Sunday, 2 January, 2022 -
Daniel Moss
Australian foreign policy was dramatically recast 80 years ago in ways that still reverberate today. It went hand-in-hand with a far-reaching overhaul of economic life, the contours of which lasted long enough to help drive a recovery from the pandemic recession. These wartime military and financial arrangements live on, in what detractors call an over-dependence on Washington and the Reserve Bank of Australia’s quantitative easing.
With Japanese troops marching down the Malayan Peninsula in the closing days of 1941 and Singapore soon to be overrun, Australia’s then-Prime Minister John Curtin abandoned the notion that the UK would be the island continent’s protector. The bedrock principle of security since the founding of a penal colony in the 18th century was jettisoned. Washington became the fulcrum around which defense and diplomacy was organized — architecture that shapes Australia today.
Asked to contribute an article to the Dec. 27 edition of the Melbourne Herald newspaper, Curtin wrote: “Without any inhibitions of any kind, I make it quite clear that Australia looks to America, free of any pangs as to our traditional links or kinship with the United Kingdom.” The column, titled “The Task Ahead,” also called for a revolution in Australian life to gear up industry and finance to meet the demands of the war.
John Edwards, author of the two-volume biography “John Curtin’s War,” spoke to me about what Curtin intended to convey in the remarks and how the sentiments came to be canonized in Australian history and politics. Edwards is a non-resident fellow at the Lowy Institute in Sydney. He worked as an adviser to former Prime Minister Paul Keating, was chief economist for Australia and New Zealand at HSBC Holdings Plc and served on the board of the Reserve Bank from 2011 to 2016.
Daniel Moss: You called “The Task Ahead” the most celebrated document in Australian foreign policy. Why was it so important?
John Edwards: The significance arose because of what happened subsequently. Turning to the United States had, at the time, a very limited validity. It was limited to the circumstances of World War II. The significance arose from postwar circumstances: The British exit from India, Malaya, Burma, the Middle East and the UK’s impoverishment. Britain’s entire role in the world changed. The Empire vanished and Australia found itself in a world of new nations where Britain was absent. Had the UK emerged from the war differently, Curtin’s remarks may have been just been another wartime speech.
The awkwardness and controversy the text created was not so much Australia turning to America, because Britain had already turned to America. The real annoyance to Britain in the article was its demand that Australia share with the US the direction of allied efforts in the Pacific, rather than going through the UK as imperial arrangements would have dictated. It was awkward for UK Prime Minister Winston Churchill as he was in Washington conferring with President Franklin D. Roosevelt on this very issue. Curtin demanded that the Pacific conflict be treated as a new war and a war of equal status to that waged against Germany, which was contrary to British policy, and the US approach as well.
DM: Is Australia as lopsidedly dependent on America now as the country was on the UK prior to 1941?
JE: Curtin didn’t intend such a shift. Publicly and privately, he urged Britain to return to the Indo-Pacific as a major presence. He wanted a big base for the UK reopened in Singapore after the war with a fleet to support it. He didn’t understand that what had happened temporarily was to become something permanent. In a certain sense it is true that Australian foreign policy and defense is driven by a fear of abandonment by the great powers. We are not comfortable in our own region unsupported by a large external security guarantor. It’s particularly pertinent today. We fear China’s defense capacity, the size of its economy, its regional ambitions and we have re-emphasized our links with the US and, in a limited sense, the UK.
Underlying your question is: Are we doing enough for our own defense? In a way, what we are doing is underrated. We are spending a little more than 2% of gross domestic product on defense. We have quite a formidable undersea and air defense and offense capacity. We have a small but efficient army. Despite the controversy over China, we do not have a threat. And it’s certainly not China, in an offensive sense. China does not have that capability or that intention. It’s not so much that we don’t do enough, but we wrongly imagine American interests are our own.
DM: This leads us to AUKUS — a trilateral security pact between Australia, the UK and the US — and the fracas a few months ago over abandoning the French-built diesel submarines for a deal on nuclear-powered subs. Can you draw a direct line between the debates in Australia in late 1941 and the sub accord?
JE: It’s evocative, but the circumstances are radically different. AUKUS ultimately gives us very little more than our existing defense understandings. It doesn’t add much to our treaty with the US or our understandings with the UK, other than the aspect of agreeing to Australian access to nuclear-propelled sub construction. It’s very, very specific. Were it to come to fruition — we are talking about a program that won’t be completed until 40 years hence — would it be a major addition to our defense capability? Nuke subs are designed for long distance offensive tasks that relate more to our alliance with US than our actual home defense needs.
DM: Curtin talked in his article about a “revolution” in society. What did he mean by that?
JE: Curtin was a bit of a scold at that point in his life. He was offended that Australians continued to go the races and drink beer and so forth. He was incensed by strikes on the waterfront and in coal mines. Curtin wanted a greater appreciation of the challenge Australia faced. He required a mobilized society in the same way that we have edged much closer to during the pandemic: Adherence to the rules in which behavior determined to be for the greater good is the rule. There are resonances with that rhetoric and what politicians have been saying over the last couple of years. Metaphorically, we often describe ourselves as being in a war against Covid. There are links in a kind of mental attitude. But I wonder whether they will be any more permanent this time than during an actual war? People do revert pretty quickly to what they wish.
DM: Curtin overhauled the tax system and central banking during the war. Did he lay the ground for the modern Australian economy?
JE: This was, in a sense, the real revolution that Curtin wrought. Prior to Curtin, the central bank, which was then the Commonwealth Bank, had quite limited powers, limited authority and a limited vision of how it would use those powers. With his treasurer, Ben Chifley, Curtin brought in legislative changes that created a true central bank. More or less, with some organizational and structural changes, it has the same authority over financial institutions as the Reserve Bank today exercises. In fiscal policy, we rely on another wartime innovation that became permanent. That was the effective monopolization of personal income tax and company tax by the federal government. It gave Canberra great revenue and spending power that Curtin’s successors never saw fit to reverse.
DM: Has this federal authority been eroded by Covid? The state governments appear to have been ascendant, establishing their own rules.
JE: It’s true the federal government has had to fight to get its way. On the other hand, our recovery has depended on the RBA and the federal government. We moved from near-balanced budget to the biggest deficit. We have gone from a position where the RBA wouldn’t contemplate buying government debt to one where it is a major bond holder. The exercise of those powers, won by Curtin, has supported our economic resilience and recovery today.
Bloomberg
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