This will go down as the gong heard round the world. On a national day that already has a distinctly 18th century feel – it celebrates the moment of British colonisation, after all — Tony Abbott appeared to doff his cap to the Mother Country again in making Prince Philip an Australian knight.

The re-introduction of a heraldic honours system that many Australians viewed as a museum piece was met last year with incredulity. His choice of the Duke of Edinburgh, ahead of thousands of deserving Australian women and men, has unleashed even more mockery. It was a 'captain’s call', said Mr Abbott, and arguably the worst since Greg Chappell asked his brother Trevor to bowl underarm to New Zealand's Brian McKechnie. That damaged Australia's international sporting standing. The surprise knighthood could have the same effect on the country's international reputation, especially in the region.

In any objective cost-benefit analysis, Abbott surely loses on all fronts. As a politician, it brings into question his judgment and could, in coup-addicted Canberra, lead eventually to his ouster. As a constitutional conservative, he runs the risk of turning small 'r' republicans into more troublesome rebels and imperiling the very institution he seeks to protect. As prime minister of a country supposedly seeking better ties with its neighbours, it makes him look more Anglo than Asian in his orientation. As historian James Curran observed in these pages earlier in the week, this move brings to mind what Paul Keating said about the 'ghost of empire' that 'remains debilitating...to our destiny as a nation in Asia and the Pacific.'

It is also worth revisiting what became known as the 'Anglosphere speech' that Tony Abbott delivered in Oxford in December 2012, before becoming prime minister.

The setting was his old college, which, appropriately enough, is called Queen's. 'China, Japan, India and Indonesia are countries that are profoundly important to Australia', he said. 'Size, proximity and economic and military strength matter. Of course they do; but so do the bonds of history, of shared values, and of millions of familiar attachments.' This seemed to imply that Australia's relationship with its Asian neighbours would primarily be transactional, whereas the relationship with Britain and America would be brotherly, emotional and thus always more meaningful.

What gave the speech its controversial edge, however, was the insinuation that Anglo culture was superior. Abbott said his 'insatiable curiosity' came from studying at Oxford, and was 'the hallmark of Western civilization (especially in its English-speaking versions) and provides our comparative advantage among the cultures of the world.' Does not the knighthood for Philip send a similar message from the Australian prime minister to the rest of Asia? That the epitome of civilization is to be found in Anglo history and institutions?

Will this controversy reverberate beyond the Australian Twittersphere and talk-back stations? Is it just a storm in a Royal Doulton tea cup? My sense is that the knighthood does create a national image problem, because it heightens the sense of confusion about the country's global positioning. It revives the seemingly unresolved question: 'Advance Australia Where?' It projects a sepia-tinted Australia to the rest of the world rather than the thrusting economic, commercial and cultural powerhouse that modern Australia has become.

It would also be a mistake to think that this kind of symbolism does not matter. Just witness the damage to America wrought by Barack Obama's failure to attend the solidary march in Paris in the aftermath of the Charlie Hebdo massacre. Or the sneering at US Secretary of State John Kerry, who attempted to mend that particular diplomatic fence by getting James Taylor to sing 'You’ve got a friend'. The international press, Fleet Street especially, looked on the knighthood as a gift horse, if only because it could re-run Prince Phillip's most famous gaffes. But it also makes the Australian prime minister a cartoonish figure of fun – an '...And finally' story.

Australian diplomacy will take a hit, and so, too, the already battered reputation of Australian democracy.