Australia to probe risks, rewards of Asia boom
SYDNEY—Australian Prime Minister Julia Gillard announced a sweeping inquiry into the implications of Asia’s growing clout Wednesday, warning it was an issue with significant rewards and risks.
Mining-powered Australia is enjoying unprecedented wealth due to surging demand for its iron ore and coal from China and India, two nations Gillard noted had almost tripled their share of the global economy in just 20 years.
“For our nation and our people, the implications of this Asian century are profound,” she told an Asian business lunch.
“The challenges for Australia are significant, the structural adjustments forced on us are real,” she added. “The economic opportunities are enormous as well.”
The Asian boom has already had a major impact on Australia’s economy, with strong commodity prices seeing the Aussie dollar consistently near or above parity with the greenback, hitting tourism, manufacturing and education.
And Gillard warned that “for the foreseeable future, a strong Australian dollar is a new status quo.”
Former Treasury chief Ken Henry will chair the “white paper” review – a strategic blueprint for the government – titled “Australia in the Asian Century.”
The inquiry is tasked with examining the strategic, environmental and social impacts of the Asian region’s boom.
Gillard singled out food security, foreign investment, stock market structures and financial regulation, immigration, education and energy policy and environmental standards as some of the areas for discussion.
“There isn’t a single aspect of government policies and national planning that won’t be touched by the great changes to come,” she said.
China is now Australia’s biggest trading partner and export market but it is not a relationship without risk, Gillard added, describing the Asian giant as “neither a democracy nor part of our alliance system.”
Australia’s strong ties with the United States put it in a sometimes tense position in the region, but Gillard said she was “confident” of a strong future with “an ally in Washington and respect in Beijing.”
“There is nothing in our alliance relationship with the United States which seeks to contain China, because a growing, successful China is in the interest of every country in the region,” she said.
Gillard said growth in India and Indonesia would also be significant, with the emerging nations expected to double the size of their economies every 11 and 15 years respectively.
The white paper will examine pressing challenges for the next five years and prepare Australia for the next 15, a period in which Gillard said Asia’s booming middle class was expected to drive further profound economic shifts.
“They’ll look to countries like Australia for tertiary educations and for technical skills, they’ll travel in new ways, seeking new custom-made holiday experiences… and through life they’ll want sophisticated financial advice and the benefits of the world’s best medical services as well,” she said.
Henry will report back early next year following consultations with the business, academic and broader community and Australia’s international partners. The paper will be made public in mid-2012.
