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Indonesia election

The government has had its vaunted “free” trade agreement with Indonesia put on the backburner because of Scott Morrison’s desperate and failed decision to consider aping Trump and shifting Australia’s Israeli embassy. It’s hard to conjure a more apt comeuppance for this sublimely awful government.

For years, the Abbott/Turnbull/Morrison/who-next government has been peddling lies about preferential trade deals, insisting what it erroneously calls “free trade agreements” are a major source of economic benefit to Australia. But again and again and again and again the Productivity Commission has demonstrated this to be nonsense, finding at best “modest benefits” from the trade diversion such agreements amount to, offset by damage inflicted by DFAT bureaucrats on the national interest in deals such as the rotten AUSFTA and the threat of investor-state dispute resolution clauses. The Coalition has persistently refused to let the Productivity Commission, or anyone else, examine such deals before signing up to them, because their benefit is not economic but political, to the extent that they can parade such agreements to voters as evidence of an economic strategy.

Now the latest of these entirely political deals, with Indonesia, has been stymied by another half-smart, half-arsed political decision, to try to swing the Wentworth byelection by pandering to Israel on the embassy issue. As we learnt from the “process” around this decision, it was a thought bubble from Scott Morrison, relayed to Foreign Minister Marise Payne and discussed by the government’s leadership group with literally no input, or even awareness, by DFAT.

As Malcolm Turnbull revealed, DFAT had already advised against such a move when he was prime minister. DFAT would have pointed out that countries in our region — which take a more realistic and less reflexively pro-Israeli view of the brutal occupation of Palestine than Australia’s major party politicians — would regard pandering to the Netanyahu apartheid regime in rather a poor light.

Now Morrison and Co get to reap what they’ve sewn, with Indonesia making clear an FTA is off the agenda until Australia drops the embassy move. “Australia is a sovereign nation,” Morrison said in an effort to rebuke Turnbull after he’d briefed his former PM on the issue and sent him to Indonesia to smooth relations. He appears to have forgotten that Indonesia is as well, rather than just another prop for yet another failed Morrison marketing campaign.

That other nations might have their own agendas is the cause of a significant impediment to another, far more damaging piece of trade silliness: Australia’s protectionist decision to waste tens of billions of dollars building a new generation of submarines in South Australia, in order to shore up Liberal seats in that state. The impediment is that protectionist Australia engaged the shipbuilder of protectionist France to make the submarines, and the two protectionists are having difficulty resolving where the risk will lie if — or as defence procurement history tells us, when — the program blows its budget and the things don’t work properly. The French company, Naval Group, is owned by the French government, but funnily enough, the French don’t want their taxpayers contracted to cover blowouts and failures on Australia’s submarines, so are reluctant to agree. It’s a superb example of how protectionists want all the benefits of government intervention but none of the inevitable downsides that come with it.

That the government is desperate to sign off on a contract before the election, so that it can demonstrate its shipbuilding wares to the good voters of South Australia, adds an element of urgency to the Australian end of negotiations. But we’ve seen before where making significant decisions based on electoral calculations can leave us. 

Peter Fray

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