Eurocentric world view is not in the national interest

As the world becomes a more complicated place politically, economically and in terms of security and defence, it is fitting to assess where we are as a nation and what has changed. The two most senior ministers in the Howard government, treasurer Peter Costello and foreign minister Alexander Downer, have both reflected in recent days on how the perception of Australian exceptionalism globally has been lost. This is due in part to changing world affairs but more so because of the decisions our leaders have taken to adjust to them. Most worrying is Mr Downer’s observation on Monday that modern Australia has lost its passion for innovative liberal policymaking, and instead replaced it with the policy packages of Europe. Across a sweep of issues and policy areas, this trend is gathering pace at a time when the United States is moving further in another direction. With Europe still consumed by energy policies that increase costs and reduce choice, the US is refocusing on the policies that saw it become the world’s biggest energy producer, and break its dependence on the fickle politics of the Middle East.

As Mr Downer writes, our international peers were once impressed by Australia’s economic growth rate of approximately 3.5 per cent, growing productivity, growing per capita incomes and growing consumption and business investment. The government ran a budget surplus and had paid off all net government debt. Australia had nurtured its soft-power skills of diplomacy through the Asian financial crisis and regional conflicts from East Timor to Solomon Islands. We offered a bridge into Asia as a founding member of APEC and later the East Asia Summit. Today we have policies that mirror the European malaise. Big deficits and high levels of debt, which increasingly is being spent on government services that generate little by way of net economic return. Mr Downer says like many European countries, Australia has been pouring tens of billions of dollars into subsidising expensive and inefficient energy resources when it’s sitting on some of the cheapest available naturally occurring fossil fuels. He argues that because we have become a half-hearted supporter of the Western alliance, what we say about Ukraine is completely irrelevant.

If Mr Downer is correct, given the view put by the nation’s top military officer in London, Grant Mason, on Monday, this is a severe miscalculation. Brigadier Mason says Russia’s use of North Korean and Iranian forces to destroy democratic Ukraine is “everyone’s business”, and described Australia’s role in holding back Vladimir Putin’s ambitions in Europe as “so important”. If Mr Downer is right, Australia is losing its soft-power credentials in the world because as a country we have abandoned economic reform and replaced it with a European-style social democratic model of big government spending, almost zero productivity growth, stagnant real living standards and GDP growth that is anaemic. His concerns are shared by former Treasury assistant secretary David Pearl, who says Jim Chalmers and Treasury secretary Steven Kennedy have worsened the economic malaise by prioritising employment over fighting inflation.

He says Dr Chalmers’ objective was not a permanent reduction in unemployment, which requires a more productive, flexible and efficient economy, but to maintain for as long as possible our overstretched, post-pandemic labour market in which employers were desperately competing for available workers. Dr Chalmers’ political strategy, which has suited the trade union movement and resulted in a less flexible workplace, faced no pushback from Treasury, which in the early 1970s did all it could to dissuade Gough Whitlam from fuelling inflation by excessive public spending. As we report on Monday, Dr Chalmers is honing the message to voters that the worst of the inflation challenge is behind us and better times are ahead.

Tough conditions have reinvigorated analysis of Donald Horne’s perceptive masterwork, A Lucky Country. As Henry Ergas and historian Alex McDermott explored on Saturday, Horne’s work was rooted in disdain for the ruling classes and argued Australian life, combining scepticism and “delight in improvisation”, had resulted in dependence on a type of gambler’s luck. In retrospect, Horne’s view ignored the fact it was the adaptiveness of primary exporters, and entrepreneurship of business leaders such as Lang Hancock and Arvi Parbo, that set the foundations for the mining booms Horne derided as just due to luck.

Ergas observes the belief that Australia’s prosperity was the result of good fortune rather than entrepreneurship and aspiration became one of the left’s key illusions. The poor treatment being given today to our major exporters is evidence that this illusion endures. We are today the product of the cultural revolution Horne championed. A new order dominates but Horne’s central complaint still rings true; it is elites that are the problem, not the people. Today’s political outlook is that as tough economic conditions continue, voters are more likely to reflect on what is being lost. The embrace of a more Eurocentric view might please the bureaucrats in the UN but it is not what has defined us as a nation, and likely not what voters will put up with for very long.