After New Labour: political and policy consequences of welfare state reforms in the United Kingdom and Australia

Growing global integration, combined with the collapse of Soviet Communism, created major challenges for centre-left politics in the democratic world. This article considers two transformative Labour Party-led experiments that refurbished the welfare states of Australia and the United Kingdom, respectively. In Australia, this includes the Hawke–Keating (1983–1996) and Rudd–Gillard (2007–2013) Governments, and in the United Kingdom, the ‘New Labour’ Blair–Brown Governments (1997–2010). We present a comparative political economy of these welfare reforms, one that draws on both the policy transfer and policy diffusion literatures. By the 1980s, both parties faced three problems related to national economic decline, the ideological challenge to Keynesianism, and the decline of the traditional working-class electorate. We argue both parties developed common electoral and governing strategies aimed at winning support for a market-driven social-democratic program. Policy simultaneously compensated voters for market inequalities and deepened market relations. Focusing on how labour governments managed post-industrial change, responded to inequalities, advanced quasi-markets, and negotiated with union partners, we argue these experiments produced increasingly contradictory results that left both parties electorally and ideologically depleted. Despite important similarities, we note differences – starting points, discrete events and institutional variations have mattered to reform paths and their consequences.