So what does it all mean for the coming year? In 2012 Australia will probably get caught up in the global financial cum economic crisis, especially if Chinese growth declines. Under the most likely scenario unemployment will rise and the dollar fall, but financial matters will be affected by particular events overseas that may have unexpected results for us. Overall, a period of lower growth is likely which will place more pressure on political and social matters.
This likely volatility will be compounded by growing pressures in international relations. For starters, Australia has to find the best place in what looks like a growing rift between the declining global hegemon, the US, and the rising power, China. With the agreement to base marines in the Northern Territory Gillard has consolidated our pact with the US, while our own defence posture is shifting to face up to potential growing threats to our resources in the north.
This all relates to the emerging energy crisis which will see oil and gas prices rise and become more volatile. As a nation we will increasingly face the need to ensure reliable supplies, but energy costs will inevitably rise because of supply issues, infrastructure issues and carbon tax issues.
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As energy prices rise along with water prices, cost of living will become an increasingly trenchant political issue that will only get more traction as unemployment grows when global economic forces bite. Cost of living rises hit the most vulnerable hardest, become hot button issues and can become major electoral influences in a short time.
In addition, 2011 was a bad year for weather extremes, as it was around the world. Australia saw flood, fire, drought and storms of unusual severity, all of which are consistent with predictions related to global warming. These events certainly affect economic conditions, but they also generate a sense of unease that can quickly turn into political pressure.
So in 2012 some core structural tensions will become ever more obvious. We have seen the rise and rise of massive transnational resource companies in national life, so powerful now that their advertising has a major impact on public opinion. They were arguably instrumental in removing a prime minister and rejigging a mining super-profits tax. Their think tanks and tame journalists are busy in various media activities, well-resourced in dealing with an array of increasingly complicated issues. What role will they play in the great debates about how we respond as a nation to emerging challenges? Similarly, the ongoing financial chaos has only acted to place the banks in a more central role, so how will they and the financial markets respond as the economic problems unwind?
And perhaps most importantly, can the national political system recover and generate the confidence Australians will need to have in it to back the reforms that must be made sooner rather than later?
One way or another, 2012 will be an interesting year. Here in Australia our main institutional structures will be further tested by forces within and without, and we will see how they stand up to the pressure.
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