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AUKUS
Over the week there has been a flow of Pearls and Irritations articles on the AUKUS deal. Allan Behm, Joseph Camilleri, Peter Dawson, Denise Fisher, Cavan Hogue, Marilyn Lake, Mike Scrafton, Jon Stanford and Brian Toohey have written on most aspects of the deal. They cover the huge strategic and diplomatic re-alignment involved (is it a return to the pre-1942 order?), the associated separation from defence cooperation with EU powers, our loss of strategic and operational sovereignty, and the long timelines involved: much will change before the submarines hit the water.
As Cavan Hogue points out, Labor, ever afraid of a khaki election, has meekly gone along with AUKUS. The Greens’ concern doesn’t seem to extend beyond the nature of the submarine’s power plant.
Paul Keating sees it as turning Australia away from the Asian Century and reverting to a “jaded and faded Anglosphere”: Keating turns fury on Labor and government over AUKUS deal in an article by Deborah Snow in The Sydney Morning Herald. Subsequently Penny Wong has raised questions about the impact of AUKUS on our defence autonomy.
Kevin Rudd, writing in Le Monde, makes his point clearly: Canberra’s decision on submarines deepens strategic tensions in Southeast Asia. He reminds us that our relationship with France is not just as a supplier of military kit. On the battlefields of France and Belgium 50,000 Australians lie buried (a consequence of our joining with the British in a conflict that had nothing to do with our interests). And there is the 2012 Australia-France strategic framework, enhanced by prime minister Malcolm Turnbull in 2017. He is scathing about Scott Morrison’s offensive behaviour towards France, “but beyond this, it has been Morrison’s failure to understand the wider foreign policy repercussions of his decision that is perhaps the most appalling of all. It has affected European solidarity in forming and consolidating a common strategy for dealing with the impact of China’s global and regional rise.”
That article is written for a global readership. On Thursday’s ABC RN Breakfast he covered the same ground and pointed out the domestic politics of Morrison’s move, which is about wedging Labor in the upcoming election. (13 minutes.)
The Council on Foreign Relations has published two guest posts on AUKUS. James Curran of the University of Sydney sees AUKUS as a “logical end point” of Australia’s foreign policies, but he sees it as “the biggest strategic gamble in Australian history” because it binds our foreign relations for generations. “Australia has opted to cleave to older outlooks rather than to forge a new path to a more secure Asia” he writes. The other guest post is by Council Fellow Ian Johnson, who sees AUKUS as a deal playing into China’s hands: “The sub deal could look anachronistic: an effort by Anglo-American countries to play to their one, fading advantage – advanced military technology – while allowing China to use its economic power to draw countries inexorably into its orbit”.
Stan Grant presents a view broadly similar to Ian Johnson’s: Despite what Joe Biden says, we’re not approaching a Cold War. China is not the Soviet Union, for one thing. “China’s approach is less of direct confrontation but a steady encirclement. There is an old Chinese saying that he who is assured of victory has no need of war. Xi knows this. For all of his heated rhetoric, China is not best served by conflict,” he writes.
The Economist sees AUKUS as an opportunity for the UK to extend its influence in the Pacific, scuppering emerging relationships between Australia and other European countries with an interest in security in the region: The strategic reverberations of the AUKUS deal will be big and lasting. The submarine deal was the biggest element of those relationships, but it was far from the only one. (Has our government’s sentimental relationship with Britain allowed us to be drawn into Boris Johnson’s conflicts with mainland Europe? If so, it’s a great price we pay for our de facto subservience to a spent power, and it reinforces the case for our republican movement to see its campaign as something more substantial than the image on our coins or the design of our flag.)
Hugh White, writing in The Saturday Paper – From the submarine to the ridiculous – is no enthusiast for the now-abandoned submarine deal with France, but he sees AUKUS as a strategic mistake. US voters have no appetite for military engagement with anyone, which means that “we in Australia simply cannot plan our future on the assumption that the US will always be there for us, no matter how many nuclear subs we buy.” Whether we like it or not, we have to live with China’s growing power and influence. Morrison “has tied Australia to a deal that undermines our sovereign capabilities, overspends on hardware we can barely be confident of operating, and drags us closer to the front line of a war we may have no interest in fighting”.
On last week’s Saturday Extra Geraldine Doogue interviewed Phillip Coorey of the Financial Review on the political implications of AUKUS. (13 minutes.) AUKUS was only a day old; we can expect a great deal more in today’s Saturday Extra.
(Note that The Economist sits behind a paywall, but you can register to receive up to three articles a week. See Schwartz Media Help for advice on paywall access to The Saturday Paper and other Schwartz Media publications.)
Non-military consequences
The most extraordinary aspect of this deal has been the way in which the Morrison government has unnecessarily antagonised the French, not only in terminating the submarine project but also in the deceitful way it has kept France out of the picture, and hasn’t given it a chance to offer its own nuclear submarines. This is on the eve of Emmanuel Macron becoming, de facto, the EU’s senior statesperson as Angela Merkel stands down.
The Morrison Government seems to have prioritised Australia’s relationship with the UK over our relationship with the EU, even though it makes no sense economically. The countries of the EU have a population of 446 million and a GDP of $US16 trillion, compared with the UK which has a population of 67 million and a GDP of $US3 trillion. We have backed the offshore island rather than the mainland.
Writing in Politico Jakob Hanke Vela and Barbara Moens discuss the prospect of an Australia-EU trade agreement materialising: it probably will, but under a cloud of mistrust and in a much less advantageous form than it would have if our government had treated France with more respect. EU-Australia trade deal runs aground over submarine furore.
Romain Fathi of Flinders University and Claire Rioult of Monash University also write of the economic consequences – C’est fini: can the Australia-France relationship be salvaged after scrapping the sub deal? – in The Conversation. Besides the risk to the trade agreement, the consequences are a loss of investments and jobs associated with the submarine contract, a loss of defence training opportunities in Australia, abandonment of emerging economic and cultural arrangements between South Australia and France, and a downgrading of relationships between South Australian and French universities.
The pandemic’s progress
The regular analysis of the pandemic and vaccination is now on a separate web page.
Politics
Who are these gentlemen demonstrating in Melbourne?
Some call those demonstrators “freedom fighters”, but what we saw on our screens over days of rioting was a bunch of angry “white” men. There was hardly an Asian face, and hardly a woman to be seen. And just what was the cause?
On Wednesday morning’s RN Breakfast program Fran Kelly interviewed Victorian Deputy Police Commissioner Rick Nugent (10 minutes) followed by ACTU President Michele O’Neil (9 minutes) about the demonstrations. In a series of leading questions Kelly seemed to be determined to suggest that some “left” group – ANTIFA perhaps, or the unions – might have been responsible for the violence and disobedience.
Nugent, whose police officers were on the ground, many of them suffering the full brunt of the violence, observed a whole mixture of people in the demonstrations, including perennial agitators, anti-vaxxers, tradies, and people pretending to be tradies, but there was no single organising group. Union members may have been in the group – as they would be in any large group – but the unions have been urging people to abide with public health directions.
O’Neil too accepted that there may have been some unionists in the demonstrations, but she reminded Kelly that the troubles started with the same angry rabble attacking and vandalising the CFMEU office.
O’Neil pointed out that this mob didn’t materialise overnight. The far right has been on the ascendancy in Australia for some years. The anti-vaxx far right, the fear mongers, the disseminators of deadly misinformation, and the people who promote division have attracted media attention and in the Commonwealth Parliament, some even within the Coalition’s ranks. While the demonstrators have been condemned by state governments, the Commonwealth has done too little to smack down far-right agitators. In fact, as David Speers points out, Housing Minister Michael Sukkar and Education Minister Alan Tudge have been giving support to the demonstrators’ grievances, and Attorney-General Michaelia Cash has attacked the CFMEU for its “thuggery”, ignoring the fact that the thugs were actually attacking the CFMEU.
Joo-Cheong Tham of the Melbourne Law School, writing in The Conversation, explains that unions support vaccination, but not employer mandates. Vaccination should be attained through encouragement and facilitation. When mandates do become necessary they should be implemented through public health orders, not employers’ directives.
Josh Roose of Deakin University is a well-regarded researcher of violent extremism. Writing in The Conversation – “It’s almost like grooming”: how anti-vaxxers, conspiracy theorists, and the far-right came together over COVID – he notes that far-right nationalists, anti-vaxxers, libertarians and conspiracy theorists “appear to have found fertile ground particularly among men who feel alienated, fearful about their employment and who spend a lot of time at home scrolling social media and encrypted messaging apps”. They are also motivated by animosity towards the trade union movement.
In this context we might recall that the Coalition, while harbouring few far-right extremists in their own ranks, has always been open to preference deals with the far-right. We can recall Howard’s dalliance with One Nation, or Morrison’s preference deal with Clive Palmer in 2019 – a deal that was probably responsible for securing a narrow Coalition victory.
Most Australians are disgusted by what they see on their screens – a mob of angry young “white” men jeopardising our efforts to keep the community safe. Looking at the same mob, Liberal Party strategists would see votes ready to be harvested: they’re already dressed in tradies’ yellow jackets, the uniform of the Coalition’s most loyal supporters.
This is our version of France’s Gilets Jaunes, or America’s angry Trumpists. Morrison is unlikely to let the nation’s need for vaccination get in the way of a chance to bolster the Coalition’s support from the far right.
As a side observation, if a significant proportion of these protestors were construction workers, unionised or not, the standards of the industry must come into question. If they are so careless about their own safety, and so contemptuous of the law, that behaviour must surely be present on building sites, where it is easy to get away with work in breach of building codes. The refrain from industry spokespeople is that most companies and workers in the industry are “doing the right thing”, which is probably the case, but because consumers have no way to know which builders are reliable the whole industry falls into disrepute and tends to attract shoddy operators. (Economists will recognise this as a manifestation of Akerlof’s “market for lemons”.)
Australia’s classes are not the classes Marx would recognise
Why do those who would benefit most from the policies of social democratic parties repeatedly vote for parties on the right that actually worsen their economic conditions? Why have America’s most disadvantaged rallied behind Trump? Closer to home, why, in 2019, did so many Australians who earn their incomes from hard work re-elect a government that shamelessly pursues policies designed to benefit wealthy shareholders, real-estate speculators, rent-seekers and others best described as the over-paid idle rich?
Lech Blaine’s latest Quarterly Essay Top blokes: the larrikin myth, class and power, addresses this question through a series of biographical sketches. Most of his sketches are unflattering about those politicians who have taken on an image as the everyday knockabout Australian with whom working Australians can identify. Morrison is the standout example. Blaine quotes Kevin Rudd’s assessment of Morrison: “beneath the cultivated veneer of suburban mediocrity lies a hard, right-wing Pentecostal and ideological Christian”. Anyone who might believe, however, that Morrison’s Christianity is guided by the moral principles of the New Testament, would do well to read Blaine’s account of how he secured pre-selection for his seat of Cook.
While Blaine’s essay is mainly about hypocrites in the Liberal Party, Labor does not escape unscathed. Bob Hawke worked on his larrikin image while doing deals with the top end of town. Blaine believes that Hawke’s use of the larrikin image helped pave the way for nationalism and isolationism in subsequent Coalition governments. “The blasé patriotism of Hawke was a gateway to Howard’s avid nationalism” he writes.
Those who fear that Albanese may not have the political attraction to dispense with Morrison would do well to read Blaine’s essay to the end. Albanese can represent the interests of working Australians without having to fabricate an image.
Twitter weaponised
Host of the ABC’s 7.30, Leigh Sales, draws our attention to the abuse journalists receive on Twitter and other social media: Bullying on Twitter has become unhinged. It’s time to call out the personal, sexist attacks.
Contrary to the idea that such channels of abuse are dominated by the disaffected right, she writes that “it is overwhelmingly left-leaning Twitter users who are targeting ABC journalists for abuse”, often in defence of Labor politicians. The experience does not align with the assertion from Coalition politicians and shock-jock radio hosts that the ABC has a Labor/Green bias.
She goes on to reveal that only a tiny minority of Australians – six per cent – use Twitter regularly. Remarks on Twitter are hardly representative of any one group in Australia. Nevertheless that small number can be a huge torrent of abuse for the journalist on the receiving end.
It is a problem faced by all journalists and others who comment on public policy, including those who write for and publish on Pearls and Irritations. Maybe it’s an inescapable burden faced by all who see it as their duty to hold the powerful to account, social media having widened the bandwidth of complaint. And maybe it’s unintentionally promoted by the practice of some producers handling issues by giving “balanced” airtime to spokespeople whose views are close to the ends of ideological spectrums. The ABC’s audience may be better served, and its journalists may have a less stressful time, if it devoted more of its current affairs coverage to the considered views of experts than to politicians, particularly government politicians who waste precious airtime by reading from speaking notes.
Pandemic politics
Ross Gittins doesn’t see much political benefit for the Coalition in the AUKUS deal. Although it’s an issue for policy wonks, it is generally not a contentious issue, now that Labor has largely gone along with it.
Morrison’s main electoral concern is the timing of the pandemic. If we all get vaccinated, take our Christmas holidays, enjoy a return to “normal” early in the new year, we will all be ready to go to the polls, forgetting about Morrison’s failures in vaccination and border protection, and about spots rorts, car parks and the waste of “JobKeeper”.
But timing the economy to fit a pandemic election is a tricky business, writes Gittins. As anyone not living in New South Wales and Victoria knows, the states are not going to open up all at once. And because the premiers of those two states have raised expectations through their “roadmaps”, with commitments to lift restrictions when vaccination reaches “70 per cent” (actually 56 per cent) and “80 per cent” (actually 64 per cent), there is a high probability that there will be such large outbreaks among the unvaccinated that the states will have to go into lockdown again to save their hospitals from being overwhelmed.
Why social cohesion matters
When we get vaccinated is it only to protect ourselves from illness and premature death, or is it also to protect others? Do we put ourselves out to help strangers we may never meet again? If a researcher comes up to us and asks “Generally speaking, would you say that most people can be trusted, or that you can’t be too careful in dealing with people?”, how do we respond?
That last question is one included in a regular survey of social cohesion, conducted by the ANU Centre for Social Research and Methods. Writing in The Conversation Nicholas Biddle reveals that from the time COVID-19 first appeared last year there was a steep rise in social cohesion, but that it seemed to peak late last year and has fallen since then – although not all the way back to pre-COVID-19 levels: How we measured “social cohesion” and why its recent dip matters. Overall the pandemic has brought out the best in us; it would be a pity if we let those gains in social cohesion slip away.
Economics
OECD growth forecasts
The latest OECD world economic outlook – Keeping the recovery on track – predicts that as “developed” nations deal with the pandemic, world economic growth will be 5.7 per cent this year and 4.5 per cent in 2022. As people in countries that have been partially locked down spend their accumulated savings, there may be a short-lived increase in inflation. It urges countries to maintain flexible fiscal and monetary policies, and points out that “stronger public investment and enhanced structural reforms are needed to boost resilience, and improve the prospects for sustainable and equitable growth.“
Its growth forecast for Australia this year is 4.0 per cent, down from a forecast of 5.1 per cent before the COVID-19 outbreaks in New South Wales and Victoria. Growth next year should be 3.3 per cent.
Inflation forecasts
A Pearls and Irritations reader has brought to our attention a Financial Times article about the European Central Bank warning of emerging inflation. (The Financial Times allows only one opening of its articles before the paywall descends.) The forecasts are for inflation in the world’s leading economies to rise to around 1.5 – 3.0 per cent in 2022, or as high as 4.5 per cent for a short while. These are not high levels. Indeed they are generally within our Reserve Bank’s comfort zone, and a little inflation may help heavily-indebted households pay off some of their debt. The article is mainly a warning to countries to wind back their stimulus measures as the problems of the epidemic recede.
Dealing with climate change
Where to for the Hunter?
In the Hunter region 14,000 people are employed in the coal industry. How does this region undergo a structural change for a future without thermal coal?
On last week’s Saturday Extra Geraldine Doogue spoke with three people involved in the region’s transition. The Hunter is well-equipped with infrastructure that has supported coal mining and that can support other industries, including a port, railroads and a university. It is ideally set up for manufacturing, particularly making the hardware to support renewable energy. One of the three people interviewed is the CEO of a firm already involved in stand-alone power supplies and energy-saving hardware. Tackling transitions: the Hunter.
Climate change and banks’ investments
During the week The Sydney Morning Herald had an article Climate change to deliver suburban house price pain: RBA. It’s about the risk to banks’ balance sheets from loans to businesses and to households facing possible adverse consequences of climate change. The Reserve Bank’s work, on which the article is based, is a staff paper Climate change risks to Australian banks. The risk to banks occurs when there are loans which already have a high loan-to-value ratio and are subject to climate change risk, mainly in coastal regions subject to sea-level rise and inland areas with high fire risk. Although the immediate risk is low, it is notable that a high proportion of properties at risk are in Queensland.
Progress on “JobKeeper” overpayments
We have run links about “JobKeeper” overpayments in earlier roundups. There is no progress on the Senate’s demand that the Australian Taxation Office disclose “Jobkeeper” payments, but analysis of Parliamentary Budget Office data by the governance advisory firm Ownership Matters sheds some light on the extent of overpayment. Ownership Matters has not provided the analysis on its website, but the ABC’s Nassim Khadem provides its main point in a post JobKeeper a $6.2b “sugar hit” for larger businesses that didn’t take a big revenue hit during the pandemic.
Included in the post is a 4-minute video, which includes a statement by the owner of a small business who claimed only what he needed. He is unimpressed by the behaviour of large businesses that kept their overpayments: “If you keep it you’re stealing the money from the public purse. It’s like claiming the unemployment benefit when you’re going to work. It’s not the right thing to do.”
Khadem’s post points to $6.2 billion in overpayments. An article in Business Insider, drawing on the same data, identifies $13 billion of overpayment.
Who will do anything about housing price inflation?
In last week’s Saturday roundup we linked to a number of articles about Australia’s housing price inflation. They all led the reader to wonder why policymakers are allowing this to happen.
The ABC’s Ian Verrender suggests that no-one is going to do anything about it. He writes that “the Australian housing market is on a one-way trajectory into outer space and no one — neither the Reserve Bank through monetary policy, nor the government through tax reform — is in any mood to alter its course” – Why the Reserve Bank and government are in no mood to rein in property prices in booming market. The Labor Party, having been severely punished in the last election for proposing modest and economically responsible reforms, will keep its head down this time. And the Morrison government doesn’t want to spook the market. That leaves the Reserve Bank, which, Verrender reminds us, has three mandates – to keep the currency stable, to contribute to full employment, and to look after the prosperity and welfare of all Australians. Because it cannot attend to all three at the same time – they can conflict with one another – it has sacrificed the third of these mandates.
The cost of job losses
It’s not much fun to lose one’s job, but once you have lost your job how do you cope as you search for another?
Staff at the Reserve Bank, drawing on data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, have examined the experience of those who have lost their jobs, both voluntarily and involuntarily – The financial cost of job loss in Australia. They find that those who lose a job, including those who have quit of their own free will, tend to experience large and persistent earnings losses, even if they find another job. The longer they have held a job, the worse is their experience when they lose it, and although older workers are less likely to lose their job than younger people, their experience when they do lose their job is worse.
Polls and elections
The regular analysis of the polls and election results is now on a separate web page.
Webinars
Notices of coming webinars are now on a separate web page.
The earthquake
Although the earthquake had no casualties, it came as a shock to people enduring lockdowns. Prime Minister Morrison has made a statement recognising the damage.
If you have comments, corrections, or links to other relevant sources, we’d like to hear from you. Please send them to Ian McAuley — ian, at the domain name ianmcauley.com
See Michael West Media for more analysis of these and other economic and political issues, and watch out for Peter Sainsbury’s Sunday environment round up.
Ian McAuley is a retired lecturer in public finance at the University of Canberra. He can be contacted at “ian" at the domain “ianmcauley.com” .
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