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Once a stronghold of coalmining, industrial and energy employment, the Hunter Valley now has the second-highest rate of youth unemployment in the country, second only to rural Queensland. Photograph: HO/Reuters

I want to start in Abermain. Its a town of about 2,500 people in the Hunter Valley, about 8km from Cessnock. It started as a coalmining community in the early 20th century and slowly became a commuter town for blue-collar workers in the Hunter industry.

It has always been a Labor stronghold but, at last years federal election, something shifted. In the federal seat of Paterson, One Nation won 12.8% of the vote the highest in any seat outside of Queensland. In a result that is surprising but not unique, the majority of One Nation preferences in Paterson went to Labor. In Abermain, they won 16.27%.

Once a stronghold of mining, industrial and energy employment, the Hunter Valley now has the second-highest rate of youth unemployment in the country, second only to rural Queensland. Towns like Abermain are the ground zero of Hansons appeal and there are plenty of similar blue-collar towns and suburbs across New South Wales.

At the moment, progressive politics doesnt have much appeal to towns like Abermain or its equivalents in Wisconsin and Michigan, or the villages in England and Wales that voted for Brexit. We are losing blue-collar communities because we dont have answers for them.

Regional NSW has effectively been in recession for years. Regional manufacturing capacity has shrunk by 20%, which has seen incredible numbers of high-wage jobs go overseas. Often, there arent even low-wage service jobs to replace them the poverty just compounds on itself.

I come from a country town. I know what those jobs represent, not just for the workers but for the whole community. When the jobs go, the people who stay face a collapse of the social organisation around them.

Those people see the political system as broken, rigged against them. Their living standards have declined, not risen, and every day is driven by anxiety about paying bills, housing security and insecure work. Can we be that surprised when they look for desperate solutions?

The success of Trump, Hanson and Brexit is that they harness the anger that failure generates and channels it into a perverse ethno-nationalism that is pitted against the communities that have benefitted from globalisation.

The real risk for progressive politics is that this split becomes the axis of future political contests. Dividing Australian society into the winners and losers of globalisation splits the progressive coalition in two.

In the past 20 years we have seen the rapid growth of the progressive middle class or, as the Sydney Morning Herald recently referred to them, progressive cosmopolitans: educated professionals, many of whom have benefited from the progressive reforms to education championed by Labor governments.

Similarly, we have created a unique and cosmopolitan society from the waves of immigrants who have made Australia home. LGBT Australians live in a better, more liberated world than a generation ago. Women have won important rights that have dramatically furthered the cause of equality.

We will not pander to the social conservatives. These struggles for justice and equality must still be at the core of the progressive agenda. The elimination of racism has to continue to be a priority, suicide rates amongst LGBT youth in particular are still unacceptably high, women still do not have full equality in the workplace or in our society.

But, without a strong progressive coalition, these priorities are under threat. The ethno-nationalism of Trump pits those communities against communities that feel left behind; especially those stuck in regional towns once the factories have gone. Its divisive, its dangerous and we know that it is effective.

Australian politics has already seen this divide. As the writer Richard Cooke puts it, asylum seekers has become the way in which the different classes of Australian society argue about globalisation.

We have seen what this does to the progressive coalition. On one side, the conservatives have used it as a way of winning working-class support in places like western Sydney. On the other side, it has seen large parts the progressive middle class decamp to the Greens, especially in the inner cities.

Unable to unite these two parts of its constituency, it has left Labor wedged fecklessly supporting a torturous program of indefinite detention and flagrant human rights violations. Without unity, the progressive coalition will lose.

And while I have always been more of a Mark Lennon guy than his Russian namesake, the real question is Lenins: What is to be done?

Inequality condemns some Australians to a life of desperation unimaginable to the professional middle class

Inequality, the denial of peoples aspirations for a decent life is degrading, alienating and condemns some Australians to a life of desperation unimaginable to the professional middle class.

We need to make the populist right redundant by actually listening to regional and suburban Australia. We need to practise a different kind of politics that treats their communities with respect and commit to delivering jobs to thousands of towns and suburbs like Abermain. It is just as important to internalise the moral imperative as it is for progressives to absorb the political dynamics here.

I think it starts by re-establishing economic justice as both a central and binding element of the progressive agenda and a moral imperative of our movement.

We need to permanently retire the Blairite idea that social democracy should evolve away from inequality as a central concern. We can no longer accept a system that condemns entire sections of Australian society to a life of desperation and poverty.

The times are coming to suit us.

I dont think that the Labor partys recent shifts on economic policy are occurring in isolation. The left is on the march. The partys neoliberals the Costas, the Tripodis, the Lathams are a spent political force and have lost critical debates on the partys policy.

We have to have a credible plan to deliver economic justice to all Australians and that will require a bold re-imagining of the role of the state in the economy, jobs and regulation.

I believe that our goal should be nothing less than the re-industrialisation of the Australian economy to deliver full employment in our suburbs and regions. Eighty-three per cent of Australian voters support that objective but it requires a commitment with the scale and the ambition of Chifleys postwar reconstruction.

After 20 years of neoliberal reform we have built a policy apparatus in Canberra that is failing to engage with the real problems facing our economy and unable to access the real drivers of productivity, growth and living standards.

The Productivity Commission, alongside the Treasury, the Department of Finance and the Department of Prime Minister and Cabinet, are committed to a discredited neoliberalism that is increasingly out of step with what our country needs.

We will need a root and branch reform of these institutions to ensure that they are able to reflect a more advanced, nuanced and progressive understanding of the role of the economy in our society.

Similarly, we should reform the Reserve Bank of Australia to include employment as a key objective of our monetary policy. I respect the independence of the Reserve Bank but its current focus on inflation is too narrow we must align our most powerful economic levers with our key economic challenges.

Additionally, we need to revive the Australian Workplace and Industrial Relations Survey: rich data about the Australian labour market will be critical in shaping the future of work.

It is time to smash the orthodoxy that government cannot create jobs. Active government intervention in the labour market has been a critical part of Labors political agenda since it was founded and I believe that it is worth revisiting.

We need to build the economy we want, not simply what is dictated to us by a neoliberal elite

We need to build the economy we want, not simply what is dictated to us by a neoliberal elite. A national industrial strategy would find ways for governments to invest directly in critical industries that will create jobs.

This isnt impossible or even that abstract.

We should create low-interest loans for investment in Australian manufacturing jobs. Our manufacturing sector has been starved of investment for decades and it is time to put our money where our mouth is. It wont be popular among the bean counters but thats the point really.

We can build an advanced manufacturing sector by capitalising on the strength of our nations research and development capabilities and create a fairer and more productive future for our economy.

That means significantly reshaping the governments bizarre narrative around innovation. As the economist Mariana Mazzucato describes in The Entrepreneurial State, real innovation requires sustained and creative government intervention and not a misplaced belief in speculative capital.

Similarly, we need to renew the social democratic interest in establishing cooperatives, particularly in agriculture. We can deliver investment in regional communities, unlocking the quality and efficiency of Australian agriculture and create jobs in our food manufacturing sector.

It is time that we radically expanded the scope of the Department of Employment and gave it the responsibility to shape the future of work in this country. Labor took a policy of full employment to the last federal election, lets create a federal department that can achieve it.

The Department of Employment could oversee the mass pooling and retraining program for workers affected by the transition from fossil fuels to renewable energy, especially in the Hunter Valley. Similarly, a rejuvenated department could lead the government-wide response to mass automation, which will be a critical issue in the coming decades.

By setting and enforcing employment targets, we can start ensuring that government is playing an active role in the labour market. It can also be a powerful force for equity: it should be leading the governments efforts to reduce the wage gap between women and men, and stamp out discrimination in the workforce.

Two-thirds of the projected job growth will be in industries dominated by women; health, human services and education, aged and child care, hospitals, schools and other education. Good jobs for women are as important as good jobs for men.

It would mean that we can offer real answers for people in insecure work. Portable entitlements, better protections for casual and contract workers and the muscular enforcement of our current protections have to be a priority of the next Labor government.

Finally, I support Thomas Pikettys proposal to use an inheritance tax to fund a one-off capital grant for every citizen at the age of 25. According to the Community Council of Australia, a 35% estate duty on all estates over $10m would raise at least $3.5bn in government revenue, while affecting only a fraction of the top 1% of Australians.

A universal inheritance would give millions of young people a future: they can put it to a house, they can start their own business, they can pay off their university fees. It may be bold but politics as usual doesnt offer the scale of policy that is required to genuinely tackle regional and intergenerational inequality.

The rise of Trump and the far right is, I believe, clarifying moment for the left. In the course of a single year, global politics has been transformed. We live in extraordinary times.

But Hanson will fail and Trump will fail, because they dont offer solutions to their voters. They offer nostalgia for more certain time with a more limited form of globalisation and more rigid boundaries around our social and economic spheres. Importantly, there is a strain of left thinking that shares that nostalgia.

Hanson will fail and Trump will fail, because they dont offer solutions. They offer nostalgia for more certain time

But those boundaries punished women who wanted to make their own choices. They refused to allow LGBT Australians to be themselves. And they were built on a model of racial hegemony that is not only immoral but fundamentally incompatible with the Australia that is all around us.

We deserve better. I remain powerfully optimistic about Australian democratic socialism.

Not only can we build a model of social democracy that is capable of uniting both the winners and losers of globalisation, I believe that Australia is uniquely capable of doing so.

We do not have nearly the economic and social dysfunction of the United States or the UK.

We have a strong labour movement with strong connections to a governing political party. I have defended the union link and I believe it is now more important than ever.

We have leaders who are committed to creating a new forms of organising and campaigning especially Sally McManus, who I believe will be the new leader of the ACTU.

And finally, I am also an optimist because of our movements history. For over a hundred years we have demonstrated a capacity to creatively link our struggles to the aspirations of ordinary Australians and win.

We had better get on with it.

This was a speech given to the NSW Fabians Society event titled He Won: Progressive Politics in the Age of Trump. A podcast of the event is available here fabians.org.au/podcasts

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Dynamic socialism: how progressives can win back the blue-collar heartlands - The Guardian