The Third Way may be good for Latham

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					The Third Way may be good for Latham
The Age - December 22, 2003

The ALP could learn a few lessons from the actions of Tony Blair's New
Labour, writes David Hayward.

Since winning the ALP leadership, Mark Latham has said a lot about
opportunity and social progress based on merit, about responsibilities as a
balance to rights, about hard work and the social recognition that comes from
this, and about the importance of enterprise as well as fairness in a modern

These are all key phrases that attach to the philosophy known as the Third
Way, of which Latham is Australia's best-known proponent, having published
several texts on the topic.

But what is the Third Way and what can Australian Labor learn from it?
The Third Way is the name given to the political program followed by Tony
Blair and Bill Clinton. Interestingly, as a political philosophy it has not been
very successful. Of the world leaders who most fervently advocated it in the
late 1990s only Blair remains in office, while Gerhard Schroeder the German
leader who once dabbled with his own version (the "New Centre"), has
effectively renounced it.

By giving it an academic underpinning as a response to modern trends, British
sociologist Tony Giddens gave the Third Way some credibility for a while, but
even in academia interest has petered out. The reason is not difficult to
locate. It is that the Third Way never added up to a coherent philosophy.

The principal characteristic of Blair's "New Labour" Government has been
pragmatism: a willingness to use different methods of governance to achieve
its aims. Some of these have been successful, others less so, but they have
not all drawn on a single philosophical framework.

Indeed, the familiar trope of "Blairism" has been the insistence that the
polarities of old-style politics no longer apply. Governments can promote
enterprise and fairness, they need not choose between them; people should
have both rights and responsibilities; government should be tough on crime
and on the social causes of crime.

The Third Way is best thought of, in fact, not as a philosophy from which one
might be able to read off what a government is espousing it will do next, but a
post-hoc description of what such governments have done. Put simply, the
Third Way is whatever the New Labour Government is doing at any one time.
But in this light the experience of the Blair Government is highly instructive.
First, New Labour has not been committed to neo-liberal-style balanced
budgets. It has followed a classically Keynesian line, building up surpluses in
economic boom times but then borrowing heavily when the economy is
weaker. Under Blair's rules, borrowing for current expenditure must be paid
back over the economic cycle, but borrowing for investment in infrastructure,
schools and hospitals is not so limited and has been significantly increased.
Second, New Labour has explicitly and openly increased taxes to pay for
better public services - by as much as 2 per cent of national income. In 2002,
most notably, Blair's Government raised social security contributions, a form
of income tax, and earmarked the revenue specifically for the National Health
Service, winning public approval in the process for boldness and the values
that underpinned it.

Whereas Labor governments in Australian states have been very cautious
about increasing public spending, even implementing cuts, the Blair
Government has injected huge additional sums into public services, including
annual rises of 5-6 per cent for the health and education services for each of
the past four years. These spending increases have been accompanied by
vigorous programs to try to improve public service performance (not all of
which have succeeded).

Third, core British public services remain free at the point of use. The Blair
Government has refused to countenance any patient payments for health care
or expected parental contributions to state schools. It is true that Blair is now
trying to introduce a new HECS-style system of university tuition fees - over
which, incidentally, he now faces a potentially disastrous parliamentary revolt
- but user payments have always been a feature of British higher education; it
is the mechanism that the Government is proposing to change.

Fourth, the Blair Government has been the most redistributive Labour
administration since the Second World War. Major efforts have been made to
reduce the poverty left by previous Tory administrations. Policies include the
introduction of a minimum wage as well as in-work tax credits to support those
in low-paid jobs, the raising (in some cases almost doubling) of social security
benefit levels for families with children and for pensioners, the implementation
of active welfare-to-work schemes that have reduced youth unemployment to
almost zero, and the investment of large sums in community and urban
renewal programs.

Fifth, among other environmental policies, Blair has introduced an energy tax
on business and a major investment program in energy efficiency and
renewable energy.

All this suggests that the impression of Blair as a neo-liberal is wide of the
mark. His is a moderate social democratic government - operating in post-
neo-liberal times, to be sure, but with a core commitment to left-of-centre

Blair's Government is pragmatic, but effective, not to mention enormously
successful in political terms at least. Many in Britain would argue that in
today's unequal and globalising world its moderateness has proved
insufficient to change British society in any fundamental way. But it has, at
least, halted the drift to greater inequality and loss of public goods, and it has
been considerably more radical, certainly, than most of the Australian Labor
state governments that now enjoy power across the country.
Australia and Britain are different. No one would suggest that the ALP should
model itself on the Blair Government, or that the Third Way offers a coherent
political strategy. But it might repay Mark Latham and his colleagues to ignore
the labels that are touted around, and instead have a close look at Blair's
domestic policies.

They might see how far some Australian orthodoxies about what ALP
governments can and should do might be challenged, to Labor's electoral

David Hayward is the director of the Institute for Social Research at Swinburne University.

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