Australia must deliver benefits of globalisation to win public support – top public servant
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Version 0 of 1. Australia’s most senior public servant says the government needs to consider “redistributive” policies as part of rebuilding public consensus for open economies in an atmosphere of rising protectionism. Martin Parkinson, Malcolm Turnbull’s department head, delivered a speech to the Lowy Institute on Thursday evening, saying three policy responses were required to deal with a developed world backlash against open markets and trade liberalisation that has intensified since the global financial crisis. Parkinson said the first response was to resist the pressure. “Rather than retreat to the failed policies of the past, we need to strengthen our engagement with the global economy and with the fast-growing nations in our region,” he said. The second was to “better equip our workforce to participate in and prosper from the changes taking place in the global economy and the evolving nature of work.” The third was to redistribute the benefits of globalisation, including through measures such as income assistance for people who, despite their best efforts, “aren’t able to rapidly re-skill or find reasonable paying work”. “Rising inequality is not destiny or a necessary consequence of the forces of globalisation,” Parkinson said. “It is a choice made by individual countries. “All governments have the policy apparatus at their disposal to build a more economically and socially equitable society that remains internationally competitive. “And before the critics write me off as believing in big government, let me be clear: Australia’s problem is not the redistribution to the poorest, but the spread of welfare much further up the income distribution.” New redistributive policies needed to support work incentives, not create disincentives to work. “To this end, the new focus on the social investment approach to welfare is a profound structural reform – potentially one of the most important of recent decades,” he said. Parkinson cited World Trade Organisation data to show G20 countries have increasingly applied measures to restrict trade since 2008. The WTO had identified 1,583 trade restrictive measures put in place by G20 countries since 2008. “There is also evidence that the pace of protectionism has recently accelerated,” he said. “Between October 2015 and May 2016, G20 economies introduced new protectionist trade measures at the fastest pace seen since the global financial crisis, rolling out the equivalent of five each week.” Australia has been complicit in the backsliding “although it surfaces under subtle guises”. “A prominent example is the uptick in new anti-dumping investigations since the GFC, and in the number of new anti-dumping measures imposed each year,” he said. Protectionist sentiment had taken hold in part because low- and middle-class people in the developed world had realised only limited gains in real incomes over the past three decades, and inequality within countries had risen. “Rising protectionist pressures are in part a reaction to these growing income disparities, manifesting in renewed calls to protect or support local jobs and local industries,” he said. Australia lacked the wide income disparities of a country like the United States, but income growth in this country was sluggish since the GFC, and this had been exacerbated by the decline in the terms of trade over the past five years. He said Australia had been one of the most significant beneficiaries of globalisation in the world, with rising living standards linked to the productivity enhancing reforms of the 1980s and 90s. But the gains would be squandered if a perception was allowed to develop that people were being left behind. “It is important we build on these gains, avoiding calls for a return to the failed industry support and protectionist policies of the past and instead focus on equipping our current and future workforce to capitalise on the opportunities that globalisation presents and using our progressive tax and transfer system to ensure that nobody is left behind,” he said. |