Why Labor and the unions need to split: Kohler

As an individual John Robertson might be a perfectly good leader of the NSW Parliamentary Labor Party, but his union background, and all that now means in NSW, will make it virtually impossible for him to succeed.

Former Labor minister Frank Sartor said two days ago that the “fix has been in” for Robertson to take over the leadership for months, so we’ll see what happens. Paul Keating says that if he becomes leader, he will become “lead in the saddlebags” for the Prime Minister, Julia Gillard.

Whether it likes it or not, the NSW election has brought the Australian Labor Party to a crossroads: it must disaffiliate from the union movement or face irrelevance and long-term opposition.

The same goes for the unions. They need to break away from the ALP and focus on their members, not politics. They should have done it 10 years ago in fact.

The link between the Labor Party and the union movement is now an obvious anachronism, laid bare by the failure of successive NSW governments to privatise electricity despite a clear understanding in state cabinet that it was the right thing to do.

It would have been unpopular, as it was in Victoria, but electricity privatisation would have set NSW up financially and ensured that when the ALP eventually lost government it would not have been an utter debacle as it was on Saturday.

The formal affiliation between the unions and the ALP is a classic case of representatives looking after their own interests rather than stakeholders. It suits union officials to have 50% of the votes at ALP conferences because it gives them powerful leverage to take the next step in their careers – into Parliament.

The Victorian branch of Electrical Trades Union, led by Dean Mighell, put ALP affiliation to a vote of members last year and it was decisively defeated. The Victorian ETU is now no longer affiliated with the ALP and Mighell is no longer a member. He says it’s the best thing they have ever done, but that branch of that union remains the only one to have disaffiliated.

There is little doubt that if Australia’s two million union members were given a vote on ALP affiliation they would vote against it – not that they are Liberal voters, although many are, but there’s nothing in formal affiliation for them.

The dwindling non-union membership base of the party might be worried about the money they’d lose, but breaking from the unions would give the party an opportunity to rebuild as a true member organisation. The current factional situation and branch stacking that is dominated by the unions is a cancer eating at our oldest political party.

Federal Labor is now desperately trying to use climate change to carve out a pragmatic existence between two populist extremes – the Coalition under Tony Abbott and the Greens.

At least the carbon tax is not officially opposed by the unions, unlike electricity privatisation, but some of the manufacturing unions – especially in steel – are decidedly uneasy about it.

Abbott, by the way, is playing a dangerous game of his own: identifying with climate sceptics while also claiming to have an effective policy against global warming. It will bite him on the backside before long.

But just as the NSW ALP ultimately crashed because of the dominance of the so-called “party machine” (read: unions), the Federal Leader of the Party, Julia Gillard, is now struggling to assert her own authority and independence from the factional machine – having been installed by it.

Kevin Rudd’s failure on climate change, which led to his sacking by the factional leaders, was not equivalent to NSW’s failure on electricity privatisation because it is not a matter of core union ideology. In any case the policy has been reborn under Gillard.

But the elephant in the room for economic policy is productivity. It has fallen disastrously over the past decade and the Labor Government has no answers because its industrial policy is controlled by the unions.

Economists now expect inflation to start rising again. The past few years of low inflation and strong profitability has seen a quiet IR environment and low wages growth.

This will change over the next few years as labour shortages bite and inflation rises in response to rising commodity prices and rising prices of products out of China. With productivity already waning, industrial policy will be front and centre again, but the ALP will be compromised by its union affiliation – or vice versa.

And there seems little chance of the sort of visionary leadership at the ACTU that we saw in the 1980s, which supported the Hawke-Keating wave of micro-economic reforms, including enterprise bargaining.

As for the unions, they must become member service organisations, not political agitators, in order to survive themselves.

This article first appeared on Business Spectator.