Footing the bill: ‘Peace dividend’ politicians, public struggle to adapt to the dangerous new world

In 1987, Australian pub rock band Midnight Oil released the hit “Beds are burning” which had a single poignant line, “The time has come to say fair’s fair. To pay the rent, to pay our share. The time has come, a fact’s a fact.”

Now while this song was focused on Indigenous rights and reconciliation between Indigenous Australians and European Australians, the lyrics now hold a different connotation and connection to the shifting sands of the deteriorating geostrategic environment.

The consolidation of the US-led liberal, democratic, and capitalist world order that emerged in the dying days of the Second World War extended the promise of values like life, liberty, and the pursuit of happiness to the whole world, all backed by economic opportunity and a golden age of peace and prosperity.

Capitalising on this ultimate triumph, US academic and author Francis Fukuyama presented the idea of “The End of History” in the book of the same name, which championed an idea that humanity had reached, “not just ... the passing of a particular period of post-war history, but the end of history as such: That is, the end-point of mankind’s ideological evolution and the universalisation of Western liberal democracy as the final form of human government”.

All seemed to be travelling pretty well for this new global order, for the most part. Peace and prosperity flourished despite periodic crises across Africa and southern Europe requiring an intervention, luring many leaders, academics, and those across the broader policy-making community into the “End of History” theory and the promise of a “peace dividend”.

All the while, Mao’s revolutionary China – now led by a burgeoning emperor, Xi Jinping – and Putin’s Russia watched the adventurism, hubris, and at certain points, hubris of the US-led Western world while embracing and learning the lessons of the Western world’s approach to modern warfare, influence operations, economics, and industrialising at breakneck speed.

It wasn’t until nearly three decades later that the mask would truly slip as Putin’s Russia began its expansion in Central Asia, beginning with Georgia and South Ossetia before turning its attention to Ukraine, first in 2014, and again in 2022.

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Meanwhile, China was rapidly expanding its military capabilities and its presence throughout the region, actively posing an ever-increasing threat to the peace, prosperity, and stability that had characterised the preceding decades.

For Australia, a nation that has historically depended upon the benevolence, capacity, and willingness of a “great and powerful friend” for its own security, the shattering of our long holiday from history has been relatively well known, at least as far back as the early-2010s, yet little has appeared to have changed.

But for many political leaders and Australian society at large, the concept of the “peace dividend” continues to dominate thinking. Highlighting this, The Australian Financial Review editorial team put together a timely piece, titled, Australia must pay the price for defence and deterrence, harkening back to the lyrics of Midnight Oil’s hit song.

Defence and deterrence spending ’inescapable’

I have often compared Defence spending and capability to home insurance, something paid in the hope of never having to make a claim, but is an inescapable and acceptable expense broadly expected by citizens.

However, one of the major challenges we now face is the misplaced belief seemingly prominent across Australia’s policymakers and the public that the level of spending and capability generated between the 1990s and into the 2010s is sufficient to defend us from the challenges of the world.

After all, the United States is still top dog, right? And there are no threats to our security and prosperity?

Well, sort of, but actually, no. The United States is in a period of geostrategic decline, being pulled in multiple directions to maintain global peace and security while competing great and regional powers continue to expand their interests, influence and ambitions, particularly in the Indo-Pacific.

Highlighting this, Financial Review’s editorial team stated, “Defence and deterrence are now an inescapable spending commitment in a new world. Russian President Vladimir Putin has put territorial conquest back into global politics.

“China changed everything for its neighbours less than a decade ago with a maritime grab in the South China Sea backed by one of the great naval build-ups in history. Australia was behind the curve by a decade even then; plans to replace the Collins Class submarines should have begun under the Howard government, but no submarine orders were placed until 2016 by the Turnbull government,” they stated.

But the nation’s defence response to the shifting geopolitical sands isn’t the frontline in this new era of multipolarity and great power competition.

Rather, the rise of hybrid or grey zone conflict, spearheaded in large part by Xi Jinping’s China and Putin’s Russia, which has seen the advent of “whole-of-nation” efforts to achieve national interests and ambitions, whether on the economic, political, societal or territorial front.

At the forefront of responding to these mounting regional and global challenges is economic resilience, competitiveness, and diversity.

Economics is the first line of defence

For the Financial Review editorial team, the economic fight is critical, stating, “A generation of politicians who grew up with a post-Cold War peace dividend are now struggling to switch from welfare to warfare.

“In Australia, this means shifting some of the prosperity earned from supplying resources to China’s industrial revolution into hedging against Beijing’s new might,” they explained.

This isn’t without its challenges though, particularly given the approach taken by Australian policymakers over the past decade or two, something, again, the editorial team detailed saying, “It is a huge national economic and industrial challenge. The Albanese government has sold defence to Labor’s sceptical left as a new employment and high-tech opportunity, which it is.

“Unfortunately, the dilatory governments of the past means it’s arriving along with other big commitments to the clean-energy transition, housing and the care economy too.”

Stressing the importance of wholesale economic reform, reindustrialisation, and ambition to take the place of dithering and “business as usual” based on the immediate post-Cold War consensus, the Financial Review editorial team stated, “And that spending can only come from a robust economy. Whether the targeted defence spend of 2.4 per cent of GDP still delivers an effective deterrent in the real world depends on the size of the GDP denominator.

“The very first line of defence is the economic one, where productivity forecasts are also sub-par compared with what’s needed.”

But as I have said many times previously, we are far from being “match fit” and capable of properly marshalling the “whole of nation” to defend Australia and its interests in the event of conflict breaking out in the Indo-Pacific.

This is something that the Financial Review reinforces, stating, “Reserve Bank research suggested this week that China’s iron ore demand may be peaking, ending both a gusher of government tax revenue and an era when budget constraints and trade-offs could be more easily ignored.

“It is going to make a whole raft of unreformed or retrograde policy in areas such as tax and industrial relations policy look even more unsustainable. Being fit to defend Australia is going to come in all manner of forms in the future.”

Going further, the Financial Review stated, “China has already shown that any Australian assertion of sovereignty in areas it doesn’t like – in control of Australia’s telecoms, on political interference, and secrecy over the pandemic – has brought sharp pushback. That’s the other sovereignty issue.

“Whether Australia’s Defence budget is adequate isn’t decided here, because this nation has no designs on any other. It will be decided in Beijing, or Pyongyang, or Moscow where real defence budgets are not published. Nor is their intent really known.

“Until it is, Australia needs to be prepared with our allies for whatever they do, and be prepared to pay the price.”

This final paragraph brings me back to the words of Midnight Oil, “The time has come to say fair’s fair. To pay the rent, to pay our share. The time has come, a fact’s a fact”. It is indeed time for Australia to pay our share and prepare adequately.