Alan Kohler: The three challenges for whoever wins the election

Up to now the election campaign has been focusing on the top centimetre of issues while ignoring the depths.

And it will probably stay focused on cash handouts, Scott Morrison’s character, Anthony Albanese’s absence of it, and the lies both sides choose to tell about each other.

But the next Australian Parliament will actually be dominated by three things: Climate change, inequality and China.

Neither major party will campaign on these things because they don’t have any solutions for them, in turn because the solutions are complicated and unpopular. These things are to be discussed after an election, not before.

1. Climate change

What’s needed is a price on carbon, but neither party is proposing that because Australian politics has been irretrievably polluted against it.

After the floods and Sydney rains, global warming is front of mind for most Australians, but it’s unlikely that either of them will campaign on climate change at all, which is why independents supported by Climate 200 standing in Coalition seats could do well.

The government’s problem is that no matter what it says, its leaders have no credibility, having actively prevented action in the past while promoting coal.

The words “net zero by 2050” emerge from their mouths, but nobody believes it and for good reason.

A Climate Council review of the government’s approach to climate change published two weeks ago gave it 3 out of 10, citing “cuts to climate-related funding … the rejection of advice from scientists and both national and international expert bodies, a lack of credible climate policy and claims that mislead the public on what’s being done as well as what’s possible”.

The Labor Party’s climate policy is almost as weak as the Coalition’s, and they even made it a story about job creation and cutting electricity bills, rather than just making it about global warming.

But at least Labor is proposing to enforce reductions in emissions by the companies that release most of the greenhouse gases, although it’s too gradual and agriculture is left out.

2. Inequality

This issue got a solid outing with 73-year-old disability pensioner Ray Drury’s five-minute seminar with the Prime Minister last week in the Edgeworth Tavern in Newcastle.

There clearly needs to be higher taxes and better welfare, an effective housing policy and increased wages.

Globalisation and what used to be called economic rationalism, now neoliberalism, along with weak competition regulation and tax cuts for the wealthy, have led to an explosion of wealth and salaries at the top and slow wages growth and poverty in the middle and the bottom.

Inequality is corroding what John Locke called the “consent of the governed”, leading to perverse electoral outcomes like the election of property developer Donald Trump as President of the United States. In time it will destroy democracy itself.

In an interview in the Financial Times last week, one of the world’s authorities on inequality, Branko Milanovic, a former World Bank economist now at City University in New York, said: “the middle class … really did not have a very good period over the last two decades and in part that absence of growth was covered up, camouflaged, by the ability to borrow”.

This has been exacerbated by a dominant 40-year paradigm that favours small government and low taxes, embodied in the 23.9 per cent limit of tax as a percentage of GDP, discussed in my previous column.

The COVID pandemic has seen a vast expansion of government, funded by debt rather taxes, but the question for the next government is where the size and role of government goes from here, and how will it be funded.

Milanovic says: “There is a fatigue of the Thatcher/Reagan or neoliberal model and I think to some extent we might see in the future COVID as a useful bookmark of the end of a period”.

What comes next? Just don’t ask anyone on the campaign trail.

3. China

The world is rapidly dividing into two spheres – America and China.

For Australia this represents the most complicated diplomatic challenge in generations, for which neither party has a viable answer.

In the first United Nations vote on sanctions against Russia over its invasion of Ukraine in February, 39 countries voted no or abstained, and another four voted yes, but later publicly opposed sanctions (Saudi Arabia, Brazil, Mexico and the UAE). Total: 43.

Last week another vote was held on whether to remove Russia from the UN human rights panel; this time 82 countries either abstained or voted no.

These countries can be seen as China’s “axis”. They account for 75 per cent of the world’s population and most of the world’s resources.

And they include India, which we thought was a member of the anti-China Quad with Australia, Japan and the US, so it seems the Quad is also dead.

Russia’s invasion of Ukraine and the atrocities now emerging are a difficult problem for China, but there is little doubt that Putin has accelerated the division of the world into two.

And there is also no doubt where Australia sits politically in this new world, but economically we depend on China.

Can Australia be a bridge between the two sides of a new iron curtain?

Well, the feats of diplomacy required to pull that off are plainly far beyond the current mob of bureaucrats and politicians running foreign affairs in Canberra.

They can’t even get anyone in Beijing on the phone, the US President couldn’t remember our Prime Minister’s name, and Mr Morrison managed to massively offend France in the process of switching submarines to ones that are more expensive and due to be delivered decades later.

So, the inbox of the incoming government in May will contain the challenges of dealing with the transition away from fossil fuels and the impact of the global warming that’s already locked in, funding the increased demands on government and navigating the new bipolar world after the war in Ukraine.

Is either side up to this? It doesn’t look like it.

Alan Kohler writes twice a week for The New Daily. He is also editor in chief of Eureka Report and finance presenter on ABC news

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