PASSWORD RESET

Magazine of Socialist Action in Australia

2009 SP Conference resolution

The general crisis of world capitalism
The main issue facing the working class in Australia and across the world is the economic crisis. Most economists now agree that we have entered a period that is worse than anything seen since the ‘Great Depression’ of the 1930s. The only point of argument is how deep this crisis will be and for how long will it last.

The downturn is not just restricted to the ‘financial sector’ but has spread to the so-called ‘real economy’. Already there is barely any corner of the globe that has not been affected in some way. The idea that some economies, particularly China, would be able to ‘decouple’ from the crisis has been shattered. There is no magic market that is capable of shoring up world capitalism.

Because of the centralisation of capitalism, and its globalised nature, the effects of the meltdown in the sub prime housing sector in the US have spread worldwide. The sub prime bubble is just one of the many financial ‘bubbles’ which have been created and are now bursting.

The fundamental reason for the slump was the crisis in capitalist production. This is a ‘classic’ crisis of overproduction and over-consumption. Under capitalism, the working class cannot buy back all that it produces. Huge corporate and personal debt was able to partially overcome this contradiction and to prolong the boom for a period, but ultimately the world capitalist economy came up against its fundamental contradictions – the private ownership of the means of production and the capitalist nation-state in a globalised economy.

The last period saw a conscious turning away from industrial investment to financial speculation by the ruling classes in major advanced capitalist economies, which, in turn, was a consequence of the deep economic crisis of the 1970s which saw the end of the 1950-1975 world economic boom. The process of deindustrialisation began during the Thatcher-Reagan era as a result of the capitalists’ lust for ever-increasing profits.

For years during the ‘boom’ times capitalism heavily based itself on debt and a whole series of financial instruments were created in order to lubricate the borrowing. This created a series of bubbles which has now turned into a series of crises for the system.

The financial destruction caused by the speculation innate to capitalism has destroyed about $50 trillion of wealth, so far, and forced the governments of the world to outlay trillions of dollars to prevent the implosion of the whole financial system.

The ‘deregulated’ and unrestrained form of neo-liberal capitalism that had been created over the past 30 years threatened an ‘unrestrained’ slump unless the capitalists and their representatives in government stepped in. This is exactly what has been done with the bank bail-outs and fiscal stimulus packages being introduced in many countries.

While some of these packages have had an effect, despite all their best efforts, they may not succeed in avoiding this catastrophe. The failure of several banks has threatened a complete financial meltdown which is why governments throughout the world have stepped in to save the system and recapitalise it through nationalisations and guarantees.

The hope of the ruling class is to ‘cushion’ the worst effects of the crisis however there is still not a great deal of confidence that this can be totally achieved.

Crisis leads to policy shift

The economic crisis has forced a major policy shift onto many representatives of the ruling class. The total dominance of neo-liberalism is over for now and many governments have made a turn to the ideas of Keynesianism.

Kevin Rudd has been one such convert to more government intervention in the economy. In February 2009 he released a major essay where he viciously attacked neo-liberalism and argued for a return to the economic policies of Keynesianism, in the process totally whitewashing the Labor Party’s leading role in the neo-liberal push.

Many strategists of capitalism, having previously worshiped the market and promoted privatisation, are now changing their tune. The main reason for this shift is that they understand the potential for the economic crisis to turn into a political and social crisis and are trying to intervene.

Governments have not wanted to step in but they have been forced to. In Australia Rudd has introduced six rescue packages over the past year including the $42 billion stimulus plan. Other governments around world have introduced similar stimulus packages and some have gone even further by nationalising banks and failing companies.

The Socialist Party believes that increased spending from the state (mainly on huge bailouts and fiscal packages) will not be a solution to the economic crisis. The income of the state either has to come from the taxes of companies or the taxes paid by working people. At base all taxes must come from the economy itself.

Either money is coming from the profits of the bosses or it is coming from the income of the working class. When you eat into the income of the employers it cuts into the rate of profit. Similarly to cut the income of the working class eats into the market for consumer goods. Mass unemployment clearly also leads to a decline in domestic demand.

An increase in the public debt by deficit financing ultimately has to be paid for, either through increased taxes on employers or increased taxes on working people. The only other solution is for the government to print more money. If this is not compensated for by an increase in goods it will fuel inflation and cancel out any benefits.

At base any attempt to boost profits reduces the ability for workers to buy goods while any attempt at boosting markets by increasing wages is a threat to profits. This is the basic contradiction of the capitalist system and no amount of manipulation or increase in government spending can overcome this flaw.

Have the measures had an effect?

Kevin Rudd in his July 2009 essay “Pain on the road to recovery” gives some figures on the seriousness of the crisis and the magnitude of the ruling class response. He says “They have implemented taxpayer-funded government guarantees for banks amounting to $6.2 trillion, or 8 per cent of global GDP. In countries where it has been necessary to save financial institutions from collapse, governments have allocated a further $2 trillion to fund bank bailouts, recapitalisations and nationalisations.”

The Australian government has also pumped billions of dollars into the economy in the form of stimulus packages. The OECD estimates that Australia’s stimulus packages accounts for up to 5.4 per cent of GDP over the three years 2008-10. Only Japan (at 4.7 per cent of GDP), South Korea (6.1per cent) and the US (5.6 per cent) come close to implementing packages on this scale. This has obviously had some effect, but in the same way that a sinking boat can stay afloat if water is pumped out temporarily.

The cost of the stimulus packages has been the wiping out of the budget surplus thereby escalating the national debt. Last year, the budget was $19 billion in surplus in the June half. This year, it will be $22 billion in deficit in this half. These debts will have to be paid back at some stage by future generations in the form of increased taxes or cuts.

The government claims that the packages will create 90,000 jobs but against the backdrop of perhaps two million people either jobless or under-employed by mid-2010 this is a mere drop in the ocean.

A large part of the stimulus has been cash hand outs but the other main part of the plan has been infrastructure funding for new roads, houses and schools. This is in effect a hand out to the big private building developers, many of whom face ruin as the recession bites. Many more billions of dollars have been allocated to guarantee the banks and subsidise the car companies but not a cent has been put aside for the unemployed or very low paid.

The state debt will only end up increasing further as a result of lower tax receipts from employers and higher unemployment benefits as the jobless rate increases. That is why vicious cuts to the public sector are guaranteed in this impending recession as the government try to cut costs.

Interest rates have also been cut to new lows in an attempt to shock the economy back into life. Low interest rates have actually been more of a boost to those with mortgages than the cash hand outs. The current low rates are not expected to last however and when they start to rise this will hit people hard.

But no matter how low rates are, they only lead to more debt if the banks actually loan out the money. Rather, banks have already tightened their lending criteria for fear of more bad debts. Essentially free money in Japan in the 1990s meant little as banks refused to loan.

The added bonus to the cash hand outs for the government is that they help soothe the population and quell any social unrest. They have also helped the government’s approval rating but Rudd knows only too well that this economic crisis can quickly turn into a political crisis with social consequences.

Bewilderment can turn to anger

Rudd actually alludes to the impacts that the crisis can have on unrest in his essay which was published in February. Referring to the crisis he says. “Bewilderment, however, rapidly turns to anger when the economic crisis touches the lives of families through rising unemployment, reduced wage growth and collapsing asset values”

Rudd says that the blame for the crisis lies with “extreme capitalism and excessive greed”. While he admits that capitalism has “inevitable inequalities” and that “the crisis was generated by the system itself”, he does not want to replace capitalism with a more equal and democratic system. Instead he only wants to try and iron out the worst of the problems.

Rudd’s essay totally ignores Labor’s ideological and practical support for neo-liberalism. It was the Hawke-Keating governments that opened up for foreign banks, introduced HECS and user pays and fast-tracked privatisation. Rudd attacks investment banks yet the Labor Party happily accepted $117,000 from the now-failed investment bank Babcock and Brown.

While Labor is talking about more state intervention at a national level, State Labor Governments and Local Councils are continuing to push ahead with more privatization, deregulation and cuts. What we are really seeing is Keynesianism coupled with neo-liberalism lite.

The reality is that the discrediting of deregulated capitalism and the intervention of the state to save the system, does not mean the total abandonment of neo-liberalism. Deregulation and privatisation will be resorted back to as soon as the government believes they can get away with it again.

The government is likely to adopt a two-sided approach. On the one hand, they have pumped money into stimulus packages and will continue to dish out subsidies to big business. They will do whatever it takes to try and massage the unemployment and growth figures while looking to cut state spending in the public sector and in areas like health and education.

When talking about the bank nationalisations in the US, Rudd says “These measures have not been implemented on the basis of socialist ideology, nor are they a return to state ownership and control. When the financial system stabilises and the recession eases, we can expect to see governments pulling back from direct involvement in the ownership and operation of the banking sector.”

He also says “The challenge for new Keynesians is also to ensure that this stimulus is targeted, timely and temporary.” This is basically an admission that these are only temporary measures to avert economic collapse and political upheavals. Afterwards, capitalist leaders will attempt to return to fiscal conservatism – the exact policies that got us into this mess.

Apart from trying to head off a political crisis Rudd also makes mention in his essay of the possibility of an interest in far Left ideas or the ideas of socialism. He says “For Social Democrats, it is crucial that we get it right – not just to save the system of open markets from self destruction, but also to rebuild confidence in properly regulated markets, so as to prevent extreme reactions from the far Left or the far Right taking hold”. Rudd instinctively fears that an era of mass radicalisation where socialist ideas can gain mass support if he does not do all he can to fix the capitalist system.

China

Some economists claim that the mining boom and exports to China will save Australia from sliding into recession. Some of the more serious analysts however are now echoing the views of the Socialist Party which is that China will not be able to provide a lifeline. They concede that China’s slowdown in growth will significantly affect the Australian economy.

While China has recorded a slight increase in growth compared to last quarter, these figures are highly questionable. The reality is that China has serious problems on its hands. Firstly its main export markets are in recession, therefore impacting on demand.

Growth in export volumes from China to the major economies of the US, Japan and Europe has fallen markedly over the past year. Most economists are scaling back growth forecasts for China in 2009/10. On that basis, demand for Australian coal and iron ore will continue to fall.

Share markets and property values in China are also falling. As construction and the boom in China weakens that in turn weakens the demand for steel. The slowdown in production of steel, concrete and energy has already been significant.

Until recently, rising commodity prices had pushed up the Australian dollar. The rise in commodity prices boosted our terms of trade and acted as an additional windfall to growth, company profits and government revenues. This is now coming unstuck.

Latest figures have indicated that the prices of iron ore and coal are likely to decrease by between 15 and 25 per cent next year. This is a huge blow to the mining boom and the overall Australian economy. This is also the reason for the nervousness that exists inside the big mining companies.

The possibility that an expanding Chinese middle class could fill the vacuum in demand left by shrinking export markets fails to account for the uneven nature of the Chinese boom. Whilst urbanisation has reached staggering proportions in recent years, these leaps have been mostly limited to the exporting regions, such as the Pearl River Delta.

As the global crisis worsens, it is precisely these areas of new wealth that are being hit the hardest. In Shenzhen, property prices have plummeted by up to 40 per cent and already this year more than twenty million workers have lost their jobs and returned to the countryside. They join the millions of Chinese who already live in poverty.

Far from the Chinese economy keeping the Australian economy out of recession, it is likely that declining growth in China will only help to create severe economic difficulties for Australia in the near future.

Manufacturing

In the past year we have seen a steady stream of job losses in the manufacturing sector. Hundreds of jobs have been lost in the car companies and this has led to thousands more being made unemployed in the auto components sector. The AMWU claim that for every job lost in a car company six more are lost in related industries.

Even during the upturn, manufacturing went backwards due to a lack of investment and the high Australian dollar. The sector is in a very weak position and only makes up 21 per cent of exports. Because the Australian economy is now dominated by services this will make it much more difficult to come out of a downturn.

As the situation gets worse, more and more manufacturing jobs will be lost. Any argument that a weak Australian dollar will give a boost to exports and therefore the economy will not materialise. This is not only because of the lack of investment in manufacturing but also because the world export market is expected to shrink by up to 10 per cent.

Property

The International Monetary Fund (IMF) has suggested that Australian real estate is overvalued by at least 25 per cent. This makes Australian homes some of the most overvalued in the world.

Due to massive amounts of speculation, a housing bubble was created which has led many people to take out mortgages which are bigger than the real value of their homes. As prices drop closer to their real values this will mean many people will owe more than they own.

Evidence is already emerging to indicate that growing numbers of Australians are struggling to pay their current debts. This is resulting in growing bankruptcies and credit agreements as well as increasing mortgage defaults. This will increase further as unemployment rises in the coming months.

Linked to this, it is estimated that up to 65 per cent of small businesses use their family homes as security to obtain business finance. If property prices drop closer to their real values, the capacity of small business owners to keep their doors open will be severely limited.

With house prices falling and significant unemployment, the heavy debt load being carried by many Australians is likely to get worse. Therefore the crisis in property is going to be another part of the downward drag on the Australian economy.

Australian banks

The Government has gone to extreme lengths to reassure ordinary people that Australian banks are safe. They have guaranteed deposits in commercial banks and also extended the guarantees to state governments. Rudd has claimed that Australia has one of the best regulatory systems in the world.

The reality is that Australia’s four largest banks are far from immune to the global financial crisis. The shares of all the big banks have plummeted on the stock market. This is despite all of them issuing statements saying that they have relatively small exposures to bad debts. This is an indication that investors are not convinced.

What the Government has failed to explain is that there is a real possibility of a loan-loss cycle. This is where housing prices fall and the banks struggle to recover loans from mortgage defaulters. As unemployment rises this will put people in much less of a position to pay their loans.

Australian banks are actually more vulnerable to the credit crunch than many of their global counterparts because of their high levels of loan-to-capital ratios. In Australia banks are leveraged 25-30 times.

This means they have given out 25-30 times more loans than they have in capital. Most other banks around the world are only leveraged 15-20 times. This means that Australian banks are more susceptible than most to a run on investments and a run on deposits. Even if we saw a moderate loan-loss cycle this would create significant bad debts and losses.

Australian banks are dependant on each other and the international banking system. If one bank did happen to go under the Australian financial system could be paralysed overnight. Such a situation would have a severe impact on the overall economy.

The financial and banking crisis has come before the crisis in the real economy has fully hit but it is likely to be made much worse by it. If the Australian government does not back up its guarantees with action then an extreme banking crisis is possible. If however they are forced to bailout banks, as other countries have, the guarantee they have given will mean that the indebtedness will be spread to the government coffers further increasing the budget deficit. This could create the basis for a budget and financial crisis in the state.

The recession: How long and how deep?

It is clear that Australia is not just facing one or two economic problems but in fact a series of crises. Regardless of what some commentators say it is likely that Australia will move into to recession quite quickly and that there will be no quick rebound. This will have a huge effect on the lives of ordinary people.

Some optimistic economists claim that we will see a downturn but that it will be soft and short. The reality is that the property bubble, external credit and international demand from China have been the key motors for Australian growth. What the optimists ignore is that all of these areas of the economy are facing a significant decline.

Any return to growth is likely to be weak and short lived. Regardless of the figures any recovery will be accompanied by high levels of unemployment. There is also a real possibility of a double-dip recession where we see a short return to growth followed by another downturn.

The basic problem for capitalism is that there is a crisis of demand. The contradiction in the ruling class response is that they are actually eating into demand by attacking jobs and wages. This means the short term situation for capitalism will be quite unstable.

The fact that the ratio between household debt and household income is hovering around 160 per cent is also extremely significant. This means that on average for every $100 people earn, they owe $160. Back in 1991, in the midst of the last recession, people only owed $48 for every $100 they earned. This undermines any recovery based on consumer spending.

Credit has been artificially used to sustain the world and Australian economies for many years. This indebtedness means that economic difficulties will be longer and more drawn out than in the past. It is impossible to say with certainty how severe or how long the coming recession will be, but the one certainty is that that there is still plenty of bad news to come.

Even Rudd in his July essay refers to the “paradox of recovery”. Basically even he is admitting that when the economy starts to grow again ordinary people will still feel economic pain. In many cases this pain will be increased.

It is worth quoting Rudd at length to highlight how he plans to make workers and the poor pay for the crisis. He says “Unemployment will continue to rise even after growth returns. On average in recent economic crises, unemployment has peaked 13 months after growth turns positive. The budget forecasts unemployment to reach 8.5 per cent by June 2011. It will not be until after a substantial period of growth that businesses feel confident to hire workers in sufficient numbers to make a dent in unemployment.

“Over the next 18 months, rising growth will inevitably cause interest rates to rise. In the past 18 months interest rates have fallen from historic highs to record lows. As a result of the cuts in official rates of 4.25 percentage points over the past nine months, the average family with a mortgage of about $300,000 has an extra $6000 in their bank account. As the recovery progresses, economists are already telling us that rates will rise, putting additional financial pressure on many families.

“Third, as the global economy improves, demand for commodities will pick up, causing prices to rise. For Australia, this will be a double-edged sword: providing a boost to our exporters but potentially inflicting higher food and petrol prices on many Australian working families.

“Fourth, the Government’s strategy to return the budget to surplus will involve some painful and unpopular decisions that will affect many Australians. As the private sector was in retreat last year, the Government acted responsibly to step in and stimulate the economy through an expansion of the budget. But in the recovery phase, the opposite will be true as the Government appropriately withdraws while the private sector expands.

“These four pressures will hit Australian families just as they begin to feel the first benefits of recovery”.

In a nutshell even Rudd sees the best case as a future of unemployment, rising interest rates, rising petrol and food prices and cuts as the government “appropriately withdraws”. He speaks nothing of pain for big business but warns of hard times ahead for ordinary people.

This shows the need for workers to be prepared for the economic conditions that are unfolding and the need to be organised in fighting trade unions to defend living standards.

Low level of class struggle

Australian workers have just come through an extended period of economic growth. While it was done on the basis of long hours and increased personal debt, a large section of the class were able to make gains or at least keep their heads above water.

As the full effects of the economic crisis has yet to be felt in Australia, there is still a low level of industrial action at the moment. The year ending March 2009 saw only 139 disputes, 3 less than the previous year. There were 78,900 working days lost – a 10 per cent reduction from the previous year, which itself was the lowest figure since 1913.

In 1974, the year of the highest level of industrial action in Australian history so far, the amount of working time lost to disputes was 1.2 days per worker. In the year to March 2009 it was a tiny 0.04 days per worker.

One major reason for this is the fact that Australia has some of the most draconian anti-trade union laws in the world. The other reason is the collapse in militancy in the trade union movement, which in turn is a reflection of the collapse in class struggle ideas in the broader labour movement.

The ‘democratic neo-liberal counter-revolution’ that began with the stunting of the late 1960s/early 1970s radical wave of struggle, saw a shift to the right by the leaders of the Labor Party and trade unions, accepting capitalism more explicitly than in the past.

The collapse of Stalinism between 1989-91 saw a big weakening of the three variants of the Communist Party in Australia and bearing in mind they had a strong position in the union movement, this further undermined the class struggle current in the unions. Generally, workers had no fighting leadership to deal with the effects of the neo-liberal assault. This meant less industrial action and no class explanation of these events.

The Accord between unions and the Labor Government of 1983-96 further strengthened bureaucratic centralism over class struggle methods in the unions. It also meant a massive shift in wealth from the working class to the bosses.

Despite the Global Financial Crisis, there has been no general rise in class struggle in Australia so far. In fact the fear of unemployment has had a stunning effect and made workers more cautious in taking on their bosses. The union leaders have also put their faith in the relatively new Federal Labor government and have concentrated on lobbying Industrial Relations Minister Julia Gillard’s office rather than engaging in struggle.

The pressure from below on the unions will increase in the future. For now, however, the main points of struggle have been in areas of the workforce outside the control of the trade union bureaucracy, for example in the quite spontaneous and militant action of mainly Indian taxi drivers in Melbourne for better safety standards in their taxis. More actions like this can be expected in the future.

Where strike action has occurred by sections of unionised workers, it has been where their leaders have had no choice but to fight. For example, the aggressive anti-union behaviour of the construction giant John Holland forced the Victorian branch of the CFMEU to undertake limited industrial action and even mass pickets for a short time earlier this year.

However, at the earliest possible opportunity, the union leaders jumped at the chance of negotiations and a settlement that left some of the striking workers outside the gate. The nature of the union leaders plus the still relatively muted attacks on wages and conditions and the fear of unemployment, has limited strike action. This will not be maintained forever.

Inevitably a worsening economic situation will force both employers and governments to step up the attacks on workers’ wages and conditions. This will radicalise workers and in turn put pressure on the union leaders to organise some resistance. It will also throw up new militants from the ranks of the trade union movement.

The role of the Socialist Party is to nurture and encourage rank and file militancy both in propaganda and in organisation. While honest with workers about the nature of their leadership, we do not take an ultra-left approach and give up on the unions. In fact we do the opposite and fight hard for rank and file organisation and alternative class struggle leadership in the unions.

We must be open to working with other forces in the unions and in the workforce at large, who share in general terms a desire to drag the unions to the left. Within such future alliances we will offer a clear socialist, militant and campaigning way forward.

The Greens

The increased electoral success of the Greens over the past 8 years, combined with the demise of the Australian Democrats, has seen them become the ‘third party’ in Australian politics. The Greens currently have 5 Federal Senators elected and 21 members of State Parliaments. They also have over 100 local councilors elected across the country.

On the surface the Greens can appear to have somewhat of a ‘radical’ persona. This veneer has won them support from the progressive middle class and even a section of the working class. However as the Greens have won more elected positions, they have continued to shift to the Right.

While not being in a position of power federally, the Greens have taken principled stands on many issues including on the protection of the environment and against the draconian industrial relations laws. However, when the party has been in a position of power at local levels they have shown that they act like every other capitalist party.

This has been seen in Byron Bay and on Yarra City Council in Melbourne. Budgets endorsed by the Greens in Yarra have seen some of the highest rate rises in the country. While Federally the Greens call on Labor to reduce Greenhouse gas emissions, in Yarra the Greens voted against increasing modest emission reduction targets proposed by Labor!

The Greens are not an organisation that focuses on work within workplaces, campuses or in local communities. They are a party that is purely based on electoral politics and as an organisation they do not have a class analysis of the world. The Greens actually see themselves as better managers of capitalism that the capitalists.

The Greens do not have an alternative economic and political program to the major parties and it is for this reason that once they get into power they cave to the pressures of big business. The Greens have acted in a similar fashion internationally. In places like Ireland and Germany the party has been part of Governments that have viciously attacked ordinary people.

Because of their lack of class perspective and their failure to orientate to the labour movement, it is unlikely that the Greens will win much more support from working class people. In the absence of a mass workers party however, they will continue to get credible results in elections.

The way that the Greens political weaknesses will be exposed in the future will be by them winning power in a significant way or by the growth of a new workers party in Australia. In the meantime we should continue to work with them where we can while at the same time taking up their weaknesses sharply.

New Workers Party question

One striking feature in Australian politics is the total absence of political representation for working people. There is no question now in the minds of the active layers of the labour movement that the Labor Party is nothing other than a party of capitalism.

In the CFMEU, recent events have led to the semi-open criticism of the Labor Party by the once loyal leadership, especially in the relatively militant and strongest branch in Victoria.

The Socialist Party and our sister parties in the Committee for a Workers’ International (CWI) were the first socialist current to identify this shift of the Labor Party from being a ‘bourgeois workers party’ into being a bourgeois party, albeit with historic roots in working class electorates.

However, unlike Germany, Greece or even Britain, there is as of yet no major forces looking to establish an independent new workers’ political formation. This, by the way, was the main reason we chose not to join the Socialist Alliance in 2001 – it had no real forces and was just a coalition of small left wing groups.

If it had of had real forces in it or had the possibility of attracting them, we would have had to deal with the secondary negative factors (such as its lack of democracy, opportunism etc) much like we had to deal with some of these issues when we were a Marxist faction of the Labor Party in the 1980s.

Our decision not to join the Socialist Alliance did not however stop us from winning a Council seat in the City of Yarra in 2004. Our electoral success, while modest, is unique and shows what is possible when ordinary people (including the middle class) are exposed to the ideas and methods of a genuine socialist and campaigning party. Our success in this field has had a small influence on the better layers in the trade union and socialist movement and we hope to expand this work.

At the moment the only indications of any sort of new alliance forming outside of the ranks of the Labor Party is coming from the Victorian Branch of the ETU. Victorian ETU Secretary, Dean Mighell is currently trying to create a type of sub-party of ‘left’ Independents around inner city Melbourne in the lead up to next years State election.

While not a new workers party, we need to keep a close eye on these developments and try to raise our ideas on the need for a genuine new party to be developed with those layers in and around it. Our exact relationship with this formation will need to be discussed further but at the moment the best way to promote the idea of a new workers party is to continue to build close relationships with militant unions, progressive community groups and others involved in struggle. At the same time we need set an example by continuing our own independent socialist electoral work.

With the absence of serious forces looking to break from Labor, the push for a new workers party is not yet a key area of work for the Socialist Party. The most important task at hand is the patient building of our own forces. Nevertheless, we must continue the campaign at a propaganda level and we may need to step up work on this question in the medium term.

Young people

Young people in Australia will be severely affected by the economic crisis and they will be the first to show signs of a fight back. Youth unemployment has already reached 12.3 per cent and casualisation amongst young workers is at more than 60 per cent.

While there are no mass movements of young people or students at the moment, things could change quite rapidly as more and more youth realise that capitalism offers them no future.

University students are being burdened with massive debts that could take decades to pay off. When they do finally leave university they are confronted by fewer and fewer jobs or a life of unemployment. Faced with mass youth unemployment the government is going to attempt to shovel young people into an already decrepit education system and into dodgy traineeships.

Real apprenticeships are becoming harder to come by and the government has announced that school leavers will be the first to face welfare cuts. Young people aged 16 to 20 without a year 12 qualification will need to be in either education or training if they are to qualify for Youth Allowance.

At first glance it can appear as if many young people are apolitical. But events, such as the world economic crisis, and issues such as the environment and imperialist wars, are radicalizing big sections of youth. It is true the ideological effects of the collapse of Stalinism and the ‘boom years’, even if ‘joyless’ for most, meant that the it was more difficult for Marxists to reach wider layers of youth for a period. But this new crisis of capitalism is creating a layer, still small, who are interested in socialism, and who are looking for a fighting Marxist organisation to join.

At the same time, working-class youth, not yet engaged in struggle, will be affected by the general situation and will be compelled to look for explanations and answers. In the first instance, this could develop amongst school students, angry at the education system, and worried about their future.

It will not just be the day-to-day issues that will motivate young people but in particular the overarching issue of the environment. Young people are also highly sensitive to the issues of world peace and to the plight of workers and peasants in the neo-colonial world.

The Socialist Party has a specific responsibility to take up the issues affecting young people and to draw the most militant fighters into our ranks. If trained correctly, it can be these people who will lead future mass movements of the working class.

Women

Working-class women in Australia face oppression on a much greater scale than working class men. A comparison of full-time ordinary time earnings shows that women earn only 84 per cent of full-time male ordinary time earnings. This is mostly due to the fact that women are more concentrated in ‘caring’ jobs, which because they are seen as ‘women’s work’ are automatically casual and low paid.

Working women do not have a real choice as to when or whether to have children because of economic factors that mean great weaknesses in social provision, childcare and access to abortion.

Women still play the main role in caring for children and family members who are ill or disabled. Taking time off work to have children or care for a family member makes it difficult for women to advance in a job or career and the lack of decent affordable childcare means that many women work on a part-time or casual basis. There is also blatant discrimination against pregnant women.

For us as a party, it is important that we continue to take up issues like childcare, abortion rights, casualisation and low pay as well as issues like family violence which affect women disproportionately. It is also crucial that we work hard to recruit and integrate women into the party by giving them a political voice.

Indigenous people

The condition of life for Aboriginal and Torres Strait Islander Australians continues to get worse. Despite the apology of Kevin Rudd to the Stolen Generations, things have gone backwards not forwards for Indigenous people. The Northern Territory ‘Intervention’ started by Howard is being continued by Rudd. Recent findings show that income for Indigenous men is only 44.2 per cent of that of non-Indigenous men, and 75.7 per cent for Indigenous women.

The level of need assistance for Indigenous people with a disability and chronic disease is twice that of white people. The imprisonment rate for Indigenous women increased by 46 per cent this decade and by 27 per cent for Indigenous men. Indigenous people in general are 13 times more likely to end up in jail, while victims of domestic violence were hospitalised at a rate 34 times higher than non-Aboriginal people.

Today against the backdrop of an economic crisis big mining companies are desperate to get their hands on Indigenous land. Howard’s Northern Territory Intervention at root was an attempt to drive indigenous people from whole swathes of rural Australia into smaller compounds where they face restrictions on how they can spend their income. The Rudd Labor government, while making minor changes, has in fact continued and widened this ‘intervention’. As with every new turn of capitalism, it has gone side-by-side with a propaganda campaign, claiming their attack on Indigenous people is really an attempt to protect children from abuse.

Unless challenged, capitalism and its parties will continue to undermine the very limited reforms won through struggle by Indigenous people in the past. However, as long as capitalism remains Indigenous people will be treated as a Third World minority within an advanced western society. Their oppression helps drive down conditions for all workers and helps divide the working class.

The Socialist Party campaigns for unity between Indigenous and non- Indigenous workers and ordinary people around a joint programme of defence of democratic demands such as Land Rights and for a decent health, education, housing and job opportunities for all.

Lesbian, Gay, Bisexual, Transgender and Intersex people

In Australia today Lesbian, Gay, Bisexual, Transgender and Intersex people (LGBTI) people are denied basic rights that the rest of the community take for granted. Most LGBTI workers report that they face harassment and homophobia at work and many do not reveal their sexuality to co-workers for fear of abuse or losing their job.

In their third term in office the Howard government introduced the Marriage Amendment Bill 2004 which saw marriage in Australia defined as “the union of a man and a woman to the exclusion of all others.” Labor gave no opposition to the bill and same-sex marriage was officially banned both in practice and recognition.

Since coming to power Labor has continued to mimic the Howard government’s position towards LGBTI people with Rudd stating that he was opposed to same-sex marriage and that the Labor Party would continue to regard marriage as the union of a man and a woman.

Labor’s justification for their archaic policies is simply that the Australian people are not ready for such a change. These claims have no grounding in reality with a recent Galaxy Poll showing that 60 per cent of Australians support same sex marriage.

The Socialist Party supports national legislation on marriage and adoption allowing equal rights for same-sex couples but we also recognise that laws aimed against sexism and racism have not ushered in a golden age for women or Indigenous people.

The way forward for LGBTI people is to build a mass movement that not only fights for legislative changes but also campaigns against things like homophobic bullying in schools and against LGBTI bashings which are still commonplace. Such a movement should not only take up specific LGBTI issues but should link up with wider social movements, such as trade union movement.

While a mass action will win gains for LGBTI people, ultimately only a socialist society, based on solidarity instead of profit, will guarantee our rights and bring true equality.

Socialist solution

The depth of the crisis in working class leadership is only matched by the depth of the crisis for capitalism. The reality is that the capitalists have no clear way out. They are trying to make the working class pay for their crisis through redundancies, closures, cuts to hours and public services. These attacks will inevitably lead to an increase in struggle in the not to distant future.

While the general position for capitalism is gloomy the system will find a way out if workers are unable to build a fighting alternative. The task of the Socialist Party is to participate in the upcoming battles while explaining our ideas and tactics to those involved in the struggle. The present crisis is creating much more favourable conditions for socialist ideas than the past period and we must take advantage of this fact.

The government’s turn to the ideas of Keynesianism and state intervention are in reality a confession of the bankruptcy of their system. Capitalism is a system that has outlived its usefulness as it is incapable of further developing the means of production.

Just regulating capitalism without changing the system will not lead to the further development of the productive forces. The fact is that in a market economy only a minority of people decide what we produce and in what quantities, regardless of the needs of the majority. While the capitalist class continues to own the means of production it will continue to exploit the working class and wreck the environment.

That is why socialists call for the nationalisation of the main corporations and privatised services. Socialists campaign for nationalisation to be fully in the interests of workers and not just temporary measures to save a rotten system. We campaign to establish a system of elected committees of workers’ representatives at a local and national level to democratically control and manage the economy and society.

On the basis of public ownership a socialist government could put in place a democratic plan of production. Resources would be utilised according to need instead of what is profitable as is the case now.

A socialist economy would be a democratically run economy set up to meet the needs of all, rather than make profit. This is the only alternative to the boom-bust system of capitalism and this is the alternative that the Socialist Party will fight for over the coming months and years.