Protectionists Do Australia No Favours

Protectionists Do Australia No Favours

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The federal Parliament is now stacked with politicians peddling anti-globalisation agendas contrary to Australia’s interests.

The underlying motivations for the Turnbull government to call the 2016 election, refilling the upper house with compliant legislators but maintaining a stable working majority in the lower house, have backfired spectacularly.

At the time of writing the government believes it will scrape back into office with a wafer-thin house majority, but this outcome is contingent on pre-poll and postal vote counting for marginal seats still under way.

But it is clear the Coalition’s political strategy to shake out the Senate minor parties has utterly failed, with the upper house still very much resembling a Tatooine bar scene.

At the head table in the Senate bar of the politically wild and wonderful sits independent Nick Xenophon and his new South Australian colleagues, who will be most determined to flex their legislative muscle over the next three years.

And of even greater concern is that the deeply xenophobic Pauline Hanson has returned to the federal political scene, thanks to much-reduced quota threshold for election to the Senate this year.

Of course, economic nationalism has a long habit for making strange bedfellows given that the sizeable Greens bloc in the Senate join with Hanson and Xenophon in opposing additional flows of goods and capital across political borders.

When it comes to the House of Representatives it is difficult to overlook the potential influence of the virulent protectionist from North Queensland, Bob Katter, as well as Nick Xenophon Team’s new MP Rebekha Sharkie.

Election campaigns often set the tone for the subsequent term of government and its policy agenda, and the reality is most of the political debutants want to roll back globalisation as a basis for Australia’s future economic success.

One can only imagine what potential investors based in London, New York or Shanghai might think about their future prospects for doing lucrative business in Australia, given the scrum of politicians so blatantly against the very concept of freedom of trade and investment.

Anti-globalisation crept into the election campaign through the expression of a political desire to protect certain domestic industries from import competition, irrespective of the cost to capital-importing industries and consumers alike.

Much of the protectionist push was centred upon a concern to bolster South Australia’s flagging steel production, with suggestions during the campaign to prop it up with subsidies, local content regulatory requirements, and other unwarranted favours.

The campaign promise by major and minor parties alike to build a submarine fleet here can also be interpreted as a protectionist measure, and not just for the sake of politically shoring up the Coalition in marginal South Australian seats.

After all, building submarines domestically means that more efficient and more cost-effective alternatives, built overseas, are not contemplated as part of a sound defence policy.

Going even further, Nick Xenophon has previously warned he may use his numbers to withdraw Australia from the Trans-Pacific Partnership Agreement, look to review recent free-trade deals with China and Japan, and look for more punitive approaches against cheap imports.

Returning to protectionism will wreak great economic harm to Australia as an island-trading nation whose costs could be magnified if Xenophon and the other anti-globalisers dissuade the Turnbull government from pursuing freer trade with a Brexiting United Kingdom.

Another player in the new Senate, Pauline Hanson, has enunciated throwback economic policies that would artificially expand the relative size of the Australian manufacturing sector at the expense of other industries and at the risk of suppressing domestic competition.

Her policies include the reintroduction of tariffs, prescriptive product-labelling regulations, and vague, but surely expensive, commitments to strengthen “public, financial and other institutions in order to protect and stimulate industrial development”.

But for a modern nation built upon the influx of people from all corners of the Earth, and with embodied human capital representing a major driver of economic growth, it is even more tragic that Hanson seeks to radically reduce Australia’s immigration intake to a trickle.

In the coming months and years it is likely to become increasingly important to ask from whence do these retrograde ideas come.

It seems some segments of the voting population feel their interests are not advanced by cross-border trading and investing relations, which is most ironic considering the huge extent to which Australian consumers have particularly benefited from globalisation.

A related aspect of anti-globalisation sentiment is that some residents feel discomfort with even the innocuous notion that people originating from other parts of the world just might perceive Australia to be an attractive place to want to live and work in.

More fundamentally, there remain erroneous attitudes to the effect that globalisation is a zero-sum situation in which some win, some lose, and most often in the sense that freeing up trade or immigration somehow leads to job losses.

Regardless of the sources of the anti-globalisation strains of thought, what is concerning is that heightened levels of discontent against global flows of capital, goods and people are being manufactured by the political class at a time when it is least afforded.

And the major parties are certainly not off the hook here, given their penchant in recent years for foreign investment restrictions on state-owned enterprises, foreign investor land registrars and special taxes on international property investors, discriminatory procurement regimes, and anti-dumping bureaucracies.

The reality is the Xenophons, Hansons and the Greens of this world seek to advantage themselves by fomenting anti-global sentiments, and even the major parties have indulged in such conduct when politically convenient.

But such political conduct borders on the unconscionable, given the harmful effects of trade, investment and labour barriers in holding back wealth and prosperity for ordinary people.

The price of economic liberty is eternal vigilance, and so sensible economic reformers in the Australian Parliament must partake in fresh efforts to counter the ill-feelings and resentments whipped up against globalisation.

Those amenable to globalisation can point to the empirical benefits of freer trade, investment and immigration, and refer to powerful case studies showing how average Australians gain in a globalising world.

It will also be important to demonstrate that Xenophon, Hanson and company arrogantly presume to know best about who their constituents should economically engage with, and where they ought to come from.

But do the pro-globalist economic reformers left standing in Parliament in the wake of the 2016 election have the courage and nous to win the argument?

For Australia’s sake, let us hope so.

This article appeared in The Canberra Times on the 8th of July, 2016.

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