Labor's 'true believers' face disappointment


When Paul Keating thanked the "true believers" in Labor for re-electing his government on March 13, he was met with a wild ovation from the loyal crowd at the Bankstown Leagues Club. But PETER BOYLE asks: what is the worth of his promise to deliver a "caring and sharing" government?

As the pundits recover from their surprise at the election result, they are being forced to admit that the vote went against the Coalition because it stood explicitly for speeding up the "economic rationalist" program carried out by Labor over the last decade. In particular, it was a vote against the GST, the dismantling of Medicare and a national version of a Kennett-style individual employment contracts.

The Melbourne Age editorial of March 15 tried to deny that this was a vote against the policy direction of both parties. Instead, Keating now has an "unequivocal mandate to lead, to continue and even accelerate the process of change that he helped initiate when Labor was first elected in 1983", it argued.

"Industrial relations reform must continue, with the moves to enterprise bargaining broadened during the next three years to include much of the workforce. The Government must continue down the path of micro-economic reform if Australian manufacturing is to become more efficient and more internationally competitive."

Arguing for continued public austerity, the Age even said that in the interest of wiping out the budget deficit, "some of the more extravagant election promises made by Mr Keating may have to be broken".

Not that there were many "extravagant" promises. Apart from some extra funding for child-care and the $2.8 billion over two years promised in Keating's February 1992 "One Nation" statement, there was little except promises not to do what the Coalition would have done. This limited boost in spending in the middle of one of the most severe recessions (in terms of duration and level of unemployment) experienced since the 1930s came after a decade when government spending was reduced from 28.8% (1982-83) to 25.3% of GDP (1990-91).

Keating won the election because he was seen to be the lesser evil. Under Howard and Hewson the Coalition had foolishly opted to campaign under a Margaret Thatcher-style "radical right" banner. It persisted on this tack even after the demise of Thatcher in Britain, the Clinton victory in the US and the fall of Brian Mulroney in Canada. These were symptoms that the public in these countries no longer had illusions that austerity, market deregulation and privatisation would

produce a return to the relatively good times of the postwar economic boom.

Much of the big business media in Australia editorialised in favour of a Hewson victory (one paper, Melbourne's Herald-Sun, even produced an edition with front-page headline announcing a Coalition win!), but there was a distinct note of hesitancy in the media's treatment of the election campaign. This reflected a lack of certainty in top ruling circles about which party would serve them better in government.

There were real fears that Hewson's more confrontationist industrial relations policy might backfire, while Labor, with the help of the ACTU, had a proven record of delivering real wage cuts and a significant surrender of working conditions.

Keating has boasted over and over again that the Accord has delivered "unprecedented wage restraint" and allowed a rebound in the profit share. The Accord Mark VII deal, stitched up between Keating and the ACTU just before the election, even promised an indefinite freeze on most centrally determined wage rises.

Some in business circles were also worried about the impact of the GST. Would it prove too inflationary? Would it be too difficult to administer? Would it further dampen the depressed economy?

As a result of this uncertainty, there was no "boots and all" campaign against Labor, even when there were obvious openings, such as the Dawkins loans affair (which the media hacks easily could have turned into a Khemlani Affair II) and the record 11% plus unemployment figures.

The Sydney Morning Herald's economics editor, Ross Gittins, who describes himself as a "card-carrying economic rationalist", declared in his March 17 analysis that most voters made the right decision for the wrong reason. Labor was offering a program of economic rationalism only slightly less radical than that of the Coalition.

In fact, Gittins now says that Labor's recipe might do the job better because, while a GST "would be nice", few economists regard further tax reform as a high priority, the Coalition's version of labour market reform was "short-sighted, unimaginative and ultimately counter-productive", and Hewson's Medicare changes would have "merely increased the national cost of health care".

Gittins is probably right, though it is interesting that this analysis has emerged in his articles only after the election. Labor has already gone a long way toward "broadening the tax base", the favourite euphemism for shifting the burden

away from the rich and big business. As Keating boasted in "One Nation", Labor has reduced the company tax rate from 49% to 39%, reduced the top personal tax rate from 60% to 47%, introduced full dividend imputation, slashed tax on retained earnings of private companies and introduced numerous other tax breaks for big business.

As for industrial relations, the mass response to Kennett's trial of the Coalition policy worried many in business circles, even if this response was restrained by the ALP.

But Gittins is mistaken about voters having the wrong reasons for their decision on March 13. The problem was less public illusions in Labor's platform and more the fact that there was little choice. Unlike in New Zealand, an electorally viable political formation explicitly opposed to economic rationalism has yet to emerge here, so voters could not vote against economic "rationalism", but only for the less "rationalist".

The election was dominated by a contradiction that has featured in every election in the so-called "Western democracies" in recent years. While economic rationalism has become very unpopular, every pro-capitalist government knows that this is the policy it has to implement if it is to rule with the support of big business.

They know, as Gittins admits, that these policies won't create jobs but instead will shed more of them. So when elections come around, they have to lie to some degree to win public support. Hewson lied that his policies would effect a quicker recovery from the recession and create jobs, but his minders now conclude that he was "too honest" about admitting what he would do!

As Hewson got himself in this terrible knot, Keating was allowed a chance to distract public attention from the terrible consequences of his economic rationalist policy by focusing on the most extreme aspects of Hewson's version of the same policy.

Across the Tasman, the March 17 New Zealand Herald concluded from the Australian elections that telling the truth is out for politicians in the 1990s. According to NZ Alliance leader Jim Anderton, the NZ Herald believes that it would be more realistic for politicians to "toss out a few vague statements in place of detailed policy and commitments" before an election.

Gilbert Myles, another Alliance MP, said that the Australian public had rejected "Rogernomics" (the economic rationalist program first advanced in NZ by former Labour finance minister Roger Douglas) and made a "smart choice" because NZ was clearly paying a terrible price for such policies.

But back in Australia, the election was followed by a grim reminder that Labor's commitment to economic rationalism remains unshaken despite the March 13 vote. On March 17, Alan Trumble, the president of the Textile, Clothing and Footwear Council of Australia, warned that another 25,000 jobs would be lost in the industry as the Keating government continued its planned reduction of duty on imported clothes from 47% to 25% and on footwear from 37% to 15% by the year 2000. The industry, which once employed 160,000 people, now employs about 90,000.

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