Shorten shows another way

Leak cartoon

AS the delegates to the ACTU congress left the gala dinner at the Sydney Convention Centre on Wednesday night, they had a spring in their step and a renewed sense of hope. They had just seen two brilliant speeches by former prime minister Paul Keating and former ACTU secretary Bill Kelty.

By the end of Kelty's speech, the room was punch drunk, having witnessed a masterly performance from a labour icon who invoked the movement's traditions and gave voice to the historic purpose of both its wings - industrial and political.

Unlike Julia Gillard's predictably cloying and insipid speech delivered earlier that day, Kelty was frank about the standing of the party and the unions.

Importantly, he outlined the great challenge for the labour movement: to focus on economics rather than politics, and to regenerate the co-operative relationship of the past to deliver reforms in the interests of working people.

What brought delegates to their feet, and prompted Bob Hawke to storm the stage and lead unionists in song, was Kelty's unvarnished view of the labour movement today.

The "sense of hope and trust that governments and unions" could manage an economy in transition and deliver "a better future" for working people "has retreated," he said.

Rather than blame the media and the opposition for the government's woes, Kelty told the delegates what they instinctively knew - that it is nobody's fault but their own.

Despite the self-criticism and the bleak outlook, the dining room, made up of unionists, party officials and MPs, lapped it up.

They cheered and they clapped. But are the Prime Minister, who heads a party that has never been more unpopular, the cabinet and the party organisation listening? They should be because Kelty knows what to do about it, even though he concedes Labor should start planning for electoral defeat.

"Why is the Australian Labor Party so unpopular?" he asked. "Well in some sense it's got me beat. The polls are devastating. The election results in NSW, in Queensland, in some sense even more devastating."

The way forward, he said, is to embrace "the political maxim that it's the economy, it's the economy, it's the economy".

Under the accord partnership between unions and the government in the 1980s and 90s, Kelty said, "We modernised the economy but we did it in a Labor way. We grew the economy faster than most, unemployment fell faster than most, productivity increased and growth increased. It worked. The Labor model worked." Today, that model of co-operation dedicated to economic and social reform is bust.

The union-run, anti-Work Choices campaign was a critical factor in Labor's 2007 election victory. According to Labor polling, about 4 per cent of the 5.5 per cent two-party preferred swing to Labor was due to Work Choices.

The unions were repaid with the Fair Work industrial relations system. But its design was a mistake as it wound back the industrial relations reforms legislated by the Keating government and gave the unions too much power. Increased industrial power has been matched with what Hawke calls "an almost suffocating influence" over the Labor Party. Meanwhile, the importance of partnering on economic reform has been lost.

The government's family payments, tax cuts, superannuation increase and a boost to the aged pension have not been met with the same kind of "trade-offs" that Kelty says were a feature of the accords.

Workplace agreements are being forged with little or no productivity goals or recognition of the government's social wage advancements.

The gaping hole in the government's economic strategy is the absence of a joined-up plan to boost productivity across the economy by addressing its key drivers - regulation, workplace relations, infrastructure, innovation policies, skills and training. It is time for a new grand bargain to be struck between government, unions and business on productivity. This is the next frontier of economic reform.

Although union coverage of the workforce is less than half what it was during the Hawke government, unions still exert considerable influence in almost all sectors of the economy.

Without a co-operative approach to economic reform three decades ago, the sclerotic and stagnating economy that Hawke and Keating inherited would have worsened, given the Fraser-Howard government's failure to make the tough economic decisions that were needed.

Today, the political and industrial partnership seems to be all about politics. Much to the party's delight, the ACTU has signed-off on a new campaigning strategy. But it needs to be a partner in managing an economy in transition, as Kelty said.

Strong leaders such as Gough Whitlam, Hawke and Keating could stand up to unions and persuade them to join in the reform effort and make sacrifices. Gillard cannot because she is inherently weak and misunderstands the Hawke-Keating-Kelty legacy.

A glimmer of hope for Labor can be found in Bill Shorten's spirited address to the ACTU congress, when he turned his back on the divisive class war rhetoric espoused by Gillard and Wayne Swan. "I don't believe that the 'us and them' rhetoric is what describes the modern Australian workplace," he said. The labour movement must lead "for all Australians" and champion "collaboration and co-operation" in the workplace.

Shorten's speech to the Sydney Institute last month also struck the right tone. He rejected "the conflict model of workplace relations" and outlined a new agenda for workplaces built on consensus to drive productivity and competitiveness without undermining fairness.

As speculation over Gillard's leadership continues to permeate through the Labor caucus, Shorten, while still a team player and not wanting to fuel talk of division, is aware of the damage being done to Labor's brand.

The importance of Shorten's speeches should not be underestimated. Shorten's conceptualisation of these issues and his response are fundamentally different to those of Gillard and Swan. Shorten is thinking about a post-Gillard future, where those left will have to pick up the pieces to restore and rebuild the party.

In showing that he understands the Hawke-Keating-Kelty legacy and in choosing a different path to Gillard and Swan, Shorten demonstrated unmistakable signs of the leader that many want him to become.