Scott Morrison

For anyone looking for a sign that the Turnbull government, and the man charged with leading its economic agenda, Treasurer Scott Morrison, is doing some reflection in the wake of its political near-death experience, the return of Pauline Hanson, the surge of NXT, Brexit and the rise and rise of Trumpism, Morrison’s latest comments are rather alarming.

“We need to double down on trade, investment and innovation, ‘entrepreneurialism’, on the ways we collaborate to improve the financial architecture and share data to facilitate the new digital economies,” Morrison told the Financial Review’s Jacob Greber. Along the way, he dismissed further monetary and fiscal stimulus for sluggish economies (fiscal stimulus is just borrowing from future generations), and also dismissed policymakers talking about greater equality and inclusion, preferring to talk instead about “participation”.

The first thing to note is that this is some weapons-grade bullshit from the Treasurer. His government — both the Abbott and Turnbull versions — is pumping tens of billions of dollars of fiscal stimulus onto the Australian economy via deficit spending, which has blown out dramatically on its watch. Morrison this year is still spending almost 1.5 percentage points of GDP more than Labor was spending in its final year. That deficit spending — which, every budget, gets extended another year — has been coupled with an extended period of historically low interest rates from the Reserve Bank. Morrison’s statement that “monetary policy and fiscal policy don’t provide a sustainable path for medium to long-term growth” appears to contradict his own economic plan, which is to continue deficit spending into the 2020s.

As for “investment and innovation, ‘entrepreneurialism'”, this government’s primary investment and innovation plan is to blow tens of billions of taxpayer dollars on keeping less than 3000 jobs going building naval vessels locally in a naked display of good old-fashioned protectionism — while propping up local steelmakers with loans and anti-dumping measures. That’s while actually reducing infrastructure spending and trashing the NBN. And that’s on top of National Party-inspired measures that, as the Productivity Commission explained last week, actually reduce foreign investment in agriculture.

But leave aside the inconsistency and Morrison’s words are troubling from another perspective. It’s true that Australia, where liberal economics have been implemented more successfully than other counties (primarily because it was driven by Labor, which was acutely aware of retaining the support of traditional Labor voters while doing so), faces a less immediate threat from populism than the UK and the United States. But it is nonetheless gathering momentum in the success of NXT and One Nation, who now join Bob Katter as parliamentary advocates of a dramatic reversal of economic direction. The bizarre response of some on the Right (like Nick Cater) is to propose accommodation of the bigoted posturing of Hanson and co in the hope they’ll support further economic deregulation, the very thing that has helped created a sub-class of bitter, Hanson-supporting old men angry about their loss of socio-economic status.

In this context, Morrison’s suggestion that we merely “double down” on globalisation suggests a profound disengagement from the political challenge posed by the resurgence of economic populism. The big challenge facing economically liberal policymakers — whether in Labor or the Liberal Party — is merely to hang on to what we have and prevent the erosion of free markets and limited government intervention. “Doubling down” is a fantasy for a world in which the Liberals just won government by a landslide, don’t need the Nationals, and Hanson, Xenophon and Katter aren’t in parliament.

Morrison’s own personal challenge is to start convincing voters that a retreat into protectionism will lead to a loss of income in the future, through poorer growth, lower employment and less investment. Playing ideological games about refusing to say “equality” because “participation” fits the neoliberal playbook more neatly plays directly into the populists’ hands — a huge driver of populism is the perception that the wealthy, and large companies, do far better out of liberal economics than ordinary people do. And that’s a problem the government and business cheerleaders like the Business Council and the Australian Chamber of Commerce and Industry are exacerbating by demanding corporate tax cuts so that the world’s largest corporations pay even less tax — often less tax than ordinary citizens.

The achievements of the last thirty years are under attack more now than at any stage in recent years. Both major parties have been infected with economic populism; those prepared to speak out against government interventionism and protectionism are becoming fewer and fewer. Morrison, like him or not, has the most important task in this battle, and at the moment he doesn’t even appear to realise he’s in one.