In 1980, then Singapore prime minister, Lee Kuan Yew, warned that if Australia failed to reform, it risked becoming ‘the poor white trash of Asia’.

At the time, Australia was inward-looking, heavily protected by tariffs, and structurally complacent. Under prime minister Malcolm Fraser and his treasurer John Howard, Australia was grappling with a period of stagflation, economic stagnation combined with high inflation. Inflation was running at around 10 to 12 per cent, driven largely by wage growth unaccompanied by productivity gains, and by Opec oil price shocks that Australia refused to acknowledge by freezing the price of domestic oil at a fraction of the world price.

Unemployment hovered between 5 and 6 per cent, a figure that, while moderate by today’s standards, was significantly higher than the near-full employment rates of the 1960s and early-1970s, which typically ranged between 1.5 and 2 per cent and rarely exceeded 2.5 per cent.

Interest rates were also high, sitting between 12 and 14 per cent in nominal terms but close to zero in real terms. The Australian dollar had not yet been floated. It was only floated in 1983 prior to which it was instead managed through a system of crawling pegs determined by government planners.

At the time, Bob Hawke was the opposition economic spokesperson and reflecting on that period, Hawke later remarked, ‘His (Lee’s) harsh but fair comment helped galvanise my determination to undertake the reforms that would save us from that fate and set us on a better path.’ Lee’s warning ultimately served as a catalyst for the government of prime minister Hawke to undertake a series of sweeping economic reforms that launched Australia into a prolonged period of prosperity and social stability.

When Hawke became prime minister in 1983, he convened a landmark economic summit that successfully built consensus for a bold reform agenda. This agenda included tariff reductions, floating of the Australian dollar, and deregulation of the banking and financial services sectors prompted by the Campbell Report on reforming the financial sector. These reforms were part of a broader shift towards integrating Australia into the global economy and marked the beginning of a new era of Australian economic liberalisation.

Throughout the 1980s and 1990s, these reforms positioned Australia to capitalise on opportunities presented by globalisation.  Economic growth became more consistent, and the labour market more flexible, and enabling Australia to emerge as a major exporter to the rapidly developing economies of Asia. However, rather than leveraging this momentum to build a more resilient, innovative and forward-looking economy, Australia gradually fell into a pattern of comfort and complacency.

In the years that followed, and especially since the turn of the millennium, successive governments have chosen to reverse course, driven by short-term political interests rather than long-term national benefit. While many may remember prime minister John Howard for championing tax reform, industrial relations reform, gun control, and leading the extinguishment of government debt, often forgotten is his role in reregulating the financial services sector, significant expansion of middle-class welfare, centralising tax collections in Canberra, the introduction of the mandatory renewable energy target and the legislative prohibition on the use of nuclear-generated electricity.

Subsequent, often mediocre and kakistocratic, leaders have instead attempted to trade national economic prosperity for partisan electoral longevity.

Forty-five years after Lee Kuan Yew’s warning, and more than three decades since the Hawke-Keating reform era, Australia once again faces economic challenges that echo the stagnation and structural vulnerabilities of the pre-reform period. The threat of becoming the ‘poor white trash of Asia’ no longer seems like averted fate. It feels like a creeping reality.

In contrast to Hawke’s economic summit, upon his election, Prime Minister Anthony Albanese convened a summit to gather support to reregulate the labour market thus signalling a reversal of 30 years of productivity-enhancing reform. Albanese then intensified the efforts begun under Howard to destroy Australia’s massive comparative advantage in cheap energy by replacing reliable coal-fired power stations with ineffectual and unreliable intermittent energy. The result was a massive increase in Australia’s energy costs, culminating in a more than 8-per-cent fall in living standards since the election of the Albanese government.

What is the status of Lee Kuan Yew’s jibe today? Consider the official World Bank data:

In 1990, Australian GDP per capita on a purchasing power parity basis, a calculation adjusting for exchange rate differences, was $35,670 and in Singapore it was 27 per cent higher at $45,371. It is excusable that in 1990 Singapore, being a small nation state, could enjoy sizeably better living standards than Australia even after Australia had gone through a sorely needed and painful economic reform process in the prior 10 years.

By 2023, a period preceding the Albanese government’s failings, Australia’s per capita GDP had risen 67 per cent to $59,553, still a substantial increase. However, over the same period, Singapore’s per capita GDP rose by 181 per cent to $127,544.

Singapore’s living standards are no longer marginally better than Australia’s but now exceed them by a massive 114 per cent.

Economists think that a nation’s endowments contribute to its success. In Singapore’s case, the opposite seems true. Its lack of land has prevented sizeable solar energy development, and the tropical winds are too ineffectual to generate renewable power. Ninety-nine per cent of Singapore’s electricity is generated from gas.

Singapore has established itself as a global leader in trade openness, with its success driven by a clear focus on low-cost exports and a strong value-adding strategy. In contrast, Australian governments and regulators, particularly under the current Labor government, have taken a more restrictive approach to the development and export of gas and coal.

Compounding this, major Australian banks have been reluctant to finance otherwise viable resource projects. Lengthy regulatory approval processes, often spanning seven to ten years or longer, along with hundreds of millions in sunk costs, have also become commonplace.

Australia needs another friend like Lee Kuan Yew, one unafraid to speak hard truths to misguided Australian governments, and a leader with the vision and courage like that of Bob Hawke to drive the reforms necessary to ensure a better future for the next generation of Australians.