Finance Finance News The Brexit-style myths that could hurt Australia

The Brexit-style myths that could hurt Australia

Brexit anti-brexit rally Manchester
As Remainers push for a second referendum, the Conservative government swears it will honour the 'exit' vote's victory. Photo: AAP
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There’s a stark lesson for Australia this week in comments made by Bank of England governor Mark Carney, who has drawn a clear line between the Brexit vote of 2016, and slower economic growth.

Mr Carney says the UK “should be booming”, but instead is “just growing” thanks to the triumph of populist politics over sober policy thinking during last year’s Brexit referendum.

In a TV interview, Mr Carney said: “Business investment has picked up, but it hasn’t picked up to any of the extent that one would have expected given how strong the world is, how easy financial conditions are.”

Then again, his comments are unlikely to trouble political leaders such as Nigel Farage, who convinced voters to get into a “lifeboat off the Titanic”, or Boris Johnson whose “lies and hype” are still being criticised by his own Tory peers.

That’s because populist leaders, by definition, trade on emotion rather than facts.

Ultimately, however, economic reality has a habit of cutting through emotive arguments – as is already happening on the other side of the Atlantic.

US President Donald Trump’s brand of populism has not held voters’ imagination for long. The Washington Post reports that he now has an “approval rating demonstrably lower than any previous chief executive at this point in his presidency over seven decades of polling”.

The trouble is, when that degree of disaffection shows up in the polls, the damage is already done.

Our own furphies

There is much to learn from the rise and fall of populist leaders overseas, because similar trends are evident here.

As Australia struggles to return to a decent level of economic growth, and to escape an extended period of wage stagnation, several persistent myths threaten to apply the brake at exactly the wrong time.

The first is the wildly exaggerated claim that Australia is “full”. Former entrepreneur Dick Smith makes the claim fairly regularly, and did so again this week in The Australian newspaper.

Mr Smith’s call for immigration to be more than halved is echoed by the likes of Pauline Hanson’s One Nation party and former Liberal, now independent Senator Cory Bernardi.

Yet none of these campaigners discuss why immigration is so high at present – net overseas migration is heavily swollen with foreign students, who obtain qualifications here and then often seek to settle in Australia permanently.

We are going through an education boom that, depending on commodity prices, occasionally pips iron ore as our biggest single export. And it is a boom that invites, trains, and then settles smart, motivated, new Australians.

Net overseas migration should fluctuate up and down a bit depending on conditions, but to kill this golden goose during a period of transition away from the previous mining investment boom would be damaging indeed.

Race for the tourist dollar

Another booming sector is tourism, and again it is threatened by populist politics – especially the spreading of race-based myths, which, as we learned after a string of attacks on Indians in 2009, produce plenty of ‘racist Australia’ headlines overseas.

And yet there are votes to be had in stoking fears that “we’re in danger of being swamped by Muslims”  – a ludicrous claim given that only 2.6 per cent of Australians are Muslim, and are overwhelming law-abiding, taxpaying citizens.

Another race-based myth, often repeated by the National Party, is that Chinese money is taking over Australia’s agricultural land. Yes, Chinese investors have increased their stake in recent years, but it is still only 2.5 per cent.

China is a huge and growing source of tourists for Australia, but when global news outlets cover some of the racist undercurrents in Australia, there are plenty of other destinations to which travellers can turn.

The energy transition

The other big myth, actively spread by elements within the Liberal Party at present, is that only coal can provide affordable ‘baseload power’ for Australia’s future – and, therefore, that there’s no use trying to be a ‘clean energy super-power’.

Even with the government’s own Finkel review naming wind-plus-gas-backup as the cheapest new-build energy available, the myth of ‘cheap coal’ has won the day.

The government’s National Energy Guarantee will force energy retailers to buy more coal power, despite it being neither cheaper, nor more reliable.

Taken together, these issues are reminders that Australians are far from immune to the kind of simplistic, factually incorrect arguments being made overseas.

And we will pay the same price if we fall for emotive populists arguments, rather than checking the facts behind them.

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