Australia and the looming double-dip

Submitted by martin on 9 August, 2011 - 4:20
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By Martin Thomas
Discussion document for Workers' Liberty Australia conference, 21 August 2011.

Click here to download as pdf.
1. Australia and the looming double-dip

Australia largely escaped the first round of the slump triggered by the global financial crash of 2008. With its house-price bubble, it seemed primed for a fall. It was saved by the Chinese government responding to the crash with perhaps the biggest fixed-capital investment drive in world history, which provided a strong market for Australian extractive industries.

Australia was the only rich country to escape technically-defined recession. House prices sagged, but the house-price bubble did not burst.

"Australia's number of billionaires increased from one in 1988 to 17 in 2005... There were 21 billionaires in 2006, 30 in 2007 and 34 in 2008. The global crash of 2008 pulled them back a bit, but there were 29 billionaires in 2010".

Now world capitalism faces a double-dip, and Australia is less likely to escape. World-wide, in 2008 a long-expanding credit bubble in the financial markets burst. Lehman Brothers went bust, and many other banks would have done the same but for governments bailing them out.

The bail-out of the banks allowed capitalist production to start recovering. By 2010 world trade and output were increasing fairly briskly, though less so from the richer countries (except Germany), and from a low base.

Suggestions in 2008 that the financial crash had fatally discredited neo-liberalism even in ruling circles have been disproved by the rigidly neo-liberal, profit-prioritising path sought for recovery by the leading capitalist states. The ruling classes had never forgotten or abandoned Keynes, and willingly went for a brief Keynesian moment; but once the first panic was over, all their attention focused on using the crisis to beat down labour, increase social inequality, squeeze social overheads, privatise, and marketise. The USA was the slight exception to that rule for a while, but has been pulled into line by the Tea Party pressure in its budget crisis.

The bail-out had shifted the focus of the stresses from private capital to governments. Government creditworthiness is more durable than the creditworthiness of individual banks, but has progressively come under pressure, culminating in the current twin crises of the eurozone and of the US budget. These crises have been compounded by the slow fumbling and haggling in the eurozone, and the resurgence of "voodoo economics" in the US Tea Party and Republican right wing.

Now a second downturn, or at best stagnation or very slow recovery, looks likely.

Decisively for Australia, it will be very difficult for the Chinese government to offset a new sagging in markets for its manufactured exports by a new fixed-investment drive. Already the Chinese government is anxious to clean up rapid price inflation and local-government debt blow-outs.

According to Nouriel Roubini, the analyst who most accurately predicted the 2008 crash:

"Once increasing fixed investment becomes impossible – most likely after 2013 – China is poised for a sharp slowdown... When net exports collapsed in 2008-2009 from 11% of GDP to 5%, China’s leader reacted by further increasing the fixed-investment share of GDP from 42% to 47%.

Thus, China did not suffer a severe recession... only because fixed investment exploded. And the fixed-investment share of GDP has increased further in 2010-2011, to almost 50%.

The problem... is that no country can... reinvest 50% of GDP in new capital stock without eventually facing immense overcapacity and a staggering non-performing loan problem. China is rife with overinvestment in physical capital, infrastructure, and property: in sleek but empty airports and bullet trains... highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging...

Eventually, most likely after 2013, China will suffer a hard landing...."

Already: " Chinese manufacturing growth has nearly stalled in month-on-month terms. The question now is whether the next step for Chinese factory growth will be outright contraction or stabilisation... China’s slowing economy is a direct result of government efforts to rein in inflation, which has been running at a three-year high". (Simon Rabinovitch, FT, 01/08/11)

From January 2007 to August 2008, and after early 2009, Australian capitalism was also helped by a rise in world prices of the main bulk commodities. The 2008 rise was so big that it looked as if it must be due to fundamental factors like exhaustion of supply. In fact it must have been largely driven by speculation, because from August 2008 to early 2009 commodity prices collapsed very much faster than any decline in demand.

Since early 2009 commodity prices have been rising again. Probably speculation plays a large part here, too: many capitalists with large amounts of wealth to stash prefer to hold ownership of physical commodities than paper assets all of which in current conditions are dubious.

A double-dip makes it likely that this speculative bubble will burst, and commodity prices fall again as in the second half of 2008. Already: "Oil has taken a steep fall [to] $105 a barrel, down from a peak of about $125 a barrel after the start of the conflict in Libya. Copper and other base metals have also fallen, but remain higher than a year ago. Agricultural prices have dropped somewhat, but continue to trade high on the back of supply worries. Bulk commodities are the exception, with both iron ore and thermal coal on the rise... Cost inflation means that [Australian miners'] margins have narrowed over the past two years. Labour costs in Australia have increased by 40 per cent over the past two years for some miners. So if prices continue to drop, their profitability would suffer more than it did in 2008". (Javier Blas, FT, 05/08/11).

Australia is one of the few rich capitalist states which does not have a "debt problem", in the sense of difficulties or a perceived risk of difficulties about borrowing what it needs on world financial markets. Total outstanding government debt for Australia (2010) is only 11% of GDP: compare 65% for USA, 181% for Japan, 44% for Germany, 148% for Greece, 61% for Ireland, 110% for Italy, 52% for Spain.

Global financiers have been keen to buy Australian-dollar assets as the dollar has increased its value relative to other currencies. Daniel Fink reports: "The AUD was the fifth-most traded currency in 2010 and accounted for 7.6% of average daily turnover in the [world] foreign exchange market, an increase from 4.3% in 2001..."

All that may go into reverse as the flood of profits for Australia's extractive industries from Chinese demand and high world prices dries up.

Then the house-price bubble is still there and liable to burst.

In March 2011, Australia just beat out Hong Kong as the most overpriced market in the developed world, with an overvaluation of 56%.

2. Australia's unions and the "not as bad as it might be" policy

In 2005 the Howard government introduced WorkChoices and the Building and Construction Industry Improvement Act. The BCII Act legislated for a special police-state sub-regime to suppress union militancy in the construction industry. WorkChoices aimed at nothing less than a gradual replacement of union-negotiated collective agreements, across the economy, by individual agreements (AWAs).

The union movement organised a big campaign against the legislation. The campaign was much less combative than we would have wished; but nonetheless mobilised large numbers, was eventually successful in bringing about the downfall of the Liberal-National coalition in the November 2007 federal election, and was accompanied by the unions working out, and formally committing themselves to, a strong and comprehensive policy for trade-union rights.

After Kevin Rudd replaced Kim Beazley as Labor leader in December 2006, in the run-up to the election, and after it, the unions let their formal policy fade away. They applied no pressure to the Labor leaders - no public pressure, anyway, beyond what they may have exerted in talks behind closed doors - to do more than a bare minimum of partially reversing the Howard legislation.

This political abdication by the unions was linked, in a vicious circle, with a slow decline in union membership and organisation.

There was a slight increase in union density in 2008-9, after the WorkChoices campaign. But it has been as if the union leaders could not even believe that this revival might be other than a blip. In 2009-10, union density fell again.

The ABS reports: "Public sector employees drove the change, with the proportion of trade union members in their main job falling from 46% in August 2009 to 41% in August 2010. The proportion of private sector employees who were trade union members in their main job remained steady at 14%".

Strike activity has also fallen.

WorkChoices was replaced by the Fair Work Australia system in 2009.

"There will still be penalties for individual workers and trade unions that participate in 'unlawful' industrial action. Such action can take place only during a legally set bargaining period, and must still be approved in a secret ballot conducted by the Australian Electoral Commission, rather than at a mass meeting of the workers concerned.

Secondary boycotts will continue to be regulated by the Trade Practices Act (which was already the case before Work Choices). For unprotected industrial action, employees will face a mandatory minimum deduction of four hours’ pay. Unprotected action may be stopped by the Fair Work Australia agency, and workers may be sacked or sued for engaging in it. The legislation allows third parties harmed by industrial action to apply to the FWA... to have the action terminated.

The law will require the FWA to stop industrial action (whether or not it is 'protected' by state laws) by workers outside the national industrial relations system, where the action causes or threatens to cause 'substantial damage' to an employer. The federal workplace relations minister also retains the power to terminate industrial action.

Union delegates will still be unable to hold workplace meetings during work hours, and there is no requirement for employers to recognise delegates, nor to provide them with resources...

The FWA legislation exempts employers from the obligation to give notice of dismissal during the qualifying period (six months for regular businesses and 12 months for small businesses)... Restrictions on the content of agreements remain. Agreements can contain only 'matters pertaining to the relationship between' employer and employees. The definition of 'matters pertaining' will still be legally uncertain.

Any industrial action around 'non-permitted content', such as the contracting out of work, will be illegal. Employers will able to introduce technology, chemicals or practices that are potentially harmful without consultation. Centralised wage fixing and pattern bargaining are ruled out, collective agreements being determined at the 'enterprise' level".

But the union leaders chose to emphasise the improvements in FWA, without even a suggestion of pressing for anything more.

Sharan Burrow: "Work Choices slashed unfair dismissal rights for more than four million Australians and left many young and vulnerable workers with no protections.

Now everyone will be protected from unfair dismissal, although qualifying periods will be longer for workers in small businesses...

Workers' pay and conditions will be guaranteed by a 10-point National Employment Standards safety net... maximum weekly hours of work, overtime pay, penalty rates, redundancy, annual leave and rest breaks...

Collective bargaining will be the centrepiece of the new IR system. If the majority of workers want to bargain for a union collective agreement, the employer must co-operate...

Australian Workplace Agreements, used to break down collective strength in the workplace and to drive down wages and conditions, are now outlawed...

Union delegates will be protected during bargaining and it will be unlawful to take action or discriminate against someone simply because they are a union member. There will be a guaranteed right to union representation when it is needed to settle a dispute or negotiate on a worker's behalf".

Labor moves to replace the BCII Act (by a BCII-lite) fell down in the Senate and were abandoned. The unions seem to have tacitly settled for a deal under which the ABCC will be restrained.

Technicalities were found to let the test cases against Noel Washington and Ark Tribe drop, and since then "the powers have been little used, with just four section 52 notices issued since the Tribe decision in November 2010. Three of [those] notices were [later] withdrawn..." The ABCC had previously issued 203 such notices. "The Gillard government has said it will reintroduce legislation this year to make the ABCC a specialist division of Fair Work Australia". (Mark Skulley, Australian Financial Review, 29 July 2011).

Paul Keating talked down labour movement aspirations during the Accord years by declaring in 1995: "This is as good as it gets". These days the union leaders have adopted a further-scaled-down philosophy: "This is not as bad as it might be". They have also inducted into that philosophy a sufficiently large section of a corps of union activists which is mostly ageing and battered by years of retreat and damage-limitation. (In a sample of union delegates studied by David Peetz, 36% of those whose ages were known were over 50, and only 7% under 30).

The weary realism is self-defeating. A new conservative government can return the ABCC to full-blast. The Fair Work legislation does cut off Howard's drive, under WorkChoices, to get rid of union-based collective bargaining altogether; but it does not allow the unions wide enough rights for them to grow and defend themselves easily, as the decline in union membership under FWA shows. Employers and the Liberals are building up a campaign to brand the Fair Work legislation as strike-licensing and union-boosting, and will push new legislation once a new conservative government is returned. And although in 2008 it seemed that Labor (with the help of the Chinese government boosting the Australian economy) could thrive electorally for as long as Blair in Britain, it has not turned out that way: Labor lost its majority in the August 2010 federal election, holds on to federal office only by the goodwill of Greens and maverick independents, and will require a huge turnaround not to lose the next federal election heavily.

Several issues exemplify the trend of union politics.

a. Iemma, Rann, Bligh

In New South Wales in 2008, the unions ran a big campaign against electricity privatisation, and, mobilising support from Labor left activists, both blocked the scheme and forced the resignation of its architect, Labor premier Morris Iemma.

Once Iemma was gone, John Robertson, the secretary of Unions New South Wales, who had led the anti-privatisation campaign, became a Labor member of the Legislative Assembly and a minister in a Labor government carrying through modified privatisation and quickly becoming as right-wing as Iemma ever was.

Robertson is now Labor leader in NSW, and the state is ruled by Barry O'Farrell's Liberals after a crushing election defeat for Labor in March 2011. Iemma had been replaced as premier by Nathan Rees, from the Left faction; but Rees pushed through a modified version of electricity privatisation and then fell from office, to be replaced by Kristina Kenneally from the Right faction.

In South Australia now, the unions have finally pushed Labor premier Mike Rann into standing down (from 20 October) and being replaced by Labor left parliamentarian Jay Weatherill. But the odds must be that union pressure on the Labor leaders will fade as soon as Weatherill is in, just as it faded in NSW.

In Queensland, state Labor conference policy is and remains against privatisation. But even the left unions did nothing to campaign against Anna Bligh's Labor government privatising utilities (with the maverick and ill-directed exception of the ETU, which paid for billboards advising voters to back anyone but Labor).

b. The mining tax and dumping Rudd

Murray and Chesters report: "When the democratically elected government announced plans to impose a Resources Super Profits Tax (RSPT), they were bombarded with a media campaign that deposed the Prime Minister... In May 2010, the then Prime Minister Kevin Rudd announced that the super profits of mining companies would be subject to a 40 per cent tax. Claiming that they had not been involved in consultations prior to the announcement of the new tax, mining company executives launched an orchestrated media campaign...

"The Labor Party sacked Kevin Rudd [in June 2010] and replaced him with Julia Gillard. Gillard promptly... consulted with executives from the three largest mining companies (BHP Billiton, Rio Tinto and Xstrata) about the future of the tax. In the end the super profits tax was replaced by the 30 percent Minerals Resource Rent Tax".

Although Rudd is from the Labor Right, and Gillard from the Labor Left; although the unions played a key role in ousting Rudd; although one of the unions' grievances was that Rudd had "treated the labour movement as a necessary annoyance" (AWU leader Paul Howes' book "Confessions of a Faceless Man", p.17); despite all that, the replacement of Rudd by Gillard was a shift to the right, not only in relation to the mining companies but also in relation to refugee policy and foreign policy. The union leaders did not have enough focus or conviction to enforce even a small left-wing wobble in policy.

c. The rise and rise of Paul Howes

The traditional division between Left and Right in the Australian trade-union movement has been blurred into obscurity. In June 2007 the Right installed Jeff Lawrence, theoretically from the Left, as ACTU secretary. The MUA, a traditional bastion of the Left, is now close to the AWU, historically a leading force on the Right. If anyone in the ACTU does any of what a Left union leader might be expected to do - speak critically on Labor policy - it is Paul Howes of the Right-wing AWU.

Howes, like other union leaders, has little to say on the central issues of union rights and the economy other than to thank the Labor leaders. "The introduction of the Fair Work Act in 2009 and the repeal of WorkChoices were massive accomplishments, huge steps forward for our members. The jobs that were saved during the... crisis... were a testament to the financial skills of the government". ("Confessions of a Faceless Man", p.18).

He speaks out on other issues. Notably, he has no capacity to mobilise activists, or inflect Labor government policies, on the issues he chooses to speak out on. He seems unworried by this: maybe he has chosen those issues as ones on which people will take it as normal that one speaks out without urgent hopes of changing public policy.

He is against privatisation. He is for same-sex marriage. He supported Rudd's carbon reduction scheme and writes that to abandon it and "not present an alternative course of action was disastrous" (p.16). He believes that: "Labor will never win a contest with the hardliners on refugees - it will only lose its soul" (p.13).

If an acute economic crisis does hit Australia as part of a world double-dip, and possibly at a time when the Gillard government has fallen under the pressure of the crisis and been replaced by an Abbott regime, the Australian trade union movement will face a challenge without precedent. It will not longer be able to plod along in gentle managed decline. It will have to pull itself into shape, and in doing so revive itself, or face drastic defeats.

3. The Liberals swing right

"Labor has let the unions back through the door with expanded right of entry. Labor has weakened the ABCC and is now allowing wages growth to spiral out of control.”

"Labor's system encourages strike action and discourages discussion about workplace productivity..."

So declare the Liberals. Between becoming Liberal leader in December 2009, and the federal election of August 2010, Tony Abbott successfully shelved his "Mad Monk" persona.

But Abbott is pretty much in "Mad Monk" mode again, and, worse, getting away with it, with a demagogic populist message: "leave capitalists free to super-exploit and pollute, and then you'll have jobs and low taxes".

On his right flank, a right-wing movement has developed against the carbon tax, drawing mainly on the same demographic as One Nation did (Anglo-Celtic, ageing), with slogans like "Smash Socialism", "Ditch the Bitch", "Green Tax, Red Control", and fears of conspiracies by the UN or the IMF. The public support by Britain's right-wing Tory prime minister David Cameron for the Australian Labor government's carbon tax is an index of how Tea-Party-like this is.

After winning the NSW state election in March 2011, the apparently bland and moderate Liberal premier Barry O'Farrell has put through legislation (June 2011) similar to the right-wing Republican measures in Wisconsin, USA.

The new law caps pay rises for the state's 400,000 public sector workers (except the police) at 2.5 per cent. Meanwhile food prices are going up at 6.1% a year, the official consumer price index at 3.6%, as of June 2011; and if the Australian dollar comes down from its very high exchange rates, as must be likely, then prices will rise even faster, driven by imports becoming more expensive in dollar terms.

If they want to get more than 2.5%, public sector workers have to offer "savings", in the shape of concessions on work conditions, to be assessed by the State Treasury. The State's Industrial Relations Commission is stripped of its discretionary powers to set wages, and the final say goes to the O'Farrell Government. Since the legislation amounts to setting wages by law, it rules out collective bargaining and makes all industrial action over wages and conditions unlawful.

4. The fading of the Labor left and left-of-Labor

On 26 July 2011 the parliamentary Labor Left backed down on one of the few issues where it might at least express twinges of conscience.

"The Labor Left has overcome its doubts to embrace the Malaysian refugee swap, saying it adequately addresses human rights concerns and is part of a genuine regional solution to people smuggling. Left faction convenor Doug Cameron told The Australian Online he was pleased with the deal and would be watching to see how it worked in practice".

Cameron has spoken at length on what he wants for the future of the ALP: it involves some rebuilding of party organisation, but no big shift in policy.

Even in terms of party organisation, all Cameron proposes is quick implementation of the recommendations of the Bracks-Carr-Faulkner review of Labour organisation, published in February 2011 and due to be decided on in December 2011. Kevin Rudd's possible aspirations for a Blair-like comprehensive restructuring of the ALP, and radical marginalisation of the unions, seem to have faded, for now, with Rudd's own fading in political clout and authority. The Bracks-Carr-Faulkner review is bland:

It gestures towards Blairism with this proposal:

"That the Party nationally implement a tiered system of Party primaries for the selection of candidates".

It also seeks to reassure activists:

"That... state and territory conferences be solely based on the principle of 50 per cent representation for members and 50 per cent representation for [union] affiliates. That the practice of including additional delegates from administrative committees, policy committees, Young Labor, and the parliamentary parties in the members’ component cease".

"That intervention in Party preselections by the National Executive and state administrative committees only occur as a last resort, rather than a first resort, and then only in exceptional circumstances".

Tom Bramble and Rick Kuhn of Socialist Alternative attempted a summing-up on the ALP in an article in The Australian of 1 November 2010:

"[Labor's] links with the working class, through its core electoral base and the trade unions, still exist although they are somewhat frayed... The Labor Left senses the need to pull the party back from right-wing positions, if only to combat the Greens.

The Left, however, is a shadow of its former self. At its recent national conference, the party's left-wing chiefs called on Gillard to scrap the union-busting Australian Building and Construction Commission and to lift the ban on same-sex marriage. But they have also urged her to press ahead with a price on carbon, which will have a regressive impact on workers' living standards, and backed the government's obsession with returning the budget to surplus by keeping a lid on public spending while so much needs to be fixed in health and education after years of neglect during the Howard era.

The ALP has problems that go beyond votes and the party's ideological soul... structural degeneration including the decline in active membership and the prevalence of branch stacking... There has been no serious post-mortem of the election debacle within the party and none is likely. Nor has there been any sign of revolt from the branches. The absence of any serious ructions within the ALP tells us how inert its internal life is today".

ALP membership and activism has continued to fall. The slight uptick in the years of strong union campaigning against the Howard government shows that class struggle can change that; but, like the union leaders, ALP organisers act as if they cannot imagine that such revival can be other than a blip.

This does not mean that socialists should cease attention to the ALP. The decline of ALP activism reflects a decline of union combativity and activism, a conservative drift in older age groups, and widespread alienation from politics in general among young people, not a shift to more left-wing politics or to militant syndicalism.

It is entirely possible that if a world double-dip brings acute economic crisis to Australia, then responses will include mobilisations similar to Spain's "Democracy Now", Greece's "Indignant Citizens", or school student mobilisations of the sort that have appeared from time to time in France in recent decades: leftish in a generic way, but avowedly opposed to all political parties of the right or of the left. If they do, socialists should respond sensitively and imaginatively.

Even in that case, historic experience - for example that of France after 1968, Italy after 1968-9, or Portugal in 1974-5 - teaches us the need for socialists to find ways to educate and organise new young activists who come out of such movements so that they can interact fruitfully with the traditional structures of the labour movement (without subordinating themselves to those structures, as did many young activists coming out of the "new anti-capitalist mobilisations" around the turn of the millennium who went into full-time organising jobs with unions; or trying to go round them, as did many of those young activists who have since pursued careers in NGOs).

For the present, anyway, our attention should be directed to developments in the trade-union and Labor left, rather than to the left-of-Labor groups, which are stagnant.

After the August 2010 election, the dissident-Cliffite Socialist Alternative and the Castroite Green Left Weekly polemicised with each other. GLW had hailed the election result as a shift to the left. Corey Oakley of SA did not dispute that the Greens had positioned themselves to the left of Labor, but saw no great new openings there. The erosion of the two-party system by the rise of small middle-class parties and miscellaneous independents - rather than by the rise of a mass genuinely socialist working-class party, which remains some stages ahead of us - indicates less rather than more leverage for socialists.

In its response to Oakley, and its coverage of the election generally, GLW scarcely mentioned its own intervention in the election, through the Socialist Alliance. Although SA did better in the NSW poll for the federal Senate than previously, its results for the House of Reps showed continued decline:

2004 - 14,155 votes - 0.12%
2007 - 9,973 votes - 0.08%
2010 - 9,348 votes - 0.08%

GLW seemed to consider that of little or no importance (and that may, in its turn, explain why the votes were so poor). All its attention was focused on talking up the supposed left and progressive shift represented by the increased Green vote.

Green votes for the Senate and House of Reps:
1996: 2.4%, 2.7%
1998: 2.7%, 2.1%
2001: 4.9%, 5.0%
2004: 7.7%, 7.2%
2007: 9.0%, 7.8%
2010: 13.1%, 11.8%

Oakley was right. If disillusioned Labor voters, especially in the inner cities, and some dissatisfied left-wing union officials, turn to the Greens, that reflects Labor moving right, not those voters moving left. There is no great flood of active members to the Greens (they have about 9000 members). The Greens, chained to the federal government by a semi-coalition agreement, are not moving left. There is no reason to expect their evolution to be different from that of the German or French or Irish Greens, which (certainly in the case of the Germans) had a larger, more active, and more leftish base than the Australian Greens, and won government posts earlier. Unsectarian cooperation in campaigns, and dialogue, with left-wing Greens is certainly necessary. Latching onto the Greens as the wave of the future, as GLW does, and as previously it latched onto the Nuclear Disarmament Party and even, briefly, to the Australian Democrats, only warps perspective.

See also the SA/ GLW debate on the Greens more broadly:

Socialist Alternative claims that "today we are the largest socialist organisation in Australia, demonstrated by the fact that our annual Marxism conference is by far the largest left event in Australia with over 700 people at both of the last two years. On the other hand ISO/Solidarity, which had over 300 active members in the early 1990s, has been reduced to a tiny rump of at best 50 activists".

GLW claims 150 for the most recent Resistance conference, and 80 for the most recent Victoria SA state conference. It gives no figures for its biggest recent public event, the Climate Change Social Change conference in November 2010, which suggests that SA's boast may be true.

SA has taken advantage of its relative good fortune - based on its now well-established routine of ruthlessly-factional propaganda activity - to put the official-SWP group Solidarity on the defensive with an appeal to it for left unity.

Solidarity (formed by the 2008 dissolution of the rump ISO into a merger with two of its splinters, Ian Rintoul's Solidarity and Emma Tovell's Socialist Action Group) responded:

"The unpalatable truth is that Socialist Alternative has a reputation on the left for its sectarianism and self-serving motivations in the movements. The group has even adopted political practices similar to the sectarian behaviour of the unlamented Socialist Labour League - denouncing all and sundry for their revolutionary failures, maintaining a highly orchestrated internal routine, disrupting the conversations and activities of other socialist groups".

Indeed. Solidarity might also, but does not and could not, comment on Socialist Alternative's choice of issues to centre its efforts on, reflected for example in the current schedule for Socialist Alternative activities in Brisbane:

Rally for Marriage Equality Saturday 13 August
Public Forum: Oscar Wilde and the origins of gay oppression Saturday 13 August
Public Forum: What really happened in the Russian Revolution Tuesday 16 August
Protest: Boycott Apartheid Israel! Boycott Max Brenner! [a chocolate shop!] Saturday 27 August
Public Forum: Spain '36. Workers' revolution against Facism Tuesday 30 August

Notice: nothing geared to the focal issues of labour and capital, nothing geared to systematic Marxist education, most things geared to cutting a figure on the issues currently most popular among left-minded young people.

Solidarity's comment is hypocritical from a group tied to the British SWP, and of little use in enabling Solidarity to grow against the competition of the more energetic Socialist Alternative.

5. A period of preparation

The current period is one of preparation. The focus of socialists should be on self-education and on developing contacts, influence, and intervention in the rank and file of the union movement.

Appendix 1: 27 February 2010 Workers' Liberty conference, Melbourne

Australian capitalism got through the 2007-9 economic crisis with less damage than any other rich capitalist country. Output never actually fell. All the banks got through without nationalisation or government bail-outs.

The Liberal [Tory] opposition is making an attempt to stir up a panic about government debt, but it's desperate stuff. In fact Australia, unlike almost all other rich capitalist countries, has no problem of spiralling government debt, and the international financiers know it.

To our surprise, and others', the housing market in Australia - which is similar to those in the USA, Britain, Ireland, and Spain, and had recently seen a "bubble" of spiralling prices - sagged only briefly, rather than plunging.

All this is thanks not to any special sagacity of the Australian government, but rather to what the Chinese government has done, responding to the crisis with gigantic public spending on industrial and infrastructural investment. Australia, heavily dependent on raw-materials exports to China, has benefited.

Politically, the effect has, perhaps paradoxically, been a double blow to the combativity of the workers' movement. The general crisis pushed much of the workers' movement in Australia, as in other countries, into a hunkered-down, holding-tight-while-the-storm-passes, posture. The relatively slight impact in Australia has meant that there have been fewer explosions at points where workers - whatever general preference they might have for "hunkering down" - feel no choice but to fight back; and it has boosted the political credit of a right-wing Labor government.

Industrial action is at a low level. Striker-days are down to about 30,000 a quarter, compared to about 100,000 in 2004, and about 200,000 at the turn of the century.

The unions ran a big campaign against the previous Liberal government over its anti-union legislation, and promised to press Labor vigorously for union rights. Labor has repealed the Liberals' attacks only in a very limited way, but the unions they have toned down their demands enormously since Labor took office in November 2007. Now the union leaders drown almost all other considerations under cries about preventing a return to office of the Liberals, who have an aggressively right-wing new leader, Tony Abbott.

In New South Wales a strong union campaign against electricity privatisation forced right-wing Labor premier Morris Iemma to resign in favour of a Labor "leftist", Nathan Rees, in September 2008. Rees then introduced a revised version of privatisation, and the unions subsided. Now Rees has been ousted by another Labor right-winger, Kristina Keneally, and she looks like to be ousted by the Liberals soon.

In Queensland, too, most of the unions, and the official Labor left, have gone along with privatisations pushed through by the nominally Labor-left state premier, Anna Bligh. (Although the Australian Labor Party is structurally similar to the pre-Blair British Labour Party, one difference is that openly proclaimed "left" and "right" factions play a big role, and are usually run mainly by "left" and "right" unions. But the "left" is... not very left).

The lull will not last for ever, and maybe even will not last long. Two obvious possible triggers for a turnaround are a future rise in inflation, and a crisis in China in the fall-out from its hectic and unbalanced growth. But for now - so a conference of the Australian Workers' Liberty group in Melbourne on 27 February resolved - the emphasis for socialists must be on education, patient explanation, consolidation, and preparation.

Number 42 of the Australian Workers' Liberty newsletter came out soon after the conference. The conference resolved to continue the newsletter - in a modest format - on a regular monthly schedule. Of late it had become irregular.

Activists from Sydney reported on the reading group about the economic crisis which they had run there, and their plans to launch a new study group, probably around David Harvey's The Enigma of Capital, in cooperation with left-wing academics at the University of Sydney.

In Brisbane, a reading group launched by Workers' Liberty on Gramsci's Prison Notebooks has acquired its own autonomy, and is still going strong after nearly two years of weekly meetings.

Activists in Melbourne plan to start a study group there within the coming months.

Workers' Liberty activists are also active, sometimes very active, in their unions. The meeting discussed the campaign against the victimisation of Workers' Liberty activist Bob Carnegie from an offshore gas rig. The rank-and-file Vigilance Bulletin circulated among Sydney port workers has taken up the campaign, and we talked about ways of helping and developing collaboration with the Vigilance Bulletin.

Workers' Liberty has been central to the AusIraq group, a solidarity campaign for Iraqi workers and unions based in Sydney. Through AusIraq's work, one of Australia's biggest unions, the CFMEU, sent an official delegate to the Iraqi workers' conference in Erbil in early 2009.

AusIraq is now trying to develop direct links - regular phone or webchat conversations - between Iraqi trade unionists and Australian trade unionists. Lynn Smith reported that US unionists active in US Labor Against the War are keen to make such links three-way if they can be set up, and there should be possibilities for getting British trade unionists involved too.

Whether Workers' Liberty members should reinvest more effort into exploring and intervening into the Australian Labor Party was left as an item for further discussion.

Arenas to the left of the ALP do not look promising. Workers' Liberty was active in the Australian Socialist Alliance when it was set up in 2001, but after a while it dwindled. When the "Castroite" DSP "dissolved itself" into the SA last year, it was actually a rationalisation of the fact that the SA had shrunk to nothing much but the DSP.

In mid 2008 the DSP suffered a split of a minority around those who had been its long-time leaders, John Percy, Doug Lorimer, and others, now reorganised as the RSP. Also in 2008 three splinter groups in Australia linked to the SWP (Britain) came back together to form a new "official" SWP group, Solidarity, but it is still very weak compared to the "official" SWP group of the late 1990s and early 2000s, the ISO. A "dissident" SWP group, Socialist Alternative, dating back to a split from the ISO in 1995, is doing better for itself, but by a tactic focused ruthlessly on propaganda and recruitment to the exclusion of broader initiatives.

The most serious activists of the Australian workers' movement will be reassessing, taking stock, and striving to educate themselves.

Appendix 2: Australian political situation - Australian AWL 2008 conference report

Australia today is characterised by the existence (for now at least) of coast to coast ALP governments. With the fall of John Howard and the rise of Kevin Rudd the most significant coalition partner still in government are the Liberals controlling the Brisbane City Council.

Rudd’s poll ratings remain high while Opposition is making little headway at the national level. The Liberals are hampered by question marks over the leadership while the Nationals are grappling with the issue of whether to merge with the Liberals as they have done in Queensland.

Now that the new Senate is without a Labor majority Rudd’s task of governing may prove to be a little more difficult as the Greens appear prepared to play a harder game than the now defunct Democrats ever did vis a vis the Coalition government. The presence of two Independents also make the situation more complex.

Labor increasingly follows an economic rationalist path. The prospect of rolling back Howard’s WorkChoices agenda seems a long way off for many workers. Existing AWAs remain in place. In the construction industry the draconian anti union measures of the ABCC remain in force until 2010 at the earliest. As we said in November 2007 the Federal industrial relations agenda comprises:

* A slow phasing-out of Australian Workplace Agreements - the new individual contracts which the coalition hoped to have replace union collective bargaining - with them being largely replaced by new forms of individual contract, and no solid new legal backing for union collective bargaining;
* Strikes will be illegal except if they are at the time of negotiating a new agreement, and over the terms of that agreement;
* The conservatives' legal restrictions on union organisers' access to workplaces will remain;
* The ABCC - the special police force set up for the construction industry, with powers to compel construction workers to testify on pain of six months' jail if they choose to remain silent - remains until 2010, and is then to be replaced by a new ABCC-lite.
* Howard’s relaxed unfair dismissal laws are still in place.

At a state level there is no certainty that Labor will hold office in as many states after the next round of elections. The ALP Northern territory government has called a snap election for 9 August and is hoping that securing a $12bn gas plant contract with the Japanese will secure its re-election. Other main issues are the continuation of the previous government’s ‘emergency intervention’ in the Aboriginal communities where Labor usually prevails. It is hard to imagine that with the Country Liberal Party holding just 4 of the 25 seats in parliament that the ALP will lose. But this is the first electoral test for Labor since November 08.

The Queensland government, led by ALP left Anna Bligh, goes to the polls in 2009 dogged by scandal and accusations of mismanagement. The only real hope of re-election for the Queensland ALP appears to be the accident prone and divided opposition.

NSW Labor faces the polls after the 2010 federal election. Many commentators think that the only reasons Labor won in 07 is because of the unimpressive Opposition leadership and the huge union campaign coinciding with the Your Rights @ Work. In 2010 the ALP appears sure to be decimated despite a lack lustre Coalition Opposition.

On the other side of the equation:

The Labour Movement response

Or more specifically without the working class acting independently the union leadership’s response to Labor in government is what is examined. Even before Labor was elected at the national level union officialdom signalled they would not roll over completely to the conservative Rudd agenda. The ACTU even advocated a vote of the Greens in the Senate on the basis of their strong stand against WorkChoices.
Union leaderships across the political spectrum are continuing their campaigns for a further roll back of the Howard anti-worker industrial regime. August 8th looms as a real test of the union leadership’s resolve. Noel Washington of the CFMEU in Victoria defies of the most notorious industrial legacy of Howard years when he faces court for not dobbing in his fellow workers to the industrial Gestapo of the ABCC. The ACTU has pledged $500,000 to the fighting fund and Washington is set to dare the courts to jail him.

The division between the union leaderships and the Parliamentary Labor Party seems to be widening at state and federal levels. It appears that Labor in government is not having an easy passage into delivering its economic rationalist agenda. Just how far the union leaderships are prepared to go remains to be seen.

In NSW a watershed dispute has been brewing over the ALP government’s plan to defy Labor State Conference and privatise electricity. At present the war of sorts continues with the terrain of battle shifting to an argument between the ALP Head Office and the unions on one side and the Parliamentary Labor Party on the other. The union leaders are doing all they can to hose down demands for industrial action in support of a publicly owned utility: their catchcry is “we can’t turn off the lights or risk losing public support”. This neatly sidesteps the possibility of a graduated series of industrial and community based actions to build pressure on the Iemma government.

Wages fights

On the wages front we have inflation running at about 4.5% and in the public sector state labor offering much less than that with trade offs. The Tasmanian CPSU has rejected a 13.5 % offer and is after “parity with the mainland”. Industrial bans are being imposed. Other public sector unions in Tas won between 14-20 %.

Unions NSW announced a Public Sector union “Day of Action” on a series of issues including a below inflation pay offer to public sector workers of 2.5%. 30 July has been dubbed a “Day of In-action” by many after learning that the major event will be leafleting railway stations followed by a “media stunt” in the Sydney CBD with a 11am crowd of officials and some union members but including nothing involving stop work action or a mass rally. One major Public Service union went so far as to warn members that any spontaneous membership activity would have to be vetted by the union Executive before being implemented.
The Victorian CFMEU has recently won 15% over 3 years. Which is a catch up and .5% over the latest inflation figures. But over a 3 year period there is no guarantee of maintaining buying power in uncertain economic times.

Falling membership

The Your Rights @ Work campaign was highly successful at mobilising workers to vote out the Coalition. But it did so by appealing to them in marginal seats as citizen voters not mobilising them as workers. The result is once again a missed opportunity to use all the energy of that campaign to increase union membership.

Before the November 07 election union members were told in no uncertain terms that although Rudd promised not nearly enough of a roll back of the Howard industrial agenda they should not kick up too much of a fuss and simply rely on the ballot box. The fight would come after the election of a Labor government. Well, now the honeymoon is over and its time to turn on the pressure.

The end result of the apparent and real arm wrestle between the unions and Labor both on a State and Federal level may be that unionists hopes and aspirations of a fight back will be carefully stage managed so that nothing ‘gets out of hand’. At the same time some union leaderships are aware and somewhat fearful of the possibility that their influence on the ALP could wane if it is not asserted.

After the November 07 election we asked:

“The question on the workers' side now is: how soon, how energetically, and how boldly will the unions and the left mobilise to apply pressure to the Rudd Labor government to win back workers' rights?
And the question on the other side is: will Rudd, who has modelled himself partly on Tony Blair, try to use the credit from his election victory to ram through structural changes in the Australian Labor Party similar to those Blair forced on British Labour with "Partnership in Power" in 1997?”

That battle is still going on with the independent working class movement yet to show/assert its potential for placing demands on Labor. Letting off steam rather than forcing the issue.

Our job remains to find and link up with workers in struggle and who want to put up a fight to see the end of the Howard agenda, who want to build a real mobilisation on wages and conditions in the face of the timid union leaderships.

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