AFR 19 Feb 2014 - Is Competition Still a Labor Word?

"I say competition is a Labor word", pronounced Paul Keating in 2008.
Labor’s record on competition is its Groundhog Day. This is where the battle line for Labor’s soul is drawn: whether Labor returns to its once strongly held convictions and stands for a globally competitive Australia – which means dismantling protection and cosy deals.

To date, Labor leader Bill Shorten has played the protection card, demanding more “assistance” for the car industry. The economics and the politics appear to elude him. “Competition” was a great Labor word in the high-reform era of the Hawke and Keating governments. Then, the political project was reviving effective markets, not government controls.

Hawke-Keating’s driving purpose was to deliver the worker and consumer the benefits, not the rhetoric, of competition: cheaper air travel, clothes and cars; more efficient industries; new jobs in a globally competitive service sector. Competition was to deliver purchasing power to the people, rising real incomes and an Australia stronger for dismantling the protection that kept us weak, despite adjustments and unemployment.

In competitive global markets, firms face two sets of constraints: those imposed by the markets in which they compete, and those set by the laws and regulatory frameworks in which they operate. Government’s only power is to set the latter. Hawke-Keating Labor made decisions from the firm’s eye view. They sought cost-competitiveness and knew that empowered firms benefited workers.

Competition has long been a policy fault line. Joe Hockey too faces ongoing internal debate about the merits of economy-wide competition. For the Liberals, however, competition is a defining word. Their electoral majority will hold them to it.

The unpalatable reality for contemporary Labor is that Australians have matured on the nature and experience of competition. The Australian public, by and large, is now comfortable with competition, and tolerates decisions such as removing government assistance from uncompetitive industries. Outside the government-funded sectors – health, welfare and education – in 70 per cent of our economy managers and workers make decisions every day in competitive environments. The electorate is changing. Labor is not.

The unions’ control of the talent pool available to the parliamentary Labor party chokes access to a broad range of people and ideas. Union membership is less than 20 per cent of the total workforce but more than double that in sectors protected from competition and still subject to government control – health, welfare and education. With its talent pool largely restricted to the world behind the wall of protection, the party which led us boldly into this new world of global competition in the 1980shas, post-Keating, drifted back to the comfort zone of government controls, re-regulation and class warfare.

Shorten, nurtured by the union movement but possessing an MBA, came of age in Hawke and Keating’s Australia. Keating once declared: “My task is to make competition into a Labor ideal.” This task now falls to Shorten.

Like Bill Murray in Groundhog Day, this Bill will rise each day and be asked the question until he gets it right.

Elena Douglas is the convenor of the Centre for Social Impact at the University of Western Australia Business School.