In a sea of global economic instability, Australia is no island, yet over the last few years we have weathered the destructive forces sweeping the globe better than most. Not only have we been spared the mass unemployment wreaking havoc in the United States and Europe, employment growth has been strong enough in Australia to drive the jobless rate down to record lows. Banks have failed elsewhere while the nation's major financial institutions return large profits. Meanwhile there seems to be no end to the mining investment pipeline.
An unparalleled economic transformation of the Australian economy will unfold over the next decade with the introduction of a price on carbon. Australian businesses are set to become carbon price makers rather than takers, developing a myriad of environmental goods and service industries to meet domestic and international demand. This will establish Australia as a major player in high tech, low carbon innovation and jobs, a competitive advantage that would not exist without a price on carbon.
The Gillard Government might look like it has expended too much political capital on securing a price on carbon but looks can be deceiving. Having shepherded this and the Mineral Resource Rent Tax legislation successfully through, 2012 could be a good year for the Prime Minister. Even the most vocal critics of the carbon scheme are likely to temper their hostility towards the Federal Government next year. Most would probably prefer to live with the new investment landscape rather than continued uncertainty. Meanwhile the Mineral Resource Rent Tax is likely to prove more electorally favorable than the mining industry and Tony Abbott hoped for.
Abbott has less to aim at next year, less to say "no" to. The strategy of perpetual negativity is now annoying more people than it is winning over. Abbott risks being labeled a one trick pony. Gillard on the other hand appears to be shaking off self-imposed shackles, finding some comfort in her forays into global diplomacy, bathing nervously but beneficially in the reflective glory of Barack Obama. Julia the Prime Minister is emerging from immersion in the role. It is a mixture of the old Julia, the new Julia and the real Julia, the evolution of a person in a role that appeared at times to weigh heavily on its host.
Strangely, we seem to be living in the best of times and the worst of times. The prospect of further inroads into unemployment remains strong if the US and Europe stabilize. This seems unlikely as the reform agenda being pursued in Europe fails to grapple with the fundamental financial system flaws that have created the problem. By imposing fiscal austerity programs on the populations of Europe, governments will deepen the crisis by choking off consumer demand. They are also sowing the seeds of a political crisis, fuelling growing civil unrest that will claim more governments.
While some conservative commentators read the crisis in Europe as the death knell of the welfare state, it is really a crisis of conservative ideology, a failure to abandon neo-liberal economic policy excesses that drive rampant finance sector speculation and undermine the productive economy - the place where most of us work. With the spectacular bursting of the speculative bubble in the US more people are asking why should so many people in the world suffer for the speculative excesses of so few? It is a challenge to us all, a challenge to ideological blindness and self-interested orthodoxies and ultimately a test of the resilience of governments to great forces for change, forces as revolutionary as those that forged the great political movements of the 21st century. This might appear to be a big call, but only in this part of the world where we have been relatively insulated from the crisis so far.
Australia is fortunate to be located in the fastest growing region of the world, generating unprecedented demand for our mineral resources that has helped to buffer us against the sharp fall in demand from the US and Europe. Our domestic economic settings have been about right. Without the stimulus package the outlook for Australia would have been bleak. The nation is not immune from the hardship sweeping the US and Europe. We, like the Europeans, are running out of time. The problem is not profligate public expenditure but speculative excess fuelled by a financial system that serves the interests of finance capital. Dracula is in charge of the blood bank and bleeding us dry. The solution to the feeding frenzy is a brutal but necessary one.
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