PRIME MINISTER
CHECK AGAINST DELIVERY EKBARGOED UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER OF AUSTRALIA
THE HON. R. J. L. HAWKE, AC NP
" AUSTRALIA 1988 AND BEYOND"
CONFERENCE COSPONSORED BY THE ASIA SOCIETY AND TIHE
AMERICAN AUSTRALIAN ASSOCIATION
NEW YORK 20 JUNE 1988
Ladies And Gentlemen,
An early edition of Baedeker the great nineteenth century
travel-guide had this commonsense piece of advice for
visitors to New York:
" Tips are of an appallingly high scale in this city end
must by no means be omitted if efficient attention is
desired. If, however, the traveller does not intend to
visit again, the formality may be omitted."
Well I like New York and I have every intention of paying
future visits here. So I shall follow Baedeker s advice and
not omit the formality of offering a tip in the form of these
after-dinner remarks.
It is good to be back in thia great city, in the middle of
Australia's Bicentennial year.
And it's good to be with the American Australian Association
end the Asia Society which over the years have played a
leading role in helping to develop American understanding of
Australia's part of the world.
To men and women such as you, who follow world events closely
as a matter of habit, the astonishing developments In Asia
over the past quarter of a century will be familiar.
But It is still worth reminding ourselves of the enormous
political and economic transformation thv regfnn hay'
undergonn In that periud. 7: 1
Where not so long ago, the region evoked in our minds Images
of conflict, di'vision and vulnerability, the words which now
come more readily to mind Arm stAbility, flexibility,
confidence and 9wowth.
Where twenity years ago the We stern Pacif ic region's GDP was
equivalent to ono-th0rd 04 Amnerica's, today it Is over two
thirds of what 1i of rooizse, a much larger US economy.
The Pacific R~ im now contains the world's fastest growing
economies, which export and Import across the Pacific more
than the older aconomies trade across the Atlantic.
That kind of mconomic success hasn't happened by accident.
it has been the result of a de~ liberate determination to adopt
outwaid-looking and extraordinarily adaptable domestic
policies. And l. et mo stress, an absolute prerequisite was a
sympathetic inti~ rnational trading environment.
The expectakion thpt this k~ ind of success will continue
indefinitoly hie -led to confident predictions that the n~ ext
century will Fn ita " 1hAcIfic Century".
Certainly, tho oviderce for the Pacific Century scenario is
easy to see the stronqth and resilience of the Japanese
economy, the floxib) llty and confidence of the newly
industrialising natlins, the steady political and economic
emergence of Chiii. inh tb* world sceno, the tp-establishment,
of democracy In the Philippines, the greater liberalisation
in South lNoien~, tile continmed demonstrAtion of regional
cooperation byf , n ASEAN nntlona not to mention the
incroaxing relianl ' nehntof the Australian economy.. I
Out will thiz tznmendous dyna'nism continue Into the future?
V) 11 those m~ utually reinfoxcing hallmarks, political
9 ability and xwkingj XivIng standa~ rds, continue to benefit
the millions of Asnn0; 7ens who now enjoy thorn?
I an essentielly an T~ tils~ t about the future of our region,
so I answer each of theso 9eitions I~ n the affirmative.
ut I am also n~ reallst and, as a practising politician, I am
fully aw. are tbAt rosy predictions are for from being
sell-fulfiilinp however ro~ ssurlng they may be.
Lo~ st Year X hAd UMe hon0K 09 delive~ ring the Singapore
Lecture. I sold then that to magim~ rse th~ e benefits of
continued economic growth Implicit in the Pacific Century
prediction, wo nust continue to work hard wo must continvue
to pursue with deteicmination and diligence the
outward-looking and adaptable policies which have been the
source of thle rrmqion's 0 ucce. ss so far.
We have MIUCh to be confident about but we should never allow
that confidenco to lapse into complacency.
On the basis oft those general comments let me examine in more
detail the principal developments In the region which will
determine Its nature a5 we enter the next
century particularly in the region's largest nation, China,
and its largest economy, Japan.
I will keep to the end what I consider, with a justifiable
sense of pride,* to be the beat news of all: that Is, the
dramatic way In which Australia over the past five years has
ecoristructed and reoriented itself to participate in the
region's econom~ ic growth, and to provide as well as the
most politically stable an excellent base for Investors
qeekinq to got Involved in the myriad opportunities that the
tegion offers.
Without doubt, some of the most exciting developments In the
Western Pacific are now taking place in China.'
China has emcr~ e4 from the self-destructive madness of the
Cultural Revolution to embark on a path of effective and
Tational modernisation and openness to the outside world.
Viewed from anrf angle political, strategic, commercial,
cultural this is a truly momentous transition.
We in Australip have been following these events closely
* ince the reform process was launched nearly ton years ago.
Indeed we have more than just followed them. We've been
actively engaged In a major and consistent effort to Invpolve
Australia An the closest possible cooperation vithiChins as
It undertakes Its reforms, an effort which the Chinese have
fully reciprocated.
Through the strikingly successful rural reforms of the early
1980., the urban reform decisions of 1901 and the Party
Congress last year, the cumulative achievements are huge In
tcale and significance.
Consider these Indicators:
China's output has more than doubled since the reform
process began.
China is aheed of its announced target of quadrupling
1980 output by the end of the century.
This Is the third 7ear In succession in which Chinese
manufactured exports have grown by a third.
Last year, China became the largest supplier of textiles
to the United States. 713 3 G;
4
Over the last five years, I have been privileged to spend
Very many hours wit hkey figures inl the ChInese leadership.
on that basis, my own assessment is that the process of
reform Is Irreversible.
No-one, least of all the Chinese leadership, expects the path
to modernisatioi in China to be without difficulty.
But the Chinese leadership in unequivocally comjuitted to
strong, sustained outward-oriented economic growth, based on
doziestic economic reform.
Since the sino-British agreement on Hong Kong In 1984 there
has been a spectacular growth in trade between Hong Kong and
mainland China.
Ch Ina has recontly espoused a radical, Internationally
oriented strategy for the dovelopuient. of the coastal
provinces, designed to foster the growth of labour-Intensive
exports using Amported raw materials.
It Is the cloarest signal yet that China Is determined to
reap the full economic potential of close Integration with a
dynamic regior) nl economy.
It is my assessment that# for all the simplistic talk in the
West about liberals verses conservatives in the Chinese
system, there As no opposition to the modernisation process
sufficiently 5trony to derail It.
At! the namn time as we are seeing these radical changes In
China, we are now at another pivotal point In post-war
Japanese history a process of change which despite all-the
dIfferences between the two'economies Is at least ai
Important to the future of the region.
I say that because these changes, driven by Japan's large
external surpluses and the associated rapid appreciation of
the Yen, ar. necessary not just to secure economic and
financial stability In Japan. They are also fundamental to
the very functioning of a viable world trading systom.
Japan's very success in emerging as an economic super-power
has forced it to grapple ag3in with the task of reshaping the
stiucture of Ate economy.
It has already made an impressive start.
For any ono even remotely familiar with Japan's extraordinary
success in exporting goods which have penetrated households
throughout the world, it Is a truly remarkable fact that
domestic demand has now completely replaced exports as the
primary engine of Japan's growth.
This has set In train major changes ih industry composition
in Japan, with greater emphasis on the non-traded sector.
Moreover, Japan is now importing strongly including
importing manufoctured goods.
This has further spurred industrialisation throughout the
region, not least in China and ASEAN a process made
possible by the region's complementary resource endowmonts.
Moreover Japan is increasingly locating its less competitive
industry offshore, directing investment and technology to
more labour-Intensive countries.
The so called Newly Industrialising Countries are
experiencing rising living standards, improved balance of
payments and, in some cases, reduced external indebtedness
largely as a result of their flexible economic approach which
has allowed them to follow the Japanese path to success and,
more recently, to exploit the opportunities Japan's success
has opened for them.
A recent OECD report forecast that next year the contribution
of the HICs to world trade will have increased by half since
1986 and will be virtually as large as Japan's.
Clearly, lito Japan, the nost successful of these cowitries
also have a responsibility to play their part in fostering
sustained growth. Just as flexibility has been the source of
their success, it must remain the hallmark of their economic
policy making.
Specifically, they have the responsibility to promote freer
trade and to allow their exchange rates to reflect 1conom. c
fundamentalsø
Again it Is good to see that there has also been some
progress recently on this front, particularly via the foreign
exchange markets.
In other words, economic reconstruction in Japan is providing
a new Impetus to growth elsewhere in the region.
But Japan still has more to do.
We are already seeing Japan's economic power being translated
into a greater leadership role in international affairs
gernerally. This Is, I believe, a quite legitimate process
and is, in any case, inevitable.
But the immediate test of Japan's capacity to adopt and
maintain a higher profile arises in the economic arena.
Specifically, Japan's leadership role will be tested, and
should be judged, by its willingness to allow greater access
to its domestic market. 7-3 3 8
S.
6.
We are already starting to see a liberalisation of what have
hitherto been very protectionist barriers. There is still a
long way to go, and both of our countries are pressing hard
to speed up the pace of reform. But, as the Maekawa report
showed, the right questions are being asked in Japan and the
right answers are starting to be applied.
In all of these ways, thpn, we face a time In which important
decisions will need to be made in order to secure continued
regional prosperity Into the next century. Across the whole
region, nations of differing levels of economic development
are responding, as they must, in similar ways to similar
Imperatives.
Ladies and gentlemen,
Whether we like it or not, there Is another important actor
in the Asia/ Pacific region the USSR.
We do not have the choice of telling the Soviet Union that it
has no right to develop political and economic relationships
In the region. The real question is whether its interests in
the Pacific are to be pursued constructively or not.
As I said last year, I would welcome a constructive Soviet
Involvement and I emphasise a constructive involvement in
political and economic developments in theAsia-Pacific
region.
For the greetor part of the post-war era, Soviet involvement
In the Western Pacific has rightly been regarded with
suspicion. We must still continue to be cautious. We must
base our judgements on deeds not words. I
Dui I believe that the more rational and creative path
suggested by Hr Gorbachev holds out positive prospects. We
should be prepared to engage In dialogue, and, on the basis
of mutual gelf-interest, explore cooperation with the
Soviets. We Intend to do that.
Ladies and gentlemen,
According to Mark Twain, In Boston they ask, How much does he
know? In Philadelphia, Who were his parents? But in New
York they ask, how much Is he worth?
to I owo It to you, having reviewed the region, to tell you
what Australia is worth in our Bicuntennial year.
five cr six yeavs ago I as s* re that many of you would have
dovbted Xvsttslia's capaciZy to participate in the brge: manrg
growth of trade in manufactures and services. As a prospect
for direct Investment in those sectors, Australia's worth
might have been rated relatively poorly. " 13 ') 11)
7.
~ Veaent could not sensibly be made today,
Australia has now addresged the major economic Impediments of
five years ago and has done to while also opening out
markets to the dynamism of International trade.
Again, look at the broad Indicators of our performance:
with the cooperation of the trade union movement, real
labour costs have substantially fallen and industrial
disputes have been more than halved;
we are steadily improving work practices and reforming
the education and training systems;
Inflation is now heading back towards 4 1/ 2 per cent or
so by the middle of next year about the same as the
OECD forecasts for the United States;
we have conveited e prospective budget deficit, just
five years ago, of over i per cent of CD3P to a
prospective surplus of about 1 per cent in the coming
fiscal year. By comparison the OECD forecasts the
United States will have reduced Its budget deficit from
just over 5 per cent of CDP to about 3 1/ 2 per cent. go
If I apeak on this visit of what further you need to do
about your deficit as I will I speak from a position
of strength;
In Australia, the deficit has been cut through real cuts
in Government outlays. They will fall by 1. 5, per cent
In the coming year, the third year of real dcIne and
this despite well targeted improvements in programs to
assist the disadvantaged. in line with intern ktional
trends the tax bass has been broadened, and corporate
and personal tax ratos cut;
just lost month the government announced further
measuron to lift australia's economic performance,
including business tax cuts and further tariff reform.
four years from now, effective protection for
manufacturing will have been cut by 30 per cent. future
investm~ ent decisions will not bo tax-driven or
tariff-driven but will be taken In the pursuit of real
economic returns.
For an American a'. dience there may seem to be a number of
paradcxes here.
In the first place, it may seem paradoxical that a Government
like mine, proud of and committed to Its social democratic
goals, should preside over real wage cuts and sweeping
deregulation. 78/ It)
~ ijtro-s--rneulno paradox, because there measures have
been absolutely essential for Australia to build the
foundations of real and sustainable growth, and to maintain
and gradually lift living standards for all Australians.
underpinning our success has been a degree of cooperation
between the Government and the Australian trade union
movement which the M~ anaging Director of the INFO Michel
Candessus, noted recently has added a new element to the
economic policy making mechanisms of Government.
This approach has enabled Australia to address Its manifest
uncompetitiveness of 5 years ago and overcome a subsequent
massive and sharp deterioration in our terms of trade, while
also creating jobs at twice the OECD average rate with So
per cent croated In the private sector. By any standards
that has been quite a treble.
A second apparent paradox may be that a country with a
balance of payments deficit about as large as the United
States, relative to GDP, should cut tariffs as we are doing.
But we havo been working over five years to internationalis.,
the Australian economy: the Aussie dollar is floating;.
exchange control has boon eliminated; foreign Investment
restrictions have been reduced to the minimum; and,
consistent with that approach, protection io being reduced.
The reason In' that we appreciato the potential -gains to
Australia from trade and particularly from greater enseshment,
with our dynoimic region.
We want to cApitalise on the advantages of our geography. . And
that requires the kind of flexible, innovative, expokt
oriented indostry structure which is needed to compete on
equal terms with the world's best manufacturers and service
providers. And we want to give our efficient agriculture and
mining sectors the best possible chance to expand further by
giving than the lowest feasible input costs.
I am pleased to say that we are having considerable success.
Last year, our exports of manufactured goods Increased by
per cent. Over the last five years the share of manufactured
goods in our merchandise exports has risen from 21 per cent
to 26 per c * ent. And, of course, tourism is rapidly growing
as a aaJor expottr earnor in fact at twice the rate of
marviiandiso exportE.
I'ndeed ouv current. account deficit has been cut from over
6 per cent of GDP just 2 yearg ago to 3 1/ 2 per cent or less
ovfir tho neuxt twelve months or so.
Ladies and gentlemen, 7834
In other tords Australia has learned, and is applying, the
lesson behind the apparent miracle of the Western Pacific
region: that is, the growth-generating power of a liberal
trading environment.
It Is not my place tonight to prescribe for the United States
the specific and detailed remedies necessary for it to derive
maximum Lbviitit from the dynamism of our rogion.
But, as one of your closest friends, Australia does have both
the right and, I believe, the obligation to say that it is
clear you have two special responsiDili Les: reduvlivy VuuL
fiscal deficit and seeking faster liberalisation of global
trade.
I am told that thpre RAAm to be a widespread Impression here
at the corporate leadership level that Lbjuzw ate no problems
between the United States and Australia.
Unfortunatqly, aisy such impression ignoros a rol
paradox. No two countries, I think, enjoy a closer alliance
relationship of first class integrity than Australia and the
United States. But that is not mirrored in our trading
relationship.
As I said In Chicago earlier today, Americang must not
underestimate how much your protectionigt actiong directed
against Japan or the European Community in fact destroy the
livelihoods of Auatialian farmers. And thooo aotiona
ultimately limit our prospects, and indeed yours, for growth
and prosperity. The paradox is real and it is hurtful.
Ladies and Gentlemen,
I have outlined Australia's broad program of reform largely
in economic terms. But I would not want it thought that the
task of responding to and implementing change is one Just fo;
the eoonomists among us. Heaven forbidl
Enduring change, genuine Australian enmeshment in Asia,
requires action across the spectrum of Government policy
including some fundamental attitudinal changes by the
Australian people.
It requires the development of an export culture: a
determination to take on the best and win.
It requires learning how to provide foreign tourists with
high quality service and foreign students with excellent
educational resources.
It means working to create a society aiverse in its sialls
and cultures and faiths by maintaining an Immigration progra
thoroughly free of discrimination. 834;-,
It means In other words applying In our homes, our factories,
our boardrooms, our streets and shops the Unavoidable lessons
of the Interdependence which Increasingly characterises our
region and the world.
it would be foolish to pretend that these attitudinal changes
are easily m~ ade, or that long established habits In some
cases, prejudices die quietly.
Australia has traditionally been oriented to Europe and the
United States. In our view of Asia we have not been free of
the ugly taint of racism or xenophobia. But as we prepare to
take up a more active role in Asia, I believe Australians
will be able to leave those attitudes where they belong in
the history books.
Ladies and Gentlemen,
It is especially true that our hopes for economic progress
depend substantially on whether we can continue to live in a
region which Is stable and peaceful.
Australia plays a full and active role in the diplomacy of
the region. We are building our defence self-reliance to
boost our capacity to protect the broad strategic interests
of the West. And we are working to increase our defence
cooperation with our regional friends.
Australia has also shown'its capacity to take the lead where
constructiva and creative action is required. Perhaps most
significantly we helped create the South Pacific Niuclrear Free
Zone. The nationg of the region who support the Zone,
including Australia, do so because it is an important nov
means of preventing the proliferation of nuclear weapons. At
the same tiimeo as the United States recogniseso It Is fully
consistent with Australia's alliance obligations under ANZUS
and your strategic Interests in the region.
I believe we are witnessing a time of enduring progress in
arms control. President Reagan and Ceneral Secretary
Gorbaphev havo established a climate of practical cooperation
which I fully expect will yield further reductions In nuclear
arsenals. It is in this climate that my Government sees merit in
exploring a now step in arms control for the Asia-Pacific
region. This would be a regional effort against chemical
weapons proliferation.
I want to announce that just before leaving Australia I
asked my colleague, Foreign Minister Bill Hayden, to set in
train an examination of how this concept could be developed
and pursued in co-operation with regional countries.
certainly, chemical warfare is an abhorrence. Australia has
very actively supported and contributed to the effort to
establish a Comprehensive Chemical Weapons Convention In the
Committee on Dsarmament In Geneva.
But at the same time we may be able to complement these
global efforts at a regional level.
I know the proposal raises complex Issues. However, I
believe the effort to examine a regional approach can
certainly serve Australia's interests and, more than that,
the interests of the region as a whole.
Ladies and Gentlemen,
In all those ways economically, socially, politically and
in the field of security Australia is credontialled and
equipped as never before to take a constructive role In the
Asian region.
I remember Steinberg's famous New Yorker cartoon which shows
the civilisod world affectlyely grnatnq on the far bank of the
Hudson River.
Shortly past the river, a spare ly " settled desert begins. in
the distant nothingness the words WPacific Ocean' are neatly
pencilled In.
The cartoon showc how large In your eyos the 01g Apple
stands. Faixr enough. You are certainly entitled to that.
But New Yorkers are also known for their hard realism. Wore
a new version of the cartoon to be drawn In 198, I' like to
think that in the place of the distant Pacific nothingness we
would surely see the outlines of Seoul and Shanghai,
Singapore and Tokyo, and also of Sydney and the other
Australian cities which are Increasingly making their
presence felt In the region.
For those centres of economic growth In Asia and the Pacific
will Increasingly nove from the horizon to the foreground.
They must Increasingly command the attention and demand the
Involvement of anyone in America who would help fulfil the
promise, and reap the rewards, of the Pacific Century.
A~ nd, my friends, may I conclude with this proud assertion
by their record of shared commitment In war and In peace to
the defence of freedom and the liberty of the individual, by
the friendship of their two peoples, by the quality and
abundance of their human and material resources, no two
countries are better able, together, to reap those rewards
for themselves and for the people of the region than are our
two groat nations, Australia and the United States.