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Can Australia make the most of the Asian century?

Published 31 Aug 2016

Our guest speaker at Glover Cottages on 30 August was former Secretary of the Treasury and current NAB chair Dr Ken Henry AC. He said Australia has been through a remarkable period of growth in the century’s first decade, but it has not lasted. The world economy is fragile and bound for another financial crisis, but if we remain bogged in populist quagmires, we cannot make the most of forthcoming economic challenges. BREXIT reflects a protest by ageing British working and middle class conservatives who feel taken for granted and ignored. But if Australia’s political discourse continues to be driven by similar fear and anger, if we retreat from globalisation, we will be severely disadvantaged. Australia needs a positive and compelling narrative, one based on our partnership with Asia.

Dr Henry said his 2011 paper Australia in the Asian Century, commissioned by the Gillard government, was considered by the incoming Abbott government in 2013 to be politically incorrect and disappeared from sight. But it set guidelines for a positive narrative. Japan, followed by Korea and China, had created middle class economies in a fraction of the time it took the Europeans. These along with those of Indonesia and India now provide enormous opportunities for Australian trade and investment. But to take advantage of such opportunities, we need, at all productive levels of society, to understand how business in Asia is done, learn how to communicate with Asian societies, support the growth of Asian capabilities and attract Asian investment to enhance our own competitiveness.

Dr Henry observed that the Foreign Investment Review Board was created in the 1970s out of concern at the growth of US investment in Australia. The concern is now about Asian, particularly Chinese, investment, which is equally misguided. Meanwhile, there exists a curious phenomenon: Australian exports to Asian countries are aggressively pursued and have been expanding rapidly, but direct Australian investment in Asia is minimal, almost invisible. Not only Austrade, but the banks and governments, need to get behind a major push to encourage ignorant, lazy or otherwise unimaginative Australian companies to seek out opportunities to invest in rapidly developing Asian enterprise hubs. Investment in New Zealand or Europe or North America will no longer offer the potentially greater returns as investment in high-growth Asian economies. Targeting likely business opportunities is a challenge for Australian governments, businesses and the banks.

Ken Henry

Dr Henry expressed his concern at the erosion of Australia’s natural assets through the short-sightedness of government policies. Our agricultural products have a highly-valued reputation in Asian markets for purity and lack of contamination, but this will be undermined by unsustainable, unregulated farming practices. Asian-born Australians are another natural asset, providing valuable skills and languages for the commercial sector, but, Dr Henry admitted, their skills are not yet appreciated sufficiently by the business sector.

Dr Henry concluded by saying that Australia’s current politics are guided by fear – of terrorism, unmanageable migration across borders, and economic collapse. This narrative needs urgently to be replaced by one of optimism. And the best way to infuse our society with such optimism is to take an objective look at Asian economies and create policies that allow full Australian engagement with them, building the capabilities of Australians. We need the media to be apolitical and free from bigotry. Above all, the political narrative needs to replace fear and threat with sensibly  grounded policies of economic and social engagement with our Asian neighbours.

Before his address, Dr Henry was presented with his well-deserved award as a new Fellow of the Australian Institute of International Affairs.

 

Report by Richard Broinowski