Crisis and opportunity

It's time that we see Asia as a partner, not a threat - just as Ross Garnaut told us more than two decades ago.

THE Gillard government has commissioned Ken Henry to report on Australia and the Asian century. Our trade with China, Japan, India and other Asian countries is booming. But our key sectors - business, education and the media - are no more Asia-ready than they were two decades ago.

This may seem counter-intuitive with the superficial signs pointing in the other direction - the number of Asian faces on our streets, staffing in our hospitals, our holidays in Bali and foreign students at our universities. But the quality and depth of our relationship with the diverse countries of Asia is quite superficial. We have booming trade but little real engagement.

Reading the submissions to the Henry Review one has a sense of deja vu. The dates and the figures are different, but the concerns raised are substantially the same as those that we ''debated'' in the 1980s.

That debate culminated in the Garnaut Report in 1989 - Australia and the Northeast Asian Ascendancy. Garnaut pointed to the sustained growth in Japan, Korea, Taiwan and Hong Kong, and how Australia needed to respond. Rather than seeing Asia as a threat, he argued that we should see it as an opportunity. We needed to reduce trade barriers. We needed to back this with greater efforts in education, language and research. Our immigration policies should also be more sensitive to the region.

The Hawke-Keating government's opening of the Australian economy forced change. We saw rapidly growing mineral exports to Japan and Korea. The back of the White Australia policy was broken. Government and business responded with more skilled people working in the region. The media became more interested in Asia. Exchange programs with the region were established. Asian students flooded into our universities. Protection was reduced. Productivity growth lifted to 2.1 per annum in the '90s.

But in the mid-1990s we went on a smoko, even as we continued to dig up more of our ores and coal for export. We are now less dependent on Japan but more so on China and India. Today, 48 per cent of our exports are fuel and mineral products, a proportion way ahead of most comparable countries. Coal, our second largest export (19 per cent of total exports), is a major contributor to greenhouse gasses. We are dependent on a few markets and a few exports.

The economic changes of the Hawke-Keating years, whilst beneficial, were painful for some. On top of these changes there were considerable social and ethnic changes brought about in part by the Fraser government's successful Indochinese settlement of 240,000 people. Some populists saw it as a chance to take us back to what Garnaut had warned us about - fear of Asia. Today the populists warn us about border protection

The Queen of England continued as our head of state and we remained at the beck and call of faraway and fading empires at the expense of attention to our region.

John Howard gave us permission to be ''relaxed and comfortable'', to have a break from the Asian challenge and opportunities.

In the two decades since Garnaut, the performance of our businesses, universities, schools and the media has been disappointing. The Department of Foreign Affairs and Trade and Austrade have done better and have more Asia-trained staff in the region, but nowhere near enough.

Let us look at the performance of key sectors in this Asian readiness.

In business, only four Australian companies in the top 150 bothered to put in a submission to the Henry Review. They were ANZ Banking, ASX Group, IAG and Rio Tinto. BHP didn't make it. That says a lot.

Far too many Australian businesses see Asia as customers rather than partners. In the long term, trade and investment is about relationships of trust and understanding.

Only a handful of chairmen or women or CEOs of any of our major companies who were born and educated in Australia can also fluently speak any of the key Asian languages. It is obviously too late for them now, but it is not at all clear that they are recruiting executives for the future with the necessary skills for Asia. It is hard to break into the cosy club.

A recent survey by the Business Alliance for Asian Literacy, representing more than 400,000 businesses in Australia, found that ''more than half of Australian businesses operating in Asia had little board and senior management experience of Asia and/or Asian skills or languages''.

There are now tens of thousands of Australian-born citizens of Asian descent at our universities. But they are likely to be recruited for their good grades and work ethic rather than their cultural and language skills.

Maybe we don't need an Asian language to sell iron ore and coal to very willing buyers, but we certainly do to sell wine, elaborately transformed manufactures and services, particularly tourism.

Some Australian expats in Asia have developed Asian skills and sensitivities, but there are downsides. Coming home for an expat is often harder than going offshore. His or her world has changed, but the culture of head office has not. Some join foreign companies or leave Australia. We know of many such instances.

Success in Asia requires long-term commitment, but the remuneration packages and the demands of shareholders are linked to short-term returns.

In education, despite 30 years of efforts, Asian language learning in Australia is in crisis again today as it was in the 1980s. If anything, the situation is worse.

This is spelled out in spades in the submissions to the Henry Review. The Australia-China Council advised that ''for the last 20 years successive Australian governments attempted to boost Asia literacy and particularly the study of Asian languages in schools ? these attempts produced limited results''.

The Australia-China Council, quoting from the Business Alliance for Asian Literacy 2011, in its submission said, ''50 per cent of schools teach very little about Asia, only 6 per cent of year 12 students study an Asian language and just 3 per cent pursue these studies at university, and only 2.5 per cent of year 12 students study Chinese.''

Tertiary education funding is also a key to Asian competence. As the University of Canberra's Ian McAuley has pointed out, public funding of tertiary education fell sharply between 1995 and 2000, and has stayed low ever since. The shortfall has been covered by income from foreign students. Teaching and research has suffered. Instead of adequately funding education from the budget, we have diverted public funds to middle-class welfare such as superannuation and private health insurance subsidies. This has crowded out funding for our future preparedness in Asia.

Australia's media relationships with the world are embedded in our history of relationships with the UK, Europe and the US.

Our TV news, commentary and entertainment are heavily dependent on the BBC, CNN, et al. Media programs about Asia shown in Australia are often recycled UK or US material. Our media is full of it. Just compare the current coverage of the US Republican primaries to the much more critical National People's Congress in China. Japan (except for disasters), India, Korea and Vietnam are covered intermittently, almost as an after-thought. It will require a real wrench to change the nature of Australian media that history has laid down.

Australia's first working holiday agreement was with Japan in 1980. In the past 10 years there have been another six working holiday agreements with Asian countries, but most of them have caps of 100 people per annum. We still have no agreements with China, India or Vietnam. Outside the four key north-east Asian countries identified by Garnaut in 1989, fewer than 1 per cent of working holiday makers to Australia come from the new and rising countries of Asia.

To take advantage and integrate ourselves in the region will require continuing openness in trade, investment, ideas and people. It will require substantial investment in skills for Asia and a new generation of business leaders who see the opportunities in our own region, and not a region they fly through on their way to Europe. We need to re-engage in economic reform alongside re-engagement with Asia beyond the superficial.

Unfortunately, we are both enriched and entrapped by our Anglo-Celtic culture.

John Menadue is board director of the Centre for Policy Development. He was Australian ambassador to Japan, secretary of the Department of Immigration, secretary of the Department of Trade, and CEO of Qantas.

Greg Dodds was director, Australia Japan Foundation in Japan, senior trade commissioner Japan and executive general manager, Austrade, north-east Asia.