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No, hell hasn’t frozen over, nor have I bumped my head recently (at least not that I can remember), but I agree with former prime minister Paul Keating in his call for Australia to shake off the “timidity” of our past and embrace a bold, ambitious future for our nation.
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Before anyone asks, no, I haven’t had my body taken over by body snatchers as one of my colleagues had suggested and I will justify myself by saying, I agree with the principle and the sentiment by comments made by former prime minister Paul Keating.
What comments am I referring to exactly? Good question.
Speaking to Michael Stutchbury, editor-in-chief of The Australian Financial Review, the former prime minister, in his characteristic manner, let loose on Australia’s culture of apathy, timidity, and what in some ways could be considered a bigotry of low expectations at a moment in history when we can ill afford it.
The former prime minister said, “The country is so timid. To come of age, Australia has to have a new and altogether different idea of itself. There is no premium on self-capacity, self-assurance, or belief in our ability to divine our own way forward.”
Going further into his presupposition, Keating added, “Our circumstance is a sad indictment of our lack of pride and wilful incapacity to do anything material to head down a new pathway.”
And while I hate to do this, given Keating’s recent comments particularly around the AUKUS trilateral submarine deal and China’s ambitions for the post-Second World War order and the Indo-Pacific in particular, when it comes to our national psyche, he has our number.
Keating explained, “It’s always been timid, you know. We’re always trying to handhold a strategic guarantor when we could do these things ourselves. There’s not enough confidence in who we are and what we’ve achieved, kind of everywhere...
“We have a sophisticated services market, we have mountains of iron ore … we’ve got the fourth-biggest pool of savings in the world, we’ve killed a structural current account deficit, and we’ve got sunlight and sunshine every day of the week. So we should be killing it. Instead of that we’re all the time timid, the whole thing is timid and there’s no what I call successful thinking ... this timidity sort of seeps, it’s like a perspiration in the country,” he added.
In doing so, Keating added further fuel to the theory presented by author Donald Horne in his book, The Lucky Country and Death of the Lucky Country where he explained, “When I invented the phrase in 1964 to describe Australia, I said: ‘Australia is a lucky country run by second-rate people who share its luck.’ I didn’t mean that it had a lot of material resources.
“I had in mind the idea of Australia as a [British] derived society whose prosperity in the great age of manufacturing came from the luck of its historical origins ... In the lucky style we have never ‘earned’ our democracy. We simply went along with some British habits ... I have had to sit through the most appalling rubbish as successive generations misapplied this phrase.”
But how do we upend this culture of timidity as described by Keating and Horne?
Ambitious thinking requires ambitious leaders and willingness to embrace the opportunities
It goes without saying that the world today is vastly different to the one which confronted Keating during his period as treasurer and prime minister.
In particular, the deterioration of the post-Cold War order, led by the United States – that has only accelerated in the aftermath of the costly forays into Afghanistan and Iraq – has given rise to a progressively more complex and contested global and regional balance of power.
For Australia, this has resulted in an increasingly difficult game of economic, political, and strategic balancing between its primary security benefactor in the United States and its primary trading partner in the world’s emerging superpower, the People’s Republic of China.
Meanwhile, the economic and strategic emergence of other potential superpowers and great powers – including India, Thailand, Vietnam, Japan, the Philippines, and Indonesia – close to home and more broadly Brazil, Mexico, South Africa, Turkey, Saudi Arabia, Russia and Ethiopia adds further complexity and opportunity for Australian policymakers.
Given Australia’s historic policy of “strategic hedging”, capitalising on the opportunities presented by the rising economic power and appetite of our region requires an ambitious plan from Australian policymakers.
This has been repeatedly recognised by successive governments, policy thinkers, economists, and concerned citizens who have called for economic and tax reform to help improve Australia’s economic diversity, productivity, and prosperity.
For Dimitri Burshtein, principal at Eminence Advisory, Australia requires an intense period of economic reform in order to avoid, as he believes, “Canberra [is] driving us down the long, slow road to economic ruin.”
Burshtein warned that this is not a new phenomenon, with much of the current policy malaise and ensuing impact on the nation’s prosperity, individual wealth, and productivity comes as a result of successive failed economic policies that have ever slowly lurched towards tighter control and central planning.
“Like boiling a frog, the cumulative effects of ever-increasing taxes, government spending, and regulations will eventually lead to economic atrophy. Shortly after the turn of the millennium, Australian governments commenced steering the national economy away from prosperity and towards penury through ever-increasing planning and control,” Burshtein stated.
Strengthening the claims of this economic atrophy is Dr Kevin You, Senior Research Fellow at the Melbourne-based Institute of Public Affairs, in a parliamentary research brief, titled, “Australia’s economic competitiveness in continuing to decline”, articulated the declining competitiveness and its impacts on our long-term national security.
Unpacking the impact, Dr You stated, “our economy has plummeted in key economic measures compared with the rest of the world. Analysis of key indicators, as measured by the Institute for Management Development, reveals Australia’s economic competitiveness ranking has plummeted 15 places from first in 2004”.
Yet despite this, Treasurer Jim Chalmers, at a press conference on 6 September 2023, told reporters, “The Australian economy remains steady and sturdy in the face of unrelenting pressure. Economic growth held up relatively well despite the inevitable toll of higher interest rates, high but moderating inflation and continuing global uncertainty, particularly as it relates to China. We know that there are challenges ahead but we face them from a position of relative strength.”
This is reflected in the government’s Intergenerational Report 2023: Australia’s future to 2063, which explained that, “The Australian economy, like other advanced economies, is projected to grow at a slower pace over the next 40 years than in the past 40 years. Real GDP is projected to grow at an average annual pace of 2.2 per cent – 0.9 percentage points lower than the average of the past.”
Re-enter Keating, who has emphasised the need for much-needed economic reform, beginning with tax reform and needing to shift the government’s emphasis on personal income tax as the primary funding mechanism for government decisions, and great fiscal discipline on behalf of government.
Keating said, “We could do more on the revenue side other than personal income tax. Of course, today nobody’s going to reduce the top rate down to 39. The prioritisation of discipline in government spending is not there today like there was then. So it means everything gets trowelled on. And when it gets trowelled on, where’s the revenue?
“The former Labor treasurer who, along with then prime minister Bob Hawke, did the most to open up Australia’s over-regulated and protected economy in the 1980s, wants Australia to aspire to an economic growth rate ‘in the threes’ rather than the 2.2 per cent projected for the next four decades in the official intergenerational report,” Stutchbury and Keating detailed.
By properly recalibrating, reorientating, and diversifying the economic mechanisms of the country, particularly as it relates to the rising Indo-Pacific, Australia could undoubtedly meet the economic growth aspiration identified by Keating.
Embracing the opportunities and delivering the economic ambition necessitates greater political ambition and a willingness to learn from the successes and failures of others.
Becoming a nation that makes things once again
As I am often fond of saying, success leaves clues and this is where it begins.
Luckily enough for Australia, a lot of the heavy lifting has already been done, particularly when viewed through the context of similar economic circumstances as was the case in the American economy in the late-1970s and early-1980s as explained by the Harvard Business Review’s Robert Reich in 1982.
“Rampant inflation, high unemployment, and negative trade balances have not only plagued the American economy of late; these symptoms of a worsening international competitive position have also proved stubbornly resistant to the familiar medicine of Keynesian demand management. Recent experience has shown that aggregate fiscal and monetary policies can no longer be counted on to generate the type of new investment needed to improve the nation’s industrial competitiveness. But what are the alternatives?” Reich asked.
In response, and despite the heavy criticism of industrial policy being a form of central planning masquerading as benevolent market intervention, Reich argued that a good industrial policy advocates for quite the opposite.
Reich stated, “Industrial policy focuses on the most productive pattern of investment, and thus it favours business segments that promise to be strong international competitors while helping to develop the industrial infrastructure (highways, ports, sewers) and skilled work force needed to support those segments ... Proponents of industrial policy argue that an American company cannot achieve international leadership without government support.
“They do not mean, however, that government should second-guess the strategic decisions of business by picking ‘winners’ and ‘losers,’ or that business should depend on government largesse. They mean simply that the strength of the United States economy will increasingly rest on public policies that complement the strategies of individual companies. Industrial policy is emphatically not national planning but rather a process for making the economy more adaptable and dynamic,” Reich expanded.
This approach conflicts with the strategies implemented in both Japan, South Korea, and Taiwan, whereby those governments took an active role in directing (at least to some degree) the investment strategies and priorities of the emerging companies that we ultimately now know as true industrial powerhouses.
However, one of the most common misconceptions is the degree to which these countries actually “directed” the investment decisions they made, something reinforced by author Michael Schuman in his book, The Miracle: The Epic Story of Asia’s Quest for Wealth, where he highlighted, “The reason companies in ‘targeted’ industries, like shipbuilding in Korea or electronics in Taiwan, have proven so successful is that the private entrepreneurs who launched them used the state support they received wisely and made products that people wanted to buy on international markets.”
Where the respective Asian governments did more directly intervene is in removing regulatory, industrial relations and legislative hurdles, and in some cases, erecting tariffs as a means of shielding emerging industries as competitive advantage and economies of scale were developed in-country to compete on the global stage.
Adding further understanding, Reich explained that “As a theory, industrial policy is closer to the strategic planning models used by many companies than to traditional macro-or-microeconomics.”
The importance of getting this right for Australia is best explained by Arthur Herman using the American context where he explained, “whether we call it industrial policy or something else, we urgently need a new paradigm. Urgently, not just because of the immediate China challenge, but because the development of advanced technologies can rapidly transform economies of scale and determine the course of future innovation, without which the US economy is doomed to stagnate – and with it, American power”.
Embracing policy that works, embracing economic reform that has proven to work would rapidly precipitate a broader shift towards Australia becoming a “value added” economy serving to boost national economic outcomes, individual prosperity and opportunity, and serve as a critical component of Australia’s long-term national security. Now, if only we had the markets...
All of this combines to reinforce statements made by Keating, who said, “What I wanted to do was to turn the continent towards Asia, where we live and fit us up psychologically for that.”
Final thoughts
Being bold, being optimistic and ambitious for our future is something every Australian wants to see from their political leaders, as the tone and direction of the any organisation is set from the top.
As confidence and ambition permeates Australian leaders, it will begin to trickle down, to steal from Ronald Reagan and begin to rapidly and powerfully shift the way the nation interacts with itself and the Indo-Pacific.
This requires a greater degree of transparency and a culture of collaboration between the nation’s strategic policymakers and elected officials and the constituents they represent and serve – equally, this approach will need to entice the Australian public to once again invest in and believe in the future direction of the nation.
Expanding and enhancing the opportunities available to Australians while building critical economic resilience, and as a result, deterrence to economic coercion, should be the core focus of the government because only when our economy is strong can we ensure that we can deter aggression towards the nation or our interests.
Additionally, Australia will need to have an honest conversation about how we view ourselves and what our own ambitions are. Is it reasonable for Australia to position itself as a “middle” or “regional” power in this rapidly evolving geopolitical environment?
Equally, if we are going to brand ourselves as such, shouldn’t we aim for the top tier to ensure we get the best deal for ourselves and our future generations?
Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at
Stephen Kuper
Steve has an extensive career across government, defence industry and advocacy, having previously worked for cabinet ministers at both Federal and State levels.
