Chris Bowen is the Member for McMahon in the Australian Parliament. In his time in public office, he has served as Treasurer, Minister for Human Services, Minister for Immigration, Minister for Financial Services, Assistant Treasurer and Minister for Competition Policy.
As the author of the books of ‘Hearts and Minds’ and ‘The Money Men’, Chris is a noted public policy thinker and expert.
Chris joined Misha Zelinsky for a chinwag about the future of democracy and liberalism including the threat to democracy posed by inequality, the role of faith in politics, how Australia can properly engage with India and Indonesia, what the future holds on Australia’s China policy, why we should be much more worried about global debt and how progressive parties can rebuild trust with the public.
Misha Zelinsky: Chris Bowen, welcome to Diplomates, thanks for joining us.
Chris Bowen: Long time listener, first time caller. Good to be here Misha.
Misha Zelinsky: I think you’d be one of our very, very few listeners that have become calls so it’s very pleased to hear that.
Chris Bowen: I did get on early, so it’s a great listen. Well done.
Misha Zelinsky: Thank you so much for that plug, we’ll make sure that we’re putting that out in the socials. There’s so many places we could start obviously, but one of the places I thought we could start was interesting recently leading into the G20 we had Vladimir Putin come out and say that liberalism was dead, is a dead project, that the West effectively had lost the post Cold War era. I mean, what do you make of those comments firstly, and secondly what does it say about the state of the world given that perhaps ten years ago that would have been laughed off, now it’s a serious point?
Chris Bowen: Yeah, I think that’s right. That’s a good way if putting it. I’m more optimistic than that, I think we have to be more optimistic than that. We can’t accept that as being the statement of fact, we have to fight back against that. But the fact that a world leader could even say that with some credibility tells you where the debate’s at. The one thing we know is that the Francis Fukuyama theorem of, “History has ended, liberalism has won”, is not how things have panned out. For a long time we thought he was wrong because Islamic fundamentalism and religious fundamentalism was a challenge to liberalism and that remains an issue.
Chris Bowen: But also, authoritarianism has become a much more accepted framework in many countries of the world to some degree or other, whether we’re looking at what’s happening in Turkey or Hungary, but the United States is on a different part of the continuum. The trend is all to populism/some form of authoritarianism and at the other end of the spectrum, whereas say twenty years ago we might have been having the discussion, will the rise of China and the economic growth of China lead to China becoming a liberal democracy? Well in fact, if anything we’ve seen Chinese authoritarianism increase, not become more of a liberal country.
Chris Bowen: The fact that we’re having this conversation tells you that the world’s not in a great state, but I’m an optimist about liberalism. Some people question whether democracy is under challenge.
Misha Zelinsky: We’ll get to that.
Chris Bowen: Yep.
Misha Zelinsky: Yep.
Chris Bowen: And that’s a legitimate question to be asking, and then I guess to subsidize smaller liberalism under challenge, or liberalism as a world view in the international context. It is under challenge, but I think we have to think of ways to ensure that it’s not only survives, but prospers.
Misha Zelinsky: So what are the reasons to be optimistic about it? It’s so obvious to give all the counter examples about the insurgence of autocracies and all the crisis of confidence in the liberal democratic order. So, what are the reasons to be optimistic? Very easy to point out the problems.
Chris Bowen: Yeah, that’s right. Well, just looking around the world a lot of the defeats of, if you like, liberalism or, in some senses, progressivism, have been narrow. Trump didn’t actually win by much, as you know he lost the popular vote, and actually a swing of not many votes in key states would’ve changed that result.
Chris Bowen: UK politics is highly contested. We may or may not get into the inner workings of the British labor party.
Misha Zelinsky: We’ve got a bit of time! Cover all sorts.
Chris Bowen: The two party system is pretty closely contested in the United Kingdom. You’d be a brave person to predict the result of the next UK election. Macron in France now, we all have our criticisms of Macron perhaps, but he’s a force of centralist liberalism, maybe slightly to the left. Trudeau in Canada, he’s had a few challenges, but he’s got one good election win and will probably win another election in the next twelve months. So, you can look at those places, and of course New Zealand, Jacinda Ardern didn’t win an election, she won a parliamentary majority, but I don’t think there’s much question that she’d win an election now.
Chris Bowen: So there are some bright spots. And, the fact that the forces of progressivism are being challenged means that we do need to think about what our answers are. I think we are doing that, thinking around the world, parties of the center left, to some degree of success or otherwise. Or at least asking the right questions. And I’m an optimist because we have to be, otherwise you wouldn’t get out of bed in the morning, that we will come up with the right answers.
Misha Zelinsky: One of the things that troubles me, is this intersection of economics and politics, right?
Chris Bowen: Yep.
Misha Zelinsky: One of the consistent things everyone talks about from a public policy point of view is this level of inequality that you’re seeing, both within and between countries. Can you have an increase in equality, where people feel more disenfranchised, particularly when you look at the pattern of that inequality where it seems to be regional areas, where regions that are distressed tend to become less hopeful.
Misha Zelinsky: Are democracies and healthy democracies consistent with inequality, or do we have to address one to address the other, where you’re addressing them isolation?
Chris Bowen: Well we should address inequality, one, because it’s the right thing to do, and two, because it is leading to this populism. You can look at inequality through any number of frameworks or spectra, but I think the most useful one for this conversation is the one that you’ve given a nod to, pointed to, which is geographic inequality. If you look at this challenge to the forces of the center left or liberalism, progressivism, what ever you want to call it around the world, it is very much a geographic divide.
Chris Bowen: Brexit one outside London. If it was up to the people of London, they’d be very firmly in the EU. Trump one in rural America. Not in the cities. If it was up to the people of California or New York, Hilary Clinton would be preparing for re-election. Macron won in Paris. He lost in the region of France to Le Pen. And, if you look here to our recent kick the guts election defeat, we had swings to us in the city, in wealthy areas, in both safe labor and safe liberal seats, the inner ring. We had swings against us in outer metropolitan areas, particularly in Sydney, which we weren’t necessarily expecting. And big swings against us in regional particularly in Queensland.
Chris Bowen: Now these are people, in my view, who say in the Australian context, twenty-seven years of uninterrupted economic growth, give me break. I don’t see it. My kid can’t get a job, I’m maybe forty-five and I’ve been unemployed for two years. You go down the main street of Mchale or Gladstone, or Gladstone’s a bit different, it’s going better than some regional centers. Mchale, or Bowen, or Rocky, and things aren’t feeling too great. They’re saying what about us? And the straight, center-right message of, “We care about inequality”, has not appealed to them. It’s our challenge to make sure that we do put it in ways which does appeal to them, when we ensure that the product is the right one for them, and two we are expressing it in a way which speaks to their views about inequality. Because they are, if you like, victims of inequality, they are falling behind in our society.
Chris Bowen: Obviously our message of, “We care about you and care about inequality.”, has not resonated.
Misha Zelinsky: It is a bizarre thing when you look at the traditional, I guess, areas that social democrats care about globally, and the regional inequality that we’re seeing somehow, whether it’s message, whether it’s policies. I think there’s an element of attitude and tone about it.
Misha Zelinsky: But, how is it that we’re just misaligned, we’re not connecting somehow?
Chris Bowen: This is not a new challenge in some ways, it’s more intense and more acute than it has been. But it is also not a new challenge. Do you remember fifteen or twenty years ago Thomas Frank wrote the book, “What’s the matter with Kansas?”, which was about this very matter. In some countries it was published as, “What’s the matter with America?”, but the real title is, “What’s the matter with Kansas?”. And he spoke about these issues, the people of Kansas, Alabama and Arkansas, and those states are doing it tough or falling behind, subject to inequality, have been left behind by the elites. And the democrats have all these wonderful policies to deal with that, and they are turning up on the first Tuesday of November and letting some old Republican. What is going on here?
Chris Bowen: And he put it down to cultural issues, lack of empathy with the cultural concerns of people in those states. And I think there is still something to that.
Misha Zelinsky: And you raise that recently, talking about whether or not people of religious faiths feel at home.
Chris Bowen: Yes. Which is, I think, an existential problem.
Chris Bowen: If you look at the United States, the single biggest indicator of voting intension is faith. Not income, not ethnicity, not geography, it’s faith. What ever faith. Even if you’re of Islamic faith, that’s the best indicator that you’ll vote Republican, if you are of very solid faith.
Chris Bowen: Again, I think we have a real challenge here in Australia about this. Now, we’re a progressive party of course, we believe in equality. I voted for major equality, I’m very proud of that. But, we need to ensure we are also having lines of communication to people who are economically progressive, and who believe in social justice. And some instances believe in social justice because of the ethos that they were brought up in, in their church.
Chris Bowen: But also have some concerns about their social conservative. Now, I’m not suggesting for one second we need to not continue with the progressive project, but I am suggesting that we need to think about how we talk to people of faith, how we bring people of faith with us, ensure that they know they have a role in our party, that they can be treated with respect by the party, and have their views considered, both within the party processes and by the party in government. And we have not done that. To be frank, we have neglected that as a movement and as a party, and we have paid a price.
Chris Bowen: I think a big part of the swing against us in western Sydney and probably in some regional areas, was the concern of people of faith, that the labor party has lost touch with their concerns and their issues going forward. People who say to me, “We just want to know that you’ll listen to us. We may have voted against marriage equality, but we accept the result, but we want to know we’ve got a place at the table going forward.” I think, collectively, the party and parties of the left, need to ensure that there is a role for people of faith. Again, many faiths teach social-
Misha Zelinsky: That’s right.
Chris Bowen: Social justice.
Misha Zelinsky: It’s not antithetical-
Chris Bowen: No, that’s right.
Misha Zelinsky: The tenants of religion are in no way an antithetical decision. Obviously, love thy neighbor, looking after one another, there’s plenty within the-
Chris Bowen: Quite the contrary! Quite the contrary!
Chris Bowen: I mean, in most religions as you say, preach love, and respect, and tolerance and understanding, and justice. We might use different words, but it’s what we’re about as well. But we’ve lost the connection with people of faith, and we must get it back. I don’t mean to be melodramatic. I regard it as an existential crisis.
Misha Zelinsky: Well that’s that. Certainly putting it at a high level.
Misha Zelinsky: This narrowness, how do progressives, and this a global problem. You look at it globally, rightfully identified progressive parties, social democratic parties have either been marginalized or disappeared in some countries, you’ve got France.
Chris Bowen: Yeah. Well there’s the French socialist party effectively no longer exists.
Misha Zelinsky: Right.
Misha Zelinsky: And so, as you say, the existential threat, Macron’s essentially co-opted that group and other parts of the center-right. Globally this retreat for the regions, this retreat from the suburbs even, this retreat from, as you say, more conservative social values, how do, rather than narrowing, how do progressive parties broaden? How do we become broader?
Chris Bowen: Well, there’s no one thing Misha. It’s got to be part of a tableau, an embroidery of our party. It’s as simple as making sure that we’re in touch. We’re in touch with the regions, we’re in touch with people of faith, we’re in touch with people who maybe at least open to the argument that’s put by the populists, that the answer to your problem is less trade and less immigration. Now you know, and I know that’s the antithesis of what the answer is. We have to say to people who have been spoken to, in the Australian context, by one nation or even Parma, or the liberals in their own cunning way, to say look, the answer to your problem is less immigration, less trade. We have to show that the answer is not less immigration, less trade. But, we cannot dismiss the question or the issues that we come back to, moving our faith back down to the regions.
Chris Bowen: If you’re in Mchale, or Bowen, or Townsville, and the economies not doing too great, we cannot say you’re wrong. We have to say, you’re right! But the answer to your problem is not Pauline Hanson. We have the answers. Now the essential key to those we have to have the answers, otherwise we can’t give it.
Misha Zelinsky: But we do tend to jump to say, you don’t get it, you don’t understand the data, you don’t understand the policies.
Chris Bowen: Yeah, what are you talking about? We’ve got twenty-seven years of uninterrupted economic growth, and unemployment’s low, and interests rate.
Misha Zelinsky: And the macro numbers don’t tell the micro story, right?
Chris Bowen: They certainly do not.
Chris Bowen: When I was shadow treasurer I used to say this, I used to do a lot of board rooms with the countries most senior business people. I used to say to them respectively, because they used to say to me, “Oh well, the labor party is wrong about this and that, and everything’s going-”, well I said, “You don’t get it. With respect, you don’t get it.”
Chris Bowen: Things look good from here. We’re sitting in a board room in Sydney, we can see the Opera house, the Harbor bridge, the unemployment rate in Sydney has a three in front of it, or sometimes a two in front. There’s no vacant shops, everything’s bustling. Come out with me. Come to Mchale and walk down the main street. Come to Emerald! Inland Queensland. Things don’t feel too great out there. We collectively, not just political parties, but the establishment, if you want to use that word, economic establishment, the political establishment, the business community, the elites, need to get it.
Chris Bowen: Far too much, collectively, we haven’t got it. Or, haven’t communicated that we do get it anywhere near effectively enough. The door has opened for that Charlottetown [clark parma 00:15:42] and the populist Pauline Hanson, and we have to close the door by being more responsive to the concerns of people who say this twenty-seven years of uninterrupted economic growth, I think, is bullshit.
Misha Zelinsky: Quote that!
Chris Bowen: You don’t beep out on this podcast?
Misha Zelinsky: No, no, that’s all right. I’m not too sure too many kids are interested in geopolitics and social democracy globally. But for those that do, close your ears.
Misha Zelinsky: So look, that was really interesting. One of the things I was keen to talk to you about, and we started with Putin and liberalism, and we’ve talked about social democracy, but the question of liberalism, the United States being the typical guarantor. They’ve underpinned the global system-
Chris Bowen: Shining hope of the world!
Misha Zelinsky: Right.
Chris Bowen: Last hope.
Misha Zelinsky: This trade war with China, they’ve now appeared to be retreating from their own system. Firstly, what do you make of that? And secondly, what’s the implications of that war between the US and China for Australia?
Chris Bowen: The trade war will be sorted. There will be a truce. The only question is when and how? Why do I say that? The alternative is unthinkable, because the only alternative to the trade war being sorted is in effect decoupling. Saying the United States and China will decouple from each other and not have tradings.
Misha Zelinsky: And some people argue for that, increasing national security grounds.
Chris Bowen: Well that’s about unthinkable as men and women decoupling. Because we need each other, right?
Misha Zelinsky: Yep.
Chris Bowen: China and the United States need each other. And the idea that you could have a two polers in the world, two poles of the world economy with very little to do with each other is just… The world doesn’t work like that. The production chains don’t work like that. Half the things that are made in America, the components are made in China. And that’s not about to change.
Chris Bowen: Now, there’s an easy way and a hard way, and that’s the only question open to president Trump and president Xi is, do we take the easy way or the hard way? I hope very much they take the easy way. But even if they take the hard way, either they or their successors will sort it. It’s true to say that in the United States this is not just Trump, it is a broader concern in the political elite, including the Democrats, that China has not been playing fair in the world trading system. And it’s also true to say that in some elements they have poy. President Trump is not always wrong. And he does have some legitimate concerns about the world trading system and China’s place in it. But the trade war is very much not the answer.
Chris Bowen: Now I’m hopeful that they’ll choose the easy way. Either they will choose the easy way, or if there’s a new president next year, but I hope it doesn’t take that long because the implications of a worsening trade war, I mean, you don’t really need us to spend much time on, because they’re pretty self evident. They’re pretty bad. They’re pretty bad for the world economy, they’re pretty bad for us as a trading nation, pretty bad for our region. Even more than the direct implications of the trade war, because you can do all the modeling, and you’ll have this impact, this flow into Australia, and all that’s legitimate. But, I think the bigger problem is just the blow to confidence around the world, just the uncertainty created by the trade war, and the general blow to confidence is terrible for a country like Australia.
Chris Bowen: I tend to be on the more optimistic side of what will happen in the world economy and the political system, but I’m also a nice, open realist as to the implications if I’m wrong, and that they choose the hard way, and it’s not pleasant.
Misha Zelinsky: Well, it’s interesting, because pretty much the only by-part [inaudible 00:19:34] that you can find in Washington is the attitude to China. The peace arises, you described before, China’s getting rich, China’s going to get democratic, peace will now be, perhaps… Has not eventuated-
Chris Bowen: Well it has been peaceful, but there’s been no move towards greater democratic freedom
Misha Zelinsky: And so we’re seeing increasing authoritarianism. The question, to your point, it’s unthinkable to decouple economically, but there’s a real push to decouple on the national security elements. How do those two things sit together when you consider the techno nationalism around Warway, and the security of data and that element of the debate? And then all the economic points that you’ve made. They seem to be completely pulling against one another.
Chris Bowen: Yeah, it’s really hard. I know I don’t underestimate the difficulty for any government in the western world. I think the liberal national government here has made mistakes in that space over the last six years, but I’m not overly critical of them because I don’t underestimate the size of the task, or the degree of complexity of the task in navigating that. Now what you need is a national strategy. The problem Misha, I think you’re really making this point, is that in many countries, including Australia, the economic establishment and the national security establishment shout at each other.
Misha Zelinsky: Yep.
Chris Bowen: And the national security establishment shouts, “China’s terrible, have nothing to do with them.” And the economic establishment shouts, “They’re our largest trading partner, we’re buggered without them!”. Both sides have some evidence to their cases, the trouble is that far to often, it’s just the shouting. In the cabinet, and I’ve served in both, there’s the Expenditure Review Committee, which is in effect the Economic Policy Committee, and you’ve got the National Security Committee, the cabinet, I’ve served on both for some years. What you really need is probably a National Strategy Committee. To get the intelligence agencies and the economic agencies in the same room and say, what are we going to do about it then? How are we going to navigate this?
Chris Bowen: Some countries are doing it differently, but we’re all faced with similar conundrums. Prime minister Trudeau is dealing with this very acutely in Canada. Prime minister May, they’ve dealt with their own Warway issue in a different way to many other countries. And they’ve obviously weighed up the evidence. And you know I’ve seen the briefings, not the classified briefings, but I’ve seen the public briefings about Warway, and there are some issues, and our position is the same as the government on Warway.
Chris Bowen: These are tough issues and we’ve got to stop shouting at each other about them.
Misha Zelinsky: That’s an interesting point.
Misha Zelinsky: One of the things, to your point about China is the oscillating between greed and fear, but I think actually we don’t oscillate that much, as you say, to people that are national security minded tend to be hawkish and people who are economically minded tend to be doveish.
Chris Bowen: We have tribes.
Misha Zelinsky: Yeah, right.
Misha Zelinsky: Hilary Clinton said you can’t argue with your banker. I think we have situation where it’s difficult to argue with our best customer. China touches up a little around coal exports, I mean, certainly the coal or oil type situation with the Canadians, as you alluded to there. But is there a case on national security grounds, or even just on a diversification basis, for Australia to build deeper links into other parts of the regional, global economy?
Chris Bowen: Absolutely. This is the key question. I think you correctly put Misha. We can talk about China and how we handle it, and obviously I have views about that, but what we’re not doing as a country is deepening our links to the region. More broadly, the Indo-Pacific. Every country is important, but the two key countries for us are India and Indonesia. We’re doing a little more in India than Indonesia-
Misha Zelinsky: Which we don’t talk about much at all.
Chris Bowen: No, no. But, by and large we’re not very much.
Chris Bowen: Both of those countries have been bedeviled, in terms of our bilateral relations with different but similar problems in that in both cases the relationships have been transactional. Indonesia in particular, our relationship with Indonesia is transactional, it’s not deep.
Misha Zelinsky: Going to Bali.
Chris Bowen: Going to Bali or, from a government-government level, we’ve got a problem with boats, can you help us? Or live exports, it’s all about a transaction. And with India it’s a related but slightly different problem, is that it’s stop start. So there’s been good intentions by prime minsters, etc., and there’s been bilateral visits, and it disputes-
Misha Zelinsky: You would’ve thought it’s easier, perhaps on a language basis and a cultural basis. There’s cultural alignment around sport, there’s language alignment-
Chris Bowen: Curry, cricket, and Commonwealth. That’s what they say about India. Well let’s just step back for minute Misha. In each case, let’s look at why both countries are vital for us, and then look at why we need do better, or what we could do better.
Misha Zelinsky: Sure.
Chris Bowen: So, let’s just take India, the fastest growing major economy in the world. Probably will be the second biggest economy in the world by 2050, probably, on track. It will overtake China as the largest, most populous country in the world. OK. You’d think that means they’re pretty strategically and economically important for us. And, they absolutely are. But, again, it’s been stop start.
Chris Bowen: I’m hopeful though that perhaps we’ve turned the corner with India because the biggest thing we’ve got going for us with India, is that they are now, pretty consistently, our largest source of permanent migrants. So we have a critical mass of permanent ambassadors, from us to them, and them to us. Those Australian-Indians or Indian heritage who now make Australia home, are very entrepreneurial, active in business, and hopefully will help us cement that relationship and stop it being about curry, cricket, and Commonwealth, but actually deepen it.
Chris Bowen: There are a few things we can do for India. Firstly, we should be actively, not just say we agree, but we should, in my view, very actively promote India joining APEC. APEC’s an Australian invention-
Misha Zelinsky: Forgot institution largely.
Chris Bowen: It’s fallen off the tree a bit-
Misha Zelinsky: Keith talked about it a lot, obviously.
Chris Bowen: Yeah. See when APEC started, it was the main game in town-
Misha Zelinsky: G20.
Chris Bowen: Now you’ve got G20, you’ve got East Asia Forum. Summit season’s a busy time. And APEC tends to now be the forgotten cousin.
Chris Bowen: Well one, Australia should promote invigoration of APEC, in my view, for all sorts of reasons. And two, we should welcome India to APEC. It’s an anomaly that they’re not in APEC. They’ve been trying to join since 1994. And the concern about India is, it’s a legitimate concern by some of our colleague countries in APEC, that India is generally not a globalized, generally not pro-free trade, and would be a blocker in APEC. Well my answer to that is we have to bring them in.
Misha Zelinsky: Yep.
Chris Bowen: You can’t pretend to exist. They are going to be the world’s second biggest economy. Let’s bring them in. We’ve got to give more support to those people in then Indian system arguing for openness. Now the proportion of trade in the Indian economy has doubled. Their exports have doubled over the last period. So, they are being more openly focused. Prime minister Modi’s instincts generally on the economy are more free trade and global in their approach. It’s still a very different economic system to ours. But there is cause for hope. So we’ve got to try to build our institutional, bilateral links with India much more, and we should try to bring them into regional architecture.
Chris Bowen: On Indonesia. Now, Indonesia is the most stable country, basically in the world, when it comes to economic growth. They just continue to grow. China does, but Indonesia’s growth rate has been, if anything, even more stable. They’re just consistent, quiet achievers when it comes to economic growth-
Misha Zelinsky: Quarter of a billion people!
Chris Bowen: Yes! And so much so that they will be the world’s seventh biggest economy probably, by 2030, and fourth biggest economy by 2050. They’ll overtake us, Germany, the UK, everybody.
Chris Bowen: Guess what? Their next door to us, and they’re not in our top trading partners. I think, hello? Are we getting something wrong here?
Misha Zelinsky: Well it’s certainly…
Chris Bowen: Yeah! And, again, as I said, our relation’s transactional. We don’t talk to each other.
Chris Bowen: Here in Australia, more Australian school students study parts of Indonesia in 1972 than they do today. University campus after university campus is closing their Indonesian faculty, because they don’t have enough students.
Misha Zelinsky: Is that an emphasis question? Why is that happening? You’ve learnt the language.
Chris Bowen: Yeah, because I decided that, for a couple of reasons, I couldn’t talk the talk, without walking the walk, and talk about Indonesia about how important it was, for example, that we left out Indonesia literacy, if I’m a middle-aged Anglo-Celtic, middle class guy, lecturing the country and young people that we need to do this, if I wasn’t prepared to do it myself.
Chris Bowen: So, I took myself off at age forty-two, when I started, and got myself a degree in Indonesian language.
Misha Zelinsky: Old dog, new tricks mate!
Chris Bowen: Yeah, that’s right. That’s right.
Chris Bowen: People say Indonesian’s an easy language, I say, no it’s not. There’s no such thing as an easy language to learn.
Misha Zelinsky: Absolutely.
Chris Bowen: There are just some that are easier than others. And Indonesian’s at the easier end of the scale. It’s still very bloody hard.
Misha Zelinsky: Other languages are always challenging.
Chris Bowen: Yeah, yeah.
Chris Bowen: But it can be done. And it can be done at middle age, mid-career. But language is important because one, it shows respect. Well I’m going to Chicago, and my language skills aren’t as good as I’d like them to be, I’m constantly working to improve them. But I can start a meeting with an Indonesian finance company, for example, in Indonesian. They often fall off their chair in surprise that a western politician can speak Indonesian. I don’t finish the meeting in Indonesian in case I agree to something I didn’t mean to.
Chris Bowen: The fact that you show the respect, and often when I’m there the meetings flow in and out of Indonesian and English, because they can’t half speak English, and if I can speak Indonesian we show each other respect of floating in and out of each other’s language, to make sure we understand each other. It just changes completely the tone of the meeting. If you’re just speaking English, and often it’s pro-former, it’s formulaic, it’s a lot of, “Here you are.”, and “Thanks for your visit.”, “And stay as a good friend.” It’s bullshit.
Chris Bowen: If you actually show the respect that you’ve learnt their language, it changes the tone of the meeting. And also, because we’re getting more young people learning Indonesian, or any other Asian language, Indonesian’s what I chose because you can’t learn them all. Any Asian language. You almost inevitably are engendering and interesting the country, and their background and their history. Part of my Indonesian degree was two compulsory subjects, the history of Indonesian language, and Indonesian contemporary culture.
Chris Bowen: But even at school. When I was school I had the choice between Italian, and French, and German.
Misha Zelinsky: Same.
Chris Bowen: But they also taught us about the culture as they were teaching us language. The same with Indonesian, or Mandarin, or Hindi. We talked about India, but how many schools are teaching Hindi? None.
Chris Bowen: And recently ABC fact checked me, and I’m glad they did, because I had said in a speech, going back to China for second, but it’s about Asian languages, I said in a speech Australian’s have non-Chinese heritage who can speak Mandarin to a level of business competence. The number is one-hundred and thirty.
Misha Zelinsky: I’ve heard stat, it’s an extraordinary stat.
Chris Bowen: It’s extraordinary!
Misha Zelinsky: It’s actually quite damning in a way.
Chris Bowen: It is. And sometimes when I say to the speech people shake their head and say that can’t be true. One friend of mine slammed a pencil on the table and said, “That can’t be right!”. As I said, fact checked found that essentially it was right. So it was an educated guess, but even if it’s double that, even if it’s two-hundred and sixty! [crosstalk 00:32:21]
Misha Zelinsky: Two fifty.
Chris Bowen: Out of twenty-four million, that’s a pretty poor figure.
Chris Bowen: Now, Mandarin skills aren’t bad, because of immigration.
Misha Zelinsky: Sure.
Chris Bowen: But that’s not going to get us there. Education is to get us there as well. So, we’ve got a massive step change to undertake, in terms of our engagement with the region. Because, to get back to your essential point, yes, we can’t put all our eggs in the China basket, share politically, economically, interest of the world, we’ve got to be lifting engagement with India, Indonesia, as young and in the entire region in particular.
Misha Zelinsky: Yeah. Going back to the Indian question, because people look at India, look at China, now China has an economic miracle, and India tends to get forgotten. India’s mess here is democratic. I’m so curious on your take of, what’s the future for democracy, open markets, and mesial liberalism versus the Chinese model of state capitalism, state owned enterprises? At this point a lot of people are pointing saying, “Well, that model appears to be delivering, bringing people out of poverty.” Now it’s a convergence, it’s easier to catch up than it is to go forward, but is there legitimate case to stay that the state owned enterprise model, the central control model, is the way forward? Or do you still think the Indian model can prevail in the long term?
Chris Bowen: No, the Indian model’s getting there. It’s a unique Indian model. It’s not what you recommend as a starting point with a tradition of protectionism and heavy state, very heavy handed regulations and anti-foreign investment. But they’re getting there.
Chris Bowen: They now have a national GST, for example. It’s got seven different levels, depending on the product you’re buying, which is not necessarily how you design it from scratch in a perfect world, but it’s what they had to do to get it through, because up until then-
Misha Zelinsky: John Howard did a deal here on the early exclusions. I mean, these things happen in politics, right?
Chris Bowen: Well up until recently, every states had its own GST, and I’ve seen it, I’ve traveled through India and the trucks get stopped on the state borders to check the goods. That’s all gone. And they’re getting there with retail and land reform, etc. And their growth rates are strong. As I said, they’re the fasted growing major economy in the world, and probably on track to overtake the United States and become the world’s second largest economy at some point when you and I are still on the workforce Misha.
Chris Bowen: That’s a big turnaround. So they’re getting there, and of course they’re a very robust, strong democracy. They just had an election. It’s a remarkable feat and logistical feat, the Indian election, as is an Indonesian election. But there’s two examples, India and Indonesia, two recent elections, all by and large comparatively smooth and straight forward, and democratic, and both engaged in pro-market reforms and continuing to grow.
Misha Zelinsky: Does that give you hope for democracy in the region? Obviously, similar outcomes in Indonesia, very complex acapella go style elections-
Chris Bowen: Absolutely!
Misha Zelinsky: Very difficult to run them. And India’s also complex. A lot of people say, “Well, democracies on the way. China’s being more assertive. The Russian’s are being more assertive. The traditional democracies have lost their swagger. Brexit, Trump, etc.” Does that give you hope for the region?
Chris Bowen: It does, and of course democratic change in Malaysia. An economy of similar size to us, similar population to us. I know Malaysia pretty well, I didn’t necessarily think I’d see a change of government in my lifetime, from the all-know government. I don’t think many Malaysians did either. They certainly had elections for a long time, but one party happened to win them every time, until this time. So, we shouldn’t discount that either. I’m not commenting on the details of Malaysian politics, but there’s been a change in government, which was unexpected.
Misha Zelinsky: A peaceful change as well.
Chris Bowen: They had a peaceful change, yeah!
Misha Zelinsky: Which is always the test.
Chris Bowen: Yeah.
Chris Bowen: And you could not have guaranteed that a few years ago, if there was a change of government, that it would be peaceful. As I said, they tend to be forgotten, but they’re a significant economy roughly. A roughly comparable economy in terms of middle power, and there’s another example.
Misha Zelinsky: One of the things I wanted to get your take on, former treasurer of Australia, you had the portfolio a long time in opposition, one thing that gets overlooked a lot in the debate is this question of debt, global debt. Since the GFC effectively money around the world has been effectively, if not free, subsidized, and we’ve just cut our own straights yet again here in Australia to 1% levels, unthinkable even five years ago. How concerned should we be about one more generally, what it’s doing to the global economy, and how concerning is debt when you look at the debt loans that individuals and countries are carrying? Big question.
Chris Bowen: Yeah, it worries me. It wouldn’t worry me if I was currently serving as treasurer of Australia. If you look at the global debt levels, it’s about 234% of GDP at the moment. Pre GFC it was 208%. So we have higher exposure than we had pre-GFC in the globe.
Chris Bowen: Now, then you’ve got to look underneath it and say, what’s driven that? Now the good news is, is that a lot of that is driven by states, sovereign states. About eleven trillion has been handed by the United States. About five trillion has been added by China. Debt created by a sovereign government has its issues, but in terms of economic [stability around the world, it’s probably one of the less ‘badish’ types of debt.
Misha Zelinsky: Owing it to yourself in your own currency.
Chris Bowen: Yeah, exactly.
Chris Bowen: Some comes from corporate in United States. And some comes from corporate in China, which is perhaps a cause for instability, if, because there are concerns about the opaqueness of some of that debt. If there is a downturn or a problem, it could be that, that is the cause of it. I don’t want to be too alarming, but you have to be realistic about where the shock could come from, and that is one.
Chris Bowen: And some is household debt, which is a concern, and that’s our problem.
Misha Zelinsky: Yep.
Chris Bowen: Australia and Canada, household debt.
Misha Zelinsky: World champions in that dubious area, right?
Chris Bowen: Yeah, that’s right. Second highest in the developed world. Not a record we should be looking for. And that does expose us. If there was an international downturn, whether it be caused by Chinese debt crisis, whether it be caused by a US recession, which the markets would indicate. Possible/likely.
Misha Zelinsky: Not to get in a super wonk-ish discussion, but inverted yield curves.
Chris Bowen: Yeah, exactly. Exactly right.
Misha Zelinsky: Predicting a US recession in twelve months, or so.
Chris Bowen: Exactly right.
Chris Bowen: And there is some rushing after that. Or it’s caused by an elongated, worsening trade war, or it’s caused by Europe/Brexit. Europe’s hasn’t been in a great state. Germany’s narrowly avoided a recession. Italy’s bouncing along the bottom. Greece continues to be Greece. Europe’s not in a great state, so from somewhere you could see the makings of an international downturn from one of the above. And if that happens, one of our exposes is our very high household debt.
Chris Bowen: I think most households can cope with an increase in interest rate, obviously they’re going down at the moment, but even if they did start to move up, most households have factored in some buffer. What you can’t cope with is unemployment. And that’s where, if there is a downturn, and we’ve got very high household debt, we are in-
Misha Zelinsky: The assumption is you’ve still got your job.
Chris Bowen: Correct.
Chris Bowen: Debt does worry me.
Misha Zelinsky: What’s the role of government? Because one of the things that troubles me, it’s a global question, going right back to basic economics, cheaper money means businesses borrow, means they invest, households borrow to an extent they can consume, but largely, we want to see this investment piece. Now, the rate of capital formation. So, i.e. people borrowing money to invest in new things to build. New factories, new businesses, etc., is on the way. You’re seeing largely this subsidized money being driven into asset markets, property shares and other forms of equity.
Misha Zelinsky: Is there a role there to make sure that we actually, well, if we’re going to subsidize money, it goes into job creation, or into things that are going to create economic activity?
Chris Bowen: Well, ideally.
Chris Bowen: I don’t want to go through the war, but that was one of the policy rationales for our negative gearing reforms, for example. Obviously the pay will go through a process of revising our policies. But one of the things that drove us on negative gearing reform was that we have the most generous property tax concessions in the world. I mean it’s almost irrational not to be a property investor in Australia.
Misha Zelinsky: Well the tax system tells you to do it, right? You can watch my essay on this, but I find it crazy for every ten dollars that’s borrowed in Australia, six bucks go in the property market.
Chris Bowen: Because we provide such incentives to do for the tax system.
Misha Zelinsky: People go with incentives like water goes down hill.
Chris Bowen: Yeah, exactly.
Chris Bowen: And so, that’s one of the reasons why we have the second highest household debt in the world. It’s because our tax system encourages it. Now, again, as I stress, the party has got to go through the process of a review, but that was the number of rationales for that reform, one of them was housing affordability, one of them was budget repair, and the other one was financial stability and high household debt.
Misha Zelinsky: What’s the way forward here, in terms of actually getting consumption going? Because 60% of the economy is driven by consumption. So the focus tends to lead largely on supplies, so let’s get monetary policy-
Chris Bowen: Well the reserve bank governors made it clear they can only do so much, right?
Chris Bowen: Again, it’s a bit hard to avoid the recent election, but we had policies on the investment guarantee to encourage businesses to invest. But we also, unapologetically said, well you can’t expect people to consume when the wage is going backwards. And so we did have some, you might call them radical, but strong policies on the living wage, on penalty rates, because unless we get wages growth going, and it did require a degree of intervention because the systems not sorting it. And this is an international problem, I don’t hold this government entirely responsible for all of it, but I hold them responsible for the lack response, and for saying-
Misha Zelinsky: And incoherence in the policy, cutting penalty rates-
Chris Bowen: Exactly.
Misha Zelinsky: Demand for consumption.
Chris Bowen: Well we can argue about the way it’ll increase wages, but I think we could probably agree the way to increase wages is not to cut them on weekends.
Chris Bowen: We saw wages growth as being pretty important for social justice and fairness, and equality, but a pretty important economic stimulus as well. Unless there is a solution found through those mechanisms or others, we are going to continue to bounce on the bottom of consumption. And the economy will continue to be anaemic. In my view.
Misha Zelinsky: Well I could probably pick your brain all day, but you’re a very busy man with a lot of things to do. But, before you go, and one of my classic clunky segues into the lamest of all questions, Chris Bowen’s barbecue, three international guests, three international shows, so who are the international guests alive or dead that you’d have at a barbecue at Bowen’s? It’s got alliteration, so already-
Chris Bowen: There you go, I could get an apron printed or something.
Chris Bowen: Three international guests! Well, and they can be dead? Well first-
Misha Zelinsky: Might be less fun.
Chris Bowen: Well, OK, to show my pure [wonkiness 00:44:15], in the fantasy football world, and they could be dead, Winston Churchill. I was born eight years after he died, so never walked the planet with him, but I’ve read basically everything you can read about him, an enormous, remarkable figure. And then you’d put Clem Attlee in. You’d see those to be in the same room as those two. Being a bit more realistic around the world, pretty interested in the US presidential race at the moment. I wouldn’t mind spending a couple of hours with Pete Buttigieg.
Misha Zelinsky: Yeah, I met Pete, he’s really a compelling guy isn’t he?
Chris Bowen: Yeah! Yeah, I’d have him over for a barbecue. I’d have Ruth Bader Ginsburg over as well, if she could make it. Very admirably figure, powerful intellectual, extraordinary figure.
Chris Bowen: And then just to mix it up completely, I’d probably have, this guy is actually a friend of mine, I’ve come to know him, I’d have, just to mix it up a bit, a guy who I think is probably the best, in my view, the best living novelist in the world, I’m bias, is John Boyne. He’s an Irish novelist. He wrote the Boy in the Striped Pajamas, and he wrote The Absolutist, which I highly recommend. A compelling read. I’ve come to know him, he’s a good fella. An Irishman, an Irish novelist. He loves Australia! He comes to Australia at every opportunity, that’s how we got to know each other.
Misha Zelinsky: [crosstalk 00:45:48] I think Churchill might have an interesting discussion.
Chris Bowen: Yeah, yeah! That’s right. I don’t think Churchill’s appeared directly in any of his novels. He certainly has written about the issues of the day. So I’d have John over as well.
Misha Zelinsky: So we’ve got a novelist, a former British prime minster-
Chris Bowen: And the nearest south bender [crosstalk 00:46:08]-
Chris Bowen: I added one.
Misha Zelinsky: And that’s right, a former president of Australia. So that would be a great barbecue, I’d definitely like to be a fly on the wall with that one. Chris Bowen, thanks for joining us, I really appreciate your time mate.
Chris Bowen: Been a lot of fun Misha. Good on you.
Misha Zelinsky: Cheers.