Progressive intellectuals have poisoned the well for Labor

The NSW economy grew by a sluggish 2.2 per cent on an average annual basis since the Olympics, the lowest growth rate of all the states and well behind the national growth rate averaging 3.1 per cent. So serious has the state's economic underperformance been that its share of national GDP actually fell by two percentage points from 2001‑02 to 2009‑10.

One of the contributing factors toward state Labor's underwhelming economic record has been its unpreparedness to dramatically improve the tax competitiveness of the NSW economy. State business tax benchmarking analysis undertaken by the Institute of Public Affairs has shown that NSW is consistently ranked as one of the highest taxing jurisdictions in Australia.

Even taking into account NSW's status as a high taxing state, the state budget papers show that in six of the past eight fiscal years growth in government operational spending had outstripped growth in revenues (including commonwealth grants). In addition, the government has failed to meet a number of financial sustainability targets, including in terms of net debt, that it had set for itself in legislation.

There is evidence to suggest that there also exists a significant degree of dissatisfaction amongst NSW voters in terms of the management and delivery of services by the Labor government.

These include an inability to deliver on commitments for significant new rail services in Sydney's west, concerns about the availability of policing services to prevent crime particularly in urban and regional areas, and chronic hospital waiting lists directly related to a sufficient lack of new beds in the system.

It is notable that NSW has suffered the greatest average loss of people to other states over the past decade, with economic concerns and service delivery problems surely playing some role in this regard. Instead of waiting to register their disapproval of the Carr‑Iemma‑Rees‑Keneally government through the ballot box this week an average of 24,000 people each year for the past ten have already voted in disapproval with their feet out of NSW.

Clearly the NSW Labor brand became political poison even prior to the Icarus‑like figure of former Labor Prime Minister Kevin Rudd crashing back to earth in mid‑2010. However, given the presence of the major parties at both federal and state levels and the extent to which the commonwealth now interferes with state responsibilities, election outcomes at the state level do not entirely hinge upon regional or local issues alone.

While Keneally and her band of ministers and backbenchers were, according to the polls, already at a point beyond political redemption, it appears that the announcement of the carbon tax proposal by federal Labor has only reinforced negative, and growing, perceptions of Labor everywhere as the party of financial pain for ordinary folk.

Indeed, NSW Opposition Leader Barry O'Farrell has capitalised politically on the close association between Prime Minister Julia Gillard and the federal Greens in his continuing efforts to reach out to Labor's traditional working class constituency as well as the growing cohort of 'aspirationals' residing in the outer suburbs of Sydney.

If the electoral coin is to fall in favour of the Coalition's Barry O'Farrell in NSW following Ted Baillieu and Colin Barnett in Victoria and WA respectively, and with Tony Abbott coming within a whisker of consigning Rudd‑Gillard federal Labor to the dustbin of history, the next big question that will be asked in Australian politics is: where to next for the Labor Party?

To help answer that question, it is necessary to consider the tectonic shifts that have transpired within the ALP across the board over the past three decades or more.

As discussed by Edward Shann in his 1930 classic The Economic History of Australia, the Labor Party originally emerged as a political contrivance so that the voice of labour, as opposed to capital, interests could be heard in the halls of assembly. Similarly, Frederic Eggleston stated in the early 1950s that Labor was little more than a trade union class party in which union apparatchiks fashioned its policy and determined its machinery and personnel.