costello's u-turn on globalisation

The Age, 31 July, 2001


Apostasy takes many modern forms. Some of its more irritating manifestations include reformed smokers leading the charge against those addicted to nicotine, ex socialists playing casino capitalism on the stock market, and newspaper pundits using their column space to attack former mentors and employers.

The common theme for apostates is the need to cleanse themselves of their earlier sins by championing the very opposite cause. It's not surprising, therefore, to find that some of the loudest cheerleaders for globalisation were once preaching a very different faith.

In the aftermath of the 1993 election loss, a despondent Peter Costello reflected upon a decade of Labor rule which had modernised the Australian economy by exposing it to the brisk winds of international competition. Searching for an issue on which he thought the ALP was vulnerable, Costello hit upon Australia's "national financial dependence", which had become "a real threat to [Australia's] economic sovereignty" (Australian Quarterly, Spring 1993).

Costello was clearly disturbed by the extent to which Labor had ceded sovereign power to bond holders, funds managers, currency traders and speculators. "We hear every day that such-and-such a policy option would scare the financial markets and cannot be taken for that reason. It is a short step to saying that such-and-such a policy must be implemented at the request of foreign lenders."

Sensing a deep seated community concern about the impact of globalisation, Costello was in no doubt where to target the Keating Government. "Labor has undermined our national sovereignty. We must recover it. This is the national aspect of self-reliance and independence.   We must also act to ensure that key strategic national industries stay under Australian control."

How views can change! After five years of socialisation by Treasury, Costello has now reinvented himself as a champion of globalisation. In a widely anticipated speech last week, the Treasurer showed few signs of his earlier concern about "internationalising Australian decision-making" and the need to "restore" our "independence and self-reliance."

Instead, Costello extolled the virtues of free trade and unfettered commerce (The Age, 26 July, 2001). Australia had advanced economically "as a result of globalisation and foreign investment." In a bold repudiation of his previous preference for autarky, the Treasurer claimed that "a country which is open to trade, investment, technological transfer, is going to be more prosperous and a better place to live than one that is not." Only basket case economies such as North Korea, Albania or Cuba have sought to "close their barriers to foreign investment and erect barriers to trade." He could have added aspiring conservative politicians in Australia to the list.

Nor was there any more talk about recovering Australia's national sovereignty. It was pointless to "rant against globalisation", as he himself had done eight years earlier. "And, what is more, you will not reverse this process", claims the Treasurer in an interesting concession to economic determinism.

The world's most disadvantaged people are screaming for neo-liberal solutions to their hardship, which could be administered to them if only selfish middle class protesters in Seattle, Melbourne and Genoa got out of their way. "Experience shows us," says Costello, "that open markets, trade liberalisation, and the economic growth which it has facilitated is boosting the living standards of the world's poor." Unsurprisingly, the Treasurer doesn't share this experience with us, or explain why every economic advance in East Asia over the last three decades is attributable to open markets and free trade rather than state co-ordinated economic development.

Although ultimately aborted by nervous governments in 1998, the Multilateral Agreement on Investment (MAI) was a vivid illustration of just how keen some states are to surrender their discretionary sovereign powers to international markets. OECD members were offering to voluntarily restrict their own ability to discriminate against foreign capital. Given that his Department was found to be secretly negotiating the MAI in Paris, Costello has clearly overcome his earlier concern about "internationalising Australian decision-making" and the loss of "our national sovereignty."

The Treasurer's reluctant rejection of Royal Dutch Shell's takeover bid for Woodside Petroleum on national interest grounds earlier this year should be understood as a mark of his fidelity to political expediency, and not a recrudescence of his desire to keep key strategic industries" under Australian control." The Foreign Investment Review Board routinely approves 98% of all foreign takeovers of Australian businesses, suggesting Costello no longer has any interest in who owns the nation's equity.

If the Treasurer really wants to understand the motives of anti-capitalist protesters he should drop the condescension and recall why only a few years ago he, too, considered economic globalisation an affront to "Liberal ideas of independence and self-dignity."