Complex trade-offs: Economic openness and security in Australia

The challenging global environment has wedged Australia into a difficult position over its economic and strategic choices. Australia’s prosperity is underpinned by its openness. More than a fifth of Australia’s GDP comes from trade (World Bank 2020), two-thirds of its population growth comes from immigration (Kehoe 2020) and its A$4 trillion stock of foreign investment has underpinned the growth of Australia’s living standards (Australian Government 2020c). Australia relies on the multilateral rules-based system for its global influence and its international economic engagement. Its largest trading partner is China, seven of its top 10 trading partners are in Asia (Australian Government 2020b), while its alliance with the United States is accepted on all sides of politics as the cornerstone of Australia’s defence strategy.

This chapter explores the global economic and strategic context Australia faces, how international tensions have shaped the public discourse in Australia, the views of different groups in Australia on how these tensions should be managed and their influence on policy decisions, and how the Australian Government is managing a difficult global environment. The  chapter proposes a new framework for thinking about Australia’s security, recognising the ways in which Australia’s openness is a source of security and how the downside risks that can arise from Australia’s openness can be managed through carefully designed domestic frameworks, policies and institutions and a new direction in international diplomacy. The key is to manage the risks from Australia’s openness, not to avoid them.