Busting political cartels and limited visions

And while Labor understands the need to focus more attention on the disadvantaged it supports excessively bureaucratic delivery mechanisms underestimating how much poorer parents and children would benefit from having access to greater school choice.

Promoting participation in the economy is where this politics comes into its own.

It is not left wing to support participation enhancers like childcare nor to support the right for union representation in the workplace as long as it’s governed by laws promoting work and productivity.

It’s not right wing to impose mutual obligations on the unemployed nor to support more wage flexibility if equity can be better achieved through tax and transfer measures.

While Howard’s WorkChoices emphasised greater individual choice in employment contracts it was too deaf to the distributional implications.

Yet the ALP does not understand that businesses should not be the instruments for achieving society’s equity goals without their being significant employment consequences.

Employment Minister Julia Gillard’s bizarre recent criticism of the Fair Pay Commission decision to freeze minimum and award wages during a period of weak labour demand shows how blinkered the modern ALP is to this reality.

A focus on participation would retain liberalised employment arrangements, including moving over time to less binding minimum and award wages, but would offset the distributional implications with a proper system of earned income tax credits or a guaranteed minimum income through a negative income tax.

This policy seeks full employment and no compromise on this goal. This is a very powerful rhetorical position for any leader.

This policy has been argued for by both the left and right in economic circles and has begun to be branded as a Jobs Guarantee by left wing economist Bill Mitchell from Newcastle University who argued at a recent Liquor Hospitality and Miscellaneous Workers Union conference for a minimum wage pay subsidy as the optimal policy for this union and its members. This is little different from a negative income tax in practice.

Innovation policy is another area where participation politics shines above the approach of trying to pick winners. It argues that innovation happens through the actions of all business when they have access to more educated staff, efficient tax and regulatory frameworks, and rarely through industry plans. It argues that we can all benefit from the creative destruction of the market as long as significant income and training support is made available to help workers adapt to the pace of change.

The ALP must be weaned off its addiction to command and control solutions. It is possible to support carbon abatement through market-based mechanisms like an emissions trading scheme without having to directly support particular producers and technologies.