Update: The Spectator cut a paragraph from John’s original op-ed. It is restored below in bold.
Senator Cory Bernardi, as the leader of Australian Conservatives, has failed his first critical national economic test.
A fortnight ago, Bernardi issued his weekly ‘common sense’ e-mail to supporters calling on Australia to force Qatar to divest billions of dollars of investment in Australia due to Qatar’s role in funding international Islamic terrorism.
Bernardi’s rationale is that Australia should deal with other nations with the ‘ethic of reciprocity’.
However, Bernardi’s so-called ‘common sense’ call to arms fails on several grounds which brings into question his ability to develop and formulate public policy and lead a forward-looking, proactive political movement.
Were Australia to force Qatar to divest its Australia’s holdings, this would dramatically increase sovereign risk among non-European and non-North American companies and investors who would view such a dramatic policy shift in the context of Australia’s long history of being hostile to non-western sources of foreign capital.
Greater sovereign risk would place existing and additional investments and thereby jobs and economic growth in jeopardy.
Moreover, Bernardi’s singling out of Qatar, with no mention of Saudi Arabia, is completely disingenuous and ineffective given that Saudi Arabia is the largest funder of global terrorism.
Hence, if Bernardi believes that it is common sense for Australia to impose an economic embargo on Qatar, then it makes even more common sense for Australia to impose an economic embargo on Saudi Arabia as well as other Islamic countries that have a history of funding international Islamic terrorism such as Kuwait and the United Arab Emirates.
Yet even if these flaws were not concerning enough, Bernardi’s policy position demonstrates a complete failure to accurately analyse core economic issues facing Australia.
Australians have historically lived an unsustainable lifestyle involving high rates of consumption and debt as well as low rates of savings. Australia’s current circumstances are no different and our unsustainable lifestyle has been amplified through a flawed monetary policy framework as well as consumption-and debt-encouraging tax and welfare policies.
As a result, Australia’s lack of national savings (both nongovernment and government) means that Australia has, and continues to, rely on foreigners to fund both its consumption and investment requirements. This has occurred through the sale of our assets (mainly through sales of company equity and of direct assets such as agricultural land) and the racking up of foreign debt which is currently at a historic high in excess of $AUD 1 trillion (or 63 per cent of GDP as of June 2016).
Hence, whether it is Cory Bernardi, Pauline Hanson or Alan Jones or other nationalistic conservative populists who rail against non-western sources of foreign investment, the underlying public policy issue is not the purity of foreign capital, but rather Australian culture and the ‘Australian way of life’ which has largely been defined by white Australians of Anglo-Saxon and Anglo-Celtic heritage dating back to transported British convicts with respect to attitudes regarding the philosophical purpose of life, work, money, entrepreneurship, risk, savings and investment.
Australian history consists of a plethora of anecdotal stories from immigrants who came to Australia from continental Europe following World War II who were caught up in the ‘wog’ cultural phenomena, whether they be Polish, Greek, Italian or Macedonian (both Christian and Jewish) among others.
These stories indicate that the rationale for social friction in the 1950s, sixties and seventies between British and Irish Australians and continental Europeans went beyond language, food, dress and skin colour, but also encompassed differences in attitudes to work, consumption, savings and wealth creation, particularly when differences in wealth and social status became observable and therefore generated social resentment.
If Australian Conservatives or Pauline Hanson’s One Nation are serious in protecting Australia’s national economic sovereignty from perceived untoward foreign capital, then they are must stare down their own voter base of largely older Australians of British and Irish heritage and the broader electorate and tell them that while government is only part of the problem behind Australia’s mounting challenges, the voters themselves are the greater problem.
Singling out foreign nations (irrespective of the merits) as a policy announcement may make some conservative and nationalistic voters feel good, but does nothing to solve Australia’s underlying economic and social challenges.
The typical Aussie holiday; the weekend away; eating out; unnecessary house renovations; fancy toys such as boats, motorcycles, barbeques, high-end electronics, furniture and fashion; our affinity with sugar, fat, alcohol, gambling, drugs and now tattoos; the ‘thank God it’s Friday’, ‘she’ll be right’ and ‘don’t work too hard’ attitudes as well as placating our children’s every wish and whim by trying to buy their love must all be eliminated.
A fundamental cultural transformation is required to effectively eliminate Australia’s mammoth foreign debt and investment capital deficit. Australian households need to dramatically lift their saving rates close to 40 per cent rather than the 4.7 per cent which was reported in the March 2017 National Accounts by the Australian Bureau of Statistics.
Changes in public policy can provide more incentives for Australians to save and fund domestic investment, but fundamentally we must change.
We must live simpler, work harder, sacrifice more, create more value and be willing to embrace entrepreneurship, industry and commercial risk.
Only then may we be able to create real prosperity and our own capital base, while simultaneously protecting Australia’s national economic sovereignty and interests by reducing our reliance on foreign capital.
This may be an unpopular political message, but this is what Australians need to be told.
This is real leadership. This is real conservatism.
John Adams is a former Coalition Advisor. This op-ed first appeared in The Spectator Australia.