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Paul Kelly on the ALP's crisis « Previous | |Next »
July 3, 2005

I normally skip Paul Kelly's commentary on Australian politics. I'm irked by the pontification, resent the way Kelly treats the rest of us as ignorant fools who have little to offer, and recoil from the narrrowness, and lack of, policy ideas.

This time round Kelly is saying something about the crisis facing the ALP. If he can help us put our finger on this crisis, then he has provided a way to kick the public conversation along. This conversation sure needs to be kicked along as this particular debate has been stuck on endless repeat for some time.

Kelly starts his op. ed. by saying that:

The crash and meltdown of Mark Latham is an agonising episode for Labor, but the party's real test is whether it sinks deeper into the mire or devises a recovery strategy from its catharsis.

True. We do know that. It repeats the speech of John Faulkner when he launched Bernard Langer's The Loner: Inside a Labor tragedy. Still it is a good opening. Maybe the industrial relations protest rallies of last week in Melbourne have opened a new political space for a recovery strategy?


Or is this workplace relations protest a looking backwards that appeals to shoring up the ALP's populist(conservative blue collar unionist) heartland?

Kelly then asks a good rhetorical question:

The media focus all week fell on Latham's anger, his denial and his refusal to accept his responsibility for the loss. It is easy to attack Latham and, of course, his crass indulgence invites this response. But Latham has left politics. And if Latham were the prime problem, then Labor's woes would be over, right?

That puts a lot of the anti-Latham commentary into perspective does it not? Kelly goes to define the nature of the crisis in a negative and positive way.

The negative approach clears away the rubbish:

The tribulations facing Kim Beazley during the past six months suggest a more searching and complex response is needed to Labor's problems than the suggestion that the removal of mad Mark means a Labor revival...Labor is in crisis, yet this crisis is remarkably undefined or rarely discussed. Indeed, any student of politics might think that Labor's crisis was that Beazley was a windbag, or that Crean couldn't communicate or that Latham had too big a chip on his shoulder. These defects are only too true, yet they are discrete personality problems that don't touch the bigger problem.

Is this crisis is remarkably undefined or rarely discussed? See South Seas Republic for a defence of the Third Way.

The positive approach is Kelly's judgement that the crisis is one of ideas and identity. He says that:

It is about how Australian social democracy defines itself in the globalised age of a market economy amid a community demand for restoration of social order and greater personal responsibility. This has been Labor's problem since Paul Keating's 1996 defeat.

This is promising. Note that Kelly says nothing about the environment.

Kelly then introduces Keating's view that Labor's problem arises because Australia has moved beyond the ALP policy framework, and that the Labor Party doesn't understand how much Australia has changed and what the Hawke/Keating economic reforms have delivered. Keating says that the "Labor Party, unfortunately, has returned to its old anvil; its focus now is on low-income earners and minority groups, but that doesn't work any more."
I've noticed this tendency too. The exclusive concentration on the conservative blue collar vote by the ALP right has always suprised me. As has its tendency to define middle class, the upwardly mobile, the self-employed and small business as an enemy. As Kelly observes this strategy only delivers 37 per cent of the primary vote and, short of a recession, it will stay a minority. The ALP has to do more than appeal to the working class heartland.

Keating's Third Way centres around two alternative ideas that he reckons should guide Labor's tax policy. The first is making Australia a genuinely creative nation and the second is being globally competitive. It is a question of values and votes and unless Labor re-thinks, it won't win the votes of the middle class, the upwardly mobile, the self-employed and small business. This takes us to a contradictory political space we know the ALP is enmeshed in.

Note that there is nothing about the economy and environment in Keating's ideas, and that Kelly merely recycles cliches about the Tasmanian forest issue. The ALP sure has a problem developing its old ideas of ecologically sustainable development.

| Posted by Gary Sauer-Thompson at 9:33 AM | | Comments (7)


Gary, I didnt write the article, "The Sad Tale of Latham and the problem of selling the 'Third Way'", siento did.

To be truthful I am probably not capable of writing an article as insightful on party politics as that.

Thanks for the correction. I'll change the post.

I notice that in the post Siento says:

The Labour Party needs to learn from this, and not by just having a leader that is from the last government that they had. They need to be able to show the Australian Community that a Federal Labour government would be able to govern well. Then they can bring in the reforms that they think are needed.

What sort of reforms would they be? Siento says those that come from pragmatic politicians who think in terms of the Third Way.

That doesn't tell us what the reforms should be

I cannot speak for siento; but ......

I would reduce taxes for everyone. Our federal government is too taxatious and middle income earners are the most raped by the federal government. Our tax brackets are designed for creep and we have a government that is drunk on tax revenue.

I would deregulate the communications infrastructure, and open up spectrum to public use. It is the only way to kickstart innovation and help differentiate the Australian economy as unique. Telstra would be sold, as it would probably become irrelevant in an environment that has low barriers of entry.

I would dump the Australian Qualifications Framework, and let the states (and private business) compete in making education faster, more relevant and more vocational. But I would also junk the anti-federalism we have now, which would include the GST being thrown out of the window. The states can raise their own taxes. The federal government raising taxes for them is an abomination.

I would increase military spending, but ensure that it went toward domestic R&D development programs; if not platform development with some of our regional neighbours. It is the only way to subsidise the high tech industry without having the WTO breath down a country's neck. It would have the added benefit of junking the retarded and limiting "great and powerful friends" doctrine of foreign policy.

The other benefit of military tech funding is that disruptive technologies arise from it. Western economies are reliant upon disruptive technologies to expand their labor markets and economies. We are innovative in medicene because we have been consistent funders of it. If we fund military development programs we will become world leaders in telecommunications as well.

Finally I would increase immigration, with an eye toward Australia having a population of 40-60 million. That will give us a domestic economy that would rival the UK/France/Germany and give local companies a chance to develop in a strong domestic market before heading overseas with all the problems of scale/capital that going global entails.

A large domestic market would also lessen our reliance on commodities. Only the wine industry has created a powerful value added export industry on our commodities. The rest pretty much go to the world's factories in Asia in their raw form. With more domestic consumers, locally innovative services and products will be able to become established, without being blasted out of the water by foreign companies that are realising economies of scale overseas before entering the Australian market.

The Age reports that Lindsay Tanner, the ALP shadow minister for Finance, is saying that high income tax rates should be targeted for cuts as part of broader tax reform.
Tanner says:

"There is no question that there is a need for fundamental reform of Australia's tax system, including a significant strong case for broadening the base and flattening rates."

He refers to Paul Keating for support. In the 1980s:
"He reduced the top marginal rate from 60 cents to 47 (cents), but it didn't alter the balance of the tax system unfavourably to lower and middle income earners because he also broadened the base with capital gains tax and fringe benefits tax."

I notice that there is no attempt by you or Tanner to address the tax inequities for those shifting from welfare to work.

Those on the bottom pay marginal tax rates way above the 47% everybody is saying too high for those on $70,000+.

I watched the interview, Tanner did specifically mention that the biggest problem was the high marginal rates caused by the interaction between the tax and family payments systems.

It was a hurried interview, covering a lot of issues, I think it's a bit much to expect him to go into policy detail of how he's going to solve it when they next win government.

Gary, Given the cost of living in Australia now, and with the GST in place, I would be completely comfortable with people paying no tax until they reach $35,000.

When I say middle income earners, I mean people who earn between $20,000 and $60,000. I find this graph disgusting. The large central spike is what I am calling middle income earners.

It is because of this inequity in the tax system that the middle income earners are being targeted in elections with hand-outs and welfare - for first time house buying, for child care, for private schools etc.

Howard's policies of high taxation for middle income earners and electoral vote buying are creating a new class of government dependancy. That isnt about creating a safety net, so failure in the labour market doesnt result in extreme poverty or ill health. It is about creating voters who are dependant on government so they can maintain their current lifestyles. If they werent taxed so much, they could pursue their lifestyle without having to worry about government policy toward them.

Thanks for the correction.I was only working off the print journalism report.It was misleading.

It is good to hear that Lindsay Tanner considers the high marginal rates caused by the interaction between the tax and family payments systems to be an important area of reform.

Yes it is a bit much to expect him to go into policy detail insuch an interview. What we need to know is whether both the senior ALP leadership and the ALP caucus accepts this as offical ALP policy.

If and when the ALP wins government (I'm a pessimist on this) then it needs to get passed Treasury and the Department of Finance. They have blocked this in the past on account of cost--lost government revenue.

So the ALP needs to be firmly committed and determined on this. Are they? Or is still just good policy idea