What is going on with the Abbott Government?

The following article is by Geoff Kitney and originally appeared at the Australian Financial Review…

The alarm bells about the Abbott government are becoming deafening. And they are ringing around the world. What started as a rumble in Jakarta is now echoing through the capitals of every nation which has any dealings with Australia.

And it’s not hard to imagine that the first question being asked about Abbott’s Australia is: “What on earth is going on?”

What is happening is that a dramatic re-positioning of the way Australia relates to the rest of the world is under way.

A new ideology is being applied by Tony Abbott and those with most influence on his thinking. And it is now clear that Joe Hockey is not one of those people.

Hockey’s shamefaced appearance to announce that he had decided to reject the US bid for GrainCorp and saying that one of the reasons was that it was “not popular” was a jaw-dropping political moment, comparable with Christopher Pyne’s po-faced appearance to announce the ditching of the Gonski education reforms and declaring that this was not a broken promise.

If popular support is a new condition for foreign investment Chinese investors need not bother applying.

It took a while, but we are now seeing the true colours of Abbottism. For those who expected an Abbott administration to resume where the Howard government left off, what we are now seeing will be a surprise.

This is a completely new brand of conservative politics.

The new “brand Australia” that the Abbott government is presenting to the world is neo-conservative nationalism, with a populist twist.

HOCKEY SHOULD BE SQUIRMING

For those trying to understand the politics of the GrainCorp decision, there are two reference points which explain it. They were provided by the National Party and the Greens.

Both were effusive in their praise of the decision, which they said protected Australia’s “national interests”.

Hockey should be squirming at keeping such company. He knows this decision will raise big questions about his standing in the Abbott government. His reputation as a liberal reformer is now on the line.

This decision raises the stakes on Hockey’s handling of the decision on what to do with Qantas. Hockey says he favours allowing it to become majority foreign owned.

The odds on him persuading Abbott to allow this absolutely rational decision have now stretched to prohibitively against.

For foreign investors, the GrainCorp decision will be deeply puzzling.

The first big foreign investment decision of an “open for business” government is to slam the door. Hockey now faces a daunting task to explain what the exceptional circumstances were that forced him to block the sale.

But there is a wider economic national interest conundrum about the Abbott government’s emerging world view.

Australia’s most important regional relationships – Indonesia and with China – have entered dangerous territory since the Abbott government came to power.

In both cases, this has not been because of actions initiated by the government but by its responses to external events which have revealed its basic instincts.

And what this has revealed has been a worryingly narrow vision which seems to take too little heed of the economic dimensions of Australia’s foreign and strategic interests.

The crisis in Australia’s relationship with Indonesia has led to a boringly predictable and myopic domestic slanging match between the Abbott government’s media boosters and its critics which completely missed the main point.

Australia’s economic future is as important in the relationship with Indonesia as its security. A healthy, open relationship with an increasingly prosperous Indonesia will present huge economic opportunities for Australia.

That element of the relationship hardly gets noticed in the domestic political debate. But it is vastly more important than the issue of boat arrivals which has been allowed to poison Australian public attitudes towards Indonesia.

The elevation of the boat arrivals issue to the level of a threat to Australia’s security and the Abbott government’s go-it-alone, populist “sovereign borders” policy for dealing with it have deepened the gulf of misunderstanding in the relationship.

The danger of this gulf was emphasised in Abbott’s initial domestic-audience targeted response to Indonesia’s anger about the spying revelations.

The idea of Indonesia as an economic friend rather than a strategic threat is completely missing from the Australian domestic debate.

A wake-up call is desperately needed.

From this point of view, the issue of Australian spying and the attention is has brought to the troubled bilateral relationship might prove to be a good thing in the longer term if both sides take this as a wake-up call.

Abbott’s pre-election rhetoric about shifting Australia’s focus from “Geneva to Jakarta” will be meaningful if both sides can use the aftermath of the current crisis to make a new start on identifying and growing their shared interests.

If Abbott could have nominated the two foreign policy issues which he least wanted to blow up in his first few months in office, they would have been relations with Indonesia and China.

He’s got both. The Jakarta crisis is now in emergency management. China is an emergency still unfolding.

TIT-FOR-TAT DIPLOMATIC PROTESTS

The soaring tensions between China, Japan and the United States over China’s muscular assertion of its ownership of the disputed islands in the East China Sea have spread to our relationship with China.

The tit-for-tat diplomatic protests between Canberra and Beijing in recent days have confirmed that China sees Australia as a US proxy.

Abbott has defended Australia’s protest to Beijing as an assertion of Australia’s “values and interest”.

The use of the word “values” will be especially noted in Beijing: It’s a strong echo of the US conservative language about why China is a strategic opponent.

This will have consequences.

At the very least, it will raise the political stakes in efforts to finalise an Australia-China free trade agreement.

But if the tensions between China, Japan and the US run out of control – which is now a real danger – the consequences could be far graver.

Running the country is getting tougher, faster for the Abbott government.