President’s Column

The Issues for Australia in the Asian Century Begin at Home

7 Aug 2012: Publication of the prime minister’s White Paper on Australia in the Asian Century can’t come soon enough. Dr Ken Henry and his team have been putting the finishing touches to it, and it will now be September at the earliest before it appears, and that assumes Julia Gillard will push it out quickly.

There is a real danger that some of its content will be overtaken by events. It’s not clear to what extent it will deal with defence concerns such as the stand-offs in the South China Sea(the subject of our AIIA meeting today(Aug 8) and the potential use of the Cocos Islands as a base for American drones.  Possibly not at all, since a new White Paper on defence is also in preparation.

The events that may have overtaken Dr Henry’s thorough examination are all now at the heart of Australia’s domestic politics. They all derive from  economic issues, and they are all directly relevant to Australia’s role in the Asian Century.

They are foreign ownership, agricultural development, the environment and immigration.

And while foreign minister Bob Carr has had a solid start in his portfolio, with some achievements, there is no evidence that either he or the prime minister have grasped the importance of these core issues that all directly affect our foreign relations, but which are under the custody of other ministers.

First, foreign ownership. Here Tony Abbott has opened a Pandora’s box with his speech in Beijing, followed up by an interview with his favorite shock jock, Alan Jones. He told Jones – never one to play down a story – that a Coalition government would introduce much tougher scrutiny of attempts by foreigners to buy agricultural land, and added the perfect sound-bite, “it’s virtually open slather on agricultural land at the moment”.

No Tony, it isn’t. I think I’m correct in saying only 6 per cent of farmland is in foreign hands – despite the fact that many Australian landowners are selling up.

Australian agricultural production could – with sensible joint ventures and investment, particularly in the North – be more than doubled, providing food to meet the increasingly sophisticated needs of the rising Asian middle class. The Federal government lacks the vision to do this, probably because there are no votes for Labor in the wet north of the country. It prefers to use billions of dollars to prop up an uncompetitive auto industry in the far South.

If Australia will not invest in agribusiness in the Kimberley region and in northern Queensland, it is only reasonable to allow foreigners to do so. China, and other Asian nations with large populations, inevitably will turn to other, more hospitable governments, such as Canada.

There is a related issue here, and that is water. Australia, the so called ‘dry continent, is in the top ten list of wettest countries. Most of the rain falls in the North, and most of that runs out to sea, just like the rain that falls in my part of Sydney, a city that statistically is wetter than Manchester.

Our forefathers built the wonderful Snowy River scheme – one which, if it had been mooted today, would be opposed by the Greens and the unions – but in the 21st century present day leadership seems incapable of engineering a scheme that would put this wasted water in the North to good use.  It is good to read today that West Australian premier Colin Barnett is putting an aquifier from the Kimberley back on the agenda, and he will need foreign investment to make it happen.

The second issue concerns the environment, and the most important aspect of this is Australia’s bid to become the world’s second or third largest gas exporter. Here a largely Australian-owned industry is being stymied by a myriad of diverse regulations and bureaucracy that makes no sense.

It is essential that we protect World heritage areas such as the Great Barrier Reef and the quality of water supplies from the Great Artesian Basin. But both state and federal governments have created a complex set of regulations that will handicap a fledgling industry that is creating thousands of jobs, and providing essential energy for Australia’s customers in China, India and elsewhere in Asia.

Add to this the nonsensical suggestion of Australian Workers’ Union secretary Paul Howes that gas exports should be restricted – in order to create an over supply to get  the price down for Australians – and you realize why international investors are starting to think twice about risking their billions in Australian resources. Whatever else Mr Howes may be doing, he is not acting in the interest of an Australia in the Asian century.

David Byers, the chief executive of the Australian Petroleum Production and Exploration Association- who will shortly be a guest speaker at the AIIA – estimates that in eastern Australia alone there is enough coal seam gas to power a city of one million people for 5000 years. According to Geoscience Australia that is nearly 240 trillion cubic feet of gas, to which can be added nearly 400 trillion cubic feet of shale gas, as yet unexploited.

Then, immigration. This is a subject which could and should be debated at great length. Suffice it to say, Australia’s immigration policies are not working. The level of debate on asylum seekers, as former DFAT chief Phillip Flood observed recently at the Glover Cottages, is abysmal, and seems unlikely to improve any time soon.

But the wider immigration issue is a bigger problem also, and Mr Howes and his friends must share of the blame for this with their rhetoric that caused the government to rethink work visas for industries where there are serious skills shortages, so that vacant jobs could be offered to Australians.

But where, in this country, are the 50,000 trained engineers that are needed by the gas industry?  It is sensible to train more engineers – and for the government to create the mans for this to happen – but until these and other highly skilled jobs can be filled, it surely should be a policy priority to bring them here from Asia, a move which would help to further integrate us into the region.

Finally, I was interested to note today that an impressive list of  Australia’s business leaders are so dismayed by  our official handling of our relationships with China that they have taken matters in their own hands and formed the Sino-Australian Business Leaders’ Partnership.

Not before time, you may say. But the fact remains that our political leaders from both sides of politics have not been impressive when they have set foot in China, and they have not spent much time in the other Asian capitals.

We can only look forward to what Dr Henry sees as the issues for Australia in the Asian century. Let’s hope his report starts with economics, and features the essential problems of adjustment closer to home. And let’s hope it does not suffer the same fate as his report on taxation, now pigeon-holed in Canberra.

Memo to Gillard: Hands off the Press

23 July 2012: One of the problems with the kind of media we have in this country is that it tends to focus on what we might term a cocktail of saloon bar politics and the requirements of the 24-hour news cycle.

In this, serious discussion of international affairs rarely gets a look in. When it does it is often spooked by domestic considerations.

For example, last week The Australian’s foreign editor Greg Sheridan reported under an ‘exclusive label’ the hawkish former US assistant secretary of state Richard Armitage  as suggesting Australia was taking a “free ride” from America in the Asia Pacific region. Armitage had earlier criticised the Gillard government’s cut in the defence budget to 1.56% of GDP.

Tony Abbott, in Washington for the same junket, latched on to this dubious statement, and grabbed yet another anti-Gillard headline. The prime minister bit back, accusing Abbott of talking Australia down and undermining national security.

Neither The Australian, which gave these stories considerable prominence, nor any of my other reading matter, took into account the fact that one good reason for the cuts was that much of the hardware identified as needed in the flawed white paper of the former Rudd government two years ago is not yet available or needed.

And that leaves aside the point that many critics of Defence have pointed to considerable waste in defence budgets.

Meanwhile a new defence white paper is being drafted on Russell Hill with precious little public debate or discussion about its contents. We badly need that debate, in Parliament and in public, before deciding what the correct cost for protecting our country and its essential trade routes should be.

Of course it is just this kind of beat-up journalism by Sheridan that has prompted the Gillard government to consider new regulations to deal with news and comment in newspapers.

This – and another plan to have media mergers subjected to a “public interest test” –  is a very bad idea. There are many imperfections in Australia’s media – but they will not be solved by a bruised government attempting to push through legislation that restricts free speech and access to media – and it is a move they will regret if he polls are right and they go to the Opposition benches next November.

It is a pity we do not have a 5th Amendment. A free press is essential to democracy, particularly in a country where Parliament meets so seldom, and where, when it does, it devotes so little time to serious debate. It is good that Kim Williams, the chief of executive of News Limited, is prepared to challenge the Gillard Government in the High Court if it is unwise enough to proceed with this plan , which is due to go to Cabinet in two weeks’ time.

You also have to question the idea of a “public interest” test for media ownership, especially when the present holder of the appropriate portfolio is Senator Stephen Conroy, whose record in the handling of the tender for the production of the Australia Network is a disgrace.

You will hear people make a case for Australian ownership, but many people now get their global news direct from overseas sources, via the internet, via various networks like Sky News, CNN and BBC on Foxtel, or from Australian newspapers that increasingly use articles from the New York Times, the Wall Street Journal and three London dailies.

Even the Financial Review’s world section now seems to be composed mostly from syndicated material. The Sydney Morning Herald’s political editor doubles up as its international editor. There is a paucity of analysis of foreign affairs.

There is our ABC, of course, but it does not have a program devoted to international affairs, except the quirky Foreign Correspondent, though ABC1’s Lateline and ABC News24’s The World, make a solid contribution.

The ABC has a large college of foreign correspondents, but they seem to be mainly delivering sound bites rather than analysis. Am I alone in a preference to seeing and hearing them on air, rather than blogging their opinions on The Drum and other web sites?  Why can’t we have programs like All Things Considered that has run for years on National Public radio in the US, or From Our Own Correspondent on the BBC.

We started the Glover Cottages portal, with very limited resources, to try and bring to our members serious comment and analysis from around the world. We welcome contributions from those who have read something they think worth passing on.

We are not the only ones doing this. Mark Colvin, the well-informed veteran presenter of PM, tweets scores of suggested reading each week, and makes an invaluable contribution to the international affairs debate. So does Chatham House, the famed London institution that was the original founder of the AIIA. And many more.

All the News that’s thought Fit to Print

8 July 2012: Colin Chapman, who recently returned from China, contributed a short analysis of Chinese media ata meeting of the Australian Institute of International Affairs in Victoria on June 5

The media is all controlled in China, right?  That’s a question, not a statement, and the answer is not as simple as you might think.

As an old cold warrior, I made interesting trips to the former Soviet Union and Warsaw Pact countries as the BBC’s economics correspondent and experienced first hand some of the many problems faced by media in authoritarian countries, as well as reading the daily BBC Monitoring of the Communist press.  And I’d been to China before as a visiting lecturer.

But on this visit there was a big difference. All is not open and free of censorship of course – but then it must be said all is not that open and free here, and it will get much worse if the Gillard government’s proposals on media shortly going to Cabinet – get through the Parliament.

But that’s another story – back to China.

If you were to ask premier Wen Jiabao about what newspapers  in China are allowed to do he’d probably say something like “All the News that’s fit to print” – the front page banner of the excellent  New York Times in a place where press freedom is enshrined in the First Amendment  of the United States Constitution .

Of course the question is who decides what’s fit to print, apart from editors, and in China’s case there are various mechanisms and bureaucracies, employing thousands of people.  But essentially it is the Communist Party, which is seldom seen and not often heard. Criticism of the Party is a definite ‘No’, but that is very different from criticism of government activities, or government departments, of which there is a great deal in newspapers, on the radio – and even more on the internet and in social media.  I’ll come back to the internet in a moment.

So reading the Chinese press is not the dismal experience it was in the days of Chairman Mao – you can learn a lot. On our study tour I looked forward to reading the China Daily and the Shanghai Daily over breakfast – and of course there were hundreds of Chinese newspapers we did not see – but what was obvious from the many Chinese we rubbed up against was that they were not badly informed, and many seemed to have at least as good an idea of world affairs as the man from Moonee Ponds.

Just to give you a taste of the kind of things reported – the trial of the top tax inspector in Beijing for embezzling more than half a billion dollars he was convicted and sentenced to death; the story of how three couples in the eastern city of Nanjing got divorced so their children could qualify for a place in a kindergarten; an op ed piece on G20 urging leaders, including China’s, to be more pragmatic; a new national inspection regime of all buses and coaches nationwide after a spate of accidents; new rules aimed at balancing workers rights with enterprises needing to make money; an article on the benefit of cloud computing; a story about how five journalists in Shanghai had been beaten up in a month; new tough measures against pilfering in supermarkets; a new push to privatize  seniors’ health care; the race to build greener homes; a list ranking the top universities and colleges; an increase in the number of sex harassment cops on the streets; a public criticism of the government by the Quandong party chief. The list goes on. As interesting to a foreigner as the Sydney Morning Herald or The Age, I suggest.

Of course I’m not suggesting All the News is published. Apart from censoring criticism of the Party, much is left out.  The failures of the One Child Policy – particularly the rising abortion rate of women who find their unborn child is a girl – does not get much publicity. It is quite difficult to find out exactly when precisely the upcoming Peoples Congress will take place – where Hu Jintao will hand over the presidency – and the more important job of party secretary – to a younger man. There are no signs of an agenda for this – or other important political meetings. We don’t know when the disgraced Bo Xilai will face trial.

And then there is the most important media in China – the internet. There’s no Facebook, no Twitter, no YouTube. This – and repeated reports of how the authorities frequently shut down some websites – might have you believe that the Chinese people are not on-line.

Nothing could be further from the truth. First internet access is widely available, at reasonable rates. China is actually the world’s largest social media market. It’s just a bit different from what we know here.

At the last count, there were 513 million internet users in China – that’s more than double the number in the United States of 245 million, those numbers from McKinsey. And more than 300 million Chinese use social networks and blogs. – that’s roughly equivalent to the combined population of France, Germany, Italy, Spain, and Britain. In addition, China’s online users spend more than 40 percent of their time online on social media. China has its own forms of social media – their Twitter equivalent was on the go 18 months before the US, and many use it to tell people about articles in papers like the New York Times is widespread. There’s a Chinese equivalent to Facebook, Weibo.

The explosive growth in social media shows no sign of abating – and makes it difficult for the government to censor it – unlike traditional media, for which a license is required.

But the Beijing government does use software and thousands of police to keep a watch on the more contentious sites and the people that use them.

But, to counter this, the Hong Kong University’s China Media Project has developed advanced software called Weiboscope to track down examples of government censorship, and analyses this on its web site. Hong Kong’s press is also very free and critical – despite having been 15 years under Chinese rule.

Also there are hundreds of social networks – many of them localized. That’s one reason it is so popular. Many access it by mobile phones – there are over 100 million mobile phone users in China.

As you’d expect advertisers love it, and are much more innovative than Australian companies in their use of it. Estee Lauder, for example, launched a 40-episode drama for its Clinique brand on social media. It can be watched each day on a dedicated web site, which also plays out to mobile phones, and to screens in buses and trains. It has been watched 21 million times – and Clinique’s sales have Xilai risen sharply.  The Chinese are indeed leading the world in internet marketing.

And just to conclude, the Chinese are inveterate travelers. Maybe instead of wasting its money on old media campaigns likely the eminently forgettable “Where the Bloody Hell are you?”, perhaps Tourism Australia should look at using video on China’s social networks to promote our country. Thank you.

Colin Chapman on Greece and the Euro

18 June 2012: We should not get carried away by the slight bounce in share prices that followed the news from Athens that a slim majority of Greeks had voted for common sense rather than self-destruction.

But Antonis Samaras, leader of the centre-right New Democracy party, faces an uphill task to put together a survivable government. It will be even harder to renegotiate the agreement with the European Union.

The EU may throw a few sweets in Greece’s direction, perhaps extending debt payback time limits, but the overall thrust of the agreement is non-negotiable. And then, even if some compromise can be reached that is acceptable, there is the enormity of the task faced by New Democracy and its partners.

There are 250,000 poverty-stricken Greeks who are dependent on soup kitchens, staffed by volunteers. There are tens of thousands – yes tens of thousands – of foreign asylum seekers, many of them from Syria, living rough under the summer skies, with no support of any kind. The United Nations High Commission for Refugees has yet to tackle this task. Compare this with the small number of boat people in comfortable detention on Christmas island or in Australia.

And then there are hundreds of thousands of Greeks who have managed to avoid paying taxes, or live in a black economy – a situation which the authorities have allowed to continue.

The Greek elections will prove to be just a short chapter in a saga which began with the Treaty of Maastricht in 1992, and will run for at least another couple of years before stability of a kind is achieved.

That stability may or may not involve the survival of the euro as the common currency for the eurozone, whose 17 EU members have embraced a unified monetary system – unlike the ten members outside the zone, which include Britain and Sweden.

The leading beneficiaries of the eurozone, particularly the Germans, the French and the elites employed in the main European institutions, will fight to keep the eurozone, even if it means losing a member or two.

But the fabric will change, because the present establishment is untenable. The common foreign policy has been weakly conducted, and major players like Germany, France and Britain have shown no desire to give up their national interests to a common pool. Germany, in particular, has worked closely with Russia on its energy needs – to the annoyance of some other members of the EU.

But it is in the domestic arena that the divergence between the members of the eurozone is most marked. The Mediterranean countries have a different way of life to their northern brethren. Life in rural France is different to almost everywhere else, where agriculture is heavily supported by the European taxpayers.

There are also big differences between the Med countries. Greece’s problem is national indebtedness, a social security system that allows people to retire at a (relatively) young age, and very high unemployment rate(22.6%). But those Greeks in work put in the hours. Spain, on the other hand, the recipient of an E100 million loan ten days ago, is riddled with huge private debt, has bad work practices, and a vast pool of unsold new properties, many of them in developments where the developer is bankrupt.

This example – and there are many others – reinforces the belief that Europe contains a group of nations, whose history, culture, economy, and outlook is very different from each other. The push to pursue national interests is now greater than working towards the common good.

For Europe to work, there needs to be a common market, without a common currency, as in the early days of the European Community, or a United States of Europe, with full political and fiscal integration, as in Australia. (And even Australia has a two-speed economy, with damaging consequences).

Achieving the latter will be very difficult, if not impossible. Achieving the former – a two-speed Europe – will be deemed a failure.

But there is something else going on. The socialists in France now have more power than at any time in their history – at the weekend election in France they attained a very solid majority. This gives President Francois Hollande more determined than ever to initiate growth policies and trim back austerity.

Austerity is going out of fashion, even in conservative Britain where more money is being pumped into the economy. At the next European summit in ten days time, M Hollande, supported by Italy, Spain and Greece will be putting pressure on Germany’s Angela Merkel to ease the pain.

President Hollande will go further. He is pushing for the European Central Bank to be given the role of directing the European Stability Fund, and for it to be directed through the banks, with the authority to not only supervise them but to shut them down if they do not perform. The idea of a deposit insurance scheme is also taking shape in the French Treasury.

Support for Hollande is growing, and not just from the left. If these ideas gather momentum – as i think they might – then Europe will have taken one small step towards banking union, although fiscal and political union still remains a distant dream.

President Colin Chapman on CNBC this Monday discussing the Greek Elections

16 June 2012: Colin Chapman, president of AIIA NSW, will be discussing the outcome of the Greek elections and their impact on Europe in CNBC Asia’s program Cashflow on Monday June 18 at noon AUST. On Saturday June 16, Colin interviewed George Friedman, founder of STRATFOR and author of the New York Times best seller The Next Decade on Europe’s New Reality: http://www.stratfor.com/video/george-friedman-europes-new-reality-agenda

President Colin Chapman on CNBC this Monday discussing the Greek Elections

13 June 2012: Colin Chapman, president of AIIA NSW, will be discussing the outcome of the Greek elections and their impact on Europe in CNBC Asia’s program Cashflow on Monday June 18 at noon AUST. On Saturday June 16, Colin interviewed George Friedman, founder of STRATFOR and author of the New York Times best seller The Next Decade on Europe’s New Reality: http://www.stratfor.com/video/george-friedman-europes-new-reality-agenda

The French Elections

21 April 2012:

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