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University of New South Wales Law Journal |
[2] In the last decade of the 19th century, representatives of the colonies, after three conventions, finally settled on a constitution – the Australian Constitution (‘Constitution’) – representing the cession of the minimum powers they regarded as necessary to make the new federal entity viable. Creative judicial interpretation by the High Court of Australia has changed the balance of power in important respects. I doubt however that, even with this, anyone would argue that if we were creating afresh a constitution for Australia, in the world we now face at the beginning of the 21st century, that it would bear much resemblance to the present arrangements.
[3] I emphasise that I do not, despite this fact,
contemplate any political consensus in the foreseeable future sufficient to
change
those basic constitutional arrangements of our federation. Nevertheless,
we must understand the full significance of a world so different
from 1901, and
particularly the fundamental forces for change that have been operating since I
addressed this issue in 1979, if we
are to begin to be able to meet the
challenges posed by these changes.
[6] But this last half-century, and particularly the latter part of it, has witnessed quite fundamental changes to that matrix, which had come to shape perceptions of the power and role of governments, the relations between them, and between governments and their citizens.
[7] This dynamic process can best be understood if we imagine the nation state being subjected to a massive and inexorable pincer movement. One arm of the pincer has been the historically unparalleled technological revolution and the associated phenomenon of globalisation. The other arm has been the dramatic political transformation that has extended the forces of the market economy to a significantly larger proportion of the world’s population.
[8] The revolutions occurring in the fields of computers, telecommunications and bio-technology are transforming the processes of production, the provision of services, communication and transportation. The costs of communication, travel and transportation have been drastically lowered and remarkably facilitated. Professor Geoffrey Blainey wrote of The Tyranny of Distance[2] – an appropriate title now would be The Death of Distance.
[9] This technological revolution has stimulated the growth of the multinational corporation and the emergence of globalisation. The rise of multinational corporations, with the capacity to evade the jurisdiction of national governments – including that of the country in which they are headquartered – has involved a distinct shift in emphasis from political to economic decision-making. Corporations can jump over what they regard as objectionable regulations and pit government against government. In fact, one of the major results of globalisation has been the extension of competition from the level of firms to the level of governments.
[10] The sheer comparative size of corporations – as measured by their annual sales or capitalisation, compared with government budgets – dramatises this power-shift. The point has been made, at the Organization for Economic Co-operation and Development (‘OECD’), that if the top 100 economic entities were now assembled in a new OECD with both private and public participation, 52 of these major players would be corporations, and 48 would be national governments.[3]
[11] The
other arm of the pincer is reinforcing this process, and its dimension, I
believe, is not so well appreciated. Consider these
facts:
[13] The process of globalisation is accelerating. One of the single most important indicators is that, generally, the volume of world trade is growing twice as fast as the volume of world output[4] – which means, simply, that the international division of labour is deepening and the world economy is becoming increasingly integrated.
[14] One of the most profound implications of all that I have written to this point is that the capacity of many national governments to sustain the revenue base necessary to undertake the services expected of them by their citizens is increasingly at risk. This risk occurs at the end of a century that has witnessed an enormous expansion in the scope of national governance. At the beginning of the 20th century, governments of European states taxed and spent somewhere between 5 per cent and 10 per cent of Gross National Product (‘GNP’).[5] At the close of the century, between one-third and one-half of the GNP of industrialised countries passed through the public exchequer.[6] The main (non-military) impetus behind this expansion of the public budget has been the substantial growth of publicly provided services and infrastructures, and income redistribution through the welfare state.
[15] The indisputable fact is that the increased mobility of capital can undermine the capacity of governments to do their job of providing effective governance either by themselves, through market forces, or through the civil society. Income distribution is shifting towards capital and away from labour. The distribution of capital assets is more skewed and concentrated so that the income tax base is more unequally distributed, nationally and globally. And the tax rates that can be applied may be lowered because of competition between governments and the capacity of those with wealth to organise their affairs to minimise tax. As a practical matter, loss or serious erosion of the tax base is one of the most serious threats to the provision of good governance. This is not just a question of the capacity to provide services, but goes to the very stability and workable cohesion of society. How to handle this problem in an equitable and efficient way will be one of the more important questions to be faced in the new century.
[16] Like
capital, environmental pollution is mobile across borders. The existence of the
threat of global warming is becoming increasingly
indisputable. It is
global in its impact and therefore requires constraints upon the exercise by
individual nation states of their sovereign powers.
There have been some
tentative steps – the Kyoto Protocol to the United Nations Framework
Convention on Climate
Change,[7] for instance
– but the measure of our collective maturity and responsibility to future
generations will be how quickly we transform
these steps into effective
supra-national mechanisms.
[19] The horrendous events of 11 September 2001 demonstrate graphically that the very nature of conflict and war between states will never be the same again. Terrorism, and the capacity for terrorism, has been globalised. It is entirely appropriate that Australia, in this tragically revealed new context, should align itself with that wide alliance of nations committed to tracking down and bringing to justice those responsible for these disasters.
[20] But we must go beyond this. There is no one single explanation for the new crisis in world affairs, and I certainly do not subscribe to Samuel Huntington’s facile thesis of The Clash of Civilisations.[8] Nevertheless, there is one thing of which we can be absolutely certain: if the developed countries of the world do not address, in a substantial way, the endemic poverty and deprivation of so much of the underdeveloped world, the recruiting fields of terrorism will be enriched.
[21] In the context of the Cold War, the developed Western world and Japan had a sharper perception of obligation to developing countries. The OECD pointed out last year that in the seven year period following the Cold War (1992-98), official aid to those developing countries fell by US$88.7 billion[9] – if I may play on words, that’s a lot of dollars and not much sense. The OECD estimates that those countries will have 90 per cent of the world’s population by 2056.
[22] The Australian born Jim Wolfensohn, a graduate of
Sydney University and now President of the World Bank, addressed the issue
squarely on a visit to Sydney last year, pointing out that 20 per cent of the
world’s population has 80 per cent of the world’s
Gross Domestic
Product (‘GDP’):
The other 80 per cent, the 4.8 billion people who live in developing countries, have to live on the other 20 per cent. So you have this fundamental inequity, and at its base you have 3 billion people who live on US$2 a day. ... Now all that is hard enough, but in the next 25 years you add another 2 billion people ... so the challenge of globalisation is increasing dramatically.[10]
[24] A comprehensive approach to the challenge involves more than direct financial assistance, as important as that is. A more liberalised international trading regime is essential to open up the markets of developed countries to exports from the Third World. Australia has demonstrated leadership in this area particularly through the creation and guidance of the Cairns Group, which played a crucial role in the liberalising process of the Uruguay Round. That much more remains to be done has been ominously reflected in the decision on 5th October by the United States (‘US’) Congress to add US$146 billion to the existing US$190 billion ten year agricultural subsidy and support programs.[11] The House Agriculture Committee Chairman defended the legislation as ‘a balanced approach that recognises the very real economic and societal problems that are pressing rural America’.[12]
[25] Australia should take a leading role in exposing the dangerous, self-defeating nonsense reflected in this line of reasoning. The Bush Administration has pointed out the intrinsic absurdity of the proposal which would simply encourage domestic overproduction and exacerbate the impact of the existing scheme whereby nearly half of all recent government payments have gone to the largest 8 per cent of farms, while more than half of all US farmers share in only 13 per cent of the payments.[13] But Australia should emphasise to our American friends who are strenuously attempting to build an alliance against terrorism that the issue goes much deeper than the perpetuation of domestic inequities.
[26] If they are going
to be truly concerned with America’s ‘societal problems’,
indeed, with the very security
of America, then they must address the
‘societal problems’ of the developing world. The challenge was best
put by Professor
Jeffrey Sachs, of Harvard University, writing in The
Economist just two months before the tragedy of 11 September 2001. He
wrote:
Although its prosperity depends on a worldwide network of trade, finance and technology, the United States currently treats the rest of the world, and especially the developing world, as if it barely exists. Much of the poorer world is in turmoil, caught in the vicious circle of disease, poverty and political instability. Large-scale financial and scientific help from the rich nations is an investment worth making, not only for humanitarian reasons, but also because even remote countries in turmoil can become outposts of disorder for the rest of the world. ...
Fifty years ago a soldier-statesman, General George Marshall, then Secretary of State, explained to Americans that urgent financial support for Europe would stabilise societies destroyed by the Second World War and the post-war economic crises. Such aid would unleash Europe’s potential for recovery to everyone’s mutual benefit. Winston Churchill called the resulting Marshall Plan ‘the most unsordid act in history’.
The United States once again has a soldier-statesman, Colin Powell, as secretary of state. A new Powell Plan to mobilise American technology and finances, both public and private, on behalf of the economic development of the world’s poor countries would be a fitting follow-up to the Marshall Plan. The world, and America, would be enormously safer and more prosperous as a result.[14]
[29] First, while we have had the good sense during the last century to draw, to a significantly greater extent, upon the resources of that half of our population – women – previously precluded from meaningful participation in national affairs, there is still more to be done. The impact of that increased participation, in economic terms, is indicated by the statistics. In 1901, women constituted 21 per cent of those employed; by July 2001, that figure had more than doubled to 44 per cent – ie, the best part of half the employed workforce are now women.[15] A breakdown of these figures shows the broad lateral extension of women across the work force and a less marked but significant permeation of management positions. The further facilitation of this process will be one of the most important issues in shaping our approach to the 21st century.
[30] In operating as we will, in an increasingly competitive globalised economy, we will need to shape our institutions and our attitudes in a way that optimises the opportunities for women to contribute their talents to the national enterprise. Some of my unreconstructed male colleagues may see this as a peripheral matter – it is not. In that competitive globalised economy which, whether we like it or not, will constitute the environment for the 21st century Australia, those nations that do not best harness the capacities of half their populations will be at a serious disadvantage.
[31] This will require more than the elimination of any remaining explicit or practical discrimination in the areas of education, employment and remuneration. In a very positive sense, flexible arrangement will have to become the norm, for both women and men, to balance the demands and obligations of employment with those of child-rearing.
[32] Second, Australia must invest the resources necessary to
equip itself to operate in what, I emphasise, will continue to be an
increasingly competitive global economy. In this respect, our performance over
recent years has been appalling. The Federal Government’s
Chief Scientist,
Dr Robin Batterham, last year in a report, The Chance to Change, observed
in respect to business involvement in research and development that
‘Australia has been on the downward slide since
1995-96. In contrast
business investment in R & D in other industrial nations has increased
markedly’.[16] This
concern was repeated, more dramatically, by David Miles, Chairman of the
Implementation Group of the National Innovative Summit:
Our R & D intensity has fallen in recent years, running counter to the general OECD trend ... for R & D expenditure in the business sector there has been both an absolute decline since the mid 1990’s and a relative decline experienced as a share of GDP.
Australian business expenditure on R & D as a share of GDP is markedly lower than the OECD average (ranking 7th lowest of 24 OECD nations) and is falling while the average for OECD countries continues to rise.
Without strong public and private sector funding for research and development Australia is at risk – we will not be able to compete in a modern, knowledge-based economy. Downward swings which go against international trends or Australia’s own past performance should ring alarm bells.[17]
[34] Third, we must understand the sense of insecurity felt by so many of our own citizens as they are confronted by a world changing so rapidly and where so many of the certitudes of the past – including security of employment – are disappearing. We must be prepared to embrace change if it is in the national interest but that preparedness must carry with it a necessary corollary. If some people, in an immediate sense, are adversely affected by such change required in the national interest, then the nation as a whole must accept the responsibility of protecting them – either by financial recompense, retraining, relocation or a combination of such measures. If we are not prepared to do this, we cannot expect to maintain a cohesive civil society.
[35] Fourth, the inexorable
processes of economic globalisation should strengthen an Australian social and
legal commitment to the
repudiation of discrimination based on race, colour or
creed. This is not only morally right, it is also a matter of economic
self-interest.
Australia’s future well-being will continue to be
determined significantly by our economic relationship with the Asian region.
If
we are seen, in any way, to tolerate discrimination, Asian countries will be
much more likely to look elsewhere for trading partners,
and for places to
educate their children, visit as tourists or invest their capital.
[37] There have
been great achievements and there have been shortcomings – not least our
failure, yet, to achieve a true reconciliation
with Indigenous Australians. The
challenges are daunting, but I believe that if we draw upon the best of our past
we can successfully
meet those challenges. We can create a cohesive, tolerant,
prosperous society in this country and an Australia able and willing to
contribute to a more secure world.
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URL: http://www.austlii.edu.au/au/journals/UNSWLawJl/2001/65.html