‘The Write Stuff’, a collection of essays from the Labor Party’s right-wing, has been promoted as a book that ‘plot’s the Party’s return to power’.
It doesn’t do this. A few central things are missing.
The book covers a wide range of policy topics including the importance of unions, addressing of casualisation and job insecurity, digital inclusion, jobs for all, innovation in the economy, economic development in Northern Australia, housing affordability, problems in regional Queensland, the NBN, communications, trade and industry policy, the plight of young people, aged care reform, migration, small business, the importance of new technology in economic recovery and the challenge of confronting climate change without alienating workers in the coal industry.
But no blueprint for Labor’s return to power can avoid the central issues that will confront Labor at the next election. Will Labor seek to provide an economic stimulus to the economy that is greater than the Coalition promises, and if so, how will it fund this and at the same time defeat a Coalition scare campaign around economic responsibility, taxation, and the level of public debt?
It may still be too early to finally determine policies on these strategic issues. We do not yet know exactly what the state of the economy will be as we enter the next election period, possibly towards the end of 2021. But this does not mean that these issues should not be broadly canvassed in a book like ‘The Write Stuff’.
There is no mention in the book of the view expressed by Oliver Blanchard, former chief economist of the IMF, that where interest rates are expected to remain below growth rates for a long time, the issuance of debt without a later increase in taxes may well be feasible. Public debt may have no fiscal cost. If interest rates remain below the rate of economic growth then a government that borrows to finance the initial spending, as well as the subsequent interest bill, will nevertheless see debt fall as a share of GDP. There is no discussion of Paul Keating’s proposition that the Reserve Bank should play a more direct role in assisting the Federal Government with fiscal policy without necessarily incurring more debt. There is no discussion of whether or how Labor will seek to re-condition public opinion around the issue of public debt or why it does not need to if that is the view.
Maybe Labor will limit its argument around economic stimulus by getting more bang for the government buck- for example by spending on social housing as opposed to the home renovation program. But if it does want to borrow more than the Coalition, it needs to focus exclusively on criticising waste in the Government’s spending rather than the size of its debt. If it wants to make the public more comfortable with more debt, given the views of Blanchard as set out above, then it will probably need to do this a fair way out from the election, not try and leave it to the campaign.
Redressing inequality is a recurrent theme that runs through many of the impressive contributions in the book. This reinforces my view that the most basic distinguishing feature between Labor (Right and Left of the Party alike) and the Coalition parties is that we have a greater concern with inequality, especially economic inequality, and we are unconvinced that market forces alone result in a just distribution of wealth and the power that comes with it.
Shadow Treasurer Jim Chalmers acknowledges that economic liberalization has added to wealth inequality, job insecurity, and has favoured financial bubbles over real economic growth. And Claire O’Neill MP acknowledges that because owners of capital get returns that outstrip the rate of economic growth, they consume an ever-greater proportion of total wealth building more and more increased structural inequality into the very fabric of capitalism.
But O’Neill presents no political strategy to confront this problem concluding that increasing taxes on capital is too hard politically. I agree with her that it is too hard to do from the opposition benches, as the last election showed. But an inquiry by a Labor government into inequality, or housing affordability, could be a political strategy for carrying public opinion towards taxation reform as well as other important contributions to ameliorating inequality or housing affordability.
In ‘What Happens Next’ a publication edited by Emma Dawon and Janet McCalman, former Labor MP John Langmore writes that it is time for a Royal Commission into the distribution of wealth and income in Australia. Similarly, the Economics Policy Committee of the Party in Victoria has unanimously endorsed a proposal that a commitment for an inquiry into inequality should be part of the Party’s national platform. The committee suggests that Labor should be committed to fully explaining and measuring the growth of economic inequality and that the Whitlam Government’s Henderson Commission of Inquiry permanently changed the discussion in Australia around the extent and measurement of poverty.
The book contains no significant analysis of how capitalism in the West has changed with the “financialisation” of the economy. Financialisation elevates the significance of the financial sector relative to the real sector; a decreasing proportion of bank loans end up in the real economy. Instead, they bid up share prices and the cost of property assets. Economic growth is increasingly driven by financial markets. The lower and middle classes keep working more for less, and finance has gone from a tool used to provide capital for the production economy to an end in itself, where speculators can even make a living off public and private debt.
Shadow Treasurer Jim Chalmers cautions against a return to “big state socialism”. He appears not to have accepted that big state socialism has already returned but that much of it is socialism for the rich. This is most extreme in the USA where capitalism is dependent on the central bank directly funding corporate debt with new money. Public debt is indirectly financed this way too by the government issuing treasury bonds that are bought by banks, insurance companies, and other wealthy investors and which are then almost immediately bought up by the Federal Reserve, once again with newly created money- a process called Quantitative Easing (QE).
QE did not start with the pandemic. It started with the 2008 GFC. Capitalism is now dependent on it.
There is also plenty of other socialism for corporations here in Australia. Both mainstream parties have contributed to it. David Hayward listed it in an article in ‘The Age’ on 6 January. Super could have been a single public scheme, substantially cheaper to run and probably providing better returns than the current privatized system. Services under the NDIS, aged, and childcare are all dominated by private providers who rely for their profits on government money and who often pay their workers poorly. Public-private partnerships are prevalent in construction projects with firms drawing on private finance which is more costly than public debt and with construction charges that are higher than if the contractors were engaged directly by the government. And who ultimately meets these extra costs? The taxpayers.
Labor’s right-wing, and especially the NSW Right, has always been convinced of its superior ability to read the electorate better than anybody else. It seems that it is not much humbled by its having led Labor to defeat in the unlosable election of 2019.
The book’s editor, Nick Dyrenfurth writes “it is the eternal task of the Labor Right to remind the party… of the pathway to, and purpose of political power…Where goes the Labor Right, so goes Federal Labor.”
On the other hand, Dyrenfurth also maintains that the ALP’s main weakness is a decline in ideas and values. He attributes this to the erosion of a distinctive, guiding philosophy and set of core beliefs binding the Right. A group that once believed in the ruthless pursuit of power for a clear and practical purpose has given way to a shell that seeks power as an end in itself.
A general thrust of the book is that to win the next election Labor must avoid a complex array of policies and instead focus on a handful of agreed policies. But this is not a view that is unique to the Right. A federal Labor MP from the Left has advocated exactly the same thing to me and this appears to already be the direction being followed by Anthony Albanese who has already signaled that better access to childcare and early childhood education will be a policy priority.
But the political reality is that Labor has no choice other than to develop election policies in all areas of interest to a diverse electorate. It can certainly try to emphasize a smaller number of key policies in its election messaging. But Labor does not get to unilaterally decide the issues in the election campaign. Much of the emphasis is determined by the media and this will likely include issues associated with so-called “identity politics”.
In his book, ‘Identity’ Francis Fukuyama says that for some progressives, identity politics became a cheap substitute for serious thinking about how to reverse the thirty-year trend in liberal democracies towards greater socioeconomic inequality. But he also says there is no escaping identity politics. He says the old class-based left has been in long term decline right around the globe. The global weakness of the left is surprising given the rise of inequality within individual countries over the last three decades. He says that the left has been losing out to nationalists for a least 100 years, especially amongst the poor and working-class constituencies. Economic issues intertwine with identity issues in determining human behaviour. “To be poor is to be invisible to your fellow human beings and the indignity of invisibility is often worse than the lack of resources.” People in this position are very susceptible to stories that make them feel more visible and important because they are part of a great nation or great religion.
Despite the emphasis in ‘The Write Stuff’ on focussing on a handful of key policies, the book contains some impressive essays on a very broad array of policy areas. It does not really identify which of the areas should form the core of the key policies for election messaging purposes. It is clear from the budget reply speech that childcare will be one. But Labor will need a few more.
In an early chapter, South Australian senator Mariel Smith writes about the importance of families. She acknowledges the changes in structure that have occurred within Australian families- with single-parent families and blended families becoming more common. Like a number of writers, she focuses on the stagnation of wages in recent years, which has been coupled with rising unemployment and increased insecurity(casualization) of work. She then emphasizes the role of education and skills in advancing Australian families as well as greater support when things go wrong. She says “Labor can leave no doubt that it stands with Australian families”. But she does not really explain when it was that she imagines Labor took some other stance.
A number of other writers also emphasize the importance of unions and increasing wages. Gerard Dwyer from the Shop Distributors Association (SDA) makes the case for the importance of unions in industry policy. He gives the example of the Health Services Union driving the case for improved aged care, the Australian Services Union calling for Local Government to be properly recognized as a critical deliverer of essential community services, and the SDA and Transport Workers Union and Australian Workers Union working to achieve a fairer and more sustainable supply chain in the fruit and vegetable sector.
But unions have always been important advocates for policies to advance the economic interests of their industries. And, on the decline in union membership, Dwyer’s chapter puts the emphasis back on unions themselves, suggesting they must adopt better communications and organizational structures rather than on changes that are required to the industrial relations system.
But as Labor lawyer Josh Bornstein wrote in ‘The Age’ on 31 December 2020′, union membership has collapsed under the weight of some of the most repressive laws in the OECD. These laws breach international legal standards and render Australian unions the only ones in the world that are forced to extend improved wages and conditions to non-union members without any bargaining fee. There are other causes as well for the decline in union membership. But what business model provides a recipe for success when consumers can obtain the same services a business provides for free? The ACTU’s substantial agenda for a jobs plan and job creation receives no attention from Dwyer or any other writer. Maybe it came out too late for consideration n the book? But in any event, none of the writers outline the IR changes that should be included in Labor’s policy priorities.
One of the most important themes is the book focuses on the northern part of Australia. This is linked to the view that results in federal elections in recent years have strongly tended to be determined by what happens in Queensland.
Townsville mayor Jenny Hill refers to Abbott’s Northern Australia White Paper which focused on unlocking the potential of the North by building priority roads, developing water resources, removing red tape building a sustainable workforce, and ensuring effective governance. But 5 years on, unemployment remains unacceptably high in Nothern and Western Queensland, clean water is not necessarily available in many communities and telecommunications is below par. Roads seem to be the only projects the current federal government will commit to and the feeling of “us and them” has grown not subsided. Hill believes there is an opportunity for Labor to lead with industry support and reestablish manufacturing in the North. At the state government level, Anastasia Palazzcuk backed regional development and the regions supported her.
Queensland senator Anthony Chisolm also focuses on Northern Queensland. He asks why it is that in 2007 Kevin Rudd campaigned on climate change and did well in Queensland including in mining and industrials seats of Flynn, Capricornia, and Dawson whereas in 2019 Labor’s vote was decimated in those seats. He says that the number of people employed in towns like Mackay and Townsville has gone backward, together with wages growth, since the peaks in 2011-13. Housing prices have suffered declines in many Queensland regions meaning people feel poorer. The rise in insecure work gives rise to a focus on the short term- whether they have enough money to pay the bills. In 2007 voters were thinking longer-term about what a better Australia could be.
Chisolm says Labor must continue to advocate action on climate change. It has done so consistently but its vote in regional Queensland, a state that will be deeply impacted by climate change, gets worse at each election. He says Labor must also, therefore, assure regional Queensland it has nothing to fear from an incoming Labor government as it will protect jobs and livelihoods. He says the World Energy Outlook projects energy from coal to only be marginally lower in 2040 than in 2018. Demand for coal for power generation will decline by 3 percent but demand for coal for industrial production will increase by 13%. Queensland should continue to supply coal.
Chisolm’s claims are of course highly contested ground. Ian Verrender has written ‘When it comes to investment, coal, particularly thermal coal for electricity generation, has little if any, future.” Jakob, M., Steckel, J.C., Jotzo, F. et al. have written: “Despite decades of knowledge about its contribution to climate change, coal combustion still accounts for 40% of global CO2 emissions from energy use. The power sector must stop using coal without carbon capture and storage by approximately 2050 if the Paris Agreement climate goals are to be achieved1. This will not be easy. Globally, the coal mining industry alone employs about 8 million people and creates revenues of more than US$900 billion a year2. While growth in coal investments is slowing and COVID-19-induced electricity demand reductions have cut coal-fired electricity output in 2020, coal use is unlikely to decline substantially in the medium term. Reductions in the USA and Europe are offset by growth in China, India, and other Asian countries, thus locking in future demand (Fig. 1). African countries may follow next.”
Chisolm argues that royalties from mining in Queensland should be used to set up a long term future for generations in Queensland. This means thinking about new industries in the long run. But it does not mean thinking about them in the short-term at the expense of coal.
Wayne Swan also emphasizes the importance of supporting jobs and reducing emissions and not demonizing the coal export industry. He also states however that over the next twenty years there will be a dramatic reduction in coal production delivered by the market. There appears to be an important factual dispute here with the position argued by Chisolm that “coal use is unlikely to decline substantially in the medium term.”
Apart perhaps from Joel Fitzgibbon who does not want a hair’s breadth between Labor and the Coalition on climate change, nobody within Labor argues against a just transition out of coal. The argument is over the pace of that transition. Anthony Albanese has emphasized the opportunities that exist in making Australia a renewable energy superpower. Nobody really argues against this emphasis either. Nevertheless, the Party, and the Labor Right itself, appear divided on the speed and terms for a transition. And, in the face of unequivocal Coalition support for coal, arguing for any transition away from coal may not win the votes Labor requires in regional Queensland.
Coal miners and their unions are not necessarily interested in alternative jobs such as manufacturing wind turbines or solar panels. As far as unions are concerned, there is different rules coverage. So you will likely get a different response regarding the transition from coal to the production of clean fuels technology from the mining division of the CFMEU than you will from the AMWU which might gain potential members from increased domestic manufacturing (assuming these products can remain competitively manufactured in Australia).
Interestingly, given they consider themselves as the ruthless political pragmatists of the Party, ‘The Write Stuff’ contains no hard-nosed analysis of federal Labor’s electoral prospects in city v regional seats. Adam Carr has done this analysis. Adam has worked for several leading figures of the Labor Right in Victoria and is an outstanding student of electoral numbers. His analysis makes for very interesting reading:
“Labor’s national election prospects have been seriously damaged by its loss of support in regional areas and in Queensland and WA, the two most resource-dependent states.
Labor currently holds 11 out of 46 seats (24%) in these two states. When Labor won under Bob Hawke in 1983, it won 18 out of 40 seats (45%), and in 2007 it won 19 out of 44 (43%).
Joel Fitzgibbon is far from alone in arguing that Labor will never win a federal election unless it rebuilds its support in regional areas generally and Queensland and WA in particular, and that it won’t be able to do that if it continues to argue for an immediate phasing out of coal and gas.
But when we look at the election pendulum on the current electoral boundaries, and we see the eight weakest Coalition seats, the seats Labor would need to win on a uniform national swing, we find a slightly different story.
Five of them are middle-class urban seats: Reid in Sydney, Chisholm, and Higgins in Melbourne, Boothby in Adelaide, and Swan in Perth. Two are the perennial north Tasmanian marginals, Bass and Braddon, and the eighth is Longman in the outer low-income suburbs of Brisbane.
None of these are resource-based seats, only one is in Queensland and one in WA, and only Bass and Braddon are regional.
So what we find, much to our surprise, is that Labor can indeed win a federal election without making major gains in regional areas.
A 5% uniform swing in the capital cities would win Labor five seats in metro Melbourne, and one each in Sydney, Brisbane, Adelaide, and Perth. That would give Labor 77 seats and a majority government.
Of course, a 5% swing in all the state capitals is a tall order. But it’s not as tall as the alternative, which is trying to win by regaining lost ground in the regions and in Queensland and WA.
Apart from Bass, Braddon, and Leichhardt, there are simply no regional seats Labor can realistically hope to win. Monash is on 7.4%, Herbert on 8.4%, Flynn on 8.7%, Page on 9.5%, Capricornia on 12.4%.
As for Queensland, the Brisbane marginals like Bonner (7.4%), Forde (8.6%) and Petrie (8.4%) are now also big asks. In fact, traditional Liberal seats in Melbourne like Flinders (5.6%), Menzies (7.5%), and Goldstein (7.8%) are on similar or better margins. Of course, Queensland seats are notoriously volatile, so these margins may be seen as inflated.
So Labor needs to decide what strategy it wants to pursue, and which side of the policy fence it wishes to be on. Does it want to pursue an urban strategy, focusing on trying to win over more affluent educated city voters by focussing on the issues they care about? Or does Labor want to try to win back voters in Queensland, WA, and the regions by concentrating on basic economic issues and forgetting about urban progressives?”
“The Write Stuff’ comes down pretty unequivocally in favour of the first strategy. And it may be the correct one, or at least an important part of one. But it might not all be quite as straightforward as the writers in the book assume.