Coalition of the willing: Why Australia needs its own Magnitsky Act

By Soleo Goudswaard

How does one deal with brutal regimes? Liberal democracies have struggled with this question for decades. When faced with the worst atrocities, the best of intentions often result in diplomatic trade-offs allowing oppressors to get off scot-free. 

Human rights lawyer Geoffrey Robertson QC argues in his latest book Bad People and How To Be Rid of Them that international justice has largely failed to end impunity for perpetrators of genocide and ‘crimes against humanity’. This is because one-party states such as China and Russia are themselves guilty of state-sponsored oppression and wield a veto at the UN Security Council. Robertson’s Plan B is for freedom-loving nations to take human rights justice into their own hands through targeted sanctions. If perpetrators cannot be brought to justice in their home countries a coalition of the willing must unite to force accountability.

Almost ten years since the passage of the US Magnitsky Act, the name of a humble Russian tax lawyer still strikes fear into the hearts of kleptocrats and authoritarian leaders. Sergei Magnitsky was a law-abiding citizen who uncovered tax fraud involving senior members of the Russian regime. He told the truth about what he found and was detained, denied medical treatment and ultimately beaten to death. 

The Magnitsky Act of 2012 required the naming of the people responsible for Magnitsky’s treatment – the jailors, the interior ministry officials, the corrupt judges, the doctors who withheld treatment – and froze their US assets. They were also denied entry into the US. It followed in the footsteps of the Nuremburg trials, which established the principle that individuals, not sovereign states, are responsible for ‘crimes against humanity’. In 2016 the law was updated to apply globally. Canada, the UK and the EU now have similar legislation, allowing them to designate perpetrators of human rights abuse and deny them access to their financial systems.

The intent of Magnitsky sanctions is to address the culture of impunity that underpins corrupt authoritarian regimes. They have an exceptional ability to get under the skin of autocrats and their proxies. In fact, Putin was so enraged that he made it his foreign policy priority to have the US Magnitsky Act repealed and also banned American couples from adopting Russian orphans with disabilities.

Enablers of kleptocratic regimes such as Russia live to defraud their countries so they can live in luxury elsewhere. They buy property in Italy or France and send their children to private schools in the UK using their ill-gotten gains. But international sanctions put all this at risk and remove the incentive to do the regime’s dirty work. 

So far the use of these sanctions has been rather timid. There is scope to be much more assertive and respond to persecution of journalists and human rights advocates, for example. It might not be clear immediately, but over time they will have a material impact on the way such regimes operate and the ordinary people who live under their oppressive rule. When imposed collectively, without fear or favour, Magnitsky sanctions have the potential to unravel corrupt authoritarian regimes and the incentive structure that sustains them.

A parliamentary committee recommended in December 2020 that Australia join this global movement and enact Magnitsky legislation. The Minister for Foreign Affairs, Senator the Hon. Marise Payne, has not yet responded to the committee’s report. In March the US, UK, EU and Canada imposed Magnitsky sanctions on officials responsible for the oppression of Uyghurs and other ethnic minorities in China’s Xinijang region. Australia was notably absent. This is unsustainable. Australia wants to be seen as a strong advocate for global human rights, but drags its feet on something that would show we mean it. Revelations of resistance in the bureaucracy are not surprising, but it shouldn’t matter if there is political will and a commitment to see this through. 

Australia must play its part in this global effort. A coalition of the willing can isolate authoritarian regimes and their enablers and make sure they cannot exploit our freedoms to enjoy the privileges they deny their own citizens.

Picture source: https://www.themoscowtimes.com/2012/11/22/why-obama-should-sign-the-magnitsky-act-a19602

A Defence of Defence Spending

By Calvin Stead 

Australia just announced an enormous increase in defence spending when the country is already facing decades of debt. Here’s why this is a good thing.

On 1 July 2020 the Prime Minister and the Minister for Defence announced that over the next 10 years, Australia will invest $270 billion to upgrade the capability and potency of the Australian Defence Force[1]. This announcement comes at a time when Australia is still weathering the economic shocks of the COVID-19 pandemic, with some forecasts predicting that if current economic settings are maintained, Australia will not reach a net zero debt threshold until FY2056-57[2]. With that in mind, why has the Government committed to this spending endeavour, and why has the Federal Opposition come out in support of it?

The answer lies in the strategic realities of the Indo-Pacific region. Australia can no longer assume that the US will remain the hegemonic power in the Indo-Pacific. Despite the Obama administration’s 2012 ‘pivot’ to Asia, China’s regional power has continued to grow, and assertions of regional economic and territorial dominance have become commonplace. Parallel to this are the growing fractures within the US domestic political establishment that threaten to draw Washington away from foreign policy commitments in the Indo-Pacific. Australia is caught in a complex position; for decades the US has been its closest strategic ally, however it is also inextricably economically reliant upon China. Faced with this, Australia must move to adopt a new approach to its defence posture in the region.

Despite the 1 July announcement, Australian regional security will still be largely dependent on the US continuing to view the Indo-Pacific region as a foreign policy priority for force projection for years to come. Corollary to this is the fact that as the domestic political climate within the US shifts, so too does its approach to foreign policy[3]. As the President sets the direction of US foreign policy, every 4 years there may be a seismic shift in the way the US conducts itself around the globe; Australia’s historic reliance on the US for regional security has made this a vulnerability. The current Trump administration has been criticized for taking a haphazard approach to foreign policy informed more by populism than strategic advice[4], a stark contrast from previous administrations. While this unpredictability may not be the norm of US foreign policy, it does highlight the vulnerabilities Australia faces by relying on a leader that we have no democratic influence over. Similarly, domestic political influences within the US will shape how foreign policy is developed; in 2020 alone, the US has been hard-hit by the COVID-19 outbreak, deteriorating race relations, and widespread public unrest[5]. These pressures have the ability to draw US attention inwards and away from foreign policy. While Australia is currently enjoying the security benefits of the strategic focus now, there is no guarantee that the US will continue to see the region as indefinitely strategically important. As such, Australia needs to embrace policy options that diversify the sources of our regional security away from single actors such as the US. 

Since President Xi’s rise to power in 2012, China has not shied away from asserting its newfound power, both hard and soft, throughout the Indo-Pacific. In 2015 it was reported that China was aggressively pursuing land reclamation and the development of military installations on multiple reefs in the disputed territories of the South China Sea, the Paracel and Spratly Islands, an act that former Prime Minister Malcolm Turnbull described as “pushing the envelope”[6]. This assertion of territorial dominance has opportunistically continued while the world was wrestling with the COVID-19 pandemic; in April 2020 China declared two new administrative districts across areas within the Spratly and Paracel islands[7]. In addition to territorial dominance, since 2013 China has also sought to assert economic and diplomatic dominance across the world through the Belt and Road Initiative (BRI), an international investment mechanism estimated by some to be valued anywhere between US$1 trillion to US$8 trillion[8]. There is growing concern within the international security community of the long-term security and sovereignty impacts of signing on to the BRI, especially for developing states who appear to lack the financial capability to repay these loans - yet sign on regardless[9]. This predatory economic strategy is not limited to the BRI.

Australia’s continued economic growth is dependent on Chinese trade. Accounting for over a quarter of Australia’s two-way trade, and nearly a third of Australia’s export market, China’s control over the Australian economy is substantial[10] – and China has not been reluctant to remind Australian policy makers of this. In the context of Australian policy decisions unpopular with Beijing, whether it related to the banning of ZTE and Huawei from the operation of the Australian 5G network, or the passage of foreign interference transparency legislation, China has been willing to pull economic levers in response; briefly banning coal imports in February 2019[11], applying anti-dumping tariffs on Australian barley in May 2020[12], and more recently warning Chinese tourists and students not to travel to Australia - threatening industries worth billions to Australia’s GDP. Australia’s economic reliance on an assertive China presents a serious security and sovereignty risk.

The 1 July announcement is an extremely positive step in the right direction to address these strategic vulnerabilities, and the Government should be congratulated for it. With $75 billion alone allocated for maritime capability investment, Australia will be well placed to engage in force projection throughout the Indo-Pacific in years to come. However, it is important for policymakers to remember that an investment in traditional defence capability is strategically worthless if the nation still possesses other security vulnerabilities in the economic and cyber spheres. Policy development must be guided by a national security grand strategy that looks well into the future, proactively identifying potential threats and vulnerabilities.

Image credit: https://www.canberratimes.com.au/story/6820658/government-should-focus-less-on-war-preparation-and-more-on-war-prevention/#gsc.tab=0

[1] https://www.pm.gov.au/media/defending-australia-and-its-interests

[2] https://www.pwc.com.au/press-room/2020/comprehensive-tax-reform-timing-is-everything.html

[3] Milner, H. V. & Tingley, D. H., 2015. Sailing the Water’s Edge: The Domestic Politics of American Foreign Policy. 1st Edition ed. Princeton: Princeton University Press, pp. 262-263

[4] Drezner, D. W., 2019. Present at the Destruction: The Trump Administration and the Foreign Policy Bureaucracy. The Journal of Politics, 81(2), pp. 723-730.

[5] https://foreignpolicy.com/2020/06/18/america-broken-trump-racism-protests-united-nations/

[6] https://www.abc.net.au/news/2015-09-22/south-china-sea-islands-before-and-after/6794076?nw=0

[7] https://foreignpolicy.com/2020/05/14/south-china-sea-dispute-accelerated-by-coronavirus/

[8] https://www.csis.org/analysis/how-big-chinas-belt-and-road

[9] Ahmed, S., Bing, W., Burimaso, A. & Githaiga, N., 2019. The belt and road initiative: Opportunities and risks for Africa's connectivity. China Quarterly of International Strategic Studies, 5(1), pp. 117-141.

[10] https://www.dfat.gov.au/sites/default/files/australias-goods-services-by-top-15-partners-2018-19.pdf

[11] https://www.smh.com.au/world/asia/a-big-chinese-port-bans-australian-coal-and-the-dollar-falls-20190221-p50zfu.html

[12] https://www.smh.com.au/politics/federal/china-relations-sour-over-tariff-threat-to-australian-barley-20200510-p54rjc.html

Let them vote and let them be seen

The troubling post-pandemic years ahead will only make plainer the injustice of excluding 16- and 17-year-olds from the franchise, argues Daniel Dummer

Australian 16- and 17-year-olds make adult decisions every day. They can – and do – work, pay tax, drive, join the army, consent to sex, marriage and (nearly everywhere) medical treatments. In fact, in NSW we charge children with crimes as young as 14 or even 10, the same age at which we permit strip searches.

The covid-19 crisis raises a stark question: are the momentous decisions governments now make about our future to be taken without the formal participation of young Australians?

If you recognise the importance of voting, you should demand for it to be among the first rights we extend and not the last. Australians should join the franchise at age 16.

Democratic visibility

Let us start from the basic liberal premise: governments must not abridge rights of citizens except to prevent manifest harm.

No right can be more fundamental in a democracy than a citizen’s influence over their leaders. Young Australians may have a variety of tools in their political toolkit, but these are no substitute for – and indeed they are impoverished in the absence of – the right to vote.

Nothing else suffices. It is crucial to understand why.

It was American economist Anthony Downs who applied Hotelling’s law to two-party electoral systems, arguing that parties would converge on platforms designed to appeal to the median voter.

It’s a simplistic model but it illustrates something powerful: every vote counts because every voter counts – by virtue of influencing where the median lies. It is your very name on the electoral roll, and the interest of the parties in winning your support, that makes you powerful. It is your democratically visibility.

Without you, and every other voter your age, many or even all the same MPs might hold office – but they would have got there with very different policies.

In this way two injustices of the status quo become clear: young Australians are deprived of the responsive government they deserve; and the rest of us are deprived of their substantive input to the policies that govern us all.

This means the analogies that cloud this debate – on both sides – are largely beside the point. Voting is less a rite of passage than a basic liberal protection. If anything it is like the presumption of innocence or right to a fair trial: we should rather enfranchise the unworthy than disenfranchise the worthy.

Can you imagine a government setting a pension rate without formal input from pensioners? Or a strategy to address domestic violence without formal input from women? Australian teens are no less a constituency in social and economic policy. Youth unemployment, which never returned to pre-GFC levels, has jumped a further 15 per cent since mid-March for Australians aged 15-19 years. With no degree, no mobility, no skills or experience, they face a reeling university sector, a scarred economy and wellbeing effects that will last until they retire. Ian Hickie notes in The Australian that Europe and the United States are still seeing the economic loss from underemployment and mental ill-health inflicted on young people by the GFC.

It is no coincidence that youth policies rarely occupy a news cycle and the prime minister mostly addresses adults (My government is supporting you). When he does speak of education or youth employment, he addresses adults then, too – not youth themselves (My government is supporting them). In one case, helping; in the other, handling. My point is not that Scott Morrison is an uncaring person. It is simply that governments don’t waste breath.

Thin excuses for disenfranchisement

Opponents worry that teenagers will contaminate the pool of informed voters. Yet adults are untested and their rights unquestioned – even as the prime minister admonishes their childish behaviour.

And such concerns are fundamentally illiberal. Votes are a test for governments not citizens.

To quote from a Liberal maiden speech at random:

“Politics is about seeking power though democratic means in order to take power away from the elites, whether bureaucratic or corporate, and return power to the people.”

Yet as Chair of the Joint Standing Committee on Electoral Matters, his inquiry into lowering the voting age later observed:

“The maturity of the young witnesses before the inquiry, and their thoughtful examination of the issues, was excellent, however, these engaged young people may not be representative of their wider cohort… These arguments are emotive and do not provide a good foundation on which to base a change to the franchise.”

Having fully conceded the capacity of particular teenagers to vote, the illiberal conclusion lands with a thud: they are to stay disenfranchised just in case they have unworthy peers. Imagine applying this logic to adults.

What is at stake? The inquiry chair, Senator James McGrath, wrote:

“Whilst there are many aspects of this Bill that Government committee members found to be either counter-intuitive or potentially damaging to the health of our electoral system, aspects of this Bill relating to voluntary voting hold some merit.”

The Senator regards additional votes as a democratic health hazard, and dreams of reducing the franchise on a stage granted for consideration of extending it. But his freelancing gets much weirder:

“Compulsory voting has ensconced a mentality in political parties and Members of Parliament that they must offend the least number of voters… This has had a chilling effect on in-depth, insightful, debates around public policy.”

So an excess of voters is chilling the speech of political parties. So much for taking power back from elites! It is no secret that voluntary voting would disenfranchise the most precarious Australians – so we know whose speech Senator McGrath prefers chilled.

Lest you think these attitudes in Canberra need not directly affect youth policies – Senator McGrath is also the Chair of the Education and Employment Legislation Committee.

Their world, their vote

Young Australians have a greater stake in today’s decisions than anyone else. Their exclusion not only deprives them of an essential liberal right but distorts the platforms the rest of us vote on.

The Young Liberal Movement’s short submission to the inquiry, which opposed the change, admitted that 16- and 17-year-olds number less than 10 per cent of our membership. I suggest we have some outreach to do.

Our job is not to wait for our elders to propose the reforms that will enrich our liberal democracy. Any youth political movement worthy of its name should begin the urgent work to fix both problems: talk to the young, and let them be heard.

Photo credit: https://www.abc.net.au/news/2019-04-15/federal-election-2019-pre-polling-and-early-voting/11002874?nw=0

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of the NSW Young Liberal Movement.

Reaching for The Stars Through Capitalism

By Keenan Smith

The great clash between communism and capitalism that dominated the latter half of the 20th Century was a truly remarkable period: technological boundaries pushed, countless proxy wars, ideologies tested and thoroughly debunked (looking at you, commies). 

This struggle between the capitalist and communist world can be best seen through the space race. An endless game of one-upmanship that would even put a campaign trail Bill Shorten to shame. The result of this rivalry between the two superpowers was extraordinary technological development: in little over 60 years humanity went from taking its first flight to taking its first steps on the moon. 

While the Soviet Union was corralling resources into putting sickles and hammers into space, the sad reality of a centrally planned economy became apparent. By the late 1980s when the USSR was developing cutting edge space stations and orbiters, it was also approaching its capitalist enemies, cap in hand, for technological assistance with its milking machines. The shortfalls of the bureaucratic, centrally planned ogre that was the Soviet Union had been made abundantly clear: central planning had led to vast amounts of resources being blindly plunged into projects with little care for the “bigger picture”.

The past decade has made even clearer the importance of free enterprise in securing sustainable technological development. Companies like SpaceX have gone from being fringe vanity projects of pot smoking futurists to regularly and profitably placing satellites into orbit. As an example, per kilogram costs for space launches were on average $18,500 before the introduction of private companies in space. With private players, it now costs around $2,720 per kilogram. The pressures of profit and competition means radically new designs, lowered costs and greater reliability. The impact of this is real and meaningful: it means more reliable communications across the world, better scientific research and pushing the envelope of innovation, prosperity and development further. 

Yesterday we saw a remarkable achievement: for the first time in 9 years, astronauts were launched from the United States into space. This was done for the first time in history using a private company, SpaceX to construct the rocket and run the mission. Even before all the benefits of an ongoing production line and economies of scale kick in, the United States is already saving 30% on the cost of sending people to space versus both the Space Shuttle programme, and ignominiously paying the Russians to get to Space. There can be no doubt this marks a new era for space related technological development.  

Free-market capitalism may be messy at times, but its ability to spur technological innovation and promote rising living standards is unmatched. The lesson from all of this is clear: central control, constraint and over-bearing regulation hold back the full potential of free individuals and businesses – to reach for the stars.

What the American Right Gets Wrong

By Hugh McFarlane

April has been a quiet month for Australia. For the vast majority, it has been spent at home, figuring out ways to pass the time and deal with the financial costs of continued social distancing restrictions. It seems a lulled sense of calm has been forced upon our society after months of bushfires, drought and flood.

On the whole, Australians have done well in adjusting to this new way of life. Indeed, it was our acclimatisation to this ‘new normal’ that made recent scenes in the United States all the more shocking.

As we sat in our living rooms in stunned disbelief, we watched footage of American protestors gathering together in tight groups in front of hospitals and on the Capitol steps in DC. There were few facemasks to be seen and even less evidence that the protestors were upholding social-distancing measures. Signs read “Give me liberty or give me death!”,“Uphold our Constitution!”and “Wake up Sheep!”. These slogans, coupled with the unmistakable presence of MAGA hats, open-carry firearms and libertarian flags made one thing clear: this was a conservative protest movement. 

Being a conservative myself, I was taken aback to see those wearing the same political label as me behaving so irresponsibly. I found myself asking whether this was really what conservatism is about. Do we block entrance points to hospitals now? Is that who we are as a movement?

It was only in asking these questions and discussing the issue with American conservatives that I began to understand why our US counterparts were responding so differently to the crisis. It appears the issue boils down to the perception of freedom within US conservative circles, and their movement’s intense focus on something called negative liberty.

What is negative liberty you ask? 

Negative liberty is freedom from certain things. Natural law theory in the context of negative liberty would hold that as an individual, you should be protected from attacks on your rights. This is obviously a very reactive understanding of freedom. 

On the other hand, there is positive liberty or the freedom tocertain things. A natural law understanding of positive liberty would be that as an individual, you have the right to live freely and to enjoy a decent quality of life. This is a fundamentally proactive approach to freedom.  

Returning to the COVID-19 epidemic, we can easily recognise a strong tendency towards negative liberty in the rhetoric used by those sections of the American right campaigning for an end to social distancing restrictions. They are demanding freedom from what they see as undue/illegitimate government intervention in their lives. Bear in mind that this isn’t necessarily invalid. The Liberal Party was in part founded on a strong belief in negative liberty and freedom from tyranny. 

The trouble lies in the American right’s extreme focus on negative liberties to the detriment of positive liberty. This has led to a situation where in protesting for freedom from government interference, they risk placing thousands of their fellow citizens on ventilators in intensive care. 

Sadly, this is only one example of how so much of the American right has lost its way. Not only has its near-exclusive focus on negative liberties endangered the lives of thousands of fellow citizens during the pandemic, but over the years it has generated a dysfunctional healthcare system, disproportionately-high costs of living and dangerous scenes of gun violence for everyday Americans.

For most US conservatives, on a practical level, freedom from high taxation trumps each individual’s inalienable freedom to decent health. It creates a society in which many are forced to choose between bankruptcy or going without medical treatment in times of illness. 

What’s more, an overzealous belief in freedom from government intervention in the economy has prevented meaningful minimum wage reform for decades. The obvious threat which this poses to one’s freedom to a fair quality of life appears lost on much of the American right. 

Moreover, the freedom from tyranny ‘guaranteed’ by the 2nd Amendment has blinded many US conservatives to the importance of freedom to a sense of safety when attending school or going about one’s day. How many mass shootings is this particular negative liberty worth?  

I don’t intend this to be a criticism of the United States at large. Ever since the drafting of our constitution, we have rightly looked across the Pacific to our freedom-loving cousins in America for political inspiration. Indeed, the US conservative movement is well-justified in wanting to uphold liberty. In doing so, however, it must remember that as human beings we are entitled to a fair and just society as much as we are entitled to freedom from attacks on our liberty. As a Liberal Party, we must be careful not to allow our movement to befall the fate of the American right. Let us not fail to promote positive liberties as we preserve negative freedoms.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of the NSW Young Liberal Movement.

Photo credit: Business Insider, Australia

https://www.businessinsider.com/coronavirus-trump-us-disinformation-foreign-interference-2020-4

Australian Larrikinism: Alive and Thriving

By Mackenzie Lofts

What constitutes national spirit? I believe Australians have set the perfect example during this Coronavirus pandemic. After the initial panic-fuelled frenzy, we have demonstrated mateship, good humour, and ingenuity in a time of great social upheaval. This is illustrated by the development of online communities which have gained international recognition, and extensive support for small business. However, these ANZAC values are appropriately epitomised by a recent grassroots movement to celebrate ANZAC day in isolation. This impressive, bipartisan effort to show our love and support for servicemen and women, past and present, is reflective of a deep-rooted respect for our country and appreciation for tradition.

The reaction to this pandemic was at first quite frightening, and as Prime Minister Scott Morrison remarked, “one of the most disappointing things I have seen in Australian behaviour in response to this crisis.” Abuse of supermarket workers and other shoppers, as well as unwarranted panic buying, was a stain on the reputation and psyche of Australians. This seems to have been mitigated with time and the realisation the world is not going to end, and as a country, we have started to make up for this reaction.

Firstly, Aussie humour has brightened the lives of many, both at home and overseas. Aussies are well known for their offbeat and self-deprecating humour, and are living up to this reputation when it matters most. Facebook group ‘Bin Isolation Outing’ has gained traction all over the world, with participants from the U.K. and U.S. marvelling at the genius of our isolation antics. After all, does anyone really have anything better to do than dress up in ridiculous costumes to take the rubbish out? Another group, ‘Tration in Isolation’, has seen the drag queen community move their performances online. It is now 3.9k members strong and growing, producing laughs and ensuring the survival of a demographic that people have come to know and love. Australians’ ability to put a smile on people’s faces has never been so important and so appreciated.

As well as this, Australians have never been so supportive of small business. Coronavirus has obviously had a devastating impact on businesses across the world, with Australia being no exception. Despite numerous efforts from the government to help, there is not much they can do to prevent the closing of small businesses everywhere. However, we are making every effort to prevent this. Businesses are adapting, with many moving online for the first time. Australians are adapting, choosing to shop at local boutique stores and cafes rather than relying on the big supermarkets for all their needs. Movements like ‘#BuyFromTheBush’ are becoming more popular as people choose to support regional businesses not only affected by COVID-19 but also by the bushfires and drought. This adaptation by Aussies and our businesses is a testament to our endurance as a nation and should be commended.

One of the most distressing effects of Coronavirus is the cancelling of a number of national celebrations, with the most recent being ANZAC Day. This is the first year it has been cancelled since 1942. This did not sit well with a number of patriotic Australians, proud of their heritage, wanting to pay their respects to those who’ve made sacrifices for our country and for us. Hence, the ‘#AnzacDayAtHome’ movement began. People Australia-wide managed to drag themselves out of bed for their own dawn services, lighting up their driveways and streets with candles. They watched the sunrise, the Last Post echoing in the quiet streets. As the day progressed, social media lit up with ANZAC tributes. Despite not being able to gather to pay our respects, we found a way to connect with each other to celebrate our values, instilled in our culture by our veterans. This tribute exemplifies the Australian Spirit and shows our tenacity in times of crises, something we pride ourselves on.

Australians have put politics and biases aside to support each other during these difficult times. The generosity shown by our population is nothing short of astounding, and reveals that even 100 years later, the ANZAC legend and values are still an extremely important and prevalent part of our culture. Australia’s national spirit is ingrained in our everyday mannerisms, gestures, and beliefs, and makes itself visible in times of need.

Photo credit: RSL Queensland

The Modern Day Myth of Self-Sufficiency

By Chanum Torres and Julia Kokic

There have been increasing calls for Australia to achieve a state of ‘self-sufficiency’ in the wake of the COVID-19 epidemic. Worryingly, calls for protection, subsidisation of flagging industries and nationalisation are gaining currency in civic discourse and within the Liberal Party. While the epidemic has exposed our over reliance on a single trade partner, it is now, more than ever that the Liberal Party must defend free trade and economic liberalism. 

Economic reality ultimately blows a hole in any argument for self-sufficiency. Wages in Australia are artificially high, rendering our manufacturing sector uncompetitive. Before Australia even thinks about being internationally competitive in manufacturing, it must contemplate serious and sweeping industrial relations reforms to keep industries in Australia. 

Protectionism amounts to taxpayer subsidisation of inefficient practices. Protection saps competition and innovation. This inevitably leads to higher prices. A lack of imports means consumers will have little choice but to cop the higher prices. Their living standards fall. While high income earners can bear the higher cost of living, everyday Aussies would have to go without. Former trade partners retaliate with tariffs and subsidies of their own. With dwindling export destinations, local firms go out of business and domestic unemployment rises. 

All the while, those with political connections are able to secure state subsidies, enabling them to monopolise entire swathes of the market. Failing companies that merely claim that their products are in some spurious way vital to the national interest would be able to avail of subsidies and bailouts, slugging the taxpayer and the everyday consumer. In the end, protectionism is a game with no winners.

This would be the absolute worst time for Australia to pursue tariffs and subsidies. The stimulus packages have steeped the Australian Government in debt. Some estimates reach $1.5 trillion dollars. Australian people are bracing for at least a decade of high taxes to pay it back. Are we really to expect the Australian people to also foot the bill for keeping unprofitable industries in Australia?

However, the argument for protectionist policy springs from the question of our national security. As supply chains were interrupted, and the hoarding began, the coronavirus revealed Australia’s dependence on China for essentials like pharmaceuticals. To this, the economically liberal answer is diversification.

The mark of any prudent investor is the diversification of assets. The same principle holds in the world of trade. The crisis has exposed our economic overdependence on China. It highlights  the dangers of putting all of one’s eggs in a single basket. Being overly reliant on China for trade was a mistake. The solution is not a retreat into isolation but a diversification of trade partners moving forward into the future. There are emerging opportunities to establish FTAs with Britain, India and other up-and-coming SE Asian countries. If viewed correctly, COVID-19 marks an opportunity for Australia to forge an exciting new path, forming new relationships and diversifying our trade portfolio. 

Those in the Liberal Party who would abandon orthodoxy and rush headlong into the bosom of protectionism at the first whiff of grapeshot should reflect long and hard on if it is indeed the party for them. The Liberal Party boasts a long and proud history of championing economic liberalism. For the Liberal Party to abandon a principle so intrinsic to its character would be its undoing. True protection of the Australian economy lies in more free trade, not less.

Image credit: The Conversation