Prime Minister Tony Abbott gave a keynote speech late last month as part of the World Economic Forum’s (WEF) meeting in Davos, Switzerland.
The WEF is an international not-for-profit foundation with its headquarters in Geneva. The organisation acts as a forum for leading business, political and other world leaders to discuss and debate global economic problems and issues.
As Klaus Schwab, founder and executive chairman of the WEF, noted when introducing the prime minister in Davos, it is tradition for chairs of the Group of 20 (G20) to present their objectives and agenda in Davos.
The Prime Minister’s keynote address comes as Australia assumes the presidency of the G20 for 2014 before this year’s Leaders Summit to be held in Brisbane on November 15 and 16.
According to Prime Minister Abbott, the “challenge everywhere is to promote sustainable private-sector growth and employment, and to avoid government-knows-best action for action’s sake”.
Recurring throughout the speech were of words such as “tax” (used 17 times in various forms), “free” (nine times) and “growth” (15 times). The use of such words indicated the emphasis placed on free market economic policy and limited government intervention – something that has been frequently advocated by the Abbott government in recent weeks.
The use of such language underscores the government’s position on current hot topics domestically over the government support for SPC Ardmona and the automotive industry. The Prime Minister’s mantra for macroeconomic policy, both domestically and abroad, is “freer trade and smaller government will strengthen prosperity”.
Also reverberating from the domestic debate was the PM’s statement in relation to debt: “Real progress is always built on clear fundamentals; you can’t spend what you haven’t got.”
Prime Minister Abbott’s speech acknowledged some of the key problems facing the world economy, including the fact that “around the world over 300 million young people are neither working nor studying”.
Other pressing issues on the Prime Minister’s agenda included the “30 million more jobs” needed to restore the global economy to pre-global financial crisis (GFC) levels.
Rather than solely dwell on these issues, there is cause to be optimistic according to the PM: “[Despite the GFC,] income per person is up over 60% from last decade.”
The speech was one identifiable with a fiscally-conservative prime minister: “No country has ever taxed or subsidised its way to prosperity. You don’t address debt and deficit with yet more debt and deficit. And profit is not a dirty word, because success in business is something to be proud of.”
Prime Minister Abbott also took time to criticise the preceding Labor government, noting that they believed the country could “spend our way to prosperity”.
The speech also urged world leaders to “be missionaries for freer trade”. Such comments come as the PM is looking to follow up a recent free-trade agreement with South Korea with an Australia-Japan free-trade agreement.
There was also a clear expression of Mr Abbott’s economic outlook for Australia this year with the reiteration of comments made during the 2013 election night that “Australia is under new management and once more open for business”.
The speech stayed on message throughout and demonstrated the fiscal conservatism motivating government policy on a number of issues at the moment.
The first is the proposal to expand the work-for-the-dole program, which was hinted in Prime Minister Abbott’s remark, “We are determined that fit working age people will work, preferably for a wage, but if not, as a condition of receiving unemployment benefits.”
The second is the position that less government intervention in market activities is generally the best policy.
In light of recent government pressure to intervene in the automotive industry and SPC Ardmona, the Mr Abbott’s speech in Davos reiterated the government’s response to these issues, noting, “Better governance is not the same as more government.”
However, a notable exception to this approach has surfaced recently with the decision for the government to provide further economic assistance to drought-stricken farmers from July 1 this year.
With several important economic decisions already made under the mantra of less government, Prime Minister Abbott’s speech is a strong indication of what motivates this government’s economic policy.