Julia Gillard trapped as an agent of the union movement

THE Labor Party's fixation on a Gillard-Rudd popularity contest testifies to a party in denial about its core problems and in a trajectory of decline until it embraces fundamental cultural and structural change.

Julia Gillard's Labor Party was on display this week - the Prime Minister and Wayne Swan on the Gold Coast at the Australian Workers Union conference, winning declarations of support from Bill Ludwig and Paul Howes with pledges the AWU would mobilise its members in marginal seats, drawing upon Obama campaign techniques. It was union power on Labor's behalf, an idea that has had its day.

Gillard is more dependent on trade union support for her internal position as Prime Minister than were Gough Whitlam, Bob Hawke, Paul Keating and Kevin Rudd. The irony of modern Labor is that as trade union coverage of the workforce has declined dramatically, its influence within the Labor Party has only grown. What does this convey?

The current polls permit only one conclusion: that beneath criticisms over election timing, Craig Thomson, ministers quitting, the mining tax and abandoned budget surplus, Labor is tarnished as a political brand with voters unwilling to trust the party as an institution. The crisis of confidence has penetrated to identity.

Labor is on the edge of an existential crisis that is repeatedly deferred by the mindless mantra of "just do something", or waiting upon another Tony Abbott blunder or some good news that gives a temporary poll boost. Yet the reckoning day is getting close.

The idea of Rudd returning for a couple of months as PM to maximise Labor's election furniture before being liquidated post-election typifies the mentality that cripples Labor. If Rudd returns he should come for the long haul, in office or in opposition, his mission being the transformation of Labor over time.

If he returns, Rudd must strive to project a different Labor Party. And if Labor doesn't want him, that's fine; it can make other arrangements from the prospect of a huge defeat and the demoralisation it brings.

The current Gillard-Rudd contest excludes any outline of competing party visions. Nor is election year the time for such debate. But Labor, having deferred this debate for nearly 20 years, is now trapped: it sits in the election waiting room with an image, structure and culture anathema to most Australians. Rudd knows this; so do many of his supporters, notably Chris Bowen.

Gillard, to an extent, is a victim of events. She has become an agent of old Labor. Not too many years ago, Gillard would lament in private the troglodytes of the industrial movement. In her heart she would fancy herself as a superior party reformer to Rudd, but she is a conscript of her backers. The unions are determined to deny Rudd leadership of their party.

The election this year is not just Gillard v Abbott. It is a judgment upon the modern Labor Party and a serious defeat must terminate the party as it currently exists. In truth, Labor is ossifying as a party. In the slaying of the old Labor Party, high on the list must be the elimination of such powerful trade union bonds. Of course, that is absolute heresy to most caucus members, who were previously union officials.

The terms of the "Rudd return" transaction have changed dramatically. Labor needs Rudd more than Rudd needs the leadership. Knowing that his chances of beating the Opposition Leader are limited, Rudd is wary about any invitation to return yet tempted because he would favour his hand against Abbott.

Rudd's pledge not to challenge Gillard is set in stone. He cannot break that without dishonouring himself and returning as a liar. That will not happen. The issue, therefore, is whether Gillard resigns under pressure. That is highly unlikely. Gillard remains favoured to survive, though she does need a pick-up in the polls.

Nobody seems to have any clue how a transition to Rudd could be effected. This is Rudd's central problem. There are no "wise men" or party elders to facilitate the change. Gillard is convinced her strategy will be sufficient to carry her to September. Rudd, therefore, has little to lose by ensuring that a desperate Labor caucus only gets him back as leader subject to his own conditions, whatever they may be.

The juxtaposition of events last Monday was extraordinary. After release of the Nielsen poll showing a Labor primary vote collapse at 30 per cent (after the recent Newspoll showing 32 per cent) Gillard highlighted her mutual embrace with the AWU.

She told the AWU delegates that "I come to this union's gathering as a Labor leader", not the leader of a party called progressive or moderate or even called a socialist democratic party.

No, she came as the leader of a trade union-based party. That is how Gillard defines herself. It is how she defines Labor. And it is how the majority of Labor sees itself. Yet this is a party turning inwards upon itself.

The Australian community increasingly has another view - it sees Labor as a party of sectional interests growing more remote from the concerns and aspirations of ordinary people. The autopsy on NSW Labor is irrefutable: a government destroyed by bad policy and bad process arising from its union and factional structure.

As the caucus went into meltdown early in the week the AWU offered rock-solid support for Gillard. Outgoing AWU boss Ludwig defiantly raised Gillard's arm. Howes praised her as a "street tough" PM and declared: "I'm proud to lead a union that backs her 110 per cent." Former national secretary Bill Shorten, who is resisting pressure from NSW to defect to Rudd, declared: "I believe Julia Gillard is a tough leader for tough times." Rarely has the AWU assumed such prominence in sustaining a federal Labor leader.

How can Shorten leave Gillard? In 2010 he was an instrumental player in bringing her to office with the argument that Rudd could not win the election that year. What integrity and loyalty does Shorten possess if in 2013 he becomes instrumental in bringing Rudd to office with the argument that Gillard cannot win the election this year?

Gillard told the delegates: "I'm leader of the party called the Labor Party deliberately because that is what we come from. That is what we believe in and that is who we are."

This is a doomed rallying cry. Union influence is stamped all over Labor's current flaws - its alienation from the corporate sector, small traders, aspirational voters, a suffocating industrial relations policy and a hostility to market-based reforms.

With their influence shrinking in the total workforce, the trade unions are more dependent than ever on Labor staying in power. They believe their own propaganda about Abbott - that the judicial inquiries he will launch into union corruption and lack of accountability will constitute a tipping point against union power.

The tactical dilemma the unions face is the same as that of the caucus - Gillard is their preferred candidate but do you follow Gillard to the point of extinction? Many in the NSW Right have posed and answered this question and are pledged to Rudd.

For Labor, there is no escaping the consequence of a traumatic defeat. This time, unlike 1996, Labor must embark on ruthless internal reform despite the blood-letting it guarantees. Returned to opposition, Labor will need a Whitlam-type figure to drive historic party reforms on which its survival will depend.

The most important is the reform most denied. It involves the reduction in union representation at Labor conferences from 50 per cent to no more than 20 per cent, matching union coverage of the workforce. As that coverage declines this proportion should also decline.

That is a core change in Labor identity. It is overdue, a reality concealed by the brilliant 2005-06 ACTU campaign against Work Choices that rendered such help to Labor in defeating John Howard. The new principle, however, would be that union influence within Labor should be commensurate with its stake in the rest of the community. It would be a revolutionary step.

The second reform would be recognition of the rank and file in electing the party leader. Such democratisation has been a recent feature of political parties in many countries. The key is to find the best balance between an ongoing role for the parliamentary party and empowering the rank and file.

In January last year Chris Bowen, a Rudd supporter, proposed in this newspaper a system in which half the votes were cast by the caucus and half by a mechanism that recognised the rank and file. This would invest members with a genuine stake in their own party, creating new hopes of broadening the base.

The obstacle to such mega-reforms is the protracted internal brawl they guarantee. This ensures a permanent argument against them but that only means Labor grows more ossified.

The most intriguing element in the current equation is Rudd's outlook and motives. They seem to shift on a monthly basis. Last weekend he told Sky News' Australian Agenda program that he was in politics for the "long haul". What does this mean?

Many ministers scoff at this. They see Rudd as halfway between dilettante and celebrity, fixated on an "all or nothing" quest for glory before the election, with no interest in remaining in politics if Labor loses.

It is, however, hard to believe that Rudd, if he returned as leader and "saved" many seats, thereby significantly cutting Abbott's expected majority, would not seek to remain as leader. It cannot be a surprise if Rudd decides he still has much to contribute to and change in the Labor Party.