failed March 2013 leadership spill. The laws that many Labor politicians wanted to stop the reporting of leadership speculation created that speculation.

Almost every part of the Gillard government’s legislative agenda was shaped by its post-Kevin rootlessness. The government was institutionally controlled by a dwindling union movement. It was unsure of its purpose or values.

And, in desperation, it tried to substitute philosophical purpose for division and victimhood.

‘We are us’—and we are opposed to them.

THE LABOR LEGACY

So after six years of rancour and division where has Labor left Australia? As leader of the House of Representatives, Anthony Albanese was always proud to say how many pieces of legislation the Gillard government had passed through the hung parliament. This is an extremely dubious measure of achievement— the art of good government is not merely the art of pushing through as many changes to the law as possible. Many of those new laws have been positively harmful. They increased regulations. They increased taxation. They expanded and entrenched the institutions of state power.

The Abbott government has promised to eliminate some of the most prominent Labor-era policies. The carbon tax is all but certain to be eliminated. The mining tax is likely to go as well. One of the first acts of the new government was to shut down a few new bodies that had been developed under Labor—the ‘independent’ advisory, the Climate Commission, for example.

These moves are welcome. But Labor was busier than the Coalition’s repeal agenda suggests. There are many government institutions which were founded or empowered during their time in government. The bodies matter because they provide the institutional support for big government years down the track. They hand out research grants, run public campaigns, and lobby governments for new laws, taxes and regulations.

One of the most egregious is the Australian National Preventative Health Agency—explicitly set up as the machinery of the Nanny State, with a $57 million budget to ‘drive the national capacity for change and innovation around preventive health policies and programs.’ In practice this has meant advocacy for Nanny State taxes and restrictions.

Such institutions are designed to lay the groundwork for legislative change and to create a sense of inevitability for liberty-reducing measures. Another obvious one is the Australian Human Rights Commission, which was empowered during the Labor years. These bodies may seem like small-fry—they are tiny constituent parts of a bloated government—but leaving bodies like ANPHA and AHRC intact has the potential to do lasting legislative damage to individual liberty, rights and responsibility.

Finally, the last six years have critically damaged Australia’s fiscal position.

Wayne Swan often claimed that ‘if we are going to be Keynesians in the downturn, we have to be Keynesians on the way up again.’

Yet Swan presided over a raft of new spending measures which push the surplus further out: for example, the National Disability Insurance Scheme, and the Gonski education funding. Having failed to compensate by cutting in other areas of government, these policies promise to be a further fiscal drag on the budget.

Will the Abbott government be able to right the ship of state? Hopefully. But the Coalition has unfortunately committed to a similar welfare expansion in its lavish paid parental leave scheme.

Furthermore, the last few weeks of the election campaign featured frantic expectations management on when the Coalition would be able to bring the budget back into surplus. Where in early 2013 the now Treasurer Joe Hockey was promising a surplus in the first year of a Coalition government, during the campaign he was promising a surplus by the end of the decade. This is a serious problem.

The Nobel Laureate James M. Buchanan argued that budget deficits are a political trap. Governments face every incentive to spend more money than they earn, and no disincentives to pay down debt. If the Coalition doesn’t wrestle down the budget quickly and aggressively, it will face inevitable pressure to push the surplus further and further into the future.

Ultimately, the legacy of the rash decisions made by Kevin Rudd during the Global Financial Crisis and those made by Julia Gillard afterwards could be a long-term deterioration of the Commonwealth budget.

Labor’s supporters will analyse every personality clash and leadership soap-opera of the Rudd and Gillard governments for years.

But Labor’s problem wasn’t personalities. The party’s time in power was defined by philosophical aimlessness, a harmful relationship with the moribund union movement, and a crippling victim complex.

And if the institutional changes that Labor made during this time survive, its legacy will be far more important—growing the state and enveloping it further and further into to the lives of its citizens.