ROY GREEN. Labor’s unloseable election

May 23, 2019

Was it the message or the messenger? Or a bit of both? This question will occupy the minds of political strategists for years to come. The federal election was a setback to Australia’s labour movement, not least because it came as a shock, but there is no reason for despair once put into perspective. The route back to political contention should already be clear.

Searching for historical parallels, the 2019 federal election has been likened to John Hewson’s loss to Paul Keating in 1993. However, a more relevant parallel may be the similarly unexpected defeat of British Labour’s Neil Kinnock by an “everyman” Prime Minister a year earlier.

The polls clearly showed the electorate turning against the neoliberal brutality of the Thatcher era, with spending on health, education and social services prioritised in poll after poll over further tax cuts. There was also an underlying sense that the nation had squandered the opportunity of North Sea oil in a consumption boom, rather than investing in the future.

In this context, British Labour felt sufficiently confident to mount an unashamedly redistributionist economic and social agenda. Besides which, instead of facing the formidable Mrs Thatcher, as in his previous unsuccessful 1987 attempt, Kinnock was now up against the mildly populist, cricket-loving former Chancellor John Major.

While Kinnock fought a barnstorming high profile campaign on the theme of fairness, culminating in the notoriously triumphalist Sheffield rally, Major made folksy cameo appearances in shopping centres and town squares, often on a soapbox with a loud hailer. The contrast was deliberate, and effective.

Major’s message was simple and single-minded, not unlike Keating’s in Australia. Only he could be trusted to manage Britain’s recovery from a damaging recession, or so the narrative went, with an additional commitment to ameliorate some of the harsher edges of Thatcherism along the way.

Against all the odds, Major held on to the so-called C1/ C2 working class voters in the Midlands marginal seats, who feared that Labour’s commitment to redistribution would favour groups other than themselves. And hence an unloseable election was lost, with Murdoch’s tabloid famously crowing “It’s The Sun wot won it”.

The 1992 British Election Study noted that this result “has become one of the mysteries of 20th-century politics”. Here is an excerpt from the findings:

From the beginning of the campaign on 11 March, the parties were neck and neck in the opinion polls, with Labour fractionally ahead. The commentators predicted a hung parliament; the only question, it seemed, was whether Labour or the Tories would be the largest party. Even the exit polls suggested a hung parliament.

The result, when it came on 9 April, was one that nobody, not even the Tories, had expected. The Government had 42.8 per cent of the vote, Labour 35.2 per cent… So did Labour blow its golden chance? And, if so, how?

Throughout the 1992 election campaign, Mr Major’s personal standing remained much higher than Mr Kinnock’s… But do party leaders make a difference to people’s votes? The findings showed that they do, but only a little…  Like most of its predecessors, the 1992 election was won and lost before the official campaign began.

Of course, this was not the end of the story, only the beginning. The Tory government’s reputation for economic management was soon shredded by the collapse of the pound, forcing the UK out of the European Exchange Rate Mechanism. And a new untested Labour leader swept into office at the subsequent election.

This is not necessarily to suggest Tony Blair as a role model for the next Australian Labor leader. However, he did understand the need not just for fiscal credibility but also for a vision of a high skill, high productivity economy which would be delivered through an ambitious education and industry policy agenda.

While Bill Shorten’s appeal to a “fair go” was squarely in the Labor tradition, it could not be sustained in the electorate without a similarly focused agenda for industrial transformation, particularly in the context of climate change and the diminishing returns from export of unprocessed raw materials.

Even more so than in the UK, Australia’s challenge is to manage its post-mining boom transition to a knowledge-based economy, building on both existing and potential areas of competitive advantage. And, in doing so, to address the poor productivity performance associated with wage stagnation.

It’s not as though we lack international examples. Norway prepared for a post-oil future with a stake in its oil and gas fields, 76 per cent resource rent tax and a sovereign wealth fund to invest in economic diversification and sustainable long-term growth and jobs. By contrast, Australia has to buy back its own LNG at inflated prices.

Australia’s next Labor leader must learn from the past while preparing for the future. The obvious lesson is to focus on wealth creation as well as its distribution, but the question then becomes how to do this effectively in a world of technological disruption, trade wars and increasing inequality.

The structural changes that are needed and overdue in our economy will not happen automatically through the market. Nor do they depend on whether we have budget surpluses. They will require active intervention, including a vastly increased commitment to research and innovation, to build our competitiveness in global markets and value chains.

It seems highly unlikely that the re-elected Coalition government will be able to address these challenges. They may even have their hands full with an economic recession before too long. This provides Labor with the opportunity to make its case for an alternative vision of the future – one that makes practical sense to all sections of the community.

Roy Green is Emeritus Professor at the University of Technology Sydney

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