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As recession looms can government investment prepare the nation?

With global demand for raw resources and services declining, Australia’s ‘trading economy’ is beginning to feel the burden of COVID, but can government investment in infrastructure and industry establish true national resilience?

With global demand for raw resources and services declining, Australia’s ‘trading economy’ is beginning to feel the burden of COVID, but can government investment in infrastructure and industry establish true national resilience?

For many nations, COVID-19 has served as a form of divine intervention, revealing foundations of sand and the frailty of over dependence on the lowest cost proposition, ailing infrastructure and rapidly declining resilience – Australia is no exception, however it is in the midst of this adversity that we can truly chart our own path forward.

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Across the globe, the post-Second World War economic, political and strategic order is coming under siege, driven by mounting waves of civil unrest.

More localised tensions in the aftermath of Brexit, growing economic stagnation across the West, concerns about climate change and the increasing geo-strategic competition between the world's great powers are all undermining the global balance of power.

Adding further fuel to the fire is the global and more localised impacts of COVID-19, which range from recognising the impact of vulnerable, global supply chains upon national security as many leading nations, long advocates of "closer collaboration and economic integration", grasp at the life boats of nation-state to secure their national interest.

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While this economic, political and strategic turmoil is in some ways 'unprecedented', the favoured catchphrase of many a media personality seeking to describe anything from the bushfires that devastated swathes of the landmass, the economic impact of COVID-19 or the societal upheaval sweeping the West, Australia does its best work when its chips are down.

However, for Australia, the rising impact of COVID upon the national economy as states and territories shut down their jurisdictions, having a disastrous impact upon the national economy, with many public policy leaders and economists now predicting the nation’s first recession in nearly three decades.

For many Australians this will be the first such recession they have experienced, with its impact further compounded by rolling lockdowns, rising unemployment and geo-political tensions adding further fuel to the fire of uncertainty and disruption.

Responding to these challenges has pushed the public policy status quo to the edge, as government grapples with how to stimulate the economy, lower unemployment and prepare the nation for the increasingly disrupted and challenging decades to come.

Both the Prime Minister and Treasurer have in recent announcements moved to prepare the Australian public for the myriad challenges that now face the nation’s COVID recovery process and the ensuing economic turmoil that will dominate Australia’s balance sheet for the coming decades.

Government needs to do more to stimulate the economy

As the government grapples with the new reality, infrastructure spending has emerged as a key focal point for slowing the economic down turn, with many hoping for the programs to turn the tide back in the favour of economic growth.

Backing this, Infrastructure Australia as part of it’s mid-year update has earmarked an additional 12 infrastructure projects to its priority list, with programs supporting the new Western Sydney Airport, two suburban rail proposals in Perth and a series of similar road projects for suburban and regional Queensland designed to help stimulate the economy.

While the state and territory governments have taken steps to stimulate the construction and retail industries, pulling various levers of fiscal and planning policy, these are part of the equation as the nation grapples with the ensuing economic chaos.

These steps have been echoed by the Reserve Bank governor Philip Lowe, who has made repeated calls for government expenditure on infrastructure including rail, bridges, roads – bringing the RBA governor into direct confrontation with “tax cut” driven response of the Prime Minister.

Currently the dichotomy presented views government infrastructure programs on the scale called for by the Reserve Bank governor as Keynesian-style ‘interventions’ as opposed to the investments in the future economic security, stability and competitiveness they actually are.

Speaking to The Sydney Morning Herald’s Peter Hartcher, Lowe explains, “Right at the moment there is limited capacity to do more mega projects in Sydney and Melbourne but there is capacity elsewhere in the country to do significant projects, and also capacity to do a series of smaller projects.

“Part of infrastructure investment is actually maintaining road, rail, bridges right across the country. It has the other advantage of making sure infrastructure spending is spread across the country and not just centralised in Sydney and Melbourne. There is capacity in some areas.”

Australia’s infrastructure shortfall has been well documented, with Infrastructure Australia identifying a $230 billion shortfall in the critical infrastructure the nation needs for the next two decades – this figure doesn’t include the infrastructure needed to prepare the nation for the next 50 years.

The $230 billion figure also fails to acknowledge the infrastructure requirements necessary for diversifying and enhancing the competitiveness of the national economy, countering the impacts of climate change, securing critical resource supplies, including water and developing industry centres of excellence.

It is clear beyond the metropolitan-centric focus the Australian landmass is a virtual blank canvas that can promote economic growth, competitiveness and sustainability in the contested era.

Time for an industry policy?

Infrastructure is but a small component of supporting Australia’s economic security, with the nation long abandoning any form of coherent industry policy, which has dramatically impacted the nation’s resilience, sovereignty and security.

COVID has shed light on the limited resilience of contemporary Australian society and the fragility of broader nation at large – with Australian industry making inroads into supporting domestic demand, yet still needing a coherent strategy to support the post-COVID recovery.

The post-Second World War economic transformation of many regional nations, including Japan, Korea and China, and the cohesive, long-term, nation building policies implemented by these nations has enabled these countries to emerge as economic powerhouses, driven by an incredibly competitive manufacturing capability – limiting the competitiveness of Australian industry, particularly manufacturing.

Recognising this incredibly competitive global industry and the drive towards free trade agreements with nations that continue to implement protectionist policies buried in legislation, Australia needs to approach the development of nationally significant heavy industries in a radically different way, recognising the failures of the past and the limitations of Australia's past incarnations of heavy industry.

Identifying these industries is the first step in building a cohesive, long-term plan as part of a broader National Strategic Industries Act – using the legislative power of government to counter-balance industry development policies of allied, yet still competitor nations like South Korea.

Such a concept leverages the industrial development policies of export-oriented industrialisation (EOI) to develop its economy into a major economic and modern, advanced manufacturing powerhouse – focusing on the global marketplace, allowing for economies of scale to provide a lower cost, high quality, value-add manufacturing industry in Australia, with the Australian public benefiting from access to such consumer goods.  

Be prepared

Speaking to ABC 7:30 earlier in the year, former director of the Department of Defence’s preparedness division, Cheryl Durrant, has echoed the sentiments of regular Defence Connect commentators – senator for NSW and Major General (Ret’d) Jim Molan AO, DSC; Air Vice-Marshal (Ret’d) John Blackburn, AO; Major General (Ret’d) Gus McLachlan, AO; and Dr Peter Layton – in calling for greater long-term planning for the nation’s future.

Durrant told ABC, “We predicted the unpredictable. We knew the problems. We knew this might be coming. We knew that various things needed to be done.

“We saw three main possibilities of that happening: the increasing and escalating effects of climate change and natural disasters; a global power conflict, probably between America and China, and finally a pandemic – one with a much greater death rate than what we’re seeing with the COVID crisis.”

Expanding on these points, Durrant added additional questions, asking, “The review looked at the big issues, like if we had to go to war, do we have enough fuel? Do we have enough energy? Can the national supply chains and our national infrastructure support Defence in a war or other crisis?

“We asked, if we had basically a halt on global supply – a couple of steps more demanding than we are seeing in the current crisis – what would run out in one week, two weeks, one month or three months?”

Perhaps, more importantly, Durrant issued an important challenge for Australia’s public policy and strategic leaders, stating, “Australia is at an interesting fork in the road where it goes on from here. If we take the attitude, ‘She’ll be right, go back to business as usual, bounce back’, I think we’re going to find ourselves not as well prepared for what happens next.”

In order to maximise the nation’s position, prosperity and security, is it time to introduce a role of a Minister for National Sovereignty or special envoy role to support the Prime Minister and respective ministers, both within the traditional confines of national security or national resilience like Defence and Foreign Affairs, to include infrastructure, energy, industry, health, agriculture and the like? 

Your thoughts

Australia is defined by its economic and strategic relationships with the Indo-Pacific and the access to the growing economies and to strategic sea lines of communication supporting over 90 per cent of global trade, a result of the cost-effective and reliable nature of sea transport.

Indo-Pacific Asia is at the epicentre of the 21st century’s era of great power competition and global maritime trade, with about US$5 trillion worth of trade flowing through the South China Sea and the strategic waterways and chokepoints of south-east Asia annually.

For Australia, a nation defined by this relationship with traditionally larger yet economically weaker regional neighbours, the growing economic prosperity of the region and corresponding arms build-up, combined with ancient and more recent enmities, competing geopolitical, economic and strategic interests, places the nation at the centre of the 21st century’s “great game”.

Enhancing Australia’s capacity to act as an independent power, incorporating great power-style strategic economic, diplomatic and military capability serves as a powerful symbol of Australia’s sovereignty and evolving responsibilities in supporting and enhancing the security and prosperity of Indo-Pacific Asia.

Australia is consistently told that as a nation we are torn between our economic relationship with China and the longstanding strategic partnership with the US, placing the country at the epicentre of a great power rivalry – but what if it didn’t have to be that way?

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific and what you would like to see from Australia’s political leaders in terms of shaking up the nation’s approach to our regional partners.

We would also like to hear your thoughts on the avenues Australia should pursue to support long-term economic growth and development in support of national security in the comments section below, or get in touch with This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it..

As recession looms can government investment prepare the nation?
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