For Australia, our participation in the Asian Century was always about one thing: getting things right in our own backyard. For the Australian economy to be part of the upside of a growing Asia, Australia itself had to become a productive, efficient, value-adding economy. We need to acknowledge and provide the unmet needs of our regional partners. We need to work on building on regional engagement. Long maligned for simply being ‘the lucky country’, Australia needed to be the smart one.
There is little doubt on the scale of the opportunity. Our largest trading partner, China, accounts for 32.5% of our total exports [1]. This amount has been growing over the past five years at an annualised rate of 7.76% [2] and continues to be a vibrant, and vital, aspect of our national economic story.
Trade and engagement into wider South East Asia markets remain on a different trajectory. Itself a fast-growing region, the total proportion of our trade with the South East Asia is unchanged over two decades at 14% [3]. And yet, this is a region which by 2040 is projected to have a potential consumer market alone of some 10 times larger than Australia’s, with great need for the assets and resources Australia can partner with for providing – items such as lifestyle, education, energy and infrastructure [4].
Discussion of Australia’s participation in the Asian Century typically considers the Gillard government’s ‘Australia in the Asian Century’ whitepaper of 2012. Back in 2012, the growth of the Chinese economy saw a tripling of Australia’s mining exports in the ten years prior[5]. Australia’s wealth, wellbeing, and economy were squarely pointed to Asia.
Among other things, the White Paper covered twenty-five national objectives for 2025 [6] – its roadmap to navigate the Asian century. These were primarily a set of national objectives to align and optimise Australia’s ability to work alongside its growing neighbours. Many were inwardly focussed: To ensure we were best able to participate in this extraordinary moment of prosperity.
The white paper is one of many engagement pieces. The New Colombo plan, the ASEAN-Australia Comprehensive Strategic Partnership, and our engagement in the Emerging Market Impact Investment Fund are just some of the other engagement Australia maintains.
As La Trobe Financial CEO, Chris Andrews, put it, “For Australia to truly participate in the Asian Century, we need to embrace our strengths: our stable democratic system, our world class education and financial services sectors. We also need a mature discussion around our delivery of energy and resources to the region, while becoming a modern, efficient and productive economy in our own right. Most of all, it remains squarely on Australia to remain on the front foot.”
Indeed, one mistake is to consider Asia, or South East Asia, as homogenous blocs. This couldn’t be farther from the truth. As Andrews noted, “Our proximity to South East Asia, our common time zones, our shared histories and our large expat communities are all wonderful reasons we should be continuing to engage. The country-by-country nuance in legal, cultural, and political systems are all things we can embrace with a whole of nation commitment”.
The idealistic view of the Asian Century has dimmed in recent years as shifts in global diplomacy have replaced idealism with a more calculated pragmatism. However, broader relationships remain strong and Asia remains a key to our national wealth and prosperity with deep historic roots. We looked outwardly to Asia from the very origins of our European settlement, and established diplomatic relationships with embassies opened through the 1950s, 1960s and 1970s across many Asian countries. Our Prime Minister, Gough Whitlam, visited China a year earlier than Richard Nixon. Even then, Australia was looking beyond reliance on its traditional ties to England, and looking to Asia.
The list of 25 national objectives set in the white paper, included a range of internally focussed objectives about being ‘match fit’ as a country and economy. Consider the objectives which relate to productivity, efficiency and growth: Could we be an innovative country? Did our infrastructure allow for assisting government and private sector growth? Did Australians have the opportunity to acquire skills and education? Are our tax and regulatory settings appropriate?
To determine the effectiveness of our response to those issues in the years since is to consider the state of the Australian economy today. Our productivity levels are lagging, and have consistently fallen since 2012 [7]. If the Asian Century was to be reliant on our productivity growth, we have fallen short. As a measure of productivity, GDP per-capita also makes sobering reading with five consecutive quarters of neutral or negative levels [8].
We are looking ahead to a period of modest GDP growth in Australia, yet paradoxically see capacity constraints from skills shortages, non-labour supply challenges, and stagnating productivity all compounding efforts to meet the demand for infrastructure [9]. Our universities are high quality, but our higher education is not meeting the needs before us.
Finally to tax and regulatory settings, and with corporate taxes as a share of GDP the second highest in the OECD, three times higher than the OECD average, and more than four times higher than the US, our taxation of corporate income is not internationally competitive [10].
On these parameters, it hardly looks like a pass-mark. However, Australia remains among the world’s richest countries across a range of metrics, and has benefitted enormously from the rise of Asian economies this century. It’s not about where we have failed, so much as where we could do better.
So don’t let the news fool you… relationships with Asia are alive and well across governments, businesses, institutions and community engagement. But this is the Asian Century, and as Andrews puts it “Australia needs to continue our efforts of participating in the Asian Century, which represents the continuation of a long history of friendship and cooperation. It requires our own repeated efforts towards productivity and efficiency, and our own repeated efforts towards engagement. And those are efforts which can benefit us all.”