Economic diplomacy brief: Labors Asian policy rebirth, foreign farm investment and PNGs legal boom

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A farm near Penong, South Australia (Photo: Auscape/UIG/Getty Images)

Labor is going back to the future with a distinctly economic determinist approach to future engagement with Asia, at a time when the region's economic 'miracle' is facing some of the greatest security challenges in a generation.

Shadow Treasurer Chris Bowen has underlined the 'butter before guns' approach of the Opposition's new FutureAsia policy by declaring that a Labor treasurer would deliver an annual stocktake on the region, rather than the prime minister or foreign minister, for example.

But while Bowen seemed to exert control over the policy direction at the Asia Society last week, the intellectual core was better expressed by the putative future Foreign Minister Penny Wong in a speech to the Australian National University in August. There she declared:

The emergence of geo-economic power as an alternative to geo-strategic power rather than its complement challenges traditional mindsets and traditional ways of doing business. Comfortable assumptions that military strength constrains global ambition are challenged by the way in which economic power is being focused and organised.

In Bowen's punchier style, that translates as:

This is not just about Australia exploiting our near neighbours for our own economic gain by selling them more stuff. It's also about deeper engagement to deal with the economic challenges and opportunities of our region together with our neighbours, for mutual benefit.

And if this sounds like Julia Gillard's Australia in the Asian Century white paper redux, that is largely right – minus some of the sunnier rhetoric. It's also, let's not forget, the way Prime Minister Malcolm Turnbull used to talk about the Asian engagement opportunities before elevation to higher office introduced him to cyber security and terrorism.

Nevertheless, Bowen has copped some criticism for barely even mentioning the security tensions stretching from North Korea to the Bangladesh border that are challenging the Asian economic growth paradigm and potential Australian opportunities.

But in a presumably unintended way Bowen actually drew attention to the classic dilemma at the heart of the Labor approach (which Wong has clearly sought to unwind) over what is really in the driver's seat:  the economic opportunities or a foundation of political security.

In an interesting insight into the evolution of a policymaker, Bowen revealed his plan for annual formal finance and trade minister talks with Indonesia was inspired by seeing in a previous life how closely defence and security officials from the two countries could work together on difficult issues. Bowen, of course, had the difficult job of managing refugee boat arrivals from Indonesia in the Gillard years.

But this inspiration only highlights the question of whether strategic trust and stability between countries such as Australia and Indonesia is necessary before the dollars can flow. This Perth USAsia Centre study outlines some new options for stronger economic ties with Indonesia in line with the FutureAsia policy.

Bowen's speech has also drawn some excessive criticism in relation to China's Belt and Road Initiative (BRI), simply because he broached the idea of some cooperation with the Northern Australian Infrastructure Fund – without any specific commitments to China. This tentative opening to the Chinese infrastructure initiative hardly seems radical, when this Cato Institute policy brief is telling US President Donald Trump to welcome signs that China is playing a serious role in global economic policy.

Indeed, the notable thing about the actual policy commitments in FutureAsia so far is the level of attention to Southeast Asia rather than China. This is actually very much in line with the government's own beyond China focus, with a Southeast Asian leaders summit next March and then a new Indian economic engagement strategy.

Hopefully this is not just the result of Bowen's after-hours Indonesian language study (so he can actually talk the talk), but more a recognition of how Southeast Asia offers a gado-gado of economic, cultural and strategic pathways into the broader region for Australia, despite recurring challenge such as the Rohingya crisis.

The other clear political undercurrent in the FutureAsia policy is the extent to which Labor is insisting that the Asia Century venture be revived in any sort of bipartisan approach. Bowen actually took a more conciliatory tack than Wong did in August by declaring he wouldn't dump existing good policies if he returns to office. The proof of that will come when Labor outlines its approach to Foreign Minister Julie Bishop's own personal legacy in the New Colombo Plan.

Selling the farm

If there is one lesson from the release of the second edition of the federal government's register of foreign-owned agricultural land, it is that selling the farm remains as politically incendiary as ever.

The latest numbers show an overall slight decline in foreign-owned land amid a significant rise in Chinese ownership to 14.4 million hectares, alongside an equally large fall in British ownership to 16.4 million hectares.

The register was established two years in response to the emerging backlash against foreign investment in Australia, even though there is generally still strong support for trade liberalisation. Senior trade negotiator Justin Brown acknowledged at the Ricardo@200 event last month that this dichotomy remained 'particularly concerning' for policymakers as work gets under way on a new whole-of-government statement on the issue.

The latest register seems to have intensified striking differences between Nationals politicians and the National Farmers Federation over foreign investment, and also prompted some predictable exaggeration over a Chinese invasion.

In fact, the figures seem to reflect more farm asset shuffling between foreign and domestic partners over a small number of actual deals, rather than any seachange. The British and Chinese changes each mostly seem to reflect one large such shuffle on each account.

But sometimes transparency takes a while to emerge. The latest numbers contain the useful additional calculation of how much land foreigners actually own once their Australian partners are taken into account. According to this approach, foreign land ownership falls from 50 million hectares to 37 million.

From briefcases to bilums

Australian lawyers make an unlikely leading indicator for Papua New Guinea, but that's what they appear to be as the country faces up to some huge economic challenges under newly returned Prime Minister Peter O'Neill.

Two firms – Norton Rose Fulbright and Corrs Chambers Westgarth – have recently opened offices in the country, anticipating a better business outlook despite the downturn in commodities prices.

O'Neill's proclivity for complex commercial transactions such as the recently unwound 2014 government purchase of a 10% stake worth more than $1 billion in Oil Search means there is probably plenty of conventional work for lawyers, whatever the state of the resources economy.

But the real challenge is to get new investment into tourism and agriculture, which will employ a lot more of the country's increasingly restless youthful population.  

Corr's Chief Executive John Denton says he sees the law firm playing a role in PNG becoming more of an economy development relationship for Australia rather than just an aid responsibility. This is certainly not a new idea, but he is right to observe that a handful of Australian legal professionals in Port Moresby can make a lot more difference to economic development than the same number in Shanghai.

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