As Australia gears up for the election, the incoming government' Labor or Coalition, will face global challenges, geo-political and economic, especially with Donald Trump starting to impose tariffs on selected countries including China,
Author
- Michelle Grattan
Professorial Fellow, University of Canberra
To discuss where Australia is placed to meet new circumstances we're joined by two experts.
John Blaxland is Director of the ANU North America Liaison Office, based in Washington, and Professor of International Security and Intelligence Studies. Richard Holden is Professor of Economics at UNSW.
Blaxland outlines how Australia should continue to support the current international norms, and how changing norms could spell trouble,
The rules based international order is something that we are going to feel the absence of quite keenly. For small and middle powers like Australia the reliance on that order has obviated the need to spend up a lot on military capabilities and that's going to shift.
We've seen the United States walking away from COP-related agreements but these arrangements still have global momentum and I would contend that Australia has an interest in continuing to support them as best as possible, particularly for the sake of our partners in the Pacific, but also just for our own sake.
On who could deal with Trump better, Blaxland doesn't think it would make a lot of difference,
I don't think the United States pays much attention to what happens internally in Australian politics and I think the Albanese government and Penny Wong and Richard Marles and others are wise to present as small a target as possible. The ALP is playing a difficult hand well in bilateral relations with the United States. Broadly it is still strongly in our interests to make that work as best we can.
There's no question there's a closer Liberal-Trump alignment, and that may make it easier. But the economic and security relations are key and here it's important to remember that the United States has a trade surplus with Australia and so that means we're not in his [Trump's] crosshairs immediately for having the opposite, and America is the biggest foreign direct investor in Australia by a country mile.
Holden says of the economy internationally,
The global economy is well on the way to recovering from the post-pandemic inflation, the associated increases in most advanced economies and interest rates in most of those jurisdictions, are coming down. In some of those, New Zealand is an example there's been a real hit to the economy. But it's generally looking reasonably positive with the one big looming thing, which is what happens to international trade as a result of the Trump tariff threats that are now starting to be put into action.
But Holden is a bit more pessimistic about Australia's economy,
Not to be too gloomy about things, I think the news is a little less good. So the Prime Minister I heard on your podcast recently and the Treasurer talking about their last two budgets, and while they're right that there has been two small budget surpluses, that's really off the back of just an extraordinary windfall in terms of tax revenue.
On debt,
If you look going forward, even so far government decisions have added $78 to $80 billion to that debt and the recent mid-year update, MYEFO reports the cumulative debt for the next four years will be over $140 billion of the increase.
I think there's a sense that our fiscal house is really being put into really good shape and I don't think that's accurate.
Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
