Abbott waves white flag on labour reform

The Liberals are looking like amateurs

THE farcical start to election 2010 is Tony Abbott coming under attack for clinging to Work Choices when, in fact, he is presiding over an ignominious retreat by abandoning the generational long Liberal Party commitment to labour market reform in the cause of job creation.

The extent of Liberal retreat is stunning. This is the first time since the early 1980s that the Liberals have not contested Labor over the need for labour market liberalisation. It is a turning point in Australia's economic debate. It points to the decline in economic reform sentiment that will erode the foundations of Australia's present success.

The reason for Abbott's retreat is understandable, but there is no excuse for his inept handling of its rhetoric. Julia Gillard got it right that Abbott is unsure precisely because he is subjugating his personal preference, a common necessity in politics. Abbott is instinctively uncomfortable when agreeing with Labor and prefers to maximise the differences.

His new position is necessary in pragmatic terms but should have been announced and bedded down months ago, not unveiled on campaign eve by a leader stumbling about and unable to get his lines right. The Liberals look like amateurs, neither ready to govern nor expecting to win. Yet they had three years to sort out their Work Choices position and avoid this debacle. Indeed, it is possible that Abbott may not recover from this fiasco and has gifted Gillard the unbeatable break she needs.

The debate of the past 48 hours is that of a nation mired in complacency and psychologically divorced from the profound economic crisis now engulfing Britain, Europe and America.

The Labor Party and the trade union movement have won the labour market debate and any

hopes for genuine reform seem postponed for many years.

This will undermine over time Australia's economic future with the 2010 election proving again that the story of modern politics is the sacrifice of national interest policy on the altar of short-term poll driven politics.

Having won the 2007 election with a massive assault on Work Choices, Labor has now intimidated the muscular Abbott into an abject backdown. Gillard's labour market re-regulation in the past parliament is the new norm. Abbott's retreat duplicates John Howard's abandonment of the GST before the 1996 election. His statement last Saturday that he had "well and truly absorbed the lessons of the Coalition's 2007 defeat" made clear that any industrial reforms would be put before the people at subsequent elections and implemented only upon any mandate won. This is sound, safe, unobjectionable and democratic. But unlike Howard with the GST it is unlikely to happen one further poll down the track.

Note, however, that media demands that political leaders declare a measure will "never ever" be undertaken are absurd and violate democratic practice because circumstances, public opinion and economic needs are in a constant state of flux that demands policy changes. In truth Abbott looked panicked on Monday with his exaggerated and repeated declarations that Work Choices was dead, buried and cremated. His desperation undermined his purpose.

The consequences upon Abbott's retreat are far-reaching. He is not just conceding labour market reform is a negative. The entire debate assumes the absurd proposition, as spun by Labor, that any Coalition reform equates with a Work Choices revival. In addition, Abbott knows that the new Senate will almost certainly be controlled by a Labor-Green alliance guaranteed to defeat any Coalition reform. In short, there is little point in Abbott fighting for a risky policy that is doomed in the next Senate anyway. The idea that Abbott might sneak through by regulation reforms that he cannot legislate is untenable since regulations can be disallowed by either chamber and the new Senate would not tolerate such action.

If this analysis seems gloomy, that's because the outlook for job creating labour market reforms is gloomy.

The problem lies in Australia's success. With unemployment at 5.2 per cent and assumed to be heading back towards 4 per cent there is no strong constituency for labour market liberalisation. The Howard government's over-extension into Work Choices and the ACTU campaign at the previous election branded such reform as a heartless stripping away of employment conditions. It may require a future economic crisis to turn such perceptions.

In February this year Abbott was more audacious. "Work Choices is dead but the Rudd government has gone too far," he said. "It's got the balance wrong. It's given too much power to the unions at the expense of business, workers, the unemployed and Australian productivity. By contrast the Coalition has been the party which under the Howard government created more than two million new jobs." Abbott's preference at that time was to exempt small business up to a threshold of 20 employees from the unfair dismissal laws. This was hardly a radical break from Labor's threshold of 15 employees. But Abbott has abandoned even this modest reform, though before Work Choices it was Howard's policy for many years on which he won several elections.

The scale of Abbott's retreat takes the Liberals back beyond the Howard years and beyond the Hewson agenda. There will be no push to reinstate individual contracts even though they were legislated originally in 1996 on Coalition-Democrat votes. All this testifies to the sheer extent of ground surrendered since Howard, Peter Reith, Peter Costello and Nick Minchin served as the formidable team that drove Australia towards a more flexible labour market.

The irony is whether Abbott would have been better served to have gambled, stood upon his February position and engaged Labor and the trade unions in a massive brawl. It would have suited his personality. The reality, however, is that he would have played into Labor's hands and guaranteed an entire campaign around Work Choices. This would have been Labor's election dream. And Gillard, as architect of Fair Work Australia, has always been keen to run on industrial relations at this election.

The further truth is that business protests against the Gillard settlement have been weak; community organisations have no interest backing job creation via a more flexible labour market; and there is public tolerance of the Labor Party's great lie that the sole obstacle to more jobs is lack of skills rather than Labor's laws discouraging hiring. For Australia's future, it is a dismal start to election 2010.