Magazine of Socialist Action in Australia

Socialist Party statement on the Australian political situation

Reading Time: 16 minutes

The following statement was discussed and agreed upon at the 2014 Socialist Party National Conference held in Melbourne on July 11, 12 &13.

Since our last Conference there has been a palpable rise in a very basic political awareness amongst millions of Australians. This is not a class consciousness, let alone a socialist consciousness, but a growing belief that there is a ‘conspiracy of the rich and powerful’ against ordinary people.

Left to itself, this can veer into nationalism and even conspiracy theories. More obviously it is open to and reflected in a vicious ‘anti-incumbentism’, where despite the authority of the major parties being shot, they both retain an electoral base in the absence of an alternative and are used by voters as a stick to attack the other when in power.

The ground is fertile for right-wing populist parties to win electoral support however the audience for left-wing and socialist ideas has also never been greater. A clear understanding of the processes will help us grow as a party.

Budget response

Millions of people are angry and shocked about the measures outlined in Abbott’s first budget. Far from ‘everybody sharing the burden’ this budget aims to make ordinary people pay for a crisis they didn’t create.

In the wake of the global financial crisis in 2008 the Rudd Labor government initiated a program to stimulate the Australian economy. This spending program, coupled with the boom in the mining sector, helped put a floor under the economy and held off the sharp downturn that was seen in other parts of the world.

This stimulus program however wiped out the budget surplus and, following a trend internationally, Labor shifted away from stimulating the economy to implementing austerity measures in 2009-10. The aim was to bring the budget back to surplus.

As you would expect parties that are funded by big business interests seek to maintain low tax rates and benefits for their backers. Under Liberal and Labor austerity means cut backs and increased costs for ordinary people while big business profits are protected.

This budget continues that process. Over the next four years the government plans to slash spending by about $36 billion. The vast bulk will be cut from public health, education and welfare. At the same time increases like the rise in petrol excise and the $7 co-payment fee to see a doctor will impact the poorest layers of society the most.

While ordinary people pay more and get less, corporations will have their tax rate cut from 30% to 28.5%. Subsidies to big miners and other tax payer funded handouts to the corporate sector will also be maintained. This budget is unashamedly biased towards the super rich.

In part these cuts are designed to make the working class pay to bring the budget back into surplus but in part they are also designed to drive through an ideological agenda – an end to the so-called ‘age of entitlement’.

Given the obvious wealth inequality that exists the government’s propaganda has so far only had limited results. Polls show a spectacular drop in support for the government. If an election was held now the opposition would win in a landslide. As we predicted this government’s honeymoon would be short lived given the economic and political crisis it faced.

But it is not just in the polls that Abbott is facing problems. Movements are developing, first around the ‘March in March’ rallies and now around a series of anti-budget protests. If this movement is able to gather pace it could become a serious threat to the Liberals.

In Victoria the trade unions have called some limited strike and protest action. This needs to be replicated in other states. In order to give people a taste of their collective strength, and to take the movement to a higher level, a 24-hour nationwide strike should be called as the next step with mass protests in every major city.

A properly organised one day general strike would shake the government and its big business backers to the core. It is the logical next step if any of the budget measures are to be defeated. This demand will need to be a feature in all of our budget related propaganda.

We should remember that a budget is just pieces of paper. It requires people to comply with it in order for it to be implemented. Side by side with co-ordinated industrial action localised actions need to be organised to stop the implementation of the budget measures on the ground. Occupations, non-payment campaigns and protests can stop this government in its tracks.

The Liberals are not strong and stable. An indication of their political weaknesses can be seen in the response of the state Premiers. Even Abbott’s Liberal colleagues are furious that he is attempting to cost shift onto the states and pass the political pain down the line.

The current level of cuts is also predicated on the idea that the Australian economy will continue to grow. This is by no means assured. Against the backdrop of the slowdown in China, and the mining boom subsiding, the Australian economy will be far more vulnerable to global shocks. The Liberal’s budget will also have a negative effect on consumer spending. While the cuts entailed in this budget are significant more pain could well be on the cards which would weaken the government’s authority even further.

Regional backdrop

Nothing can be understood in Australia without a regional perspective. The Asia-Pacific region is both the most important area for capitalism and the most dangerous geopolitical conflict point at this moment. The rising tensions between the old dominant power of the US and the rising power of China is most recently witnessed in the drama over a number of uninhabited outcrops in the East China Sea but there are many other examples.

A new order is developing in East Asia spurred by the rise in the Chinese economy and its resultant desire for more power and influence in the region. While China has risen, the US is in historical economic decline, yet maintains a military dominance.

The US’s share of trade to East Asia fell from 19.5% to 9.5% from 2000 to 2012, while China’s rose from 10.2% to 20% over the same period. In November 2009 Obama announced his “Pivot to Asia” in terms of foreign policy, in an attempt to check China’s emergence as a challenger to US dominance in Asia.

History knows no example of a rival rising power winning top spot in the international order without a war with the dominant power. This is not on the cards in the short term but war is inherent in the situation without a perspective for a socialist future, which we fight for. In years to come the Cold War between US and USSR will be seen to be replaced by one between new imperialist rivals, China and the US.

Every dispute in this region can only be understood through the prism of this conflict between superpowers.

China is reliant on a steady import of coal, iron ore and other raw materials to drive its economy. With this in mind the US is identifying ‘choke points’ to potentially cut off China’s trade. The Malacca Straits is but one example.

China is driven by imperialist interests in the region and a rising assertive nationalism. In response to US power, it is developing cost-effective sea-defence capabilities (submarines, drones, long range ballistic and anti-ship missiles etc.) to turn the Western Pacific into a naval no-go zone. A recent Pentagon report acknowledged that “China is deploying an anti-ship missile — known as the DF-21D — with a range of more than 1,500 kilometres, giving ‘PLA [the Chinese military] the capability to attack large ships, including aircraft carriers, in the western Pacific Ocean.”

Australia remains the US ‘deputy sheriff’ or in fact plain subordinate in the region, despite its massive economic ties to China. From 2006 to 2012, Australian exports to China rose by 25% a year. Two-way trade in 2008 was worth $73 billion and this rose to $125 billion by 2012.

It is true the boom has been based in the Western and Northern regions of Australia and led to a highly-valued Australian dollar that has contributed to the collapse of local manufacturing. However, China’s growth has been responsible for a 25-year Australian economic boom, based on the export of coal, iron ore and liquefied natural gas.

This boom in the mining sector has hidden a relative economic decline of Australia in the region. 20 years ago, Australia’s economy was equal in size to China’s. Now China’s economy is 4 times larger.

Mainstream experts following these regional developments have fretted about the dilemma facing Australia, with its historical, political and cultural ties with the US coming into conflict with its growing economic ties with China.

Both Labor and Coalition parties have openly declared they are in the US camp. The former Gillard government welcomed Obama’s provocative ‘Pivot to Asia’ and allowed 2000 US Marines to be stationed in Darwin. However, it maintained a fig leaf of respect to China.

The current Abbott government has dispensed with this fig leaf and has been almost provocative to China. This is causing great angst in sections of big business reliant on Chinese trade.

The Abbott government’s crude foreign policy is mirrored in the trashing of diplomatic relations between Canberra and the Indonesian elite thanks to the ‘tow-back the boats’ refugee policy and revelations of an Australia-Indonesia spying scandal. Again this raises questions in the mind of the more far-sighted local capitalists and their thinkers – is the ALP not a more rational representative for our interests in government?

Economic and class issues

The recent high Australian dollar has fast-tracked a crisis of local manufacturing and an outright collapse in the car industry. The post-war tariff protection for manufacturing was first changed by the Hawke ALP government in the 1980s. Since then government protection of local industry has been progressively cut. At the same time industry has been battered by the mega-factories with their huge economies of scale in the likes of Japan, Korea, China and Germany.

Advances in technology allow global production in a small number of mega plants. This means massive profits for the elite and layoffs and demands for wage cuts in smaller centres of production, followed by plant closures.

In Australia car industry employment has collapsed from 250,000 in the early 1970s to about 40,000 just prior to the recent closure announcements. The impending total collapse of local car production is the most important economic development since our last Conference.

Australia – as far as the capitalist class is concerned – is to be a site for regional business offices, a source of raw materials and a holiday destination for rich of the region.

They see no room for a meaningful manufacturing industry and will push hard for wage cuts and increased exploitation of workers. For example at SPC, the Federal government wanted management to move workers from the Enterprise Bargaining Agreement (EBA) rates of pay to Award rates – for some a 40% drop in wages! The attempt by the Federal government to blame workers’ wages for the SPC closure was so crude that even management criticised Abbott, as did the local Coalition Member of Parliament.

Yet it is a sign of the times – an insatiable demand by the capitalists and their politicians to lower wages and conditions of workers and to slash spending on social services and public sector jobs. Attempts by some trade union leaders for ‘short-term’ deals such as wage freezes or even accepting wage cuts to protect jobs will never go far enough for capitalism in this period.

The drive for profits has led to a focus on parasitic investment in areas like property speculation, financial markets and through privatisation of state assets and services. This explains the pressure on right-wing politicians to loosen up planning laws, to sell off what’s left of government-owned enterprise, and – crudest of all – to step up corporate welfare.

The parasitic nature of modern capitalism is proved in recent figures showing that the stock market indexes in the UK and US are back to pre-GFC record levels. The Guardian is predicting “(the bubble)..will burst”. This financial bubble is due to the massive ‘quantitative easing’ by the US government – effectively printing money (US$85 billion a month) to boost the profits and ensure the survival of the capitalist system. Elsewhere the bubble is expressed in property. In China, the housing market is valued at up to 35 times income in the cities.

Here in Australia, the bubble is also seen in housing prices. On average housing is valued at 10 times average income, the same level as California’s just before the subprime crash. Investment advisor Harry Dent told the media “I see a decline (in house prices) in the 30-50% range across Australia.”

Corporate welfare

The clearest example of corporate welfare in Australia is seen in the low tax rates paid by corporations. The Australia Institute think tank showed that mining companies received $4.5 billion in tax concessions and subsidies in 2012 alone. Last year BHP Biliton increased its profits 83% to US$8.1 billion – yet it only paid US$29 million in minerals resources rent tax. The effective tax rate in Australia for resource sector is 13%, compared to 78% in capitalist Norway.

On top of this massive handout to the sector via low tax rates, it is expected that $50 billion of dividends will leave Australia from 2012 to 2016 due to 83% of the industry being foreign owned. If the sector was nationalised (under workers’ control) it would provide a ‘gold mine’ of wealth to boost public health, education and transport.

Added to this is the infrastructure built at taxpayer’s expense to assist big business increase their profits even further. The East-West toll road tunnel in Melbourne is an example of this. Billions in public money is being used to build a road effectively for private freight transportation rather than the real needs of commuters.

Any commercial losses for the winning bidder are underwritten by the government. A significant campaign, in which the Socialist Party has played a prominent role, has highlighted in the eyes of millions the ties between big business and the state government. This has been achieved through a revival of the traditions of militant struggle adopted by the campaign.

In February it was reported that after a lengthy campaign by the Murdoch media, the Federal government ended an Australian Tax Office legal case against News Corporation over alleged tax fraud and instead gave them a $882 million payout! This was the single largest contributor to the blowout in the 2014 deficit, which in turn leads to more cuts to spending on social services and jobs.

No wonder the wealth of the top 50 Australians increased by 49% over the past three years to over $100 billion. Even in booming Western Australia, in the middle of a resources boom, class divisions have widened. AAP reported that the richest 10% of households there had about 3.8 times the income of the poorest 10% of households in 2003-04. This climbed to 4.5 times in 2011-12. This fits with international trends, with Oxfam recently reporting that the wealth of the richest 85 people equals the wealth of the poorest 50% of humanity!

Only an international and socialist response can resolve this global crisis: fighting for every job and against every cut. Militant struggles around such campaigns will raise the class consciousness of workers, undermine divisions, and build support for a revolutionary alternative of ending capitalism. We stand for ending private ownership and greed-driven production, with replacing it with sane, international planning of the resources we have for the benefit of all.

Weak trade union response

With no alternative to capitalism, the trade union leaders, at best, try to ease the pain for workers. Sackings are met with demands for transition packages, fair payouts and lots of empathy. Militant responses to sackings and closures such as industrial action and occupations will overwhelmingly come from the rank and file directly in the years to come.

At worse, sections of the trade union leaders openly try to present themselves to the ruling class as useful allies in helping sell cuts to workers. This was most clearly seen in former AWU National Secretary Paul Howes’ speech to the National Press Club in February:

“I’m ready to make compromises and concessions in the national interest. Any my invitation to my counterparts in the business community is to join me.” One example from Howes (who earns over a $1 million a year with his partner) was to cut the aged pension.

The inept and right-wing character of the bulk of the union leaders however means that a vacuum of genuine leadership exists. At a certain point workers will refuse to accept the cuts demanded by the employers and they will be pushed into action.

Socialists that participate in the struggles that will unfold with vigour can potentially play an important role in offering an alternative leadership and transforming the unions along class struggle lines.

As seen in other countries, the overarching drive will be to replace fulltime relatively well-paid jobs with casual and low-paid jobs. Unions who are seen as a barrier to this in the well-organised construction industry will be attacked without mercy.

Side by side with austerity measures we will see attempts to undermine the already limited power of the trade unions. This will include attacks on union rights and further attacks on democratic rights.

Social issues

A cruel approach to asylum-seekers arriving by boat has been a feature of both Coalition and ALP governments over the past two decades. Refugees have proven a convenient scapegoat to whip up racism and divert attention away from the class issues like job cuts and lower living conditions affecting ordinary people.

Both major parties have outbid each other in cruelty towards a relatively-tiny number of refugees. Let’s not forget that it was the Gillard Labor government who reopened the offshore processing centres on Manus Island and Nauru. Therefore, while in opposition Labor has nothing of substance to say on the matter.

Without even the fig leaf of a tendering process, the Coalition government has handed over a $1.2 billion contract to the private company, Transfield Services, to run the Manus Island detention centre. This was a desperate move to try and cover over the problems with the previous contractor and the crisis that has developed at that centre.

What was once a seen as useful ploy to divert people’s attention away from other political issues is now beginning to come undone. The trashing of the relationship between Canberra and the Indonesian elite thanks to the crude tow-back the boats policy is more collateral damage from what used to be a beneficial policy for the ruling class.

A rebirth of the refugee rights movement is occurring now. Inevitably it will begin with moral outrage and basic compassion. However the understanding of those involved is at a higher level than it has been in the past.

Illusions in the Labor Opposition are less than before. Our attempts to link the issues to broader class questions will separate us from other tendencies in the movement. It is crucial that the refugee rights movement employ class appeals to win over layers of working class people who are currently not involved in this movement or see it is as against their interests.

On the environmental issues too, we can see a recovery after the Carbon Tax push of the Greens derailed the last mass movement demanding action to address climate change. This time it is based on more than a broader concern for global warming. In the recent summer we have seen extremes of weather. The raging fires at the coalmine in the La Trobe Valley in Victoria encased Morwell in foul air and smog, leading to headaches, nausea and sore eyes for thousands of people.

At the same time a series of blockades and protests have taken place at coal mines and against fracking in regional New South Wales and Queensland. The issue of climate changes and protection of the environment is no longer just an inner city issue.

Again, our involvement has to be drawing out the class issues and linking the environmental crisis to the capitalist ownership and mismanagement of resources.


The federal budget has seen cuts to spending on the public sector and on services. This almost guarantees defensive industrial battles around jobs in the public sector and community campaigns around services at some point in the future.

Cuts to welfare and policies like work for the dole, first introduced for Aboriginal Australians, will be spread much further in an attempt to create a low paid reserve army of labour to drive down wages and conditions amongst the majority of workers.

Towards the end of this year it is possible that the CFMEU in Victoria will be pushed into defending their conditions through industrial action when their enterprise bargaining agreement expires. This will be made more intense by the Federal government’s egging on of construction companies to take on this still strong union.

Later this year the already intense East-West tunnel campaign in Victoria will also move to a higher level as deadlines for the contracts to be signed come closer and plans are made for construction proper to begin. This will require a mixture of direct action on the ground and political pressure on Labor to scrap the contracts if they are re-elected in the November state election.

While it is possible federal Labor will criticise certain Liberal policies for electoral benefit, their general direction is still to the Right. Their rank and file is aging and has never had less influence inside the party. The ties to the unions – which have next to no impact on policy in any event – are likely to be weakened as they have been in the UK Labour Party.

The Greens too will continue to shift to the Right. They were punished in Tasmania for the neo-liberal policies they employed (and championed) when in power with Labor, where they slashed and burnt spending on health, education and public housing.

Tellingly of the nature and trajectory of the Greens Party, this has caused next to no debate inside that party. However, with their financial resources and electoral base, they will remain a complicating factor for socialists. They will remain open to opportunistically attacking the major parties from the Left for short-term electoral gain at times but in the absence of a political and economic alternative they will be forced to follow the general direction of the profit driven system.

The rapid rise of the Palmer United Party (PUP) indicates an extremely volatile political mood developing under the surface of society. Worsening living standards and growing concern about the future are undermining the pro-capitalist parties. In this context populist right-wing forces can develop by drawing on this mood. Examples of this kind of process can also be found elsewhere in the world.

According to the polls the PUP is now Australia’s fourth largest party. This spectacular result for the billionaire Clive Palmer’s party gives an insight into the hatred that exists for the major parties and the burning desire to vote for an alternative.

The real agenda of Palmer is pro-profit tax cuts and other policies to support his business interests. This will conflict with the interests and hopes of those who voted for him at a certain stage but for now they also complicate the political landscape.

Progressive forces need to seize the initiative and cut across the potential for right-wing forces to take hold. In the absence of this we can expect a rise of nationalism and racism in Australia. There is a rich vein of racism and nationalism in this country and in the absence of a mass class alternative these ideas will gain an echo. We must study closely how our comrades take this question in Europe, where the politics of nationalism and racism are more advanced.

While not immediately on the cards, at some stage we will have to make initiatives to help build a new workers’ party in Australia. A new party could develop in a number of ways. It could grow out of community campaigns against cuts and austerity or from the pressure of struggle forcing a section of the union movement to break with the ALP.

At the moment the forces required are not yet sufficient. We need to continue to champion the idea however and in the meantime build a strong Socialist Party. This will help strengthen the fight back, and help lay the basis for a broader force to develop when conditions are more favourable.

A growing number of people are open to building a political alternative to the major parties. Many understand that if the Liberals were brought down the ALP opposition would just carry on with a similar agenda.

Only a year ago the previous Labor government was similarly slashing public sector jobs, cutting welfare benefits for single parents, raising the retirement age and making cuts to higher education among other things. Disappointingly the budgets that contained those measures were also supported by the Greens and Independents.

Bill Shorten has indicated that he wants to block about $12 billion worth of the cuts in this years budget but this is only about a third of Abbott’s proposals!

Alternating between the two big business parties is clearly no solution. Similarly using smaller parties like the Greens or the Palmer party as an outlet for anger is inadequate. Both of these parties have indicated that they believe some cuts and increases are necessary. Just like the major parties they do not have an economic or political alternative to the profit driven system.

Without an alternative you are forced to play by the system’s rules. As we have seen with the Greens in places like Tasmania they act in much the same way as the major parties when in positions of power, regardless of their stated intentions.

We need to build a political alternative that stands opposed to lumping the burden onto ordinary people. Only a new political movement that offers an alternative to the profit driven system will be capable of really representing the interests of the 99%.

An alternative way of running society based on the public ownership of big industry, democratic control and sustainable planning would mean that the wealth that is created could be distributed more equally and living conditions could be increased rather than attacked.

By removing the profit motive billions of dollars could be freed up to be spent on creating the jobs and services that we need. People and the environment could be prioritised as opposed to the profits of the 1% as is the case now.

It is this type of alternative that the movement against Abbott needs to adopt. Anything less will only see Labor try to railroad the anger that exists into a campaign aimed at getting them re-elected. If this were to happen we would only end up facing the exact same problem, albeit with a different face and style. The Liberals can be stopped but we need to champion the idea that they should not be replaced with another version of the same thing.

Regardless of which major party is in power the capitalist system does not work for the majority of people. This is the case not just in Australia but the world over. The challenge ahead is to build not just a movement against Abbott, but a movement with a leadership that can get us off this two-party merry-go-round and change the capitalist profit driven system as a whole.


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