Australia says g’day to Asia
The Economist magazine had an interesting take earlier this month on Australia’s attempt to spark investment in its northern outback areas from other Asian nations, especially China.
The northern part of the continent sweeps across the states of Queensland, Western Australia and the Northern Territory. It’s the size of India, but has only one million people living there.
“Once a haven for misfits and fortune-seekers, it is now attracting people at a faster rate than the rest of Australia, thanks largely to a boom resulting from the sale of its iron ore, coal and gas to Asia’s resource-hungry economies,” said the Economist.
In June, the administration of Prime Minister Tony Abbott released a report outlining plans to develop the area. With six of Australia’s top ten trading partners located in Asia, the report talks about making northern Australia a hub for Asian investment. While the report says it won’t follow the idea from lobbyists to make business and income taxes there lower than the rest of Australia, the government did pledge to invest in infrastructure, such as roads and dams.
The Economist said the scheme has promise. It reported that Northern Australia has already grabbed much of the foreign direct investment in Australia’s booming mining business. In 2012 alone foreign investment reached A$206 billion ($213 billion). And China, Australia’s biggest trading partner, welcomed the latest plan.
The government, among other things, wants to relax visa rules to allow mining companies to recruit more overseas workers, and to abolish caps on seasonal workers from Pacific Island nations and Timor-Leste.
However, the plan faces many potential pitfalls. The Aboriginal Australians lay claim to much of the northern land, and certain parts can only legally be used for livestock farming. So, traditional landowners and environmentalists are likely to put up a fight. And as the Economist said, “China’s enthusiasm is not to be counted on.”
The magazine quoted economist Saul Eslake saying that the north’s harsh landscape and remoteness are always likely to triumph over “emotional appeals” to the notion of populating vast empty spaces.
Asia Unhedged agrees. We also wonder whether the land that gave the world Rupert Murdoch and Crocodile Dundee, and where everybody goes sailing on Wednesdays, can successfully turn itself into an Asian investment haven. Oz, in the past, has also been less than friendly to Asian immigrants.
Still, with a population of just 23 million compared with China’s 1.3 billion, Australia has plenty of uninhabited bush and resources to offer. If it can cut through its local politics and red tape, it could lead to more investment and development from Asia that might benefit everyone.