Socialism/capitalism with Australian characteristics

There's a new establishment running Australia and there are new rules.

The thumping success of the Albanese government at the federal election on 3^rd May 2025 means that a ‘new’ Australian economic/political ‘realty’ needs to be understood. That’s the purpose of this Substack post. I’ll give you my analysis of that reality.

Now holding 94 of the 150 lower house seats in parliament the Labor government is supreme. It must be assumed they will remain supreme for a long time. And in their supremacy Labor are changing the very institutional structures of Australia.

Essentially the concept and practice of free market economics has and will continue to be relegated to that of an historic hangover. Instead, Australia is being transformed into an elite establishment ‘guided’ economy.

This should be no surprise. Labor has been upfront about their agenda.

I first wrote about this in January 2023 in a series of articles The New Australian Socialist Experiment. I was reflecting on the seminal article by the then new Labor Federal Treasurer, Jim Chalmers where he dismissed the Labor Keating/Kelty free market heritage stating “…we can’t just retrofit old agendas or retrace the steps of our (Labor) heroes…’

Chalmers explained the Labor vision that ‘… government has a leadership role to play …to guide how we design markets, facilitate flows of capital into priority areas and ultimately make progress on our collective problems and purpose.’ Chalmers tagged this as a ‘rebirth of Australian capitalism.’

What was in early 2023 the Chalmers Labor vision, has been significantly advanced during Albanese Labor’s first term. There are several key elements to this vision implementation.

Industrial relations

A big vision implementation step has been the two industrial relations laws of 2022 and 2024. I summarised and explained these in The IR laws of Legislative Nonsense. The laws may be legal nonsense in my view, but they are not nonsense in their business and economic effect. They put unions at the centre of business decision making.

Key institutions

There are also critical institutional markers. Labor disbanded the Administrative Appeals Tribunal, an independent authority to which individual Australians’ could appeal against departmental decisions adversely affecting them. It appears that the AAT was excessively independent for Labor’s agenda. They have replaced it with a Labor orientated body.

They sacked the staff of the government funded free market think, the Productivity Commission, inserting Labor ‘visionary’ personnel. The Reserve Bank of Australia has been ‘restructured’ to Labor’s vision.

Compulsory superannuation

But the big institutional gun in Labor’s supremacy is the compulsory superannuation system. Effectively the broad Labor ‘family’ controls a gigantic quantity of Australian workers’ savings. Through this, the integrated Labor network dominates Australian capitalism.

Consider this. As of January 2025, total worker savings ‘assets’ in all superannuation funds was $4.1 trillion. Compare this with Australia’s four dominant banks which, combined, have $A3.8 trillion in assets.

But the area of greatest control and centralisation of workers’ money under the system is the Industry Superannuation funds. Just 21 funds control $A1.4 trillion of workers’ money. Effectively these funds operate as a single coordinated financial unit. This makes them the ‘big daddy’ of the Australian capitalist economy. Nothing is bigger. The trustees of these funds are drawn from small cliques of former and current union officials and employer representatives For example, six industry funds managing $A690 billion have thirty-two current union officials as board directors. The Labor establishment is tight.

Through this legislatively mandated system, the Labor controlled Industry Funds exert huge influence and often dominant control over corporate companies in which they have significant shareholdings.

These Industry funds are at the financial centre of this Labor dominance of Australia’s financial institutions. Effectively, unions (who would ordinarily be thought of, and claim to be, socialist, to some degree at least) have become the most powerful capitalists in Australia. Their power is enhanced because they don’t have imposed on them the levels of transparency and accountability that apply to other financial institutions and corporate businesses in Australia.

This money machine model extends into multiple union-controlled redundancy, long service leave and other funds that hold billions of dollars of workers money. In all, the extraction of money and resources through this layered system bestows on the Labor Party itself a massively sophisticated capacity to dominant the Australian economic and political scene. We are now seeing the true unfolding of that dominance.

The Labor Establishment – Chinese Communist Party parallels.

This package of control I’ve described above quite naturally extends into government departments, the justice system and academia. And when this jigsaw puzzle of institutional control is put together, the picture that’s revealed is that the Australian Labor movement is the Australian ‘establishment’ of this century. What does this mean?

If I’m to draw a very broad comparison, this Australian Labor establishment resembles several key aspects of the Chinese Communist Party (CCP).

Stop! I’m not doing a ‘reds under the bed’ rant.

Rather, to appreciate what I’m about to argue I’d ask you to momentarily sweep away the idea of the CCP as an authoritarian, oppressive one-party dictatorship intent on dominating the globe. That might be true about the CCP but it’s obviously not applicable to the Australian Labor establishment.

The comparison however is this.

Contrary to probably most pre-conceptions, the CCP is not a capitalist hating regime. Quite the opposite. The CCP as an organisation has embraced capitalism and is at the centre of capitalism in China. But the CCP are mercantile capitalists, not free market capitalists. That is, the members of the CCP are effectively ‘merchants’ focused on accumulating wealth through trade. And for several decades they have manipulated the global free trade system to make themselves rich. They have been massively successful. (As an aside, I suspect that this explains Trumps trade war thinking. He’s attacking head on the CCPs mercantile capitalist exploitation of global trade particularly USA-China trade.)

My take on the CCPs mercantile capitalism has in part been formed following work I did some years ago for several Chinese businesspeople looking to invest in Australia. My clients were not connected but each represented substantial Chinese firms. I quickly learned that each were ‘princelings,’ sons of CCP billionaires and each a highly placed member of the CCP. Add these personal experiences of mine with studies by Chinese watchers and one thing is clear. Any Chinese national who runs a business in China of any substantial size, is and must be a member of the CCP. That is the CCP is a formalised conglomerate of wealthy businesspeople. This has become more so under President Xi Jinping. This CCP conglomerate runs China in an exceedingly authoritarian manner. They crush dissent. People who even inadvertently seem to threaten the brutal authority of the CCP disappear, are removed, ‘re-educated’ and more.

The Australian Labor establishment I talk of above has structural parallels to the CCP but with considerable differences of course. The CCP has formalised the mercantile capitalist elite to the membership of the CCP.

The Australian Labor establishment does not involve CCP-like, formalised political party membership. ALP and union membership is common but not required. The totality of the establishment ‘membership’ is quite opaque, hard to identify for outsiders, operates on ‘insiders’ understanding ‘wink-nudge’ signals but is non-the-less highly disciplined.

The extent of this establishment discipline was and is on stark display in the Albanese government’s takeover of the powerful construction union the CFMEU. I’ve explained this in CFMEU-What the heck is going on?(August 2024). Put simply the CFMEU became so powerful within the Australian union movement that their then leader John Setka, announced that he was going to take over the ALP. The controlling Labor establishment could not tolerate this and so took over the CFMEU instead. The expelled John Setka who as an excluded man, now says that he suffers from a mental health condition.

Such public drama is rare. Establishment discipline works instead on quiet exclusion in particular targeting people’s income sources. If you are ‘inside’ the establishment, you’ll be assisted and guided to have rewarding income, even riches. If you misread the establishment signals, demonstrate independence or worse challenge the establishment rules you’ll find yourself excluded. This happens not just within the membership of the ALP, unions and bureaucracy. It’s now extended heavily into key financial institutions and some corporate businesses.

Now I don’t want to overdo the CCP comparison. Australia has a long tradition and culture of free market entrepreneurship. People can and do become millionaires and billionaires without seemingly bending the knee to prevailing incumbent political power. That is not the case in CCP China. Australia’s democracy is robust. Individuals can openly engage in political debate and criticism. Elections are genuine. In the privacy of the ballot box the Australian people can and do change the political landscape. This is not the case in CCP China.

However, I think my comparison has validity as far as I take it. The huge rise of the financial dominance of the Australian superannuation sector is a seismic upheaval. But more, the massive concentration of workers savings in the industry superannuation funds has transformed the nature of the political, economic and financial institutions under which Australia is governed. The transformation started slowly in the 1990s but roared ahead over the last 15 years or so as billions of dollars poured into superannuation. That upheaval has involved a great jump to the political Left. And staggeringly the Liberal/National coalition (the alleged alternate government) displays zero comprehension of the extent to which they have been institutionally neutered.

But this new powerful Australian establishment of the Left is not like the Left of old. As Xi Jinping preaches about the CCPs ‘Socialism with Chinese Characteristics’ we can declare I think that the new Australian establishment is about ‘Socialism with Australian characteristics’. As the CCP uses the term ‘socialism’ to mask its actual practice of mercantile capitalism the Australian establishment Left is pursuing an agenda of ‘guided’ capitalism, to borrow the term from Treasurer Jim Chalmers.

As an example of how this uniquely Australian Left takeover of capitalism has been managed at the political level this excellent article from The Australian (May 2025) gives an insight. The article describes in some detail the transformation of PM Anthony Albanese from a radical, hard Left youth in the 1980s, to a master manager of Labor’s complex Left/Right factionalism. In summary the Australian Labor Left have modified their socialist ambitions given the nature of the Australian economic and political culture. And the core enabler of this has been the capture of Australian capitalism by the Labor socialists through compulsory superannuation.

Where to from here?

The behaviour of all establishments is to retain, enhance, expand and further centralise their power. In this context and with Labor’s dominance of federal parliament, I can envisage several agendas being rolled out. Agendas such as the following!

· Expansion of industry wide portable long service leave funds. These are standard in the commercial construction sector and replicate superannuation with the delivery of large amounts of workers money into union-controlled funds. Expect this to be broadened across a big bulk of the economy over time.

· Construction union control extended into the housing sector. Currently the housing construction sector mostly functions through thousands of small business tradies without union influence. Expect this to be attacked through multiple union ‘friendly’ requirements being imposed.

· Gig economy superannuation. The 2024 ‘Loophole’ industrial relations laws delivered control of gig economy workers, particularly ride-share drivers, to a parallel industrial relations type system. My view is that the agenda is to leverage gig companies into deducting superannuation contributions from gig workers earnings, for payment to industry funds.

· Attacking Self-Managed Super funds (SMSF). Close to 1.2 million Australian’s have their superannuation in some 638,000 individual SMSFs with total assets of around $1.02 trillion. (ATO stats) SMSFs are a major annoyance and competitor to the financial power of the establishment’s industry funds. Expect laws to make SMSF operations more difficult. I suspect that the current proposals to tax unrealised capital gains in superannuation is primarily targeted to impact SMSF. This particularly attacks farmers and small businesspeople who have their farms/business assets locate in SMSFs.

· Workers’ superannuation funding pet political projects. We see this already with industry funds investing in wind and solar energy projects. These may prove to be profitable investments but the political motivations arounds such investments are obvious. Expect more of this.

This is just a short list of what should or could be expected is in the political pipeline.

Those who are believers in free market capitalism would likely cry ‘we are all ruined!’ But who knows! It may prove that this new Labor socialist/capitalist establishment may prove to be brilliant managers and directors of the Australian economy. They may fulfill the vision stated by Treasurer Jim Chalmers and be stunning at ‘guiding the design of markets, facilitating flows of capital into priority areas and ultimately making progress on our collective problems and purpose.’

Whatever the outcome, this new establishment is firmly in control.