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Privatised, corporatised Labor has lost touch with its core values, and voters

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McKnight, David
Publication Date: 
20 Nov 2010



The fate of the Rudd government and Labor's dismal election results have reignited a long-running debate about the beliefs and principles that underlie Labor's policy and public statements.


The other barb in Gillard's speech was an expression of horror at the return of populism. Both sides of politics now use this as a swear word to describe the opportunistic seizure of shallow but popular fads. But populism actually describes a political philosophy that takes the side of the little people against the powerful. It's a force that propelled Labor for many decades. And it was a resurgence of community-based populism in 2006-07 that defeated laws that favoured employers and helped elect Labor.

Rather than abhorring populism, Labor needs to revive populism, especially among blue-collar workers, based on Labor values. The absence of such a populist element meant Labor was unable lead a community campaign to defend its mining tax. The usual strategic play of seizing the middle ground and acting responsibly meant Labor was incapable of badly needed tax reform. When the obscenely wealthy launch a campaign of lies, there is no option but to fight back in populist terms.

But it is Labor's infatuation with the market that is the central problem. Twenty-five years after the arrival of the privatisation and free-market agenda a significant part of the community remains skeptical. And for good reason. Common sense and life experience have made most people suspicious of elevating self-interest to a supreme governing principle. On the other hand, appeals to the common good can strike a resonance, if carefully packaged. This sentiment is a basis for reviving Labor's popular support and giving it renewed purpose.

Yet the Labor leadership embraces a philosophy that idealises market mechanism. Some verge on free-market zealotry.

The evidence for this can be seen by its first-term plans to deliver vital public services by setting up what are called quasi-markets. These government-sponsored markets for services (education, health, aged care) will replace or modify services that put the emphasis on the common good. It's a policy revolution that is barely remarked on because the opposition agrees with its direction.

Labor's schools policy is an example of this. The MySchool website makes each school's achievements public for the purpose of creating a competitive mechanism whereby parents choose schools as part of the laws of supply and demand. Its critics argue this will produce league tables of best and worst schools and will be a form of public shaming that will undermine attempts at improvement in many public schools.

Labor's schools policy reveals a naive faith in the superiority of markets to deal not just with economics transactions but all kinds of human relationships. The great fantasy is that parents' competitive choice of itself will somehow drive quality upwards and all schools will benefit. I expand on all of this in my chapter in the recent book co-edited with Robert Manne, Goodbye to All That?.


Labor's backroom policy wonks show little awareness that real-world market models have unintended consequences. One is market failure.

This was the case with ABC Learning, which became the biggest publicly listed childcare corporation in the world. In 2008 ABC Learning collapsed, causing chaos for the parents of 120,000 children enrolled in their centres and the 16,000 staff who cared for them. Its meteoric rise and fall holds many lessons for Labor's plans to extend the market.

For a start, its expansion did not necessarily mean more choice. Childcare expert Deborah Brennan points out ABC became so big that sometimes it was the only centre in a particular region. Sometimes, ABC Learning deliberately operated childcare centres unprofitably to drive non-profit centres out of business. Nor did parental choice drive higher quality or diversity; rather the opposite. ABC Learning standardised its curriculum and met only the minimal requirements for staffing. Naturally, it lobbied government to lower these standards.

Labor's answer to this criticism is that better regulation will fix things. But better regulation may not be enough. Models that rely on user choice to improve standards have a crucial flaw. They assume users can recognize quality.

Researchers have found, for example, that a large number of parents cannot distinguish higher quality services from those of lower quality. Early childhood academics Jennifer Sumsion and Joy Goodfellow say parents have difficulties in discerning quality for many reasons. They may not have purchased long-day care before and may not know what constitutes high quality. By the time they become experienced their children are likely to have grown up, they say. Even parents who are knowledgeable actually spend little time in centres and struggle to monitor quality.

There are also emotional complications: research has found that in convincing themselves that they have acted in the child's best interests, parents may overestimate the quality of the long-day care they have purchased.

Supporters of marketised public services often paint a picture of old-style public services that are bureaucratic and inflexible, in which one size fits all.

But for decades Australia had a significant private sector in child care largely composed of community non-profit groups along with mum and dad private enterprises. Market models foster large corporations that seek to eliminate competitors.


-reprinted from The Australian

Entered Date: 
1 Dec 2010
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