Abbott must return with a global vision

Seeing Australia through foreign eyes may just convince Tony Abbott that he has an historic opportunity to change Australia’s political economy for the better.

A quarter of a century ago, the slogan “Think globally, act locally” was gaining currency in the environmental movement. The “greenhouse effect” was the emerging global issue of the time, and protests against the forestry industry, new roads, gas guzzling cars and the like were the local response in many developed nations.

But why should that slogan be used only for climate change, or other unfolding ecological catastrophes, such as disruptions to food supplies, large regions of almost unbreathable air, or the accelerating extinctions of species?

Recent developments in Australia’s political economy, or at least the rhetoric around it, suggest we need to get a whole lot more “global” in our thinking about other issues too.

Let’s today dispense with carbon pricing in as few words as possible. Australia must make a genuine effort to convince the biggest polluters – the US, China and India – not to inflict unaffordable social costs on our children and grandchildren. 

So far we have legislated a weak, but symbolically important response, and the Abbott government is hell bent on scrapping that to put in place an even weaker response. The apposite slogan is ‘Think globally, pretend to act locally!’

Looking to other areas, Australia has been a leader in imposing globally reproducible solutions on the problem of unrestrained debt and securities trading. Our banks are the model of stability, albeit thanks to invisible subsidies from taxpayers in the form of implied guarantees that we’ll never let them ‘do a Lehman’s’. That’s a big global tick.

On the other side of that coin, however, is the local risk that ‘Casino Australia’ may be ravaged in the year ahead as the tapering of US quantitative easing measures begins.

Not only is our currency traded in volumes way above the level that our economic importance would imply – making the AUD more volatile than it should be – but there are unknown time bombs in our equities markets. The trades of foreign institutions and central banks might be easy to estimate, but a run on our market by ‘Japanese grannies’, as one economist described it to me, could leave us wondering how we became such a popular gambling house.

All that said, restrictions on capital flows usually end in tears. Australians, and their elected governments, can really only watch the dollar gyrate, and their domestic-equities-focused super funds yo-yo, and ponder diversifying their long-term savings offshore. Remember, think globally.

What’s the score so far: on carbon we’re the spoilt rich kids of Asia, on regulating financial markets we’re awfully grown up (yet heavily indebted), and on planning our retirements we’re largely unhedged. That’s one-out-of-three for being globally aware.

So where can the current Abbott government, or the Labor opposition, help bump up that score?

There are four pressing issues on which much work needs to be. I would be interested to see readers’ comments nominating others.

Debt and deficit

The first biggie, raised at the Davos conference this week, is ‘spending our way to prosperity’. Abbott has been slammed at home for using a speech on the world stage to criticise Labor.

I don’t think a dig at Labor is really a problem, but he should be slammed for a more obvious reason. Lecturing the world’s developed economies, nearly all of whom carry more public debt as a proportion of GDP than we do, is just absurd. Seen through European, Chinese or American eyes, Abbott is the leader of ‘China’s sandpit’, and if China had not chosen to dig up that sandpit in 2009, we’d be even more indebted than we are. Silly.

Wage restraint

There’s an equal degree of silliness in some of Labor’s industrial relations legacies – though sadly this is the one area the Abbott government has promised, faithfully, to ignore.

While overall there has been a large degree of wage-restraint in our enterprise-bargaining-based system over the past few years, Labor, and now the Coalition, are too scared to fix IR anomalies that crimp productivity and will allow us to pay workers too much until the whole economy is on its knees.

We need to act faster in this area. Both the current union standoff at Toyota over some of its archaic EBA conditions and pay rates, and some of the ludicrous disparities in pay rates among workers at Qantas, show why stronger action is needed to curb the ambit claims of unions.

Toyota workers still get paid time to donate blood, and do weekend shifts at 2.5 times the normal pay rate. Measures like these are almost a wilful act of sabotage – a responsible Labor leader (stand up Mr Shorten) should be actively seeking to cleanse the nation’s IR landscape of these political weapons.

Likewise, as controversial IR consultant Grace Collier pointed out recently, workers at Qantas can receive in some cases nearly double the pay of a fellow worker doing the same job, if they have the right kind of ‘seniority’.

Do we think these kinds of unfair bonuses for some workers are funny? Think globally, and it's clear that the EBA system, though functioning reasonable well overall, is full of quirky Australianisms that our competitors can only laugh at.

As argued previously, either Labor or the Coalition needs to step up and create a working agreement with unions – not unlike the successful Accords of the Hawke/Keating era – to ensure fair pay for all workers, but no free rides and bonuses for workers whose union representatives have abused the spirit of the EBA process.

That might sound an impossible task for Abbott, given union hostility to nearly everything he does. But that, in itself, could be Bill Shorten’s greatest advantage going into the 2016 election.

Promise us a new Accord, Bill. Make history.

Open markets

The Abbott government has had a mixed start on its commitment to open markets. As Nationals (and former Nationals) such as Barnaby Joyce and Bob Katter often protest, we are small and trying to compete ‘fairly’ with countries such as the US and Japan who heavily subsidise everything from auto manufacturing to agriculture.

So while the Abbott government has pursued bilateral free trade agreements with great vigour – an FTA with South Korea has been signed, and all stops are out to sign one with Japan – it was roundly condemned for blocking ADM’s takeover bid for Graincorp.

Yes, we must protect the national interest. But seeing as the Abbott government did not release the reasoning behind that decision (it was not a unanimous ruling from the Foreign Investment Review Board), it sent a clear signal that we’re “free trade” until the Nats kick up a fuss. Abbott and Hockey should have shown more leadership on that issue.

The global refugee crisis

Finally, then, both Labor and the Coalition have thrown global thinking in the bin – and too many refugees in the slammer - on the issue of boat arrivals.

Indonesia’s decision to deploy more naval vessels to stop incursions by Australian navy ships into its territorial waters is damning.

There was an opportunity in 2012 to try some form of ‘people swap’ deterrent to seaborne arrivals. While that proposal was deeply flawed (The boats bill must be allowed to pass, June 28, 2012), it is still the only proposal from either side of politics (ignoring, for the moment, the Greens’ ‘let them come’ policy) that would have fitted into a regional solution.

Indonesia’s anger on this issue is completely understandable. It is teeming with ‘illegal’ arrivals. Malaysia has two million stateless persons. Thailand has hundreds of thousands of long-term detainees, most living miserable lives in camps on its northern borders.

Labor has serious blood on its hands on this issue. While its ‘people swap’ deal was at least an attempt at a regional solution, it is also the party that had a diplomatically skilled leader who could have brokered a deal with our near neighbours to cooperate fully on the refugee crisis engulfing our region.

That may well be Kevin Rudd’s greatest failure ­– rather than lead a rational response to unauthorised arrivals, he swung to the right of the Coalition and condemned needy people to incarceration in Nauru and PNG.

Nobody expected Abbott to do any better in this regard, though many have been surprised at the cack-handed ‘military-style’ response his government has launched. It has seriously damaged relations with Indonesia and has set back the cause of a true regional solution by a decade.

A bit more global, please

Putting all these issues together, the way forward for the Abbott government is clear. It needs to forget the successful domestic political strategies that swept Labor away. They don’t work on the world stage.

At the same time, seeing Australia through foreign eyes may just convince Abbott that he has a historic opportunity to change Australia’s political economy for the better in so many areas.

Put aside the focus groups for a while, Prime Minister. Remember what you learned at Davos and start telling the Australian people some of the harder stories they don’t want to hear. Without that, we’re all sunk.