ADDRESS BY THE PRIME MINISTER, THE HON P. J. KEATING MP
TO THE HONG KONG AUSTRALIA BUSINESS ASSOCIATION
SYDNEY, 18 JUNE 1992
Ladies and gentlemen,
I'm pleased to have the opportunity to address the Hong
Kong Australia Business Association.
As this country increasingly looks toward Asia for its
future we will need organisations like this one.
We'll need you to promote business.
We'll need you to establish the networks of
communication, trade and investment essential to our
integration with the region.
We will also need you to promote the id~ a of Australia
engaged in Asia.
And it's not jiz= a in Asia that we need to promote it.
We need to promote the idea he=: because Australians,
by and large, have yet to fully grasp the dimensions of
our opportunity in Asia, or the imperatives which
accompany that opportunity.
We simply haet seize the time in Asia and, quite
simply, we can.
But it is one of the lessons of the success of the Asian
Tiqers indeed it is a lesson to be learned from
successful countries around the world that there has to
be a conscious, concerted, national effort.
The nation has to know what the goals are, what the
rewards will be, and what is required.
Your example will help in that educationnl process.
And I hope you will take every opportunity to
proselytise. Asia is where our future substantially lies, but we won'It
secure the future without effort.
We can't assume that our presence on the margins of the
most rapidly growing economies of the world is an
historical accident to replace that other one, called the
British Empire Asia will not serve as a substitute for
the imperial security blanket.
It is not like a reef of gold or a mountain of iron ore
which needs only to be mined. It's not just a matter of
sending in a railway line and some earth-moving
equipment.
We won'It wake up one morning and f ind ourselves riding on
Asia's back as we used to ride on the sheep's.
It will require, as I said, a conscious national ef fort.
We will have to adjust our thinking and increase the rate
of our work.
We'll have to think of ways into these markets, which
means being clever as perhaps never before, bold as never
before, tenacious as never before.
At this stage we are not doing badly.
If our economy is not yet so international and open as
Hong Kong's, it is much more so than it was a decade ago.
We have radically opened it up in the 1980s.
If we are not yet as competitive and dynamic as the
Tigers, the floating of the dollar, reduced protection,
wide ranging micro-economic reforms, the transformation
of our industrial relations system and a responsible
fiscal policy have given us a chance to play in the same
league. We now export more than twice the volume of goods we did
at the beginning of the eighties.
And the composition of those goods has shifted markedly
to manufactures and services.
It can also be said that if our economic imperatives are
still imperfectly or inadequately understood, they are
much better understood than they used to be.
I think perhaps the economic education of Australia has
been one of the more remarkable developments of the last
decade.
In 1992 Australians know that we cannot prosper by a
policy of exporting commodities and maintaining
inefficient industries for a small domestic market behind
a tariff wall.
They know the realities including, in principle, the
reality of Asia.
What they need, I think, is the confidence and your
association can be an important supplier of that.
These have been hard times revolutions of the kind we
have been going through are bound to be.
But the reward will be contributing to and sharing in the
prosperity of Asia where in the last year the Newly
Industrialising Economies grew by 7.1 per cent, compared
with the OECD average of 1.1%
The reward is nothing less than the maintenance of our
standard of living and our way of life.
The reward is the future of Australia.
And there are reasons for confidence.
Already nearly 55% of our exports go to the Asian region.
We are in a position of considerable strength.
Our GNP is equal to the combined GNP of all the ASEAN
countries. We have a skilled, well educated and flexible work force.
We have a high degree of political and economic
stability. We have things which the region wants like raw
materials, but also technologies and manufactures, skills
and services, and space.
Our trade with Hong Kong is a good measure of how well we
are doing.
Our bilateral trade with Hong Kong has grown three-fold
in the past decade and Kong Kong is now our seventh
largest export market.
Hong Kong has become an important investor here.
Last year it was our second largest source of migrants.
As the centre of the " Greater China" growth triangle,
Hong Kong now offers Austral-an buis-i ies-a new frontier
of opportunity.
There have been significant recent changes in the region.
4
As wages have increased in Hong Kong and Taiwan,
manufacturing has shifted to the coastal provinces of
China especially the Guangdong and Fujian provinces.
I'm sure you are familiar with most of the facts and
figures, but they are worth recording in an Australian
context. They speak eloquently of the challenge which we
face. Up to three million workers in Guandong province are
employed in factories owned by Hong Kong manufacturers.
With the aid of Taiwan's and Hong Kong's capital,
technology, management and marketing skills, Guangdong
has built a dynamic economy with real GNP growing by
12.40 per year from 1980.
Hong Kong, of course, is a gateway to China, its 1.1
billion people, and its increasingly vibrant private
sector.
China is now Australia's ninth largest export market.
Hong Kong's growing role as a financial and services
capital for China represents major opportunities for us.
Again, there are reasons for confidence:
in the example, for instance, of AOTC which has been
granted one of the licenses to operate a second
generation mobile telephone network in Hong Kong.
-Or in the new airport and port development there,
where Leighton Industry is tendering.
Ladies and gentlemen-
What is presently happening in Hong Kong and China is
happening in other parts of Asia, and the opportunities
for Australia are replicated throughout the region.
Intra-regional foreign investment has rapidly increased.
The NIEs are now important foreign investors in their own
right. Intra-regional foreign trade has expanded.
Major developments are underway or being planned to
improve the infrastructures.
Economic growth in Asia is increasingly being driven by
demand within the region itself.
That is why, as everyone here knows, we mnust become a
part of it.
There is no doubt that this dynamic progress in Asia will
continue into the next decade.
But there a= a uncertainties.
The greatest of them continues to be the risk of a
breakdown in the Uruguay roundj of the GATT.
A breakdown in the Uruguay Round has the potential to
create regional trading blocs in North America and
Europe. We face the prospect of revisiting a world with
a fortress mentality. I
Hong Kong and the other Asian economies have shown the
benefits of a free trade policy.
We in Australia share their beliefs, and we have a common
interest in voicing these beliefs in international
forums. It is not only because of enlightened self-interest, but
also because we share a common conviction that
unrestricted bilateral trade is the best way to foster
economic development in the developing countries.
The APEC process is one forum where we can pursue these
goals. We should remember what the reality of APEC is:
over the past twenty years the share, of our total
exports to APEC countries rose from 54 per cent to
73 per cent.
in the same period the EC's share fell from 21 per
cent to 12 per cent which, as from last year, is
less than the volume of our trade with the ASEAN
countries alone.
in fact our trade with ASEAN is now greater than our
trade with the United States.
APEC has become the major regional economic and trade
forum and it will became an increasingly important
instrument for promoting regional trade liberalisation.
That is why I have proposed a process for periodic APEC
Heads of Government meetings.
Ladies and gentlemen
As part of the continuing process of internationalising
the Australian economy an essential undertaking if we
are to succeed in Asia in the One Nation statement I
announced that we would issue more foreign bank licenses,
and allow foreign banks to operate as branches for
wholesale banking and acquire smaller banks.
By these measures we intend to more closely integrate
Australia with the Asia Pacific economies by taking on an
increasingly substantial role as a regional financial
centre. In One Nation I also announced that we would allow the
taxable income derived from pure off-shore banking
transactions by an authorised off-shore banking unit in
Australia to be taxed at the reduced rate of 10 per cent.
The Government realises that if it wants to facilitate
the development of the industry in Australia it must
broadly match the concessions in other major centres.
Our concession will be generous. For example, it will
apply to the profits from trading with non-residents in a
large range of financial instruments ( including foreign
currency) and to the fee income received from credit
support activities.
We intend to introduce the legislation next week. I
think you will see then that the Government has provided
tax measures conducive to the development of a viable
off-shore banking centre, while taking measures necessary
to protect the domestic revenue base.
These initiatives, I believe, recognise the unique
character of off-shore banking as a highly specialised
activity distinct from the core business of the banking
sector. They number among the fundamentals we have to get right.
They demonstrate our commitment to the long term.
Hong Kong, of course, has been enormously successful in
establishing itself as an off-shore banking centre.
Our stable economic and political system, our location in
the right time zone, our skills, our increasingly close
links with the region, and our competitive taxation
arrangements mean that we have the potential to make a
success of the same business.
I think it is appropriate also to note that the
Government will continue to support the high degree of
autonomy promised in Sino-British Joint Declaration for
this autonomy is the key to maintaining stability,
prosperity and human rights in Hong Kong after 1997.
Australia and Hong Kong have initialled an agreement
which will protect Australian investments in Hong Kong
until at least 2007.
China will formally approve this agreement before it is
signed. Ladies and gentlemen
The Government recognises the important role played by
small and medium sized businesses, and we have
implemented a number of reforms and programs designed to
address the structural impediments which face them.
Our aim is to promote the creation and growth of
competitive enterprises by removing regulatory and other
impediments and providing appropriate assistance at
critical stages.
The reforms, which address priority issues such as
taxation, export development, access to finance, and
business skills and enterprise development will help
small business to take advantage of new opportunities as
the economy recovers.
We have recently taken a number of other steps to promote
our economic integration with the region.
The National Trade Strategy which the Government launched
last November established an integrated and consistent
framework in which to pursue trade and investment in East
Asia. Austrade's overseas resources have been re-allocated to
reflect the high priority we place on supporting
Australian business in the region.
In One Nation we announced a further increase in their
funding. In February the Government issued a follow-up to the
Garnaut Report which seeks to anticipate future
developments in South-east Asia and so prepare us to take
advantage of the opportunities they present.
We are undertaking in consultation with the private
sector and state governments a major study of trade and
investment in Asia.
It also serves our economic purposes that an increasing
number of Australian students are studying Asian
languages at secondary and tertiary level.
There are now 34 centres or institutes of Asian studies
at Australian universities, and there is a growing number
of educational exchange programs between Australian and
Asian universities.
Our schools are changing the curriculum to reflect
changes in the community, the evolving requirements of
government and business, and the ground-swell of interest
in the societies of the region.
8
All these things bear testament to our commitmentthough
they do not, as a few critics have suggested,
reflect any willingness on our part to compromise our
social and political values.
As I said in a speech in Sydney early in April, and as I
re-iterated while in Indonesia, our traditions of
democracy, our notions of social justice and personal
liberty are not negotiable.
Indeed, the more confident we are of what we stand for,
the better we will do in Asia and, I believe, the rest
of the world.
To be ambivalent about identity will only weaken us.
Part of that identity these days comprises our nondiscriminatory
immigration policy and the principles of
cultural tolerance enshrined in multicultural social
policies. This of course is a significant change: not so long ago
we were known in the world for discrimination and
intolerance, particularly towards Asia.
The change we have made, which now sees us known in Asia
for our openness, seems to me a proof of our ability to
make the other necessary adjustments.
Because the nation's future quite literally depends on
it, few things press so urgently on the Australian
Government as the need to create the right environment
for Australian trade and investment in Asia.
But the Government's capacities stop short of meeting the
ultimate challenge.
That responsibility falls to business itself.
Australian business ii making considerable progress, and
it's really not for me to tell those who are making it
what else they might do.
But it does seem to me that our cultural diversity equips
us extraordinarily well, and we can probably turn it to
greater account than we are presently doing.
our Asian migrant community, through small business
networks, is making considerable progress in opening up
new avenues of trade and consolidating commercial links
with all parts of the Asia-Pacific.
Personal familiarity with the linguistic, cultural,
religious, geographic and national differences of these
markets constitutes a genuine advantage for the
Australian economy.
It follows that Australian firms might do well to draw
upon the wealth of language and cultural skills in their
own workforces not just in Asia, of course, but in
Europe and the Middle East.
I think it will become very clear in the next few years
that there is a greater reward to be reaped from our
immigration and multicultural policies than we have
hitherto imagined.
And I think it will be all the greater if we recognise
and ensure that nothing in those policies compromises
our identity or our loyalty to this place.
As we become more Asian in our economic and geopolitical
orientation we will do well to become more undividedly
Australian in our thinking and in the image we project
abroad. That, I believe, will herald not a more parochial
Australia but a more sophisticated one a more confident
and a more successful one.
So, ladies and gentlemen, I congratulate the Hong Kong
Australia Business Association for the initiative they
have shown and for the vanguard role they are playing in
Asia, not only on behalf of their members, but on behalf
of Australia.
And I thank them for inviting me here today.