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A growing number of government MPs and ministers have joined a choir of economists calling for Treasurer Josh Frydenberg to use the federal budget to help build the nation’s way out of its first recession since the 1930s. Doing so should also focus on enhancing Australia’s national security and resilience over the long term.
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Australia's economy and its public face a seemingly insurmountable series of challenges that threaten to leave the nation floundering amid a sea of emerging regional and global giants, each of whom are at various stages of strategising their way to prosperity and stability in the post-COVID world.
This new reality comes as a shock, particularly as Australia as both a continent and a nation is unique in its position, has enjoyed relative geographic isolation from the flashpoints of global and regional conflagration of the 20th century.
Blessed with unrivalled resource wealth and, despite public commentary an immense industrial potential, the nation has enjoyed the benevolence of the post-Second World War order, caught up in the promise of easy wealth generation through unfettered globalisation, economic neo-liberalism and the "end of history".
Amid this flurry of economic transformation propelling once 'developing' nations onto the world stage, the world's established powers, including Australia, now face a new paradigm, one committed to undermining and influencing the very fabric of Western democracies and the economic, strategic and political order they are built upon.
As Australia has sought to push back against a rising level of economic, political and territorial expansionism at the hands of President Xi Jinping's rising communist China, the nation has drawn the ever growing ire of its "primary economic partner" as it seeks to exert its influence and "manage" the public perception through economic, political and societal coercion on a massive scale.
All of these factors combine to form one absolute realisation: Australia's record period of economic stability and prosperity buoyed by the immense mineral and resource wealth, combined with the benevolence of the post-Second World War political, economic and strategic order, is at an end – it's time to adjust accordingly.
The lay of the land
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, is having a disastrous impact upon the national economy, with the nation now facing its first recession in nearly three decades.
For many Australians this is 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.
Now is the right time to invest
As Australia grapples with its first recession in nearly thirty years, many Government MPs and Ministers, including the Deputy Prime Minister, Michael McCormack and noted economists have called for the Government to take a direct hand in boosting the economy through targeted infrastructure investment.
Shane Wright and David Crowe in a piece for The Sydney Morning Herald, titled 'A 'short-term window' to build infrastructure for long-term gain', have identified the growing calls for the government to get more involved in stimulating the economy.
"Australia could build its way out of the deepest recession since the 1930s through a $220 billion pipeline of infrastructure projects that would transform the nation, deliver jobs and sharply increase the nation's long-term productivity," Wright and Crowe explain.
"The projects, on top of the government's existing $100 billion infrastructure plan over 10 years, could be a key consideration for Treasurer Josh Frydenberg in the October 6 federal budget as economists call for a bigger stimulus to rebuild the economy."
This sentiment has 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.
Expanding on these points, Wright and Crowe, speaking to CEO of the Global Infrastructure Hub Marie Lam-Frendo, highlight some of the key focal points for close consideration.
"The Global Infrastructure Hub, an Australian initiative at the G20 summit in Brisbane in 2014, estimates Australia faces a $217 billion infrastructure shortfall by 2040. By its estimates, Australian governments have already committed enough to road and water networks and the biggest problems concern railways and ports," Wright and Crowe state.
Mounting pressure from government ranks
As concerns continue to grow about the length, breadth and severity of the Australian and global recession as the world continues to grapple with the impact of COVID-19 and mounting great power tensions, many government members have begun advocating for expansive infrastructure investment.
Of particular note, Sydney-based MP John Alexander has called on government to commence the construction of high-speed rail between Sydney and Melbourne boosting regional and metropolitan growth, despite concerns about the cost proposition.
Alexander states, "The position that high-speed rail can't pay for itself has been totally refuted. This devastation to our economy makes us sit down and realise we can't make the mistakes of the past."
Expanding on this, he said, "Here is a chance to have really major infrastructure as we did at the end of the Second World War, because we will have huge demand from people wanting to come to our country.
"The way to house them is not to try to stuff them all into Sydney and Melbourne, as we've done in the past, but to have our regions really blossom through greater connectivity, which means faster rail and high-speed rail."
Adding further pressure, Deputy Prime Minister Michael McCormack is advocating for increased investment in critical water security infrastructure, including dams and critical water pipelines, in order to build national resilience and security for the nation's agricultural industry.
It is often said that much of Australia’s public policymaking decisions are based on the comparatively short election cycles across the various jurisdictions, and this is a challenge faced across the democratic world – however, the grand irony is that if governments and oppositions planned for the long term, they’d be more likely to be returned.
In light of this, it is time for Australia to plan for the next 15 to 20 years, not the next term of state, territory or federal government, providing policy consistency and above all, long-term stability and vision for the public and surety in a period of global and regional turmoil.
This approach requires more than vanity programs, which can be best left to local government or private developers, rather, it requires a strategic approach to a number of highly visible, big impact public policy areas, including:
- Infrastructure development: Addressing the critical links between hubs of economic prosperity, including regional hubs and metropolitan centres – including improved, faster and more reliable road, rail and air transport links.
- Water security: Australia is a continent of extremes, “droughts and flooding rains”, yet we do little to adequately channel and store the vast quantities of water that falls – now is the opportunity to promote economic stimulus through infrastructure investment while supporting Australia’s agricultural industry and drought-proofing the continent.
- Energy and resource security: Addressing the nation’s lack of strategic resource and energy supplies has come to the fore during COVID-19, preparing the nation for such challenges, whether natural or man-made, should be of paramount priority – this requires less ideology and more pragmatism.
- Strategic industry development: COVID has stirred many within the Australian public to question why Australia isn’t manufacturing more of the critical – it is clear that Australia requires a concerted policy initiative in the form of a Strategic Industries Act to develop a robust, globally competitive industry 4.0-oriented manufacturing base.
Each of these contribute to the nation’s sovereignty and security at a time when many of the principles that Australia’s post-Second World War public and strategic policy is based upon are coming under threat – serving to make Australia a more reliable economic, political and strategic partner amid a period of great power competition.
Furthermore, it serves to make Australia more resilient to man-made and natural shocks, resistant to coercion, economically competitive and robust at a time when the Australian public is calling for leadership, forward planning and vision.
Developing Australia's potential is backed by senator for NSW and retired Major General, Jim Molan, AO, DSC, in an opinion piece for the Daily Telegraph, where the long-time advocate of a holistic 'National Security Strategy' backs calls for the enhancing every aspect of Australia's national power, with the economy critical to such progress.
"So, how do we stop this shaping from becoming violent? Indeed, how do we stop the shaping that is bad for Australia? It will take many different efforts," Senator Molan articulates.
"Our diplomacy must produce effective alliances of all like-minded countries to stand up against China. If everyone is strong in themselves, then the alliance is strong, and deterrence might just work. This government has made a very good start on doing exactly that.
"The Australian Defence Force needs to be able to strike out against military action directed at us, or our friends. This requires the ability to destroy targets with long-range weapons, the ability to defend our cyber and trade networks, and to keep others guessing about the whereabouts of our submarines.
"We need to have systems to protect us from missile strikes, and to anticipate trouble. We need an army that can quickly support others should they be threatened. And the ADF needs a strong nation behind it.
"Right now, as a nation, we have far too many vulnerabilities."
In order to maximise the nation’s potential in its precarious position, is it time to introduce a role of a Minister for National Sovereignty or a Minister Assisting 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, political 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.
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.
Rear Admiral Kevin Scarce also issued a challenge for Australia's political and strategic policy leaders, saying:
"If we observe that the level of debate among our leaders is characterised by mud-slinging, obfuscation and the deliberate misrepresentation of the views of others, why would the community behave differently ... Our failure to do so will leave a very damaging legacy for future generations."
Further complicating the nation’s calculations is the declining diversity of the national economy, the ever present challenge of climate change impacting droughts, bushfires and floods, Australia’s energy security and the infrastructure needed to ensure national resilience.
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
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.
