Opinion Pieces

Not Dead Yet - Response to Mark Latham's Quarterly Essay

October 30, 2013

Election night on 7 September 2013 brought devastation for the federal parliamentary Labor Party and its supporters. It saw some very talented representatives defeated by a big national swing that put a full stop on the Rudd-Gillard era. For my part, it wasn’t until well after 8 p.m. that I felt certain that I was the newly elected Member for Rankin, covering a large slab of Logan City and a handful of suburbs in Brisbane’s south. Others, including the television networks, had called the seat much earlier. Cautious by nature, I had locked myself away with two colleagues in the small office of the massive former hardware store my team had commandeered for the campaign HQ, crunching numbers and taking calls. Outside, where the shelves of stock had once been, more than a hundred volunteers sipped on Fourex tinnies, ate spaghetti and watched the results roll in. Through tinted glass, I watched the room erupt when the ABC coverage noted an initial swing towards Labor in my seat, punctuating the gloom of the broader national political devastation that even the most optimistic Laborite knew was coming for us.

Earlier that day I drove through the electorate with my wife, Laura, through the suburb where I was born, another where I went to primary school, another where I spent most of my childhood and lived while studying at Griffith University, and yet another where I bought my first flat before moving down the street into the house we live in now. All within the current boundaries of Rankin and all in Logan City. Sustained by Laura’s company, sausage-sizzle fare, four hours’ sleep and adrenalin, we visited two-thirds of the forty-plus booths, meeting voters, shaking hands, thanking volunteers and fretting about the outcome. In the car between booths I composed in my mind a speech for the evening. As pessimism set in, I focused on words of concession. I had convinced myself that a wealthy opponent who had spent ten times what I had, and campaigned for twelve months longer, would be the first Liberal elected to represent the community I was born in, live in and love. A Sky News exit poll forecasting my defeat was quickly relayed by SMS to Liberal booth workers, who high-fived and, in one case, danced a little jig.

Few federal seats around Australia are homogenous, and Rankin is among the least so. What fed my pessimism on election night was a sense that while I had made specific connections with the diverse groups in my electorate, there was no overarching message that appealed to all parts of the electorate equally – a version of the problem we had nationally. In a cacophony of people and their aspirations, at home and around the country, we couldn’t simultaneously satisfy diverse constituencies. My electorate, for example, has a core of low-income families, pensioners and immigrants; a south-west of commuter suburbs dominated by utes and high-vis vests; an east comprising working families; and a north including wealthier suburbs just on the other side of the Logan–Brisbane border. There seemed little affinity between the areas when it came to voting. The gap was 30 per cent between my best and worst booths, perhaps among the widest in Australia, comparing 70 per cent in Woodridge with high-40s in Algester and Calamvale, and just 40 per cent in Daisy Hill.

The key to rebuilding the Labor Party after defeat is finding a new program to reunite our constituencies, without the luxury of the institutional advantages of a bygone era. The fragmentation of the old structures of working-class life, such as unions and the Catholic Church, upon which our organisational and electoral hopes once rested, has thrown up the representational challenges Mark Latham identifies in his original Quarterly Essay. There is hardly a challenge to Labor’s future which isn’t related in some way to his dichotomies – between aspirationalists and the underclass, and between inner-city progressive elites and outer-suburban cultural conservatives. Solving this constituent dilemma is the ALP’s philosophical and electoral Rubik’s cube. Getting all the colours to match up is our most daunting task.

Now that the political battleground is dominated by two extremes – the Greens and Tea Party wannabes – the task for this and following generations of Labor people is to fill the vacuum at the centre of Australian politics. That’s why any useful analysis of the future of the Labor Party begins with this dilemma. To succeed electorally and philosophically we need to find new ways to unite the country behind a dynamic idea. This will be difficult, but not beyond us.

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To understand the task ahead we first need to assess the Rudd-Gillard period. We need to explain the disconnection between Labor’s stunning policy achievements from 2007 to 2013 and the decisive defeat we suffered at the election. The story of the past six years is one of policy progress and economic success untold and under-appreciated – partly because of division within the ALP caucus, to be sure, but also because of the poisonous politics practised by the “hyper-partisans” and the way this fed the deterioration of Labor’s culture and relationships. Combined, these phenomena prevented Labor from sharing in the credit for Australia’s achievements, particularly during the global financial crisis, and from uniting the country behind a plan for the future built on the pillars of Better Schools, DisabilityCare, emissions trading and the National Broadband Network. This created the essential preconditions for someone as extreme as Tony Abbott to slip through the doors of the Lodge, an awful prospect undreamt-of half a dozen years earlier.

These are some of the themes of the book I wrote early in 2013, called Glory Daze: How a World-Beating Nation Got So Down on Itself. In it, I argue that the incentives in our political system are badly misaligned, which allows the hyper-partisans in the media and business to dominate the national debate in a way that pushes it to the extremes. This complex and costly combination of hyper-partisanship, short-termism, lobbying, rent-seeking, sloganeering, oppositionalism and circular self-criticism has poisoned Australia’s confidence in itself and diminished Labor’s achievements under Rudd, Gillard and Wayne Swan.

Despite the election result, the fight over Labor’s legacy is not yet won or lost. The onus is on all Labor people, especially those who were part of the just-defeated government, to defend our policy legacy. It has been pleasing to see this recognised in the immediate aftermath of the 2013 election, even if couched in the negative as a way of avoiding the mistakes made after 1996 when the Hawke and Keating legacy was hidden in a cupboard far too long. Not one contemporary Labor figure has convincingly argued that it was Labor’s lack of policy or economic achievements that cost it government.

There is a great deal to be proud of and salvage from the Rudd-Gillard era. Almost alone in the developed world we maintained an unemployment rate of under 6 per cent, and added almost 1 million jobs. Our economy is about 15 per cent bigger than when we took office, partly due to what Joseph Stiglitz described as “probably the best-designed stimulus package of any of the countries, advanced industrial countries, both in size and in design, timing and how it was spent.” We bequeathed to our successors interest rates at record lows, inflation well contained, and debt a tiny fraction of our peers’. By any measure, economic management was the finest achievement of the Rudd and Gillard governments. Had we failed there, we would have been mired in the type of rolling crisis management we still see in comparable countries, and we would never have gotten around to key reforms like emissions trading, schools, disabilit services and much more.

As I argued in Glory Daze, economic reform has never been easy in Australia, but it is near-impossible in the current climate. One problem is the quickened pace and heightened partisanship of the media. Another is the straitened fiscal circumstances that make it impossible to soak the electorate with cash in a way that allows governments to buy reform without “losers.” The third is the rent-seeking and hyper-partisanship that magnifies the opposition of a select few at the expense of policies designed to benefit the great mass of silent Australians going about their lives. This is the cost of Australia’s lack of self-confidence: an unwillingness to change in ways that are difficult in the short term but deliver lasting gains to more people into the future.

Returning to opposition now begins a period of deep thinking and reflection for Labor. As we go about this, the best service we can provide the party is to maintain a focus on what kind of country we want, then to work backwards from that vision by colouring in the policies and structuring the party to best deliver bold national objectives. We must not get this the wrong way around: fighting over the institutional arrangements of a declining party, developing policies to satisfy different stakeholders, and then trying our best to stitch them together into an all-encompassing story, which is little more than an advertisement that does not survive a change of leader.

We did not make this mistake when it came to the big economic policy achievements and social reforms I have touched on. But Australians who did not discern a coherent narrative underlying this suite of policies found can be forgiven their confusion. Whoever we blame for this failure, we can all agree that Abbott’s election demonstrates that by the end of Labor’s period in government our accomplishments were not matched by a widely shared sense of national achievement, unity or purpose.

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Sometime during the 2012 American presidential campaign, Mitt Romney revealed himself as a fan of Downton Abbey. Within minutes the joke started circulating that of course he did, he thought it was a documentary. Tony Abbott is not quite a politically tin-eared plutocrat from central casting, but he is another self-confessed fan of Downton Abbey. And there, perhaps, hangs a political tale – that the nascent Abbott prime ministership represents something much more than a deficit of unity on the Labor side or any deficiencies in our 2013 campaign. It represents a smaller Australia, frozen in time.

The new prime minister’s description of women “knocking on the door” of the cabinet paints the picture of a small group of middle-aged men taking decisions in a wood-panelled room behind lock and key – the cosy oligarchies of a bygone era returning to rule the roost. A nation robbed of the dynamism and creativity that comes from drawing on the broadest available talent, not just in politics but in the economy, dominated as it will be under Abbott by the well-funded noisy demands of the vested interests drowning out the disparate voices of working people, pensioners and small business.

Our country and our economy need to be more dynamic and more inclusive, not less. Labor’s alternative vision for Australia should build on the conviction that the next economic success stories need not be selected from the limited, yellowing pages of the last. That there is not just room for more Australians to get ahead but that the future demands it. That dynamism and creativity come from harnessing the broadest possible workforce, one that taps women leaders, the work ethic of new migrant workers, the experience of seniors, the potential of disadvantaged communities, the technology for parents to work from home, the ingenuity and entrepreneurism of small-business creators, and the powerful imaginations of thinkers and innovators attracted to our shores by the promise of a more inclusive economy.

That’s why Labor now needs to embrace the overarching theme of generational mobility as the core organising principle of our policies. Generational mobility is simply the idea that life choices and future economic contribution should not be determined at birth. Building mobility requires a focus on the tools of success – the means through which Australians can write their own destinies, provide for their loved ones, and get ahead. This can stake out crucial territory for those of us on the sensible centre and centre-left of the political spectrum. It will differentiate us from the backward-looking stasis of the conservatives under Abbott, and from the post-materialist obsessions of the Greens, which bear little resemblance to the hopes and dreams of middle Australia.

The idea of the “fair go” has been deeply ingrained in Labor values for more than a century. It is not only connected to Labor’s past, but also to the country’s future. Inequality has been on the rise for some time, and though research (by Andrew Leigh and others) shows no decrease in Australia’s intergenerational mobility over time, the now-famous “Great Gatsby Curve” of the Canadian economist Miles Corak suggests that today’s inequality will give rise to less generational mobility in the future. Labor’s mission in the coming years is to turn this around – to be the party not only of fairness and redistribution, but also of mobility and success.

There’s nothing revolutionary in this, and even our political opponents will pay lip service to a lot of it. But there is a fundamental difference for Labor. At our core, we are Labor because we believe in economic mobility. These are words that trip off the tongue fairly easily, but when you stop and think carefully about them, you immediately notice two important things: one, no other political party in Australia actually believes in economic mobility; and two, it is an idea radically at odds with current social and economic trends.

Labor believes in economic mobility because we believe in the more contested political ideas and choices that underlie it – the ideas that the circumstances of your birth must not dictate your life chances, and that there is a role for the state in helping to create better life chances for the disadvantaged, both through enhancing their capabilities and through breaking open networks of privilege to admit people on merit.

The Greens obviously don’t believe this because their animating policy concerns are post-materialist in nature. And the conservative parties more obviously don’t believe in such economic mobility because they were invented to prevent it. Labor has held up half the Australian political sky since the election of the world’s first labour government under Chris Watson. Conservatism has had to define itself in opposition to Labor for all of this time – to define itself in opposition to the aspirations of working people for a better life – first as protectionists and anti-socialists forming the Commonwealth Liberal Party in 1909, through Menzies’ creation of the Liberal Party in the 1940s and the Coalition of today. That’s the story as told by the history books, and it’s no different today, be it in the unquestioning opposition of the conservatives to the mining tax or a billionaire starting his own party to look after his commercial interests.

Today there is a rising global trend of inequality, particularly across the developed world. The Economist reports that in the United States, for example, 95 per cent of the gains from the post-GFC recovery have so far gone to just 1 per cent of the population. Conservatives don’t even bother to dispute the trend, preferring to argue that we shouldn’t worry about it. Research connects this growing inequality to an even deeper concern about declining economic mobility. In other words, inequality in one generation breeds further inequality in the next. There’s a brutal logic to this, but one violently at odds with our national self-image, in which Australia is a place where anyone from any background can make a success of themselves.

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Labor’s focus in the coming term of opposition and beyond should be on creating the essential preconditions for genuine social and economic mobility, across suburbs and across generations. Having deployed the tools of Keynesian demand-management to build the modern welfare state and save Australia from recession, this is now the role for Labor in the modern economy. Having established better ways to redistribute wealth, we must now turn to better ways to redistribute opportunity. This means giving people the tools to be more successful participants in the market economy. It means promoting digital inclusion and a dramatic re-ordering of our budget priorities to create deeper, broader, more sophisticated pools of human and capital and technological advance. Getting the policy right can deliver a virtuous cycle of political success, by creating a more inclusive base beyond public sector workers and declining blue-collar industries, reaching deep into knowledge industries, entrepreneurs and small business.

The idea of economic empowerment is not a new one. Taking from the work of the brilliant development economist Amartya Sen, Latham argues that, “We need to think of inequality differently, as a threshold test” based on “the skills and capacity to benefit from economic growth, to be active in the community, to enjoy good health and wellbeing.” And we need to “ensure all citizens reach an acceptable threshold, lifting up the disadvantaged so that, in acts of self-reliance, they can do more things for themselves.” Sen’s often-quoted dictum summarises the idea best: “poverty is the deprivation of opportunity.”

A scan of the global centre-left and the ideas being generated by Labor’s fraternal parties throws up some interesting ideas on how to colour in Sen’s big picture. Take, for example, the concept of “predistribution” being developed by Ed Miliband in the United Kingdom. The term itself – described by the Guardian’s Martin O’Neill as “an unsnappy name for an inspiring idea” – comes from Yale’s Jacob Hacker. To “make markets work for the middle class,” Hacker advocates a “focus on market reforms that encourage a more equal distribution of economic power and rewards even before government collects taxes or pays out benefits.” This means that, “instead of equalising unfair market outcomes through tax-and-spend or tax-and-transfer, we instead engineer markets to create fairer outcomes from the beginning.” It “is the idea that the state should try to prevent inequalities occurring in the first place rather than ameliorating inequalities through the tax and benefits system once they have occurred.”

Much of the writing about predistribution centres on three kinds of policies. The first relies heavily on government regulation and direct intervention (for example, Miliband’s proposed rail price caps). The second draws on a history of thought stretching back to the days of the mid-century political philosopher James Meade and, more recently, John Rawls, both of whom have advocated a form of “property-owning democracy.” A third kind of predistributive policy has been described by Kitty Ussher as “the empowerment interpretation, which focuses on what is needed to ensure that an individual can respond to the uncertainties of a global economy in a positive and confident way.”

The regulatory strain that sees national governments interfering substantially in the pricing of basic services may find superficial favour in a community burdened by cost-of-living pressures, but it is no way to foster a competitive economy. For those of us on the centre-left wary of over-regulation and not yet ready to give up on the possibilities of markets, it is the empowerment interpretation that attracts us most. It is the best way to achieve our goal of broad, sustainable growth – by harnessing the capacity for people to get ahead, to be a confident and self-sustaining part of a dynamic and innovative economy.

According to Ussher, empowerment predistribution “is about striving to endow everyone – regardless of circumstances of birth – with sufficient weapons in their own personal armoury that they can achieve their ambitions and hopes even in the face of strong economic forces that seem daunting.” It leads policy-makers down the path of heavy investment in human capital and the empowerment of workers so that, combined, they have the best chance of creating a high-wage, high-skill economy.

In this term of opposition, Labor’s focus should be on policy development at the intersection of human capital and technology, recognising, as the Economist has, that “Many of the underlying causes of the growing gap between rich and poor – fast technological change and the rapid globalisation of the economy – are deep-seated and likely to persist.” The magazine cites the view of Tyler Cowen of George Mason University that “the population will soon be divided into two groups: those who are good at working with intelligent machines, and those who can be replaced by them.” The Economist’s recipe to address this is a “two-part agenda drawing on ideas from both left and right, aimed at reducing boondoggles for the affluent and increasing investment in the young.”

An agenda based on heavy investment in young people is one that everybody interested in building intergenerational mobility should sign up to. It is the key to unlocking a more successful economy. That a traditionally right-wing, pro-market, pro-business magazine should point this way forward gives us a hint of the possibility of uniting business, workers and the community behind a dramatic reordering of budget priorities in Australia. In tight fiscal circumstances, investing more in human capital and technological capacity will require difficult choices. Given the future benefits to business, our first port of call should be business-tax concessions. We can strike a blow for economic mobility and tax simplicity at the same time by hypothecating money raised from closing tax concessions directly to investment in our economic capacity.

In time, Prime Minister Gillard’s legacy will be regarded as a key part of the story of intergenerational mobility, especially when it comes to schools and disability services. By combining protections for workers with dramatic increases in investment in education and reforms to attack entrenched disadvantage, she has already followed the predistribution playbook. We can go further down this path, breaking new ground by reordering national spending to mirror the investment in human capital being undertaken by our competitors. We can do more to encourage students from disadvantaged backgrounds to enter our universities, with a combination of scholarships and mentoring. We can be more creative when it comes to digital inclusion. In this way, empowering workers need not be an alternative to market economics, but a way of allowing more people to succeed in a competitive, dynamic, growing economy.

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On 13 September, as caucus members new and old filed into the Opposition caucus room, my mind wasn’t on the loftiness of economic policy, Amartya Sen’s work or the legacy of our just-defeated party. Only afterwards did I realise the cause of my melancholy: the last time I had stood in that room, beneath the portraits of leaders past, was on 4 December 2006. That was the day Kim Beazley was defeated by Kevin Rudd for the Labor leadership. It was also the day Beazley’s brother had passed away. As the leader’s deputy chief of staff, I had snuck into the back of the room to watch him deliver a classy farewell, full of emotion, praise for his colleagues and pride in the party. That speech marked the end of a more civil, loftier, thoughtful period in our politics, replaced with the hyper-partisanship and poisonous politics I have described.

The truth is that it wasn’t necessarily Labor’s policies or principles that saw us defeated in 2013, but fragmented constituencies and an internal culture tainted by the politics of polls and personality. The fact we were thrashed by a Liberal Party bereft of positive plans and unable to cost or properly explain its policies necessitates serious soul-searching. In the immediate aftermath of the election there has understandably been a focus on leadership. Understandable given the events of the last few years, but also because a defeat like that which we have just experienced cuts deep and people want to apportion blame. But the problem is broader than leadership; it is cultural as well.

Now each of us in the federal parliamentary Labor Party has a choice about how best to contribute to the broader discussion about future direction, learning from the past. As Sean Kelly, a former adviser to both Rudd and Gillard, wrote so convincingly, we need to cling to the best policy achievements of the last half-decade while discarding the worst internal obsessions.

Each of us will come to a different conclusion. Some will focus on rules and structures, and they are very important. The democratisation push within the party has already made some impressive gains. But as one of my most astute campaign workers said to me on election night, the rules of the ALP are irrelevant if the culture is “stuffed.” Culturally, we haven’t gotten along sufficiently well in recent years to press our policy advantage or superior vision. That’s why the onus is now on all Labor MPs, and particularly on those like me, elected for the first time, to help repair caucus’s culture in the new parliament. This means giving the “thinkers’ faction” the intellectual freedom and encouragement to map the way forward.

For inspiration we should reflect on the words embossed on the simple print portrait of President Barack Obama, which hangs on the wall of my study at home: “Our destiny is not written for us, but by us.” This is how I approach Australia’s future and Labor’s role in constructing it. We want a country where people have the capacity to be the master of their own destiny. Where, provided the tools to succeed, more people grasp the opportunities of a growing, vibrant, dynamic market economy fuelled by a growing, vibrant, dynamic population.

Genuine economic and social mobility requires a compact between government and citizen – and between generations – that government will maintain a decent social safety net and provide the requisite opportunities for more people to prosper and provide adequately for their loved ones. If we can unite the country behind an idea as simple as this, we can convince Australians that we are neither exclusively new or old Labor, not just the party of the poor or the successful, or of inner or outer suburbs, but a broad party for those who want to get ahead, writing for middle Australia a new chapter in our national story. A destiny written by people themselves, freed from the shackles of birthplace or ethnicity. A dynamic, wealth-creating market economy powered by that merit-based, more inclusive society.

The overwhelming feeling experienced by a newly elected MP is that a lot of people are now relying on you to stand up for them. Of course, the same is true of the Labor Party. We delivered for Australia over the last six years, yet the country still felt let down. The sooner we rebuild our culture, the more likely we are to come up with the necessary policies, ideas and vision to reunite the country and make amends.

WE'LL PUT PEOPLE FIRST