Turnbull – What are His Policies?; Stone on Budget; Bob Carter

Turnbull & Foreign/Defence Policies

When an Australian PM makes an obviously pre-prepared address during a visit overseas his main object is not so much to inform his overseas audience as to let his supporters and opponents at home know his thinking about those government policies that are in dispute domestically. The address Turnbull made in Washington to the think-tank Centre for Strategic and International Studies was relevant particularly to his government’s policies on Islamic terrorism and our military involvement in Iraq/Syria –and to his own capacity to deliver them.

In fact, The Australian’s foreign policy editor, Greg Sheridan, hailed Turnbull as having issued the equivalent of a papal pronouncement in addressing the challenge of IS and related terror groups in that address. One must be excused from questioning such a conclusion! Sheridan was referring to the issue of whether the government should publicly acknowledge the link between Islam and jihadism, which both Turnbull and the head of ASIO had previously denied. But that was an obvious recantation  and should have been said long ago.

In his Washington address Turnbull had the following to say relevant to the issue:

“Now, looking at the challenge more broadly, all of our words and deeds must be calculated with one aim in mind – to defeat the extremists, to dissuade people from joining them, to thwart them when they try to attack us, to punish them severely when they do – all to the end of making our people safe.We should not be so delicate as to say ISIL and its ilk have “got nothing to do with Islam”.But neither should we tag all Muslims or their religion with responsibility for the crimes of a tiny terrorist minority.This is precisely what the extremists want us to do.Today, they want us to turn on the Muslim communities in our midst because it reinforces their narrative to young Muslims that America or Australia does not want them, that they have no future here, that this is not their country too.”

Frankly, I thought this a rather weak concession to those who have long believed that the link should be openly acknowledged by the government and indeed form part of the justification for strong counter-terrorist policies. While Turnbull now says he recognises the link, the important question is what is the government going to do about it in practice?

I have argued for some time now for a comprehensive statement by the government on why our policies should aim to prevent Islamic extremists playing any role in Australia, whether in advocacy or in practice; on why the focus has to be on those of the Islamic  faith; and on why  further changes in existing policy, such as indefinite detention of those identified as advocating violent activity or involved in it, will be necessary. We are a good way from having any such policies let alone any such statement and the question is whether Turnbull can take leadership in this important policy area.

Relevant in this context are the now daily reports of extremist activity in overseas countries and reports of intelligence assessments of looming threats in western countries as well as the increasing “small” terrorist incidents little reported in Australian media. One does not have to be an alarmist to see that a serious threat from Islamatic jihadism is now widespread and should be of major concern to Australia.

A survey in today’s The Australian by David Kilcullen shows the extensive spread of activity by terrorist groups and/or countries which have adopted jihadist policies. And the very think-tank, apparently bipartisan, at which Turnbull spoke has now published an analysis which effectively confirms that Obama has lost the plot on defence policies and American leadership and that Australia could play a more active role – which is what Abbott was doing when he was PM.

The recent Paris killings, and the Gatehouse report on The Islamization of France, also provide an indication of the serious problems likely to emerge if the Muslim proportion of populations reaches the level in that country (about 6.5mn or 10% of the total population). In  short, while Turnbull has improved his handling of this arm of policy, he still has a good way to go in developing policies to justify the optimistic future he presented to his American audience as facing Australia.

Turnbull also used his address to confirm the government’s position that it would not send more military to Iraq/Syria in response to the request, also made to many other countries, by the US Defence

Secretary for additional military involvement. That was scarcely surprising given Obama’s refusal to involve additional US troops beyond those there as advisers or in special forces. Yet Turnbull asserted that, while “the destruction of ISIL requires military action including boots on the ground”, the boots have to be Iraqi albeit with assistance from advisers and armaments. This may be the most practical immediate perspective but it falls short of emphasising the importance of western countries acting together to ensure the destruction of any serious military threat based on Islamic extremism. Not only are Iraqi forces unlikely to be sufficient on their own to recover the HQ of IS at Mosul but there are threats elsewhere that require boots on the ground from those who support western values. In his speech Turnbull rightly said they should be more active: now for the follow-up.

Turnbull on Budget Policy

Former Treasury Head, John Stone, has had an article published in the AFR which the editor headed “Government of waffle, not strategy”. Stone rightly argues that Turnbull has provided no indication of “the course of action we should take” which, Turnbull had complained, Abbott failed to offer when he was being challenged by Turnbull. Stone points out that the strategies outlined in the mid-year economic and fiscal outlook 2015-16 issued on December 15 talks in general terms of the future but in fact hold out little prospect of substantive result in terms of eliminating the long standing deficit. Today’s  The Australian has an article in similar vein by former Treasurer Peter Costello and by its editorial.

In particular, the promise of controlling expenditure can only be doubted in the view of the increase from 24.1% of GDP in 2012-13 to an estimated 25.9% in 2015-16. Turnbull’s supposed economic expertise has yet to emerge and the question must be whether he is prepared to adopt tough measures. Notwithstanding the politically weak opposition, the suspicion is that he does not have the capacity to do that – and might not have the inclination.

Economic Outlook  

Earlier in last week The Australian ran a lead article with the heading “Income growth lowest in 50 years”, which predicted an increase in national income of only 1.2%. This was accompanied by predictions of further falls in share prices and in predicted world GDP growth in 2016.  But is it all gloom and doom?

The world is going through a period in which the supply of goods and services has, as Lord Ridley has pointed out more than once, increased beyond demand. The increase in CO2 has in fact helped to add to supply and the overall addition to supply has created increased competition amongst producers and amongst labour forces. It is important to recognise that the increase in competition has come importantly from rapidly growing countries such as China and India as well as from within developed countries.

Hence inflation and wages growth have fallen quite sharply from “natural” causes (and surprisingly here given the power of the trade unions). My perception is that improved technology has also reduced the need for labour: in a sense the upwards wages push in the past has brought this about and the unions et al responsible for it are starting to get wages they deserve! There is still some way to go to get a “free” labour market and increase the employment of younger and less skilled both here and elsewhere. But on the supply side generally there is reason to be optimistic: an increased supply of goods and services is available and at lower costs.

What about the demand side? The increased competition has reduced the growth in incomes/demand as has the increase in social welfare in developed countries. With increased competition and higher debt levels, the welfare provided to relatively high income groups has reduced the incentive to operate businesses and become employed. Also, most in developed countries already have higher per capita incomes and face higher rates of tax if they work harder in order to increase their expenditures/demand. A reduction in the intervention of government would help.

Part of the current gloom comes from the slow-down in growth in China. But China’s GDP has more than doubled since 2007 and a reduction in annual growth to 6.9% in 2015 scarcely indicates a recession! Remember that not so long ago world economic growth ran at 5-6% pa when the Chinese economy was quite small.

Bob Carter

It is encouraging that today’s Australian has published an excellent assessment of Carter by Jennifer Mahorasy. Jennifer had already circulated her assessment of the contribution Bob made and that is made available here.