With the elevation of the Hawke/Keating period within federal Labor’s ranks, you may have missed that Anthony Albanese reserved his more inspired rhetoric for Labor’s wartime and reconstruction leaders, Curtin and Chifley. In the middle of US tariff war negotiations, the PM’s Curtin Oration in 2025 laid out the former leader’s legacy in charting Australia’s foreign policy on our own terms, while at the UK Labour conference Albanese celebrated Atlee and Chifley as leaders who worked “to build societies worthy of those who’d fought to defend the world from fascism and tyranny.”
What does it mean that Albanese is yet to integrate the nation-building reforming spirit of his wartime inspirations into domestic politics, presently reserved for Bob Hawke ’s consensus model? With neoliberal globalism collapsing and an erratic global US hegemon threatening world war, the pursuit of sovereign reconstruction and new alliances which delivered decades of security and prosperity for post-war Australia would seem a better fit in our times. Certainly the “Trump factor” behind Labor’s thumping electoral victory in 2025 demonstrates the people’s appetite.
Behind Albanese’s global/domestic taxonomy of former Labor leaders is an inner struggle to break with the crisis-ridden neoliberal model generating economic ruin and political reaction across the world – a model birthed by Labor’s own heroes in Hawke and Keating. By breaking the model, I mean constructing a new way of doing government that resolves established failures of privatisation, monopoly, outsourcing layered on outsourcing (for example, the National Disability Insurance Scheme, the National Broadband Network), low private investment, regulation, short-term budgeting, individualised workplace relations and the decline of shared civic life. This is no small feat.
Contest and conflict between different economic interests has been airbrushed out of Australian politics. For decades, people have been told that growth, higher profits, better government services and rising living standards were all possible, all at once. But with inequality exploding, an outdated tax system making it worse, and Australia’s social compact with wage earners unravelling due to housing unaffordability, it’s impossible for Albanese’s Labor to continue claiming these are still mutually reinforcing goals. But with the exception of IR reforms in the first term of government, the consensus politics of the Hawke model prevails, through gritted-teeth smiles.
Unlike in the fortunate epoch of Hawke and Keating, the days of having one’s cake and eating it too are over. As Kelly’s essay makes clear, Albanese’s Labor is yet to articulate what it stands for.
Is it attempting a social-democratic or democratic-socialist program, per the party’s constitution? That is, is it seeking to incrementally re-route social relations away from the profit motive towards non-profit, state or community control? Or is it continuing along the path of Australian neoliberalism?
The protracted crisis in government-funded services is the pointy end of this question. Since the 1980s, the party has relied on handing big public spends to private actors to sell the idea of welfare state expansion, and to avoid any confrontation with business interests. But a simple reliance on so-called “markets” to deliver reforms everywhere – including the NDIS, childcare, aged care and housing – isn’t possible, as outsourcing undermines provision itself. Nowhere is this more evident than in childcare, where systemic criminal abuse of infants adds to the litany of outsourcing failures, representing a major problem for Albanese, who wants universal childcare to be his defining legacy.
In The Age of Uncertainty, John Kenneth Galbraith says the Anglo-American leadership instinct, where citizens look to politicians in high office to solve big problems, is “not the politics of people but the politics of leaders.” He reminds us that this isn’t universal, with many people and cultures looking to the collective responsibility and intelligence of the people when solving problems. I think much of Sean Kelly’s reflection boils down to this central question: can we justifiably blame Albanese and federal Labor for a lack of leadership or structural reform, or do we point to wider social malaise, immobilisation and other structural factors dragging on leadership everywhere? Is it the leader, or the lack of an active citizenry directing or signalling to the leadership?
I see plenty of effort within Albanese Labor to plot a new direction. But they reach roadblocks and lack the firepower to push through, oscillating between optimism for social-democratic revival and cynical resignation that we cannot really buck global capitalist forces, only ride them out in “the Australian way” (that is, the “Third Way,,” pioneered by Hawke and the inspiration for Blairism). What stops half-measures from becoming full measures? I think there are some key explanations for the blockages.
First, Australia is unique among Anglophone countries for the historic influence of wider civil society organisations, especially unions, on the foundations and functioning of our democracy. That is, Australia’s leadership model was conceived with a strong dose of horizontal, citizen-led problem-solving. Formed in the 1890s, the ALP is a creation of unionised workers who wanted to spread their considerable workplace power into a democratic state. Pledges were imposed by unions on their representatives that they would commit to what they were put into parliament to achieve. This pledge culminated in the socialist objective, the “democratic socialisation of industry, production, distribution and exchange,,” which is still in the ALP’s national constitution, with a wriggle-room caveat added later: “to the extent necessary to eliminate exploitation and other anti-social features..”
By reaching into workplaces, unions brought everyday people’s perspectives, hopes, dreams and demands into parliament. They were authorities on “how to be a human being,,” and by listening to them Labor had confidence it was walking with the people. No governing through polling needed.
The centrality of strong unions to the origin story of our democracy is the reason why industrial relations is still the unifying ground for both ALP and the Coalition. In the 1940s, the Liberal Party formed through a concern for the rising power of unions and the ALP in society. Coalition with the Nationals was based on fortifying opposition to unions while using government power to embolden business. Sussan Ley’s recent desperation to repair net-zero party fractures by returning to IR shows yet again that curtailing unions is always fertile, unifying ground for conservatives.
Recall that Bob Hawke was elected off the back of this once, vibrant democratic infrastructure, with 55 per cent of workers members of their union when he took office. Big reforms were tackled by harnessing unions – most notably, in the Accords – with positions arrived at through fierce debate and negotiation, and with a governing tool available to reliably reach the working population and most of the business sector.
The fact is there is no such wave for Albanese to ride. In part, because the Accords demobilised unions, and the decades of technocratic super-union reform and labour market deregulation that followed have severely reduced union influence. Labor could go further than the first-term IR reforms to lift unionisation, unleashing a democratic revival through measures that incentivise membership, including ending free-riding. But that would require Albanese to kill the cultivated “consensus” image he learnt at the feet of Hawke.
The declining health of unions has an outsized impact on the health and operation of the ALP, more than on any comparable party in the world. Kelly points out that Albanese is clear on what Labor is not – a Liberal, a conservative or “purist” Green – but isn’t clear on what Labor stands for. Here is the real crisis for the two-party dynamic. The loss of union power and the capacity for cooperative effort everywhere is a crisis of purpose and representation for both parties. In reality, the ALP is still learning how to operate without an organised working class.
Asserting leadership amid a historic decline in social organisation was already a task, but the Albanese government must also contend with the rise of a new US-cultivated, anti-establishment right intent on dismantling the redistributive welfare state, liberalism and the international rules-based order. It is a mood spreading through all of Australia’s Western allies in the United States, Europe, UK and New Zealand. As Trump moves on from the neoliberal consensus into something darker and older, the space for Albanese’s Labor to entertain the status quo or push for any incremental social-democratic possibility is being actively undermined – or closed off.
This is no small adjustment for Australia, as a small, trade-exposed country located very far from its closest ally. It is fast-tracking questions about our relationship to China and how to best protect our interests. It is brand-new territory for the government, and a big driver of caution and tiptoeing. The terrain for decision-making is like quicksand.
Political discourse often conflates politicians or parliament with “government” as a totality, as though elected leaders were inclusive of all the nuts and bolts of actual governing. But it is the tangible resources available to elected representatives that determine their success, and this includes a strong and capable public administration to enact the democratic will.
As Kelly says, “passive language … makes you passive,,” and a force for overwhelming passivity and ceiling-setting is the state of the federal public service. It is impossible to overstate the challenge Albanese’s Labor faces here. As a (now former) senior staffer, I found the biggest challenge of my job, as for many staffers, was working out how to squeeze reform out of a sclerotic APS lacking in confidence and capacity. It was working out how to translate ministerial ambition and direction into tangibles.
Albanese Labor holds to the principle of rebuilding a “frank and fearless” federal administration – after decades of deskilling, outsourcing and funding cuts. But the reality of rebuilding public service leadership from a very low point means that asserting direction, or having confidence that things will be done, is not a straightforward process. Sometimes the only option is very patient collaboration, and large amounts of hand-holding. Like geopolitical repositioning, the road to rebuilding the government’s capacity to do stuff is slow and painful.
Now the Albanese government has the tough task of attempting reform in the absence of strong signals from an active, organised citizenry that would create the political space for it to act. Harder still, it must reform top-down alongside a generation of public servants without any experience of delivering federal reforms, government services or building stuff. This is risky business. The big question we should ask is: should we ever seek major reform in the absence of constituencies’ capacity to demand and implement it? Incrementalism feels inevitable.
Yet incrementalism is less and less possible for Albanese. Australia’s economic conditions are already closing the space for slow social-democratic reform, which depends as a strategy on both a growing economy and a reliable, predictable flow of the benefits of that growth to everyday people.
Australia may have escaped the stagnation and reduced living standards that hit Europe and the United States after the global financial crisis, but since the pandemic inflation crisis we have firmly entered a new period, with rising inequality, slowing productivity growth and a persistent threat of inflation.
While the Albanese government was protecting us from supposedly “imported international events” such as the Russia–Ukraine conflict, it delayed the hard work of confronting our homegrown problems, including big untaxed wealth, monopolies, and an investor-dominated housing system. Now the domestic is coming to bite it on the butt. Our conditions demand a confrontation with the conflicts inherent in the economy between the haves and the have-nots. Albanese Labor must accept that this is a period of inevitable conflict, choose a side and take up the fight.
Galbraith defined the essence of leadership as “the willingness to confront unequivocally the major anxiety of their people in their time.”.” In 2026, Albanese Labor faces choices about how to respond to that rising anxiety. Australia could be an internationally celebrated case of how to be brave when you’re small, delinking from an illiberal United States and finding new friends. We could avoid the rightward drift by doing what other Western countries have failed to do, by rethinking and reinventing how a social-democratic state delivers public goods and economic and social equality in new times, actions that mirror those taken by the Prime Minister’s inspirations in Curtin and Chifley.
Albanese Labor needs clear-eyed, ambitious and definitive breaks with current practice. It’s not an easy route, but our own post-war history proves it’s possible both to build an ambitious project of mass prosperity and shield Australia from a dangerous empire in decline so that we may engage with the world on our own terms.
This essay was first published in the Quarterly Essay.
Alison Pennington is the chief economist at the McKell Institute.
SOCIAL SHARE