Sunday, February 28, 2010

Unions and Labor: is Dean Mighell right?

above: A union protest against the draconian industrial laws of the former Australian Howard Conservative government.

nb: what follows is a response to a call from unionist Dean Mighell for unions to disaffiliate 'en masse' from the Australian Labor Party.  Also considered is the future of parties of the relative right in Australia, and the need to contest the 'common sense' of Australian politics...

By Tristan Ewins

Left-wing State Secretary of the Electrical Trades Union (Victorian branch), Dean Mighell, dropped something of a political bombshell recently, arguing in an essay that appeared in The Age and the Sydney Morning Herald for unions to disaffiliate from the Australian Labor Party.

This stand has developed against a backdrop where Mighell had been condemned as a maverick by powerful figures within the Australian Labor Party: a figure whose militancy threatened to “spook” swinging voters. The cynical might suppose the expulsion of Mighell from the ALP in 2007 was really about setting to rest the “bogey” of militant unionism. Unfortunately, few in the ALP leadership seem to recognise that the real problem is that union militancy is considered a “bogey” at all: this in a context where the rights of labour have been severely curtailed in violation of International Labor Organisation (ILO) conventions to which Australia is a signatory. Mighell himself has referred to provisions against pattern bargaining - among other areas.

Dean Mighell’s call for a more independent Australian labour movement will have upset many powerbrokers within the Australian Labor Party. And there will be ordinary members who also feel Rudd Labor’s spirit of compromise - including accommodation of corporate interests when it comes to Industrial Relations - is the only way to achieve anything.

Even though the ACTU represents almost two million workers, the power of capital is hardwired into the political and economic systems. It is the “elephant in the room” that no one dares acknowledge openly: both because of the dominance of capitalist ideology, and for fear of antagonising corporate interests, including monopoly media, who have the power to make or break any government. Although liberal democratic ideology permeates Australian society, democratic practice is fatally compromised by this state of affairs.

But workers have power as well, as the ACTU showed in the run-up to the 2007 Federal election in Australia, when its campaign against the conservative Howard government’s repressive WorkChoices industrial relations legislation helped bring that government down.

Given the importance of the ACTU campaign in bringing about the demise of the Howard government, one would have thought unions would enjoy more influence under Rudd Labor than has turned out to be the case. Instead there has been one disappointment after another.

Most glaringly, before its election, Rudd Labor committed itself to an “Award modernisation” process through which (supposedly) no worker would be worse off. For those who are not familiar with “Awards”, they comprise minimum standards for wages and conditions under Australian industrial relations law. In the process of “simplifying” the Award system it is now clear that many workers may be worse off, in both their wages and in their working conditions.

For example, in September 2009, Melbourne newspaper The Age revealed that some airline industry employees would “lose between $70 and $300 a week from their base pay”.

And in January 2010 the Australian Nursing Federation (ANF) warned that, “thousands of aged-care nurses working in age care homes in Queensland and NSW will be forced out of the industry due to a wage decision that could see them $300 a week worse off.” Importantly here, undermining the position of skilled aged care nurses in the sector could also lead to a reduction in quality of care for vulnerable and elderly residents of aged care facilities.

Many varied and complex Awards may be more difficult to administer. But it can be reasonably argued that this is an acceptable price to pay for fairness. And arguments about complexity can comprise a “fig leaf of legitimacy” behind which lurks an agenda of undermining the rights of workers.
Which brings us to Mighell’s call for unions to disaffiliate from Labor.

Mighell is right to call for strategic thinking from unions when it comes to relations with the ALP. Too often ALP strategists and power-brokers take union and grassroots support for granted. The conference process is often abused, stage-managed and manipulated in a fashion which silences grassroots voices, leaving many disillusioned, and threatening to demobilise Labor’s organisational and support base over the long term.

What should unions do?

The worth of direct organisational affiliation of unions to the ALP in Australia has been called into question because, with the abuse of the Conference process, old channels of policy influence for unions are effectively annulled.

For many it seems that all that is left is a “carving up of the spoils” of safe Labor seats and other related career paths. Some figures genuinely try to work within these channels for what is right, but often the interests of ordinary workers and union members seem to be forgotten in this process.

Mighell posits, as an alternative to the labourist tradition in Australia which involves direct organisational affiliation of unions with the ALP, the example of unions in the United States. He notes the attempts by organised labour in the US to influence the position of both Democratic and Republican candidates: backing those who are ultimately more sympathetic to their interests. The conditions prevalent in the US are, however, are radically at variance with Australian conditions.

With the exception of minor centrist and left-of-centre parties such as the Australian Democrats and the Australian Greens, the prevalent Australian political conditions have been those of a two-party system. For much of the modern history of Australia, thus, the political milieu has taken the form of polarisation between conservative parties, and the Australian Labor Party as the “political wing” of the Australian labour movement.

In recent decades this polarisation has further exacerbated deeply ingrained prejudices in Australia’s Conservative parties against organised labour.

While sometimes paying lip-service to the idea that organised labour in Australia rightly deserves some minimal regime of rights, the real outlook from the hard-right leadership of Australia’s Conservative parties today is one of pursuing the destruction of the organisational and social base of their main political rival. This takes the form not only of attempts to defeat the ALP and the broader Left electorally, but to forever “break the back” of organised labour and create a “free for all” when it comes to the wages and conditions of Australian workers - a move which could create a “downward spiral” in this regard.

That said, can this state of affairs be altered?

The Liberal Party in Australia was not always so dominated by factions of the “hard right” as is the case today. Figures such as Ian MacPhee, who were purged from the parliamentary party in the period from the 1980s to 1990, represented a kind of progressive social liberalism for which there was a real and legitimate role for unions, as well as a preference for a mixed economy. Added to this was some genuine support for the principles of social justice, and the rights of refugees. Former Liberal Prime Minister Malcolm Fraser has also since emerged as a consistent and powerful critic of the dominant hard right of the party he once led.

But if this state of affairs is to be challenged, it will be a long, hard struggle. The challenge is not merely one of organisational and cultural reform inside the Liberal Party. There is a struggle at the level of popular and academic culture: a struggle for the “common sense” of Australian politics. This is the struggle to define those “invisible boundaries” of the contested “relative centre”: those boundaries which most political players are compelled to observe in mainstream debate for fear of electoral backlash.

Against this backdrop, Australia needs decent and progressively minded activists not only within the Labor Party, the Australian Greens and various progressive movements, but also fighting for the soul of the Liberal Party - for that strain of social liberalism which that party’s hard right has sought so ruthlessly to marginalise, uproot and destroy.

That said, organised labour in Australia needs to take note of these conditions, and what this implies for the interests of their members, and for the social democratic and democratic socialist values which they espouse.
Influencing Labor Party policy should remain an important focus of organised labour in Australia. But unless unions are willing to “play hard ball”, Labor power brokers will continue to take their support for granted, resulting in a further decline in union influence.

Unions must remain independent of parliamentary Labor as much as is necessary to retain a genuine, strong and independent voice and power, beyond that accommodated by purely electoral politics, and the opportunism this involves. By providing a genuinely independent voice in this context, unions could contribute to a shift of the relative centre in favour of social justice and the rights of labour.

By the same token - if unions merely echo the positions of parliamentary Labor this will create a political “vicious circle” by which right-wing “opinion makers” in the mainstream media, and consistently opportunistic power-brokers set the terms of debate: ultimately shifting the “relative centre” deeper into the confines of an economically neo-liberal, and socially illiberal ideology.

That is not to deny that politicians need to compromise in the pursuit of electoral success. It is to insist that this can only be justified as a means to a greater and more principled end.

Looking beyond purely electoral politics, there is also the prospect of organised labour again realising its true and independent social power. A labour movement which systematically educates, involves and mobilises its members; and which applies its power and militancy effectively in strategic sectors; is more likely to achieve leverage, and secure a more favourable compromise at the policy table.

Over the long term, hopefully, such conditions would progressively “feed into” the prospects of a rejuvenated and emboldened Australian social democracy.

By contrast, a purely defensive labour movement, afraid to take a stand and staging a constant “rear guard action”, may continue to decline in the face of an aggressive employer lobby. This has already been the case over recent decades - with employer demands for ever greater “flexibility” in wages and conditions, and brutal sanctions meant to destroy the legal rights of workers to withdraw their labour.

In this context: there are some individual unions which have already “broken away” from Labor Party affiliation. But a more co-ordinated response could perhaps yield better results.

There has been talk, recently, of financial worries for the ALP’s organisational wing. This being the case, in the short-term, the ACTU could do well to realise the strategic worth of its affiliated member organisations. Unions must demand that Rudd Labor deliver on its promise that no worker would be worse off under a “modernised” Award system. And unions must also collectively and in unison demand legislation - or whatever other moves are necessary - to restore and improve the relative wages and conditions of the most low paid and vulnerable workers. These were frozen, and so declined in real terms, in the last decision of Howard-era Fair Pay Commission in 2009.

Finally, unions must secure an iron-clad commitment from Labor that obstacles to pattern bargaining will be removed should Labor win the next Federal election.

Federal Labor’s capitulation on the rights of labour has obviously gone too far. And it is reasonable that unions now seek redress. At the same time, the ACTU might, from a position of strength, wish to negotiate as a bloc for a limited but meaningful reduction in ALP affiliation fees. This could free the resources of organised labour in Australia to run its own independent campaigns: and also shift resources to those political forces in a position to make a less compromised defence of the rights and interests of workers. Specifically, this could involve strategic support for candidates from the Australian Greens, and other candidates who have real prospect of success - with an established record of support for working people.

Increased public funding for all significant political parties in Australia could, in this context, ensure that all players still retain the means to get their message across. The hope is that organised labour in Australia could make progress - instead of being taken for granted - if unions collectively stopped “putting all their eggs” in the ALP (Australian Labor Party) basket.

Perhaps the most telling of Mighell’s observations in his recent essay was his condemnation of the sentiment of so many union leaders that the ALP is the “main game”, with the broader labour movement relegated to a secondary role.

Having Labor in power matters, but it must be viewed in the context of a broader movement, and a genuine and realisable agenda for social change.

Mobilised, educated, and organised workers have real power. It is time labour movement leaders helped working people realise this power - rather than compromising everything to satiate the demands of an aggressive employer lobby, and for the sake of the parliamentary Labor Party’s short term standing in the polls.

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Sunday, February 21, 2010

ALP and the Unions – Where to from here?

above: the author, Dean Mighell

What follows is a controversial discussion concerning the future of the relationship between unions and the Australian Labor Party.  Respectful discussion is welcome here from both sides of the debate - and I will be publishing my own reply here next week.  If anyone would like to submit a piece of their own on these issues, pls feel welcome to approach me with proposals...  

article by Dean Mighell; Electrical Trades Union Victoria Branch State Secretary

In 1972 Gough Whitlam changed Australian politics forever with the mantra "It's time". Today the same slogan should apply to Australia's unions because it is time for them to break away from the Australian Labor Party and stand independently for what they believe is right. There's a great unspoken truth in Australia's labor movement at the moment and if it is not addressed soon the future of this country's unions as the effective political voice of the workers is in serious jeopardy

Everyone will remember Tracey, the highly stressed working Mum who featured on the ACTU Your “Rights at Work” TV ads. Well Tracey, if you still work in a workplace with less that fifteen employees you can still be sacked unfairly and worse, Gillard has reduced your basic Award conditions under their “modernisation” program. Despite Rudds election promises many thousands of Australian workers now face a reduction in their working conditions.

A new relationship between the ALP and unions that is based on mutual respect is desperately needed. In Scandinavia unions and the Social Democrats have an alliance, not affiliation. In the United States, unions largely support the Democrats and their campaigning and finance is critical though they have no affiliation mechanism. They effectively lobby Republican politicians on many issues and some unions actively support Republican candidates if they believe it is in their members’ interests. Our system differs but the principle remains. The union/Labor relationship has its history in the British model and if that’s utopia for workers, I’ll give it a miss.

Today, both Labor and the Liberals now look to the polls rather than the party Conference for policy making despite the theatre. There can be no more glowing example than that of industrial relations policy. Labor has effectively adopted most of the Howard governments IR policy and rebadged it and refers to it as “Fair Work” but in reality, big business and their representatives have had unprecedented access to Labor and are delighted with the results. Even Howard’s Building Industry Taskforce has been retained to the delight of multi-millionaire builders and developers.

I well remember when John Howard ushered in the 1996 Workplace Relations Act. Peter Reith was Industrial Relations Minister and the ACTU denounced the legislation as the ultimate, anti-worker evil. Union anger was at boiling point and Reith was demonised at every turn. Now there is a deafening silence from the ACTU as Labor governs and workers rights and conditions are attacked.

The truth is that Howard’s laws at the time - as bad as they were - gave workers and their unions a much better go than Rudd and Gillard’s Fair Work Act. When Howard controlled the Senate he then took it too far and paid the ultimate political price

In the lead up to the last Federal election workers rights were the main game and the unions went on a full frontal assault with the “Your Rights at Work Campaign” led by the then ACTU Secretary Greg Combet.

Interestingly, the ACTU sacked the public relations firm that crafted this campaign after Labor won office choosing an ALP friendly and un-unionised organisation in its place. Clearly, campaigning like the YRAW campaign is off the agenda at the ACTU and it’s now about ‘”branding” and spin. Combet is in federal parliament and the ALP ensured the decent yet ultra conservative Jeff Lawrence would replace him at the ACTU.

During the recent Senate enquiry into the Fair Work Bill, the ACTU refused to buy into the debate that the Bill contained many breaches of human rights as defined by Australia’s international obligations under International Labour Organisation conventions. If the ACTU is so severely compromised by the ALP relationship that it can’t stand up and fight for basic workers rights then something is seriously wrong.

Only after my union laid a complaint to the ILO and the Victorian Trades Hall Council agitated at the ACTU Executive level, did the ACTU decide to examine the Act against ILO standards and then only after the Fair Work Bill had become legislation. Damage done, deal done. Belatedly, they have identified 15 serious breaches of human rights. The ACTU’s statement that “on balance”, the Fair Work Act met Australia’s ILO obligations looks a little sad. Australian workers have every right to feel let down.

Union membership numbers for many unions has declined and so too has the influence of the ACTU. In recent decades the ACTU has absolutely refused to adopt a policy that is at odds with the ALP and this strategy simply hasn’t delivered. A better strategy is required.

The challenge for unions is simple, create unions that workers want to join. The financial membership of the Victorian Branch of the Electrical Trades Union has grown every year since 1995 despite the massive job losses through electricity privatisation, manufacturing decline and bad IR laws. Unions like the Nurses Federation and Police Association have had large growth too. Neither are affiliated to the ALP in Victoria. We have close to two thousand apprentices as members under the age of 25. So much for young workers not wanting to join unions. Our members like us to be outspoken on political issues that effect them but have little respect for party politics.

Many workers are skeptical that ALP affiliation is too often a mechanism to ensure pre-selection to a safe Labor seat for a few union leaders and they rightly ask, ‘to what end?’ I’ve seen too many union leaders that think the ALP is the “main game” and spend most of their time wheeling and dealing in the ugly factional process. Make no mistake - I’ve done my bit too. However, I’ve always known that a union’s mission is looking after workers and growing our unions and not pre-selection.

Unions must get politically smarter and more strategic. Collectively, we represent close to two million Australian’s directly as members. We act to protect millions more. We proved with the “Your Rights at Work” campaign that we can be Australia’s most powerful lobby group. By remaining affiliated with the ALP, unions are automatically the enemy of the Liberals and National party and I seriously question if their stance on trade unions would be as severe if unions were not an intrinsic part of their political rival.

I’m not anti Labor - far from it. It is my hope that unions and the ALP always have a good working relationship in the continued interests of Australia and working people. However - relationships change, evolve, collapse and rearrange. It’s part of life and so too must the relationship change between Labor and Unions for the betterment of both.

When Steve Bracks was elected Victorian Premier in 1999 a procession of senior union officials got few moments alone with the new Premier to “kiss the ring” so to speak. I like Steve Bracks and he’s a decent bloke but I ain’t no ring kisser. I congratulated Steve and said, “All the best mate. I know you’ll never put the interests of the ETU ahead of your Government and I’ll never put the interests of your Government ahead of those of my members. However, I look forward to working with you”. It was a frank conversation said without offence and sums up the way I think the relationship between unions and the ALP should be.

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Monday, February 15, 2010

Debating an Australia-China Free Trade Agreement

above:  Chinese Vice Premier Li Keqiang (R) shakes hands with Deputy Prime Minister of Australia Julia Gillard at the airport in Sydney, Australia, Oct. 29, 2009. Li Keqiang began his official visit to Australia on Thursday.(Xinhua/Liu Jiansheng)

Post Accord- Trade or Industry Policy?

A Progress Report on Prospects for Manufacturing

By Sarah Howe, February 7th 2010

nb: the following essay, by Australian labour movement activist and thinker Sarah Howe, explores the issues surrounding manufacturing policy in Australia.  More specifically, this is considered in light of moves to establish an Australia-China free trade agreement.  Howe argues in favour of a more assertive stance by Australian negotiators than we have seen so far under Rudd Labor, and refers to the experience of previous Labor governments.

This paper seeks to consider the progress of the current Australia-China Free Trade Agreement (FTA) negotiations in investigating whether the Australian Government could best secure the future of the manufacturing industry through the mechanism of trade or industry policy.

In global terms, Australia’s manufacturing industry currently operates on a small scale and occupies a relatively vulnerable position in global supply chains. This makes Australia position in the world vulnerable with many commentators observing that a robust manufacturing industry is critical to not only economic success, but also its success is crucially important on social and environmental grounds.
Economically, China is the world’s sixth largest economy, fourth largest trader and Australia’s largest export market. Australia mainly exports primary commodities to China, while China mainly exports labour intensive, value-added manufactured products to Australia. Better relativities in the trade relationship between Australia and China must be achieved if Australia is to continue to develop as a balanced and knowledge-based economy and is to avoid an ongoing mounting and unsustainable current account deficit. In social terms, the manufacturing industry provides stable, full time and largely well paid jobs for over one million Australians (9.3% of all jobs in Australia). And in environmental terms, it is argued that we need to start thinking about the impact of export of export of coal and uranium without concern for the impact on global warning.

In the light of these challenges, does trade policy (and instruments such as FTA negotiations) present a possible policy path to encouraging the growth of a sophisticated export orientated manufacturing industry as opposed to industry policy? It will be argued that since the Accord policy period in the 1980s, industry policy in Australia has fallen away and is now not achieving the much needed capacity building in high technology manufacturing that is required to ensure its required growth and sustainability in global terms. Trade policy becomes a crucial instrument, for the Australian Government in positioning the manufacturing industry strategically to the meet economic, social and environmental challenges that face the industry.
In trade policy, bilateral trade agreements are again a force in Australian trade policy post the Howard years (they briefly disappeared from view after Rudd was first elected in November 2007 and initially vowed to focus instead on the multilateral trade rounds). While Rudd’s initial position was that Australia did not have the size, influence and power to secure significant trade deals with major trading partners at the expense of other countries- which is the inherent feature of bilateral preferential trade agreements-the global take up of bilateral agreements encouraged the Rudd Government to take a policy shift back to favouring preferential trade agreements in response to the development that in recent years they are the preferred instrument of trade policy for all of Australia’s major trade partners.

Australia must take an offensive strategy in current FTA negotiations with China to further the interests of the manufacturing sector to assist with the building of a high value added export orientated manufacturing industry. In the absence of a Rudd Government led heavy state orientated industry policy (as the Accord promised to be), our focus turns to trade policy and we pin our hopes on our Australian negotiators and their capacity to extract concessions from the Chinese to assist in boosting the export potential of the manufacturing industry, as well as protecting the existing industry through protective measures. We imagine that this may be able to be achieved by exploiting or capitalising on the insatiable Chinese demand for our iron and coal.

Trade and Industry policy experts argue a strong position for manufacturing can be achieved by taking a defensive protectionist stance via pursuit of concessions in the area of non tariff barriers. This is not about creating infrastructure for the manufacture and logistics of adding value to our iron ore (it is argued by commentator Martin Feil that we missed that boat in 1976 when it was determined we would instead just export blooms, billets and slabs of iron and steel). Rather, it is about Australian negotiators taking a hard line position on many of the key non tariff barriers that have impacted on trade for the manufacturing industry; stronger anti dumping measures, greater intellectual property protection, greater transparency in legal and financial systems, and stronger rules of origin clauses.

It is argued that by Australia toughening up our stance on non tariff barriers, negotiators will assist in Australian manufacturers in building capacity in our export manufacturing industry, so as to position us better to build a sustainable, innovative and socially just manufacturing policy. In this way, Australia will depart from a trade policy that reinforces us as a ‘quarry and farm economy’- a mere source of cheap raw materials for the rest of the world’s economies.

The Economic Imperative- The Current Account Deficit

A stable and growth orientated manufacturing sector is critical for a nation’s economic success. However, Australia’s trade and industry policy strategy since the 1970’s has not positioned Australia well in relation to building a strong export orientated, high value added manufacturing sector. In recent times, the AMWU has lamented Australia’s lack of energy in pursuing a high growth future for the manufacturing industry in various submissions to Commonwealth trade and industry policy consultations;

‘at a time when developing nations are building information technology industries from the ground up, Australia must do better than relying in trade and industry policies aimed at encouraging the exportation of low value added products. In terms of exporting high and medium-high technology goods, the only OECD economies that Australia performs better than are Turkey, Greece, New Zealand and Iceland. This is not a formula for a high wage-high growth economy of the future’

The early development of Australia’s manufacturing sector depended heavily on protection for its growth reflecting the aim of Australia’s trade policies post Federation as to diversify the economy by reducing the dominance of trade in primary products. This development strategy took a dramatic turn in the early 1970s, when with the onset of severe economic difficulties marked by slow economic growth, high inflation and rising unemployment from late 1974, pressures for structural adjustment of domestic manufacturing industry increased as the competitive problems of the sector were more starkly revealed.

Worldwide economic pressures bought a dramatic end to ‘fortress Australia’ and the protected nature of the manufacturing sector. The 1970s and 80s presented a critical re-adjustment phase for the Australian manufacturing industry. It was felt that Australia could not compete with low-wage manufactured exports from newly industrialising countries, and that we now had to factor in the increasing technological sophistication of manufacturing in leading industrial economies.

Pressure was brought to bear for Australia to liberalise its trading relationships with the Pacific region- which involved allowing for greater imports of low wage manufactured goods, in order to open up markets for agricultural and resource exports. By the end of the 1970s, the Australian Government determined to replace its ‘post war import substitution manufacturing strategy’ with a new approach that would be about focusing efforts to develop a mature high wage industrial economy with a manufacturing base that was specialised, competitive and export orientated. In moving away from its labour intensive industrial base of the motor-vehicle and TCF industries, Australia needed a strategic approach to develop a more specialised industrial structure that reflected Australia’s comparative advantages, particularly in capital, knowledge and resource-intensive manufacturing industries and in developing greater export development and orientation of the Australian manufacturing industry.

A state led industry policy would have enabled such a transition from Australia adopting a ‘defensive industry policy’ to instead an offensive industry policy- the need for ‘a shift in emphasis of the debate on assistance to manufacturing industry away from complete concentration of the tariff towards consideration of how in a tariff distorted environment, manufacturers could be positively encouraged to become more outward looking and export orientated. However, in the absence of a current account deficit at the time, the Government did not have a great impetus to reach the goal of encouraging a new ‘more specialized industrial structure’ of the sort that was needed to replace the light industry associated with the textiles and motor vehicle industries and notes that this kind of goal required massive state oversight and intervention.

In the 1970s and 80s, the Australian Government instead adopted a policy approach that was about merging free trade policies at a foreign policy level, with relatively minor interventionist policy approaches at a state level. Unfortunately, positive interventionist policies in this era remained partial and poorly implemented, reflecting weak bureaucratic capabilities, conflict over the role of the state in industry and the limited commitment of key policy makers to notions of a positive state role in industrial restructuring. This policy malaise in industrial restructuring as reflecting a lack of political will behind the manufacturing industry restructure in Government. Instead the prevailing view in Government at this time was that the resources boom of the late 1970s and early 1980s would be the key driver of national wealth creation, with the services sector providing a key area of employment growth; with manufacturing increasingly seen as an oversized and inefficient product of post-war protectionism.

Increasingly a widespread view developed within the state and the wider society that the manufacturing sector’s call on productive resources and on state assistance had become a burden on the rest of the economy and a drag on national development aspiration – it was felt from a balance of trade perspective, that the significant exports generated by the resources boom, could allow for the increase of imports of manufactured goods. Australia’s strategy at this time was therefore to continue to trade with our resources, to the expense of our manufactured goods, with little commitment to the implementation of a state based manufacturing industry plan based on industrial restructuring towards high end manufacturing growth. At the same time, countries like Japan, were implementing an economic policy strategy with the development of the manufacturing industry at the centrepiece of plans.

Finally by the mid 1980s, alarm bells began to ring on this approach to trade and industry policy at Parliament House, with Australia’s reliance on rural and commodity exports in a world increasingly dominated by lucrative manufactures trade, showing up an dramatically increased current account deficit, prompting Treasurer Paul Keating’s famous statement of 1986 about the prospect of Australia becoming a ‘banana republic’. In response, the Hawke Government quickly adopted a ‘quasi corporatist’ industry policy, which built on the embryonic positive assistance measures already in place.

The Accord policy of 1987 emphasised state centric approaches to development (based on the Swedish and Japanese models) with steel, heavy motor vehicle, engineering and TCF plans being developed as well as developing new industries where we were seen to have a comparative advantage such as resource processing and in the information and generic technology industries. The Hawke Government believed that the Accord policy, coupled with the depreciated Australian dollar would combine to generate the industrial restructuring that was required in the Australian economy to boost exports and limit imports- to correct Australia’s trading problems. This policy direction is often remembered as achieving ‘too little-too late”- a move in the right direction but requiring massive state resources to enable it to turn the manufacturing industry into a high value export orientated industrial base. The Accord period generated a lot of excitement amongst social democratic thinkers, who thought it would set us on the path of the successful social democratic economies such as Sweden.

Economist Ross Garnaut argues that the Accord policy in fact did make an impact on export figures, and maintains that throughout in this policy period (between 1983-84 and 1989-90) that the manufacturing sector expanded its total share of exports and production However, on alternative figures, it is argued that since this period we have been steadily losing market share in Asian markets on our exports. Bell argues that in 1980, Australia supplied 6.2% of all Asian imports and by 1987, this figure had declined to 3.5%, including all sectors, including food. Importantly, since the Accord period, an offensive Australian policy direction on manufacturing industry policy have been further marred by a lack of policy co-ordination (for example tax and financial deregulation policies have worked against productive investment) a lack of a clear industrial vision, and a lack of integrated policy development that takes into account ‘triple bottom line’ policy considerations (economic, environmental and social issues). While the Accord model was a good start in state centred industry policy development, it petered out by the 1990s and neo-liberal policy prescriptions again took precedence.

Contemporary current account deficit

As the Australian Industry Group report in their submission on the Australia-China FTA to DFAT, the latest annual trade figures show that in 2005, China exported $21.4 billion worth of goods to Australia, the bulk of which were manufactured products such as clothing, computers, toys, games and sporting goods, and telecommunications equipment. Commodities such as iron ore, wool, copper and coal dominated the $16.1 billion worth of Australian exports to China in 2005. This $5.3 billion merchandise trade deficit with China was only partially offset by a $1.3 billion services trade surplus in our favour, still leaving Australia with an overall trade deficit of $4 billion with China.

Australia’s trade deficit with China is having a growing impact on Australia’s rapidly deteriorating and unsustainable current account deficit. However, as the AMWU contend- it is not only is the rate of growth of Australia’s trade deficit with China an increasing cause of concern, so too is the composition of the trade deficit. Australia’s exports to China are overwhelmingly dominated by primary products. Of Australia’s top ten exports to China, seven of them are primary products. Two of the remaining exports inside the top ten (aluminium and pig iron) are simply transformed manufactures with little value added.

Many economists argue that the current account deficit and foreign debt levels are an unsustainable economic situation for Australia. While China’s demand for resources from Australia is currently providing a ‘boom for some parts of the Australian economy’, the successful economies of the future will not be sustained on the exportation of resources. It is argued that Australia must do more to encourage the growth of strategic high value added manufacturing. Ross Garnaut has also argued that Australia cannot go on running a persistently large current account deficit, arguing that our current account deficit (one of the largest in the Western world) places Australia in an increasingly unsustainable precarious position and dependant on foreign markets rolling over debt.

Ken Henry, the current Department Secretary of Treasury, argues that Australia, structurally, has no choice but to keep borrowing and running current account deficits far into the future. Henry argues that Australia cannot afford the high investment associated with building manufacturing capacity and argues that Australia’s population is ‘too small to be able to adequately fund an abundance of investment opportunities’.

Given that this is the current ethos of the Rudd Government as well (there are no signs that Australia is going to return to the Accord style policies of the 1980s, in building state capacity in the high value added end of the manufacturing industry to improve our balance of trade position) what could be a possible role of trade policy in providing a solution to the malaise facing manufacturing exports?

The glaring social and environmental imperative for a new approach to manufacturing policy also underpins the urgent need for policy review at a Commonwealth level. At the end of 2009, 50,000 manufacturing jobs were lost in that year. Manufacturing jobs tend to be well paid, stable, full time and skilled jobs- the decline of the manufacturing sector has led to Economist Bob Gregory to note in the Australian context, as in the US- evidence of a 'hollowing out' of the wage/employment structure – the growth of low paid jobs and high paid jobs with a 'disappearing middle' in the distribution of work and living standards. This trend is often associated with the decline of the manufacturing sector.

In environmental terms, Tim Flannery has argued that Australia needs to take more responsibility for the environmental, social and political impact across the globe of exporting coal and uranium-moving away from a current approach of ‘buyer beware’ in our export policy. He also argues that with the resources and agricultural sectors so entrenched in Australian politics and economy, we are missing the opportunity to turn to manufacturing and exporting renewable energy technologies that can reduce greenhouse gas emissions.
It is therefore crucial from not only an economic standpoint, but also a social and environmental perspective, that a strong position is taken in the Australia-China FTA negotiations so that trade policy may provide the policy platform for a new look manufacturing policy for Australia.

Australia-China FTA negotiations

Against this policy backdrop, in April 2005, formal negotiations commenced between China and Australia in negotiating an Australia-China Free Trade Agreement. Australia’s official position was that it felt that it may be able make some ground on ‘new’ trade issues, such as investment, intellectual property rights, competition policy, government procurement, mobility of natural persons, labour and environmental clauses, scientific and technical co-operation and e-commerce. Given that the average import tariff levels have gradually fallen over time, especially on manufactured goods, it was felt that broad band elements may compensate in presenting additional areas where FTA parties are looking to open up and integrate their economies close together.

Australia had traditionally adopted a defeatist position on ‘broad band’ non tariff barrier issues, lacking the leverage to extract significant concessions in these areas. Thus, under Howard FTA negotiations did not proclaim to be offensive in economic terms and instead were focused on a combination of political motives (broader foreign policy and strategic interests) and defensive economic objectives that were about preserving existing market access for our existing export trade, such as in the case of the Gulf CC negotiation where the aim of the Australian Government was to protect our export market for passenger motor vehicles.

Under Rudd, and with the lesser emphasis upon the multilateral process, what have been the prospects for Australia to take a more offensive economic position of bargaining for the manufacturing industry under the new bilateral regime, in the context of the Australia-China PTA? Given Australia’s low level of tariffs and open economy, it is placed in a weak position at the outset to pursue offensive interests on behalf of the manufacturing industry (for instance in overcoming many of the non trade barriers identified by manufacturing industry interests in submissions to DFAT).

It is argued that Australia has lost much of its bargaining power and started off on a weak footing in negotiations, with Australia awarding China market economy status prior to negotiations starting. Australia departed from the European Union and the United States who did not accede to China’s request to be granted market economy status.

The Australian manufacturing industry had pinned its hopes on Australia taking a hard line position on many of the key non tariff barriers that affected trade for the manufacturing industry such as ensuring stronger anti dumping measures, cracking down on IP rights infringement by Chinese companies, ensuring transparency in legal and financial systems and simplifying the now complex multitude of conflicting rules of origin clauses, that are complex and costly for exporters. However, Australia’s capacity for a hard line position in negotiations with China on broad band issues and non tariff barriers has already proven difficult given early concessions made by the Australian negotiators.

This was a disappointing development, as China had two major agenda items for negotiations with Australia; to lock in supply of energy resources and raw materials from Australia at relatively stable prices and to request market economy status from Australia and subsequently to use this to request to the EU and US to follow suit, which would ease the disadvantaged position of China as an economy in transition for fifteen years in anti-dumping cases under the WTO .

As already outlined, China has already made significant progress on the second of its key offensive issues; achieving market economy status, before negotiations had even commenced. This has significant implications for the Australian manufacturing industry, with a key reform that they were seeking (stronger anti-dumping measures) being now constrained by this concession. Furthermore, in relation to market economy status and energy resources, China does not have many strong offensive interests in the FTA with Australia, as it has already achieved a few major energy cooperation agreements outside the FTA framework and does not necessarily need to use the mechanism of an FTA to further these negotiations.

In the context of Australia’s low bargaining position, and China’ lack of offensive interests, negotiation’s have been marked by their ‘glacial pace’ and frustrations on the Australian side, in the lack of significant progress on any of its key non tariff barrier trade issues.

There has been lack of progress on non tariff barriers such as regulatory and behind the border issues such as China developing a legal system, lack of capacity, the relationship between central and provincial governments and in particular enforcement of intellectual property rights. For instance in relation to IPR, China prefers the intellectual property chapter to be minimalist and non binding, focused on general principles, co-operation and information exchange, and strongly resists going beyond its existing international commitments. Australian negotiators on the other hand argue that its manufacturers cannot benefit from the Chinese market because of the inadequate IPR protection in China. Negotiations have stalled on this important Australian agenda item.

With the recent announcement from Prime Minister Rudd that he seeks the conclusion of a free trade agreement with China to occur as "rapidly as possible" following talks in Canberra, and with may outstanding issues still on the table for an Australian offensive position, it would appear that the political and foreign policy considerations are again overshadowing commercial and trade issues in this agreement.
Australian industry policy agitators are already calling through the Australian media for alternative economic modelling to justify the expense of Australia entering into these kinds of agreements, which they argue (based on independent modelling) are not economically advantageous, but rather are about promoting other non-economic, diplomatic and regional interests.


There was clearly a strong economic, social and environmental imperative for the Federal Government to enter negotiations of the Australia-China FTA seeking trade policy solutions around promoting the growth of a strategic high value added manufacturing industry in the Australian context.

In reviewing Australia’s trade policies since the late 1970s to date, it becomes apparent that apart from the Accord policies of the mid 1980s, that little in the way of state industry assistance to building a sustainable high valued added manufacturing industry has occurred. This policy malaise has set the scene for Australia’s current economic difficulties as evidenced by an unsustainable current account deficit, of which the Australia- Chinese economic trade imbalance plays a big role in generating.

In examining the extent to which Australia may have been able to rectify this trade imbalance through the mechanism of a bilateral preferential trade agreement with China, it has been seen that Australia’s offensive positioning has been compromised by it granting China market economy status prior to negotiations even commencing, thus undermining the capacity for Australian negotiators to extract leverage over China’s need for stable prices of energy and raw exports. Thus, Australian reform agenda items on non tariff barriers, such as intellectual property protection, transparency in legal and financial systems, rule of origin clauses, have not gained traction in negotiations.

The Australia-China FTA will most probably ironically set back the manufacturing industries export growth, with if by Australia granting China’s market status- this enables greater ease in dumping cheap imports on the Australian market.

It would appear that Australia’s large trade deficit with China, and growth in its manufacturing sector will not be resolved through a bilateral process through the mechanism of an Australia-China FTA. The best prospects for the manufacturing industry are possibly best served by a shift in policy emphasis by the Commonwealth away from trade policy to micro management through an emphasis on innovation policy, investment in major infrastructure, further liberalisation of Australia’s investment regime, and measures to enhance Australia’s capacity to participate in global supply chains (picture a revamped Accord with triple bottom line planning on a massive scale). This would entail a reallocation of public resources away from Trade to other portfolios such as Industry and Innovation, with DFAT becoming further dominated by foreign policy agendas.

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AI Group, Australia-China Free Trade Agreement, Feasibility Study, DFAT, 2004

Australian Workers Union, Inquiry into Manufacturing in Australia, Victorian Parliament, August 2009

Flannery, T in Mark Lawrence- hhtp://

Capling, A, Preferential Trade Agreements as instruments of foreign policy: an Australia-Japan free trade agreement and its implications for the Asia-Pacific Region, Pacific Review, Vol. 1, No 1, March 2008

Feil, M, We Must Export More Than Fresh Air, The Age, Wednesday March 28th, 2008

Australian Manufacturing Workers Union, Submission to DFAT concerning a possible China-Australia Free Trade Agreement: June 2005

Bora and Pomfret, Policies Affecting Manufactruing, Australian Trade Policies, 1995

Bell, Australian Manufacturing and the State: The Politics of Industry Policy in the Post War Era, 1993

Bell, ibid, 1993

Bell, ibid, 1993

Bell, ibid, 1993

Bell, ibid, 1993

Bell, ibid, 1993

Bell, ibid, 1993

Bell, ibid, 1993

Ross Garnaut wrote an influential Report entitled Australia and the Northeast Asian Ascendancy : Report to the Prime Minister and Minister for Foreign Affairs and Trade, Commonwealth, 1989 – In the Report Garnaut argues that on ETMs (exports) we did very well, arguing a jump of 3%- 1982-3- 10 per cent to 13 % in 1990-91

Bell, ibid, 1993

Australian Industry Group, ‘Australian Manufacturing and China: Deepening Engagement’, August 2006

Australian Manufacturing Workers Union, Submission to DFAT concerning a possible China-Australia Free Trade Agreement: June 2005

xx AMWU, ibid

xxi Garnaut, in Colebatch, T, Balance of Power, The Age, October 24th, 2009

Henry in Colebatch, ibid, 2009

ABC, Manufacturing survey predicts further job losses, 2nd March, 2009

Gregory B in Belchamber, G, Disappearing Middle or Vanishing Bottom? A Comment on Gregory, Economic Record, Vol 72, 1996

Flannery in Lawrence, M Farm and Quarry at, September 8th, 2006

Ravenhill, J, ‘The new bilateralism in the Asia Pacific’, Third World Quarterly 24, 2 pp 219-317, 2003

Capling, ibid, 2008

Ravenhall, J, Preferential Trade Agreements and the Future of Australian Trade Policy, Australian Journal of International Affairs, Vol 62, No2, June 2008

Jiang, Australia-China FTA: China’s domestic politics and the roots of different approaches to FTAs, 2008

Jiang, ibid, 2008

Jiang, ibid, 2008

AAP, Australia, China seek free trade deal, 2009

Feil, M Martin Fiel argues that of the four FTAs that Australia is signatory to, currently in force a common feature has been their impact on trade flows. The feasibility study modelling claims that the benefits expected to accrue to Australia of a free trade agreement with China were in the vicinity of $24.4 billion over ten years. Yet, it has been suggested that the figures concerning service and investment are unreliable (and further have negative employment outcomes for Australian joins) that the gains for manufacturing are in further liberalisation of merchandise trade at the expense of strategic manufacturing industries such as in the automotive industry

Capling A, Australia’s trade policy dilemmas, Australian Journal of International Affairs, Vol. 62, No.2, pp 229-244, June 2008

Monday, February 8, 2010

Howard Zinn remembered

above: Howard Zinn - Standing up for Human Rights

a Eulogy by Wes Bishop

On the evening of January 27, 2010 President Barack Obama was nearing the end of his first State of the Union Address.

Before a joint session of Congress, before the leaders of the military, his cabinet, and the nine Supreme Court Justices, Obama addressed the people of the country by talking in front of its most powerful individuals.

Meanwhile, in California an aged scholar and historian was drawing his last breath.

The man was Howard Zinn.

It is strangely poetic that Zinn would pass away on the night when all the power brokers of the country were meeting in a single room. Throughout his long life he had been a direct challenge to the establishment, arguing that true democracy did not occur in the halls of power but instead in the streets and homes of everyday citizens.

He popularized this idea, while gaining national fame and almost pop culture status, when he authored the best seller A People’s History of the United States.

The People’s History, when first published in 1980, was a breath of fresh air for professional historians and the general public alike. It drew both criticism and praise for re-examining such topics as the genocide against Native Americans, the labor movement, women’s rights, slavery, imperialism, and the various anti-war movements.

Although the People’s History is Zinn’ best known work it was in fact one piece of scholarship that fell in between a life of academics and activism.

Born on August 24, 1922 in Brooklyn, to Jewish immigrants, the young Zinn came into a world highly divided by class. Class that was solely based on economics. Zinn would later report that his father, who worked as a waiter, was one of the hardest working men he knew, yet for all of his hard work he was largely unable to move forward in society. It would be one of the first lessons that Zinn would experience in regards to American capitalism and do much to dispel the idea that people could make it rich if they only worked hard enough. Such sentiment, Zinn would later criticize, was one of the foundations for people having animosity for the poor and struggling middle class, because with that ideology came the notion that if you were poor and powerless you were doing something wrong.

This early establishment of a love for the underdog, and a reverence for liberty and freedom, carried Zinn into World War Two as a bombardier. Eager to fight fascism and rid the world of bigoted empires he was astonished to witness racism with his fellow soldiers. In one incident Zinn reported that he came down on a fellow Caucasian soldier that was angry over an African-American eating at the same table. Zinn was outraged at the soldiers behavior asking the servicemen what exactly America was fighting in the war against Hitler.

This anger over bigotry would soon be coupled with outrage for Zinn has he witnessed the whole sale bombing of European towns, acts of war that claimed many an innocent European civilian. Revisiting some of these cites years after the war Zinn learned that towards the end of the conflict the military had chosen a route of fighting that disregarded human life, benefited military testing, and made little distinction between enemy combatants and innocent bystanders.

Returning to the states after the war Zinn took all of his medals that he had received, placed them in an envelope, and wrote across its surface these simple words- “Never Again.” For the rest of his life Zinn would advocate and practice the liberal ideal of pacifism.

And so began a long career of academia. In one of his first professorships Zinn offered advice and helped foster the spirit of the civil rights movement on the college campus. For his endeavour he was fired. To add insult to injury the college that fired him was Spellman College, an institute of higher learning that was an African-American girl’s college. It is bizarre that such a thing could occur but as Zinn repeatedly made clear throughout his life injustice and apathy to societal ills can be committed by any segment of the population.

Like many that had come before him he viewed his ascent in society not as a justification for solely bettering himself and his economic standing. Instead he understood that those in a position such as his have a duty to serve, educate, and assist all rungs of society.

As a young educator in the social sciences, the lessons and material Zinn made available over his long life are veins of work that will continue to benefit classes of students long after all those who knew him are gone.

We can view Zinn, and his ideas, as many a “patriot” have. That is to say with a knee-jerk reaction that confirms the suspicions of deeply embedded nationalism. Or we can take Zinn’s work, learn the many lessons from it that are available, and work to craft a more perfect union.

As Zinn said once, “There is no flag large enough to cover the shame of killing innocent people.” Life is too precious, democracy to dear, to treat government policy and human existence as flippantly as a move on a strategic board game.

Democracy is rule of the people. We should never forget that in democratic countries the policies of the powerful should always work to benefit the populace and not institutions, ideologies, or governments. It is at both times a simple and profound position to espouse, and it is one that Howard Zinn faithfully proselytized to all those who would listen. For this he will be missed, and always remembered.

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