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Some Avoidance Clouds Over Delivery of the Treasurer’s Economic Statement and the October Budget

By Denis Bright

Australians are still waiting for a real response from the Shadow Treasurer Angus Taylor to Jim Chalmers’s economic statement. Angus Taylor’s media site released a political statement on the forthcoming economic statement on the day prior to the delivery of Dr Jim Chalmer’s economic statement:

“The former Coalition Government left Labor with the toolkit to continue Australia’s strong economic position. Record low unemployment, strong GDP growth, historically low interest rates and the largest turn around to the budget bottom line in 70 years.

“Anthony Albanese needs to provide Australians with a plan to help them deal with this cost of living crisis, not a list of excuses.”

Ironically, the Treasurer’s economic statement on 28 July 2022 delivered precisely what the Opposition suggested. With the support of Treasury, Jim Chalmers has three months to develop a responsible approach to inherited problems from the coalition years and new projections just released from the IMF. Nostalgia for the old order left by the federal LNP is increasingly irrelevant as the weeks tick by to the new budget in late October.

There should be a lot of common ground between the Albanese Government and the Opposition to work at addressing an inherited mess of weak private sector capital investment, a trillion dollars of federal debt and an even higher debt burden for the states and territories as shown in the latest Reserve Bank (RBA) Charts which extend only to the March Quarter of 2022.

The bright spot is the resources sector of exports and the steadying influence of a moderating Australia dollar.

New capital inflows have been on a downward spiral since the election of the Abbott Government in 2013 as shown by the trendlines from the RBA charts.

Fortunately, the new government is working on repairing economic and investment ties with China. Foreign Minister Penny Wong met with her Chinese counterpart Wang Yi during the G20 summit in Bali in early July. DFAT offers a good synopsis of our economic ties with China. Eroding this relationship will make the preparation of the new budget even more challenging.

China is Australia’s largest two-way trading partner in goods and services, accounting for nearly one third (31 per cent) of our trade with the world. Two-way trade with China declined 3 per cent in 2020, totalling $245 billion (Australia’s global two-way trade declined 13 per cent during this period). Our goods and services exports to China totalled $159 billion in 2020, down 6 per cent compared to 2019. This decline largely reflects reduced services exports as a result of the COVID-19 pandemic (down 36 per cent in 2020). A series of trade restrictive measures by China has also impacted Australian goods exports to China, which were around 7 per cent lower in the second half of 2020, compared to the second half of 2019.

The China–Australia Free Trade Agreement (ChAFTA) entered into force on 20 December 2015. ChAFTA is an historic agreement that is delivering enormous benefits to Australia, enhancing our competitive position in the Chinese market, boosting economic growth and creating jobs. Businesses have taken advantage of lower tariffs under the agreement, with a utilisation rate of over 90 per cent in both directions.

The opportunistic trip by US House Speaker Nancy Pelosi to Taiwan is probably geared to a quest for better polling numbers for the US mid-term elections on 8 November 2022. The slender working majority of the Biden Administration could be challenged by this election in both houses of congress to leave the US in charge of an ageing lame-duck president.

It is in Australia’s interest to work at repairing the damage caused by faulty economic diplomacy to please our allies in the Australia-US Global alliance. China is not a model democracy but neither is Saudi Arabia with its mass executions or Israel which refuses to accept the nuclear proliferation treaty and installs nuclear field, air and submarine weapons.

Without a more independent economic diplomacy from the Australian government, the economic updates in the Treasurer’s economic statement over pre-election forecasts may be a trifle optimistic particularly in the imbalances between employment growth and unemployment as well as GDP forecasts.

 

 

There is nothing in the text of the ANZUS Pact to require Australian governments to follow the prevailing US Administration in developing our own sovereign economic, trading and investment issues. Way back in 1951, Labor supported the ANZUS pact which was negotiated by the Menzies Government with these important caveats:

SECURITY TREATY BETWEEN AUSTRALIA, NEW ZEALAND, AND THE UNITED STATES OF AMERICA

THE PARTIES TO THIS TREATY,

REAFFIRMING their faith in the purposes and principles of the Charter of the United Nations and their desire to live in peace with all peoples and all Governments, and desiring to strengthen the fabric of peace in the Pacific Area.

Regrettably, both the LNP and Labor have drifted into an All the Way with the USA approach to international relations regardless of the economic cost to Australians. Already the new government has paid $6 billion to France for our breach of contract on the submarine deal negotiated by Malcolm Turnbull. Fortunately, Tory Shepard of The Guardian (14 December 2021) was brave enough to deliver some home truths relating to the Morrison Government’s defence purchases from Britain and the USA.

Australia’s eight planned nuclear submarines will cost $70bn at an ‘absolute minimum’ and it’s ‘highly likely’ to be more than that, defence analysts say. With inflation, the cost could be as high as $171bn, according to a new report from the Australian Strategic Policy Institute.

When it comes Angus Taylor’s references to Labor’s so-called extravagant spending to implement election promises on a change agenda in the late October Budget, readers should be demanding more protection against the cost of greater involvement in the US trade and investment wars with China.

France made the mistake of extending too much trust to the integrity of the US Global Alliance as covered by my reference to the extended deployment of the ageing nuclear submarine Émeraude on an extended mission to the Indian Ocean, Perth and onto the South China Sea to test the capacity of the Chinese navy to detect a submarine operating in stealth mode in my article on the eclipse of Henry Kissinger’s effects to promote peaceful engagement with China (The AIM Network, 22 July 2021). Such stealth operations in contested waters are dangerous to the lives of naval personnel on both sides of the strategic divide.

Meanwhile, Jim Chalmers’s Treasury is working on responsible preparations for a budget in October 2022. Opposition Treasury spokesperson Angus Taylor could do much more to assist with these processes to extend bipartisan goodwill generated by the complex election results from 21 May 2022.

Working to restore full trade and investment ties with China is not incompatible with a continued dialogue on human rights issues in China and stronger relations with neighbouring ASEAN and Pacific Island countries with their largely more non-aligned trading and strategic policies.

A more stable Indo Pacific Basin is essential for improved Australian living standards through savings on those unproductive strategic manoeuvres in the Taiwan Strait and the South China Sea. Despite all the sabre rattling clips on eyewitness news services, Chinese tourists regularly visit Great Kinman Island just off the Chinese city of Xiamen for outings to an outpost of Taiwan where fortifications shelled the mainland during the worst years of the Cold War while the leaders of the US and Taiwan took full advantage of tension building visits.

 

Image: Taiwan Times 16 June 1960 showing US President Eisenhower and President Chiang Kai-shek in Taipei

 

Will Australian leaders have the courage to reject repeat performances by Nancy Pelosi and Taiwan’s President Tsai Lng-wen as contemporary domestic election gimmicks to impress voters on both sides of the Pacific if such visits stoke up international tensions and economic costs to Australian Governments of all persuasions?

 

Denis Bright is a financial member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to consensus-building in these difficult times. Your feedback by using the Reply button on The AIMN site is always most appreciated. It can liven up discussion. I appreciate your little intrusions with comments and from other insiders at The AIMN. Full names are not required when making comments. However, a valid email must be submitted if you decide to hit the Reply button.

 

 

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11 comments

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  1. leefe

    “The former Coalition Government left Labor with the toolkit to continue Australia’s strong economic position. Record low unemployment, strong GDP growth, historically low interest rates and the largest turn around to the budget bottom line in 70 years.
    “Anthony Albanese needs to provide Australians with a plan to help them deal with this cost of living crisis, not a list of excuses.”

    If Australia’s economic positiion was so strong, where did this cost of living crisis come from?

  2. Marjorie

    Welcome the news that change is on the way.
    Why should government spending be capped at less than 24% of GDP as recommended by the LNP.

  3. Leila

    Will faith in politics be restored by Jim’s initiatives?

  4. Ivy

    Denis, thanks for the great article which draws a correlation between the economic statement and foreign relations in the region.

  5. New England Cocky

    Well done Denis, You have made current politics understandable.

    Australian voters must remember that Gassie Taylor works for the best interests of Gassie Taylor and nobody else. Now who sold the government an $80 MILLION empty glass of MDB water during the worst drought in living memory?

    Any move by Australian politicians of any persuasion to push Australia further under the thumb of the USA (United States of Apartheid) should remember the long term economic exploitation of the Western Hemisphere by American corporate interests. Then there is the small matter of American influence in the 1972 Dismissal of the democratically elected Whitlam ALP government, one of 79 political coups initiated & financed by American ”security” interests between 1947 and 1989.

    When you have friends like the Americans yo9u do not need enemies.

  6. Indigo

    Thanks for a nice article Denis!!! Great to see you back from Italia belle!!!

    Calls for reduced government spending by the LNP are hard to justify in difficult times when job seeker allowances are so low and cost of living challenges have exploded in intensity.

    Cheers,

    Indigo

  7. GL

    Leefe,

    Angus was wearing the LNP brand Super Extra Rose Colouring and the Giant Economy Sized Added Hallucinatory Fantasy Glasses when he said that.

  8. Tessa_M

    Australia needs a long term government with a commitment to social justice

  9. totaram

    Tessa_M: Nice thought but how do we go about getting it?
    How do you even define social justice? It might be shown to be be nothing other than “communism”.

  10. rubio@central coast

    Activists should contact their progressive MPs to reverse them Morrison Government’s erosion of our profitable trading and investment ties with China. Reaffirming support for a One China Policy has indeed come from Anthony Albanese, That’s a start. Countries like India and Taiwan Province have no real capacity to assist Australia with decisive altternative forms of major trading markets and investment flows. The crunch will hit us from 2023 when the worst of Treasury’s economic projects will hit our living standards as mentioned in Denis’ article.

  11. wam

    My lovely sensitive dad came back from the war an Americophobe anti-war commo(which lasted till uncle joe was exposed)
    Consequently my bias made me suspicious of ANZUS and my simple conclusion was ‘we would follow the US and the septics would think about helping us’.
    Nothing since has ameliorated my suspicions of all dealings with America.
    The subs were headlined, by the french, as the deal of the century. Wow, a miniature of a yet to be built atomic sub would be converted to diesel. Plus it would be designed and built in France, employing thousands of FRENCH workers.
    The pynenut could have chose either german or japanese subs for $20m, built in SA starting in 2015. I believe the lnp, by choosing the french $50m, expected the adelaide union workforce to be disbanded by the time the french sub was ready for construction.
    AUKUS nuclear subs deal will follow the war material deals that began as a rip off and ended as a massive theft of cash.
    When robb’s FTA was so rapidly signed and he got gifted a job (even before his term actually ended) any labor cynic would have been suspicious with our tariffs disappearing and some chinese tariffs staying for up to 9 years. Sections allowing unlimited Chinese workers with no proof of competency free entry.
    letter to the editor (Do you think the rabbott lied to get elected? Do you trust the federal government to accept an agreement that they have kept secret?? Do you trust an FTA that allows China to keep tariffs till 2024 and Australia till 2015. Do you think you will remember or care about these incidents by the election? Does it bother you that the clp has leased the port to the Chinese? Do you know any tradie with these qualifications -Automotive Electrician, Cabinetmaker, Carpenter and Joiner, Diesel Motor Mechanic, Electrician, Motor and Motorcycle Mechanic? Any of the 1.5 billion Chinese has access to a two year visa without any skill testing or direct testing the Aust labour market? Sit back or do some research for yourself.)
    The kiwi’s FTA has it all over us with limits per sector.
    ps
    Dr Jeffrey Wilson, a research director of the Perth USAsia Centre, said the free trade agreement inked by the Abbott government in 2015 was “not worth the paper it’s written on today” in light of the actions taken by Beijing.

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