Wilson da Silva

Science journalist, feature writer and editor.

Mar. 1, 1993
Published on: 21C Magazine
14 min read

Is Australia an economic backwater about to sink into the chasm of Third World despair?

By Wilson da Silva

HERE'S A GUESSING GAME you can try at a party: What country am I? I have an economy about as big as that of all the ASEAN nations combined. I run bigger trade surpluses than most of the ‘Asian Tiger’ economies and two-thirds of my trade is with my Asian neighbours. I have the lowest inflation rate in the world and am growing faster than any of the rich OECD nations.

So what country am I? Most people are quite surprised to hear that the answer is: Australia.

We more accustomed to hearing that Australia is being left behind in the backwash of Asia’s explosive push forward, that our creaking and moribund economy has to modernise and look outward to Asia to survive. This is hammered home in newspaper columns, radio talkback shows and television current affairs programs. 

One can be forgiven for slowly but surely developing the impression that Australia is little more than an Euro-centric economic backwater out of place in the dynamism of Asia, hopelessly out of step with the world’s fastest growing region and that we will never be anything but knee-high to our neighbouring economic behemoths. 

Yet Australia is, in fact, an overlooked Asian giant. It is the region’s third-largest economy after Japan and China. We ain’t small fry and, despite the doomsayers, we are not about to sink under the weight of our collapsing tariff walls. 

Australia has changed much since the days when it was a resource and agriculturally rich nation hiding behind tariff barriers. By the early 1970s, these had created an Australian economy colourfully described by Prime Minister Paul Keating as “an industrial museum”.

Today, nine of Australia’s 10 largest markets are in Asia and the Pacific, and exports of services and manufactured goods have tripled over the last decade. In 1991, Australia for the first time exported more manufactured products than rural products.

Keating would like us to believe that all this has occurred in the last decade. But in truth, it can be traced back to Prime Ministers Gough Whitlam and Malcolm Fraser in the 1970s, and there were even murmurings during Robert Menzies’ days in the 1960s. Bob Hawke also pushed the ‘enmeshing’ of Australia into the region. 

To his credit, Keating has raised the issue to a much more prominent position on the national agenda. In speech after speech since taking office, he has been evangelic about Australia’s Asian identity, forcing the discussion onto the front pages and prompting debate about the nation’s cultural psyche.

He has been joined by businessmen, unionists, academics and economists who stress Australia’s economic future is in Asia.

But in part they are describing what has already taken place. Although surveys show Australians still consider themselves culturally distinct from Asia, Australia has for the past few years – almost without realising it – become a big-time Asian player.

Australian-built ferries take passengers up the Pearl River to Guangdong in China, Australian-made cellular telephones are assembled in Malaysia for the Asian market and Singaporeans happily snack on mountains of Australian confectionery a year.

Australia’s economy, as measured by gross domestic product, was US$294.40 billion in 1990, only slightly smaller than the combined GDP of US$312.58 billion for the Association of South East Asian Nations. Asia accounts for 67 per cent of Australia’s external trade, while our traditional markets of Western Europe and North America represent only 13 and eight per cent respectively.

Japan is Australia’s biggest market. Trade between Asia’s industrial colossus and Australia totalled US$18.05 billion in 1991, with Australia racking up a US$4.6 billion surplus. This is the sort of trade balance the United States can only salivate over – it runs an annual US$40 billion trade deficit with Tokyo.

Australian exports to Hong Kong soared 45 per cent in 1991 to US$1.9 billion, and 250 Australian companies operate there. The territory last year became Australia’s biggest source of migrants.

It is true that much of this Asian success has taken place in the past decade as our economy has globalised and local companies have pushed into Asia. Since 1987, exports have soared 42 per cent to US$40 billion.

In fact, Australia has exported more than it has imported for most of the past two years – in 1991, exports were US$3.12 billion ahead of imports. Keating is fond of telling luncheoning businesspeople that Australia runs a stronger trading balance than economies like Singapore, South Korea, Thailand and Malaysia. He has no doubt our future is tied to the region and that a revolution, which began quietly in the late 1960s, cannot be turned back.

“There has been a revolution in our thinking and an irreversible re-casting of our economy,” Keating told an Australia Day luncheon in Sydney.

“It is an effort to make an historic shift to Asia and the Pacific. All this means transforming ourselves – our habits of mind and work, the way we see ourselves and the way we see the rest of the world. It will require a mature sense of identity.

However, Australia does have serious problems. One is the shortness of capital – we are resource rich but capital poor, and so are forced to import boatloads of other people’s money to finance our development. Hence, despite having a trade surplus, when you count our A$150 billion foreign debt, we run rather huge monthly current account deficits – and will likely do so for a very long time. 

Australia: resource rich but capital poor, relies on foreign financing

But changes have been taking place for some time. Economists like Richard Braddock, head of economics at Sydney’s Macquarie University, call Australia the most Asian of European countries. Looking through the figures, peering through the charts and crunching the statistics helps water down the ‘white trash of Asia’ myth which has been progressively seeping into the psyche of a recession-weary nation.

Braddock told an interviewer last year: “We are, in trade and investment, an Asian country, but only recently has this been accompanied by a gradual cultural realisation.”

And therein lies the source of all the debate about Australia’s Asian destiny.

Economically, we are already heavily intertwined with the region. But this has slowly, quietly crept up on us. Only recently have we awoken up to find that, hey, we actually do live in Asia and we do business with Asia. What’s more, we are swamping Thai restaurants, studying Bahasa Indonesia, practising yoga and tai chi, eating sushi and singing in karaoke bars. Three-fifths of the two million Australians who travel overseas each year now visit Asia and the Pacific.

If this realisation comes as a bit of a shock to us, it is more of a jolt to our Asian neighbours, many of whom still see us as a resource-rich backwater of lazy Europeans content to live on anything we can grow or dig out of the ground.

Some even find it hard to believe we really have ditched the White Australia policy of old. They would be surprised to hear that about 40 per cent of new immigrants come from Asia and that settlers of Asian origin have almost tripled since 1981 to 716,000, or 4.1 per cent of the population.

Try quoting Australian economic statistics to Asian hosts when you are travelling, without revealing the country you are discussing – it becomes obvious that if Australia’s population were Asian rather than mostly European, the country would easily be seen as a regional economic heavyweight.

Some places in Australia are more Asian than others. Northern Territory chief minister Marshall Perron likes to call Darwin Australia’s Asian capital: “We’ve got only 16 million people to the south but 45 million to the north. Asia has the world’s fastest developing economies – the rest of Australia is only now waking up to the fact. We’ve known it for years,” he said in an interview last year. Understandable really, considering Darwin is closer to Singapore than it is to Sydney.

The territory has worked feverishly to lay the groundwork for its Asian push, with some success. While Australia has languished in recession, the territory’s gross domestic product has grown 5.7 per cent to US$3.3 billion in the year to June1991. It resembles an Asian Tiger economy in the way government often acts like a paternalistic big spender, encouraging exports to the region. Exports jumped 38 per cent to $1.9 billion in the year to June 1991, primarily to Indonesia, Japan, China, Korea and India.

Of course, our economic relationship with Asia is new and needs to mature. While we trade heavily with Asia and export much to the region, we still prefer to invest in countries with the same language or cultural background. Two-thirds of Australia’s exports may go to Asia, but only 15 per cent of its total overseas investment is ploughed into the region, compared with more than 50 per cent for Anglo-Saxon countries.

Managing director Hsieh Fu Hua of the Singapore-based investment bank Morgan Grenfell Asia Holdings had a point when he told an Asia-Pacific business conference in Sydney last year: “I contend that you are not in the loop. Your lack of investment makes you an outsider. Your Anglo-Saxon background inhibits you from understanding Asia better. The understanding of Asia has to go right across the board – not just at the business level, but should include all institutions: your schools, your universities your government, your political leaders and certainly your media.”

What Australia is not is an economic backwater about to sink into hopeless industrial disrepair. We are a nation that revels in self-adulation as intensely as we disparage ourselves when times sour. The most hard-nosed capitalists overseas don’t share our pessimism – many see opportunities to use the well-educated, large and developed Australian market as a gateway into Asia.

Du Pont of the U.S. decided last year to move production of X-ray photographic products and chemicals from its Shimuzu plant in Japan to Sydney, from where it will supply all of South East Asia. Local doomsayers must have been stupefied to read deputy managing director Ian Dennis quoted in newspapers saying that higher wage costs and lower productivity at the company’s Japanese plant had prompted the switch to Australia, an operation that was now much more efficient.

Which brings me to my point. Don’t believe the doomsayers who shriek that we are about to careen head-first into the chasm of Third World despair, or the ageing diplomatic has-beens and pontificating commentators who demand we ditch our Western liberal democratic values and acquiesce to the “reality of Asia”. For this, read – don’t make a fuss about Indonesian human rights abuses in East Timor or the clearing by Malaysia of virgin forests in Sarawak.

Under this formula, we can pout all we like about Serbian militias in Bosnia-Herzegovina and about the nasty Afrikaners in South Africa, but we mustn’t make too much noise in Asia lest it upset the neighbours.

But Asia also has to learn top accept us. “The reality of Asia” is that we too are a part of it. Instilled with Western values, enriched by indigenous culture and enhanced by the waves of post-war immigration, we are one of the most multicultural nations on Earth. Asia should no more expect us to ditch our values and assimilate than we should expect Asia to become more Westernised.

Some acceptance appears to be seeping through. Ratih Hardjono, the Sydney-based correspondent for the Indonesian daily Kompas, promoting her book White Tribe of Asia, told an ABC Radio interview recently that Australia had changed much in the last 15 years, and was a much more diverse culture.

“Australia is in its essence a European culture, you cannot change that. That’s why Australia is a white tribe in the region. The white tribe of Asia has its roots in Europe and England – but it is mixing, it is merging into Asia without losing its own identity.”

Australia still has some way to go in its psychological and economic integration into the region, but I would contend that Asia also needs to refashion its view of modern Australia to fit current realities. Asia has to accept what we are. After all, we are all going to be neighbours for quite some time to come.