SPEECH TO AUSTRALIA CHINA BUSINESS COUNCIL
PARLIAMENT HOUSE, CANBERRA
TUESDAY, 19 JUNE 2018
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Bob Hawke’s most savage criticism of his predecessor Gough Whitlam was that what he knew “about economics you could write on the back of a postage stamp and still have some room to spare.”
Whitlam certainly wasn’t the economic reformer that Bob Hawke or Paul Keating were, but it’s also true that Whitlam – whether he knew it at the time or not – was responsible for one of the most transformative economic decisions in our history.
I am talking of course about his trip to China in 1971 and the establishment of formal diplomatic relations between Australia and China in 1972. The year I was born.
It’s easy to forget – looking back through the mists of time – just how contentious and how politically dangerous that first trip was.
It could have been political suicide.
Whitlam went because he saw an opportunity – for himself and for Australia.
And it turned out he was right.
China is now our biggest trading partner – all from a standing start less than 50 years ago.
One in three dollars we make from trade, we make from China.
Just to put that in perspective, no other advanced economy is as heavily leveraged to China as we are.
China is the biggest trading partner for roughly 130 countries around the world, but no other developed country sends a greater percentage of its exports to China than we do.
That creates opportunities and risks.
It means we have the potential to benefit more than most from the rise of China.
We already have, but think about this:
- We currently invest more in New Zealand than we do in China – we invest more in New Zealand than we do in China, Japan and the rest of Asia combined.
- According to the most recent ABS data about 18,000 companies currently export goods worth more than $2000 to New Zealand – only 7,000 export the same to China
- Lots of Chinese tourists visit Australia every year – more than 1 million – but still only 8 percent of Chinese citizens have a passport.
There are lots of untapped opportunities.
But there are also risks – and we have got a taste of that in the last few months.
A few unwise and provocative remarks from the Prime Minister and other Ministers over the last few months have had an impact on wine and beef exports.
We have had issues like this before and we’ll invariably have them again.
It’s almost inevitable.
What matters is that we sort them out.
I want you to think about this for a minute.
Think back to March when President Trump was threatening to put tariffs on Australian steel.
The government pulled out all stops.
A month before the Prime Minister led a delegation of Premiers and Chief Ministers and business leaders to Washington.
When Trump threatened to put tariffs on everyone including us, we were able to pick up the phone and lobby friends in Congress, in the White House and the business community.
And we got a good result.
Now compare that to what’s happening with China at the moment.
The Chairman of one wine company has tried to get the Prime Minister on the phone a number of times – and still can’t get him to return the call.
Beef companies have also written to him – and are still waiting for a response.
It’s very different to the way the government worked with BlueScope when they were threatened with steel tariffs by the US.
The fact is we don’t have anywhere near the depth or strength of relationships with China that we have with the US.
That’s not really a surprise.
But given the problems we have at the moment, and given the likelihood that that there will be other problems to sort out down the track, it’s important that we build and strengthen key relationships so when they do pop up we can sort them out.
None of this is easy. China is not America. It can be complex to navigate.
But we have got to do this. We have got to make it a priority.
And as Zhou Enlai said to Whitlam in the Great Hall of the People all those years ago:
“All things develop from small beginnings.”
You are going to hear from Penny Wong and Chris Bowen a bit later today, and I am sure they will talk to you about our FutureAsia plan.
Chris launched it back in September last year and since then Penny and I have added to it.
And there is more to come.
At its core it’s about what I have just been talking about – relationships.
Building closer bonds between people.
A few quick examples:
We have an extraordinary asset in Australia. Massively underutilised.
More than four million Australians have Asian ancestry, and we have said we will setup an Australian Asian Diaspora Program to better coordinate and tap the skills and experience and connections of our Asian diaspora here at home and our Australian diaspora in Asia.
Language is important too in building relationships. And we have failed dismally here. There are lots of Australians who speak an Asian language but most brought it with them or learnt it from their parents – not at school.
Think about this – In 2015 there were four thousand HSC students studying Mandarin. That doesn’t sound too bad, but only 10 percent of those students were from a non-Chinese background.
Fixing this requires a lot of work by state education departments – but it also requires national leadership.
Just as depressing is the number of Australian business people with any experience working and doing business in Asia.
AsiaLink surveyed the directors and senior executives of our top 200 listed companies last year.
What they found was only 10 percent had a high level of experience doing business in Asia.
No wonder a lot of businesses are reluctant to take on Asia. Why would you if you didn’t know how it works.
To help we have said we will set up a program with the Australian Institute of Company Directors to mentor people with experience working in Asia and get more of them on boards.
And, if the Chinese Government agrees, we also want to set up an internship for young Australians who have just finished university to work in China for six months and get some real life commercial experience working in China.
The French have signed an agreement like this.
We could be the next cab off the rank.
And if it works it could be expanded to other countries in Asia.
As I said, I think my colleagues will talk about this in more detail, but you see where we are heading.
It’s about relationships and building the skills needed to help build those relationships.
What we have announced so far is just the start and hopefully a few more ideas will spring out of our conversations today.
Thank you very much.
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