Australia has a greater reliance on its economic and financial relationship with the US than at any time since World War II, former Labor leader Kim Beazley told a Business News breakfast, but a Donald Trump presidency could mean a big shift in the superpower’s relationship with its allies.
Australia has a greater reliance on its economic and financial relationship with the US than at any time since World War II, former Labor leader Kim Beazley told a Business News breakfast, but a Donald Trump presidency could mean a big shift in the superpower’s relationship with its allies.
Speaking at this morning’s Business News Success & Leadership breakfast, Mr Beazley, who was more recently Australian ambassador to the US, said the distribution of power in the Asian region had shifted decisively against Australia and would continue to do so.
“We have probably a greater level of interest in our relationship with the US than at any point of time in history since WWII,” Mr Beazley told the audience of Perth corporate and political leaders.
“(And) we have a greater level of reliance on the US than we have at any time since WWII.”
Part of that was because an effective defence of Australian territory would now be reliant on technological assistance from the US, he said.
A further component in the relationship was the level of financial investment, which was much more significant than that with China.
There’s about $1.3 trillion of mutual investment between Australia and the US, Mr Beazley said, mostly in indirect form through superannuation funds.
Australia had the fourth largest sum of money under management globally, he said, and within 15 years could have $2 trillion invested in the US.
The current level was 15 times investment in China.
But that puts Australia in a position where US foreign policy decisions have a huge impact.
“If they make a mess of things … we get hit really hard,” Mr Beazley told the breakfast function.
In the immediate future, one global agreement hanging in the balance is the Trans Pacific Partnership, which will set rules for intellectual property and investment flows between 12 countries in the region, including Australia, Japan and the US.
US Republican presidential candidate Donald Trump opposes the agreement and says he will withdraw from the process if elected.
The agreement is yet to pass US Congress, however.
Mr Beazley said that although a majority of the Congress supported the partnership, passing it would become increasingly difficult.
Further trade proposals floated by Mr Trump, including tariffs on imports of Chinese goods, would be very damaging to the Chinese economy, he said.
And Mr Trump would not necessarily need new legislation to take some of the actions against China he was proposing.
In the end, Mr Beazley said, the US may not pull out of treaties with Japan or South Korea, or make funding for Nato conditional as Mr Trump has said, though the process may be started and require backpedalling, ending in a mess where the US is in a worse position.
US election
Mr Beazley said the world had turned upside down in the US in the election.
“For starters there is actually no Republican candidate in this campaign,” he said.
“Except on the issue of race and ethnicity, and that’s a big (exception), Mr Trump is running way to the left of not only (Democratic candidate Hillary Clinton), but he’s running to the left of Bernie Sanders.
“There is no Republican in the hunt in the traditional sense ... that is what is discombobulating the politics basically.”
However Mr Beazley said all these concerns may not come to pass, instead forecasting a victory by Mrs Clinton, although it would be a tough road.
Mr Trump had had such success because of aggrieved white working class voters who felt their country was taken away from them, he said.
But it was a trend that could’ve been predicted.
Mr Beazley told the Success & Leadership audience of a conversation he had with a US politician in 2014 about his views on the Republican Party.
“You are now the party of the white American working class, you represent their social attitudes, what you don't represent is their economic interests,” he said.
“And sooner or later you're going to find a populist candidate rise in your ranks and he's going to tear out the heart of your party.
“I would never have predicted Trump would be this guy and I wouldn't think it would come this early.”
Mr Beazley defended Mrs Clinton, however, who is leading in one average of recent polls by only 1 per cent.
“Yes she was foolish to utilise a private server when she was secretary of state … a large number of Republican and Democratic politicians have used private servers,” he said.
“Mr Trump is a scandal-a-day man.
“The entirety of the Trump business empire is scandalous.
“It is based on the utilisation of bankruptcy as a business method.”
Mrs Clinton was running a conventional campaign in an unconventional time, however, and had made a lot of mistakes.
Mr Beazley speculated that some Republicans opposed to Mr Trump’s ideals, despite publicly supporting him, would be preparing a backup plan if he wins the November 8 election.
That would involve a swift impeachment, and his replacement by vice-presidential candidate Mike Pence.
His selection as running mate had placed a poison pill into a future administration, Mr Beazley speculated, because Mr Pence looked pure gold as a reasonable and respectable conservative in comparison to Mr Trump.
Global Isolationism
It isn’t just the US that is experiencing a surge of public sentiment against free trade and external engagement, with a recent vote in Britain to exit the European Union a further example.
People in industrial societies had been affected by globalism but it was driven by technology, not policy, Mr Beazley said.
Here in Australia, Pauline Hanson in a way represents that line of thinking, although her One Nation party only scored 4.5 per cent of the vote in the most recent election, he said.
That stood in contrast to the US, where Mr Trump was close to 50 per cent support in some polls, and Europe where similar parties picked up between 15 to 20 per cent of the vote.
To understand the trends, you had to look at the circumstances of a particular country, Mr Beazley said.
Brexit, for example, was partly about immigration, including from Eastern Europe, and partly about a British sentiment towards self determination.
Australian alliance
Mr Beazley, who served as defence minister for six years under Bob Hawke, said it was very much in the national interest for Australia to have a close alliance with the US and be engaged in some international operations.
Further to that, he said it was ludicrous that some people looked immediately to the defence budget to make spending cuts.
When he was minister, he said, defence spending was 2.5 per cent of GDP, when it was roughly equal to health.
Now defence was around 1.5 per cent and health had doubled.
It was a similar story in the US, he said.
Federal election
In local politics, Mr Beazley said Labor colleagues had been concerned when Malcolm Turnbull took over as prime minister, for a couple of reasons.
“One was obviously the probability that he’d make a very big difference in people’s voting intentions,” he said.
“The other was a more subtle thing.
“What he was talking about – innovative societies, investment in education, investment in skills, investment in technologies- that has essentially been for quite a while Labor Party story.
“We thought … not only is he going to steal our votes but he’ll steal our clothes, which will stop us getting them back.
“(However) as every week passed the capacity for the government to exploit that dwindled.”
In the end, no initiative would emerge to be electorally decisive.
“Then we got the joy of a two-month election campaign,” Mr Beazley said.
That benefited Labor because opposition leader Bill Shorten got equal billing, with announcements from both parties equally likely in terms of outcomes.
Mr Turnbull had numerous opportunities to make his mark on politics and destroy Labor, though he had one hand behind his back due to a lack of support in the partyroom.
“Whenever he gets a position up adjacent to what he really thinks, he has to compromise,” Mr Beazley said.
Ultimately, Mr Turnbull probably should’ve gone to the polls last year when his support was stronger, he added.
Ambassadorship
Mr Beazley joked that it was disappointing he hadn’t continued as the Australian ambassador to the US in what is a very exciting election year.
He was appointed to that role in 2010, and finished his term in January of this year, when he was replaced by former treasurer Joe Hockey.
Mr Beazley said he had suggested to former prime minister Tony Abbott that ambassadors serve four-year terms aligned with the US election cycle.
“That gives them a chance, and I understand Joe is taking pretty good advantage of this, to bond with the advisers, and the political factotums that support the various presidential candidates
“They don't have time to get to know you once they're in the job, it's a 24-7 operation.”
