Australia's Place in the World
As Australians set their focus on Christmas and the beach, there is almost complete unawareness of international trends which will impact this country in the coming decade and beyond. The Korean Peninsula and domestic political turmoil may grab media attention, but larger tectonic shifts will alter our position in the world.
The first and perhaps most underrated development is the US Senate passing a comprehensive tax reform bill. While still needing to work its way through a conference committee and be signed into law, it will increase US growth rates well above the average of the anaemic levels of the Obama-era. A 20 percent company tax rate and accelerated depreciation could turbocharge the US economy. Personal rates should be flatter and the carve outs are less than ideal, but this a major development. It will change the dynamics of the 2018 mid-terms and the 2020 presidential election cycle. Yet, it barely made a mention in the Australia press, with ABC burying the story down with human interest items.
Secondly, as China receives the lions share of attention, India’s slow reforms are gaining momentum. The result will not be as steady or centrally planned like Beijing, but this will be its strength. When India’s economy becomes a larger and more flexible economy, will Australia matter as much as it did historically? Probably not. In both economic and strategic terms our importance will wane. In a new quadrilateral alignment with the US, Japan and India, it is possible that Australia could slip to become a very junior partner.
Thirdly, crypto-currencies, digital innovations and continuing disruption are transforming businesses and employee-employer relations. Instead of embracing and leading these changes, much of the cartelised sectors of the economy and their collaborators in government are reluctantly plodding along.
Fourthly, world energy prices are low. Australia benefited from keeping its own energy costs low and earning export income from sending bulk energy abroad. This period has ended. High domestic energy prices, chaotic energy policy and potential summer blackouts are now the norm.
What does this mean for Australians as they turn up their air conditioners and ponder the quiet month of January? At a household level, staying cool and relying on the grid is more expensive and fraught than it was even a decade ago. More broadly, the world is moving, and we may soon slip behind. Higher company tax rates, expensive domestic energy, an inflexible industrial relations system and more attractive international investment destinations is the current reality. We have an inward-looking political class who have spent their entire working lives either working for or in government. Leadership, like that of Bert Kelly and his successors is needed once again. We don’t know who they will be or where these leaders will emerge from, but Mannkal is working hard to identify those Western Australians with potential to join the ranks of Modest Members
Yours in liberty,