In case you were wondering, we’re living in Australia’s fourth economy — at least according to Treasurer Jim Chalmers.
In a speech titled “Patterns of Progress”, Chalmers argued yesterday that Australia had first a colonial economy, then an industrial one, then the open trading economy of Hawke and Keating. Now, after a wasted decade of Coalition rule, we’re in a fourth economy — of renewables, services, and AI (because it’s now compulsory for politicians to invoke AI). Chalmers added fragmentation, not so much because it fit with his neat 1940s/1980s/2020s schema but because it gave him an excuse to attack Peter Dutton as divisive.
Dutton, meanwhile, was in Queensland campaigning on the cost of living — and happily fielding questions about the Nationals going after Bunnings via a Senate inquiry into “big box retailers”, with accusations the hardware chain was price gouging. “Our role is not to ensure margins for big businesses, it’s to make sure that consumers are getting hardware items and grocery items at reasonable prices,” Dutton said. “We can’t have price gouging, particularly where you’ve got market concentration … we want a free market to operate effectively, and a free market is not where consumers are being ripped off.”
Well! That left the Financial Review apoplectic that Dutton was betraying the Liberal Party’s core values in one of the funniest editorials from the business tabloid in years — and one riddled with basic errors. “Clear fault lines in the relationship between big business and the party of free markets first appeared in July when Opposition Leader Peter Dutton backed the call by the neo-Marxist Greens and the agrarian socialist National Party for a divestiture power…” it ranted, before adding that not even Kamala Harris (presumably the AFR’s yardstick of Soviet-style command economy policy) wanted a divestiture power.
That might be because, erm, the United States has had a divestiture power for well over a century, chaps.
And the “fault lines” between big business and the Dutton-era Liberals were obvious on the first day of Dutton’s leadership when he said “I think the Liberal Party in recent years has become quite estranged from big business and I want to focus on small business.” It’s taken the AFR this long to work out that Dutton — who hails from the Queensland LNP, not the NSW Liberals like the past five Coalition leaders — is happy to go after large corporations (except on industrial relations, where he still toes the employer line).
The AFR blames Dutton’s antipathy to big business on big business itself — they’ve been too mouthy on culture war issues like the Voice referendum and too quiet on demanding a return of WorkChoices and company tax cuts. “Look what you’ve made him do,” is the AFR’s resentful lament. But Dutton’s antipathy is more reflective of a transition that began during the Coalition’s years in office, and which complicates Chalmers’ “fourth economy” argument.
Certainly, the Coalition’s three terms were wasted in terms of the transition to renewables. But the dramatic enlargement of Australia’s health and caring sectors Chalmers touched on in his speech was the product of expanded funding under the Coalition for health care, child care and home care for seniors, and the runaway expenditure on the NDIS that marked the Morrison government. If Chalmers believes ageing and services are a characteristic of the “fourth economy”, that began under Malcolm Turnbull and continued under Morrison — the health and social care workforce consisted of around 1.5 million people when Tony Abbott was dumped; it was over 2 million when Morrison was defeated.
The other transition was the political outbreak of resistance to neoliberalism, led by the right, initially centred on free trade and open borders. Hostility to open borders helped propel Brexit and Donald Trump in 2016, with Trump going on to embrace protectionism for US manufacturing — all of it a reaction not merely to globalism but perceptions of an economic system stacked against ordinary people.
The reaction was slower to set in here because Australia has a stronger safety net and derives a large proportion of national income from exports to China. But again it was the Coalition that did it with a permanent increase to the size of government to well above 26% of GDP under Morrison, a level only previously seen briefly at the height of the Rudd government’s stimulus package. Under Labor, that larger role of government will be driven not only by continuing investments in health and caring, but also by an embrace of manufacturing — less damaging than Trump’s but every bit as illogical — courtesy of the Future Made in Australia program.
If there’s a fourth economy in place, it’s not quite as straightforward as Chalmers suggests. It’s an economy in recovery mode from three decades of neoliberalism, with both sides of politics no longer content to keep government on the sidelines while free markets and large corporations do what they like. It’s an economy that is, and will be for decades yet, characterised by constant growth in the health and caring workforce — a workforce that will depend heavily on immigration because Australia, like other Western economies and China, is going to start running out of workers, shifting bargaining power away from employers, who until recently have enjoyed a three-decade long increase in power under neoliberalism. And despite the transition to renewables, it’s going to be an economy routinely affected by the higher costs inflicted by the climate emergency, which won’t be halted while governments like Chalmers’ are devoted to expanding fossil fuel exports.
If Hawke and Keating indeed ushered in Australia’s third economy, attesting to the role individual politicians can play in major transformations, the fourth economy is one that will proceed driven by demography, climate and the seething discontent neoliberalism generated. Individual politicians like Dutton — or Trump — will try to exploit that discontent with tribalism and racism, but in the end it’s not about individual politicians.
Is Dutton right to go after price-gouging corporations? Should Labor follow suit? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
