Monday, October 29, 2012

Three fundamental challenges to Australia in the Asian century

I haven't had a chance to properly absorb the Australian Government's white paper on Australia in the Asian Century. For those interested, you will find the PM's announcement here, the full paper here.

I must say my first reaction to the reporting was negative because of the target focus. I am not opposed to targets as such, but have been complaining for a while about the way in which narrowly defined targets in areas such as education distort. I am also concerned at the apparent focus on what Australia can gain in economic terms. There is limited focus on the contribution this country might make to Asia. However, these reactions may be unfair. 

Based on what I have read to this point, there are three fundamental challenges to be overcome if the white paper's aspirations are to be realised.

The first one is simply bringing the Australian people along for the ride. Australia has been experiencing dramatic change. The need for further dramatic change is implicit in the paper. There is already considerable change weariness. How will further change be managed?

The second challenge lies in the effective integration of Government policies to be at least consistent with the paper's aspirations. There has been a considerable gap between policies and indeed rhetoric intended for domestic consumption and effective Asian engagement. You only have to look at the ways that the Government mishandled policy towards international students or live cattle exports to Indonesia to see what I mean.

The third fundamental challenge is simply to bridge the gap between what has actually been happening and the paper's aspirations. The decline in Asian languages is an obvious example, one that I have explored in earlier posts.

Take services as a second example. If you go back to the rhetoric of the 1980s, service exports were seen as a holy grail that would somehow act as a new driver for Australian growth. Outside now threatened education services, it hasn't  happened. Indeed, to a degree the opposite has happened and will continue to happen as technology facilitates outsourcing from Australia.

In responding, the paper apparently focuses largely on productivity improvement. I'm not sure that's sufficient to bridge the gap. Consider legal services. The top end of the Australian sector has been restructuring and internationalising on the back of the minerals' boom. Yet it's not clear to me just what long term economic gains will come to Australia from this process. To be very specific, just what legal services will actually be carried out in Australia in this new world? I would have thought that there is a pretty fair chance that Australia will end up just a branch office in legal terms.

The paper may have answers to these various challenges that are not clear from the reporting. I will read the detail with interest.     


Evan said...

Hi Jim. I haven't read the paper yet.

When government and the economy are discussed a phrase trotted out is 'not trying to pick winners'. I would like to know your views on this phrase (clause?) and the nest of issues it raises.

Jim Belshaw said...

This one deserves a more substantive response, Evan. At one level, I agree with the comment, but at a second level it's very misleading. I will respond in more detail later.

Evan said...


Having read the executive summary of the asian century report I can't see it going anywhere.

The kinds of changes it envisages for 2025 look more like they'd take 1-2 generations to me.

Jim Belshaw said...

You may well be right, Evan.