Transcript

How should government balance national preparedness with cost-of-living pressures? 

Can Australia strengthen fuel security, defence capability and supply chain resilience without undermining productivity and living standards? 

How do economic pressures, housing stress and inequality shape public trust – and what does that mean for national security? 

In this episode, Aruna Sathanapally, Richard Denniss and Michael Stutchbury join Rory Medcalf AM to examine the intersection of national security, economic pressure and social resilience. 

Transcript

(This transcript is AI-generated and may contain inaccuracies.) 

Michael Stutchbury 

“If we run out of liquid fuels in Australia, the whole place is going to grind to a halt.” 

Richard Denniss 

“If Australians don’t trust each other, and if Australians don't trust their government, then you've got no chance of delivering national security.” 

Aruna Sathanapally 

“We do actually have strong institutions in Australia. We have incredibly low levels of corruption for all my points about vested interest, we do have a history of reform, and we also have a history of good responses to crises.” 

National Security Podcast 

You're listening to the National Security Podcast, the show that brings you expert analysis, insights and opinion on the national security challenges facing Australia and the Indo-Pacific. Produced by the ANU National Security College. 

Sharryn Parker 

Welcome to the National Security Podcast. I’m Sharryn Parker, a Senior Policy Advisor at the National Security College. I acknowledge the traditional custodians on lands of which we meet and record, and pay respects to the Ngunnawal and Ngambri people listening. This week in Canberra, all eyes are on the Federal Budget, one of the most significant moments of the federal policy calendar. Beyond the headline numbers, the budget shapes Australia’s strategic priorities, from defence capability and intelligence investment, to cyber resilience, regional engagement and the broader national security agenda. In the coming days, we’ll be watching closely to see how the government balances economic pressures with an increasingly complex strategic environment. But that requires time and focus, so for today’s episode, we’re bringing you back to an economic security discussion that was held at the recent National Security College conference, ‘Securing our Future: a ready and resilient Australia’. The discussion features leading experts examining some of the key challenges facing Australia, and it captures many of the debates currently shaping national security policy. We hope you enjoy the discussion. To see more from this year’s conference, please follow us on YouTube @ANUNationalSecurityCollege. 

Rory Medcalf   

Delegates, thank you very much for being here, and I'm delighted to see that the numbers are reasonably evenly split between economics and society. So that is more, that is more science is not so dismal, or maybe just fits the tone of a lot of our concerns about national security anxiety that have informed this conference. We really have a an outstanding panel here to help you and help me unpack, and I hope, critique as well the work we've done on Community Consultations’ public attitudes to security, risk and resilience, but very much through the lens of the economy and the nexus of economy and society in Australia, because one of our starkest findings in the focus groups, of course, as I mentioned, was that although we identified heightened anxiety about security risk, we also recognise that economic hardship is the day to day risk that a lot of Australians contend with, more than a risk, but a reality. And of course, this does not pose any kind of enviable challenge for policy makers in government, up on the hill, or indeed, anywhere in the corridors of power and influence.  The three guests don’t need much introduction from me, but just to recap, we've got the leads of three key institutions, three key research institutions and think tanks around the country that look every day at economics and society, but often from quite distinct perspectives. So immediately to my right, Dr Aruna Sathanapally, who is the Chief Executive Officer of the Grattan Institute, as well as directing its Economic Prosperity and Democracy programme, bringing extensive experience, not only in public institution, design, economic policy, regulation, but combining, I guess, government and also very much research expertise. So thank you very much for being here, Aruna. Dr Richard Denniss, co Chief Executive Officer of The Australia Institute. And of course, those of you who are Canberra based particularly would know the work of Richard and his team very well. Richard is a prominent Australian economist, author and policy commentator with previous roles, including here at the Australian National University, at the Crawford school, and as a columnist for The Finn review and The Guardian. And speaking of the Australian Financial Review, I'm really pleased also to welcome Michael Stutchbury. So Michael was, of course, former Editor in Chief of the Australian Financial Review. I think a really, a really guiding and foundational role in building the financial review into the newspaper that continues to have, I think, so much influence and respect around the country. But of course, after your journalism career, you've now moved to become the Executive Director of the Centre for Independent Studies in Sydney, and so you bring, I guess, deep engagement, particularly with the corporate sector, to the perspective today. So please join me in welcoming our guests, and then I'm going to go straight to the conversation. So Aruna, you've had a look at our data, and Grattan, I think, has a very proud record of looking at the way in which the economic, I guess, challenges for Australia and the pressures in society intersect. We've always found your research pretty compelling. So from your vantage point. If you were trying to synthesise what we've found into your worldview, what would be, I guess, some of the immediate challenges that would spring to mind. 

Aruna Sathanapally 

So thanks Rory, thanks for having me, and congratulations on the work. It is a really comprehensive and very thoughtful piece of work. I really enjoyed. I've probably got more time to dive into it, but I really enjoyed what I've read so far. One of the questions that struck out to me, and you mentioned it before, in terms of future work, is, what do we mean by preparedness? There's a lot packed into that concept, and so it's one thing to say, well, we don't feel like we're fully prepared. I worry, what does fully prepared look like? And it's a bit of a question of, how long is a piece of string? And one of the things that, if we think about sort of what really lean highly efficient processes look like. They have less contingency in them. They have less redundancy in them, which means that they are more brittle to risk. You can build in that contingency. You can build in that redundancy, whether you're talking about it for a specific company, or whether you're talking about it for an entire economy. But that is expensive. It is more expensive than running a kind of just in time inventory, or, you know, just picking the cheapest supply chain and using that all of that diversification absolutely makes sense from a broader resilience perspective, but it's not without cost. And you know, if you ask me for my big takeaway, and it's not, it's from the Community Consultations, but I think it's what all of us are facing. The future looks more expensive, and that's something we're grappling with, whether that's, you know, from an environmental perspective, whether that's from a geopolitical perspective. But certainly what we've long known is the future was going to be more expensive from a demographic perspective. And then the future is more expensive in the sense that some of that meant that we could do more with less has definitely dropped off. And so insofar as we were assuming that that productivity growth would continue, and therefore we would, you know, continue to see that growth, those assumptions are having to be continually revised downwards. And just last week, Treasury, you know, made public that through the through the Treasurer, that those assumptions have properly been down and revised downwards again. So what does that mean? Slower economic growth and a more expensive foundation of things we want to invest in, is a bit of a squeeze, right? There's, there's less to go around and there's more things to spend it on. So maybe that's my kind of opening. 

Rory Medcalf   

That's a great opening, and I think that sets the scene for a lot of what will come. Richard, we've, spoken not only about these issues, but also, of course, about the intersection of political decision making as well with whether it's national security or economic policy or social policy. And there's clearly a lot of change and disruption in the system at the moment, on so many levels, I'd be interested initially, I guess, in your perspective from The Australia Institute, and you know very clearly from the, I guess, the progressive side of the debate as to what you think our data means in the context of getting the balance right between economy, society, security. 

Richard Denniss 

Yeah, thanks, and congratulations again. I think it's an important piece of work. I'm glad you've done it, and I'm glad people are interested in it, but I guess for me, there's nothing sort of wrong with the way that you've done that research. But what it does is it highlights a whole bunch of structural but arbitrary binaries that I would argue are baked in to Australian policy making and debate. They don't have to be baked in. And other countries don't have them, and we haven't always had them, but they're there, and they're binaries like, and they're so common, economy versus environment, or national security versus human rights, and, you know, freedom of speech or whatever. So we have these binaries that are just baked into the way we see a lot of big issues, and then overlaid on that, we have political binaries like left and right. Because everyone knows that climate science is left wing. It's just obvious, when you think about it, all right, it just is right. It's a lefty thing. That's why Margaret Thatcher was worried about it. That's why Angela Merkel was worried about it. But these lazy habits of Australian democracy are causing real problems when things need to jump those arbitrary barriers. And I think that's what your polling highlights that these arbitrary categorizations between security and society, defence spending and inequality, that's a great way to organise a public service. Well, maybe it is. Maybe it's not, but it's the way you think it's a great way to organise a public service, just not how the public sees it. It's not how the world sees it, and it's not how reality sees it. So I guess my opening gambit would be that if Australians don't trust each other, and if Australians don't trust their government, then you've got no chance of delivering national security. But what undermines trust, all the things that don't, you don't have to worry about if you're in the national security space. So inequality. People can't afford housing, people can't afford health, people can't afford education. Sure, go tell them you're going to buy the AUKUS submarines. See how that goes. Right? So the fact that you, or the person sitting next to you can categorise these things quite nicely and say, ‘Oh, but human services worrying about that. I'm doing national security.’, those categorizations, those binaries, those ideas that the lefties want this and the security hawks want that, good on you if you think that's going to last, I don't think it is. And to give you a sense of that, you know, Rory and I have talked about this, but all right, when One Nation usurps the Liberal Party as the second biggest party in Australia's parliament, when that happens, you know, One Nation are going to be on the Intelligence Committee that you won't let the cross benches on to, right? You know the Liberals won't be allowed on there anymore. So this idea that if you hold on tight and you keep other people out because they don't understand, it's not going to hold and when it slips through your fingers, it's going to be messy. 

Rory Medcalf   

So we've branched beyond economics already, and that's fine. That's fine. Thank you. Thank you, Richard. If you think - 

Richard Denniss 

Well if it's all about economics 

Rory Medcalf 

No, no, no - 

Richard Denniss 

No, no, but let's be clear, it's inequality, and it's economic disadvantage that's driving Hansen's vote, and it's a sense that people are let down, and that's why Trump won. That's why poor people in America voted for Trump, because they thought more of the same from the Democrats was scarier, scarier than Donald Trump's whatever he was promising. All right, so these things are all linked. And of course, Australian defence and security, I don't think you really saw Trump coming, the real Trump and yeah, but that was driven by inequality and a loss of faith in the state. 

Rory Medcalf   

And we sure have this vortex now of international security disruption affecting everything else. I'll go to Michael Stutchbury, so Stutch, the, we talked a bit previously about the productivity challenge. I mean, how do you provide for all of the, or even a reasonable proportion of the national security goods that a nation might need in times of growing risk with the economy that we have. I'd also be interested, because I know that very much at CIS you connect with trying to understand the perspectives of corporate Australia on a lot of these issues. What's your initial take on our data? Where would you like to take it? 

Michael Stutchbury 

Well, thanks. And again, I'd like to say, Rory, congratulations on the big effort you've put in. Also, I found when running summits like this at the Financial Review, the trick was to time it totally with a major global crisis. And so you've, you've managed to do that very well. That's the way you get, get a bit of buzz in the room. So well, well done. Not sure how you did this? We actually - 

Rory Medcalf 

We have ways.  

Michael Stutchbury 

Centre for Independent Studies is a self styled classical liberal think tank. Actually doesn't have a lot to do with actually, big corporate funnily enough, I think it probably should have a little bit more to do with that. It's more at a private donor. It's a classical liberal type think tank. And maybe if I put it in the context of last night at the minerals Council, Fatih Birol from the International Energy Agency, depicted this as a bigger oil crisis than the mid 70s, which I found a bit surprising. But, you know, he claimed it's a more intense thing than back then. And my own think tank, I'll do a little quick thing about the leading up to it. It's 50 years this year, and I say that 2026 is an echo of 1976 it was the collapse of the Keynesian consensus. We had the Whitlam government. We had the stagflation and all that in search for an alternative framework. And of course, that framework came out of more of a pro-market open framework, which flowed through into so Reaganomics in the US did flow through into Margaret Thatcher in Australia. It flowed through with a little bit of delay into, funnily enough, a Labor government, a Hawk-Keating Labor government, which deregulated the economy, opened it up, floated the dollar, deregulated the financial sector, got rid of tariff import protection, privatised government enterprises, and that was followed, in a bipartisan way, by and large, by a centre-right government, Howard-Costello government. They continued Central Bank independence, Charter of Budget honesty, which, of course, have gone out the window, and had competition policy reforms. And then out of nowhere came the Australia's China boom, which people didn't really see coming. It was coming. It was an echo of the 1960s Japan boom. We had the China boom, which came in, and so we that became our new big export market. And I say that peaked at around 2011-12, with the iron ore price at around about $180 US. We went from Lee Kuan Yew calling Australia the “poor white trash of Asia” in the late 70s to becoming one of the world's highest income economies. Like even today, and Australians don't quite appreciate it, per capita in Australia is 10 to 15% higher than the Germans or the Swedes. It's 20-25% higher than the Canadians or the Poms, it's higher, again, than the Japanese or the Koreans, and that's because we're smarter than the Germans and the Swedes, and because we work harder than the Japanese and the Koreans. We've been at a, we've been at a high watermark of Australian prosperity, which sort of peaked at around 2011-12. Since then, I think the whole system has deteriorated, and we've been largely arguing over what you might call the ‘rent of Australia’. So you can see politics has deteriorated. You don't have a consensus over regionally centrist grounds about how to grow the pie. We're talking about dividing up the pie, that's the debate. And as that's happened, the, what's that, the global national security framework, rules based regime for security and for trade have both fallen apart. And these are the this this regime, a rules based regime, which are middle power such as Australia, commodity exporting country of Australia, has relied upon it from our prosperity has deteriorated. So we're now in a different world. We see now the security threats that have that have blown up in the Middle East, and we really haven't seen a China shock, come on, that's on that front yet. And everyone's expecting that's down the pipe. But we've under invested in defence. We now got, we've now find that the global trading system has been disrupted. So there's questions about supply chains, out of, out of Covid. We have to shore up them. And there's a lot of push for national sovereignty and really going back, which has a big danger of becoming turning into a protectionist race as well. We want to produce everything here. This will all come at a cost. We're going to have to spend more. We're a fully employed economy right now, at the peak of our prosperity. China has now turned from being, you know, an unalloyed gift to Australia, to being a two edged sword, because it's become a security risk as well. So these are, and then our main security ally, the US, has become a bit unconventional. So, so we're grappling all this. So I think the challenge is for a high income economy, which not, doesn't really appreciate the source of its wealth, to be able to divert resources and work out how to do this in a way that, something's got to give. There are trade offs in all this. And in some ways we have to sort of shore up supply chains. In other ways, we've got to get a lot more sharper and become more prospect and boost our productivity at the same time. So I think that's the sort of challenge facing us now. And I see 2026 an echo of 1976 not just with the oil shocks, but in the whole scope of political economy, medium term framework cycle, and we really need to reassess a lot of our frameworks and our economic thinking as well. 

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Rory Medcalf   

Aruna, I want to start with you, though, on the future is expensive, and on the cost of resilience, the cost of preparedness. And I cannot disagree with you. I think the measures that we took from the public about under preparedness were very clear. And this is even, I can even say this on record, even in even in briefing government on this project, briefing the bureaucracy, briefing parliament, as we've done in recent days, we emphasise this is under preparedness, not complete unpreparedness. There's an important distinction there. And the question really is, what is the right level of preparedness? What is an optimum level of preparedness? And is this about being prepared for multiple shocks and risks? Are there ways in which, arguably, you could look at, for example, the relative resilience of some Australian rural communities against bushfires and floods and the kinds of risks they do with all the time. Are there lessons we can learn from there for other parts of Australia to be prepared for multiple risks, not necessarily the military staff, or are there very expensive forms of preparedness that are really only good for one purpose, and therefore, as you say, that high cost contingency? What do you think? 

Aruna Sathanapally 

Yeah, so maybe I'll start from the basics, and Michael's led me there pretty well. We have high expectations in Australia. We enjoy high living standards, and we have high expectations of what government will do when times are tough. That is not a bad thing. That is that is a good thing. And Australia has actually acquitted itself pretty well through recent crises, both coming out of Covid and coming out of the global financial crisis. But what that is done is that has doubled down on some of the expectations we have that government will provide a floor under us when, when times are tough. Now, if that happens once a decade or once every 15 years, then you know your economic theory, or your fiscal theory would have it, you kind of you spend big, and then you build, you will, you pull that spending back, and you build your fiscal buffers back up. But if we're dealing with multiple crises, one on top of another, then we don't actually have that, that dynamic where we can kind of build during the good times to spend during the bad times, and sort of rinse and repeat. I don't have all the answers here, but there is a piece around Australians having expectations that are both ambitious and attainable for what we can achieve collectively, and some. an ability for us to make the early investments in the things that we know will build our resilience in the future and not just leap from crisis to crisis. So, you know, the way I think about it is there's sort of two sorts of crises we have to deal with. There's the shock and there's the squeeze. And, you know, Richard makes the point about inequality. And you know, we've gone into the to the data on this, and the, you know, from our perspective, the biggest driver of inequality, financial stress and long term economic stress is housing. That is a problem that has been decades in the making. It is not a sudden shock, but its consequences will also be a long term in the unravelling. We can't lose sight of our need to act on that because we're jumping from crisis to crisis, because that's what kind of undermines our ability to then meet people's economic stress in the event of a financial shock, because it's much harder if people are in insecure housing, even before we go into an economic shock. So for me, I'm thinking about, how do we, how do we balance those long term reforms that tackle housing, that maybe, you know, tackle forms of improving productivity that are on the table, you know, state, you know, state based regulations that that we could see benefit and harmonising, while also being able to step into the fray for a shock. That is a really tough thing to ask of our public servants and our institutions, to be perfectly honest. We've done very well during crisis, often because our public service will surge to the crisis. But now I love to have a better metaphor than walk and chew gum. But I feel like we're entering the walk and chew gum era where we're going to have to have a public service that can respond to the immediate crisis that arises in relation to fuel but also progress housing reforms on like capital gains tax and negative gearing, and do all of that for the same budget.  

Rory Medcalf   

Look, thank you. So Richard, the binaries, the baked in the baked in binaries. And I, I think you're right that one of the views that was surfaced in a lot of our study is that the public don't think about security in some kind of very narrow compartment. Though it was, there was a lot of common sense in drawing, in drawing, those connections, but at the same time, it's and I'm certainly not accusing you of this, but I'm thinking, you know, it wouldn't it be nice if, if there was some kind of holistic policy approach that that brought these issues together, that you know, that the inter, interagency, or that the federal process, could somehow have integrated solutions to every problem, and they're so expensive. So what do you see as practical steps towards breaking down the binaries? 

Richard Denniss 

Oh to break down the binaries, but to admit they're there by owning the consequences of them being there. I mean, we live in a country that spends $14 billion a year on fossil fuel subsidies and says it's doing everything it can to tackle climate change. I mean, pick a lane. Right, the idea that there's something, and of course, to say that as a public servant is, you know, well, don't, right? My advice to you is, don't say that. All right, it will not help you get a promotion. All right, there's helping the energy industry grow, and there's reducing emissions. And they're separate things with different branch heads and never the twain shall discuss. So that kind of absurdity is maintained in the farce of you know, whatever we're doing here, I mean, to give you know, you know productivity is going to keep declining. Here's a tip. I only forecast the inevitable. Productivity is going to continue to decline. And it's not because we're not going to fix the IR system again, or it's not because we're not going to reform company tax again. We've been doing that for 30 years. Economists think in diminishing returns. The idea that we can keep going back to the same well, but pulling out a bigger bucket, no chance. Climate change is going to lower productivity. But I promise you, no one at Treasury is thinking about that, because that's a climate change - 

Aruna Sathanapally 

I’m sorry, I have to interject. There absolutely is a whole team thinking about this in treasury. 

Richard Denniss 

Okay, well, then the words don't make it outside into anything Chris Bowen or Jim Chalmers said. So let me give you some crystal clear examples. More storms equals more damage equals more resources used building stuff we already had, and the more resources we use rebuilding stuff we already had, the lower our actual standard of living will be. Okay? Now we still haven't fixed the floods from Lismore. We still haven't rebuilt all the houses from the bushfires of 2000. This is only going to get worse. Now, the more activity, the more, ironically, the more disasters we have, the more people will be employed in construction, the more construction output will rise, but our standard of living is going to decline, the more, if once upon a time 5% of crops got knocked out every year, and all the labour and capital and fuel that went into making a crop that gets destroyed is lost. If that goes to 10% agricultural productivity is just going to fall. So there are major macro drivers linking climate change and productivity growth, but go have a look at the productivity round table. All right, let's talk about the agenda at the product here. Great. There's a whole team at Treasury. They sat there like while everyone said, IR and tax. So the point is, these silos that are baked in, ‘that's a left wing issue, Richard, that's a right wing issue, Richard, that's, you know, you don't understand’. I do understand pretty well that we're going to spend a fortune on the AUKUS submarines. That's going to lower productivity in Australia. That doesn't make it a bad thing, okay, where, there's a trade off between how much we spend on national security and market output per person per hour worked. So when we buy 300 billion bucks worth of subs, we're buying lower productivity. And we might want to buy lower productivity, but the Abrams tanks did not add to GDP per person. The AUKUS subs, if they ever come, I don't think they will, will not add to GDP per person, and the bigger the defence budget, the lower our productivity growth will be, which doesn't make it a bad thing, but we've got a narrative where productivity growth is, we pretend, our number one goal, and then defence spending and national security are our number one goal. And what our brains are trained not to cope with is, what if the expenditure and putting our best brains all, think about all the scientists and engineers working on AUKUS who've signed NGOs NDAs to never mention their research findings for the rest of their lives. How's that creating spill over benefits for the rest of the economy? So Fine. Have national security as a goal. Fine. Have productivity as a goal, fine. Pretend we're trying to tackle climate change. I don't believe it for a minute. But those three things contradict each other in ways that public servants don't usually discuss. 

Rory Medcalf   

I'm going to come back to Aruna, and then I'll come to you in a moment, Mike, so please. 

Aruna Sathanapally   

There's much that you say, Richard, that I don't I don't disagree with in substance. I think the thing that I just want to guard against is this idea that the reason that, you know, either productivity growth is slower, or the reason that you know we don't have a prominent public narrative about how climate change is going to affect productivity growth is because people aren't doing the hard work. I think that kind of breeds this sense of cynicism that there isn't, that the work isn't being done, or people don't care enough. And I that doesn't, that doesn't ring true with me. Just to give you a very concrete example, in the New South Wales intergenerational report in 2021, there was a clear productivity shock scenario related to climate change that documented exactly what you talk about. And off the back of that, from 2022 through to the 2023 IGR, and then the upcoming ‘26 IGR in the Commonwealth Government, there will be climate change modelling. Now, I appreciate the points that you make. It doesn't take away from the points that you make, but I think that - 

Richard Denniss 

It does take away from the points that I make.  

Aruna Sathanapally   

Well, I think -  

Richard Denniss 

It was not mentioned at the productivity round table. It was not mentioned at the productivity table.  

Rory Medcalf 

Right, let’s hear from Aruna. Thanks. 

Aruna Sathanapally   

I think that there is absolutely a recognition there that the really important question is, what do what do we do about that? Right?  

Richard Denniss 

Be honest.  

Aruna Sathanapally   

Be honest is step one. I don't disagree with that. And then the thing that follows is, does that mean if we, and we're in the midst of it now, in this budget we will see lower productivity growth rate assumptions. We know that because that's been announced last week. The consequence of that is revenue growth is going to decline. A structural budget balance position is going to become worse. And then there is a real question of, how do we raise the money for the things we want to do? Now, I know you've got answers to that. You say these are the taxes we should raise. Grattan has got answers to that. We point to some of the same taxes and we point to some different one. Michael will have answers to that, you know, from a different perspective. But I think that rather than having a debate about exactly what that productivity growth rate assumption is going to be, because, like, I don't think I can get it right. I don't think you can get it right, and I don't think Treasury is going to get it right, the real debate is around those trade offs over exactly if we agree that the future is going to be more expensive if we agree that productivity growth is going to, in all likelihood, be slower even despite our best efforts, how are we going to pay for the things that matter most? And how are we going to make decisions collectively around what matters most? Because we live in a liberal democracy and those collectively but liberal so there's going to be space for dissent around views of the good life and views of what government should be investing in. 

Richard Denniss 

Yeah look -   

Rory Medcalf   

I was hoping to go directly to -  

Richard Denniss 

Let me just make one point. Let's agree to disagree. We've spent decades in Australia pretending that not tackling climate change was good for the economy. Okay? We've spent decades saying that tackling  climate change was a cost. That fundamentally contradicts what you just said. We've spent decades saying ‘if we tackle climate change, it will harm the economy, so let's not do the fancy environment thing and tackle climate change’. Let's not do that. Let's do the good for the economy thing. 

Rory Medcalf   

Aruna, are you comfortable come back to a bit later on, or do you want to... yeah, sure. Good. So, Michael, you've, firstly,  I've liable you by saying that the Centre for Independent Studies is the creature of big business. So I'm very glad that you've, that you've set the record straight - 

Michael Stutchbury 

Which it was. 

Rory Medcalf 

There. But secondly, I don't think I need to ask you a question, because there’s already, there's already quite a live conversation here about particularly the productivity challenge. How do you see it? 

Michael Stutchbury 

Yeah, well, look, I wouldn't, I wouldn't agree with Richard that the climate change costs are what's driving the fall in productivity that we've seen the flat line for the past decade. Most recently, it's the expansion of the low productivity care economy and the size of government, it's grown by at least three percentage points of GDP. We've reached a new plateau, a record high plateau of about 40% federal and state government spending, a record high plateau in the economy. We've piled more regulations into all walks of life. We're re-regulating the labour market, including just the anti-productivity and anti-competition things such as patent bargaining that has been imposed upon the labour market. Now, they might not have bitten a lot yet, but that's where I think the productivity slow down is, has been, and we just need to get a much more sharp and more market signals, economy like that. I'd say, if it takes, say the, it does mean, though, that we probably need to spend and Australia can't really affect the overall climate ourselves, doesn't say we shouldn't take part in global action that should try to do that, even though you'll find that, I think, stepping back a bit, you'll see around the world, the real push for net zero by 2050 will step back a bit as a result of what we're going through here and the slowdown in sort of economic growth and the shock. But we should spend more on, for example, adaptation, in Australia, we spend very little on adaptation compared to other things we spend on. But if you take the current oil price shock we're seeing going on now, you might predict that out of that we'll see an uptake in in electric vehicles, probably more for cost grounds and security grounds, and perhaps for pure people wanting to save the planet, for example, there will be some of that, but you'll see an uptake of that. I think you'll see a push for more liquid fuel security, where we've got very, we've really brought home that liquid fuels, basically petroleum and oil, still matter a lot for the global economy and for everyday life. And it's more than just driving around your car. It's for the whole operation of all industry. Now, at some stage in the future that might change, but it's still, you know, a very, very big thing. If we run out of liquid fuels in Australia, the whole place is going to grind to a halt, and that's the thing that's on everyone's mind in business right now, the next month or so, am I going to run out of oil and petrol and diesel, so we'll see a push for more fuel security. But then the question becomes, how much more? Because we've relied upon this high area of globalisation, on being able to, well, ‘we export gas, and we can import, we can import crude oil, and we can refine some of it’. Most of it comes in refined as well, and we've relied on a globalised trading system to do that. How much can we rely upon that in the future? And there will be a push coming from it won't be, if you like, the progressive left this time, but it might come from the sovereign populist right to have, you know, high levels of sovereignty, of sovereign capability, of total self-sufficiency in liquid fuels. It cost a fortune. This will be a push for all of this, it's limit. You know, how much more sovereign capability should we have in liquid fuels, petroleum, fossil fuels, that we need to keep the place going. And then, thirdly, I'll say I think there should be a push for ‘we should become more forthright in asserting ourselves’, as Barole said last night, to becoming truly where we can be an energy superpower. We've talked about becoming a clean energy superpower. The government and doesn't talk about that anymore. May come down the down the down the track, but gas, we have a real ace in our hands, and we've had a passive aggressive attitude to gas. We celebrated 10 years ago that we were going to become the world's biggest LNG exporter. A Labor government celebrated that. That's gone very passive aggressive since then, and we've tried to restrict the use of gas. We've put, probably our domestic electricity system at a little bit of risk of that, and we haven't taken on the ability to be able to say, as a part of the free world, quite frankly, the world of democracies, we can become a reliable, much more reliable supplier of a critical fuel for the transition, for the clean transition of gas to especially Northeast Asia, to our friends, Japan and Korea and so forth, and make the world less reliant on, say, Russian gas, where the Europeans have fallen foul on, so we could become and get some strength from that, if we sort of focused on what our strengths are. 

Rory Medcalf   

Aruna, I'm going to give you the last word. We're almost at time. But if there any, any of those issues have provoked some conclusions. 

Aruna Sathanapally   

Yeah, it's just one, and it's a broader observation. Because, you know, maybe I felt a little bit sad during some of that, that conversation, a bit depressed. And I just want to kind of lift up from that a little bit, because I think it's worth thinking about the fact that, you know, you talked about national security involving hard choices. We absolutely have hard choices ahead of us, but like there are a few countries I would rather be in making those hard choices than Australia, and just in terms of some of the economic fundamentals, yes, the future is expensive, but we also have lower public debt levels than most of our peers. We have a lower tax to GDP ratio than more of our peers, others of our peers. I know Michael's concerned about the sort of the scale of government spending to the size of the economy. I'm less concerned about that given our demographics. I actually think that it's not particularly out of sync with our standards of living or our age profile. Our age profile is also better than a lot of our peers. We have a community that I think does, is happy to face the world and from from your work, is prepared to have that conversation. And the thing I'd come to last is we do actually have strong institutions in Australia. We have incredibly low levels of corruption for all my points about vested interest, we do have a history of reform, and we also have a history of good responses to crises that have acquitted us well. So maybe just a call for some optimism in terms of our ability to handle those hard choices. 

Rory Medcalf   

Thank you for ending us on that confident note. I think this has been an incredibly rich discussion. I think this is probably one of the least prepared and least war gamed discussions of the conference, and it shows it was it was dynamic. I think we all learned something. We were all challenged. I hope we all have had our assumptions challenged, and we go back to track the insights from the Community Consultations data against the different schools of economic and social wisdom that you've heard here today. So please join me in thanking our panel.  

National Security Podcast  

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