JOIN LABOR'S CULTURE OF IDEAS

Sliding doors – Australia and Indonesia

The 1998 film “Sliding Doors” starring Gwyneth Paltrow explores the different paths her characters, Helen’s life might take after she does, and doesn’t, find her lover in bed with another woman. It’s a reminder of how timing can be everything.

It’s also a reminder for Australia of the dangers of falling in love with the wrong neighbour, as a recent PWC report shows Indonesia growing to be the 4th largest economy in 2050. The same report finds Australia tumbling down the list from 18th to 28th. If true, this means two things:

1.     A seismic shift in the economic power balance in South East Asia.

2.     A dramatic change in the relationship between Australia and Indonesia.

If we accept the PwC findings it won’t be for Australia to play the role of local Sheriff. Nor will it be a strategic partnership defined exclusively by Bali, boats and beef.

Instead, advanced manufacturing, education, infrastructure, finance and pubic administration should define Australia’s future relationship.

A McKinsey Global Institute report titled “The archipelago economy: Unleashing Indonesia’s potential” highlights the advantages of having one of the world’s youngest demographic profiles—60 percent of the population is below 30 years of age, and the population is growing at a rate of 2.5 million a year. Australia’s higher and vocational education system is well placed to take advantage of this growth in demand.

Just as Australian $2 trillion superannuation funds would benefit from Indonesia’s massive infrastructure demands.

The sensible thing to do for Australia would be to invest in this relationship so we benefit from the growth on the world’s next economic super power. But are we?

According to Australia’s Department of Foreign Affairs and Trade (DFAT), Australian investment in Indonesia in 2013 totalled $10.9 billion in 2012.

Compare that with Australia’s $46 billion of foreign direct investment in New Zealand – a country with fewer than 4.5 million people and a growth rate of around 3%. Compared with Indonesia with over 250 million people and a growth rate of around 5%.

And so if the dollar investment is so small perhaps we are better invested in other aspects of the relationship. In doing those things that build trust.

But instead of building trust the Abbott government has done the opposite. Foreign Minister Julie Bishop making comments that Indonesia needs “to enforce sovereignty over its borders”. Cutting the Indonesian aid budget from $605 million to $366.4 million. And comments from Prime Minister Abbott at the time Andrew Chan and Myuran Sukumaran were on death row saying the Indonesian government ought to show mercy as a form of reciprocity, given Australia’s generosity in the aftermath of the 2004 Boxing Day Tsunami.

Low investment, mistrust and a lack of initiative to correct either. It really feels like we are walking through the wrong sliding door. We need a course correction. We need a reboot. That means asking the right questions. I offer a few:

What will Indonesia want? What can Australia offer? Can we provide them and if not why not? Where should we focus the functions of Australia’s innovation system to capitalise on this growth? And what areas of the economy are likely to be most critical for Australia in the Asian century?

Is it the case that rising Indonesian demand for consumer goods and services, particularly for food, education, financial services, healthcare, advanced manufacturing and public administration aligns well with Australian capabilities.

For example wheat consumption in Indonesia is on the rise and Australia ranks as the fourth highest exporter it is well positioned to capitalise. Primary products like beef and wheat is just part of the mix, the rising middle class means more disposable incomes for premium produces.

And from this example what will Australia be producing that delivers high yield in 2050 that Indonesia will want? We should be exploring the consumption changes and consider whether we need to change what we produce.

What will be the impact of climate change on agriculture by 2050? Water scarcity is a reality today, look at California. Australia is a pretty dry continent and we’ve developed some real expertise in water conservation and water supply systems. We should be world leaders in the space and providing Indonesia with help to ease the water constraints they confront particularly in their growing urban areas.

But even more so are chances for Australia to assist the Indonesia political system to be its best self.

As Sam Roggeveen from the Lowy Institute points out “without a more capable state sector that provides better health care, education, economic regulation, and infrastructure, Indonesia may not even achieve the projections made by PwC.” Australia has an excellent record when to comes to public administration, government accountability and transparency.

According to Transparency International Australia ranks 11th out of 175 nations when it comes to corruption whereas Indonesia ranks 107th. This is an area where Australia has expert and institutional knowledge to assist Indonesia.

So not only are there opportunities for business to trade but there are also opportunities for government to trade as well.

The answer to all of these questions is yes. Yes to developing a broader and deeper relationship.

And just as we answer yes to these questions we must stop answering yes to small-minded short-term domestic political parochialism.

Because if we want to fully benefit from the economic giant a mere 344 kilometers from our shore a vision, policies and action now could step us through the right door.

 

About Polo Guilbert-Wright

Polo Guilbert-Wright

Polo Guilbert-Wright is a graduate of public policy from the London School of Economics. Between 2005-07 he worked as a policy and later a media adviser to a number of NSW Ministers. In 2007 he moved to London where he worked for a global public affairs consultancy before becoming a media adviser in the UK Home Office, responsible for immigration, security, and law and order. Since returning to Australia in 2012 he has been working for a leading trade union. He holds a BA/LLB from the University of NSW and tweets @pologuilbert

  • BECOME A FINANACIAL
    CONTRIBUTOR click to Donate

    The Chifley Research Centre relies on contributions from individuals and organisations to fund our operations, events and research. Without your donations, nothing we do would be possible.

  • Cameron Clyne

    Cameron Clyne is the former CEO of National Australia Bank and now chairman of advisory firm Camel Partners and a

    Catherine King

    Catherine King is the Shadow Minister for Health and Member for Ballarat.

    Cilla DeLacy

    Cilla has 20 years’ experience in public policy and corporate strategy across the water, land use planning and environmental management

    David Coats

    David Coats is in Australia as a Visitor at the Chifley Research Centre. He is a research fellow at the

    Gabrielle Kuiper

    Dr Gabrielle Kuiper has a background in science, sustainability and urban planning. She was previously Senior Adviser, Climate Change, Energy

    Erinn Swan

    As Deputy Digital Director I look for new and better ways to tell stories online. When I'm not doing that

    Jim Chalmers

    Jim Chalmers MP is Shadow Minister for Finance, and the federal Labor Member for Rankin. Prior to his election

    Linda Tirado

    Linda Tirado is a completely average American. She also has good rants about how much it sucks to be poor

    Michael Cooney

    Michael is the Executive Director of the Chifley Research Centre. He was previously Speechwriter to Prime Minister the Hon Julia

    Paula Matthewson

    Paula Matthewson is a freelance communications adviser and writer on politics. She was media advisor to John Howard in the

    Terri Butler

    Terri Butler is the federal Labor Member for Griffith, Queensland.

    Tim Kennedy

    Tim Kennedy is national secretary of the National Union of Workers, organising for secure jobs and a fair Australia.


    Website design and development by cartercarter.com.au