How Labour Built Neoliberalism, a book by political economist Elizabeth Humphrys, is a meticulously researched diagnosis of the malaise that has plagued the Australian labor movement since the 1990s. It’s a vital perspective on politics in Australia over the last thirty years.
Wayne Swan, the national president of the Australian Labor Party (ALP), recently decided to engage with her argument on Tom Ballard’s podcast in a characteristically thoughtful and constructive manner:
Someone published a book recently claiming the Hawke–Keating years were neoliberal which is just rubbish . . . we’re a laborist party with unions affiliated with us and I find it offensive, some of that analysis, which somehow suggests that the union movement of the country and Labor politicians of enormous stature . . . were somehow neoliberals.
When Ballard asked Swan whether he’d actually read the book, the answer was predictable: “I’ve read the summaries of the book, yeah absolutely.” That’s the kind of intellectual openness for which Labor’s Right faction is renowned.
Swan’s paraphrase of Humphrys is wildly inaccurate, of course. Her analysis revolves around the Prices and Incomes Accord, a social contract brokered by Labor between unions and business in 1983.
The ALP and sections of the trade union movement still consider that deal to have been a triumph. But as Humphrys argues, it played a crucial part in making Australian capitalism profitable again following the economic crisis of the 1970s.
In The Write Stuff: Voices of Unity on Labor’s Future, a recently published book of essays by leading Labor Right figures, Swan faults Humphrys for supposedly arguing that “Labor’s agenda was no different from the neoliberal agenda of Reagan and Thatcher.” But she didn’t. Rather, Humphrys shows how Australia’s path to neoliberalism was unique:
In the case of Australia, the implementation of neoliberalism occurred through a “positive” corporatist project centered on working-class sacrifice in the national interest. In turn, the use of corporatism within vanguard neoliberalism led to a particular method of labour disorganization — one marked by the labour movement itself implementing successful wage suppression and self-policing of industrial activity.
With the consent of the then-powerful union movement, the Hawke–Keating governments implemented an astounding array of reforms that swung the pendulum away from workers and toward capital. In the account supplied by Humphrys, these reforms included
. . . floating the Australian dollar and abolishing exchange controls; deregulating the financial and banking sectors; dismantling the tariff system and promoting “free trade”; widespread industry deregulation; privatization of government-owned entities; corporatization of government departments and contracting out of services.
Perhaps most importantly, Bob Hawke and Paul Keating also maintained strict control over wage growth while restricting the right to strike outside mandated bargaining periods. At the same time, the system of enterprise bargaining they introduced deregulated the labor market by forcing unions to negotiate with individual employers.
As Humphrys argues, the Labor leadership “implemented what was effectively a prolonged period of national austerity for the working class through wage suppression and public expenditure restraint — lower than the conservative governments that came before and after it.”
As a way of building neoliberalism, it was staggeringly successful. But these reforms critically undermined Labor’s long-term electoral viability.
Holding the Neoliberal Un-Populist Line
Paul Keating held on for a time, winning the supposedly “unwinnable” 1993 election against John Hewson on a moderately progressive platform of job creation and tax cuts for workers. But Labor couldn’t outrun the self-inflicted electoral damage forever.
In 1996, John Howard defeated Keating. It was a devastating loss as a significant proportion of Labor’s blue-collar voters crossed over to the Liberals. Humphrys cites a 1996 national report commissioned by the ALP on the defeat that squarely blamed Labor’s economic reforms, noting that most of its submissions constituted “a collective criticism of Labor’s support for neoliberalism.”
Rather than change tack, the ALP has stood firm behind neoliberalism ever since. In 2019, Hawke and Keating issued a joint public statement in which they boasted that “the design and structure of the modern Australian economy was put in place exclusively by the Labor Party.”
This is why, for two decades, the ALP has remained unpopular, trailing behind the Liberal Party and churning through a long list of failed leaders, including Kim Beazley, Simon Crean, Mark Latham (now a New South Wales senator for the far-right One Nation Party), Bill Shorten and, most recently, Anthony Albanese.
Kevin Rudd is the only Labor leader to have ousted an incumbent Liberal government this century. He beat John Howard in 2007 thanks to a combination of more populist rhetoric and the union-led Your Rights at Work Campaign. This campaign saw millions of workers stop work and march nationwide against Howard’s WorkChoices legislation that would have undermined collective bargaining in favor of individual agreements between workers and bosses.
Then Rudd’s own party brought him down after he proposed to tax the superprofits of mining companies. His replacement, Julia Gillard, steered Labor back toward neoliberal unpopulism before she was also deposed in 2013 — again, by her own party.
Today, only one in three Australians vote Labor. Of the last nine federal elections, the ALP has lost seven outright and only won a plurality in 2010 as Gillard was reelected at the head of a minority government. In the last three elections, Labor’s primary vote stagnated around 33-34 percent.
By way of comparison, during the 1950s and ’60s, Labor also endured a long stretch out of power. Back then, however, their vote averaged 45 percent over nine elections. If Scott Morrison wins the next election and serves his term, the Coalition will have governed for twenty-three of the last twenty-nine years.
According to the most recent Australian Election Study:
The long-term pattern since the 1980s suggests an erosion of Labor’s working-class base. In 1987, 60 percent of working-class voters voted Labor, by 2019 this had decreased to 41 percent.
Back in 1954, when Australia had a population of about nine million, Labor membership sat at 75,000. Now, there are 25 million Australians, but at the most generous estimate there are only about 50,000 ALP members.
The consequences for workers have been dire. As journalist Gareth Hutchens reports, compensation of Australian workers as a share of GDP now sits close to the bottom of the international table. Wage growth is slower than any other time in the postwar period. Even the Reserve Bank governor acknowledges that there is a “crisis of low pay.”
Workdays lost to industrial disputes are down more than 97 percent since the 1970s and the number of workplaces covered by union agreements has plummeted. Prior to the accord, union density sat at over 50 percent. Today, it’s about 15 percent — and only 10 percent in the private sector.
The Wrong Stuff
You might think the faction responsible for this long period of decline might at least try to understand the problem, if not take responsibility for it. But the Labor Right is not known for soul-searching.
According to The Write Stuff, the way to turn around the ALP’s electoral malaise is not to break with neoliberalism, but to produce and adopt more Labor Right ideas. In the introduction, Nick Dyrenfurth, one of the book’s co-editors, writes the following:
Labor’s woes are the result of the decline of factions as fulcrums of ideas. The balkanization of Labor Right and the erosion of a distinctive, guiding philosophy binding its parts, is the real source of the trouble.
To redress this failing, the contributors to The Write Stuff propose a guiding philosophy essentially copied from Malcolm Turnbull, moderate Liberal prime minister from 2015 to 2018. The similarities are striking — some seem like a verbatim reproduction of Turnbull’s 2016 “jobs and growth” election launch speech.
Wayne Swan, for example, argues that “Labor must always have a strong message centered around growth and jobs.” Richard Marles insists that “innovation is the key ingredient in any kind of serious economic reform” and can “help unlock the path to prosperity for the nation.”
Other contributions echo Josh Frydenberg’s more recent speech, “Creating Opportunity and Encouraging Aspiration: The Key to a Growing Economy and Stronger Australia.” Chris Bowen, Labor’s shadow minister for climate change and energy, urges his party to embrace “growth and opportunity . . . growth to lift people out of poverty and turn aspiration into reality.”
Senator Marielle Smith argues that Labor should
. . . reorient our political narrative from one focused on redistribution to one that centers on growth . . . it is far too easy for redistribution narratives to be characterized as hostile to aspiration.
These examples are characteristic of the book as a whole. In fact, if there’s a unifying thread to the contributions, it’s an insistent rejection of anything that might resemble working-class politics, partly out of ingrained conservative instincts.
Jim Chalmers, Labor’s treasury spokesman, claims that “the answer to neoliberalism is not permanent big-state socialism; just as the antidote to right-wing populism isn’t left-wing populism.” Former trade union leader Michael Easson approvingly refers to Labor’s conservative “Burkean” character, while shadow minister for industry Ed Husic argues for “effective — not bigger — government.”
At the same time, the contributors shy away from redistributive economics for fear of alienating business. Shadow minister for senior Australians and aged care, Clare O’Neill, rebuts the idea of a Universal Basic Income by wondering “who would pay?” Despite acknowledging that capital receives “outsized benefits of economic growth,” she dismisses the idea of taxing capital and redistributing wealth because “that thinking is out of step with the desire of so many working Australians to get the control over their lives that comes with ownership.”
In place of even moderate social democracy, The Write Stuff proposes individual entrepreneurism. Federal member for Kingston, Amanda Rishworth suggests the answer to intergenerational inequality is “investing in our young people and supporting entrepreneurship [which] will not only increase opportunities, but also drive participation and innovation.”
The contents of the book sometimes border on bleak, unconscious satire. Senator Deborah O’Neill writes that “starting your own micro-business is a form of self-care,” and praises business owners for “rejecting old notions of working, of workplaces, of the roles and rights of bosses and workers.”
If It’s Broken, Don’t Fix It
A key component of populism, on the left and the right, is the clear identification of an enemy. But with such a deeply held pro-business philosophy, the only enemies the Labor Right can see are redistributive economics and the Left.
And yet the Labor Right remains the dominant force within the ALP. Under their decades-long neoliberal guidance, the party’s popularity has collapsed. Their solution? Hold the neoliberal unpopulist line.
Continuing down this path will consolidate Labor’s obsolescence. The only plausible alternative is to rebuild a working-class constituency with a left-populist strategy.
To make this work, the ALP would have to clearly name their class enemies, reinvigorate the trade union movement with a compelling vision for economic and environmental justice, and propose genuinely redistributive measures that could rebuild social services and public ownership long eroded by austerity and privatization.
But however many principles the modern ALP has shown itself willing to shed, it seems likely that Labor’s dual commitments to neoliberalism and being unpopular will be the last to go.