Published daily by the Lowy Institute

Foreign policy hits home: A globalised economy requires a larger Australia

Foreign policy hits home: A globalised economy requires a larger Australia
Published 8 Dec 2015   Follow @FemInt

This is the second in a series of posts marking the launch  of A Larger Australia, the book of the 2015 Boyer Lectures, by Lowy Institute Executive Director Michael Fullilove.

Michael Fullilove challenges us to seek a 'larger Australia' during his Boyer Lectures, and modeled the point by delivering one of the lectures in China. That was a moment to applaud.

In his third lecture, Fullilove is riffing off the Richard Haass quote that 'foreign policy begins at home', noting 'Australia's reputation and influence overseas are underpinned by the quality of our society and our economy'. He identifies political leadership churn, lack of reform and the low quality of public political debate as hampering our position on the world stage.

He argues that to be 'bold in the world' we need more boldness at home, and singles out our approach to 'economic reform, climate, education and immigration, and on reconciliation and the republic'. I agree whole-heartedly with the proposition that Australians should 'develop a larger sense of ourselves' as Fullilove states. Our policies on climate, asylum and the rights and status of Aboriginal and Torres Strait Islander peoples have been disastrous in human costs, ruinous of our international reputation and ultimately self-defeating.  

I would extend Fullilove's proposition one step further. He points out that the 'single biggest contributor to a nation's power and influence is the strength of its economy'. Just as our domestic economy, as the 13th largest in the world, underwrites our diplomatic status, I want to strongly assert that the reverse effect is also true. In other words, our domestic economy is shaped and buffeted by forces beyond our borders. As a leading economic power, we are expected to step up into the leadership space.

The European financial crisis, US quantitative easing policy, infrastructure investment debates, commodity prices, Chinese investment, foreign exchange rates: yes, most Australians know these things affect us. But economic debate in Australia does not properly canvas the geopolitical shifts bringing these impacts to our shores. And so, every year, the Federal Budget plays out like a cosy piece of  theatre, with the Treasurer apparently in control of Australia's destiny. In a globalised economy, economic debate must also be globalised. [fold]

Even when Australia was hosting the premier economic forum, the G20 Summit in Brisbane in 2014, there was precious little impact on the debate here in Australia. This was a chance to bring home the macroeconomic debates that will shape our kids' futures. Instead, we focused on the personalities and then forgot about it as soon as the leaders left (readers are directed to Michelle Grattan's excellent chapter in The G20 and The Future of International Economic Governance). But some of most crucial issues of our times were raised at that meeting, and again at the 2015 G-20 Antalya Summit. They deserve our attention.

Here are some of the questions we should all be thinking about:

  • How are we going to stop the big banks failing again?
  • How will we regulate banks if they adopt the new block-chain technology?
  • How are we going to price fossil fuels that are more valuable to us if they stay in the ground?
  • How are we going to plug the infrastructure gap, address corruption and how can public-private partnerships in infrastructure work in the public interest?
  • What would decent work look like in the knowledge economy, how are we going to skill citizens to get that kind of work and what kinds of mobility across borders should they have?
  • How are the G20 countries going to implement their growth strategies without deepening inequality inside and outside their borders?
  • What rates of growth do citizens want, who wins and loses from structural reforms, and what can the planet bear?
  • How are our global economic institutions going to reform to take into account Asia's rise?
  • What kinds of trade deals will be needed in a world of global value chains and 3D printing?
  • How are parliaments going to coordinate to cope with base erosion and profit shifting from multinational corporations?
  • What is the duty of the richest nations to the poorest, when their economies are linked to each other in complex ways?

These issues can seem remote, abstract and technical, but they will affect all our livelihoods and all of our families.  This comes through clearly in the excellent books by George Megalogenis. We should follow G20 meetings the way we listen to Reserve Bank pronouncements and the Treasurer's budget speech. No single country can solve these questions on their own. Economic megatrends should be debated in Australian politics, because only a larger frame tells the true story of our economic future. Without this debate we cannot play the leadership role the world is expecting. We are not a small player in economic diplomacy. We are the 13th largest economy in the world. Out of 193 nations. That is not the middle.

So I join Michael Fullilove's plea for a larger Australia. A bolder foreign policy would better reflect the reality of our globalised and exposed economy.  It would also acknowledge the fact that we have a clear duty to lead. 

You may also be interested in