Anthony Albanese Needs to Stand Up to the Right of His Own Party

Labor’s Anthony Albanese has been elected Australia's prime minister just as the economy looks set to plunge into a recession. To avert the worst effects, he’ll need the audacity to transform production — which means taking on the right wing of his own party.

Labor leader Anthony Albanese speaks to the media at a press conference at Bentley Hospital on May 16, 2022 in Perth, Australia. (Matt Jelonek / Getty Images)

In Australia, the Labor Party (ALP) has an unerring, near uncanny instinct for being triumphantly elected just as the world is about to plunge into a global recession, or worse. It is grimly funny how regularly they do this. In October 1929, after a decade locked out of power, the party won government on its most socialist program to date, led by editor-intellectual James Scullin. Mere days later, the Wall Street crash sent shockwaves round the world.

In the next three years, the party split four ways, with the right joining a “United Australia Party” that emphasized conventional austerity budgeting — and locked Labor out of power for another decade. In 1972, the ambitious, modernizing Gough Whitlam government, swept in a year before the 1973 global recession that decisively ended the Keynsian postwar era; Whitlam struggled through for barely three years. In 2007, a decade of John Howard’s mix of neoliberalism, corporatism, and culture war came to an end, and the keys were handed to Kevin Rudd just in time for the 2008 financial crisis.

Indeed, there are only two Labor prime ministers who have escaped this cycle. John Curtin, who came to power in 1941, didn’t face an economic crisis. Instead, he found himself with a total war on his hands. Bob Hawke also escaped in 1983 — the recession ended just as he came in because — well, because Hawke was the luckiest bastard who ever lived.

Anthony Albanese is no Bob Hawke. He and his government face the by now predictable onslaught. They have taken power just as the global money-printing party has come to an end, and now, a highly inflated bill has come due. How Albanese responds to this crisis will define his time in office and, if he handles it poorly, his departure from office as well.

The Crisis in 2008

Albanese’s bad luck is multiple in comparison with Kevin Rudd. From the Howard-Costello Coalition government, Rudd inherited a budget surplus and a paid off debt. This meant he could draw on a degree of public support when he launched a then eye-watering stimulus package costing $250 billion. Indeed, the obvious need for stimulus spending gave the Rudd government the opportunity to enact some of the schemes it had promised, for example, a vast school-building program. Charging into such territory demanded a certain audacity, which Rudd had.

The Albanese government will need to find the same audacity as the lineaments of a global recession — and possibly depression — make themselves clearer. Indeed, it will have to draw deeper from Labor’s well of courage and boldness. After all, long gone are the local and global conditions that gave the Rudd government an advantage. There is no surplus or clean slate that could absorb a little red ink. To the contrary, the country is now carrying a trillion dollars of public debt. Although that figure is still manageable — even as global interest rates rise — public opinion is unlikely to recognize this, given the persistent prejudice that national budgets are basically household budgets on a grand scale.

The other difference in the situation Albanese faces is that the 2008 recession was a banking crash that came at the end of a fifteen- or twenty-year bubble boom. Although it may not have felt that way for those losing houses and jobs, back then, there was still a significant distance to drop.

Indeed, underlying the bankers’ crash, the global economy was still powering ahead, propelled by China’s continuing high-growth phase. These conditions meant that many governments were able to fill the sharp recession, first with direct stimulus, and then with zero interest rates and quantitative easing. As is now known, much of this served mainly to swell finance capital. Even so, enough of it gooped down to give many millions the experience of solvency as meanwhile, their wage purchasing power steadily shrank.

The Albanese Government’s First Test

What about now? Today’s recession is in large part a consequence of the factors and measures that got governments through after 2008. China has slowed its economic growth in order to consolidate, politically. At the same time, the global system is still flooded with cheap money. This has fueled multiple speculative bubbles, including ludicrous house prices, inflated art markets, the crypto boom and, most recently, NFTs.

Additionally, the Albanese government is already facing its first challenge born of the new order, namely, the spike in global prices caused by the fuel upheavals that have resulted from the Ukraine war. Because the gas industry is largely unregulated, this has transformed into shortages and price spikes across Australia, leading to immediate demands for action. This was the Albanese government’s first test. So, how did it go?

The answer is: not well. Treasurer Jim Chalmers and energy minister Chris Bowen were both quick to launch verbal attacks on the Opposition, as it tried to score cheap points about “inexperience.” However, Chalmers and Bowen were unable to back their rhetoric up with action. They found themselves forced to admit that the so-called “gas-trigger” — supposedly an emergency measure to ensure gas supply to the domestic market — wasn’t much more than a political prop. The “trigger,” if pulled now, will not deliver supply until January 1 next year.

The Opposition went quiet, realizing they were so unpopular that they should simply step out of the way. This freed Labor to focus on what it is best at, namely, disciplining the demands of its own base and the broader population in general. After noting the need for greater changes, both Bowen and Chalmers resorted to assuring people that these conditions would pass. Meanwhile, southern Australia has been going through a ten-day polar surge, causing temperatures to plunge. Bowen urged people to save on power by switching off appliances.

Labor’s Enemy Is the Labor Right

This was already a pretty dire place for a government in its third week. But it got worse. On Tuesday June 10, former Liberal prime minister Malcolm Turnbull appeared on the ABC’s flagship news radio, RN Breakfast. He dismissed the “gas trigger” and argued that the government should impose temporary export and price controls on the industry. Labor found itself outflanked to the left by a former Liberal prime minister. The Albanese government responded by talking about the difficulties of getting such legislation together.

If the Albanese government continues in this manner, it will have a short and unhappy three years in power. Inaction like this could see Labor driven into non-majority — or even opposition — by a combination of newly elected independents and a newly populist Coalition, who will not miss the opportunity for redneck grandstanding on a grand scale.

The Albanese government’s enemy isn’t the bedraggled Liberal mob seated opposite them in parliament. The main enemy of Albanese’s government is inside his party. It’s the leadership of Labor’s right faction, which combines Catholic political conservatism with standard-issue technocratic neoliberal economics. The Labor right sees its job as subordinating the wishes of party supports to an abstract, unmediated “national interest,” whose meaning is supposed to be obvious.

Although their politics have changed, Labor’s right wing was to blame for the fall of the Scullin government. In 1929, the Catholic right of the ALP was economically nationalist, though not socialist. Their program favored high tariffs to protect local industry, deference to established authority and modest improvements in collective working-class life. Their vision was based on Pope Leo XIII’s 1893 “Rerum Novarum,” which asserted that it was necessary to mitigate the extremes of capitalism, while also reaffirming social hierarchies and the legitimacy of property.

In opposition to Labor’s Catholic right was the Industrial left, based in unions, which had come together in the aftermath of World War I, the October Revolution, and the formation of the Communist Party of Australia. A broader movement within Labor advocating for the socialization of industry further reinforced the party’s left wing.

ALP party unity depended on keeping its right and left factions united under the broader party’s umbrella. However, this unity was as much a product of the electoral system as of common feeling or shared vision. Scullin’s great misfortune, then, was to come to power at the beginning of a depression that drove a wedge between Labor’s fragile unity. In response to the crisis, Labor’s Catholic right split, affirming the need to discipline the Australian population into abnegation, duty, and sacrifice. The defectors then joined with the Nationalist Party, itself the product of an earlier right-wing Labor split. The result was the first iteration of the United Australia Party — and the downfall of the Scullin government.

The Labor Right Today

Today, the Labor right stands for a different economic politics. It has wholly adopted a neoliberal understanding of the good life, with its emphasis on consumption, individualization, and micro-choices. It’s a worldview that all branches of the Catholic social movement once saw as nihilism. All that Labor’s post-Catholic right retains of its antecedents’ viewpoint is the idea that the party’s primary role is to restrain its own supporters.

To reinforce this view, the Labor right relies on the cautionary folk-wisdom that Gough Whitlam’s downfall was the result of his ambition. By contrast, they point out that Bob Hawke won four elections by skillfully disciplining Labor’s base and offering minor improvements alongside free-market oriented reforms. Indeed, endorsing Bob Hawke’s strategy has become a mantra for Labor’s strategists.

The mantra only worked — in its own terms — during the 1980s and ’90s, as Australia dismantled its old protectionist system, which saw the price of consumer goods plummet, and which laid the basis for a sustained resources boom. The old notions that workers could only expect a limited, modest way of life fell away, and, over the course of a generation, the availability of collective social security became taken for granted. New generations equated social improvements with maximal consumption.

The legacy of those years explains why Australians are, in their political affect, half-American and half-Swedish, expecting both ever-expanding consumption and familial “freedom” at the same time as efficient, universal social services. As paradoxical as it was, that paradigm is gone. As the gas crisis shows, the country will be hit by a series of systemic, structural shocks. Combined with rising interest rates, this will impose sharp limits on the consumption possibilities available to individual families.

If the Albanese government allows the current global economy to wreak havoc on living standards and consumption, it will be blamed for every failure and every difficulty the next few years hold. And if Labor legitimizes this crisis by imposing austerity and positioning itself as the country’s stern parent and financial counsellor, the resulting damage to our already weakened welfare state will also be politically fatal.

As much as Labor’s right would love to square this triangle, it is doubly ill-equipped. Albanese’s cabinet abounds with economics PhDs, a sign of trouble ahead if ever there was one. However, this academic training will make them incapable of intellectually stepping outside of global neoliberalism as a given framework. This conservatism will be reinforced by Labor right’s heritage, which makes them temperamentally inclined toward enforcing the authority of institutions, and favoring deference and conformity over resistance and collective self-assertion.

The Labor Left Today

That is not a good combination. What makes matters worse is the asymmetry between the left and right factions in the Albanese government. The right is confident in their worldview and are attuned to the needs and power of capital. The coalition of grouplets that comprise the national left faction define themselves more in terms of what they don’t believe, than what they do.

The members of today’s Labor left are ancestors of the great left split of the early 1990s, in which one section of the Left, led by deputy PM Brian Howe, broke ranks. They agreed to the Hawke-Keating right’s plan to remove the last of the tariff walls and privatize huge public corporations including Telecom (Telstra) and Qantas. In exchange, the Left secured the extension of Medicare and social security.

As a consequence, that part of the Left equated the social good purely with distribution and equity, and started seeing production as a “black box,” whose mysterious inner working should be left strictly to the market. Later, this subsection of the Labor left added social and cultural issues — for example, cultural gender equality and indigenous reconciliation — to the point where these began to overwhelm economic issues.

The Brian Howe Labor left gained its final victory with the preelection retirement of Senator Kim Carr. He was the last parliamentary representative an industrial Labor left, still devoted to transforming and reforming production by government intervention. The remaining Labors left MPs cannot envisage progress in any terms aside from distribution that leaves production and the market untouched on the one hand, and on the other, symbolic, cultural redress for marginalized or oppressed groups. This explains why Albanese’s election campaign commitment to reviving manufacturing was so perfunctory.

The Labors of Albanese

To respond to the global crisis, Anthony Albanese will have to show greater audacity than Kevin Rudd. In a country as dependent on international markets as Australia, this won’t be easy. However, it’s a moment that calls for precisely the kind of production-oriented social politics that have now departed the party.

For decades, Australians have taken social security for granted. If Labor’s leadership had the wit to do so, they could point to the consequences of the crisis to reveal a society that has become more precarious and unequal than it has been for many decades. This, too, could generate the opportunity for major, transformative program reforms.

Albanese’s government could put forward a comprehensive set of self-reinforcing, interrelated reforms, for example, by linking very big infrastructure projects with energy and industry upgrades, an expansion of training, and the high-tech upskilling of work. And it could go further by rethinking how we organize our working time, how we design cities, and other issues that could be part of a wider and deeper conversation about how we want to live and how we steer our country within the global system.

In an era of tightening money, there is only one way we could fund such a recovery: taxing major corporations. Thanks to sweetheart deals made by Coalition governments of the last decade, the extractive resources corporations in particular pay virtually no tax. There’s just one problem. During the election, Labor proposed to introduce no new taxes whatsoever, spooked by Bill Shorten’s 2019 failure, which they associate with his proposal to close the franking credits loophole.

Renouncing new taxes has left Labor in a bind. Enormous sections of the population agree with taxing corporations properly in order to reconstruct the country. This is why, for once, Malcolm Turnbull’s political instincts are right. There’s a very simple way to fix the gas crisis — stand up to the gas companies. However, Labor’s capacity for audacity of action is undermined by the strength of the Labor right, for whom audacity is a liability, and the timidity of the Labor left, which should be the party’s standard-bearer of audacity.

In a way, we can see the gas crisis as a political gift. The Opposition is so weak and discredited that Labor can fumble this one, and treat it as a learning experience. Meanwhile, around the world, there is a growing realization that political and economic changes are needed that may be of an order greater than in 2008. Indeed, the fact that Labor came to power on the eve of global reversals only appears to be coincidental. Historically, people turn to Labor when the first signs of a major shift become perceptible, even if they cannot yet be named.

Yet, what Labor wants is something the system can no longer deliver. The present moment calls for courage, imagination, audacity, and a transformative vision. If the Albanese government isn’t up to the task, it will fail in the face of a global crisis. If it does, just like Scullin’s government, almost a hundred years before, Albanese will give last century’s great defeat a companion in this one.