Australia: Labor reinstalls Rudd as crisis continues

Instability ahead regardless of election outcome

Labor’s leadership tensions came to a head late last month as Kevin Rudd was reinstalled as party leader and Prime Minister. The unpopular Julia Gillard was swept aside in an attempt to improve Labor’s chances in the upcoming election.

While the leadership change may give Labor a boost in the short term it will not resolve the deep rooted crisis in the party. It is not just the fact that Rudd is seen as a divisive character in the caucus, the truth is that Labor’s woes are intimately connected to the historic decline of that party.

In the past Labor won a support base by offering piecemeal reforms to the working class within the framework of capitalism – especially during the years of the post war boom. Today, in an era of economic crisis, capitalism is unwilling and – in some cases – unable to grant reforms. In fact all of the gains of the past are now being whittled away.


By basing themselves first and foremost on the system of capitalism Labor has been forced to adapt to this new period. Subsequently they have embraced the neo-liberal policies of free trade, privatisation and workplace deregulation – policies that have resulted in bloated profits for big business. Labor’s policies have actually helped facilitate the increasing gap between rich and poor in Australia.

When Labor talks about reforms today they are really talking about counter reforms. Gonski [review and proposals on schools] and DisabilityCare are a case in point. Both policies are aimed at entrenching a private, user pays system that further undermines the welfare state and opens up new markets for private profiteers.

Labor’s dilemma is that while their policies serve the interests of the rich and powerful they are still reliant on the votes of ordinary working people to stay in office. With this being the case they are forced to spend all their efforts deceiving people about the true nature of their politics. Void of any substance, they mix Orwellian language and populism with policies that increase profits at the expense of people’s wages.

Inevitably people feel betrayed when the real nature of their policies is periodically revealed. As a result people view Labor as fundamentally the same as the Liberals [the conservative party in Australia]. In the absence of a real mass progressive alternative, working class voters often use the Liberals as a stick to beat Labor over the head with. Others are temporarily voting for parties like the Greens while some people are so despondent that they don’t bother to vote at all.

Tony Abbot and the Liberals

It is this general process, rather than any love for Tony Abbott [leader of the Liberals], that is behind Labor’s poor poll results and the recent leadership tensions.

It is likely that with Rudd at the helm the election will be a lot closer. Regardless of whether Rudd, Abbott or some type of minority government comes to power, the next parliament will be no friend of ordinary people.

The Liberals, just like Labor, are representatives of big business first and foremost. Capitalism for both the major parties is a system that best facilitates the accumulation of profits. Both parties act to defend the system and protect the profits of their rich backers.

The next government is going to face a worsening economic crisis and just like all other capitalist governments around the world they will attempt to make ordinary people pay the price.

End of Chinese buffer for Australian economy

Uniquely Australia has not yet felt the full effects of the crisis that is gripping the globe. This however is set to change. Until now Australia has been buffered by the mining boom and exports to China. That buffer is now diminishing with most commentators agreeing that the investment boom in mining has peaked.

A slowdown in the mining sector will inevitably leave a huge gap in government revenues. With many other sectors of the economy already in recession there is nothing on the horizon that can fill that gap quickly enough.

Upon coming to power the next government will be under pressure immediately from big business. Employers will be demanding that the government does not increase taxes on them to fill the void. Instead they will be pushing for cuts to public spending, the sell off of public assets and other austerity measures aimed to ensuring that low company tax rates are kept in place.

It is not ruled out that there could also be a push to increase the Goods and Services Tax (GST). The ability of the state governments to raise more revenue via this mechanism would allow the federal government to reduce spending in areas where the two tiers of government share responsibility. Again ordinary consumers would be forced to pay through higher prices.

Given that voters have no real love for either major party they will not consider an election victory as a mandate for this type of austerity agenda. Social and political tensions are bound to intensify.

How quickly cuts are implemented, and tensions arise, is somewhat contingent on the world situation. If China dipped quickly the new government would be under much more pressure but if the Chinese economy is able to chug along for a little bit longer they may have a bit more wriggle room. Regardless it is likely that the honeymoon of whoever comes to power will be short lived as people do not accept that their living conditions should be pushed backwards.

The Socialist Party wholeheartedly rejects the idea that any cuts or austerity measures are necessary. We reject the entire concept of ordinary people paying for a crisis that they didn’t create. We say that those who profiteer, not those who work for mere wages, should pay.

If big business was forced to pay proper taxes on their super profits more than enough money would be available to balance the budget. If society was organised in a way that put people’s needs before profits we could actually move quickly to increase living standards across the board.

Unless there is a fight against it though, austerity will prevail. The task ahead is to prepare ourselves for the battles that will inevitably come. A good start would be solid votes for election candidates that stand firmly against austerity. At the same time unions and community groups need to prepare their members now to ensure that they are not caught by surprise after the election.

An important part of the struggles ahead will be the need to link them to a genuine political alternative to the two parties of big business. We can’t just continue to exchange one capitalist party for another. We say that trade unions and community groups should stop supporting and financing Labor and instead move towards setting up a new political vehicle.

We need to build a genuine mass workers’ party that stands in elections, but more importantly is rooted in all of the struggles that will take place against cuts, privatisations and austerity. Ordinary people desperately need a party that wants to put an end to attacks on our living conditions. In our view the best way to do that is to fight for a system that is not crisis ridden – a democratic socialist system that uses society’s wealth to provide for all. This task will become all the more urgent in the months and years to come.

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