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There’s one story in Australian politics in 2010, one story that forms the basis of all others. That’s the revelation of just how hollowed out Labor is as both a political and an intellectual force.

Something went catastrophically wrong for Labor at some point after 1996. Paul Keating may have left the federal party with its political stocks at a low ebb, but he left it with a compelling legacy of economic and progressive social reform. Keating never stopped reforming – indeed, he picked up the pace after 1993.

As John Howard would go on to boast about himself, you might have disagreed with Keating, but you knew what he stood for. Australians knew his Big Picture, and they even knew a fair amount of the detail, however little it appealed to them. The Labor of the Hawke and Keating years was every bit as closely identified in the public mind with core principles like economic reform, reconciliation and the republic as John Howard would come to be identified with national security, punishing asylum seekers and budget surpluses.

The contrast with the party of Julia Gillard is, to use a favoured phrase of her predecessor, stark. It’s genuinely unclear, even to Labor MPs, what Labor now stands for, what it believes in its heart of hearts. The party’s turn away from reform under Kim Beazley and Simon Crean was, evidently, more than just petty politicking. But the bigger problem was it didn’t abandon economic liberalism in favour of something else — say, old-fashioned big government and a regulated economy. No, it continued to talk the language of economic liberalism, but without the commitment to it of the previous generation.

In such a party, unmoored from core principles, unsure what its philosophical foundations are, the hucksters of NSW Labor, with their relentless focus on announceables, and focus groups, and media management, could have a field day. And they have.

There’s little evidence that Labor is finding a way to repair these deep tears in its soul. Julia Gillard understands that one of her tasks as leader is to do exactly that, to offer a vision that channels her own personal values and explain how it will be achieved. But her vision, such as it is, is hardly the complex economic-historical melodrama of Keating, or even John Howard’s suburban fantasy of a white shareholder democracy.

That Gillard was confronted on the campaign trail by Mark Latham was, for all the bullsh-t from the Nine Network, oddly apt. Latham, a highly intelligent, thoughtful, profoundly self-loathing man on a Pluto-like orbit through Australian public life, was the last Labor leader to leave no one in any doubt what he stood for, and thereby Banquo’s Ghost at the rather undernourishing meal that was Labor’s 2010 election campaign.

Gillard, at least, has the excuse that she became Prime Minister well before she expected to be. And responsibility for that lies with Kevin Rudd, a man who managed to wreck an historic opportunity gifted him by voters who first elected him to the highest office in the land, and then backed him strongly in his first two years.

It is salient that Rudd followed the same path in polling as John Howard in his first term – starting off strongly, but then slowly coming back to earth – until his response to the GFC, which saw him return to almost absurdly high levels of public support. Voters liked Rudd when he took strong measures. But, outside the GFC, they were few and far between. Rudd had a reasonably coherent reform agenda, but not merely did he struggle to articulate it, he struggled to believe in it.

The moment he decided not to fight a double dissolution election on the CPRS, he gave away that he didn’t really believe in taking serious action on climate change.

Some of us had long argued that Labor’s commitment to climate change action was more about politics than policy, that its first goal was wrecking the Liberal Party, ahead of taking genuine action on climate change. So it proved when Rudd, scared by Tony Abbott’s aggression, declined to take up the latter’s challenge. That was a necessary precursor to the disastrous and fatally ill-advised decision to abandon the CPRS altogether.

The counterfactual is straightforward – Rudd would have won a double dissolution election, probably handily, Labor MPs would even now be tolerating his Downfall-based management style, and we would have in place the spectacularly awful CPRS.

Unlike Labor’s rejection of the Keating legacy, the Liberals can still channel John Howard’s convictions. Tony Abbott doubtless still dreams of the Howard era, not realizing that, really, Howard is the dreamer and he the dream, albeit one of those weird dreams where individuals spout complete non sequiturs and behave bizarrely. Listen again to Abbott’s downright lunatic “I’m being a wimp” laugh as Neil Mitchell took him apart back in May, or his admission to Kerry O’Brien that he basically makes sh-t up when he’s under pressure a few days later.

But as the Liberals have always preached – if not necessarily practiced – a core philosophy of what they’re against – big government, taxes, bureaucracy, unions and, in the Howard years, refugees and the environment – rather than what they’re for, the Liberals don’t have the same identity crisis as Labor, not by a long stretch.

They’re also not as fully professionalized as Labor, which can now offer a virtual cradle-to-grave career path to insiders, only a tiny proportion of which will be in elected office. Both sides of politics now suffer – as John Howard noted when launching his memoirs – from too many political careerists, but in Labor they’re in dangerous proportions, and in dangerous positions. Two of them, Karl Bitar and Mark Arbib, occupy particularly central positions from which they’ve wielded a sort of political death ray that robs its victims of whatever political judgment they once had.

Witness the transformation of the once-impressive Deputy Prime Minister Julia Gillard into the Gillard of the citizens’ assembly. It was only when someone threw bombs at her, as happened on several occasions during the election campaign, that the old Julia briefly graced the political stage again, although she did return for the last fortnight of Parliament, when Labor got something resembling its mojo back.

But Kevin Rudd brought his own particular weaknesses to Labor’s philosophical drift. Rudd’s nadir of public support was never as poor as some media outlets tried to claim – and never as poor as the depths Howard reached – but it wasn’t the numbers so much as the changed relationship between Rudd and voters. He had lost their trust, abrogated their faith in him, by walking away from the CPRS.

Grand visions of health reform and mining taxation – even though they were backed by voters – could never repair the basic flaw in the political personality of Kevin Rudd after May: he had promised action on climate change, committed to it because it was so important, and then walked away from it. Once you break voters’ hearts like that, there’s no way back.

His popularity had been the only reason many MPs could stomach him as Prime Minister. His management style seemed almost purposefully intended to alienate not just Cabinet colleagues but Caucus, which he seemed to actively dislike. From his first days as Prime Minister he was storing up bad blood amongst backbenchers, none of which would ever be revealed while he remained so popular, and which certainly wouldn’t be revealed without a viable challenger.

And in the end it was Rudd himself who created that challenger with his disastrous error of dispatching one of his staff to check his levels of support in Caucus – a perfect example of an offensive personal style that so many backbenchers had come to despise.

Compare and contrast John Howard, who had an error-ridden first term and far worse polls, but who learnt from his mistakes and worked to at least give his backbenchers the impression they were being listened to.

Rudd’s problems and Labor’s hollowness left his Government dangerously exposed. A strong government could have stood up to the savage campaign of regime change waged by 4 foreign companies – BHP, Rio Tinto, Xstrata and News Ltd – and local collaborators like Andrew Forrest and Gina Rinehart against Labor. For that matter a smarter government would have avoided such a bitter fight with the miners in the first place. But in a display of raw economic power, those companies helped remove a popularly-elected Prime Minister.

That won’t get much coverage in the end-of-year reviews, but the successful campaign by mostly foreign mining companies and their media ally to change a government was a key event of 2010, and one that will haunt Labor for years to come. That Kevin Rudd picked a fight with this ugly crowd without the wherewithal to win it should be held against him every bit as much as his CPRS decision.

What helped mess Rudd up so much, of course, was Tony Abbott. Abbott pretty much has only one play, but he does it so well he – nearly – doesn’t need any other. It’s important that Abbott used to be a journalist, because he has a knack of knowing exactly what story to tell and how to tell it convincingly. It’s a mistake to simply describe Abbott as aggressive: he’s effectively aggressive, in ways that thoroughly discombobulate Labor.

The way in which Abbott is most like his hero John Howard is in the substantial gap between his image of conviction and the reality that he has the underappreciated capacity to dump key principles in a cold minute for political gain (witness, for example, the extraordinary number of positions he has held on emissions trading). That image of conviction is crucial, especially when your opponent has an existential crisis about why they’re even in politics.

But where Abbott failed – and failure is an entirely unfair term for what he managed in nine months as leader – was on policy; it seemed as though every time the Opposition offered something positive by way of policy, from PPL and “soil magic” climate action through broadband right down to the costings for his savings and spending commitments – it would blow up in Abbott’s face, leaving him to dust off his singed eyebrows and dismiss it with a charming smile. “Hey, it’s me,” he seemed to be telling us, and that wasn’t good enough for Rob Oakeshott and Tony Windsor and Andrew Wilkie after the election, not by a long way.

Of course that election result, coincidental as it was, represented a remarkable surge for the party least afflicted by professionalization (in all senses) and most strongly possessed of a sense of purpose in public life. What’s crucial about the election result for the Greens is that, after years of living off scraps politically, they are now masters of their own destiny, with not merely the balance of power but the capacity to introduce bills in the House of Reps and access to the Public Service to help develop policies, courtesy of their deal with Labor.

How effectively they use that access, how they deploy their Senate power, how well they negotiate a carbon price with the Government and the independents and how they manage to transition from Bob Brown to Christine Milne as leader will be the crucial determinants of whether the Greens become a fully-fledged third force, or simply temporary beneficiaries of Labor’s identity crisis.

I began this year by claiming that very little would happen in 2010, and that anyone who told you otherwise was just trying to sell papers. Coupled with my prediction that Tony Abbott would reduce the Liberals to a reactionary rump, and my later contrary prediction that the independents would make him Prime Minister, I suspect that makes me the least successful forecaster in Australian politics. But there is a sense in which, indeed, very little has happened: the biggest economic challenges facing Australia are little closer to being addressed now than they were this time last year.

The task of decarbonising one of the world’s most emissions intensive economies, to at least enable us to start catching up with the rest of the world by the time concerted international action begins on stabilizing atmospheric carbon levels, is no closer to commencing, courtesy of our two major parties.

Our housing shortage continues to grow, courtesy primarily of state and local government cupidity and stupidity. The only real advance on housing this year has been the slashing of temporary migration as a consequence of the Federal Government’s decision that the education sector should focus on education rather than acting as a de facto arm of immigration policy. Nonetheless, we continue to build too few dwellings, and particularly too few dwellings for low-income earners. The issue remains mired in the COAG process, from whose bourn no traveler seems to return anymore.

Our banking sector still remains uncompetitive – in fact it’s a cartel, complete with its own media mouthpieces. Moreover, the implicit guarantee from which the Big Four benefit is serving as the springboard for entry into riskier markets that history suggests will leave the banks badly exposed when the next financial crisis hits. Here, at least there’s been a modicum of progress, with Wayne Swan’s relatively innocuous reform package and Joe Hockey’s embrace of the need for real reform, which has rightly earned him and his party support from voter in the face of an incessant barrage of banking propaganda.

There are plenty of other examples. In immigration we’ve actually lost policy ground, with both parties retreating from the post-war consensus that migration benefits Australia. Both sides further extended middle-class welfare as part of their election pitches. The bold reform proposals in health from the NHHRC have been replaced with, at best, a useful set of measures suffering the death of a thousand communiqués in COAG.

Against this, there are only a handful of areas where the year hasn’t been a complete waste – superannuation and financial services reform, for example, where Labor has shown it has some vision, competence and leadership, and the NBN, the single case where the Government has successfully fused economic reform and traditional Labor nation-building in a way that will leave a vital legacy for generations to come.

Julia Gillard has promised more and better in 2011. From a policy perspective, we can only hope she is justified by events. But, looking back on 2010, how much do you think Labor can really accomplish?

Peter Fray

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