The following speech was given by Evan Thornley MLC, PS to the Premier of Victoria, at the launch of the New Zealand Fabian Society in November 2007...

LABOUR IS THE PARTY OF IDEAS

 

Tena kotu, tena kotu, tena kotu.

Katoa. I pay my respects to the tangata whenua of this land.

Thank you very much, Mike and thank you all for the honour of the invitation to speak.

Prime Minister Clark, Ministers, MP’s, Party and Trade Union leaders, let me also say “greetings from the last days of the Howard Government”.

 

I hope that’s right. But I should warn you, if it’s wrong, it’ll be time for the old “greetings from the West Island” line. If the ALP doesn’t win, the universal response is “emigrate to New Zealand”. For those of you wanting to really keep track, may I recommend the psephological blogs like www.pollbludger.com or www.mumble.com.au

 

where you’ll find the inside info on all the latest polling.

 

I’ve been asked to speak on the topic “Labour as the party of ideas”. It seems a tad dangerous for anyone from Australia to come over to lecture the Kiwi’s about anything given our respective national election records over the past decade. You have been a great inspiration to us through some very dark days.

 

As you know, however, Labor is in Government in every State and Territory and the Government I serve, the Bracks and now Brumby Government in Victoria is now in its eighth year and is, like the Clark Government, serving it’s people well.

 

But we all understand the importance of renewal within Government, if we are to receive a mandate for a further term.

 

And there lies the central importance of constantly renewing our ideas.

 

Today I’d like to cover 4 topics:

 

1.     Firstly, to state that Progressives draw from a diverse history of traditions and we constantly evaluate new ideas and synthesise them into an ever-improving understanding and narrative

 

2.     Secondly, the conservatives have been ideologues obsessed with just two dangerous ideas – “free” markets and punitive morality – and have tried to get better at selling their old ideas rather than developing or incorporating new ones

 

3.     Thirdly, to advance 5 ideas that demonstrate the power of progressive politics to assault these bastions of conservative orthodoxy; and finally

 

4.     To talk about the importance of the Ideas Institutions – particularly Think Tanks – in playing a complementary but vital role to the Parliamentary Party, the Trade Union Movement and the other Progressive Institutions that make up the Labour eco-system.

 

In doing so, I will dwell for some time in the world of economics. Paul Keating famously described his one-time opponent, Dr John Hewson, a PhD economist as a “feral abacus”. I’m not sure if you ever got quite that up close and personal with Don Brash, Prime Minister, but regardless, I shall try to avoid the same trap today. But I hope to convince you that economics is our friend. Indeed, it is one of our most powerful weapons.

 

 

IDEAS AND PRAGMATISM BOTH VALUABLE

 

In starting to talk about the importance of ideas in progressive politics, I’m reminded of the frequent observation that Labour is an odd coalition of pragmatic, real-world experience – particularly from the trade union movement - and intellectuals and idealists. Both groups sometimes seem to think the other has too much influence.

 

The truth is that both pragmatism and intellectual enquiry are critical.

 

Senator John Faulkner, a giant of the modern ALP once remarked that he was reading the minutes of his Glebe branch from the 1930s and read about the concerns that the workers in the branch were at war with the students and academics from nearby Sydney Uni.

 

He realised that it has been forever thus!

 

So when I talk here about the power of ideas, I do not want to be seen as taking sides in that debate. I think it’s a silly debate. But for today’s purposes, I will champion the role of ideas.

 

In doing so, I can’t go past the famous quote from Keynes:

 

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years ago.”

 

 

LABOUR IS A SYNTHESIZER OF IDEAS

 

So to talk about the power of ideas, I want to do a very quick “cook’s tour” of the last 200 years or so of political history to illustrate the centrality of ideas to the flow of politics.

 

The over-riding theme, however is this: Labour and progressive politics is a rich weave of the threads of a wide range of traditions.

 

We are not about just one idea or one ideology. The very nature of single idea positions is that they are conservative.

 

Rather, we are constantly evaluating, constantly searching, constantly adding to the store of good ideas that we can use – and indeed, on occasion, discarding those which have lost their utility or even turned out to be false.

 

What is enduring and essentially never change are our values.

 

The ideas we are willing to press into the service of those values, however, will constantly progress and evolve.

 

We take from our own traditions, we even take what’s useful from our opponents. Then we do the hard work of thinking about how it all fits together.

 

Our passion for justice and progress comes from a righteous anger at injustice and the abuse of power.

 

There is a powerful, emotional and visceral morality that motivates our politics.

 

But passion without direction dies.

 

Passion without solutions becomes bitter.

 

We bring the power of ideas – a wide range of ideas – into the service of our values.

 

 

HISTORY OF PROGRESSIVE IDEAS

 

Our “cook’s tour” of progressive ideas starts I think with the Enlightenment. The Enlightenment sought an end to the tyranny of kings and an authoritarianism that kept the people ignorant to make them pliable -- and it did so by empowering individuals with knowledge and capacity to think for themselves.

From the French and, I think particularly the more pragmatic Scottish Enlightenment, we have learned to question authority and to judge the truth for ourselves on the basis of evidence. We learned the benefit of sceptical enquiry versus blind faith.

 

Fast forward to the Fabian Socialists in Britain, in the MacDonald but especially in the Atlee Governments and to Roosevelt and the New Dealers and some of Johnson’s Great Society in the US. From these we developed the central ideas about a welfare state and civil rights. Keynesian economics helped understand how to avoid the worst of depressions. We have learned from these traditions and we retain what worked and discard what didn’t.

 

From the rights movements we have learned about gender equality, the rights of all “minority” groups and a commitment to wipe out discrimination in all its forms. We understand the power of reconciliation with Indigenous peoples.

 

From environmentalists we have learnt the essential lessons of sustainability and that the price of inaction often being higher than the price of change.

 

Recently, we have gone further. We have moved into hostile territory and taken hold of ideas that originally were set out by our opponents.

 

There is little debate these days on the need for independent central banks to manage inflation through interest rates and for floating currencies – “the most important price in the economy” as Paul Keating called it – to mediate our interactions with the world.

 

That some of these ideas were originally put forward by people like Milton Friedman is a source of some amusement to me, but it is no cause for shame on the progressive side. We are not ideologues, but we love and value and use good ideas.

 

BY CONTRAST, CONSERVATIVES HAVE BEEN THE BETTER SALESPEOPLE – NOT THINKERS

 

I think it is a fair reading of history would say they have won more battles than we have in the last 40 years.

 

It is important to understand how and why.

 

To do so, let me begin a second brief historical tour. It starts in the time of Jim Morrison and tie-dyed combi’s.

 

In 1971 the cause of unfettered market fundamentalism was not looking nearly as strong as it is now. Indeed, they feared they faced political extinction. The conservatives were desperate for change. They got it. But not in an afternoon. Not even in a decade. But they laid the foundations for long-term dominance of public opinion and values that has covered the best part of the last 35 years.

 

The irony is that the architects of this conservative “counter-revolution” modelled themselves on the strategies of social democrats (Fabian socialists and others) from the previous generation.

 

In an astounding leaked document written in 1971 by Lewis Powell, shortly to become a Nixon nominee to the US Supreme Court, you can see what the American Chamber of Commerce was advised to do in response to an unfavourable political climate. This rather apocalyptic document included the following:

 

MEMO: Attack on American Free Enterprise System

 

…No thoughtful person can question that the American economic system is under broad attack…

 

The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals…

 

… the response to the wide range of critics has been ineffective, and has included appeasement; the time has come – indeed, it is long overdue – for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it…

 

But independent and uncoordinated activity by individual corporations… will not be sufficient. Strength lies in organisation, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action…”

 

Powell laid out a clear, simple, but monstrously ambitious plan to take back control of the public debate through every forum available – from schools and universities to the courts, media and the churches and last, but not least, the politicians.

 

These days Lewis Powell casts a very long shadow. His blueprint, a couple of billion dollars from the Scaife, Olin and Coors families and a generation of aggressive activists later and the conservative counter-revolution became an unstoppable juggernaut.

 

By the mid-seventies, they’d established their Think Tanks to provide a well-resourced home and a loud megaphone to sympathetic intellectuals and academics. By the early ‘80s, the College Republicans were running riot over American campuses – training a generation of activists like Karl Rove, Grover Norquist, Ralph Reed and Jack Abramoff.

 

By the early ‘90s the shock jocks owned talk radio and Fox News Channel delivered “fair and balanced” conservative propaganda. The religious Right had been mobilised into a hugely disciplined ground force at every ballot box south and west of the Mason-Dixon Line.

 

This was not an accident.

 

But if you look closer, the Conservative counter-revolution was less about creating new ideas than it was about selling old ideas better.

 

As linguist George Lakoff notes in his recent best-seller “Don’t Think of an Elephant”, conservative ideology is now packaged into emotion-laden word-brands that have been created to “frame” the debate and their political opponents.

 

The phrase “family values”, for example, no longer has its ordinary literal meaning, but is universally understood to mean “anti-abortion, anti-gay”.

 

The phrase “tax relief” sounds like it’s a cure for something in need of a laxative!

 

It’s a far cry from the observation of the great American jurist, Oliver Wendell Holmes that “taxes are the price we pay for a civilised society”.

 

These word brands are now so commonly accepted in mainstream debate that they are parroted by the media and even by ourselves. How often did Don Brash, reading from the Republican play-book, accuse us of quote “political correctness”. Then there is “latte-sipping elite”, “bad old days of class warfare” and so on.

 

These phrases didn’t fall out of the sky - they are the products of years of research and, like all successful brands, ubiquitous placement. These things have been focus-grouped to an inch of their lives and then systematically launched on an unsuspecting public and, it seems, even an unsuspecting media and political class.

 

These “think tanks” are indeed better understood as advertising agencies – they didn’t create new policy ideas so much as learn how to sell old ones much more effectively.

 

“FREE” MARKETS

 

One of the greatest victories for the conservative language framers, however, was their first. The greatest fiction ever perpetrated on an unsuspecting public – the non-existent “free market”. There is no such thing. All markets have rules.

 

What is a game of rugby without the laws ? It is chaos.

 

Every market in the history of the human race has had some rules. Those rules will always change and evolve. The question at any given time is simply this: “are these a good set of rules or a poor set of rules to deliver a good game ?”.

 

To be fair, some conservatives were rightly opposed to totalitarianism in all its forms. But then, in an over-simplification of breathtaking scope, they decided that any form of State provision or oversight was tantamount to co-ercion. They wanted to tie the valid benefits of market mechanisms to a cold-war struggle for political freedom.

 

The greatest linguistic couplet of modern politics was born – joining the two concepts together – “the FREE MARKET”.

 

By characterising markets as “free” they avoided the far more difficult and to us far more fruitful enquiry – is this a good or a bad market ?

 

Are the rules of this market delivering a good or a bad game ? Do they accurately measure the true value of things ? Do they encourage competition or tend to monopoly and oligopoly and abuse of market power ?

 

Now, so long as you can create a fiction of a “free” market, you can defend any distortions already existent in the current rules of that market as being “natural. It’s like the divine right of Kings from the pre-Enlightenment era. This almost religious attachment to the status quo is used to brand reformers as infidels.

 

But can someone pls tell me, what is a quote “free” market in electricity ? One that has no rules ??  What does that look like ? I’ve never seen one anywhere in the world ! All electricity markets have rules and depending on how good the rules are, determines how good a game is played in the electricity business.

 

The same is true for markets in automobiles, lawyers, telecommunications and airlines. The concept of a “free” market is a complete fiction.

 

Adam Smith would be appalled – he laid out the conditions of a perfect market – but it was anything but “free”. And so would Keynes. And so would Galbraith. And so, indeed, would Sir Nicholas Stern.

 

And the purpose of this elegantly worded charade ? To enable the wealthy to pay less tax and oppose the simple goal of quality education for all.

 

It is the antithesis of the Scottish Enlightenment on which tradition they would claim to stand.

 

As Kenneth Galbraith said:

No one likes to believe that his or her personal wellbeing is in conflict with the greater public need. To invent a plausible or, if necessary, a moderately implausible ideology, in defence of self-interest is thus the natural course. A corps of willing and talented craftsmen is available for the task.

 

EXTERNALITIES

I want to talk about something economists rather politely call “externalities”. These are things that definitely have value, but which we either find difficult to measure or choose to leave out. Some are good, some are bad. This is what the climate change debate is all about.

For example, let’s imagine a company pumps devastating pollution into a river for 50 years-destroying the river and its environment - without ever paying a cent in costs. The company’s books may say it’s a profitable enterprise, but if the lost value of the river, the agriculture on that land around it, the increased health costs to other river users and such were included, the real economics of this business may be a very large loss.     

Now not all externalities are negative. When an early childhood intervention  program delivers $9 in benefits for every $1 invested, then it’s created massive positive externalities. Huge economic benefits that it doesn’t keep for itself or count in its accounts. But those benefits are no less real just because they’re not counted or accounted for.

So many of the distortions which are apparently “natural” in these “free” markets are the refusal to account for social and environmental externalities.

 

To account for externalities might be economically accurate and therefore lead to efficiency and higher growth, but apparently, it would make us less “free”.

 

So the conservatives have established a plausible justification for existing market distortions but erroneously labelled them “free” and the rest of us have been buying what they’re selling.

 

Not content with that, they then set about abusing the value of faith and spirituality to complete the task. They cling to a form of punitive morality.

 

PUNITIVE MORALITY

 

These two ideas serve one over-riding purpose – to justify the redistribution of resources from the bulk of the people to a powerful elite.

 

Having pulled of an intellectual sleight of hand to justify market distortions as “natural” and “free”, they try to cover their tracks by inventing a punitive morality code to blame their victims and use it as an excuse for further redistribution.

If I can convince people that you are a bad person, then I can convince them to take resources away from you and give them to me – if I am a good person. Take money from those “evil” sole parents and give it to “good”, hard-working 6-figure salary types. Take money from those evil, slovenly under-resourced schools and give it to these well-funded over-resourced schools that people clearly “want more”.

This is truly the empty morality of the Hollow Men.

All the better if you can find the one or two percent of people in any group that really aren’t pulling their weight. And sadly there will always be a few. Because then you canhighlight that tiny minority to vilify the entire group. That creates a climate where we can redistribute away from them all.

For example, sadly,  when the currently benign global environment get’s tougher and unemployment starts to rise again, we’ll have a resurgence of blaming the unemployed for their plight.

Changes in unemployment are a result of changes to the economy, not epidemics of immorality.

 

But flawed as the conservatives only two core ideas are, they are pervasive. And if we are going to demolish them in the public’s mind, we have a lot of work to do.

 

We must start at the start and reclaim the foundations on which they claim to stand.

 

1ST STEP: RECLAIMING THE HIGH GROUND OF MORALITY AND ECONOMICS

 

Let us start by drawing from our own history, as we in Victoria and you here is New Zealand can often do, by reflecting on the influence of the Scot’s in our traditions.

 

The Scottish Enlightenment turned a small, backward country on the edge of Europe into the intellectual powerhouse of Western Civilisation.

 

And what did they do ?

 

They invested in broad-based education.

 

One of the first places in the world to see investment in the people themselves as the central enabling device for national progress.

 

It is a model we Progressives have shared and believed in ever since. Indeed we both benefited directly through the establishment of our respective wool industry – yours as the strong wool carpet kings, ours as the fine wool suit specialists.

 

But the great progressive history of the Scottish Enlightenment – the economics of Smith and Ricardo, the philosophy of Mill and Hume, the engineering of Stevenson – has been twisted into a rigid and extremist ideology by those that followed.

 

A deviant form of liberalism took a sharp right hand bend around the time of Hayek and Ayn Rand and kept on driving into the land of Thatcher, Howard and Bush.

 

They are not the inheritors of Adam Smith. He understood the role of markets and the nature of humanity.

 

In fact, as Kevin Rudd has frequently mentioned, central to Smith’s world were two intersecting spheres – left-brained and right-brained in you will. Economics and Morality.

 

As not only did Smith write “The Wealth of Nations” but he also wrote “The Theory of Moral Sentiments”.

 

Not only did he write about self-regard, but in the same breath spoke of the importance of regard for others.

 

Smith would roll in his grave if he could see where his ideas and his notion of what is called Liberalism has been taken today by the far right of politics.

 

Similarly, the punitive moralists of right wing politics would have us believe that there is a contest between individual responsibility and community responsibility. But as progressive American evangelical Jim Wallis points out in his book, “God’s Politics”, we actually believe in the importance of both. This contest is hollow and unnecessary and extremes of either view absurd.

 

I sometimes call our opponents the sharp elbows brigade. They have a faulty understanding of the world. They believe that for you to have something must mean I cannot. The genius of investing in people -- that by investing in people now, we can both have more later -- has passed them by. And so they believe that by inflicting damage on you, I will somehow be advantaged and, perhaps even more absurdly, that you will not respond in kind and inflict damage on me.

 

So to those on the Right who claim morality as their own I say “who was it who fought to end slavery ?”, “who was it that put an end to kids working in coal mines ?”, “who was it that fought Hitler but opposed a war in Vietnam ?”, “who was it that fought every step for democracy and the increase of the franchise ?”. If it were left to conservatives, we’d still have only male property owners with a right to vote.

 

Whose first meetings were held in a Methodist Church hall ? The answer, of course, is Labour.

 

Labour is founded on an understanding of what is right and wrong. Of what is just and unjust.

 

It is a morality at the heart of our values of social justice, tolerance and progress. It is a morality that is inclusive, NOT exclusive, as conservatives always are. It is a welcoming morality. A compassionate morality. Not a judgemental and exclusive and punishing morality.

 

Yes, we own the moral high ground. We own the economic high ground. And it is from these commanding heights that Labour enters the battlefield of ideas from a position of strength.

 

So step one is the most important – reclaim the high ground of economics and morality.

 

2ND STEP – REJECT THE FALSE DICHOTOMY BETWEEN PROSPERITY AND FAIRNESS

The conservatives have created a false dichotomy between prosperity and fairness.

 

It used to be said that the conservative side of politics was interested in wealth creation and the progressive side only in wealth distribution.

Maybe that was true once. If so, it certainly isn’t now. Given what we’ve just discussed about the greatest wealth being generated by investing in the greatest number of people, this old debate has been turned upside-down.

The global economy is now a team sport. Rather than worrying about our team’s capacity to compete in the global A-grade by skilling up all our players to the maximum of their ability, conservatives are more interested in fighting among ourselves as to how we’ll distribute the spoils – even if it’s at the expense of the team’s success.

Why would you do that? Well let me tell you it hasnothing to do with economics.

Take a visit to your local bookshop and look at the "Business and Management" section. All the action is around topics like Branding, Intellectual Property, Knowledge Management, Human Resource Development, Innovation and such like. What the accountants would call the "intangibles" on the balance sheet. Because it's these "intangibles" that drive modern capitalism. It's the investments in people, their ideas and their relationships that drives value. Do Microsoft invest in their people ? General Electric ? Nokia ? Macquarie Bank ? McKinsey & Company ? Of course they do. By and large, they treat them well, invest in them and invest in supporting them.

Business people and scholars alike have been onto the power of investing in people for a while.

 

HUMAN CAPITAL ECONOMICS

 

Since we’re talking about investments, let’s briefly talk about rates of return. With most traditional investments – like shares or property or bonds – returns are usually in the range of 7-12% per annum. So keep in mind this basic calibration: a 5% return is a pretty small number, a 10% return is a pretty good number and anything around 15% or over is an absolute Monty!

James Heckman, a Nobel Prize winning economist quotes the Perry Pre-School study, where two groups of severely disadvantaged kids in Chicago were split – one received a high quality pre-school program designed to overcome the symptoms of their disadvantage. The other group wasn’t – they were the control group. They followed these kids for 25 yearsthrough to adulthood to keep track of the differences. The results were startling.

But let’s look at the economics of the outcomes – that’s what’s really startling. When you measure the benefits of higher incomes and lower costs, theinvestment in these kids resulted in a rate of return of about 16% per annum. 16%! Per annum ! For 25 years of compound growth!

Again, these are outstanding returns on investment in anyone’s language. You get 5% if you put it in the bank, 7-12% for shares or property and 16% if you invest in early childhood !

 

I should say, as a passionate advocate of early childhood investments that I read with pride and envy of your commitments in this field and the Clark Government’s record. The Howard Government has the singular distinction of the lowest investment in early childhood in the OECD. It is one of Kevin Rudd’s most central commitments that that will change forever under Labor.

 

Gary Becker, another Nobel Prize winning economist first published a book called Human Capital in 1964. He quotes studies that show the rate of return on an individual’s investment in education varied from 16 to 28% per annum for completing High School and between 12 and 15% for University.

But all these investments in human capital return much more than that -- they improve people's lives; they give them dignity and hope; they help them enter or become more productive in the work force; and they help them help their own families and communities rather than needing help.

 

Investing in human capital is what Labor has always been about -- although we have not often used that language.

 

So beware the argument "we know it's not fair, but it's good for the economy". Check your pockets quickly after someone gives you that line. It's an eloquent smokescreen for redistributing benefits in favour of the group whose so-called attachment to "the economy" is really a tawdry excuse for trying to ensure they get a larger share of it.

 

The battle between progressives and conservatives should not be about prosperity versus fairness.

 

Labor believe that a strong economy and a fair society reinforce each other. The conservatives believe they are in conflict. That's where the battle lines should be drawn. That commitment to the economics of human capital investments is the second step in us winning the war for public opinion.

 

3RD STEP  – INVESTMENT VERSUS CONSUMPTION

In business you learn the difference between the P and L and the balance sheet -- the difference between what you get for today and what you invest for tomorrow. The purpose of government is not to take money from individuals with one hand and give the same money back to the same individuals with the other. The purpose is to pool the resources of the community to get to the scale where we can invest in the things that we all need and which bring us all future benefits.

 

Given what we have learnt about human capital, Labour is the party of Investment and the conservatives are the party of Consumption. We create the wealth, they spend it. Not content with that, they'll borrow more and spend that as well or sell off the balance sheet to prop up the P/L.

 

In Australia, Labor created compulsory superannuation to create a huge savings pool for needed investments and to provide for workers’ retirement incomes. The conservatives opposed it. Labor took high school completion rates from 33% to 75%. They've flatlined under the conservatives. Labor oversaw value-added exports growing 13% compound per annum. It's flat-lined under the conservatives.

 

The conservatives have visited upon us the greatest debt-funded consumption binge in our nation's history. We rank among the worst on the planet in our capacity to pay our way in the world. And this despite having the best commodity prices in over 50 years. We've had the best party on the block because we've borrowed the most money to buy the most beer.

We build it, they plunder it.

In the US, Clinton fixed the deficit, Bush has plundered it.  In Australia, Howard has taken the windfall gains of the greatest mining boom in 2 generations and squandered the lot in a vain attempt at re-election. I note that here John Key promises a flood of tax cuts to inflate demand while simultaneously promising lower interest rates.

 

Positioning ourselves clearly in the public’s mind as the party of Investment is the third step in winning the war for public opinion.

 

STEP 4 – CAPITAL AND MANAGEMENT

During what I call “the last war”, class conflict between capital and labour used to define the political spectrum.

But there is a different issue confronting modern capitalism and Labour has a fresh opportunity to make a difference. It's the tension between the owners of capital and senior management. And with workers retirement incomes now tied to share ownership in the nations' largest companies, labour can be allied with capital.

So when management compensation goes up 15-20% per annum but shareholder returns are significantly less, what do we see? A silent redistribution of wealth from shareholders to management. When 80% of M&A deals destroy shareholder value, but 80% of the same deals lead to increased management pay packets, what do we see? A silent redistribution of wealth from shareholders to management.

The dirty little secret of management compensation is that Boards start with objective advice on industry comparables but then decide to pay their management in the top quartile of their peers. That's right, 90% of management teams are somehow "top quartile" performers! It's almost Orwellian. Contrary to the apologists claims, Boards are not paying to meet the market, they're paying to beat it. Hence the ever-upward spiral.

“Belling the cat” on management not representing the interests of shareholders is our fourth response. The conservatives will instinctively take the side of management.

 

5TH STEP - PRICING EXTERNALITIES INTO THE MARKET – SEEING GOVERNMENT AS MARKET DESIGNER

Our discussion of externalities before may have seemed rather esoteric, but two words can immediately bring it to life for you – Carbon Trading. Pricing externalities into the market.

 

The push for emissions trading is but one very powerful example of the need to bring these “Externalities” – these accounting errors – back into the equation. Self-evidently there is a massive cost in carbon emissions. If that cost were priced back into the market, producers and consumers would behave differently. And so we have one of the central issues of our times as a vivid illustration of the previously obscure economic concept of externalities.

 

But the idea of externalities is not limited to environmental damage. If, as we have suffered in Australia, you have a far-right wing nut conservative Government committed to destroying the rights of working people to bargain effectively, you see whole new classes of externalities appearing.

 

If you can be asked to be available at any time for a shift on an hour’s notice, this obviously has a cost. It creates a cost for childcare, a cost for plans otherwise forgone, a cost in lost sleep, cancelled appointments, stress. If you receive no, or vastly inadequate compensation for those costs, then they too have been “externalised” – taken out of the equation by the accountants. They haven’t gone away – they’ve just been moved onto someone else – in this case working families – and off the books of the employer in question.

 

So in some ways, many of the things that progressives have traditionally opposed about markets is not really the markets at all – it is the failure of those markets to correctly value things – the failure of the accountants to measure and price those costs – and enable them to be fairly traded in the marketplace.

 

In some ways much of the whole of progressive politics can be seen as a battle to have the real value of things measured – to have the externalities brought back inside the equation – to have them properly measured and priced – to enable people to make rational decisions about them.

 

This problem is not confined to costs. Consider our case of early childhood investments.

 

If it’s such a great investment, why are we having cake stalls to fund it ? Because we haven’t counted the real value – all of these benefits – back into the equation. Those who invest in early childhood have no way of capturing a share of the returns because the accountants haven’t measured and priced them.

 

Rather than trying to separate our environmental and social accounts into a triple bottom line, I would contend that Labour would be better off pursuing a more difficult but ultimately more rewarding approach – seek to have the externalities properly priced into the market. Thus we would retain a “single bottom line”, but with radically different results.

 

Seen this way, a major role of Government is therefore to design markets correctly. To ensure that the true costs and the true benefits are measured and priced. In many cases, if this were done properly, Governments could then get out of the way and let the market operate – but the results would be stunning different to what we have seen from the poorly designed and, in some cases, deliberately distorted markets that we have inherited in the past.

 

The central role of conservative governments has not been to create markets – it has been to create or perpetuate and protect distortions and externalitiesthat their powerful backers wish to see continue.

 

The role of progressives is not to oppose markets, but to make them work well – to design them better – to make them truer – to value ALL, not just SOME, of the costs and benefits of any human activity.

 

That is our fifth step – seeing Government as market designer and ensuring externalities are priced in properly. Trust me, that’s enough work to keep us busy for decades!

 

THE ROLE OF IDEAS INSTITUTIONS

 

I hope you found those 5 ideas stimulating and useful. Now I want to turn to the question of how we ensure that our ideas marketplace continues to be rich and fruitful. And to do that, we must look beyond just the Parliamentary Party.

 

Our pollies have their formal Parliamentary roles and processes, all their constituent concerns and social functions, all the pressure groups and portfolio responsibilities and a relentless 24 hour media cycle to contend with. Above all else, everything has to be done under constant enemy fire. Most of them would also like to see their families! It’s a tough job.

 

Yet many of us think the Parliamentarians are the only ones responsible for developing the big picture ideas and then winning over public opinion on them as well. Of course that is an important part of their roles, but as we saw from the example of the Powell memo, it is the development of supporting ideas institutions that really moves things along.

 

All of us can play a role in that process. All of us should. While we obviously hope and expect our elected leadership to play a high profile role in this effort, it shouldn’t be a solo-hand. If that’s what we expect, we are destined to be disappointed.

 

Our job surely is to create an environment where principled positions are in tune with public opinion, where progressive values are widely accepted and where resulting policies make sense to ordinary people. That’s an environment where Labour is best placed to win elections and the Leader and the Parliamentary Party can have maximum effect.

 

Similarly, we need to find new ways of organising the thousands of progressives out there who are not so interested in traditional political engagement.

 

In Australia, we founded an internet based campaigning organisation called GetUp! (www.getup.org.au) Two years later it has over 200,000 members. And it’s giving John Howard hell. When GetUp produced their own ad on climate change, they asked the membership to fund putting it on TV during the AFL grand final. They asked for $110,000. In 48 hours, the membership donated over $250,000!

 

There’s plenty of scope for non-Parliamentary forms of politics.

 

But we also have to be willing to Invest in Ideas

 

When it comes to raw idea development, in Australia, we have been outspent 8:1 by the conservatives over the last 20 years. While they have upwards of 25 people working in conservative think tanks like the so-called Centre for Independent [sic] Studies and the IPA, the progressive side of politics currently has just four. And that’s double what we had a year ago, before we at the Australian Fabians launched our new Think Tank, Per Capita.

 

Contrast this with our colleagues in the UK where about 150 people are involved in a wide range of think tanks like IPPR, Demos, the Fabian Society, Social Markets Foundation, Policy Network and so on. Even adjusting for population, we’d have perhaps 50 people to be comparable. In New Zealand, on the same metrics, there’d be a dozen or so.

 

Think tanks are a beginning, not an end to the process of winning public opinion. But they are vital. I’m thrilled to hear you are establishing your own Fabian Society and therefore joining the international fraternity of progressive Think Tanks. I look forward to the exchange of ideas across the pond and hope and pray we’ll both have Labour Governments into the future to implement them.

 

CONCLUSION

 

So Labor is and always will be the Party of Ideas. Those ideas evolve and change – they progress – that’s why we’re called “progressives”. The ideas change, but the values they serve never do.

 

We must be proud of our heritage and proud of our tradition to keep vibrant enquiry and open ears to the next set of promising ideas. Incorporate the good ones, discard the bad ones and keep moving forward. We must refresh our ideas – particularly in long term government – and to do so we must work beyond just our Parliamentary Party.

 

The single idea people – whether they be far right or far left – are all fundamentally conservative. They serve the idea at the expense of values. While they claim superiority in economics and morality, they have neither.

 

Our job is to give the people a better choice. A harder working choice. A harder thinking choice. A Party of Ideas that serves the great bulk of the people and responds to a changing world with the security of unchanging values and the dexterity of new ideas.

 

If Labour stays the party of ideas, we will always be the better choice.

 

THANK YOU.