193682
2/25/2009 7:23
09CANBERRA188
Embassy Canberra
CONFIDENTIAL//NOFORN
P 250723Z FEB 09FM AMEMBASSY CANBERRATO SECSTATE WASHDC PRIORITY 1080INFO AMCONSUL MELBOURNE PRIORITY AMCONSUL PERTH PRIORITY AMCONSUL SYDNEY PRIORITY

C O N F I D E N T I A L CANBERRA 000188 NOFORN SIPDIS E.O. 12958: DECL: 02/24/2019 TAGS: PGOV, ELAB, AS

SUBJECT: ALP FACTIONS BIDE THEIR TIME

Classified By: Political Counselor James F. Cole for reasons 1.4 (b) and (d).

1. (SBU) SUMMARY: Despite the apparent desire of Australian Labor Party (ALP) leader and Prime Minister Kevin Rudd to end the power of ALP factions, the January outbreak of a dispute between members of the Right faction in Victoria is a reminder that they still control politics at the local level. Nationally, the factions have lost much of their relevance. Rudd ignored the factions in picking his cabinet ministers after the 2007 election. It is virtually impossible, however, to rise in the ALP without the patronage of a faction – the Prime Minister being a notable exception. Rudd, popular with the voters and the man who led the ALP to its first victory in 11 years, currently dominates ALP politics but once his popularity with the voters wanes, faction leaders believe their national influence will return. END SUMMARY.

VICTORIAN RIGHT SPLITS AFTER DEAL ON PARLIAMENTARY SEATS 2. (U) In January, a dispute broke out among members of Labor Unity, the principal right-wing faction in the state of Victoria. Labor Unity, which includes Premier John Brumby, Federal MP and former trade unionist Bill Shorten and Communications Minister Stephen Conroy, made a deal with the ALP Left in the state to protect sitting state and federal MPs from a nomination challenge. The reason for the agreement was to shut out a dissident element in Labor Unity that had defeated Shorten’s and Conroy’s preferred candidate in a nomination for a state seat, and had then attempted to oust ALP state secretary Stephen Newnham, an ally of Brumby’s.

THE POWER IS IN THE PRESELECTION

3. (SBU) In Australia, nominations for state and federal parliamentary seats are called “pre-selections.” Meetings are held at the district branches of each party and the members choose a candidate. Because this is a small-scale, parochial exercise, ALP pre-selections are controlled by those who can bring the most local ALP members to a meeting. The factions, and the unions which back each faction, can always ensure that enough members turn up to a branch meeting to determine the outcome (sometimes known as “branch stacking”). For this reason, even though the unions are now less than 20 percent of the workforce in Australia, they retain a disproportionate share of political power within the ALP.

UNIONS UNDERPIN FACTIONS

4. (U) Fundamentally, the power of the factions resides in the membership of their affiliated unions. The Australian Workers Union (AWU), the Shop Distributive and Allied Employees Association (SDA), and the Transport Workers Union (TWU) are major unions affiliated with the Right, while the Construction Forestry Mining and Energy Union (CFMEU), the Australian Manufacturing Workers Union (AMWU), and the Liquor Hospitality and Miscellaneous Workers Union (LHMU) are major unions affiliated with the Left.

5. (C/NF) The downfall of New South Wales (NSW) Premier Morris Iemma in 2008 illustrates the sway a union can have within a faction. The Iemma Government proposed to privatize the state’s electricity system so that the sector could be modernized and the sales proceeds used to fund pressing infrastructure projects. The unions in NSW, which are in the NSW Right faction with Iemma, balked at the sale, knowing privatization would mean job cuts. When Iemma refused to back down, the unions forced the Right faction to withdraw its support for the Premier and he had to resign. Interestingly, AWU President Bill Ludwig, a Right faction QInterestingly, AWU President Bill Ludwig, a Right faction powerbroker in Queensland and one of the most powerful union leaders in the country, confided to us that he opposed the NSW unions’ tactics with Iemma. He said that ALP governments have obligations to the general community, not just the unions, and voters turn on governments that appear beholden to unions.

GROWING CRITICISM

6. (SBU) During the ALP’s years in Opposition (1996-2007), a growing number of MPs expressed concern that the factional system, based on power and personalities, was rewarding political hacks at the expense of talented candidates from the broader community. In early 2006, in a well publicized speech, Gillard claimed that factionalism was a “cancer eating away at the very fabric of the Labor party,” and that it was about “who wins, not what they win for.” She called for the ALP leader to have the prerogative to choose the cabinet. Before the election, Rudd declared he – not the Caucus – would choose the ALP ministry. Caucus approved this in March 2008, overturning more than 100 years of ALP tradition. Rudd and Gillard no longer attend faction meetings. (NOTE: Ironically, even though Rudd claimed he would pick his ministers without regard for the factions, his cabinet reflects the factional balance within the ALP: 11 from the Right and nine from the Left. End Note)

END OF COLD WAR BLURS DIFFERENCES

7. (C/NF) Over the last two decades, the ideological differences between the Left and Right have blurred, largely due to the collapse of Communism, and a recognition by the Left that a market economy, with appropriate safeguards, is the best way to raise living standards. For decades, foreign policy, particularly the American Alliance, was a key point of difference between the factions, but today key figures in the Left like Gillard are as supportive of the Alliance as the Right. According to ALP Senator Dave Feeney, a central figure in the Victorian factional dispute, there is no longer any intellectual integrity in the factions and he describes the current system as unpredictable and “byzantine.” Feeney points out, for example, that there is no major policy issue on which he, a Right factional leader, differs from Gillard.

FACTIONS MAKE RUDD LEADER

8. (SBU) Ironically for Rudd, who won a seat in federal parliament without the support of a faction or the unions, he and Gillard would not have won the ALP leadership in December 2006 without the backing of some of the factions. Gillard was supported by the Left but she knew she would never get enough support from the Right to win so she backed Rudd as Leader. Meanwhile, most of the traditional union bosses from the Right, unhappy with Gillard and knowing Rudd was not a union man, supported Beazley. However, the head of the Right in New South Wales (NSW), State Secretary Mark Arbib, backed Rudd. Arbib is now the most powerful figure in the national Right. Rudd has taken him into his inner circle and on February 18 appointed him as a Parliamentary Secretary.

COMMENT: FACTIONS COULD KEEP GILLARD FROM LEADERSHIP

9. (C/NF) Two ALP Right factional leaders we have spoken to, AWU President Joe Ludwig and Senator Don Farrell, former head of the SDA in South Australia and the most influential powerbroker in that state, both agreed that Rudd’s political power in the ALP is now unchallenged, but they opined that the factions would reassert themselves once Rudd’s popularity declines. Although Gillard is currently Rudd’s heir apparent, factional maneuvering could ultimately deprive her of the leadership. Right-wing powerbrokers, the key to winning the leadership, are likely to prefer one of their own – such as the leader of the Victorian Right, Bill Shorten – for the job. CLUNE

Peter Fray

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