Chalmers: Economic security top priority in world of ‘churn and change’

National and economic security are “more closely intertwined than ever” as Australia grapples with a world of permanent “churn and change,” Treasurer Jim Chalmers warned on Wednesday.

Boosting resilience and national security was one of the Government’s three main economic priorities at the outset of its second term, Dr Chalmers said in an address to lay out the Treasury’s upcoming agenda.

“The best defence against global volatility and the best way to lift living standards is with a more productive economy, a stronger budget, and more resilience,” he said in a speech to a packed room at the National Press Club in Canberra.

In the question-and-answer session that followed, he revealed how persistent global turmoil had pushed economic security concerns to the top of his in-tray.

The Government was thinking “very deeply about the fact that we’re in this period of extraordinary churn and change,” and how the country could be a beneficiary and not a victim, he said.

The Treasurer added it would be a “heroic assumption” to pretend the world would return to its previous period of post-Cold War calm after four big economic shocks in less than two decades that had contained national security elements.

Australia has been a huge beneficiary of the “great moderation” that followed the end of the Cold War, before the start of the war on terror and the global financial crisis.

“Now we need to work out a way to do really well out of this world of permanent churn and change,” said Dr Chalmers.

Economic security was a key focus of an Independent Intelligence Review, commissioned by the Government in 2023 to assess the work of the ten agencies of the national intelligence community, and released in a declassified form in March.

Among the 67 recommendations by authors Heather Smith and Richard Maude, was the setting up of a dedicated economic security unit inside Treasury and embedding Intelligence Community members in policymaking.

It urged the Treasury to lead its own review of the economic security functions across the Government.

“We are taking the recommendations seriously,” said the Treasurer, adding that he was regularly briefed by national security officials on the economic implications of global crises like the current conflict in the Middle East.

On Tuesday, Dr Chalmers warned of a “perilous moment” for the Middle East and the global economy as the war between Israel and Iran hits economic growth and creates oil price volatility.

Asked about the possible economic impact of conflict closer to home in flashpoints, including the Taiwan Strait, or the South China Sea, where global shipping lanes could be severely disrupted, Dr Chalmers said the risks were being factored into the Government’s resilience considerations.

“There are good reasons not to go into a lot of detail about that advice that I receive and the thinking that we do, but to assure you that it’s substantial, it’s high quality,

“It’s across government, and it recognises that a big part of our economic challenges right now are security related.”