Balancing Act

In reply to George Megalogenis's Quarterly Essay, Balancing Act: Australia Between Recession and Renewal.

BALANCING ACT

Correspondence


Elizabeth Humphrys and Tad Tietze

Like Paul Kelly, George Megalogenis is one of those rare journalists who integrates economic, social and cultural developments into his political narrative and policy proposals. His writing is among the most insightful and empirically substantiated of its kind, superior to both the efforts of fellow journalists and much of the recent academic literature on Australian politics. He gets beyond personality-based non-explanations of political success and failure to arrive at deeper structural causes.

But one issue undermines the agenda he spells out in Balancing Act. Do politicians and governments any longer have the capacity to carry through a serious socio-economic reform program of any kind?

Megalogenis contrasts today’s political malaise with the Curtin and Hawke reform periods:

On the previous two occasions when Australia reinvented itself, in the 1940s and 1980s, it was taken for granted that the project would be collaborative. Strong bonds of trust existed between politics, bureaucracy and the press, and between the representatives of labour, capital and welfare. Those connections have been broken by a culture that favours the attention-seeker over the expert, and the bully over the consensus-builder. 

In doing so he provides an explanation of reform success that relies on somewhat ill-defined cultural concepts – “bonds of trust,” “expertise” and “consensus-building” – without asking what material foundations these were built on and whether they still exist. Indeed, those two previous “reinventions” were marked by something that has been missing in recent decades: the organised social bases of the political system, and in particular labourism’s mass trade union base.

The relationship between a powerful but conservative trade union bureaucracy and the ALP was the fulcrum of Australian politics from the early years of the twentieth century. In simple terms, the unions formed the ALP to have representation in the political sphere, and conservative parties united in opposition to that. It is no coincidence that serious reform was often the work of Labor governments: their close connection to unions of key industries meant that organised workers could at times play a consensual role in economic change, even though at other times they locked horns with employers and governments. The conservative side of politics, allied to business interests, tended to operate more as an antagonist to labour’s power than an agenda-setting force of its own.

But the effect of the 1980s reforms was to hollow out the ALP–union link and, more importantly, to disorganise the working-class base of the unions. These changes have greatly undermined the ability of politicians to implement far-reaching national economic reforms – simply because they no longer have institutional partners with a serious social base in civil society with whom to develop trust, mobilise expertise and build consensus.

Crucially, Hawke and Keating’s key macro-economic policy tool was a corporatist contract between unions and government (with only informal business support). The Accord – initially laced with the promise of price controls to restrain runaway inflation, industry restructuring in the interests of job creation and dramatic increases in social spending – rapidly became little more than a blunt instrument for the infliction of centralised real wage cuts. With the enthusiastic participation in the Accord of (previously) militant unions like the AMWU, workers were persuaded to accept large sacrifices “in the national interest” in what was almost certainly the biggest consciously implemented upward redistribution of wealth in Australian history. Organised labour – and its ability to increase its exploitation by accepting “wage restraint” on a national basis – was offered up as the critical tool of macro-economic policy. 

One obvious consequence was a fall in rates of unionisation, which declined from over 50 per cent in 1983 to just 31 per cent after Keating lost office in 1996, and continued to fall to a derisory 15 per cent in 2014. While this fall is not solely attributable to the Accord, the widespread suppression of wages and industrial action saw the ALP and ACTU disorganise their own base. The centralised nature of the unions’ compact with the government required that the ACTU and union leaders quell workplace disputes, police those unions that threatened the deal’s stability, and shift the locus of union activity from workplace organisation to high-level negotiations with government and legal argument in the Industrial Relations Commission (IRC). At ground level the effect was devastating: rapid erosion of rank-and-file participation in union activity, and a consequent weakening of the social weight and power of unions themselves. Archived minutes from local AMWU groups disclose a tragic tale of proud members watching in pain as the union they had built up systematically wound down its basic rank-and-file structures.

The unions tried to cover over this loss of power, first with a series of mergers and then with a campaign to replace centralised wage fixing with enterprise bargaining. Megalogenis assigns responsibility for enterprise bargaining to Keating, but the unions were the ones to demand it – desperate for a way to recover the drastic wage cuts of the 1980s. The new bargaining system was initially opposed by the IRC and key employers because of fear of revived militancy, but they needn’t have worried: by the early 1990s unions were so weak that they were forced to accept a legal framework that effectively confined better organised workers’ gains to single workplaces (with a paltry safety net for weaker groups of workers). Wages rose again in the Howard years, driven not by industrial militancy or government policy but by labour shortages in a booming economy, and they have stalled now that the economy has slowed.

Accompanying this, the social bases of both sides of politics, employer peak bodies and the non-government sector also faded. The leaderships of these organisations have become increasingly isolated and detached from their constituencies, just as civic participation in politics has withered on the vine. Labor Party angst that working-class voters can no longer be relied upon is paralleled by Liberal Party exasperation that employers don’t go into bat for it when it pushes aggressively pro-business policies.

All this helps explain why periodic calls for new national-level cooperation among governments, employers, unions and other interest groups never get very far. This is not a matter of absent political will, or some “cultural” failure of the system. Rather, no section of the political class can claim to be practically tied to an organised bloc of civil society – certainly not one as economically crucial as organised labour – and so have the clout to make an impact on the political economy on a national scale. Further, it is not just that governments have allowed markets too much power in economic life, but that the changes of the last thirty-five years have left governments with ever-fewer levers with which to subvert blind market logic. Instead, we see at most a nebulous hope that infrastructure spending (that is, a sophisticated form of the state throwing money at economic processes beyond its control) can address the problems we face as a society.

We believe that no matter how brilliant and balanced a reform program is concocted by the best minds in the country, the coming years will be characterised by the persistence of a mostly reactive approach by governments to economic developments, and the inability of any section of the political class to develop an agenda that might consistently carry a majority of voters, let alone reshape society in line with this. The deeper structural factors we have outlined mean that pragmatic twists and turns, incoherent policy-making and political chaos are not about to exit the national stage.

Elizabeth Humphrys and Tad Tietze


Elizabeth Humphrys is a political economist at the University of Technology, Sydney. In 2016 she completed her PhD thesis on The Corporatist Origins of Neoliberalism: Australia’s Accord, the Labour Movement and the Neoliberal Project.

Tad Tietze is a Sydney psychiatrist who co-runs the political blog Left Flank

CONTINUE READING

This is a reply to George Megalogenis’s Quarterly Essay, Balancing Act: Australia Between Recession and Renewal. To read the full essay, login, subscribe, or buy the book.

ALSO FROM QUARTERLY ESSAY

Lech Blaine
Peter Dutton's Strongman Politics
Alan Kohler
Australia's Housing Mess and How to Fix It
Micheline Lee
Disability, Humanity and the NDIS
Megan Davis
On Recognition and Renewal
Saul Griffith
Electrification and Community Renewal
Katharine Murphy
Albanese and the New Politics