International and Australian political situation report (June 2009 National Committee plenum)

The January National Committee (NC) discussed the triple crisis that confronts us: climate change, the economic crisis and capitalism's crisis of legitimacy. This report will focus mainly on the economic crisis, as the area in which there have been the most developments since January, and which increasingly informs the state of the class struggle today.

The January NC international report concluded: "The coming year we will see how bad this crisis is for capitalism. How far can the ruling class go in shifting the burden on the workers and poor?"

The general line of the following report and summary by Emma Murphy on behalf of the DSP National Executive was adopted unanimously by the DSP National Committee meeting on June 6, 2009.

Well, we still can't say how bad the economic crisis is. Two years after the crisis began, it's still unclear what the volume and value of debt is. Also, the question of how far the ruling class can go in making the working class and the world's poor pay is of course unresolved, as that question will only be answered in the course of class struggle. What we can do is look at how the crisis has deepened so far, how the ruling class is responding, and what working class responses we can see.

We need to be careful how we discuss the magnitude of the crisis and how we interpret capitalist commentary because the system has a vested interest in putting a positive spin on the situation, restoring investor confidence etc. The IMF keeps increasing its estimates of debt levels, so we should be very careful of any promises of stock market returns.

Also, "the 'positive economic indicators' that are used as evidence for recovery totally ignore the fact that things continue to deteriorate drastically for workers--skyrocketing unemployment, rising homelessness, deep real wage cuts, loss of benefits, and more." (Socialist Worker, May 6)

Development of the crisis

Global economy contracted further in the first few months of 2009. The International Monetary Fund's (IMF) April World Economic Outlook has predicted it will contract by 1.3% this year. The IMF predicts a slow recovery will begin next year but it will be sluggish compared to other recoveries. It says this is the worst recession since World War II.

Of course, some areas of the world economy are being hit harder than the average. Eastern Europe is on the brink of collapse.

  • Estonia - economy to contract this year by 5%
  • Ukraine - by 6%
  • Latvia's economy - which has been one of the fastest-growing in Europe - is set to contract by 18% this year, according to website Foreign Policy.

The impact on global unemployment will be dramatic, even in the best case scenario. The latest ILO report (May 2009) says:

That the global economic crisis will result in a larger-than-expected negative shock to global growth in 2009 has serious implications for the world's workers. The updated unemployment scenarios indicate a higher range for global unemployment in 2009 of between 210 million and 239 million. This would represent an unprecedented increase in the number of unemployed workers around the world this year. Where global unemployment will fall within the range of the middle and higher estimate will depend on the impact of fiscal expenditures decided by governments to stimulate aggregate demand, the functioning of the financial sector and the application of the ILO proposed Global Jobs Pact to be discussed at the International Labour Conference in June 2009.

The report draws a picture of the recession's impact on unemployment and poverty according to three scenarios—one benign, one average, one severe.

The ILO predicts extreme poverty in Asia will increase by 140 million people. One third of people in Sub-Saharan Africa are already hungry.

Global unemployment rose from 5.7% in 2007 to 6% in 2008. For men, the unemployment figure was 5.8%, and for women 6.3%.

Besides being the deepest recession since World War 2, how deep is it likely to be? The truth is, nobody knows. Or, since business and consumer confidence plays such a key role in determining the answer, those charged with fighting the recession can't really say: they just keep talking about "green shoots" in the hope of fertilising them as much as possible. This phrase, first mentioned by Federal Reserve secretary Ben Bernanke in March, has since been mentioned 7000 times in US news items, roughly 85 times a day.

The IMF World Economic Outlook measures the probability of particular forecasts turning out to be correct. It gives us the striking scientific information that there's a 90% chance that world growth will be somewhere between -1.4% and 4.4% by 2010, a 7'% chance that it will be between -0.1% and 3.4% and a 50% chance that it will be somewhere between 0.5% and 2.9%.

Why such huge uncertainty? Primarily because nobody knows how deep the vast black hole of financial debt really is, how many more public assets will have to be shovelled into it, and what the impact of this process on government balance sheets will be into the future?

We get some idea of the size of the problem from the latest IMF Global Financial Stability report. It shows the face value of financial assets issued in the US, Europe and Japan that are at risk of writedown — $58 trillion, annual global GDP, in all.

The value of writedowns to date is over $4 trillion. How much more of outstanding "financial instruments" will prove to be worthless?

According to the IMF report, the 22 largest global banks will need to lay their hands on a further $25.6 trillion by 2011 if they are to say afloat. And that's after they have already received from governments $8.9 trillion, as well raising $30.9 trillion on the private market.

Ruling class response

The ruling class is panicking about this crisis, about how to fix it. Who can it make pay for the crisis it has created? G20 saw a recommitment to neoliberalism, to bailing out capital at the expense of the poor. Of the US$1.1 trillion stimulus package, only $50 billion — 1.1% — will go to the governments of the 49 poorest countries.

The vicious behind-the-scenes fight at G20 over how big a package should (appear) to be launched, and about who should pay, plus the fact that this crisis is being "managed" globally not by the G7/8 but by the G20, reflects the beginnings of the weakening of US economic hegemony.

It's weakening to the point where China — with support from some emerging economies — can make proposals that would see capitalists in developed imperialist countries foot some of the bill. For example, China's proposal for a global currency for holding funds. This would seriously weaken the hegemony of the US$, so, while it won't actually be adopted, it's still significant that it's getting rhetorical support from some countries.

As much as is possible, the system will try to put the burden of the crisis onto the Third World. As First World economies continue to contract, the underdeveloped economies based on exports will suffer the most. We'll also see a massive reduction in overseas remittances as temporary workers get laid off and/or sent home.

Workers will pay

Workers in the First World will be forced to carry the burden of the ruling class's crisis. This is already manifesting in massive job losses and attacks on public services.

Since the start of the recession in December 2007, the US economy has lost 5.7 million jobs. The unemployment rate is currently 9.4% — the highest in 25 years. Economists are predicting it will rise into double digits.

Obama's February stimulus package fell drastically short of what was needed.

  • $20 billion more on food stamps over several years = an extra $63 a month for an average family of three
  • $25 to every weekly unemployment check, extends benefits for the long-term unemployed through 2009 and expands eligibility to certain categories of workers, like part-timers, who are currently excluded.
  • $100 billion over two years for public schools, universities and childcare centres.

But there were many trade offs, and some things were just left out of the original proposal altogether.

Sixteen billion dollars was cut from badly needed school construction. Plans to open up Medicaid to the unemployed were abandoned.

The ruling class is trying to find a way out of this crisis, and is taking serious measures in its attempt.But so far none of the $700 billion+ stimulus packages have been enough. While unemployment rises, triggering a new round of mortgage foreclosures, the government continues to throw money at industry, trying to prop it up. For example, despite the US$19.4 billion loan to General Motors, that company has now petitioned for bankruptcy.

Capitalism's crisis, peoples' response

Economic crisis has triggered protest movements. While Latin America remains the centre of the global struggle against capitalism, the crisis has triggered a wave of protests, most advanced in Europe.

Protests in Latvia in January decried public sector cuts, reduced social security payments and an increased consumption tax. The protest also demanded new elections — a demand the government caved into.

In Britain, some economists are bracing not for a recession but a depression similar to the 1930s. The fall-out is particularly severe because of Britain's dependence on the finance sector. Massive pay cuts and job losses are leading to a new tide of militancy, with a wave of wildcat strikes earlier this year.

In Ireland, an Irish Congress of Trade Unions rally in February brought 150,000 people onto the streets of Dublin — the largest rally there in 30 years. Irish government estimates in February were that unemployment would surpass 10% with 120,000 jobs being lost in 2009-10.

In France, the jobless rate rose to 10.2% in March, the highest it has been since December 1999. There were 2.8 million people unemployed. More than 1.2 million people protested on May Day, demanding Sarkozy implement policies to protect workers and the poor from the global economic crisis.

This is the context in which the New Anti-Capitalist Party has been formed. In fact, its founding conference in February followed directly from a mobilisation of 2.5 million people again protesting the foisting of the economic burden onto working people.

The example of the NAP is a reminder that in times of capitalist crisis, more people are open to radical alternatives. And the radical alternatives they're drawn to won't necessarily be from the left. For example, in Europe, growing disillusionment is also seeing a rise in support for far-right parties, such as the Dutch anti-Islam Freedom Party, which has doubled its ratings this year and is currently the country's highest-polling party.

This phenomena, this new receptiveness to radical alternatives — and the fact that those alternatives might come from the right — reminds us of the need for socialists to be constantly putting forward our alternatives, relating to workers where they're hurting, where there's movement- even if it's limited.

Latin America

The extent to which the world's ruling class can get away with making the Third World pay depends upon the level of atomisation and disorganisation of the Third World. In this respect, the role of the revolutionary governments of Cuba, Venezuela and Bolivia, and what they're doing in ALBA, is critical.

Latin America continues to be the centre of global resistance to imperialism, and Venezuela is spearheading this resistance.

At the January NC we made this assessment: "The coming year will be important [for Venezuela]. The oil wealth that has enabled the policies of lifting up the poor without decisively confronting the wealth and privileges of the rich will no longer suffice in a context of much lower oil prices. There will have to be choices."

The victory in the February referendum was important following the regional elections last year. It was a vote not just for Chavez but for the Bolivarian project. The strong grassroots organisation in the lead-up to the referendum has also had flow-on effects in terms of restructuring and strengthening the PSUV (United Socialist Party of Venezuela).

The Venezuelan government recognises not just the need to get out of the current crisis, but to get out of capitalism.

The economic crisis is heightening the class struggle. There are greater moves by the Chavez leadership against capital on the one hand, and by the elite in defence of capital on the other.

In the face of the economic crisis, Chavez has reiterated his commitment to social spending, insisting it is the wealthy who will suffer the most from the crisis. The 2009 budget commits 10% of GDP to social programs.

We're seeing an increase in factory take-overs and expropriations. Chavez is also pushing ahead with the pro-poor land reforms, which basically legalise the occupation of otherwise unused land. Land reform becomes more important in the context of the economic crisis: the rich can afford to buy imported food, but in terms of national food security, the government needs to get the land off the exporting agribusinesses and giving it to the rural poor to grow food for Venezuelans.

Venezuela is spearheading the revolt, but it is spreading across Latin America. We're seeing a strengthening of Latin American integration, a political co-ordination of this bloc of countries against imperialism — see, for example, the recent ALBA declaration in response to the Summit of the Americas statement.

At the Summit of the Americas, there were three camps: the US, looking for re-engagement in the region; at the other extreme, ALBA, led by Venezuela and Bolivia, willing to form another body outside of the Organisation of American States (OAS), calling for unity of every country minus the US; and in between, Argentina and Brazil, looking at re-engagement with the US but on terms not totally dictated by the US.Argentina and Brazil are pushing a new process of regional capitalist development and engagement with ALBA etc can serve that purpose for them.

Another sign of the shifts that are occurring was the OAS resolution in early June, which lifted the historic suspension of Cuba — although so far Cuba has declined to re-join.

Brazil's presidential elections at the end of this year will have an impact. Argentina's congressional election mid-year will also most likely result in a shift to the right. In the lead-up, there is pressure being put on Kirschner to condemn Venezuela's nationalisations, a push from the right to break ties with Venezuela.

We also see the imperialist powers trying to woo Brazil and Argentina away from the anti-imperialist bloc. For example, the fact that the economic crisis was addressed through a G20 meeting rather than a G8 meeting broadened it out, in an attempt to bring some emerging economies — such as Brazil — into the imperialist fold.

In Peru, we've seen the uprising of the Amazonian people against the neoliberal laws of the Garcia government and the FTA. In El Salvador, there's been the victory of the FMLN.

In Bolivia, there's been a big victory with the defeat of the September coup through mass mobilisations of the oppressed and the rejection of the coup by other Latin American countries. This fed into mobilisations that secured the constitutional referendum victory in January. The opposition has been forced to accept new elections in December.

Ecuador is also following this left-ward shift. President Rafael Correa's re-election in Ecuador — a strengthening of the radicalisation there, with Correa committed to nationalising key sectors of the economy like oil and the mines. Correa has announced that Ecuador will join ALBA.

These developments in Latin America — the ongoing dynamic towards Latin American integration on a basis of independence from the US — are an increasingly weighty strategic problem for imperialism and the capitalist class, and we can expect more counter-attacks and further escalation of the struggle, within Latin America and between the revolutionary forces there and imperialism.

The state of imperialism

What Obama, Rudd et al need to do on behalf of the ruling class is appear to be presenting a softer, more humane version of capitalism. To reassure the world's workers and poorthat they don't need to look to thealternatives to capitalism like those developing in Latin America, that the capitalist rulers will get us through this crisis — of course, without making any fundamental changes to the system.

This survival strategy for capitalism starts to fall apart when we turn to the pointy edge of imperialism: war. There's nothing soft and fuzzy about the state of imperialism's wars, led by Obama and supported all the way by Rudd.

While they may hope to gain some credibility by arguing that the war in Iraq was a "mistake" — and they've even withdrawn some troops — the fact is they've left an utter quagmire in Iraq, and look set to leave Afghanistan (and possibly Pakistan) in a similarly devastated state.

The escalation of the war in Afghanistan is not limited to troop numbers — although Australia and the US have recently increased troop deployments. It is also spreading into Pakistan, which the US has identified as the greatest global threat to US "national" security.

Tariq Ali: "As far as AfPak — Afghanistan and Pakistan — is concerned, Obama is worse [than Bush in terms of war on terror], because he is escalating the war.Nobody in Washington can tell me what its purpose, the real war aim, is.What do they want?They want to withdraw from Afghanistan — only not immediately. But the longer they stay, the worse it gets. I have told Obama advisers: To continue the occupation of a country of 24 million people, you are ready to destabilize a country of 180 million.We will pay dearly for that.You need an exit strategy.Only the regional powers can help stabilize the region, you should involve them."

US imperialism is weakened, because of the mess it has created in Iraq, because of the growing anti-imperialist pole in Latin America. And the unpopularity of imperialism's wars is also growing. Public opinion against the war is growing.

Obama's recent backsliding on releasing torture photos, reviving Bush's military commissions etc have been a slap in the face for the millions of people who, at least in part, elected him out of an anti-war sentiment.

In Sri Lanka, we've seen the recent military defeat of the Tamil Tigers by the Sri Lankan Army. While there are criticisms that we can make about the LTTE's purely military tactic, its military approach to dealing with any form of disagreement etc, our main analysis needs to focus on the implications for imperialism. What we've seen is that, in certain situations, it is possible for imperialist forces to have a complete military victory over a national liberation struggle. What conclusions will the imperialist countries draw from this? Will they be emboldened to attempt a similar crushing defeat of Hezbollah and Hamas in the Middle East? Or the Taliban in Afghanistan?

The DSP has drafted a statement in response to the UN Human Rights Council resolution — supported by Cuba and Bolivia- condemning the LTTE for itsattacks on civilians and welcoming Sri Lanka's "liberation" of civilians held against their will be the LTTE. It's important for us, especially for younger comrades, in explaining why Cuba would take such a position — their distrust of the rhetoric of "human rights" used by imperialist powers, their tactics with regards to diplomatic relations etc. But it also reiterates the DSP's support for the Tamils' right to self-determination.

Imperialism has already taken a battering in the Middle East this year. Following Israel's brutal assault on Gaza, Israel is more isolated internationally. The global boycott campaign is starting to bite, with 21% of Israeli exporters facing "problems" selling their goods abroad. The fact that the pro-Israel lobby is taking the BDS campaign seriously is evidenced with the launch of the new pro-Zionist group Trade Unions Linking Israel and Palestine (TULIP), being pushed by non other than Australian Workers Union national secretary Paul Howes, among others.

Internally, however, Israeli politics has shifted to the right, with the election of a coalition led by the right-wing Likud party. This is possibly one of the most right-wing governments in Israel's history. Will the political isolation Israel felt as a result of its atrocities against Gaza be outweighed by a renewed confidence following the LTTE defeat?

Nepal is another significant front in the struggle against imperialism now. The defeat of the LTTE — once a very powerful guerilla army— has given confidence to Nepal's elite that perhaps the Maoist mass movement can be crushed. The Maoists withdrew from the government after the military refused to be subordinated to the government. Their support among the masses has grown.

In recent weeks, the right-wing forces have formed government and there is a very fine balance between the counter revolutionary and the revolutionary forces at present. And the same time contradictions are at play — that being the incompatibility of the Maoists and the revolutionary aspirations of people on the one hand, and the current power structures and plans of the elite on the other. So at present the elites are trying to kill off the revolution and reinforce the status quo, as they have a new confidence — firstly by having formed government. Secondly because of the hardliners' confidence boost following the LTTE's defeat —they think they can just kill off what they see as the "Maoist problem".

The Maoists are in a politically strong position, and say that they are going to use the next period to reconsolidate the party, rectify some minor flaws they had built up and then at some point go back on the offensive.

Responses of Australian ruling class

There's been lots of discussion about just how badly Australia will be affected by global recession. We're not feeling it to the extent that the US is , in terms of massive job losses, growing homelessness etc.The full impacts are kicking in slower in Australia. yet

Comparisons have been made between this recession and the 1990s. However, this time around it is much more dependent on international factors and unknown quantities. One factor is China.

China is attempting to boost its domestic market to compensate for a falling export market, i.e. encouraging people to put an extra room on their house etc. The extent to which this policy is successful will inform whether to a greater or lesser extent Australia is shielded from the worst effects of the global situation: for example, we are still seeing some new projects going ahead in the resources sector, but on the other hand it has been reported that Chinese demand for resources is falling.

There was the RBA May 19 announcement re "green shoots" in the market, predicting economic recovery will get underway by the end of this year. But we have to be cautious in interpreting this: firstly, they warn that recovery will be slow; secondly, the RBA clearly has an interest in promoting the good news, appearing to be doing the right thing, to boost confidence. Finally, there is a big difference between the statistics used to measure their "economy" and the realities of the economy in which most of us struggle to survive.

In the first week of June we learnt that so far Australia had "technically" avoided a recession. These are the "numbers" that Kevin Rudd spent one day boasting about. It's clear that the biggest contribution to keeping the economy out of technical recession (two quarters of negative growth) is the leap in net exports, due to a fortuitous, and unrepeatable, combination of crashing imports and exports still enjoying favourable terms of trade. Consumption contributes only 0.4 %, while private business investments, the driver of capitalist economy, are already crashing (the main reason for the decline in imports).

The only way this sort of result can be repeated in the next quarter is if there is a leap in the contribution of government spending, ruled out by the small size of the Rudd stimulus package.

It seems there's little reason to be overly optimistic. The IMF has already dramatically downgraded its outlook for the Australian economy, predicting a recession similar to the 1990s downturn. And, even if the economy begins to improve in 2011/12, that doesn't necessarily mean the end of hard times for working people. Far from it: unemployment can continue to rise in a period of economic growth — and they're already predicting it will be officially at 8.5% by the end of next year. The official unemployment rate is currently 5.5%, and we know that it is in reality much higher.

We shouldn't underestimate the impact that a rise of 3% over 18 months could have, not only on the living conditions for the working class — i.e. ability to continue to pay mortgages, possibly unemployment, etc — but also on the political consciousness, openness to alternatives to the system that is getting people where it hurts.

Apart from the economic forecasts, the measures that the ruling class has taken during hard times — mass sackings, restructuring, and other "cost-saving" measures (all at the expense of working people) are not going to be overturned simply because the economy starts to grow again. While the ruling class ask workers for "restraint", and expect us to "all weather the difficult times together", we know that when profits start to pick up, we won't all be sharing the good times. We'll have to fight for wages and conditions: things we've already fought for, and won, but now stand to lose because of the recession.

The problem for the government is who will pay for this recession. This is an ideological and political problem for the government, not an economic one. While the debate in parliament focuses on the national deficit — how much debt is too much? We know that's not really the problem. Governments have gone into massive debt in the past, such as following World War II.

The government could make the investment necessary to stave off recession. Just like we know it could undertake a massive turn to renewable energy in response to the climate crisis.

In fact, climate change and the economic crisis could be tackled simultaneously, a massive whole-of-society mobilisation away from a carbon-economy. A jobs-rich transition, led by impressive levels of government investment funded by taxing the rich.

Large-scale public investment would mean declaring war on a section of the capitalist oligarchy — the very sections of society they represent — so instead what we're seeing is the government back-pedalling on its already catastrophic "solutions" to climate change, bending over backwards to protect the profits of the polluting industries. While climate change is currently a big factor in the Australian political landscape, Simon Butler's report will be dedicated to this issue, so I won't go into it here.

A look at the recent federal budget confirms that working people, young people, the unemployed, and aged pensioners will pay for capitalism's crisis.


As Graham Matthews' budget articles in GLW discussed, the basic tenet in Labor's budget is that working people will have to work longer. The eligibility age for the aged pension is going to increase by six months every two years, reaching 67 by 2023. Will it stop there, or continue to rise?

The age at which workers can access their superannuation will also rise to 67. Government subsidies to voluntary super savings will be cut from 150% to 100%, and this of course will hurt working people the most.

These attacks on our ability to retire at a reasonable age and maintain some form of economic dignity are being justified as a way to fund the paltry $32-a-week increase for single pensioners.

However, while the government acknowledges that unemployment is set to reach about 1 million people by the end of next year, those out of work were largely ignored in the budget. There will be no increase in unemployment benefits. Single parents went without a pension increase. Young people were singled out in Labor's "earn or learn" strategy.People under 20 who are not at school or in vocational training will not be eligible for the youth allowance. And the youth allowance itself will continue to be 28-42% below the poverty line.

Women, promised by Rudd last year that we would finally catch up with other OECD countries and be guaranteed a paid maternity leave scheme, also miss out. For a start, the scheme proposed by Labor isn't at all guaranteed but has instead become an election promise — it's not due to start until 2011. And the proposal promises primary carers earning less than $150,000 18 weeks on the minimum wage. On average, women working full-time receive twice the minimum wage, so in effect it will be a dramatic pay cut.

In theory, this taxpayer-funded scheme is on top of already existing, employer funded schemes. In practice, though, there is no compulsion for bosses to maintain the current parental leave schemes unions and workers have fought for.

Another way the federal government is ensuring workers will pay is by capping future government spending at 2% while paying off the debt (revealed to be going to peak at $300 billion). This will hurt middle and lower income people. We can expect to see more cuts to public services, and we're already seeing cuts in the public service — in the ABS, ATO etc.

Already we're seeing attacks on public sector wages. If the government succeeds in pushing down wages, it will make it that much easier for private business to follow suit. So, for example, in Victoria, the starting point for negotiations with public sector workers is now for a 2.5% per year increase, rather than the previous 3.25% per year.

We've also seen companies such as Pacific Brands use the recession as a pretext for moving jobs offshore where labour costs less.

Imperialism and foreign policy

One area that Rudd is not asking for cuts or restraint is war spending. Australia's imperialism continues, with Labor pledging support for Obama's "surge" in Afghanistan, and sending 450 extra soldiers. The budget boosted war spending by $25.1 billion, with an extra $1.3 billion for the war in Afghanistan.

The defence white paper, released on May 2, proposes the "largest single defence project in Australia's history", committing $300 billion over the next 20 years to bolstering Australia's imperialist grip in the region.

The war in Afghanistan is increasingly unpopular, with two thirds of Australians opposing more troops being sent. Emerging reports of Australian soldiers killing civilians including children, and a growing death toll of Australian soldiers — currently it's 10 — could lead to a sharpening of the anti-war sentiment.

Rudd refused to take action or make comment during the recent genocide of the Tamil people. We can now expect an increase in Tamil refugees.

Fortress Australia

We could expect to see the ruling class fanning the flames of racism in anticipation of climate change and global recession producing more refugees.

Migrants are already being scapegoated for growing unemployment: the skilled migrant intake has been slashed by 21,600 in 2009-10.

The budget committed $1.3 billion to "border protection" and "bolstering people smuggling laws". Villawood will also be refurbished, in anticipation of the need to lock up even more people fleeing the wars Australia is engaging in overseas.

Rudd is attacking refugees through attacking "people smugglers". The fact is, if the government simply allowed people who had been recognised as refugees to come to Australia, there wouldn't be a need for "people smuggling".

When that boatload of refugees exploded earlier this year the government pledged it would not "politicise" the issue. To a certain extent it has been successful — that incident has been referred off to a committee, and although boats keep arriving, they've received barely a mention in the mainstream press.

But while the government and media have gone quiet, the anti-refugee policy has continued.

More neoliberal than Howard?

This government is almost more neoliberal than Howard was. But Rudd is going about it in a smarter way. On the one hand, he criticises neoliberalism in his Monthly essay, and on the other he gets away with attacks on the working class that the Liberals weren't able to. In part this is due to close links with the trade union leadership, but also the lack of any viable alternative. He also has the complicity of most of the media, which is still giving him a dream run.

Examples of neoliberal attacks the Rudd government is getting away with include: flexibility agreements, performance pay for teachers and health re-structuring.

There is also the massive land grab and attacks on land rights. Rudd is not only continuing the Northern Territory intervention, but is launching quite historical attacks on land rights. The NT government — supported by federal Labor — plans to fund only 20 of the 600-odd Aboriginal communities. This is a massive attack on the gains of the 1970s homelands movement.

On June 4, NT minister Marion Scrymgour, who has been critical of the attack on homelands, quit the Labor Party. This will create trouble for Labor in the NT, as it had only had a majority of one. Scrymgour will now be an independent, and Labor will be forced to negotiate with her.

The federal government has announced its intention to use Howard's NT intervention laws to compulsorily acquire the Alice Springs town camps. While a legal technicality has forced Macklin to extend the timeline for submission to July 28, the government seems adamant it will go ahead with the acquisition after that date.

This follows Macklin's March directive to state housing ministers, in which she stated no new government funds could be released for Aboriginal housing until Aboriginal people signed their land over onto 40- or 80-year leases.

While most communities are standing strong and refusing to sign the leases, it remains to be seen whether the attacks will reinvigorate a national land rights movement.

While we earlier made the assessment that the NT intervention was a key moral weakness for the Rudd government, we have seen the impact of the "Rudd factor" on the Aboriginal rights movement, just as on other movements. Labor continues to enjoy influence over leading conservative Aboriginal leaders. It also is yet to play its hand in announcing the detail and make-up of its promised new "ATSIC-like" representative body: Will this body be used to co-opt some of the Indigenous leaders who might otherwise focus on fighting Labor's new attacks on land rights? That will be Labor's aim.

Similarly, the ALP is using its links in the trade union movement, and in the peak environment bodies, to minimise opposition to its betrayals.

How much it can get away with, how much it can make us pay for the recession depends on the state of class struggles, and the extent to which ALP can continue to exert that influence over the social movements, particularly the trade union movement.

The government needs the trade union bureaucracy, with which it has close links, to be strong enough to police the workers' movement for it.

Responses from unions

We assessed in January that we couldn't expect much real fight from the unions because they don't want to challenge the Labor Party. Even militant unions are tied to the ALP.

There tends to be a "heads-down" psychology during recession, and we are seeing the relative complicity of unions. For example, the ACTU accepts the proposal for one day a week of training wages and accepting down time. These schemes attack full-time work and are very dangerous for the future. Concessions workers and unions make in "bad economic times" tend to carry over and continue when the recession is over.

Unions — from the more blatantly right-wing such as the AWU to the more militant ones — are still working in the context of capitalism, playing a role in working out how to save capitalism.

On the other hand, there are some points of struggle. Struggles that are a continuation ofstruggles under Howard, they create a sense of "us" defending ourselves against "them": they enable the grouping together of people who hate Rudd, who think he's a bitbetter than Howard, who thought he'd bring change but have become disillusioned etc.

So, for example, some unions are buying the government's line of the need for restraint, such as the Alcoa workers who, earlier this year, agreed to defer their 4% pay rise. On the other hand, others are standing strong, with the National Tertiary Education Union (NTEU) forging ahead with its 20% claim and the Sydney Uni branch has already locked in 17%.

The most significant struggle against Labor is the anti-ABCC (Australian Building and Construction Commission) campaign. It is the only union campaign that is nationally mobilising people. Following the response of the Wilcox review, which basically proposes that the policing role of the ABCC continue, albeit under the auspices of a new body, the unions realised that lobbying the ALP on this issue is completely ineffective.

Following the release of the review, we saw the first anti-ABCC mobilisation since the Washington rallies in December. Fifteen-thousand people mobilised in Melbourne, with a few thousand in Brisbane and Perth. There has also been the launch of a national non-cooperation campaign, plus pledged industrial action if any worker/union official is charged. An Adelaide unionist has been charged and the CFMEU is gearing up for a fight.

The ACTU Congress took place in the first week of June. It's interesting to make a comparison between this congress and the first ACTU congress following the election of the Hawke Labor government.Then, one delegate raised criticism of the Accord. This week, the entire congress, including Sharan Burrow, wore anti-ABCC T-shirts and Gillard was booed off stage. Burrow and Lawrence have been under increasing pressure from rank and filers for their pro-Labor stance, and we can see the labour bureaucracy being pushed further to the left than it is comfortable with.

There is no national struggle around the Fair Work Act. The effects of this will be mainly played out in individual workplaces. And we're already seeing these site-based struggles, for example the important West Gate Bridge dispute that ended recently.

There have been fightbacks in response to factory closures and lay-offs such as PacBands, but these have been largely weak and tokenistic; calling for companies to be bailed out but no call for nationalisation.

Workers have definitely shown a willingness to fight under Labor, but the key issue is that union leaderships are still tied to the ALP. The impact of years of neoliberalism is very entrenched: the idea of public ownership is very radical for many unionists. Others believe nationalisation is just not possible.

Any fight against wage freezes, job losses etc will necessarily be limited if there is no fight against the laws in the Fair Work Act. The act completely stifles union activity.

We also need to consider the future situation unions might finds themselves in, in the context of mass lay-offs predicted, particularly in the construction and manufacturing sectors. Unions will lose lots of members. The need to organise unemployed members will become very important.

Rudd and the crisis of political legitimacy

So we're seeing widespread cynicism about capitalism, with break-outs in Latin America and throughout Europe. But we're also seeing the impact of Rudd, Obama and their supposed "Coalition of change". What the system needs them to do is to re-package social democracy: Change the rhetoric to something more humane, while continuing neoliberal and imperialist policies.

The extent to which they can succeed in this is still playing out. We noted at the January NC that a new Labor government would have some impact on people's willingness to mobilise. This was correct. We have the position that Labor must be in power so that working people will realise what they stand for, become disillusioned and look for other alternatives. The flip side of that is that there will be a demobilising effect on some movements.

However, we are registering discontent, growing anger and some willingness to come out against Labor as it becomes more obvious to people that Rudd really is continuing Howard's project. The campaign against the ABCC and the movement for a safe climate are two areas that are bringing people out onto the streets, willing to protest against Labor. The post-budget polls indicated a significant drop in Rudd's approval rating.

That said, 64% approval is a pretty high rating. People and social movements are still having to adjust to the phenomena of a Labor government. Contributing to all of this is the weakness of the Greens. The Fremantle Greens victory is significant. But there is no indication of a change in the Greens' parliamentarism: they don't have a mass action strategy so are not building movements.

The growing anger toward Rudd is real, and it's something that we need to relate to. The electoral success of the Greens is testimony to that.

We need to be prepared for the fact that the effects of the recession on working people are going to get worse this year. Already we are seeing small but definite signs of the breaking up of Labor's consensus. The shine is coming off. The federal government has had its first casualty this week, with the resignation of defence minister Joel Fitzgibbons.

We need to be constantly mapping the political terrain, taking measure of the anger and discontent, engaging with it through our propaganda and in the campaigns when it is channelled into action, however small. And, in being part of these spot fires of dissent, be it around the ABCC, climate change, or whatever else, we need to be raising the need for an alternative to Labor that will champion the rights of workers, the oppressed and the environment.