Open letter to the new Government of Australia

Dear Next Government,

Congratulations on your election triumph! We hope that the result gives you the mandate you need for strong management and leadership of our economy for next three years. To help with your post-election action plan we thought it timely to set out our thoughts and ideas for you to capitalise in Australia’s role in the Asian century, particularly in relation to China. We have set out our ideas under five headings and invite you to consider these carefully. 

1. Innovation, investment and our services sector

It has long been touted that Australia’s greatest offer to China are our services and “smarts”. As our mining industry has been declining, our exports in services like education, healthcare, renewable technology and financial services have been growing. However, we still have a long way to go. According to the recent ‘Demystifying Chinese Investment in Australia’ Report by KPMG and the University of Sydney, the dollar amount of Chinese investment into our healthcare, renewable energy and agribusiness sectors have been growing. But this has largely been due to a small number of mega-sized deals with large Australian companies which included State Power Investment Corporation’s acquisition of Pacific Hydro for $3 billion and Biostime’s acquisition of the Swisse Wellness brand for $1.38 billion.

In my opinion, there is still a long way to go before we see more deals made with the smaller end of town. If we want to see investment across the board in our services industry, we need to remain as innovative and globally competitive as possible. Under their ‘Going Out’ Strategy, China is going around the world looking for the best technology and capabilities in which to invest and bring back to China. If our SMEs are not encouraged to innovate and have the necessary support to develop their capabilities, services and technology, we are likely to be overlooked and left behind. The raft of initiatives - such as funding for start-up incubators and increasing collaboration between industry and researchers - proposed in the Government’s new National Innovation and Science Agenda are a good start. However, these plans need to be matched with the necessary investment, funding and support if we are truly serious about attracting more Chinese investment into our services sector.

2. Top-down rather than bottom-up

In 2013, I worked with Citrus Australia to take a group of citrus growers to China to attend a number of trade shows and meet with local importers and premium supermarkets. At the beginning of the trip, many of the growers worked independently – chasing leads, having private conversations with importers and hiding confidential information from everyone else. However, after a few conversations, the growers learnt that the demand for their produce from China was so large that they could not possibly supply it alone. The growers realised that in order to meet the demand, they all had to work together under the Citrus Australia banner. Presenting a collective, united and collaborative front was also more effective in attracting attention as the Chinese recognised ‘Brand Australia’ more easily than the brands of each individual farm. This led to the group securing some lucrative contracts and since then, citrus exports to China have been doubling year on year.

I believe this is occurring across other industries, with businesses competing against each other for a cut of the pie which is, more often than not, too large for them to grapple with by themselves. Whilst the presence of Austrade and other agencies have been consistently strong in China, industry associations now need to get involved and receive the encouragement and support necessary to represent their businesses in China, just like Citrus Australia. Without a united and national brand, businesses will be dwarfed by the demand of China’s emerging middle class.

3. Are we really a multicultural nation?

We have always claimed that Australia is one of the most multicultural nations in the world – with nearly 30% of our population born overseas. But do our businesses, organisations and institutions, and more importantly, executive boards, reflect this multiculturalism? The short answer is ‘no’. In 2014 the Diversity Council of Australia released a report in which they found that whilst the Australian labour force is 9.3% Asian born, only 4.9% make it to senior executive level and in ASX 200 companies, only 1.9% of executives have Asian heritage. These percentages would be even smaller if we just looked at those with Chinese heritage. Also, many Australians who have lived and worked in Asia for a long period of time often return back to find that their knowledge, skills and experience are under-utilised and under-valued. And what about in Government? How many Asian faces do we see sitting in the Upper and Lower Houses? When dealing with a market as complex, diverse and challenging as China, we need to promote Chinese and Asian staff into roles where they can use their cultural background and knowledge to make the big decisions about China.  

Of course we cannot expect the Government to elect people into executive board roles or parliamentary seats. But we do hope that a commitment can be made to make finding feasible solutions a priority.

4. ChAFTA – Just the beginning

The signing of ChAFTA was a watershed moment in the Australia-China relationship and represents a real commitment on a Government level to further the relationship. However, I believe that ChAFTA only marks the beginning of the next chapter in the relationship. In order to fully take advantage of ChAFTA, the Government has the responsibility to educate the business community and the community at large about the opportunities and benefits China represents to Australia and what it means for our economic growth and the creation of new jobs. Without this, there is a big risk that businesses will not be mobilised and energised and will miss out on these opportunities. Chinese businesses and institutions are already taking advantage of ChAFTA – as seen by the increase in investment deals and infrastructure projects and will continue to do so. If we do not educate the greater community and provide the necessary support to businesses, organisations and institutions, there is a strong possibility that the agreement will be unbalanced with the Chinese getting more out of it than us. And if we were to look back in 10 years’ time, we would consider this missed opportunity a great shame.   

5. Education overhaul

From Hawke to Keating to Rudd to Abbott, it seems that every government since the late 1980s has promised an education overhaul to encourage more students to undertake learning an Asian language. Whilst Hawke and Keating were somewhat successful, every plan since then has been shelved due to funding issues and changing priorities. And since the year 2000, student enrolments into Asian languages have been on the decline. If our next generation grows up without an appreciation for Asian cultures and languages, how can we expect them to engage with, let alone understand, our Asian neighbours? If Australia is serious about growing its relationship with Asia and China, a sufficiently-funded national program encouraging schools to offer more Asian languages and encouraging students to study should be at the top of the new government’s priority list.

One of the things I admire about China is their 5 year planning cycle and how this has been effective in lifting thousands of people out of poverty, building world-class infrastructure and transforming their economy. Whilst I appreciate a 5 year planning cycle doesn’t quite fit in with our 3 year election cycle, I hope the Government can consider the possibility of a 5 year ‘Asian Engagement Plan’ to fully embrace the opportunities of the Asian Century.

Yours sincerely,

David Thomas & Katya Dobinson