National Sections of the L5I:

Australian Labor: Thirteen years of social con-trick

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For a decade and a half, neo-liberal economic programmes have dominated the global scene within the leading club of capitalist nations. Market deregulation, minimal state intervention and cuts in social expenditure have been the norm.

Much the same has happened in Australia. But as in France until 1993, this has occurred for over a decade under a “socialist” government. Since 1983, the governing party has been the Labor Party (ALP) which has a mass base in the working class. Federal elections in the first half of 1996 will decide whether Labor renews its mandate. These elections impose upon revolutionaries the duty to develop a clear analysis of Labor’s years in power together with an electoral tactic that assists the job of breaking workers from their reformist illusions in Labor.

The workers have paid dearly for their attachment to Labor. In terms of their wages and conditions, ability to organise, security of employment, access to welfare services and general living standards, Australian workers have experienced a constant erosion of past gains over the last decade.

Much of this has been achieved by the ruling class through a series of national “Accords” between the Australian Council of Trade Unions (ACTU) and the ALP. These agreements, begun in 1982-1983, tied Australian unions hand and foot to the ALP. The ALP’s strategy of making the Australian capitalist economy more dynamic and internationally competitive has made the workers suffer. The Accord is the main mechanism for doing this. As well as tying workers to falling real wages and increased exploitation, it has overseen the dismantling of the “welfare state”.

The clearest indicators of working class retreat have been steady decreases in real wages and an increase in poverty. Real wages have fallen since 1985 by between 0.5% and 3% each year. Similarly, there is a growing body of evidence showing a rise in poverty since the early 1980s, which gives the lie to the “trickle down” dogma of neo-liberal economists.

Among the G7 countries, Australia is now second only to the USA in the size of the gap between the rich and poor. Last year alone the wealth of the richest 200 Australians grew by 10%.

In addition to the growth in poorly paid, part-time work, unemployment has grown massively. It peaked at just under 10% in 1984 and has rarely been below 8% since.

Two decades of capitalist decline

Few bourgeois political commentators would dispute the picture of decline, loss of competitiveness and erosion of living standards that has accompanied Labor’s time in office. But there is profound disagreement over the causes and consequences of Labor’s programme. Neo-liberal ideologues view the changes as a necessary, if partial and long overdue, response to years of state regulation of the economy. They consider that they need to go further, and possibly Labor is now an obstacle to the next stage of “reform”.

The neo-Keynesians, for their part, suggest that the changes are a product of the ideological ascendancy of economic rationalists within government and the state bureaucracy. This, they argue, has its roots in the policies pursued by Conservative governments between 1976-83 in response to the recessionary tendencies unleashed by the oil shocks and falling prices for Australia’s primary product exports. Those policies only exacerbated the crisis and strengthened the position of those who advocated a more fundamental and consistent restructuring.

While both explanations offer insights into the situation, they are both fundamentally mistaken.

Both approaches tend to treat the state, or more precisely Australian Federal government, as an independent variable which determines economic and political outcomes within the bounded universe of the Australian nation-state. Although they acknowledge the impact of external forces on the Australian economy, primacy is given to the political responses and initiatives of governments of the day, rather than to the objective structural constraints and imperatives of the capital accumulation process both inside and beyond Australia. This accumulation process has had three marked phases since the second world war.

During the post-war boom (1947-69), Australia experienced relatively full employment, rising real wages and steady economic growth. There was a broad consensus throughout the ruling class that the state had a legitimate and necessary role to play in regulating the market. Major sectors of the working class were drawn into this consensus.

But by the late 1960s capitalism globally was entering a long phase of depressed accumulation. The relatively undiversified economy of Australia was badly hit. Moroever, all the supposed explanations for this decline in Australia—Britain joining the EC in 1973 and thereby loosening its trade ties with Australia, the oil price rises of the same year—all occurred long after the essential features of decline had set in.

The 1970s were marked by a slowdown in the rates of growth of real gross domestic product and fixed capital formation and a rise in inflation and unemployment. Economic decline and stagnation persisted even when punctuated by shallow cyclical economic recoveries.

Over time, this fed a political and ideological struggle over the relative merits and de-merits of the welfare state, and over the form that any alternative might take.

The most vocal challenges came from forces on the right who pointed to the manifest failings of welfarism and advocated the supposed benefits of greater market freedoms while systematically demonising the role of state intervention.

But the right’s initial attempts at deregulation faltered in the face of workers’ resistance and the Liberals’ own half-heartedness.

Despite being elected on a platform of welfare cuts designed to alleviate capitalist crisis, welfare expenditure under the Fraser Liberal government actually increased as a percentage of total budget outlays from 23% in 1975-76 to 28.8% in 1982-83.

This was not because of any commitment to the welfare of the working class, but because of growing unemployment caused by deepening capitalist crisis. In spite of the increases in welfare spending, there were real reductions in the standard of living of most Australians, and an associated upward redistribution of wealth, throughout the Liberal government’s reign.

These factors, combined with intensifying industrial strife and the inability of the “party of capital” to solve the problems of the Australian economy, strengthened an alternative vision within sectors of the Labor Party and the ACTU of an historic compromise between capital and labor.

For example, the Amalgamated Metal Workers Union (AMWU) had been elaborating such a view in a series of pamphlets since the late 1970s. These argued that a voluntary agreement between “Labor in office and Labor in industry” was essential to the well-being of “the nation”. Such an agreement, it was suggested, should be based upon the recognition that it was sometimes necessary to forgo wage increases in return for improved social welfare. This was a view endorsed by both the leader of the ALP, Bill Hayden, and the President of the ACTU, Cliff Dolan.

Bob Hawke, as President of the ACTU in the 1970s, developed similar views which he made clear in a 1979 lecture, The Resolution of Conflict:

“ . . . there should be a convening, by government, of a national summit conference of major employer organisations, trade unions and other relevant bodies, where all the facts, analyses and forecasts are put on the table. . . I have been totally convinced for some time now that this step is crucial. Co-operation can only be the product of understanding; confrontation and conflict are the inevitable and disastrous alternatives.”

With these words Hawke anticipated the Accord strategy finally adopted four years later.

Accord politics

After a lengthy period of negotiation between the respective bureaucracies of the ACTU and the ALP, the Accord was finally signed in February 1983 and ratified by a special union conference shortly afterwards. Although originally a bipartite agreement, it was later extended to include the involvement of business representatives in various tripartite forums such as the Economic Planning and Advisory Council (EPAC).

Shortly after the accord was signed Hawke led the Labor Party to victory in the general elections for the federal parliament. While the Accord has been renegotiated several times since, its basic thrust has remained unchanged: an agreement for “wage restraint” in return for state guarantees on welfare provision. The key theoretical assumption—and ideological rationale—was that restricting wage growth would control inflation and promote capitalist investment, thereby creating jobs.

The first part of the deal has been more than adequately delivered, as is indicated by the falling real wages of workers from 1983. The maintenance of the social wage, however, has quietly dropped off the federal government’s agenda.

Since 1983 Labor has presided over: commercialisation of state housing, health, education and energy resources; more means testing for welfare entitlement; a lowering or even liquidation of trade barriers and state subsidies which protected domestic manufacturers and farmers, and a general shift toward privatisation.

Within months of Labor coming to power, the contradiction between the Accord as a strategy for capitalist recovery and the Accord as a “social contract” with a nominal commitment to social reforms, was clear.

The right within the party, led by Paul Keating, was already calling for fiscal responsibility. Meanwhile the so-called left was also being converted to the language of “realism”.

The re-negotiation of the Accord in 1985 confirmed this trend. Employers claimed that the devaluation of the Australian dollar meant that international competitiveness could only be maintained if wage increases were kept below the inflation rate. The Labor Party agreed with this argument and the trade union bureaucracy piously accepted wage increases 2% below inflation.

Whilst the Accord was used as the “carrot” to buy off the bureaucracy and dupe the rank and file, Hawke did not hesitate to use the “stick” wherever workers’ resistance threatened to break the class collaborationist consensus.

So in 1986 the ALP government smashed the country’s most militant trade union, the Building Laborers’ Federation (BLF), arresting union leaders, deploying riot police to break picket lines and finally outlawing the union itself.

This crucial trial of strength came just before an economic upturn, allowing the bosses to set the terms of exploitation within the recovery cycle, using it to “restructure” both workplace labor relations and the terms of the Accord itself.

Subsequent versions of the Accord accelerated the decline in the social wage. Accords Mark 3 through to Mark 8 have each restrained both income wages and the social wage. From Accord Mark 4 (1988) there was a shift away from a “cost of living” criterion for determining wage levels, towards a productivity based criterion. This is associated with a movement towards “enterprise bargaining” that has increased the rate of exploitation, divided the workforce, and foisted onto the working class the familiar recipe of increased hours, harder work, falling wages and higher unemployment.

The results of 13 years of class collaboration stand as a stark warning to workers all over the world who put their trust in Laborism, in particular to British workers currently mesmerised by Tony Blair’s New Labor—a project explicitly modelled on Keating’s alliance with the bosses.

In May 1995 the latest, and what might be the last, Accord was signed by the ACTU and the ALP.

It may be the last not only because Labor could lose the federal election this year, but because it is increasingly difficult for the two parties to the Accord to keep up the “social contract” charade.

While the ALP was able to offer the semblance of a concession to the unions in Accord Mark 8 (a one-off cash payment as a maternity allowance), if it does win the next election it may not have the scope for granting such reforms in the future.

This is because, despite a shallow economic recovery since 1992, there is a massive current account deficit of A$27 billion, which the bosses are demanding must be reduced. This will require dramatic cuts in social spending and in the wages and conditions of Australian workers.

The bourgeoisie is already demanding that Australian capitalism should be more internationally competitive with other capitalisms, especially those of Hong Kong, Taiwan, Singapore and New Zealand, all of which have lower tax rates than Australia and punitive anti-union laws. Selling this to workers in the shape of a new Accord might well prove to be beyond even the consummate sales skills of the ACTU bureaucrats and ALP racketeers.

This brings us to the heart of the contradiction facing Labor. It has to reconcile the irreconcilable: the diametrically opposed interests of its working class base and its ruling class masters.

Character of the ALP

Labor, as a bourgeois party committed to private property, parliamentary politics and profitability, must ensure the survival of all three. Yet to do this it must attack, and hence risk alienating, its mass working class base.

The degree to which it is compelled to attack the working class, and hence the degree to which it exposes itself for what it really is, an anti-working class party, is determined by the rhythms of capital accumulation and the balance of class forces.

Both of these determinants have necessitated that Labor step up its attacks over the last 13 years. Without doubt, this has already alienated many of Labor’s working class supporters, and will continue to do so if Labor is re-elected.

But it has not decisively changed the character of the ALP as a bourgeois workers’ party.

The mass of the working class still have active illusions in the Labor Party. Labor’s organised link with the working class is expressed via the trade unions and mass electoral support. Revolutionaries must apply tactics which help to expose in practice the objectively anti-working class nature of the Labor politicians, and which can thus help break workers’ illusions in reformism.

These tactics are the various forms of the workers’ united front; working within the Labor movement, placing demands on the misleaders which they are unable to grant but which the working class need; and include giving critical electoral support to the Labor Party to put them to the test of office.

Many on the sectarian left (for example, the Socialist Labor League and the Spartacists) jump from the fact of Labor’s betrayals over the past thirteen years, to the assertion that Labor has already lost its mass working class base.

The conclusion is that Labor has to be treated the same as the Liberals in all tactical respects.

This reasoning is fatally flawed because it reads-off, mechanically, what the consequences of ALP/ACTU policy will be for workers’ consciousness.

It does not necessarily follow from Labor’s betrayals that workers have had their illusions smashed in the Labor Party. In fact, despite Labor’s continual betrayals over recent years, there are good reasons for believing that the vast mass of the organised working class still do view Labor as in some sense “their party”.

To begin with, there is the fact that a body representing 3 million Australian workers (the ACTU) actively campaigns for Labor and provides the lion’s share of funding for the party. Affiliated unions are represented at state level by fulltime union bureaucrats.

To think that this would be possible if the mass of workers had already broken with Labor, or with the ACTU bureaucrats for that matter, is pure fantasy. This is confirmed by the fact that Labor still has a mass membership base in the working class; workers who wrongly think that the party can be reformed from within.

It was these organic links that enabled Trades Hall (ACTU headquarters) to mobilise hundreds of thousands of workers against the Liberal administration in Victoria in 1992—a mobilisation which was, of course, dampened down when it threatened to get out of the control of the bureaucracy. In 1994 the bureaucracy sanctioned a one-day general strike against the Liberal state administration’s anti-union laws.

Now, with Labor in Federal power, but having lost control of all but one state government, Keating is showing his preparedness to use the union link as a political weapon against the Liberals.

All of these factors point to a continued organic link between the Labor Party and the working class. For the mass of workers these illusions cannot be broken merely through propaganda, but only through the practical experiences of betrayal and open conflict with workers who have been mobilised in pursuit of their own needs.

Of course, like most reformist Labor parties, the contradiction within the ALP is not static. The ALP bureaucracy has been able to build a base within the Australian bourgeoisie, through a mutual policy of patronage towards multinational bosses like Murdoch and Kerry Packer. But it has not yet abandoned its working class base as the key selling point to such bosses: we can control the unions and manage the Australian economy better than the Liberals.

The Accords have been successful for Australian capitalism precisely because of the unique relationship of the Labor Party to the working class organised in the trade unions. Neither Liberals nor Conservatives could have used an Accord to pursue capitalism’s interests half as successfully as Labor has.

And, as always, the Labor and trade union bureaucrats seem about to be awarded with a stab in the back from the bourgeoisie.

The bosses who flocked to Labor under Hawke and Keating are well aware of the limitations of Accord politics from the capitalist point of view. Constructing a labor market to compete with the South-East Asian “Tigers” will require an end to the Accord and a renewed attack on working class living standards and welfare gains.

Some, like Rupert Murdoch, who has supported Labor over the past decade, are increasingly critical of the ALP. However, it is not a foregone conclusion that the bosses will pull the rug from under Keating. It is a matter of cold calculation. Will a weak Liberal government be any better at pushing through the next stage of neo-liberalism than an ALP government with the unions shackled to the Accord?

Whoever represents the ruling class in Canberra will be forced to launch that attack. At present neither the Liberals nor Labor are prepared to stand openly on a platform of ripping up the remnants of the welfare state and imposing high interest rates. It was the Liberals’ preparedness to voice demands for these which ensured Keating’s surprise victory at the last election.

Faced with the possibility of defeat, Labor is promising the bosses everything and the workers very little. But as long as workers retain the illusion that Keating’s party can protect them from the ravages of an Australian Thatcher, and in the absence of any credible mass break from Labor, revolutionaries have to operate the tactic of critical support.

In the coming elections our slogan will be: Vote Labor, but organise to fight! The task for militants in both Labor and the unions, as well as in the social movements and single issue campaigns, will be to activate the illusions of the working class in Labor around clear, immediate demands, launching the fight for these demands from below, and using every election platform to mobilise resistance to whoever wins in 1996.

The ALP in the Whitlam Era

Today, many argue that the programme of social reforms implemented by the ALP in 1972 represented some sort of socialist panacea. Indeed, for some Labor stalwarts, a misty-eyed nostalgia for “Gough’s Party” and its achievements is preferable to an honest confrontation with the unpalatable realities of the present. However, closer scrutiny of the “Whitlam legend” suggests that the continuities between the policies of the early 1970s, and those of the Hawke/Keating governments, may be more important than the differences.

After nearly a quarter of a century’s absence, the ALP, under Gough Whitlam, was elected to power in late 1972.

Its platform of class peace and national unity, which had been supported by significant sections of the bourgeoisie, included reforms designed to appease a working class roused into action by the consequences of the end of the long boom.

Within months of being elected, the new government had initiated a series of social reforms demanded by the working class.

They included the abolition of tertiary education fees; a universal entitlement to health and medical benefits; the introduction of a supporting mother’s benefit; the re-opening of the case for equal pay legislation and the withdrawal of troops from Vietnam.

These were not the uncontested handouts of a benevolent government. On the contrary, they must be understood in the context of a mass upsurge of militancy in the late 1960s and early 1970s as workers, students, aboriginals and women began to challenge the legacy of more than two decades of Conservative government under Menzies.

This upsurge was expressed most clearly and forcefully on two fronts; opposition to Australia’s involvement in the Vietnam war and conscription; and the industrial unrest which emerged in the late 1960s under the impact of economic slowdown.

The impact of the Vietnam war on a whole generation of activists is well documented. By contrast, the significance of the industrial unrest which punctuated this era has been less widely considered.

In 1969, the Australian working class won one of its finest victories, defeating the hated “penal powers” of the arbitration system. These punitive powers were used by the capitalist state to discipline labor in an era of low unemployment.

Struggle against the penal powers broke out in 1969 when the Secretary of the Victorian Tramways Union, Clarrie O’Shea, was jailed for refusing to give evidence against his union. Over 400,000 workers immediately took strike action, O’Shea was freed and the penal powers were effectively destroyed. This heralded an upsurge of militancy in the early 1970s which was reflected in an increasing number of working days lost to strike action, and wage increases in excess of inflation levels.

It is against this background of emerging economic crisis and the spectre of social revolt that the reforms of the Whitlam government and changes to the relationship between the political and the industrial wings of the Labor movement must be understood.

After the victory against the penal powers, Whitlam and his faction of the ALP set about “modernising” the party. This entailed severing the federal parliamentary party from the direct collective control of the trade union movement and local party branches.

In addition, there was federal intervention into the strong left-wing Victoria branch of the ALP. Left members were threatened with expulsion if they did not toe the line of the dominant Whitlam faction.

In addition to the institutional modernisation of the party, there were also important ideological shifts that marked a transition towards a philosophy now customarily associated with the Hawke and Keating governments. Central to these changes was a renewed emphasis on the “social wage”—welfare services—at the expense of income wages. In fact, Whitlam and others in the ALP negotiated with the ACTU, and then actually attempted to impose, a number of wage and price controls which pre-figured the incomes policy upon which the Accord now rests.

These measures were militantly rejected by the working class, who responded to a wage freeze in 1973 with a wave of strike action. Unfortunately for the ALP, increased spending on the social wage was accompanied by increases in wages at a time of rising inflation and growing unemployment.

The last 18 months of Whitlam’s Labor government testify to the variety and efficacy of the weapons available to the ruling class when it senses that its interests are being threatened. The bourgeois media, led by the formerly “pro-Labor” Murdoch group, embarked on a campaign of systematic vilification of Labor.

At the same time, many multi-national corporations initiated a ‘capital strike’ which intensified throughout 1975. Moreover, as became quickly apparent, the CIA set about destabilising the Labor government with a well orchestrated campaign of subterfuge within and around the party and the state bureaucracy.

Labor abandoned any pretence at being a government of social reform in its August 1975 budget.

But for its bourgeois masters this was too little, too late. Following growing tensions in the final months of 1975, an unelected representative of the British Queen, Governor General John Kerr, used constitutional powers to dismiss Whitlam, the elected Prime Minister.

Whitlam’s Labor government was not in any way socialist, as is often suggested by its apologists.

On the contrary, Labor was then, as now, a pro-capitalist party which, because of its organic links to the working class through the trade union movement, was able to demobilise a militant working class, thus keeping class struggle within the bounds of parliamentary legality and maintaining capitalist stability.

What he did was to inaugurate two processes which bore fruit for the ruling class in the mid-1980s: the process of buying off the ACTU bureaucracy with promises of greater “social wages” and the process of removing the ALP from the union bureaucracy’s control.