Kevin, we need to talk about you

Labor ministers need to get the PM to take a leaf from the Hawke-Keating reform book. If the first term of a Labor government is not to be a complete waste of time then serious conversations have to take place.

In the context of a new mining boom, federal Resources and Energy Minister Martin Ferguson has argued the case for greater labour-market flexibility. Thank goodness someone in this government is awake.

There is a real Australian economy that has nothing to do with school halls, windmills, solar panels, insulation, an emissions trading scheme or Kevin Rudd. We are an energy superpower: the largest exporter of coal, the second largest exporter of uranium and the fifth largest exporter of liquefied natural gas.

Moreover, many of Australia's best minds have spent their life perfecting ways of developing the country's resources while the rest of us have been intent on feeding off their riches.

There is vast demand for our resources: 1.6 billion people in the world do not have electricity. By 2030, in China alone, there will be 220 cities with more than one million people. But, as Ferguson says, to meet the challenges of the new boom a new wave of productivity growth is essential, built on the reforms that have strengthened the Australian economy progressively during the past 30 years.

If the first term of a Labor government is not to be a complete waste of time then some serious conversations have to take place within the Labor caucus about what it is in government for.

In fact, the immediate challenge is to form a caucus around former union officials - Ferguson, Simon Crean, Bill Shorten, Greg Combet, Richard Marles - and knock some sense into a Prime Minister who lives on another planet. They may take as a starting point the role played by trade union leaders in the Hawke and Keating governments.

There were two main conversations in the early Hawke governments, one between the government and the trade unions, the other between bosses and workers. The former was designed to hold down wages in lieu of a social dividend and to smooth the path to a post-tariff economy. The latter was to overcome the historic barrier between bosses and workers over productivity. Trade union leaders helped those conversations mightily.

The significance of Bob Hawke and Paul Keating in this industrial relations agenda was to turn Australia from the land of the long weekend into the land of the engaged worker.

It was no longer acceptable to nick off at lunch on Friday and leave the boss to fill orders.

The apparent triumph over the forces of darkness, aka the Howard government's WorkChoices legislation, and the various ostensible protections of Labor's Fair Work legislation have led Rudd Labor to believe that it is preparing a way for a more productive economy.

The Treasurer and the Prime Minister have spoken often of the need for increased productivity, but it is a monologue, one with no particular audience. They have no means of engaging the workforce, no partners to do the job.

For years the ACTU leadership has been based on public sector - mainly teachers union - officials whose experience is altogether different from those who deal with the private economy.

Those who remember the mining boom of the 1980s remember most the attitude that the workers should be as rapacious as the miners. The result was a short-lived boom and a wages breakout that started in the mining sector, which could afford it, and spread to all sectors of the economy, which could not. When the boom crashed, the resultant wages overhang and high unemployment took years to unwind.

We see clearly now that the global financial crisis was, for Australia at least, a brief interruption to a long-term resources boom and deeper engagement with China. It was not the end of capitalism, as essayist Rudd led us to believe. The time has come for a more serious consideration of how to set sail for growth.

The themes that Hawke brought to government - recovery (economic), reconstruction (infrastructure) and reconciliation (industrial) - were universal themes that could engage the workforce in an economic dialogue. The Rudd government has no language and no insight into economics.

This was always going to become a problem when economic management came to the fore. The burgeoning environmental agenda and, somewhat contrarily, the global financial crisis, clouded the path to ongoing reform of the Australian economy.

A seminal green paper from 1993, the Prime Minister's Committee on Employment Opportunities' Restoring Full Employment, posed a hard question: “Are we prepared to reduce constraints to business expansion, such as disincentives to hire people?”

This government has to come up with an answer to that question. Labor does not have to revisit incomes policies or trade union accords.

Those devices played their part but are no longer necessary. What is necessary is that workers and bosses can cut a deal keeping in mind the viability of the business in which they are engaged, not a business thousands of kilometres away in the Pilbara in northwest Western Australia or in the Surat Basin in southwest Queensland.