" Rudd Labor to take on the more extreme elements of the trade unions that have substantial power in the Labor Party."

The union movement has no power in the modern ALP. I cannot remember the last Labor politician who said anything about the workers. The unions didn't get their way in Fair Work Australia. Until the last election, the ALP hadn't campaigned on indistrial relations in years. Coincidentally, they had a hard time winning elections.

It is middle class trendies who need to be kicked out of the ALP. Go and form your own party and leave the ALP to the workers.

Dear readers;

The full version of Mighell's article has been published at the 'Left Focus' blog - and I welcome repsectful discussion - supportive and/or critical - here and there...

see:

http://leftfocus.blogspot.com/2010/02/alp-and-unions-where-to-from-here.html

nb: I've also written my own personal response to Mighell - and I'm hoping it will appear in On Line Opinion - and my blog 'Left Focus' soon.

Right here and now, though - I have some specific points to make:

* Rudd Labor promised no worker would be worse of under Award modernisation - For now this looks like it's not going to be the case... Personally I think some complexity is a reasonable price to pay for fairness.

* Pattern bargaining is a reasonable objective to prevent a 'race to the bottom' and Rudd Labor should never have compromised here.

* 'Militant unionism' is a great bogey - but the reality is that workers' share of the economic pie has been shrinking for decades; and the divisions in the labour market between 'haves' and 'have-nots' is getting greater and greater... This is the consequence of a weakened labour movement - afraid to take action when necessary or appropriate for fear of 'over the top' sanctions...

* That said - Corin's call for tax credits and a 'negative income tax' could be one way of ensuring no worker is worse off - but given the adminstration costs - what would the point be re: 'Award simplification' anyway under such circumstances? Maybe combine a negative income tax/tax credit with retained Award protections?

* Finally: It is simply not right to let the most poor and vulnerable workers 'take the brunt' of assaults on wages and conditions - the ACTU is completely right in seeking redress here - with the restoration in real terms of the wages and conditions of these people... It is a failure of common decency if there is resistance, here, from the Federal Labor government...

"The union movement has no power in the modern ALP"

Somehow, I don't think Morris Iemma would agree after the unions managed to get him booted from the NSW Premiership. Nor would Kevin Rudd privately: it is well known that he did a deal with the unions where he would get their support for the ALP leadership as long as he promised to scrap AWAs.

"Pattern bargaining is a reasonable objective to prevent a 'race to the bottom' and Rudd Labor should never have compromised here."

In actual fact, enterprise bargaining resulted in big increases to wages and productivity. So its pattern bargaining that makes most workers affected worse off, not better off.

"Militant unionism' is a great bogey - but the reality is that workers' share of the economic pie has been shrinking for decades"

Dean Mighell is living proof of militant unionism. Also, wages can only increase in profitable businesses. So the fact that wages have been increasing with profits is confirmation of the fact that profits are a precondition of real wage rises.

Labor is doing a pretty good job of remodelling itself as a progressive social democratic party. In so doing, they have ditched the socialist claptrap of the past.

The unions, on the other hand, have failed to remodel themselves and cling to old and thoroughly discredited ideologies. So, labor and the unions have nothing in common except two things - a shared history and a heap of ex-union hacks now sitting as Labor MPs.

The trade unions in Australia are, in general at least, on the way out. Any privileges granted them by the Rudd government won't stop their inevitable further decline. And good riddance to them. Labor can safely cut them adrift. They should do that and, in the process, take that last step in their transition to a thoroughly modern and broad-based party.

Hounian: Without the ability to defend wages and conditions through self-organisation; in the midst of an increasingly deregulated labour market - the 'demise' of unions would be to the detriment of workers.

A social democratic party does not necessarily HAVE to be 'labourist' in the British tradition of direct union affiliation. But the rights of workers - including their right to self-organisation - and support for the benefits of self-organisation - are VERY important to any genuine social demcocracy.

You pull out the 'socialist bogey' opposing social-democracy to socialism. But what is it exactly you're talking about? I consider myself a social democrat AND a liberal democratic socialist.

I believe in regulated labour markets: a strong minimum wage, and consistent and fair conditions in different sectors. I believe in a progressive tax-transfer system including strongly progressive taxation. I believe in a strong and fair welfare state and social wage: and in economic democracy purused via a variety of channels. I want to balance planning and markets: the private and public sector; and support for options such as mutualism and co-operativism.

There was a time when social democracy and socialism were taken as the same movement. World War One and the post-war Keynesian consensus saw the two opposed to each other.

But today I think is an opportune time for merger and interpentration of those traditions again.

The bottom line: What does social democracy mean to you? If it is emptied out of all progressive content - how is it recognisable as social democracy?

I think you need to specify what exactly you mean by social democracy.

As I said earlier - I am a liberal AND a socialist. But I think social democratic tradition has always been more ambitious in its approach to social justice than liberalism alone.

And anyway - your contempt for unions goes against even a genuine liberalism - which would recognise the rights of workers as related to the right to withdraw labour - and freedom of association.

Again - explain what social democracy is to you.

Hi, thanks for your comments. The piece is really a discussion starter rather than a final position that the ALP would likely get to. I take issue that removal of award conditions will make workers worse off, the retention of award wages is proposed (i.e. penalty rates and overtime) would stay. I am proposing a system that is far from a deregfulated market and the use of the tax system for creating better income distribution is nothing revolutionary, it is the social wage.

Hi Corin,

I must say I do enjoy reading your articles in The Australian because they make a lot of sense.

I do however disagree with you on the subject of awards. Whilst Labor has acknowledged that the award system is rigid, prescriptive and very complicated, the process of "award modernisation" is merely a band-aid solution. Whilst there will be fewer awards at the end of the process, the rigidity and prescriptiveness will remain. Furthermore, some workers will be worse off whilst many pharmacies are not expected to be open on evenings as a result of the exhorbitant penalty rates they will have to pay their employees.

Certified agreements and AWAs were ways of overcoming this, but Labor has abolished the latter. So there's no way past the award system unless there is a union in your workplace or your employer wants to bargain collectively. Flexibility is still killed under Labor's 'Fair Work' and award modernisation.

The solution is instead to allow for individual agreements which vary award conditions and having only one standard safety net for all workers across all enterprises and industries, with a view to phasing out the relic known as the award system.

The Australian people decided at the last election that the Workchoices safety net was too low. Perhaps allowing for standard penalty rates and overtime for lower paid workers would be the right bargain.

Thanks for the comment about the articles in the Oz. It is quite hard coming up with pieces that 'push the envelope' without being too far outside of the mainstream. I think I do ok on that front.

I think removal of the award conditions would help. I also consider that a no-disadvantage test is a reasonable policy for Abbott on penalty rates (and unlike some I don't think it's political suicide).

For Labor, they simply can't get to that position, so what I have proposed is a good solution for them, probably for the next Parliament. I think they are stuck until the election on a whole range of fronts.

The policy debates in Australia are being run by the forces of industry welfare, in both the Libs and Labor. Climate change (especially the Libs policy) is appalling. There is an across the board move away from elegant solutions from the reform point of view.

Don't worry, everything old will be new again in about 4 or 5 years, including pro-market, pro-competition views.

Tristan, explaining the difference between socialism and social democracy is usually the stuff for long theses. There's a limit on the length of posts on this site!

Essentially, socialism is about government ownership of stuff. Social democracy doesn't give a toss who owns it, just that the service is delivered as efficiently and as broadly as possible - so they tend to use agreements of various kinds to lock the service provider into delivering to the poor, the remote etc.

Socialism is about government micromanaging our lives and is based on the presumption we are idiots who can't manage ourselves. Liberalism is about minimal government intervention in our lives (so not like a lot of the "liberalism" in the Liberal Party). It assumes we are all rational and responsible people. Social democracy is in the middle of these two world views.

I note you claim the right to organise and I accept you have that right. But it does not include a right for you, or anyone else in a union, to organise me. It does not include a right for a union to presume to represent me in (and thereby exclude me from) discussions with an employer. Your right to withhold your labour does not include a right to hassle me to do the same.

The overwheleming majority of workers (and I am one of them) reject the unions. For much the same reason most people reject organised religion these days. Unions did some good in the distant past and that's about it - just like churches, temperance leagues and so on. We are much better educated these days and most of us see right through the claptrap of socialism, unionism, organised religion and so on.

Modern Labour has no reason to remain linked to the neanderthals, even if that link is little more than tokenism these days. Now some advice for the Liberal Party. It's high time you ditched your relationship with the loopy religious right.......for essentially the same reasons as outlined above !

I sent a letter to the editor of The Age in response to Dean Mighell’s article:

‘If Dean Mighell genuinely believed that unions should not be affiliated with the ALP (“Unions must leave Labor”, 11/2), he would move to disaffiliate his own union, the ETU. Given his union’s support for Greens, ALP members would be very pleased.

‘The ALP does not need to break its connection with the union movement, which actually keeps the party in touch with reality. It needs to strengthen it. It could do this by restoring the right of rank and file unionists to vote in ALP pre-selections for Lower House seats, but that is something that will not happen until ordinary party members and ordinary unionists use their internal electoral processes to make it happen.

‘Yours sincerely,

‘Chris Curtis

‘Emailed to letters@theage.com.au
As Green Dean can find the door’

It was not published.

Huonian:

Just quickly - your description of socialism is an obivious 'straw man': and your understanding of social democracy is radically at odds with the dominant historical understanding of that tradition. I include here both radical interpretations - and the relatively moderate and dominant interpretations that were 'mainstream' - especially in the post-war context.

Bringing all traditions "under the neo-liberal umbrella" - is in reality destroying the substance and practice of those traditions.

That's why attempts to do this must be resisted vigorously.

Corin,

I agree that reintroducing the no disadvantage test is astute politics from Tony Abbott. Both sides will be contesting for the middle ground on IR, which is somewhere between Workhoices and Dean Mighell's ideal world.

Where Abbott might be unstuck is in his proposal to exempt small businesses from unfair dismissal. I suspect many people will feel uncomfortable with that idea.

I must say that I have found Rudd Labor to be disappointing. At the last election, Rudd and his senior colleagues all said that they were "economic conservatives." Since then we have had industrial relations rollback to the 80's/ early 90's, increased protectionism to the car industry, government installing insulation and broadband Soviet-style, excessive and inefficient spending, essays condemning economic rationalism etc etc. In short, all the failed policies of the Whitlam era.

Kevin Rudd has effectively been a Trojan horse for old left ideas in Australian politics.

AJFA, in some ways the stimulus is now a victim of its' success: http://www.theaustralian.com.au/business/mining-energy/resources-boom-effects-on-economy-starting-to-reappear-battellino/story-e6frg9df-1225833578683

It was probably about $10 bn too big, but sitting back in January 2009 and assessing that would have been very hard. I agree on industry welfare for 'green cars' (appalling). Diesel is far more efficient than even the best hybrids and there is little to think that Ford and Holden will build hybrids (nor would they sell them in all likelihood). Nor would it actually help the economy is they did. How about zero tarriff on cars that do 50MPG or better.

I think more general stimulus measures should have been more prominent, like a 20% payroll tax cut and now we are seeing the unravelling of some (but certainly not all) direct programs. I do consider that the $900 cash bonus measure was effective, but it would have been better to have made it even more targetted and to have used the savings here for tax relief to low income earners, thereby the wage freeze (see Fair Pay Commission decision in June 09) would have been a reasonable long term trade off for more job security among award earners.

I think you have to accept that the stimulus was on balance, good policy though. It was temporary and reasonably targetted. Where it has failed is that it was probably too big (in hindsight), but the risks on this meant that it was always better to have a stimulus that was too big.

How this now reacts with re-regulating the labour market will test the flexibility (left) in the economy. http://www.onlineopinion.com.au/view.asp?article=9406

I do consider that Gillard has tried to reduce the negative effects, but the policy has obvious flaws, some of which I highlight in my article, and more precisely here: http://www.theaustralian.com.au/news/opinion/on-the-wrong-track-when-politics-drives-wages-policy/story-e6frg6zo-1225769982854

Tristian, mate, join the 21st century. Stop confusing means and ends: http://www.theaustralian.com.au/politics/opinion/markets-bring-mobility/story-e6frgd0x-1225781310921

Corin,

Concerning the stimulus, there's a number of important points:
1) many other factors contributed to Australia avoiding recession, not just stimulus
2) the money on insulation and school buildings was spent inefficiently. See this blog for detailed analyses: http://catallaxyfiles.com/
3) deaths and house fires have occurred as a result of insulation

Here's an excellent article that I would recommend: http://www.theaustralian.com.au/news/stimulus-may-not-work/story-e6frg7b6-1111118793315

What amazes me with the insulation furore is why the government didn't keep in simple and easy by using tax cuts. Malcolm Turnbull's idea of bringing the tax cuts forward was therefore more sensible. I agree the $900 handouts were OK.

Even if the GFC had been worse than feared, at least we wouldn't have blown 5% of GDP in the initial months and we would still have had room to move for when a recovery is forseeable.

But then, you can't take as much political credit for tax cuts. Greens for one don' like tax cuts, but they like insulation because it may reduce energy consumption. Furthermore, it was hoped that all those tradies working on the school gymasuims and halls at inflated prices would return the favor by voting Labor.

But because they wanted to make it complex and spectacular, the whole thing has now blown in their faces.

This surely should be a lesson for Kevin Rudd about the limitations of Government activism.

Corin: you say -

"Tristan, mate, join the 21st century."

But old ideas are not necessarily bad ideas. The idea of democracy - although then implemented in a highly imperfect fashion - goes back to ancient Greence. And although I don't accept the provisions of that ideology - it's nevertheless worth noting that the roots of the dominant neo-liberalism go back to 18th Century economics...

Yes there's always pressure to observe "intellectual fashion" - and it seems there's never any shortage of people willing to promote these 'fashions'. For decades this has helped keep the Left on the defensive... The point is tha there's always something 'new' - which is employed to co-opt the relative Left, but does not meaningfully challenge neo-liberalism, and the inequality and human suffering this entails.

It's all very well to recognise a legitimate role for markets; for price signals, and other signals that drive efficiency and innovation.. I don't disagree with this... And for your information - I don't oppose church-run schools on principle either - I simply oppose the privilege of many of these schools - which I feel is against basic Christian precepts... I cop a bit of flak for this from some quarters also...

But policy instruments such as progressive taxation; a broad social wage of the kind found in Denmark, Sweden, Holland; robust minimum protections for wages and conditions; observing the rights of workers to withdraw their labour - Attempts to brand these mechanisms 'old', 'irrelevant' - just comprise a mechanism to reinforce the dominant ideology... It's meant to appeal to people who just follow the intellectual fashions of the day...

BTW - anyone reading this - feel welcome to carry this debate over to my article today on ALP and the unions as well... (Feb 24th)

sincerely,

Tristan

nb: When I say 'I don't support that ideology' - obviously I mean I don't support neo-liberalism. I certainly do support democracy. :))

"But old ideas are not necessarily bad ideas. The idea of democracy - although then implemented in a highly imperfect fashion - goes back to ancient Greence. And although I don't accept the provisions of that ideology - it's nevertheless worth noting that the roots of the dominant neo-liberalism go back to 18th Century economics..."

Yes Tristan. But when old ideas have been discredited and/or refuted, they ought to be discarded. Pick up any first year economics textbook and it will explain to you why high tariffs, subsidies, government ownership of enterprises, inflexible labour market policies and high taxes for companies and the rich result in lower economic growth, higher inflation and higher unemployment. Whilst you obviously are very passionate about what you believe in, you do not seem to have considered the negative economic consequences of what you promote.

Like most Labor lefties, your heart is in the right place, but your idealism does not help those you want to help.

AJFA

Look I wouldn't pay too much attention to Catallaxy (though I accept they have a strong point of view). I accept that a good deal of the stimulus was waste, but I still think they erred rightly that too much was better than too little.

As I said, with the benefit of hindsight, the stimulus probably should have been up to $15 bn smaller. I also accept that they got little by way of 'reform'. I also agree that tax cuts could have been used for those on the 15c rates if no one else.

You have to be careful in using tax cuts when there is a structural defacit as the long ternm fiscal position would get worse than even the big stimulus they have used.

Tristan, I'll read your article now. Old ideas are good ideas, sound like a sound bite for Abbott too ....

AJFA - you mention "first year economics textbooks' as if there's a global consensus.

There's not.

Yes - in the Anglosphere Keynesianism and social democracy are out of favour.

But in Sweden, Holland, Denmark, Finland, Norway - it's a different story. These countries have mixed economies, robust progressive tax systems, strong industry policies, extensive welfare states and social wages... And these countries are successful economically by most peoples' measure.

There ARE different ways of doing things. Different strategies can succeed or fail depending on the means we use - and the values we use - to measure.

Regardless of what 'First Year Economics textbooks' say - They are not 'final' or 'absolute' authorities.

There is a different way - and depending on your values, a better way.

Tristan, Paul Keating rightly viewed Australia as having vastly different circumstances to northern Europe. Australia is in a much more precarious position as we don't have natural trading partners like the EU does. This means that business by nature is more difficult (at least until the resources boom) and paradoxically why protection is so wastefull. However this does not mean that action by government in the economy is inherently bad, but it does mean that governments must think first before acting and have a rational basis for it, such as a 'spillover'. i.e. that the market would not fund education to the extent necessary to have a modern economy. If you think 'spillovers' are everywhere you are deluded though, they are rarer than proponents of any government action admit. What is clear though is that education is in general a much better economic growth driver than infrastructure ...... infrastructure projects often end up as 'roads to knowhere' or worse 'roads in marginal seats' .... perhaps now 'school halls in marginal seats' which have little educational benefit.

The stimulus is an emergency measure and in my view is not a basis for normal government. We'll see if Rudd agrees with his 2 per cent spending target, which in my view they won't have the guts to do in practice, especially as now the resources boom will mean that the defacit (as opposed to the structural defacit) will more naturally close.

Corin,

As I said, $900 handouts were OK. I'm sure that helped a lot of cafes, restaurants, hotels, theme parks and other businesses going. However, as the Stutchbury article shows, the gross waste and inefficiency of the halls and pink batt schemes were readily foreseeable. But it appears the govt was more interested in buying our votes with our money.

Tristan,

Whilst Sweden is a high taxing, high government spending nation, that's about as far as it goes. Sweden has a lower minimum wage than Australia, and less protected work conditions. The government there privatises businesses. So while you may dream of nationalising Telstra, the Swedish government has no such plans with Sony Ericson. Finally, the govt there supports free trade (unlike the Rudd govt).

Also, unemployment in Sweden is currently at 9%, and at 30% for those aged between 15-25 years. That's far higher than unemployment rates in Australia.

So the example of Sweden does not support your argument. Likewise with the other countries you mention when the facts are scrutinised.

Surely the home insulation and school halls debacles would make you consider that governments are not suited to playing such an active role in the economy?

AJFA, I accept that Michael Stutchbury has been proved right on the stimulus and indeed I thought say in January 09 that the recession would be pronounced and it wasn't. I accept that I was wrong like 90% of economists. What I got right is that the Fair Pay Commission needed to freeze minimum wages and it did. I think Swan/Rudd/Gillard thought hard about a wage-tax-trade-off as in January 09 they were opening discussing the need for wage restraint. They should have done this and award wage earners are worse off because they did not (Shame). I think since about October last year, some of the stimulus should have been phased out faster. I do think that we'll see a drag on growth though as the stimulus is removed so this is a balance, but one that needs to be found. I think interest rates will be raised for a period of relatively weak labour demand (as low head line unemployment masks a great deal of capacity in the existing employed workforce - see hours reducing). This likely period of elevated interest rates is a result of widespread policy measures and IR is one part of this. I think we'll see once the AIRC/FWA sets the minimum wage again that we'll have a substantial lift in wages and this would not be great - for those wanting work, more work and those owning mortgages. The main problem with Rudd Labor is a lack of debate about this and where to go from here. If inflationary pressures do build in a time of relatively weak labour demand, they'll probably be forced to act (to sppress wage pressures) and the unions won't like it.

Withdrawing the stimulus would however give the RBA reason to not raise interest rates. The sooner the stimulus is wound back the better. I think it's quite clear that Australia has beaten recession. Both sides of politics should look at making deep expenditure cuts over the next few years to get the budget back into surplus.

Concerning your earlier comment that you don't believe the govt has the guts to stick to its 2% spending growth target, I couldn't agree more. If there's anything notable about this government it is its inability to take any genuinely tough decisions. Rudd wants to be all things to all people, and he loves using the money of taxpayers to achieve this.