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    Quarterly Essay 61 Balancing Act: Australia Between Recession and Renewal
    Quarterly Essay 61 Balancing Act: Australia Between Recession and Renewal
    Quarterly Essay 61 Balancing Act: Australia Between Recession and Renewal
    Ebook140 pages2 hours

    Quarterly Essay 61 Balancing Act: Australia Between Recession and Renewal

    By George Megalogenis

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    In this urgent essay, George Megalogenis argues that Australia risks becoming globalisation’s next and most unnecessary victim. The next shock, whenever it comes, will find us with our economic guard down, and a political system that has shredded its authority.

    Megalogenis outlines the challenge for Malcolm Turnbull and his government. Our tax system is unfair and we have failed to invest in infrastructure and education. Both sides of politics are clinging defensively to an old model because it tells them a reassuring story of Australian success. But that model has been exhausted by capitalism’s extended crisis and the end of the mining boom. Trusting to the market has left us with gridlocked cities, growing inequality and a corporate sector that feels no obligation to pay tax. It is time to redraw the line between market and state.

    Balancing Act is a passionate look at the politics of change and renewal, and a bold call for active government. It took World War II to provide the energy and focus for the reconstruction that laid the foundation for modern Australia. Will it take another crisis to prompt a new reconstruction?

    “Australia is in transition. Saying it is easy. The panic kicks in when we are compelled to describe what the future might look like. There is no complacent middle to aim at. We will either catch the next wave of prosperity, or finally succumb to the Great Recession.” —George Megalogenis, Balancing Act

    ‘What sets Balancing Act apart is the rich historical context and the razor-sharp clarity with which [Megalogenis] explains present realities.’ —Australian Book Review
    LanguageEnglish
    PublisherBlack Inc. Books
    Release dateFeb 29, 2016
    ISBN9781925203837
    Quarterly Essay 61 Balancing Act: Australia Between Recession and Renewal
    Author

    George Megalogenis

    George Megalogenis is the author of Faultlines (Scribe 2003) and The Longest Decade (Scribe 2006, updated 2008) and a senior journalist with The Australian newspaper. He spent 11 years in the Canberra press gallery between 1988 and 1999 before returning to The Australian’s Melbourne bureau. He has a small footprint in each area of the media: newspapers, the Internet, television and radio. Apart from his day job, he runs his own blog, ‘Meganomics’, on The Australian’s website, is a regular panellist with the ABC’s Insiders program and appears on Melbourne community radio RRR’s Breakfasters program. The Longest Decade created a record of sorts in 2006 when it was launched by John Howard in Canberra and then Paul Keating in Sydney. The book has been updated and expanded with new chapters covering the end of the Keating–Howard era and the rise of Kevin Rudd.

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      Quarterly Essay 61 Balancing Act - George Megalogenis

      Quarterly Essay

      Quarterly Essay is published four times a year by Black Inc., an imprint of Schwartz Publishing Pty Ltd. Publisher: Morry Schwartz.

      ISBN 978-1-925203-83-7 ISSN 1832-0953

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      BALANCING ACT

      Australia Between Recession and Renewal

      George Megalogenis

      CORRESPONDENCE

      Bernie Fraser, Amanda Walsh, Tarah Barzanji, Allan Behm, Jennifer Rayner, Anne Tiernan, Graham Evans, John Quiggin, Scott Ludlam, Michael Keating and Stephen Sedgwick, Laura Tingle

      Contributors

      Australia is in transition. Saying it is easy. The panic kicks in when we are compelled to describe what the future might look like. There is no complacent middle to aim at. We will either catch the next wave of prosperity, or finally succumb to the Great Recession.

      Each force that is pulling apart our present reads like a turgid unit in a university degree. The technological revolution. Population ageing. The Asian century. Global warming. The mining boom, and bust. The crisis in capitalism. What are the challenges and opportunities? Discuss.

      Some of our leaders have revelled in the detail. Kevin Rudd wanted to be across every subject, although he couldn’t stick to any one topic long enough for the public to catch up. The annoying imprecision of his method sent his successors to the other extreme of simplicity. It will be impossible for coming generations to separate the banalities of Julia Gillard from those of Tony Abbott. Moving forward and Stop the boats will be slogans shorn of their contexts, and our children will wonder if our prime ministers were really that shallow. No, they were the most talented politicians of their era, their old supporters will reply. It was just that governing was impossible in the digital age.

      Malcolm Turnbull brings us back to where we started with Kevin07 – this is a leader who sounds unafraid of the future. But we are no closer to understanding where the world is heading, or our place in it. We do know we want to remain affluent and egalitarian. Turnbull had that platitude worked out before he took over. He told us on the day he sought the Liberal leadership last September that he wants Australia to remain a high-wage, generous social-welfare net, first-world society. But in making that pledge, he acknowledged the root of our anxiety: the fear that we will be overrun by globalisation once China no longer has any need for our coal and iron ore.

      The national mood has been defensive for so many years now that it is hard to recall the last time we were genuinely free of hang-ups and could look to the future with optimism. We greeted the new millennium as the cheery hosts of the Sydney Olympics, but virtually every message we have sent to the world since then has betrayed our parochialism. The Tampa episode of 2001 marked the birth of a long, complex phase of Australian insularity. Its first peak had nothing to do with asylum seekers. It came a few years after the Tampa, when the boats had stopped and the mining boom was underway. John Howard gave back every windfall dollar in the budget so that we could treat ourselves. That was the more revealing expression of our self-absorption, unprompted by a global crisis. We simply didn’t care enough about the future to reinvest some of that money on behalf of our children. But then Howard double-crossed voters with his WorkChoices program, and the true source of our anger was confirmed – it was globalisation itself. With WorkChoices, Howard reminded Australians that their government no longer felt obliged to defend them against the open economy. Rudd’s election win in 2007 briefly broke the spell. We applauded his handling of the global financial crisis, but once the danger had passed he lost his governing nerve, and a new cycle of narcissism commenced. The boats returned in 2009, reviving the old Australian dread of foreign invasion. Abbott ultimately turned the asylum seekers back again with the help of Labor’s more punitive policies, but still we were miserable, with him in particular and the world in general.

      The supposed strengths of the Australian character – our openness, our love of technology, our pluck – have been notably absent in our attitude to the future. Put bluntly, we don’t have a plan. We know we need one, written jointly across government, business, trade unions and civil society. But we keep finding excuses to return to the trenches of our prejudice. Even there, within the sanctuary of the tribe, there is little cohesion. The Liberal Party is split along fault-lines of ideology and personality. Labor still lacks purpose. The trade unions divide between the ineffective and the corrupt. Within my own profession, the media, too many commentators have assigned themselves to covering their rivals. News Corp, for instance, deploys more resources to attacking the ABC than analysing the economy. Only business appears to have unity of purpose in its relentless pursuit of concessions from government.

      The most consistent message sent by voters to the main parties over the past decade and a half has been the demand for security. Both sides have taken this to mean border protection and bribes at the ballot box; one fist clenched against the rest of the world, while the other hand offers cash to the most aggrieved. Yet each leader that tried this was bewildered when voters could not be appeased. The truth is that the demand for security is more sophisticated than politics has allowed. We want our leaders to think for the long term; to prepare us for life beyond the mining boom. Both sides have found this in their research since the earliest days of the boom, but both have been unable to see past the next Newspoll. Something deeper is happening here than the predictable incompetence of politics. The system knows what voters are really asking for: a return to some form of government intervention in the economy. Yet this is resisted because of a misguided faith in the open economic model. The only leader who seriously tried to find a way out of the impasse was Rudd, but he lost focus after the global financial crisis. Now a Liberal prime minister is being asked by the public to redraw the line between the market and the state.

      The economy was the primary reason Turnbull gave for challenging Abbott. It is clear enough that the government is not successful in providing the economic leadership that we need, he declared.

      It is not the fault of individual ministers. Ultimately the prime minister has not been capable of providing the economic leadership our nation needs; he has not been capable of providing the economic confidence that business needs … The big economic changes that we’re living through here and around the world offer enormous challenges and enormous opportunities and we need a different style of leadership. We need a style of leadership that … explains the challenges and how to seize the opportunities. A style of leadership that respects the people’s intelligence … We need advocacy, not slogans.

      He wasn’t pitching to undecided colleagues, because the numbers to topple Abbott were already locked in. This assessment was delivered for the benefit of the public, and six months after the coup it remains the most remarkable admission that a Coalition government has made while in office.

      No previous regime removed its leader on grounds of economic incompetence, although others probably should have. Before Abbott, the conservatives had replaced three sitting prime ministers – Billy Hughes in 1923, Robert Menzies in 1941 and John Gorton in 1971. In each case, the basic complaint was leadership style: arrogance, in short.

      With Abbott, the personal and the polling were secondary to economic management. His erratic, uninspiring leadership demoralised business and consumers to an extent that no prime minister had since Gough Whitlam. Confidence in the future is the essential ingredient of economic growth. For a nation in transition, a loss of confidence can create a self-fulfilling prophecy of missed opportunities. Businesses become risk-averse. Consumers close their wallets. Employers respond to that weaker demand by cutting costs. Workers react to the squeeze on their wages by reducing spending. And so on, until growth stalls.

      It was on Abbott’s watch that we finally lost our global economic bragging right. The verdict was confirmed on the very day he was ousted, 14 September 2015, when the International Monetary Fund released its annual review of the Australian economy. Australia has enjoyed exceptionally strong income growth for the past two decades, the IMF concluded. But the waning resource investment boom and sharp fall in the terms of trade have brought this to a halt. A cyclical recovery is likely in the near term, but over the medium term, income growth is likely to slow to a rate in line with other advanced economies.

      Identifying when Australia’s long run of economic over-achievement ended is relatively easy. It was June 2014, when our unemployment rate crossed 6 per cent for the first time in eleven years. Timing matters here. This was just one month after the release of the Abbott government’s pugnacious first budget. Unemployment had been creeping

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