The Exhaustion of Australian Social Democracy

Written for Left Business Observer, n.92, 1999.

Australia has imagined itself — and perhaps been regarded — as an island of liberal democratic, if not always social democratic, protections. The apparently contrasting backdrop for this image is Asia, depicted as a place where few distinctions operate between the law, economics, and politics — or in liberal parlance, between the state and civil society — vague distinctions often rendered indistinct by military control and violence. Let’s not invoke, however, “traditional Asian values.”

The disintegration of the rule of law is no less apparent in the trajectory of Australian politics than in the “guided democracies” of Indonesia, the Philippines, and Malaysia. To be sure, the relative strength of Australian workers — relative to other workers in the region and the rest of the world — has mitigated against any comprehensive suspension of the law as in a state of emergency. But it’s also true that any formal separation of powers and of zones (political, economic, legal) is no longer — if it ever was — a feature of capitalism. This has disastrous implications ranging from the most bloody to the quietly caustic, from the belief that such formalities obtained in East Timor to the continuing attachment of Australian unions to social democracy.

Australian social democracy had been associated with certain protections for workers, among them the official recognition of unions and their inclusion in the state’s economic policy bodies, a high degree of state ownership and regulation of infrastructure and key industries, and centralized bargaining. The system operated through strict and ongoing assumptions: a definition of the constituent pieces of the state as labor and capital (as the apparently productive sectors of society) and, more insistently, the na- tional reckoning of each. The nation was — is — the allegedly self-evident, fixed terrain for negotiating favorable deals between labor and capital. This legitimated the exclusion of only the most marginalized and un- organized or simply those who, figuratively or not, remained be- yond Australia’s borders. These nationalist assumptions always implied a resolute forgetting of the rest of the world, specifically the relative standing of the national currency, and the petty (but by no means trivial) Australian imperialisms in the Pacific. With these assumptions no longer effective, exceptions to the social democratic bargain became regularized.


The Australian Labour Party (ALP) held office between 1983 and 1996, unequivocally signaling its preferences in it first year with the floating of the Australian dollar and the abolition of exchange controls, exposing national economic performance to the harsh disciplines of the international capital markets. Between 1983 and 1996, ALP rule was notable for a series of seven agreements on prices, incomes and taxation between the Federal Government and peak business and union bodies. Alongside the Accord process, the unions undertook a major (and largely unchallenged) restructuring whose goals were laid down by the ALP leadership of the Australian Council of Trade Unions (ACTU). The number of unions was to be halved through amalgamations and the creation of “super-unions,” and the ACTU would press the government for the abandonment of the classical centralized award structure of pay rates and conditions in favor of a system of enterprise bargaining, putting workers into competition with each other. Workers’ demands were restricted to individual firms, circumscribed by estimates of that firm’s “ability to pay”; pay increases could, under the eventually legislated terms of enterprise bargaining, only be gotten by trading away conditions deemed to be “inefficiencies.” Thus, union bureaucrats were further isolated from their memberships.

The ACTU’s agreement in the 1982 pre-election Accord to restrain wage increases in return for a nominal commitment to full employment became, after the ALP’s election in 1983 and in later Accords, little more than a mechanism for diminishing what the Treasury saw as the “wages overhang” of the 1970s. A regimen of wage-cutting austerity was applied in the name of “belt-tightening” and “consensus.” Highlights included the deregistration and criminalization of two large unions for daring to pursue real wage increases and the use of the army as a strike-breaker for the second time in Australia’s history — and for the first time ever with official union support. While union bureaucracies were consolidated into the corporatist scheme, the most difficult unions and the rank and file of the rest were excluded from the process.

In 1989, confronted with a move by some left-wing unions to pursue wage outcomes outside the Accord — which were of course deemed inflationary dangers — then-Treasurer Paul Keating wilfully pursued a recession he later said “we had to have” lest Australia become a “banana republic.” With this necessary recession would come “necessary reforms”: the privatisation and deregulation of banking and finance, the contracting out of public services, budget surpluses, a flattening of the tax system, a shift from regulating to subsidising domestic and foreign corporate investment, and cuts to the corporate tax rate.

The residual left opposition within the ALP and the unions was rapidly overwhelmed by a dramatic fall in the Australian dollar, as the exchange rate replaced polls as the measure of political well-being; by a significant tightening of monetary policy (to defend the currency and provoke the necessary recession); and, subsequently, by a swift rise in unemployment. Until mid-1989, the rate of unemployment wavered around 6%. From there, it rose sharply to reach 11% by 1992. Union leaders accepted this in return for the continuation of a system of arbitration which, given the disavowal of any content on incomes and working conditions, resolved into a protection scheme for a union bureaucracy increasingly isolated from its membership and kept alive only because of its continuing “representative” functions within the state.

With the curative recession began the rapid casualisation of employment, with no regulation of times worked, no entitlements to vacation or sick leave, and no recourse to unfair dismissal laws. Between 1985 and 1997, 62% of all new jobs were casual. Along with that came the collapse of the union movement. In 1982, half of the workforce was unionised; by 1997, just 28%. Not unexpectedly, between 1985 and 1997 corporate profits more than doubled. Discipline & libel. In 1992, confronted with the likely extinction of social democrats in the upcoming federal elections, the government began to advance the need for vast changes to the Migration Act and welfare criteria as the obligatory answer to “changed economic circumstances.” These amounted to an apparently renewed commitment to “full employment” deployed via a heightened recourse to the old Labourite rhetorics of the righteousness of work and production and the dangers of the emergence of a “culture of welfare entitlement.”

Forced to account for the rise in unemployment and the collapse of incomes and protections engineered by its own policies, the ALP defended itself with a libel on immigrants and a sharpened discipline of the unemployed. The jobless were subjected to a new regime called case management — a system of surveillance, giving case managers power to deny benefits if their charges weren’t looking for work with sufficient vigour. Also, for the first time since the collapse of the White Australia Policy (a “colour bar” in immigration that operated from 1901–73), immigration and refugee laws were tightened — meaning the ALP reverted to its historic championing of that policy since the migrants targeted in the new laws were Asian, just as they were in the early part of the century. Of particular relevance: newly-arrived migrants would have to wait six months before they could be eligible for welfare and health care; refugees would be automatically imprisoned; the courts would no longer be able to review either the detention of refugees or the merits of applications; refugees would no longer be asked if they wanted to apply for refugee status, and any failure to apply would trigger deportation proceedings; decisions pertaining to refugee and migration application were handed to a tribunal, whose judges were appointed by the Minister for short terms, which would conduct hearings in secret, and which would not allow legal representation or the cross examination of testimony against the applications; and, most astonishingly, the Minister for Immigration would now hold arbitrary power to decide when the laws and the Tribunal could be suspended, thereby re-moving immigration matters from the law directly into the realm of politics. In any case, the ALP had always seen immigration and demographics as a part of labour market policy — as economics. This repositioning for the elections was sufficient however: the ALP did not gain a majority of votes, but managed to be reelected by virtue of a gerrymander.

And so the twin mechanisms of social democracy — the regulation of money and labour along national(ist) lines — became, especially after the floating of the dollar in 1983, reduced to the second part of the formula. The ALP revived its old preoccupation with restricting the movements of people across the border as an apparently essential and reasonable bulwark against the erosion of incomes and working conditions. At the same time, there was a breathtaking disintegration of the formal protections for workers (particularly in the areas of welfare, health and safety, working hours, entitlements and unfair dismissal laws), and a restriction of the scope of demands workers could legally pursue. Almost a century of compulsory arbitration had rendered union members largely passive, and the unions themselves were structurally bound to the ALP, financing it without any need of approval from the membership.

In the 1980’s and early 1990’s, the unions served as transmission mechanisms for the Labour government’s austerity schemes. With the 1996 election of a Liberal–National coalition, few unions were able to organise a defence of unionism as the new Government abolished the vestiges of national and collective bargaining and union recognition. Nor were the unions capable of fully resisting the explicit campaigns to de-unionise key industries through casual labour agencies (temp firms, employee leasing schemes, etc.), wholesale sackings of unionised workforces, the expansion of workfare, or the denial of welfare to newly arrived immigrants for two years (a handy source of cheap labour). In 1996, confronting its lowest primary vote since World War II, leading sections of the ALP quickly moved to denounce “political correctness,” exalted the Party as the representative of “those who work hard” and called for greater restrictions on immigration and welfare, more police and prison guards. In short, they declared the ALP the true heir to the dismal tradition from which the xenophobic new party called One Nation had emerged. The only notable difference between the two is that the ALP’s “pro-development, pro-business and pro-profit” position (a quote from an ALP press release) is not qualified by alarm at the “foreign” in the phrase “foreign capital,” as it is with One Nation.

Nevertheless, nothing moves in a straight line. With the departure of its old leadership in August, the ACTU has moved to reverse its liquidation through a shift to direct workplace organisation, a disavowal of enterprise bargaining, campaigns for basic wage increases, an organisational focus on informal and casualised sectors, and a national campaign to reduce and reregulate working hours. It is unlikely that the ACTU will agree again to the kinds of wage restraints contained in the Accords — perhaps an indication of how much the union movement has been pared back to its most recalcitrant sections, mostly left-wing unions who maintained a close connection, despite the ACTU, to their members. More generally, if the events in East Timor were greeted by the Australian media as an occasion to bolster the myth of Australian benevolence and a call for more military spending, left-wing unions showed more than anything that trade and foreign policy relied, as it always has, on workers doing the work they are sup-posed to do.

While the Government tried hard to focus attention on whether or not to send “peace-keepers” into a situation it had a strong hand in creating, declaring on a daily basis how much it was concerned about the violence, left-wing unions rediscovered the nature of the world in which their work takes place: moving swiftly to put a halt to shipping, trade and tourism between Australia and Indonesia, threatening (successfully) an ex-tension of the bans to Government activities unless the Minister for Immigration agreed to evacuate the East Timorese hiding in the UN compound, and consolidating their links with Indonesian unions. In short, it was a conflict between whether the Government or the unions conducted foreign and trade policy.

What remains to be seen is the extent to which this recalcitrance develops into a breach between the union movement and the ALP as occurred between 1917 and the 1940s — in short, whether or not workers believe the state will afford them any protections that haven’t already been forced onto it (and the ALP) through an autonomous workers’ movement. What also remains to be seen is whether the current debate and referendum over whether Australia will become a republic independent of the Queen of England enables a nationalist exuberance of a character sufficient to limit the rediscovery of the world in which Australian workers live, or indeed whether it adds to the breach.


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