Ken Henry to Business: Integrate with Asia

ImagePRESIDENT’S COLUMN: Australia needs to “embrace its geography”, ditch the “dismal thinking” on the tyranny of distance and build a “deep, seamless” integration with Asia rather than see it as competition.

This was the message Dr Ken Henry, prime minister Julia Gillard’s special adviser and leader of the task force preparing the white paper on Australia in the Asian Century, gave business leaders and trade unionists this week.

It’s a sure sign that the former Treasury secretary will not mince his words when the white paper is published in about four weeks time. Indeed the early leaks of the document suggest that it will stir the same kind of controversy and lively debate as that generated by Sleepers Awake, a book by former Labor minister Barry Jones published in 1982.

Dr Henry told the Australian Chambers Business Congress (ACBC) in Melbourne on August 17 that he thought Australians would ultimately became comfortable with a higher level of Chinese investment in this country, and that history had shown first a pattern of fear, and then acceptance, of foreign investment.

I have not had the benefit of seeing a copy of Dr Henry’s full speech, as the ACBC has not shown either the courtesy or the generosity to publish it. Entry to its congress was priced at a ludicrously high $875 a day, an indication this was an event designed for elites. Unlike the Australian Institute of International Affairs, a not-for-profit organisation that publishes its speakers, the ACBC appears to think that important contributions to the national policy debate should be confined to members.

So I’m grateful to the Australian Financial Review and The Australian for their reports. The Australian quoted Dr Henry as saying of the current debate on Chinese foreign investment:

“The evidence in our history is that after a period of time, Australians get comfortable with the idea that their prosperity relies on remaining an attractive destination for foreign investment. I would not interpret the questioning of the moment as anything terribly unusual at all, and the history is that we will find a way of bringing ourselves to a position of comfort with some level – and a significant level, I think – of Chinese investment in Australia.”

The Australian Financial Review carried the quote with which I began this commentary on current “dismal thinking”, adding to Dr Henry’s remarks, “we don’t need to compete through lower wages, we don’t need to compete through inferior working conditions nor through lower quality products. Instead, we need to find opportunities for the deployment of our skills and our products.”

Dr Henry added that businesses needed to reform their standard business model. “More Australian businesses need to become regional businesses,” he said.”

This is definitely a wake up call. It is all the more relevant because, as Robert Gottliebsen points out in the Business Spectator, the days of easy mineral pickings in China are over. Australia’s challenge in the mining sector will be to try and maintain market share in a minerals market that grows less than it did in previous years but has the benefit of big increases in supply from Russia, US, Africa, Brazil and other places.

In the gas sector, whereas earlier this year Australia was headed towards becoming the number two gas exporter, the industry is now beset with the problem of remaining competitive, given the handicaps imposed by excessive regulation and soaring costs. The AIIA in NSW will hear more of this on September 4 from David Byers, chief executive of APPEA, who will address the issues facing Australia in this key industry.

So the Henry white paper is shaping up as being a definitive and challenging document. It is probable that much of the white paper will dwell on domestic issues.  It is questionable whether our current policies on immigration, the environment, foreign investment, agriculture, energy and, above all, population growth, are appropriate for Australia’s role in the Asian century. The Department of Foreign Affairs will have views on all these subjects, but these portfolios are in the hands of other ministers, so this will truly be a national debate.

Finally an important reminder that the Institute’s own contribution to this debate will be held on Thursday and Friday of this coming week. There will be a public forum at The Glover Cottages at 124 Kent St, Sydney on Thursday 23 August from 6pm to 8pm, with refreshments provided. And on Friday 24 August there will be an all day event, starting at 8:45 am, to be held in the chamber of the NSW Legislative Assembly of Parliament House in Macquarie Street, Sydney. Admission is free and open to all, but reservations are essential.

This column was written By AIIA NSW President, Colin Chapman.

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