Internal reform won't fix Labor's crisis

nicholson 15june

LABOR veteran John Faulkner is right to argue the party faces political eclipse unless it achieves meaningful internal reform - but his agenda is neither the most urgent nor most important test facing the party.

The Labor Party confronts a governing crisis. And it is the governing crisis that counts. This crisis, while related to the internal reforms demanded by Faulkner, transcends them and is more complex. Indeed, it would be nice to think such internal reform would solve the bigger problem but that is not believable.

Put brutally, Labor has got the worst of both worlds. As its grassroots energy has been strangled, its leadership, bequeathed more authority by this "top-down" power, has failed to display the necessary policy judgment or administrative ability.

The collapse of electoral support for Labor following Kevin Rudd's defeat of John Howard at the 2007 election remains one of the astonishing events of post-World War II politics. That Julia Gillard, installed a year ago as Labor's saviour, has suffered a similar decline only accentuates the crisis of Labor governance. On the evidence, it was not merely Rudd-specific, the assumption at the time. The defect seems embedded in Labor's DNA.

Gillard's tragedy as PM is that she knows the problem but seems unable to resolve it.

She knows where Rudd went wrong: too many premature announcements in deference to media spin; too many expectations without the follow-up delivery; too many switches of positions leaving the public confused about the beliefs and identity of their Prime Minister.

These were Rudd's mistakes but Gillard now repeats them. Consider the list. Gillard opposed a carbon tax before the election and embraced a carbon tax post-election. She chose a formal alliance with the Greens but later denigrated the Greens as extremists. She pledged to "fix" the mining tax but has finished with a model incompatible with state royalty systems.

She offered an asylum-seeker deal with East Timor when it was never in prospect. Then she repeated the blunder by premature announcement of the intended agreement with Malaysia igniting an assault on her policy before it was unveiled.

Above all, by foreshadowing the carbon tax in February without her broader ETS policy, Gillard has seriously jeopardised her electoral standing as PM. More recently, her government declined to act on abuses in the live cattle trade with Indonesia and then reacted to a television program without thinking through almost any of the consequences. These are the mistakes of a minority PM constantly on the run.

Gillard is a conscript of history. The problem, inherent in the way she came to office, is that she never enjoyed clear air or high strategic ground. Rather than commanding events, Gillard has been in a mad political scramble for the whole year, fighting an election, saving her political neck by negotiating a minority government and battling on two fronts: the Greens on her left and the Coalition on the right.

The crisis of governance that Labor faces is multi-dimensional: it penetrates to ideology, policy, organisation and politics.

Modern Labor, originating with Rudd, has chosen to define itself by pricing carbon and Gillard, because of Rudd's retreat, is trapped with no option but to press ahead with a policy that may yet destroy Labor at the polls. The reason is that retreat would bring its own form of political destruction by stamping a second Labor PM and a second Labor government as without conviction, a result utterly untenable for Gillard and for Labor. The nature of this trap is exquisite.

On another level, however, Labor has succumbed to its default instinct of faith in government intervention. This worked in macro terms to combat the 2008 global financial crisis but now constitutes a series of political landmines that Labor seems unable to resist.

The most dramatic, so far, has been the disastrous roof insulation scheme. But the big cannons are lined up: the re-regulation of the labour market, the gamble on the government-owned National Broadband Network rollout and a vast defence procurement agenda based on Australian industry, a fiscal and defence crisis in the making. Each testifies to Labor's revived faith in regulation and de facto protectionism.

The ultimate test of leadership is to understand its times.

For Labor, the omens here are ominous. This Labor era will be judged not by its handling of the global financial crisis but by its management of the resources boom. That requires a set of flexible, pro-market policies based on state government co-operation to handle what former Treasury boss, Ken Henry, called the greatest external shock to the economy in Australia's history.

There is no point endlessly belting the current government for lacking the spirit of Hawke-Keating reformism.

Each Labor generation must re-interpret party faiths for its own times yet the evidence is that Labor is locked in a crisis of belief and identity.

Perhaps it is because over the past 120 years much of Labor's foundational purpose has been achieved. As the working class upgraded to become small capitalists, investors and asset holders, class consciousness and Labor tribalism declined. What else would you expect? The past cannot be recovered because that phase of history is over. Union coverage in the private sector in Australia is now 14 per cent, too narrow a base to define a political party aiming at a majority vote.

Perhaps the question should be: how did Labor adapt so well for so long?

Labor's recent paradox has been its weakening as a party institution combined with its electoral success notably at state level. Many analysts have struggled with this paradox. The party became highly proficient at winning elections under Bob Carr, Steve Bracks, Mike Rann and Peter Beattie.

Its lack of ideological purpose became a plus as Labor devised a new state-based model based on the "leader as salesman", shunning policy risk, relying upon message mastery and spin and careful respect for Australia's conservative political culture. It is wrong to say there was no policy progress.

Yet the real purpose of Labor became to govern, not to reform. It became a party of interests, not faiths. It used incumbency to look after pro-Labor stakeholders, not to challenge the existing order. Its worst fate became not the loss of conviction but the loss of office. Mark Latham was right when he said: "The party's defining purpose now revolves around power and patronage."

Rudd and Gillard came to power as ambitious reformers but also as a products of this culture and Labor's test, despite its poor ratings, is to prove a new reformism for its time.