Modern Labor: A Tradition of Change

Author: Mark Latham is Federal Leader of the Opposition.

This address was delivered to the Australian Fabian Society Rememberance Day Dinner, 19 November 2004, Melbourne.

The great speechwriter Graham Freudenberg has described the Labor Party as “a collective memory in action”.

Indeed, that’s what brings us here this evening, in remembrance of the dismissal of the Whitlam Government.

We gather with a collective memory and appreciation of that Government’s achievements, especially in health, education and foreign policy.

So too, we maintain a collective sense of injustice and outrage at Kerr’s sacking of Gough.

And through our support for an Australian Republic, we reaffirm our collective determination to make sure it never happens again.

Nearly three decades on, 1975 still says a lot about Australian politics.

It says that the Labor Party draws strength from its history and culture. We believe in the true believers.

Our critics say we are too sentimental, too dewy-eyed about the likes of Gough.

But I say that we wouldn’t be a Labor movement unless we cared about our past:

• Our great history of struggle and defiance

• All our dreams and campaigns for a fairer Australia

• Our famous victories, as well as our moments of defeat and despair.

We wouldn’t have it any other way. It’s certainly a better way than our political opponents.

Even though the Liberals won in 1975, they can barely bring themselves to remember it, let alone celebrate it.

They are a political cause without a past – without the depth and solidarity of knowing where they have been. And why it might matter.

Just look at their treatment of Malcolm Fraser. Earlier this year Gough Whitlam said that, largely because of the Liberal propaganda machine, Fraser had now supplanted him as Public Enemy Number One in the demonology of the Australian right-wing.

Gough said he was much more relaxed about being replaced by Malcolm Fraser the second time than he was the first time around.

This is one of the things we should never lose: our love of Labor history and Labor culture.

It gives us a feeling of common purpose:

• That there is something special about the Labor movement.

• That we always respect our former leaders and honour their achievements.

• That we are a movement of the heart, not just the head.

I want Labor to stay this way. But let’s be honest: some of the best parts of our culture are at risk.

Modern politics has become more cut-throat and cynical. It is tightly focussed on today, sidelining the importance of political history.

Labor must guard against this tendency. We shouldn’t become a throw-away party like the Liberals and their junking of Fraser.

So tonight, as we remember Whitlam, let’s also honour Curtin and Chifley, and Hawke and Keating, and all the true believers who have given our movement so much emotion and meaning.

And most of all, let’s redouble our efforts to keep it that way.

This is more than a matter of sentimentality. It’s one of the things that makes us distinctly Labor. And so much better than the other mob.

Labor Modernisation

One of the best things about our history, of course, has been Labor’s capacity for modernisation. As society has changed, we have always updated our policies and programs.

This hasn’t meant a loss of traditional Labor values and goals. Far from it. Our commitment to a more just and equal Australia has been constant.

The Party has used these values to guide it through the policy development process. The challenge has been to find the most appropriate reform technique, the best policy settings by which our goals can then be achieved.

In the 1960s, for instance, Whitlam successfully argued that social justice relied heavily on the expansion of health, education and community services in Australia’s fast-growing suburbs and regions.

In the 1980s, Hawke and Keating knew that Australia could not maximise its economic opportunities without liberalising its markets and integrating itself into the global economy.

We have always modernised our policies in response to new circumstances. Constant Labor values – social and economic change – new Labor policies. This is how the reform process works. It’s our greatest tradition – a tradition of change.

And one we need to follow, once more, within the Australian Parliamentary Labor Party.

After four election losses in a row, we need to be brutally honest about the changing nature of Australian society and its economy, and the ways in which Labor must change.

Sure, there are other things we can blame for our defeat last month – foremost among them, the Liberals’ dishonest scare campaign on interest rates and economic management.

There are policies that could have been improved. Things that could have been said and done differently. And other, one-off factors that went against us. All of them, valid explanations.

But none of them address the long-term trend. None of them confront the seriousness of our position: Labor has not won a Federal election since 1993.

Something more substantial has happened. Something bigger than one-off factors or single-issue setbacks.

That’s why we need to be honest about our position, to face up to the huge social and economic changes swirling around us.

Nobody owes us a future as a political party. We need to make one for ourselves.

Our choice is quite simple: we can either move with the times or be swept away by them.

I am determined to broaden Labor’s base and appeal. We will not become a niche party, a loose collection of interest groups and single-issue campaigners. Not on my watch.

Tonight I want to set out a modern Labor approach to national politics. On each of the big domestic issues – economic and social policy, the environment and community-building – I want to outline our direction for the coming term of parliament.

But more than that, I want to provide a policy structure, a framework for modern Labor thinking. A statement of our values and beliefs and how they can benefit the Australian people.

Economic Policy

Since 1996 we have not handled the economic debate well. This is one of the sad ironies of Australian politics.

Having secured nation-building reforms under the Hawke and Keating Governments (the internationalisation of the Australian economy) we surrendered our legacy after the 1996 election. We failed to defend our economic record, precisely at the time when these reforms established the foundations for a new era of growth and prosperity.

John Howard could hardly believe his luck. Having squibbed the tough decisions as Fraser’s Treasurer, he watched Labor modernise the economy and then hand its benefits to him on a platter.

Our Party has not recovered from this error. We haven’t been able to reclaim our legacy of reform from the 80s and 90s. Nor have we, in the eyes of the electorate, successfully crafted a new generation of economic policies and credibility.

As a result, our base – political and industrial – has steadily declined. Labor’s primary vote has fallen well below 40 per cent while, in the industrial wing of the movement, trade union membership has also fallen away.

We urgently need to establish a new basis for the economic purpose and legitimacy of the Labor movement. We need to be realistic about the changes happening around us.

After a decade of economic growth and globalisation, the two fastest growing classes in Australian society are the middle class and the underclass.

The conventional working class – in steady, semi-skilled and low-paid jobs – has declined. Just look at the affluence of the traditional trades in the mining, construction and service industries. In many cases, they make enough money to be investors, not just workers.

The new middle class is here to stay, with its army of contractors, consultants, franchisees and entrepreneurs. This reflects the decentralised nature of the modern economy, where flexible niche production has replaced the organising principles of mass production.

People have broken free from large, hierarchical organisations and become agents of their own economic future. They have less affinity with the traditional role of capital and labour, and even the notion of a traditional workplace. Australia now has more than 800,000 home-based offices, mostly occupied by this rising class of economic independents.

The implications for the Labor movement are obvious. Workers are more discerning and self-reliant. Large, centralised institutions and policies are less relevant. Our economic strategies need to be based on the principles of flexibility, enterprise and upward mobility. Investing in our people and building international competitiveness.

At the other end of the scale, under the Howard Government, the number of people excluded from the new economy has grown. This is reflected in record levels of long term unemployment and poverty, plus the extraordinary growth in health-related problems, such as disability and mental illness. The Government has neglected these people, under-investing in their skills and potential.

It has also ignored the working poor – people who suffer from economic insecurity, moving above and below the poverty line on a regular basis. With the decline in the social wage – the loss of basic education and health services – this group has fallen further down the social ladder.

This is the stunning inequality of the modern economy. Those with skills and opportunities thrive, while those without are left at the bottom of society – denied the advantages of a regular life.

The challenge for Labor is to develop an economic agenda that works for all parts of society: policies that reward the effort and enterprise of the new middle class, while also overcoming the punishing cycle of underclass and inequality.

The common theme is upward mobility:

  • Developing new skills and creativity
  • Ending financial disincentives and poverty traps
  • Reforming economic institutions to foster enterprise and flexibility
  • Always lifting productivity and competitiveness
  • And in terms of individual effort: providing opportunity, but also demanding responsibility – a society based on self-improvement.

These are the values that will drive Labor’s economic policies in this term of parliament and beyond.

It is inappropriate to tackle inequality by levelling down economic success, by punishing the successful to make the less-successful feel better. We need to foster creativity and entrepreneurship in all parts of society, from the classroom to the boardroom, and celebrate the virtues of this approach.

I want a rising tide of economic growth to lift all boats – meeting the aspirations of the middle class, while also providing new life opportunities for the poor. This is how I see social justice: as upward mobility all-round.

And only Labor can deliver this great national goal – economic opportunity for all Australians. The Liberals have given up on the poor. They see no political or economic advantage in helping them.

Labor has a different view. And it comes not just from our commitment to a fairer society. As a nation, we can’t afford to waste the potential and skills of any Australians. To maximise our national economic growth and efficiency, we need the participation of all our citizens. We need an inclusive economy as the basis of a fair society.

Economic Reform

I want Labor to set the agenda for the next generation of competition and productivity improvements in the Australian economy. We achieved the first wave of productivity gains under the Hawke and Keating Governments. Now we must achieve the second.

This is urgent work. In the global economy, past performances count for little. Australia needs to run faster just to keep pace with its competitors.

We need to act now on the warning signs of a less competitive national economy. Our productivity is too low, with only marginal gains over the past five years.

This has weakened Australia’s export performance. For the past 12 quarters, net exports have detracted from economic growth – a record period of failure that must be corrected. Despite favourable terms of trade – now at their highest level in 28 years – our share of global exports has fallen by 20 per cent under the Howard Government.

Structural problems have also emerged in the household sector, with record levels of debt and dissaving. For nine consecutive quarters, the household savings ratio has been negative.

This is the real Howard-Costello legacy: low productivity, record trade deficits and household debt – all feeding record levels of foreign debt in Australia - $20,000 for every man, woman and child.

Labor’s productivity agenda will address these issues. Our starting point is to promote education, training and research as the key drivers of economic growth.

The Howard Government has under-invested in education and failed to solve critical skill shortages in the economy. For instance, there are currently around 20,000 unfilled vacancies for tradespersons.

We need a skills revival in Australia, especially through the development of a world-class TAFE system. This is essential for overcoming capacity constraints and easing the pressure on interest rates.

We will also persist with our strategy, announced during the election campaign, to end the poverty trap and move people from welfare to work – expanding prosperity through increased participation and labour market opportunities.

And when it comes to market reform, we believe in overhauling the Trade Practices Act and breaking down the concentration of economic ownership. Nothing beats private sector competition and expanding the rights of the small business sector. It’s a cattle prod for growth and productivity.

In this term of parliament, Labor will also develop a new agenda for micro-reform, especially in infrastructure. We need to increase the efficiency of our transport, energy and communications systems – lowering business costs and improving productivity. Australia urgently requires an infrastructure efficiency plan.

Just this week the ACCC has criticised the “cosy duopoly” on the waterfront. Rising margins and restricted competition are driving up costs for exporters and hurting our international competitiveness.

In industrial relations, the Labor movement must move with the times and develop new strategies. We must broaden our approach and champion new causes and constituencies.

Traditionally, labour laws have been framed around the imbalance of power between employees and employers. In the modern economy, however, new imbalances have emerged, such as between contractors and big businesses and between franchisees and parent companies. This has produced a huge volume of legal disputes – small businesses battling the big end of town.

We need to apply our traditional Labor values (about fairness and cooperation) to this problem. If contractors and franchise-holders are being mistreated by large corporations, we should be just as passionate and determined to defend their interests as when workers and their rights are abused by employers.

In many cases, small businesses and independent contractors face the same type of economic injustice and exploitation as workers. This is why, increasingly, they are seeking to bargain collectively and protect themselves from unfair trading practices. This is occurring throughout the economy: in agriculture, transport and the service and franchise sectors.

From a Labor perspective, the same principles apply: government laws are needed to even out the imbalance of power and deliver just outcomes. This is not just an equity issue. It also concerns productivity: fairness and cooperation between the parties is likely to produce better results than conflict and litigation.

Labor should, therefore, promote bargaining rights across the economy: for workers, contractors, franchises and other small businesses.

Our labour policies should be based on enterprise bargaining as the fairest and most productive way of determining workplace arrangements. This provides flexibility while also encouraging cooperation. The evidence in the mining industry, for instance, shows that enterprise bargaining sites have higher levels of productivity than sites with individual contracts.

Our business policies should be framed the same way: flexibility with fairness. This means advancing the competitiveness of small business through extensive Trade Practices reform and the reduction of paperwork and red tape.

Another issue is cash-flow, ensuring that large companies and government departments make prompt payment to contractors and small enterprises. Just as Labor is determined to protect the statutory entitlements of employees, we should defend the rights and entitlements of the new class of economic independents.

I believe in an economy that rewards hard work and enterprise. But this shouldn’t be a function of market size and power.

The role of the modern Labor Party is to establish fair market rules – to empower workers, contractors and entrepreneurs to do more for themselves. This is what I mean by upward mobility all-round.

That’s our new economic agenda: productivity, participation and a broader approach to industrial relations. All underpinned by responsible financial management: surplus budgets, a lean public sector and downward pressure on interest rates.

Social Policy

While we need to rebuild our economic credentials, in other areas – especially health and education – Labor’s policy foundations are strong. So much so, that even though the election is over, the Liberals are still campaigning against our schools funding plan and Medicare Gold.

They are trying to use the mythology of the campaign to make us back away from good public policy. That’s the last thing we’ll do.

We ran on a modern, progressive Labor platform – rejecting the Howard Government’s user pays approach to education and health care.

For instance, our plan to increase the availability of bulk-billing doctors would have substantially lowered out-of-pocket expenses for patients.

The Government responded with a $1.8 billion policy to increase the Medicare rebate to 100 per cent. But as soon as the election was over, it allowed most of the money to be eaten up by increased doctors’ fees – more user pays in health care under the Howard Government.

I don’t want to see the Americanisation of our social services, where they become so expensive that only the wealthy can access them.

This is one of the defining differences in Australian politics. The Liberals believe in user pays and privatisation. Labor believes in public access and opportunity.

While we do not require social services to be provided exclusively by the public sector, we want them to be publicly affordable. In fact, many of our policies are designed to harness the resources of the private sector for sound public purposes.

This is what defines a modern Labor approach to service delivery: pragmatism, not ideology.

The key issue is not public or private ownership. It is public access and public benefit. What matters is what works. Let me provide three examples from the recent campaign.

Our early childhood policy was designed to extend the principles of public education in Australia into the child care and preschool systems, through the provision of a free day of learning for three and four year olds. Most of these services are run by non-government organisations, either community-based or profit-based.

The impact of our policy, therefore, was to harness the resources of the private sector for a progressive social purpose: investing in the education of our infant children. Pragmatic service delivery, the modern Labor way.

A second example was our schools funding policy. This defined a new national standard of resources and excellence for all Australian schools, government and non-government. It then allocated funding on the basis of need, ensuring that 9,500 under- resourced schools would reach the national standard as quickly as possible.

The Tories have attacked this policy for its reallocation of resources away from 67 wealthy schools, those that have already exceeded the funding benchmark in their fee income alone. But given the limited nature of government funding, there is no logical alternative to this approach.

Redistribution is not only a fair policy, it is also the most efficient way of achieving a rigorous national standard. Indeed, there is no point in governments establishing a national approach to schooling unless they are willing to protect its integrity.

The sooner all schools reach an acceptable standard, the sooner governments can maximise the number of families in Australia that realise their aspirations for the education of their children.

Labor’s schools policy is not a punishment policy. It is an efficient and fair way of achieving a vital national goal: all schools offering their students a quality education, a decent start to life.

In the name of equity, why should schools without libraries and computers wait any longer for fair funding, when schools with boat sheds and rifle ranges have been over-funded? These are successful schools, already above the national standard. And under Labor’s funding program, they would have maintained a high level of classroom excellence.

Our policy is, in fact, an aspirational policy. Aspirational not just for the few, but for all parents and students. Not just for the King’s School and Geelong Grammar, but for every Australian school.

Again, it is ownership-neutral – defining a common standard and a needs-based funding plan for government and non-government schools alike. More than 2,500 needy private schools would have benefited from this approach.

A third example concerns Medicare Gold. This policy extends Federal responsibility for hospitals to the universal care of people aged 75 and over.

It commits extra resources to the public and private sectors – in particular, using the surplus capacity of private hospitals to expedite the treatment of older Australians. It is estimated, for instance, that just one hospital (the Mater in Brisbane) has the capacity, without the need for extra doctors and nurses, to handle an extra 6,000 admissions.

Once more, the policy is blind to ownership issues. It treats extra patients in the public interest, but not necessarily in public hospitals.

The Liberals, of course, say that Medicare Gold is too ambitious. But they said that about Medibank and then Medicare. They always say that about universal health care – because they don’t believe in it.

Labor believes in this principle. And we want to honour our senior citizens by getting them off waiting lists and into hospital beds.

This is not just about the fairness and decency of our society. It is also efficient health economics.

Australia’s health system is hopelessly inefficient, with its overlapping Federal and State responsibilities, and its dual system of public and private funding.

In reorganising the system, it is not realistic to expect one level of government to take over all the responsibilities of another. A more logical approach is to coordinate the care of high user groups.

This is the purpose of Medicare Gold: to make the Federal Government responsible for the hospital care and aged residential care of senior Australians.

Under the current arrangements, Federal authorities have an incentive to keep frail aged patients in acute hospital beds, reducing nursing home subsidies and pushing medical costs onto the States and Territories. Medicare Gold is designed to overcome this waste of $500 million per annum between the two levels of government.

It has other important efficiency features: 

  • It makes major savings to the 30 per cent private health insurance rebate, the cost of which has been blowing out since its introduction.
  • It reduces waiting lists for all age groups, and the cost of private hospital insurance by at least 12 per cent for people under the age of 75.
  • And, through the introduction of a single buyer for aged hospital care, Medicare Gold is likely to hold down specialist costs – one of the reasons why the medical trade unions have opposed the policy.

This is typical of the modern Labor approach to service delivery:

  • Finding efficient ways of achieving our equity goals
  • Utilising private sector resources for a progressive public purpose.

We have consigned big, bureaucratic policy solutions to the dustbin of history. In the last campaign, Labor produced $28 billion in budget savings, including the abolition of nine government agencies and cuts to 13 government programs.

We were determined to deliver a lean and efficient public sector – shifting resources from the centre of government to assist families and communities on the edge of society. This will continue to be our approach: big savings, surplus budgets and efficient, affordable services.

We also need to ensure that our social policies are as flexible as possible. In a diverse and demanding society, it is no longer sufficient to supply public services with an assumption that one-size-fits-all.

The economic independents I mentioned earlier – the new middle class – see a new role for government. They want the public sector to empower them to do more for themselves, not make them fit into big, centralised structures.

They want responsive, customised services and entitlements. Targeted policies that enable them to develop their skills and competitiveness.

The ALP needs to embrace this approach. We shouldn’t be afraid of policies that empower the individual, especially when it comes to skills development. After all, a highly skilled society – one in which all citizens benefit from education and training – is a just society.

In the past, we have advanced some of these policies, such as Learning Bonuses for mature age workers. Now we need to do more: individual entitlements that foster new skills and independence in life.

As a Party, our goals and values are constant: universal access and equity. Our policy methods, however, need to move with the times: giving people extra opportunity and choice. New ways of helping themselves, and then helping society.

The Environment

One of the core values of the modern Labor Party is our commitment to the environment. This is the ultimate inter-generational issue.

A prosperous nation such as ours has a responsibility to pass on our environmental assets to the next generation of young Australians. We are the custodians of their future, their quality of life.

And it would be irresponsible to deny them the benefits of decent air and water quality, as well as the chance to enjoy our national icons, such as the Great Barrier Reef, the Murray/Darling and our magnificent forests.

Labor is a party of the environment because it is the right thing to do for our children and our grandchildren. Australians of our generation have a choice:

  • We can sign up for unsustainable industry practices and deplete our resources
  • Or we can accept our responsibility to young Australians and give them something to look forward to: sustainable development and a decent environment in which to live.

This is why, in the last campaign, Labor advanced a new environmental agenda for Australia’s future:

  • Ratifying the Kyoto Protocol and establishing a carbon trading system – ensuring that Australia meets its international responsibilities in the fight against global warming. That we take action now to stop the coral bleaching of the Great Barrier Reef and the flooding of Kakadu National Park with salt water.

We also released policies to:

  • Save the grand old river system, the Murray/Darling
  • Protect our fragile coastline and beaches
  • Accept Federal responsibility for cities and the urban environment
  • Upgrade the Mandatory Renewable Energy Target to 5 per cent
  • And save the high-conservation value Tasmanian forests.

Have no doubt, we will continue to campaign on these issues. They are right for the environment, right for the next generation.

History tells us that environmental campaigns are never won overnight. It takes time to fully establish the facts in the public arena.

Prior to the Federal election, the Tasmanian Government said that protecting the old forests would cost jobs. After the election, it announced a pulp mill project with 1,500 extra jobs, using plantation timber as best practice. There is no nexus between the pulp mill and the logging of old growth forests.

Clearly, conservation and employment can go together. This need not be a divisive, win-lose debate.

Ten years ago, every timber job in Tasmania relied on 1.25 hectares of harvested forest. Today, one job relies on five hectares.

The industry has fallen down the value chain, exporting more than five million tonnes of woodchips to Japan and Indonesia each year. Its corporate worth relies on the resource flow, rather than modern skills and technology.

This is not a sustainable position. Old industries with old machinery have a limited future in the new economy.

Real job security lies in value-adding: a high-skill, high-tech future for the workforce. This approach also makes more efficient use of the resource, allowing major conservation initiatives without a net loss of jobs.

Already Tasmania has a significant number of highly skilled timber artisans (boat-makers, arts and craftsmen) who make a relatively modest call on the forests, selectively harvesting specialist timbers. They have demonstrated how high-value production assists the conservation cause.

This was the purpose of Labor’s policy, to invest in the industry and put it on a sustainable basis. Access to the timber resource was never in doubt (with nearly 500,000 hectares still available). But our strategy was to make better use of the resource – allowing job security and conservation to co-exist.

The Howard Government’s policy is to turn the Tasmanian forests into tree stumps and woodchips, without investing in the technology and skills of the workforce.

Labor believes in real employment security and the protection of the high-conservation value forests. I want future generations of Australians to be able to see and experience areas like the North Styx, the Tarkine Wilderness and the Great Western Tiers. If sustainability is to have any meaning in this country, we must protect the mighty Tasmanian forests.

Conclusion

The final message I want to leave you with tonight is this: we can win in 2007. Labor can win the next Federal election.

Modern politics is volatile. The electorate is less rusted-on. And the Howard Government has build up huge expectations:

  • That all of its spending promises will be delivered
  • And that interest rates will not harm homebuyers and small businesses.

Labor will hold the Government to account for these promises and expectations. Earlier this week the Governor of the Reserve Bank said that interest rates are likely to rise in the next 12 to 18 months.

We will also continue to campaign on our social policy strengths:

  • Talking to parents and teachers about the benefits of our schools funding policy.
  • Talking to families about our plans to make the health and education systems more affordable.
  • Talking to senior Australians about the impact of Medicare Gold on hospital waiting lists.
  • Talking to the community about the need to protect the environment – our climate, our coastline, our rivers, our forests.

 

We will be campaigning every day to get our message across – at the school gate, in the shopping centres, in the suburbs and towns, across all age groups – advocating our positive alternative to the Howard Government.

We will also be working hard on a new economic agenda – new policies, new productivity – but also reassuring people about our economic credentials:

  • That we won’t run deficit budgets.
  • That we won’t increase the size of the Federal bureaucracy.
  • That we won’t have a long list of spending promises – only the things we can deliver.
  • And we won’t be putting pressure on interest rates.

This is how I see modern Labor: as a financially prudent but socially and environmentally progressive party. A party that values hard work and enterprise, but also believes in the tolerance and fairness of a good society.

So tonight, as we honour the history and heroes of the Labor movement, let’s redouble our efforts to modernise our policies, to move with the times and regain the trust and support of the Australian people.

Let’s redouble our efforts in the struggle against the Howard Government, and show this country a better way forward, the modern Labor way.