Governments are forever immersed in the daily challenge of responding to what the former British Prime Minister Harold Macmillan once knowingly described as “events.” It was he who coined the resounding phrase the “winds of change”.
Governments become so embroiled in the details of policy, and the political in-fighting to secure their survival, they rarely have the opportunity to look over the horizon to see what may be heading our way.
Closely constrained as a minority government, employing the sterling services of Ken Henry, the Gillard government has had the courage and vision to focus — just for once — on what lies ahead for Australia. The global and economic shifts we face outlined in the White Paper are truly astounding:
The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity.
The share of world output within 10,000 kilometres of Australia has more than doubled over the past 50 years to more than a third of global output today, and this share will rise to around half of global output in 2025.
If Asia’s development proceeds, the number of middle class consumers in the region will grow from around 500 million today to 3.2 billion by 2030. Nine out of ten new middle class consumers worldwide will be in the region.
While we may hope that successive governments will have the capacity to resource some of the immense initiatives that will be required to respond to this great opportunity, the key message of Julia Gillard in launching the report was that an effective response must be multi-dimensional and collective: “This is not just about the role of government but also about challenging business, unions, universities, civil society and the media to engage in the region… a coordinated effort from the entire community.”
The continued rapid economic growth of Asia is projected in the White Paper, with huge gains in productivity anticipated. (Presently, per capita productivity in China is only 20% that of the United States.) Effectively the Australian economy will be carried along in the slipstream of the advancing Asian economy, continuing Australia’s record of economic growth. This places Australia in the happy position of being an advanced industrial country with a consistent 20-year growth rate comfortably between the low rates of growth of the West, and the high growth rates of Asia.
However, the emphasis upon Australia’s economic contribution to Asia’s growth is forecasted in the White Paper to be dependent upon commodity exports. Mining exports are forecast to increase to 65% of the total by 2025; manufacturing will reduce from 30% of exports in 2015 to 15% by 2025; while services that compose 80% of the Australian economy will only rise from 8% of exports in 2015 to 10% in 2025.
While Australia’s career as the lucky country seems destined to continue, there are two deeply worrying aspects to this export profile. Firstly, why is Australia apparently trapped at the low value-added end of the international value chain? Secondly, what on earth is going to happen to global emissions and other pollution when another 3.2 billion people begin to consume like the middle classes of the West?
Fortunately the answer to both these dilemmas is the same: Australia must strive to use all of its skills, knowledge and ingenuity to make the Asian Century a sustainable century. Government, business, professions, and universities must endeavour to transform production processes, materials, technologies, products and consumption to achieve sustainability. This expertise in sustainability could be a key success factor in Australia’s engagement with the Asian century.
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