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PAI. AMENI A' L-. A
S.
PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
AUSTRALIA JAPAN RELATIONS SYMPOSIUM
24 MARCH 1987 CANBERRA
Your Excellency,
Sir Geoffrey,
Ladies and Gentlemen
In my four years as Prime Minister, this is the nineth
occasion on which I have spoken on Australia-Japan
relations. When the contributions of my ministers are
added, the number increases ten-fold.
That is but one indication of the importance my Government
attaches to forging closer relations between Australia and
Japan. The Japanese Government, for its part, has also fre quently
demonstrated its recognition of the importance of its
relationship with Australia not least through its support
over the years for this symposium.
Together we have come a long way.
Twenty five years ago Australia's top exports to Japan were
wool and wheat. Today they are iron ore and coal. Japan
sold mainly textiles and iron arnd steel products to
Australia 25 years ago. Now its main export earners in
Australia are motor vehicles and consumer electronics.
Twenty five years ago, Japan was a negligible foreign
investor in Australia. Today she is the third largest
behind the US and Britain.
And 25 years ago, it is estimated that only 2,200 Japanese
tourists visited Australia, while this year an estimated
220,000 tourists from Japan will enjoy the natural beauty of
the Australian landscape and the friendliness of the
Australian people.
whenever Australia-Japan relations are discussed at symposia
such as this, the two staples of discussion are the dynamism
of the Pacific region and the complementarity of our two
economies.
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These two facts are the reason why the Australia-Japan
relationship is on-the threshold today of a fundamental
restructuring that offers huge benefits for the people of
both our countries.
They were certainly uppermost in my mind in may 1986 when I
last visited Japan to inspect your remarkable economy and to
assess ways in which Australia can work more closely with
You. Let me briefly recite the salient facts.
First, the proof that our region is the most dynamic
economic performer in the world today is crisply summarised
by this fact: two years ago the value of trans-Pacific trade
surpassed that of trans-Atlantic trade for the first time.
The Pacific rim is without doubt where the action is in the
world economy today. China's bold modernisation program
offers vast opportunities for trade and investment; South
Korea and other newly industrialising countries of East Asia
are rapidly moving into high-technology assembly; and the
ASEAN nations too are beginning to break their commodity
dependence and rekindle their enormous growth prospects.
Second, within this dynamic region, the two economies of
Australia and Japan are very well equipped not only to take
advantage of the new markets and investment opportunities
our neighbours offer. We are also moving into closer and
more complementary bilateral relationships which present us
with increased potential for trade and investment.
Perhaps the clearest pointer to these changes is the massive
realignment of our currencies over the last few years.
A strongly appreciating yen has eroded the competitive edge
of many of the Japanese industries such as steelmaking and
aluminium smelting that formed the foundation of the
country's post-war growth.
The pressure for the re-location of parts of these
industries offshore is enormous, and Japan's massive
surpluses of irvestible capital are creating opportunities
for countries of the region including Australia as sites
for that inevitable relocation.
At the same time, the depreciation in the Australian dollar,
along with a very considerable range of internal
restructuring measures, make us both a more desirable focus
for foreign investment as well as a competitive and capable
exporter.
As I have said, the details of our mutual strengths and
needs, and the challenges they present to us, have become
well understood over the last few years and I do not propose
to spend time this evening elaborating them before this
audience. P. 3/ 9
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It is nearly a year since Prime Minister Nakasone and I
agreed to establish a series of investment missions between
our two countries.
An Australian mission visited Japan in November 1986 and we
were honored last February to play host to a distinguished
and very large mission of Japanese businessmen.
Accordingly I consider I should give you my perspective this
evening on how Australia and Japan have actually managed to
meet these challenges and on the progress we are making in
building the next stage of our relationship.
Probably the most promising achievement has been the
continuing acceptance by Japanese policy makers of the
thrust of the Maekawa Report.
it is a very great honor, and a very positive omen for the
success of the symposivm, that the chairman of the group
responsible for that report, Mr Haruo Maekawa, is in
Canberra and will address you tomorrow.
When it was released in 1986, the Maekawa Report was
welcomed by the Australian government. It remains in our
view a valuable blueprint for the essential task of economic
restructuring which lies ahead of the Japanese nation, and
it has been heartening to see that the maekawa message
is being heard and understood in Japan.
A second and related development in our relationship has
been the significant upgrading by Australia of our efforts
to seek an end to the crazy spread of protectionism which
threatens to stall world trade.
At Davos in January I proposed a method of attacking
protectionism as it affected agricultural trade. This
message was specially directed at the the European
Community and Japan who between them share the greatest
responsibility for the corruption of agricultural trade.
I recognise of course that the response to the Maekawa
Report has demonstrated a growing awareness within Japan of
the need to liberalise Japanese agricultural policies.
I recognise too that Japan is the world's largest
agricultural importer, and that it has the lowest
self-sufficiency ratio amongst the major industrialised
countries.
Nevertheless, Japanese consumers are paying a very high
price for domestic protection and this policy continues to
have very substantial adverse implications for other
agricultural exporters.
I would be less than frank with you if I didn't say that we
want Japan to press ahead resolutely in opening its domestic
market to imports.
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Let me in this context acknowledge that the Japanese
Government's recent decisions which' should allow greater
import penetration for Australian coal are an optimistic
sign for the future. While Japan's coal mining industry is
undergoing painful adjustment problems, we are seeing an
encouraging application of the principle of enlightened self
interest in enhancing the overall prosperity of the Japanese
people.
AS Japan continues to address itself to the new
circumstances in which it finds itself, with the strength of
its currency and the huge pool of investible surpluses it
has accumulated, we will I hope see Japan continue to apply
that principle.
A third development in our relationship has been the
continued discovery of new investment projects as tangible
products of the complementary and friendly relations between
our two countries.
The investment missions themselves have produced some
promising proposals and I urge those involved to pursue them
actively.
Nowhere is our complementarity more evident than in basic
metal production. While Japanese basic metal production has
been contracting slowly for more than a decade, Australia
has developed and retained a strong comparative advantage in
these industries. As Japanese exports of steel and
non-ferrous metals lose their competitiveness, Australia
will be well positioned to step into the breach in supplying
the needs of the Asia/ Pacific region and countries further
afield.
Another emerging export-oriented industry in Australia is
the production of auto parts and accessories. Mitsubishi
Australia's achievement in exporting 26,000 cylinder heads
per month to Japan is an example of the new face of trade
and investment co-operation between Australia and Japan.
I am pleased to see that this investment co-operation is not
being confined to export-oriented manufacturing industries
but is being extended into traded services and hotel/ resort
development. One of the exciting ideas to arise in the context of the
latest investment mission is a proposal that the Kyoto
Institute of Science and Technology establish a private
Technical College and Technology Exchange in Sydney. This
$ 100 million investment has the potential to establish a
basis for Japan-Australia co-operation in knowledge
intensive industrial sectors.
The detailed proposal is being finalised and will be subject
in part to decision by the NSW Government. However I point
to it as one kind of project which we should be looking to
in building our relationship. As far as the Commonwealth is
concerned, we will ensure that every avenue is pursued in
exploring this project. P. 5/ 9
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Reviewing our relationship, we therefore fIinad irrefutable
evidence that we are on the right path and that real
progress in being made.
our two governments have a responsibility to approach the
task of restructuring in a positive fashion and to set about
the task of removing the impediments to change.
For Australia's part, I can assure you of our growing
awareness of the need for a new industrial structure. With
that, there is a new determination within both the business
community and the workforce to achieve it.
I can also assure you that we will continue to welcome
foreign investment, including Japanese investment, in
Australia. My Government's proudest achievement has been that, from day
one in office, we have sought to foster awareness of this
need for change and to remove many of the obstacles in the
path to change including some unnecessary obstacles. to
foreign investment.
We have set in place a program of policy changes designed to
make Australian industry more competitive, more outward
looking, more vibrant and more resilient.
we established an unprecedented Accord with the trade union
movement which, thanks to the magnificent response of
Australian workers in moderating wage claims, has allowed
real unit labour costs to fall by more than 6 per cent.
This has helped create three quarters of a million jobs, the
vast bulk of them in the private sector. While we have had
to slow the economy down in the last year, the reduction in
labour costs has been sufficient to allow continued job
expansion 131,000 new jobs and a recent fall in the
unemployment rate.
And there is yet another critical dimension to the Accord
which has been acknowledged by many Japanese observers of
Australia including the Japanese Prime Minister, Mr Nakasone
and the head of the recent investment mission, Mr Amaya:
the rate of industrial disputation in this country has been
more than halved.
That is a very gratifying achievement and one which ranks
Australia highly by international standards in reducing
industrial disputation. Of 19 OECD countries for which
figures are available, only nine experienced a decline in
working days lost due to industrial disputes between 1982
and 1984 and only four experienced a decline greater than
Australia's.
As pleasing as those figures are in their own right, they
tell a story that augurs well for the future of Australian
industry. For with the large depreciation of the Australian
dollar, matched by the wage restraint exercised by the
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workforce, Australian industry is now more internationally
competitive than in at least two decades.
Such is the commitment of the trade union movement to the
establishment and expansion of export industries that its
leadership has assured the Government of its willingness to
facilitate new investment in Australia. Trade unions are
willing to have consultations with potential investors to
explore a basis for the necessary co-operation between
employer and the workforce in prospective projects.
This is an opportunity which potential investors should be
quick to accept. Australia's reputation as a reliable
supplier was somewhat tarnished through the 1970s and early
l980s. But today, steady progress is being made through our
co-operative approach with the trade union movement in
assuring our trading partners of our renewed reliability.
My Government's cooperative and innovative approach to wages
policy has been coupled with our efforts to improve the
productivity of the Australian economy. At my request,
trade unions and business are currently engaged in an
examination of ways of eliminating outdated work and
management practices. Productivity has, we recognise, been
hampered in the past by these restrictive practices.
Today there is a growing recognition that we can only earn
durable prosperity if we improve productivity through
greater efficiency and flexibility in our work places.
My Government has also deregulated the financial system in
Australia, allowing the Australian dollar to find its
natural level, allowing the entry of foreign banks, and
easing exchange controls. This has increased the
competitive supply of financial capital to investors.
similarly, we have gradually reduced protection of
Australian industry by laying out sectoral plans for the
steel, motor vehicle, shipbuilding, chemicals and plastics,
heavy engineering, and textiles, clothing and footwear
industries.
Our commitment to these measures demonstrates that we are
not asking of others reforms which we are -unwilling to
implement ourselves.
Lower protection enhances the competitiveness of Australian
industry, by lowering its cost structure and through its
effect on the exchange rate.
The protectionist ethos fostered by successive conservative
Governments over some three decades now is virtually gone.
Australian business for the most part now rejects the
nostrums of the protectionist school, as do Australian
workers. They know, through bitter experience, that there
is no future in it; our future lies in efficient, outward
looking industries. P. 7/ 9
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These are challenging times for Australian businessmen and
workers: never before in the post-war era has there been
such a stable policy framework for the encouragement of
export-oriented manufacturing and service industries.
No longer are investment opportunities confined to a small,
protected domestic market.
No longer do our industries have to endure the severe
penalties of rising real unit labour costs and an
over-valued exchange rate.
while this fundamental re-orientation of the business psyche
must, by its nature, be a long process, it is heartening to
see the response already beginning to show through.
Our trade figures over the last few months are telling us
that many Australian manufacturers are beginning genuinely
to expand into overseas markets. New, export-oriented
projects are coming on stream. Manufactured exports have
increased by nearly a third so far this financial year over.
the same period last year.
Having learned the lesson that it is not in our self
interest to sustain a protected, insulated and highly
regulated industrial structure, we in Australia look forward
to working with Japan in reaping the rewards of less
restrained trade and investment flows.
And we do this, acutely aware of and highly receptive to the
opportunities for new investment to satisfy the changing
demands of our dynamic regional market.
it must be clearly understood that my Government welcomes
Japanese investment in Australia and sees great benefit to
the people of both our countries from it.
To help achieve this, we have liberalised Foreign investment
Review Board procedures.
Each year the Government receives a large number of
applications from Japanese investors to establish projects
in Australia. Virtually all of those applications are
approved. it is only on the rarest of occasions, such as
the recent decision on the Shelburne Blay sand mining
proposal, that an application has to be rejected on national
interest grounds.
in the case of Shelburne Bay the national interest grounds
related to the adverse impact the project would have had on
the environment. our decision to oppose the project
proceeding would have been the same had it been wholly
domestically owned. The decision in no way weakens the
Government's commitment to encourage Japanese investment in
Aus t rali a.
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The Government is aware of Japanese concerns over the
question of entry by businessmen for temporary residence.
Several steps have been taken in the past few years to
facilitate this entry. We know, however, that Japanese
business is still not satisfied with Australian procedures.
The Government is now looking at means of further
streamlining policy and procedures relating to entry for
temporary residence to allow companies more effectively to
place executives in their Australian operations. we will be
taking decisions on this question in the near future.
Japan's role in the celebration of our Bicentenary is a
particularly pleasing example of the warmth of
Australia/ Japan relations. Among a number of Japanese
contributions to the Bicentenary, one stands out for special
mention: the Japanese Government's considerable involvement
in the Science and Technology Centre now being built in the
heart of Canberra's Parliamentary Triangle.
Australia and Japan are partners in the development of this
imaginative joint project, which will serve to educate,
entertain and inform Australians and visitors to Australia
about present and future applications of science and
technology. This Centre will stand as a significant and
lasting reminder of the Bicentenary and of the strength and
closeness of relations between Australia and Japan. I would
be remiss if I failed to take this opportunity to
acknowledge Japan's generosity and vision in making this
contribution. Finally let me make a comment about tourism. The Australian
Tourist Commission expects two million tourist arrivals by
1988. Judging from current arrival figures this target is
well within reach. The official estimates are for 220,000
Japanese tourists to visit Australia in 1987, an increase of
105 per cent on arrivals in 1985.
These tourists play an important part in the creation of a
very healthy Australian tourist industry, and we welcome
them for that reason.
However we welcome them too as friends, as honoured guests
sharing the delights of the Australian lifestyle and
landscape. it is my belief that these visits, reciprocated
as they are by Australian pleasure and business travel to
Japan, symbolise the closeness and friendliness of the
relationship between our two nations.
Conferences such as this play an important role in building
a stronger relationship between our two countries. Your
success as you tackle the challenging issues on your agenda
will have a beneficial impact on both Japanese and
Australian decision makers engaged in the all-important task
of enhancing our mutual prosperity and building our shared
future.
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