JOHN MENADUE. What should Labor stand for? Some key issues. Part 2 of 3.

May 30, 2019

At the same time as addressing overarching ‘Labor’ principles that could guide Labor policies and programs that I will return to in Part 3, there are five immediate issues which must be given priority.  

Democratic renewal
The first is democratic renewal in our public institutions, including the ALP. We are increasingly alienated from our institutions. Our politicians are not trusted. This suits the conservatives who implicitly seek to protect private corporate interests from public intervention. Loss of faith in parliament inevitably leads on to denigration and a loss of faith in government. Those that Labor has traditionally represented and the wider community are the losers. They need help and opportunities that only good government can provide. The Coalition has deliberately set out to destroy faith in our public institutions, public policy and politics. The signs of democratic decay and lack of respect for politicians are everywhere. For example:

  1. Policy advice is increasingly given by ministerial advisers while the public service is co-opted into providing political support to government.
  2. Governments are overly-influenced by powerful lobby groups and donors, e.g. miners, developers, licensed clubs and hotels.
  3. Labor is no longer representative of those that vote for it or have empathy with it.

The concentrated media does not properly expose abuse of power and directly skews the public debate towards personalities, the whims of proprietors, conflict and celebrities, rather than serious policies. Group-think on key issues has overtaken our mainstream media including the ABC

Democratic renewal is urgent – reform of the parliament, political parties, party factions, lobbyists, donors and the media.

The economic role of government
The second immediate issue is the economic role of government. Those who would benefit from weak and distrusted government have undermined the legitimacy of the public sector.

Australians have been encouraged to forget that their prosperity is based on both public and private goods. To many people government has become ‘invisible’, except as a vehicle for distributive welfare. Australians have lost sight of the contribution of the mixed economy, not only in providing public goods, but also in ensuring that the forces of greed and short-sightedness don’t lead to economic and social collapse. It is noteworthy that despite the continued denigration of government and the public sector, the three most trusted institutions in Australia are public institutions – the High Court, the ABC and the Reserve Bank. The three least trusted groups are business, trade unions and political parties.

Even conservatives acknowledge that only the public sector can provide some services such as national defence and management of the money supply. In addition, however there are economic functions where private funding or provision is possible but only at high economic cost, with distorted incentives and with serious consequences for equity. These include education, health insurance, energy and water utilities and communication and transport infrastructure. In these and other areas there are market failures for which prudent economic principles require a strong government role in funding or provision.

Unless Labor articulates and defends the proper economic role of government – a pre-requisite to improving Australia’s weak taxation base – economic growth will be restrained by inadequate public spending and investment. Of these investments, the most important is human capital to ensure that people can develop their capabilities so that they can contribute to their full potential through employment, business or unpaid work. In the competitive global economy of this century, human capital is a nation’s only secure asset. Scandinavian countries demonstrate this. A population with skills and with incentives which match rewards to contribution will draw less on distributive welfare, preserving public revenue for needed social insurance and public goods. The best antidote to disadvantage and low self-esteem is not welfare but well paid and meaningful employment. The best way to tackle inequality is upgrading the skills of our workforce through public education and training.

Labor will find it hard to make these investments if it allows itself to be depicted as the party of big welfare spending. In fact conservative governments, because of under-investment in human capital and physical infrastructure, and neglect of economic adjustment, have spent strongly on distributive welfare to compensate for inequalities rising from a weakened economic structure. Labor should be the party which ensures that Australia becomes less reliant on distributive welfare. Instead of referring to ‘the education revolution’ in isolation, it should present its human capital policies in the context of a unified set of principles in infrastructure, education, health, environmental and protection, underpinned by principles of investing in capabilities, nurturing individual freedom and autonomy and supporting social inclusion.

A reframing of policy in terms of strengthening the economy in order to reduce the need for distributive welfare would not only neutralise the ‘right’s’ attack on Labor as the party of the welfare state but would also give a unifying theme to many policies. It would link policies in industry adjustment, infrastructure, education, health and social inclusion. It would overcome the false framing of a trade-off between equity and efficiency. It would give Labor parliamentarians an opportunity to engage more openly with the public without the need for spin and carefully prepared texts.

Climate change and the economy
The third immediate issue is reconciling the apparent contradiction between climate change and the economy. In his election defeat, Tony Abbott put it this way ‘where climate change is a moral issue, we Liberals do it tough. But where climate is an economic issue we do very, very well.’ This is inferring that only better educated and wealthier people can indulge themselves in the luxury of worrying about the moral issue of climate change whilst the less privileged worry about jobs and how action on climate change will prejudice their future, as in Central Queensland.

This is a dishonest description of the problem. First, climate change is a problem for all of us – and particularly for our children. As the planet worsens and the signs are clear, there will be severe adverse economic impacts. We are seeing them already,; bushfires, droughts, cyclones, rising tides and more. Our economy can only flourish if the planet is healthy.

We have also seen this issue starkly in the Murray Darling Basin. Unless the rivers are healthy, farmers and communities along the river will face dire economic and social consequences. Like the planet, the health of our rivers must be paramount.

Secondly, on purely economic grounds a green economy offers much better long term prospects than an economy based on coal. Thermal coal has no viable economic future and our workforce should not be misled that it does.Facilities associated with thermal coal are becoming stranded assets around the world.The coal workforce will be also  stranded . Politicians who tell us that there is a future in thermal coal are dudding mine workers.

The Coalition showed little concern for 200,000 workers when it forced the closure of our motor manufacturing industry.It’s concern for coal miners is for political advantage and little else.

Furthermore investments and job growth in the future will be in renewables and storage, perhaps even a ‘Green New Deal’. Professor Garnaut has pointed to the enormous opportunity Australia has with the development of renewable energy. A major driver of economic growth will also be in services. There will be more jobs growth in Queensland in tourism, such as in association with the Great Barrier Reef, than in coal mining. Yet the coal mining industry is putting at risk the future of some of our pristine tourist attractions. A key of course will be for the ALP to show that it can efficiently and equitably manage the transfer from coal to renewables.

The unconnected voter base.
The fourth immediate issue is that the ALP has inadequate contact with its own membership as well as minimal or no contact at all with its voter base. The same is true of the Liberal Party, but that is much less important for a party that represents powerful interests and the status quo. The ALP faces much greater challenges to persuade the public to change.

Having lost significant contact with its own base, and heavily influenced by a handful of factional power brokers, the ALP at election time has increasingly relied on donations for advertising, political polling and focus groups. It has been a terrible mistake.

Marc Stears, who worked for Ed Miliband in the 2015 disaster for Labour in the UK election, put the problem this way in the Guardian on 25 May 2019.

I will never forget the feeling of hollow emptiness on seeing the results roll in. Where once a glorious future beckoned, all of a sudden there is nothing but bitterness and regret.

The questions on everyone’s lips are predictable: how on earth did it happen? How do we stop it happening again? It is obvious why people ask. But the better place to start is: why did no one see it coming? We had the world’s best opinion pollsters and strategists working with the British Labour party in 2015. The same was no doubt true of Shorten’s ALP team. So why were they both expecting a victory that just wasn’t coming? These mistakes happen when a political party ceases to be in relationship with people on the ground.

When a party’s membership is too small, its activist base too narrowly restricted and its broader community connections weak then the vital intelligence network on which it depends withers. If you’re in an everyday relationship with everyday voters, then they will tell you what they’re about to do. There is no investment in phone banks or computer modelling that can beat that basic fact. We had offered a host of clever policies. But a list of dot points is not a national story.

It is also only when you really know the voters in all their diversity that they will tell you what they didn’t like. When we started those conversations in the aftermath of defeat in 2015, we expected that we’d hear about specific policies. Miliband’s Labour had backed income tax rises for the wealthiest and a new property tax. Perhaps that’s what scared people off. In fact, when we started real conversations, we discovered that people very rarely vote on individual policies. They vote on an overall feel.

People want to hear a story about where this party is going to take the country, what are the fundamental values that drive them, what will the nation look like when they’ve come to the end of their governing term. Back in 2015, British voters simply couldn’t answer those questions about Miliband. Many of them had no idea. And it wasn’t the voters’ fault.

Our campaign had been too fine-tuned. We had offered a host of clever policies. But a list of dot points is not a national story. We had not created a new, appealing, different national vision – an alternative that people could understand and choose.

That sounds like a rerun of our last election

Economic growth and redistribution
A fifth issue is the suggestion that at the last election the ALP focused too much on redistribution and not sufficiently on economic growth, rising incomes and aspirations. In this blog on 27 May 2019, Michael Keating addressed this issue.

Unfortunately, in the recent election, Labor was too often perceived as focussing on distribution of wealth, and not its creation, with the implicit assumption that Labor’s support for wage growth would come at a cost to economic growth.

Instead the reality is that economic growth is being held back by inadequate growth in aggregate demand, and demand growth is inadequate because incomes are stagnating, especially the wages of low-income households. It is these low-income households, which have a lower propensity to save, who provide most of the support for consumption growth. Furthermore, without that consumption growth investment will also continue to stagnate, which then retards the take-up of new technologies, and is the reason why productivity growth has also been very low.

In short, Labor needs to sell the message that redistribution is essential to sustain economic growth.

Labor needs to argue that this weakness in aggregate demand is why we have experienced economic stagnation over the last five years of low wage growth. The first message must be that the only way to return to a more buoyant economy is to restore wage growth and reduce inequality. …

There is no reason to choose between redistribution and economic growth. Instead, we need more investment in skills so that we can achieve a more equal distribution of incomes while also improving the take-up of technology that drives future productivity increases and economic growth.

In this way Labor can achieve Albanese’s objective of combining a fairer distribution with the creation of wealth.

There are clearly some specific issue the ALP must focus on- democratic renewal, the economic role of government, climate change and the economy, its loss of contact with it’s natural consistency and that redistribution is essential to sustain economic growth.

In Part 3 I will focus on how ALP policies and programs must be grounded in values and social democrat principles.

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