Election 2004: Labor and business: Could Labor’s campaign be damaged by the oldest ‘wedge’ of all?

Carol Johnson, The University of Adelaide

Labor has been very concerned by potential wedge issues such as same-sex marriage. However, Labor seems to be less concerned about the oldest potential wedge of all—that between labour and business. After all, Mark Latham has acknowledged that ‘right through the 1950s and ’60s, Labor was wedged on communism. We were seen as too soft to deal with the communist bogey’ (cited in McKew 2003). But Labor wasn’t just wedged on communism but also on the related accusation of being soft on socialism and so anti-business.

The accusation that Labor was anti-business certainly aimed to reduce their business and middle-class support. But perhaps more importantly, those making the accusation also sought to reduce the support of a key group of traditional Labor voters, namely workers employed in private industry. The accusation therefore works as a ‘wedge’ not just in the broad sense of manipulating any electorally damaging ideological cleavage (see Henderson 2004) but in the more specific sense of an attempt to ‘wedge’ off a section of a party’s traditional support base.

Business opposition can scare voters just as much as the threat of Aboriginal land grabs.

Historically, Labor governments have been elected when business interests either actively supported them or business opposition was at least neutralised. They have often lost office when business organisations have mounted strong campaigns against them. John Curtin, for example, came to office in 1941 when the Independent A.W. Coles (of the retailing family) supported a Labor government. Business organisations had criticised the conservative government’s inability to mobilise manufacturing industry in war time and its business cronyism (Johnson 1989, pp. 15–16). Labor lost office in 1949 partly because of a major campaign against it by the banks, petrol interests and business generally (May 1968; Johnson 1989, pp. 52–53). Whitlam came into office at a time of significant business dissatisfaction with the McMahon government. He lost office in 1975 while being strongly condemned by peak business groups (Ghosh 1980; Johnson 1989, pp. 52–53, 77–84).

Business support or opposition is obviously only one of many issues that can determine an election result. However, it could be a major factor in 2004, given Howard’s emphasis on whom voters should ‘trust’ to run the economy. Business organisations are more than just another constituency that any Party seeking office must cater for—and seek campaign donations from. Business’ structural position in a private sector economy means that business confidence and investment are crucial for employment levels, personal income and the well being of the economy generally. Business attitudes can also influence voters’ perception of how effective a government will be as economic managers and what economic risks may be involved in electing them. Business opposition can scare voters just as much as the threat of Aboriginal land grabs or an influx of boat people.

Because Labor has drifted to the right, major mobilisations of business opposition against Labor governments have seemed a thing of the past. Latham’s particular form of neo-liberalism could change that. Some media commentators have noted that both Latham and John Hewson have bitter and talkative ex-wives. They also share a particularly strong belief in free markets and competition that can alienate business ‘special interests’.

Labor may think that being pro-
competition will protect it from serious business opposition.

Latham’s populist dislike of elite business ‘insiders’ derives from his free market views that both market concentration and government assistance can rip off the public, rather than from any lingering socialist beliefs he might have harboured as a Labor man (Johnson 2003; Clark 2003; Mendes 2000). Latham affirms that he is ‘a free-trader by instinct and background’ (2004b). He believes the best way to deal with business excess is to introduce government policies that encourage market competition (Latham 2003, p. 11; Latham 2004d). Consequently, Latham announced that Labor would regulate to reduce the ‘lopsided market power’ of big retailers such as Coles and Woolworths (2004c)—A.W. Coles must be spinning in his grave. Similarly, Latham’s view that banks should provide more customer information seeks to encourage market choice (Latham 2004a; Latham & Conroy 2004). And Labor’s amendments to the Free Trade Agreement between Australia and the United States promised that major drug companies would face increased competition from generic drug manufacturers.

Labor may think that being pro-competition will protect it from serious business opposition. Yet big business has already complained that proposed Labor policies will protect small business at their expense (Lewis & Wallace 2004). Powerful established industries may reject Latham’s arguments that they are ‘reconcentrating’ and his populist aim to establish ‘an enterprise culture open to all, not just a selected few in the corporate sector’ (2004d). But as Hewson discovered when he criticised government assistance and protection for the automobile industry and other business ‘special interests’ (Warhurst 1993, p. 120), some sectors of business don’t want free market policies that financially disadvantage them, only the ones that they’ll benefit from. Therein lay John Howard’s genius. He mobilised neo-liberal arguments against the ‘politically-correct’, ‘elite’ ‘special interests’ such as feminists, unions, or aboriginal organisations. He did not make Hewson’s mistake of explicitly antagonising business ‘special interests’.

Labor’s relations with business have been further aggravated by the combination of older labour movement distrust of big business with Latham’s (2003) populist, neo-liberal ‘outsider’ versus elite ‘insider’ rhetoric. Stephen Conroy, Labor’s financial services spokesman, has launched what the Australian Financial Review has described as ‘a blistering attack on corporate Australia’ attacking the arrogance of an ‘elite clique of board directors’. Conroy suggested Labor would legislate to promote accountability, good corporate governance, and shareholder rights. He responded to criticism from the Business Council of Australia and others by arguing that, yes, ‘there is an internationalist socialist conspiracy on this issue … it consists of George Bush and me’ (Hewitt 2004). Conroy’s ironic comment misses the point that business would be less concerned at regulations introduced by a wealthy conservative president than it would be at regulations introduced by a Labor party with links to the unions.

Labor may gain support from sectors that benefit from increased competition, including small business.

Indeed fear of Labor’s new populism has combined with previous business concerns about Labor’s attempts to introduce fairer industrial relations legislation. Labor’s industrial relations spokesperson, Craig Emerson, has attempted to reassure business that Labor will re-regulate using a ‘light hand’ and ‘will ensure that business has the flexibility to compete in the global economy’ (Kelly 2004). However, numerous business organisations, from the Business Council of Australia to the Australian Chamber of Commerce and Industry and the Australian Industry Group, have argued that Labor’s re-regulation will limit employers’ flexibility—that is, their power and profitability (Lewis & Wallace 2004; Maher 2004; Norrington 2004; Kelly 2004).

Latham (2004d) argues that in emphasising increased market competition he is continuing the tradition of the Hawke and Keating Labor governments’ economic reforms. However, unlike Hawke, Latham does not have a long-standing reputation as someone business can negotiate with. He has not promised wage cuts and more efficient work practices in return for an improved social wage. Hawke and Keating did not combine their support for increased competition with a populist attack on elite business ‘insiders’. Indeed, they offered business organisations a dominant role in tri-partite advisory mechanisms (McEachern 1991, pp. 40–107; Johnson 1989, pp. 92–108).

The Australian’s Brad Norrington has predicted that ‘Federal Labor is now on a collision course with big business that is certain to see an overt campaign by employers against a change of government’ (2004). Predictably, the Coalition is seizing the opportunity to argue its old line that Labor is too closely aligned to the unions and is anti-business.

Labor economic policies and negotiations might still be able to lessen or neutralise business opposition. Labor may gain support from sectors that benefit from increased competition, including small business. Labor is obviously less vulnerable to socialist scare tactics than in the past. However, wouldn’t it be ironic if Labor’s arguably most free-market leader were damaged by the oldest ideological wedge accusation of all—that he was anti-business? This accusation, I have argued, can affect not only business and middle-class support but also the support of working-class voters employed in the private sector. Even more perversely, it is precisely Latham’s populist (though neo-liberal) critiques of elite business interests that make him more vulnerable to that charge than his immediate predecessors. Latham’s naively benign view of market competition may lead him to underestimate what left social democrats have long acknowledged, namely the exceptional power of business in a private sector economy. How to negotiate that power, while pursuing social justice, is one of the long-term dilemmas of social democracy.


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Carol Johnson is an Associate Professor/Reader in Politics at The University of Adelaide. She is the author of The Labor Legacy: Curtin, Chifley, Whitlam, Hawke, (Allen & Unwin) and Governing Change: From Keating to Howard (UQP).