Labor’s forgotten hero


The Australian, 1 September 2015


It is quite a feat for a Labor leader to address a conference on reform without mentioning Bob Hawke or Paul Keating, but Bill Shorten managed to do so last Wednesday.

The leader of a party that likes to celebrate its history may have been expected to bask in the ­reflected glow of his reforming predecessors.

Yet Shorten chose not to do so in his speech to the ­National Reform Summit save for an oblique reference to the spirit of 1983.

You have to scroll back through more than two months of his speeches to find the names of his esteemed predecessors.

“Bob Hawke and Paul Keating transformed Australia and brought down the tariff walls to prepare us to be an international economy,” Shorten told a Committee for Economic Development of Australia event in June before adding dismissively, “but you can only open your economy once.” Only once? What would a former Labor trade minister such as Craig Emerson have made of that? Those hours sipping jasmine tea with his Chinese counterpart Chen Deming were wasted apparently because the economy had already been opened.

When Emerson addressed the National Press Club in 2012, Labor had been pursuing a free trade deal with China for five years, despite the xenophobic rumblings of its union bosses and the fears of others in the community.

“I will not seek to play on their anxieties for political gain,” said Emerson. He would not threaten the Australia-China relationship and Australian livelihoods “in ­exchange for a few votes”. “Why would we want to withdraw from the world to buy and sell to ourselves, a return to the failed Fortress Australia strategy?”

Hawke, Emerson’s former boss, made the same point last Friday in an interview published in The Australian. “The party must not go backwards on this issue — the party and the trade union movement. Talk of opposing it is just absolutely against Australia’s best interests.”

His comments are a reminder that Shorten commands a ­radically different party to the one that held government in the 1980s. Hawke’s mandate allowed him to address the national interest. Shorten, should he ever take power, will be hostage to sectional interests. Hawke stood for wealth creators: the workers who supplied the labour that unlocked the value of capital. Shorten manages an uneasy alliance between the wealth redistributors in the public sector and the wealth destroyers in the trade union and environmental movements.

Hawke defined his target as “real economic growth”. For Shorten, the adjective real no longer suffices; last week he spoke instead of “better-quality economic growth”. He speaks of “reform for purpose: increasing output, fairness and equality. Trying to improve one of these, without the other two, is not enough.”

Hawke understood growth is growth, it provides the dynamism that creates jobs and opportunity.

Shorten’s support for growth is qualified. As he told CEDA, reform would be achieved by “combining the egalitarian, communitarian spirit of Curtin-Chifley with the market dynamism and Asian engagement of Hawke-Keating”.

The union movement today has, at best, a tangential interest in creating jobs; its chief concern is the wellbeing of a narrow, privileged group of employees, regardless of the cost to the rest of us. The antics of the Construction Forestry Mining and Energy Union, for example, add considerably to the cost of building, and increase the time it takes to build. The rest of us, directly or indirectly, are expected to pick up the cost.

In opposing the reinstatement of the Australian Building and Construction Commission that would control the CFMEU, Labor is supporting a sectional interest rather than the national interest.

So it is with Labor’s attempts to scupper the China FTA. Its potential to create jobs and wealth is clear. New Zealand’s exports to China have quadrupled since it signed a similar deal in 2008. The Australia China Business Council, headed by John Brumby, a former Labor premier, calculates that 200,000 Australian jobs are sustained by exports to China.

Hemmed in by the demands of the unions on one side and public sector rent-seekers on the other, Labor has little room these days to establish good policy.

By placing “fairness and equality” alongside plain, old-fashioned economic growth, Shorten is placating the party’s new base, those who earn a crust providing government services and those who survive by receiving them.

It is hard, if not impossible, for Labor governments to resist demands for new spending without damaging its brand as the party of compassion. As for trimming government spending, forget it.

Economist Oliver Hartwich paints a graphic picture of where this kind of appeasement leads in an extract from an essay, “Why Europe Failed”, that appeared in The Weekend Australian. For decades, European political elites have sought to buy peace with the electorate with “an all-encompassing insurance and entertainment scheme”.

“To their subservient citizens, the European elites provide free or heavily subsidised education, healthcare, TV and radio programs, roads, income support and pensions, public transport, libraries, opera houses, and theatres,” writes Hartwich. “Unfortunately, it is often overlooked that government can bribe the people only with their own money.”

The 2008 financial crisis forced recognition that this strategy was fast driving Europe broke. Yet Labor seems set to follow the same path. Consolidated government spending since 2008 in Australia rose faster under Labor than it did in Europe. It is now close to 38 per cent of gross domestic product, 2.5 per cent higher than it was before the crisis.

A party that aspires to govern in the national interest would seize opportunities to expand trade and increase competition, the approach pursued by the Hawke and Keating administrations 30 years ago. That, however, would require the party to confront its rent-seeking base. It is struggling to find the courage to do so.