Stay informed for Election 2010 - Labor Factions: Basic Questions Answered

By Andrew McMicking

Why does the ALP have factions? What are the benefits?

Factions have been set up to serve a useful purpose in the ALP. In brief they:

• Allow support to be readily marshalled behind candidates and ideas.
• Provide for a sharing of power between different philosophical or ideological interests in the party.
• Serve as a mechanism to settle disputes.

Any organisation or group of people – be it the workplace, a golf club, church group or school classroom – will always see groups of like minded people associate more readily together. The ALP has recognised this and, through factions, has formalised such groupings. Members and unions in the ALP can now formally apply and join a faction. Each faction usually has a membership list, executive, AGM, bank account, fundraising activity and negotiation committee for dealing with other factions. This formalised nature allows the principle of solidarity to be applied i.e. a decision is made within a faction and all members are bound to abide by that decision.

What is Right and what is Left?

You often here the terms ‘left wing’ and ‘right wing’ applied to factions by both the media and in public discussion. In political/philosophical terms, ‘right wing’ means you tend to take a more conservative and pragmatic view of policy issues, whereas ‘left wing’ means you tend to take a more reformist or progressive view. Support for a budget surplus, tax cuts as opposed to more government spending, a close defence relationship with the US, free market economics, less red tape for business and uranium mining is regarded as ‘right wing’. Support for greater government spending on health, education, disability services and infrastructure, an Australian Republic, recognition of the rights of indigenous people and other minority groups, and opposition to the war in Iraq is regarded as ‘left wing’.

What do we currently have in Qld? Federally?

The ALP, in each State, have factions which can be classified as either Left or Right.

In Qld we have The Left as a left wing faction. However we have two right wing factions: Labor Unity known as the ‘Old Guard’ (refer page 3) and Labor Forum known as the ‘AWU’ faction (as the AWU, Qld’s biggest union, dominates this group). These two factions are now in close alliance together and many view them as one right faction. They technically remain separate entities, though, and many in Labor Unity would not see themselves as a right wing faction, but more in the centre between The Left and Labor Forum.


Key Labor politicians and unions who are members of each faction in Qld include:

• The Left – Anna Bligh, Rod Welford, Margaret Keech, Stephen Robertson, Senator Claire Moore, Senator Jan McLucas, Cr Helen Abrahams, the Missos Union, the Qld Nurses Union, the Manufacturing Workers Union, the ETU and the Transport Workers.

• Labor Unity or Old Guard – Arch Bevis, Kevin Rudd (although he claims to have resigned now), Peter Beattie, Andrew Fraser, Rob Schwarten, Judy Spence, Cr Shayne Sutton, the BLF and the National Union of Workers (the Old Storeman & Packers).

• Labor Forum or AWU – Craig Emerson, Senator Joe Ludwig, Yvette D’ath, John Mickel, Paul Lucas, Cr Victoria Newton, Cr Milton Dick, the AWU (Secretary Bill Ludwig) and the Shop Assistants Union.

In other States, different labels are also applied. For example, in NSW the right wing faction of the ALP call themselves ‘Centre Unity’. Present/past members include Premier Morris Iemma, Graham Richardson, Paul Keating and Laurie Brereton. In Victoria we have Labor Unity (including Simon Crean), an AWU faction (including Bill Shorten) and the Left (including Julia Gillard). There is also a ‘Pledge’ faction opposed to privatisation policies.

When the Federal Caucus, National Conference or the National Executive meets, the different groupings come together and assemble as either left or right. Remaining (few) members are either independent (like Bob McMullan) or the remnants of the Centre Left faction (formed by Bill Hayden in the 1980s and previously very strong in Qld, SA and WA).

How did modern day ALP factions start?

The 1970s and 1980s saw factions formalise in the ALP, particularly in the 1980s when Bob Hawke came to power and Labor was in government in 4 of the 6 states. Some rationality and control was seen as being needed to apply to party processes, to ensure Labor enjoyed a successful period in power (which it did enjoy). The party did not want a repeat of the turmoil and chaos that marked some periods of the Whitlam Government.

In some States, reform or federal intervention was often needed first to pave the way for factions to operate. This was particularly true in respect of Qld and Victoria. In both states a small clique of labor/union interests wielded extreme power. Factions were a way the party could be opened up and power shared more equally. Factions allowed the bulk of branch members and affiliated unions to have a greater say in party affairs.

What does the term ‘Old Guard’ mean? Was Peter Beattie in a faction?

Queensland provides a ready example of how factions came about in the ALP. Back in the 1970s and early 1980s the Qld ALP was an unelectable basket case (we only returned 11 members at the 1974 State election and 2 members after the 1977 Federal election). A key reason why we were seen as dysfunctional was that the party was dominated by a small clique of unrepresentative union leaders – unions affiliated with the old Trades Hall. People such as Jack Egerton (Boilermakers), Neal Kane (ETU) and Arch Bevis Snr (Transport Workers). These people and others were part of the (now) notorious 7-member ‘Inner Executive’ which ran administration of the Qld ALP during this period. It meant power was not shared with the vast majority of party members, and no free flow of ideas within the ALP was occurring.

Reform efforts were led in the late 1970s by people such as the late Dr Dennis Murphy, Peter Beattie, Manfred Cross and Bill Hayden. It led to intervention by the National Executive during 1979-1980. Reforms included:

• An expanded State Conference, with Conferences eventually occurring annually.
• An enlarged inner executive to be known as the Administrative Committee.
• Elections to party positions, such as State Conference delegates, coming about by the proportional representation system – much like how we vote in Senate elections. This ensured one group or clique in the party could not monopolise power.

These reforms were important as it opened up and democratised the party more. Factions formed so groups of like minded people could gain representation in different party forums. At the time factions included the Socialist Left (now part of the Left), the Centre Left (has ceased to exist in Qld) and the AWU (with this union readmitted to the Qld ALP in 1979, after leaving in the late ‘50s, a move generally seen as a positive and ‘healing’ step for the party.)

The Jack Egerton-cum-Neal Kane group which dominated the ALP fought tooth and nail to stop reform efforts in the ALP. Other members associated with this group included Jack Camp, Greg Moran and Arch Bevis (now MP for Brisbane). Because of this they were known as the ‘Old Guard’. Interests associated with Dennis Murphy and Peter Beattie were known as the ‘New Guard’ as they fought for a new administrative direction for the ALP.

Reform did occur in the QLP ALP as the National Executive had the power to intervene. The Old Guard reluctantly accepted the change (although some didn’t) and formed their own faction: Labor Unity. However this group, which now includes Arch Bevis, Andrew Fraser, Michael Dart and Kate Jones, is still referred to in the party and media as the ‘Old Guard’.

Of note, Peter Beattie ended up joining the Old Guard in 1988, having previously been part of the Reform Group, then the Centre Left faction, and then the Centre Majority faction (which was an ill-fated alliance with the AWU). This move virtually guaranteed him preselection in the safe Labor State seat of Brisbane Central – an area dominated by Old Guard members.

Have the reforms of the early 1980s helped in Qld?

The reforms of the time helped the Qld ALP do much better at the 1983 State and Federal elections. At the March 1983 Federal election the ALP won 10 of the 19 seats on offer in Qld. An influx of talented Labor members also occurred in the State Parliament at the October election that year – people such as Wayne Goss, Pat Comben and Ann Warner (with Paul Braddy entering Parliament a few years later). It paved the way for an eventual State election victory under Wayne Goss in 1989 (where Peter Beattie won the seat of Brisbane Central). In the past 10-20 years we have seen high quality people enter State Parliament and climb the ranks - people such as Anna Bligh, Rod Welford and Paul Lucas. The Qld ALP scored massive State election victories at the 2001, 2004 and 2006 polls. At the Federal level, the ALP did superbly well at the 24 November 2007 poll. We received a 7.5% swing to us in Qld and captured 15 of the 29 seats. Wayne Swan, Senator Joe Ludwig and Craig Emerson are all key Ministers in (Qld) PM Kevin Rudd’s Cabinet team.

Although not perfect, our party is more open and involved compared to the dark days of the 1970s and early 1980s. We are widely seen as a professional and well-financed campaigning outfit. We have a sophisticated system in place that incorporates an annual State Conference, monthly Administrative Committee meetings, Regional Conferences, Policy Committees, and geographic-based ALP branches - with FEC, SEC and MEC campaign units.

What are the problems with the factional system?

The formation of factions in the 1970s/80s was seen as a way to combat then problems. However, since then factions themselves have presented new problems for the party:

• People who join a faction come to regard it as more important than the party as a whole. They work exclusively for the faction as opposed to promoting good policy and good candidates for the ALP. They see other factions or independent members as ‘the enemy’ rather than the Liberals, Nationals and One Nation.

• Factions often collude together to ‘annoint’ people for parliamentary and council seats (particularly safe ones) leaving party members with no say in choosing a candidate.

• Factions tend to see parliamentary/council seats as ‘theirs’ - it is up to them to decide a successor candidate. Like the House of Lords, a seat is seen as belonging to one faction, and it is theirs to pass down among their own from one generation to the next.

• Appointments to ministerial posts and seats are based on factional service and longevity - rather than talent, merit and community service.

• Independent or unaligned party members are regularly left out of party decision making and preselection processes. They have few opportunities for public office.

How do I join a faction?

To join a faction, a party member is usually invited to by an existing faction member who has noticed their service or activity in the party. If this doesn’t occur, a person should simply contact the relevant organiser at party office aligned with a particular faction

A Rum Thing

Guest post by Stephen Hogg

This Business Spectator article gave me pause for thought. It is discusses how ASIC recently made a ham-fisted attempt at reigning in rogues in the market making a buck off spreading a rumour and then profiting from inevitable price movements. It’s called rumourtrage, and is the practice of spreading false or misleading information in respect of securities in order to take advantage of artificial changes in market prices.

Now don’t get me wrong, it’s a cunning idea. I know a lot of people who wish they had thought of it some years ago. But I became stuck on one point made by ASIC. At the end of the article it is made plain that when ASIC was figuring out how to put a stop to all this, that:

"The principles were developed noting concerns that confidence in the integrity of Australia’s markets could be undermined if investors believe rumours are actively spread in the market to distort proper price discovery"

I think is a flawed statement.

Let’s go back a step or two, and revisit the Modigliani-Miller theorem (which everyone conveniently forgot about until a year or so ago!). The theorem predicts that in a world of perfect information, the choice to fund your company with debt or equity won’t change its value. The same theorem leads us to the conclusion that with perfect information, the share price of a firm reflects all the information regarding that firm – a pretty well-known result!

“The basic theorem states that, under a certain market price process (the classical random walk), in the absence of taxes, bankruptcy costs, and asymmetric information, and in an efficient market, the value of a firm is unaffected by how that firm is financed. It does not matter if the firm's capital is raised by issuing stock or selling debt. It does not matter what the firm's dividend policy is. Therefore, the Modigliani-Miller theorem is also often called the capital structure irrelevance principle.”

However, full information is absolute insanity. There are heaps of things we don’t know. For example, I would pay dearly to know what Andrew Forrest, CEO of Fortescue Metals, was thinking when he described his knock-down drag-out conversation (read: argument) with Ken Henry at the National Press Club last Tuesday as “delightful” to a pack of journalists afterwards. I’m pretty sure that if that tidbit was common knowledge the share price of Fortescue would be significantly different to what it is at the moment.

So in this world of imperfect information what does the share price of a company reflect? Not much, unfortunately. All you can really get out of it is the appetite for risk of the average punter which, when you put it on a chart, appears to go up in a boom and down in a bust. Seems logical enough.

Which brings me back to the problem with ASIC’s latest piece of work. If the prices of shares don’t really reflect anything at all aside from the appetite for risk of the average individual in the market, why on earth take on the Sisyphean task of making sure that price signals are representative of the shape a given company is in? There’s a far bigger problem at work here, which ASIC doesn’t appear to be focussed on. It is the welfare transfer which occurs because of rumourtrage.

Because of the ability to distort the perceptions of others regarding the state of the market and the general willingness of the participants to take on risk, a welfare transfer occurs, from the rumour monger to the rumour believer, which otherwise would not have. That’s the thing which needs to be sorted out here – which means unwinding selected trades rather than adjusting the share price for all trades, including those not subject to rumourtrage.

iHate Steve Jobs or Why I Won’t Buy Anything Made by Apple (Yet)

Guest post by Ben today

At the moment it seems that the ascendance of Steve Jobs and the Apple Empire knows no limit. With the media player and smart-phone markets sewn up and their eyes firmly set on conquering the tablet PC market with the omnipresent iPad, it seems that Apple can do no wrong.

But not for me; I can see the Apple vision for the future and it’s a safe, bland, white-chrome corporate hell. Why do I say this? Well maybe it might have something to do with:

• Apple’s restrictive licensing conditions for the sale and development of apps which basically amounts to censorship and discourages innovation;
• Their refusal to allow 3rd parties to sell apps; iTunes is it – monopolistic price gouging anyone?
• Draconian digital rights management – installing unlicensed apps on you iProduct voids the warranty as does ‘jail-breaking’ them;
• Stupid ongoing court antics with Adobe meaning that iProducts aren’t compatible with Flash;
• Rechargeable batteries which can’t be replaced;
• And the thing that irritates me the most: requiring the use of propriety peripherals e.g. iPod shuffles are designed so that you can only use Apple headphones; USB devices or HDMI monitors can’t be plugged into an iPad - you need to purchase a Apple ‘adapter’ first etc.

But these are secondary to my main issue with Apple, which is their pricing policy.

The personal computing market is a good example of a ‘Lemon Market’, that is, a market where information asymmetry is skewed to advantage the producers of goods rather than consumers. Apple represents a particularly egregious case of this by charging premium prices for their products which aren’t substantially different from other competitors in the market (in fact, I would argue they are inferior).

I’m currently in the market for a good quality laptop and one thing that immediately struck me while shopping around for one was that Macbooks are about $1000 more expensive than their equivalent PC-based competitors. And they get away with it. Sure they look pretty, but so what? It’s a tool not a fashion accessory (yes, I know some people do use them as fashion accessories). In an amazing slight of hand, the Apple PR/marketing machine has managed to convince a substantial subset of IT consumers that their computing products are actually worth paying premium prices for.

Why is this? Is this brand ‘tribalism’ of the ‘I’m a Ford man, he’s a Holden man’ variety? Or are Apple products an example of Veblen goods i.e. goods whose demand perversely increases with increasing prices (although it is surprising how many economists are Apple crazy). Whatever the case, Apple is relying on the ignorance of consumers combined with shiny aesthetics to sell people overpriced electronics.

So what’s the moral of the story?

If you’re determined to waste spend money on Apple you’re better off buying Apple stocks rather than Apple products. The US$5,700 you would have paid for an Apple G3 Powerbook in 1997 for would be worth US$330,563 today if you’d bought Apple stocks instead of a computer…