Inside Story

How Labor lost New South Wales

A culture of entitlement helped undermine policy-making under four Labor premiers, writes Andrew West

Andrew West 30 April 2012 3247 words

NSW treasurer Eric Roozendaal with premier Kristina Keneally (above) shortly before the 2011 state election: the decision to resurrect electricity privatisation magnified Labor’s defeat. Tracey Nearmy/AAP Image

From Carr to Keneally: Labor in Office in NSW 1995–2011
Edited by David Clune and Rodney Smith | Allen & Unwin | $39.99

THE story of the devastation of the NSW Labor Party in 2011 begins on the night of one of its more miraculous victories. On Saturday 24 March 2007, the premier, Morris Iemma – whose government had been returned with an unexpected margin of comfort after twelve years of Labor rule – declared the result “a mandate with a message.”

Labor had won fifty-two seats in the ninety-three-seat Legislative Assembly. Even though the party had suffered a swing against it, the margins built by Iemma’s predecessor, Bob Carr, at the 1999 and 2003 elections provided enough insulation. For the members of that government, and for the thinning ranks of Labor’s membership, it was an extraordinary result. Just five months earlier, a junior minister in Iemma’s government had been arrested and charged with sexual offences against a minor, then a senior minister had been forced to quit after misleading parliament and, in the final days of the campaign, a breakdown on Sydney’s rail network crystallised in voters’ minds the long-running story of neglect and failure in public transport.

Labor had also fought the 2007 election in an atmosphere of hostile coverage by the media. The Sydney Morning Herald and the Daily Telegraph published front-page editorials urging its defeat. If Labor could prevail in such a climate, it was, surely, politically invincible.

But the look on the face of Iemma’s deputy premier, John Watkins, who had spent the evening as a member of the ABC election panel, told a different story. He looked not so much surprised – because polls had been turning back in the government’s favour since the previous November – as ashen. Was this really the election to have won?

If the polls had been accurate in forecasting a win for Labor, they had also been accurate in reflecting the reluctant, even grudging support of many voters. Iemma acknowledged as much when he said, “Now I know there are some tonight who have voted for the Labor Party with some reservation, and to them I say, ‘Please know that I have heard your message.’” But in a comment that would cloud the collective judgement of NSW Labor for most of the last term, he added, “Don’t believe the rubbish that this is not a good government. It is, and we are going to work very hard to make it even better.”

What seemed lost on Iemma, just as it was lost on Paul Keating and his loyalists after the 1993 federal election, was that Labor had not won a victory; it had won a reprieve. Its near obliteration in 2011 was guaranteed that moment in 2007 when people felt they had little choice but to re-elect a failing party that had been shedding its values for more than a decade.

I accord the 2007 election such prominence because, despite the mythology – the elder statesman of NSW politics, Neville Wran, called it “probably one of [Labor’s] greatest victories in history” – it highlights the fragile and increasingly resentful nature of support for Labor over sixteen years, ending with the 2011 catastrophe, in which Labor won only 25 per cent of the vote after a two-party preferred swing of 17 per cent.

From Carr to Keneally attempts – admirably and successfully – to give a balanced account of Labor’s long stretch in power, analysing its policy successes and failures. Its triumphs were few in number but strong: protection of the natural environment and creation of national parks; Scandinavian-standard literacy results for primary schoolers; improvements in child protection and disability spending; restoring balance to industrial relations. Its greatest failure – public transport – is best summed up in the phrase, “Swedish prices for a Mongolian level of service.”

But as necessary as these policy accounts are, the real story of Labor’s term is political. Which is why the standout chapter in the book is the opening missive by the former Labor minister, Rodney Cavalier, who has become the foremost chronicler of the party’s decline since losing his seat in 1998.

This is not to suggest that Cavalier – who wrote the 2010 bestseller Power Crisis: The Self-Destruction of a State Labor Party – dwarfs or diminishes the assessments of policy or analyses of the 2011 defeat by the other contributors to the book, some of the best minds in Australian public policy and psephology. But his brutal prose puts everything in context. The structure and processes of the Labor Party are everything because they determine everything. Who will decide the policy? Who will choose the candidates who will represent those policies in the electorate? Who will decide the leader who will explain those policies to the voters?

“In 2011, the Labor Party is based on appointment by grandees,” writes Cavalier. “It is a party of, by and for insiders. As the party avoids meaningful reform, the status quo has defenders who note the electorate is not interested in party reform. They say the ALP is distracted by such navel gazing. What the electorate has worked out is the quality of modern Labor governments. How could Labor be providing a critical mass of capable MPs, given what the ranks of the party has been reduced to?”

Since the early nineties, when Cavalier abandoned plans to return to state parliament and dedicated himself to scholarship and journalism (and cricket), he has been something of an Old Testament prophet crying into the wilderness. But he was among the first to see that Labor would reap what it sowed, and he argues that the destruction of vital party democracy in New South Wales, “incremental until 2002–03,” accelerated when the party machine, led by Eric Roozendaal, imposed on safe seats an army of candidates who would later fail embarrassingly in public office.

But he sidesteps the culpability that Bob Carr – whatever his extraordinary intellectual and rhetorical gifts – must accept. Put simply, Carr lost interest in the job of premier and, rather than consider the premiership the greatest honour of his life, saw it as a favour he was doing for the party, if not the electorate.

WHAT few would admit, even today, is that NSW Labor had been sustained in office since 1996 largely by the performance, policies or image of the three Coalition leaders who faced Carr and Iemma at the 1999, 2003 and 2007 elections. Kerry Chikarovski had been a strong minister in the previous Liberal–National government but in 1999 lacked confidence and preparedness. John Brogden was arguably the most talented Liberal of his generation but he turned just thirty-three a week before the 2003 election. Peter Debnam had served his country as a naval officer but his personal style and his promise to cut the public sector by 10 per cent, threatening jobs in key marginal seats, cost him the 2007 election.

And the presence of a long-term conservative government in Canberra, against whom enough voters wanted the bulwark of a state Labor government, especially after John Howard introduced WorkChoices in 2005, was always one of NSW Labor’s best assets. Iemma acknowledged as much when he said on election night, “Tonight’s result is a message for me but there’s also a message for someone else and that is John Howard. The people of New South Wales have rejected WorkChoices.” Just as Howard’s popularity had ebbed conveniently before the 1999 and 2003 state elections, in 2007 he rendered his final service to NSW Labor.

In the aftermath of the 2011 devastation, some attempted to quarantine the problem to specific scandals in the last term of government. One Labor minister had quit after allegedly placing his hand on the knee of a female staffer, another after dancing in his underpants; the anti-corruption commission found that Labor MP Karyn Paluzzano had falsified staff pay slips, not to gain money for herself but so she could assign taxpayer-funded staff to campaign work; minister Ian Macdonald resigned after claiming the cost of a private airfare as a work expense; minister Paul McLeay quit after using the office computer to surf legal adult porn and gambling sites.

But to argue that personal scandals brought down an otherwise good government is to promote the biggest myth of all. Scandals like these are highly damaging in politics but not necessarily lethal. Between 1992 and 1995, a series of scandals beset John Fahey’s Coalition government. The then NSW agent-general in London, Neil Pickard, took taxpayer-funded trips to Europe with an American evangelist; Liberal MP Tony Packard, who had run a famous car dealership, was found guilty of bugging his customers; police minister Ted Pickering quit after a dispute with the commissioner, and Pickering’s successor, Terry Griffiths, resigned after admitting to being “a toucher” and “a kisser” with his staff. With alliterative flourish, Bob Carr, then opposition leader, would declaim: “Pickard, Packard, Pickering, Griffiths!'” Another Liberal MP, Barry Morris, was found guilty, and later jailed, for leaving death threats on the voicemail of a Greens councillor.

And yet Carr won the 1995 election by just one seat, in a sleight-of-hand victory. The Coalition won almost 44 per cent of the primary vote and 52.7 per cent of the two-party-preferred. As the Herald’s Alan Ramsey observed at the time: “What all this means is that NSW Labor in 1995, whether Bob Carr forms a government or not, is one of the least popular, in terms of base electoral support, the state has seen in eighty-five years. And should it indeed gain office in the next few days, it will do so with the lowest winning vote it has ever recorded in all that time.”

Neither Fahey nor his party was humiliated by the result, just frustrated. The Coalition was out of office but not out of business, despite the string of scandals, and within a year it would provide Howard with more than half the seats he needed to form government at the 1996 federal election.

By the beginning of NSW Labor’s fourth and final term, in March 2007, it is arguable that it had survived the most sordid scandal of all – the arrest and indictment of the former Aboriginal affairs minister, Milton Orkopoulos, on charges of sexual assault of minors and drug supply.

But few of the personal scandals that erupted in Labor’s final term were significantly worse than those that had beset Fahey’s government. For example, the manufactured scandal around Labor’s transport minister, David Campbell, who resigned after Channel 7 filmed him leaving a legal gay bath house, backfired on his accusers, as the network’s management and the Australian Communications and Media Authority acknowledged after an avalanche of complaints about the report.

Labor’s scandals were peripheral, not central, to the public’s increasing hatred of them. In the public mind, they merely affirmed, rather than brought about, their decision to vote against Labor. The report of the 2011 state election campaign review by John Watkins and Queensland party secretary Anthony Chisholm noted: “It is hard to explain why such a break-out of scandal occurred in this last four years of a government that had largely been resistant to such scandal over its previous twelve years.” Perhaps, they wrote, “after the unexpectedly comfortable victory in 2007 some caucus members believed that we would never be beaten and saw this as permission to behave as they wished.”

APART from the self-serving implication that for twelve of its sixteen years in office Labor had been a model social democratic government, this observation points to the broader issue behind Labor’s demise: the culture of entitlement and the way it corrupted policy.

The most obvious example was the attempted privatisation of NSW electricity assets by Iemma and his treasurer, Michael Costa, after the 2007 election. One of the myths perpetrated after the 2011 annihilation is that the decision of the 2008 state Labor conference to block privatisation – and the decision of a small group of courageous, dissident Labor MPs led by Lynda Voltz and Penny Sharpe to abide by that conference decision, even if it meant crossing the floor of parliament – was ultimately to blame for the later election defeat.

But this narrative overlooks one simple fact. Labor’s problems did not begin when the conference voted against privatisation; they began when Iemma and Costa flirted with privatisation. An analysis of the polls by Antony Green for the NSW Parliamentary Library shows that in January 2008 – as Iemma and Costa made plain their determination to defy party and public sentiment and proceed with the sell-off – Labor’s poll ratings dipped to 34 per cent and continued falling.

Iemma and Costa had no mandate to sell a publicly owned asset. Quite the opposite. Before the 2007 election, Iemma had given assurances that he would not privatise. Opposition to asset sales was deep and broad. The secretary of Unions NSW, John Robertson, who led the campaign against privatisation, and the unions and the Labor Party members who overwhelmingly supported him, were reflecting the attitudes of between 63 and 85 per cent of voters, according to the Herald’s Nielsen poll and the Essential Media poll.

The NSW public had never indicated support for electricity privatisation. It is indisputable that in 1997 – when Carr and his treasurer, Michael Egan, presented their plan to sell off power – the Labor conference saved an indifferent first-term government from defeat at the 1999 election by voting down the proposal. Kerry Chikarovski and the Coalition’s promise to sell power cost them dearly at that election, even though they tried to entice voters with a promise of $1100 each in compensation. The architect of the Coalition’s privatisation policy, deputy leader Ron Phillips, even lost his seat on the anti-privatisation backlash.

It was the decision of the last Labor premier of New South Wales Kristina Keneally – urged on by Costa’s successor as treasurer, Eric Roozendaal – to resurrect the privatisation, and then prorogue parliament to prevent scrutiny, that magnified Labor’s 2011 defeat. It would be unfair and inaccurate to blame Keneally for the fact of Labor’s downfall. The accumulated grievances of sixteen years in office, especially over public transport, made a landslide defeat, with loss of at least twenty of Labor’s fifty seats, inevitable. But it was arguably her poor political judgement – despite other attributes – in the last months of her government that exacerbated the defeat, perhaps by as many as ten extra seats lost. According to the Watkins–Chisholm review: “It is arguable… that these decisions meant the campaign was unable to claw back support that would have ensured that NSW Labor may have won some of the seats that were, eventually, narrowly lost.” As David Clune, one of the editors of From Carr to Keneally, writes, the bungled privatisation and the cover-up by proroguing parliament, “called into question Keneally’s credibility and competence and irretrievably tarnished her cleanskin image.”

The repeated pursuit of privatisation by Carr and Egan, Iemma and Costa, and Keneally and Roozendaal, suggests a culture in which some believe that, having accepted all that the Labor movement has to offer – jobs in unions, seats in parliament, positions in the cabinet, the leadership itself – they are free to defy the movement and pursue policies antithetical to social democracy. The Watkins–Chisholm report found that “the government became dominated by a more narrow and strident policy direction that appeared uninterested in, or aggressive to, these traditional policy strengths. This caused some division and bitterness in caucus, as some saw the government align itself with business and Treasury over the broader community interest.”

Of the “traditional policy strengths” that NSW Labor abandoned, the most obvious was transport and it became the most emblematic policy disaster. Carr’s boast that his government had undertaken the biggest metropolitan rail project in Australia is demonstrably false. After promising a thirty-kilometre rail line between Parramatta and Chatswood, the Labor government opened only thirteen kilometres of track between Epping and Chatswood, with just three stations. It came three years later than promised and, at $2.3 billion, at more than twice the original cost. By contrast, the WA Labor government built a seventy-two-kilometre line from Mandurah to the Perth CBD for $1.22 billion.

The estimated number of rail building plans that NSW Labor announced then abandoned or shelved varies between four and eight, but I can identify at least five: those announced in 1998, 2001, 2005, 2008 and 2011. As Watkins–Chisholm reported, “the failure to complete or even commit to viable transport plans in the last years of the government clearly had an impact on the electoral result.” While undoubtedly true, this observation exculpates the Carr government, which was primarily responsible for the infrastructure disaster in public transport.

BUT underlying all these failures and scandals was a much bigger problem: Labor had shed its values. It was impossible to discern any general philosophy behind the Carr, Iemma, Rees and Keneally governments, beyond a few platitudes about quality public health and education, which either side of politics could easily utter. After all, who is in favour of poor quality public health and education? As Clune, explaining why Labor lost, writes (with a reference to Ben Chifley’s famous “Things worth fighting for” speech), “By 2011, few ALP supporters could identify the ‘things,’ let alone be bothered to fight for them.”

In 2004, US President George W. Bush eked out one of the narrowest victories in modern American politics, despite the growing casualties and disorder in Iraq, and a series of localised recessions in key states such as Ohio. This is admittedly a contested theory, but many analysts attributed Bush’s survival to the support he won from so-called “values voters.” These are the voters who are willing to overlook or accept failure in governments if they are convinced their candidate believes in a set of values. These are the voters who can sustain you through hard times. If they cannot keep you in office, they can at least keep you in business.

But in 2005, when I was NSW political correspondent for the Australian, I interviewed Carr on the tenth anniversary of his becoming premier. I asked him what he believed in; what ideals guided his government; what was the nature of the Carr project. After thirty years of fidelity to social democracy, Carr said, “I accept that I could no longer be described as a social democrat.” He had abandoned the creed that enticed him into politics and motivated his quest for power. He called himself a “restless reformer who place[d] the highest priority on saving the natural world, so much under threat, and driving kids from disadvantaged backgrounds through an education system that [was] academically and vocationally challenging and rigorous.”

Noble intentions, to be sure, but they essentially made Carr a preservationist who liked reading difficult books. It was hardly an agenda for enduring Labor reform. If, like Carr, Labor leaders say that governing is no longer about social democratic philosophy but merely the efficient delivery of services, where does that leave them when those services fail, as they did so spectacularly in New South Wales?

It is a purely rhetorical question. •