Transcript
DR DAVID GRUEN
Welcome everyone. My name is David Gruen and I'm the Executive Director of Domestic Macroeconomics at the Treasury, and I'm very much looking forward to today. Before I begin, let me acknowledge the traditional owners of the land on which we meet – the Ngunnawal people. And welcome everyone here to what I think will be a very enjoyable and interesting one-day conference, jointly hosted by the International Monetary Fund, the Reserve Bank of Australia and the Treasury.
It's my very great pleasure to be able to introduce the Deputy Prime Minister and Treasurer to provide some welcome remarks to begin our conference. Wayne Swan became the Treasurer in late 2007 and the Deputy Prime Minister from the middle of 2010. He has presided over one of the most challenging periods in Australia's... in recent decades, certainly for the global economy, and it has been... there've been a range of challenges for the Australian economy, and they continue. He's got a busy schedule, so we're very grateful to him for spending some time with us to open the conference. So, without further ado, let me call on the Deputy Prime Minister and Treasurer to open the conference.
THE HON WAYNE SWAN MP
Thanks very much, David. To all of my colleagues from the Treasury, the Reserve Bank and from the IMF, to all of our distinguished guests here today, welcome this morning to what is a very distinguished group of analysts, commentators and policy makers.
Days like this are important for stimulating informed debate, for sharing ideas and insights, and, I think, most importantly, for taking the long view of Australia's prospects in Asia's Century. These dialogues are about improving our understanding of Asia, and let's not forget, perhaps most importantly, Asia's understanding of us, and to consider the implications of Asia's extraordinary rise for our own future, not just in the coming months, but in the coming years and in the coming decades.
Just last week I had the opportunity to participate in a conference on China hosted by the Wall Street Journal and The Australian. I had the chance to have, there, a broader discussion about Australia's strengths and relative contributions that government and the wider community can make to our national prospects. I won't go into all of that again today, but I do want to make the point that Asia's rise should not only be viewed through the prism of the resources boom, or indeed, through the prism of Chinese demand alone because the heavy focus on resources and commodity prices sometimes does us a disservice for three key reasons. Firstly, we never thought record high prices would continue forever. Secondly, we have other tremendous advantages here in Australia. And, thirdly, we are already seeing a broader sweep of opportunities in services and beyond, build on the expansion of the middle class right across the entire region. This puts Australia in the box seat of Asia's re-emergence, so long as we properly manage this transition over the next decade or two.
So while the public debate on structural change focuses almost exclusively on the negatives, it's our job to explain the vast opportunities of moving up the value chain, collaborating with out neighbours and more fully participating in the evolution of our region. It's why the government will shortly release the White Paper on Australia and the Asian Century. And I know many people here today have made a substantial contribution to the White Paper's development. Of course, no one conference or one government can unlock every opportunity or address every challenge that we face in coming years. It is critical that we keep the national conversation focused on what will be a transformational period for our country, our region and the world.
Now, I don't have to convince the people in this room of the enormity of Asia's rise. It remains staggering, even to the most familiar observer. Over the past decade China has managed to double its GDP in one fifth of the time it took the UK to double its GDP during the industrial revolution. And by early next decade the economies of China and India alone are expected to be larger than all the major advanced economies combined. By this time Asia is not only expected to account for the majority of the world's population but the majority of the world's middle class. As it becomes the world's largest production zone, it will also evolve into the world's largest consumption zone.
Now this is not only a story about size or speed; it's a story about the shifting gears of Asian growth and how these changes map across our own economy. It's about the long term policy choices of countries in our region and how they choose to shape global governance and international institutions. It's a story of demographics, the degree of domestic consumption, productivity improvement and the competitive dynamics of global markets. And it's a story of urbanisation in our region, particularly in China, something Joseph Stiglitz described as one of the most powerful global forces shaping the course of the 21st Century.
Now, all too often the long term story of Asia's rise get clouded by commentary on the latest data point in China or daily movements in commodity prices. I often get asked whether Australia is too dependent on China or whether we are too dependent on Asia's demand for our resources. Now, it is my view, a logical one, that we should never be overly dependent on one country or on one commodity, but I think this question too frequently misses the point; it often ignores the fact that our prospects in our region are underpinned by structural forces that will sustain growth over the medium term. So to those who mount the argument that we are too closely tied to China, or too dependent on Asia's demand for our resources, I say this: it's extremely difficult to make a case that we should be doing less trade with the fastest growing, most dynamic region in the world. It's extremely difficult to make the case that we should tie our economic fortunes more closely with the anaemic growth and bleak prospects faced in other parts of the developed world.
Now, in saying that, we can't ignore the risks, we can't ignore the challenges, and we do need to have a sensible discussion about all of those. Here in Australia we need to think seriously about how we seize the opportunities and manage the challenges of structural change that are brought about by the powerful economic forces, which is shaping our region. How we manage the evolving patterns of growth across our sectors and regions, and the impact of this on our communities, but I do think we can be quietly confident, given what we've managed to achieve already in Australia in the face of enormous structural change as we've come through the largest terms of trade boom in our nation's history.
We have an economy not only with low unemployment, but contained inflation despite the difficult adjustments faced by some sectors in our economy. We've also begun to convert this price boom into something much more enduring. This is seeing investments in our resources sector unrivalled in our history, with significant investment still to come, and through this investment, we are turning our prices boom into a sustained increase in our economic capacity, which will see higher levels of production and exports for years to come. Our success so far stands in stark contrast to past booms, and what it hinges on is our sound microeconomic and macroeconomic frameworks, our openness and our flexibility, which is being brought about by successive reforms over a very long period of time.
Now this is a theme which is, of course, taken up by Standard & Poor's overnight, who have reaffirmed Australia's triple-A c
redit rating with a stable outlook, one of only seven countries in the world. And here in Australia, for the first time in our history, our triple-A credit rating from the three major global agencies, something not achieved under the previous government. And as we go forward, Australia's resources boom itself is only the taste of Asia's rise. There are broader opportunities to be captured in coming years if we play our hand well.
The cliché of our country is one of a quarry, but we know, in fact, that Australia is a services economy, a sophisticated and diversified economy. Services account for nearly 80% of GDP, and as millions of people are added to the ranks of Asia's middle class in the next decade, the demand for Australian services will also grow, along with demand for our food and other consumer goods. There'll be greater opportunities in everything, from agriculture and food, to travel, tourism, education, engineering, arts, architecture, to banking and to financial services, as well as all of the things we haven't dreamed up yet.
So this is a long term story, far broader than resources and we've only just begun to see some of the benefits. For example, the number of students from Asia studying in Australia has doubled in the past decade. China's share of our wine exports has jumped five-fold in four years, and six of Australia's top ten most valuable inbound tourism markets are already in Asia. So Australia starts the Asian Century in a very strong position. We do need a concerted and coordinated push from governments, business and the entire community to lift our productivity growth and to fully connect with the region. But, overwhelmingly, the best way to do this is to invest in our people.
There's a widespread perception that our comparative advantage lies in the ground beneath our feet, in our rich and abundant natural resources, but one of the key themes coming out of the Asian Century White Paper is that our greatest comparative advantage is the Australian people themselves. We're home to a population that's educated, highly skilled, creative and diverse. We're feted for our ingenuity as much as our endowments. The capabilities and attitudes of our people will be our most valuable asset as we deal with the very big structural changes in the years ahead. This will not only help us make... take advantage of opportunities, it will broaden minds and help communities come to terms with what will be some difficult and uneven structural changes for many years to come. That's why I've been talking as much in recent weeks about Asia focused people as Asia focused policies. Now, no doubt today you'll cover a lot of ground in your discussions. This is a very important national discussion for Australia and for our region, and I look forward to reading about all of your ideas in the days ahead. Thank you.