CEO & Partner John W.H. Denton participated in a Panel Discussion in response to the Australia in the Asian Century White Paper and the launch of the Asialink Report: Our place in the Asian Century: Southeast Asia as 'The Third Way'.
Hosted by Corrs Melbourne on Thursday 29 November, the event was moderated by Sid Myer, Chairman, Asialink. John was joined by panel members Professor Ross Garnaut AO, Vice-Chancellors Fellow and Professorial Fellow in Economics, the University of Melbourne, Professor Tony Milner AM, Basham Professor of Asian History, ANU, Jenny McGregor, CEO, Asialink and Lesley Alway, Director, Arts, Asialink.
Thank you. It's a pleasure to be here, and to have the opportunity to discuss the Asian Century with some of the finest minds working on Asia.
It's a tough job summarising all the work that went into the White Paper into such a short time, so I'll try and divide my talk tonight up into a couple of brief sections.
Firstly, I'll talk a little about the findings of the White Paper, and how these can be used as a way to guide our activities.
Then I'll talk about some of the specific strategies noted in the White Paper, and discuss some of the ways we can implement these.
Finally, I'll look at a couple of key priorities coming out of the white paper and discuss possible ways to pursue them.
A feature of the White Paper is that it does more than just document issues, it aims to distil goals and the policy pathways to achieve those goals. The purpose was to provide a blueprint for predictable and consistent national policy for years to come.
The White Paper notes that right now, we're doing well from the Asian Century. We have one of the strongest economies in the world. Unemployment is low. Inflation is contained. The terms of trade are high. Although commodity prices appear to have passed their record peak, considerable minerals and energy investment is still to come and large-scale production and exports are yet to flow.
So that's a bit of a "good news story". But the other bit is what needs to be done to make the most of our opportunities. In answer: The task force thought that now is the time to push for more reform. Not just incremental change but to raise the ambition of the nation and force us to think though how we will do things differently. In our view More of the same but faster will not be enough. And that is because the scale of the opportunity is unlike anything we have seen before.
So the ambition lies in the five key areas listed in the Asian Century White Paper.
The first is building on our strengths, and reinforcing the things we already do well. Because we must keep our own house in order, as this is what makes us attractive to Asia.
The second is developing the capabilities of our people, and making sure they understand the region. We need these capabilities and this understanding in order to build stronger relationships and partnerships across the region.
The third is ensuring that the business sector develops strong relationships with others in the region as well. We'll need new business models and new mindsets to operate at our best in Asian markets, and to seize the opportunities in our region.
The fourth is keeping our region stable. We will work to build trust and cooperation in the region, and to secure a greater role for Asian countries in the rules-based regional and global order. We'll do this while maintaining a strong alliance with the US, and encouraging China to fully participate in regional developments. It is not to down play ASEAN but to work with it as well.
The final key area is to strengthen Australia's relationships across the region at every level. A wide range of groups — from businesses, to educational institutions, to community groups, to unions, to cultural organisations and even to sports teams — can enjoy stronger relationships through Asia. It will be these relationships that form the base for future improvements in Australia's relations with Asia.
There is, obviously, an enormous number of actions necessary to implement these themes. The government, of course, has a leadership role in this and in case you missed it has already announced steps to establish a framework in which this implementation can happen:
- A dedicated Cabinet Committee has been established to oversee implementation, which will include the Prime Minister, Treasurer and other senior Ministers;
- Dr Craig Emerson has been appointed as the Minister assisting the Prime Minister on Asian Century Policy, to oversee implementation of White Paper commitments and engagement with key partners in Australia and in the region;
- Individual Ministers will be responsible for advocating and pursing their relevant policy directions in the White Paper;
- To tie all these responsibilities together, a cross-agency Taskforce has been established in the Department of Prime Minister and Cabinet to support whole-of-government implementation of the White Paper
- And as with the White Paper development, a Strategic Advisory Board of external experts will have an ongoing role in promoting public dialogue and advising Government on implementation and emerging policy issues. This will include the original external panel members, including myself. But others will be appointed.
A key priority for the first 12 months is to raise awareness and increase momentum. In delivering on this priority, key stakeholders such as Asialink are instrumental. And the Asian Literacy Roundtable held earlier this week is a good example of this.
So what are the critical 'implementables'?
The first is to re-emphasise that we welcome foreign economic investment. Economic investment is good for us. It creates jobs. It boosts our tax base. And it lets us engage and interact with Asia.
At present, investment from Asia in general is much lower than it should be given the relative size of Asian economies. There are a number of specific actions listed in the paper, and they will help support welcoming environment for investment. These include domestic reforms to strengthen our regulatory environment through improving the functioning of bodies such as COAG and COAG Business Advisory Council. And they include Australia playing an active role in international fora to reduce barriers to investment and trade, particularly for 'behind the border' reforms.
But there's a great deal that the business community can do to help boost investment. We can work together with colleagues in the region to guide and influence the formation of regulatory frameworks and capabilities to strengthen our confidence and enable us to boost our own investment stock in Asia. We currently trade heavily with and invest scarcely in the region we live in. Recent estimates have it that 50% of our trade is with Asia, but only 5% of our investment is. We can look to build deeper financial market ties with Asia. At present, like the other countries in Asia, we're much more financially integrated with other parts of the globe than in Asia.
But in the longer run, Australia getting more out of the Asian Century is not just about more investment. There are many other things we need to address:
- we need to have much greater flow of goods, services, capital, ideas and people;
- we need to have stronger trade links;
- we need to encourage and be a part of more comprehensive regional agreements; and
- we need to see and understand Asia as a working partner.
This means knowing Asia's legal institutions, political leaders, commercial practices, cultures and governance standards better across the board.
This greater knowledge, and this push to make Asia our partner rather than only our supplier, will need to come at all levels of society. And it will require us to develop a raft of new capabilities. And I know Jenny will have much more to say about these, so I'll be brief: by 2025, should we successfully be able to implement the capabilities roadmap of the White Paper, every Australian student will have the chance to engage comprehensively with Asian languages, history, culture and studies. They'll have the chance to pair with Asian schools. And when they leave school, they'll have university courses and commercial opportunities that will allow them to continue engaging with Asia.
Driving this is the knowledge that we, as a country, will succeed in the Asian Century through the quality of our people.
We already have a highly skilled, hard-working and creative population. We have many world leading research institutions in education, health, environmental management, science and design. But not enough.
We can add enormous value to cross-border value chains and regional production networks. And we have the intellectual property frameworks and traditions to allow us to make the most of all this talent. We need to continue building on this.
But winning in the Asian Century isn't just about Australia: it's also about our friends throughout the region.
Asia will become an increasingly significant source of new ideas, technologies and leading-edge science for Australia. And our population — more than a quarter of whom were born overseas — and our large diaspora can help to build social, business, and, cultural networks that help us work together with Asia to make the most of their new ideas.
These networks are vital. They bring with them many, often-unanticipated benefits. Today's students, tourists, and friends are tomorrow's investors, business partners, professors and political leaders. Being intertwined in Asia requires us to be intertwined through people.
Businesses can enjoy similar benefits. More sophisticated relationships between our firms and Asia will encourage us to share knowledge, and to specialise in the things we do best. to do this, we need more knowledge of Asian institutions and 'cultural norms', this is where the notion of one-third of all board members and senior public servants having a 'deep knowledge of Asia' has relevance.
But we also need to shift our mindsets. We need to look afresh at the opportunities that are happening before us, in our very region. We need to work now to build the relationships that will make us more effective there in 20 or 30 years time. And we need to figure out what we can create with and give to Asia, as well as what it can give us. Anachronistic thinking is to our peril.
Part of this mindset shift involves opportunities outside Australia, but another, oft-overlooked part can happen here in Australia. It can happen through us creating ways we collaborate at a national and community level to make the most of these opportunities across society.
The Asian infrastructure market is a concrete example of this. The region needs lots of infrastructure and fast. The Asian Development Bank (ADB) recently estimated that the 32 ADB developing member countries are expected to need almost US$8.2 trillion (in 2008 US$) to meet their infrastructure needs to 2020.1 And most of this investment (around 68 per cent) is needed for new investments in infrastructure.
But the ADB developing member countries have committed to only US$330bn worth of these projects that are thought likely to be profitable or likely to succeed, leaving a gap of around US$8 trillion.
Australia has all the tools it needs to make the most of this infrastructure boom. Australian business has vast experience with infrastructure funding, with infrastructure building and with the many services that go with both of these activities.
The Australian and state governments have made infrastructure a priority through actions such as the recently-launched National Infrastructure Construction Schedule and the Victorian Governments revised model for PPPs.
The former brings information on all major government infrastructure projects in Australia, and which if successful could be a stepping stone to an even bigger database of information.
The latter thinks through approaches to PPPs in a post GFC world.
Clearly, on the individual level, Australian firms could be very successful chasing this infrastructure pot of gold. But we can be yet more successful working together and seeking networked advantage. That is the adoption of an Australian PPP platform across the region.
This is the promise of the Asian Century – that the biggest opportunities (and challenges) in the world are now in our region. The challenge becomes how we all work together to make the most of it.
1 Bhattacharyay, B.N. (2010) 'Estimating demand for infrastructure in energy, transport, telecommunications, water and sanitation in Asia and the Pacific 2010-2020'. Working Paper Series, No. 248. Tokyo: Asian Development Bank Institute
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