Bloomberg News

Australia Plans to Overcome ‘Tyranny of Distance’ With Asia Ties

October 28, 2012

Australia Plans to Overcome ‘Tyranny of Distance’ With Asia Ties

A man rides his bicycle on the Pyrmont Bridge as commercial buildings stand in the central business district in Sydney, Australia. Photographer: Brendon Thorne/Bloomberg

Australia must find new trade opportunities and strengthen its education system to take advantage of Asia’s economic boom, Prime Minister Julia Gillard said, outlining goals for the country to meet by 2025.

“As the global center of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity,” Gillard said in a report yesterday. “Australia is located in the right place at the right time.”

Australia, whose economy has avoided recession for the past 21 years amid surging Asian demand for iron ore, coal and natural gas, will need to rely on more than luck to benefit from the region’s expansion, Gillard said. Australia plans to boost trade links to Asia to at least a third of gross domestic product by 2025, compared with a quarter today, she said.

Australia also plans to improve diplomatic relations with China, its top trading partner, India, Indonesia, Japan and South Korea, while expanding ties with countries in the region including Vietnam and Mongolia, Gillard said.

The country’s GDP per person should be in the world’s top 10, compared with 13th in 2011, requiring a gain in productivity, the government said. That would lead to an increase in Australia’s average annual income to about A$73,000 ($75,723) per person in 13 years from about A$62,000 in 2012.

Universities, Languages

The government wants to have 10 of the world’s top 100 universities by 2025 and a school system among the five best. All Australian students will have the opportunity to learn at least one “priority” Asian language, Mandarin, Hindi, Indonesian or Japanese, Gillard said in a speech in Sydney yesterday.

One-third of board members of the biggest publicly listed companies in Australia should have Asian expertise, she said.

A global economic slowdown has prompted policy makers from the U.S. to Europe and China to add to stimulus measures in 2012 to boost growth. In Australia, central bank Governor Glenn Stevens has cut interest rates to revive demand outside of a resource boom that may peak earlier than previously forecast.

Resources Minister Martin Ferguson said last month that the commodity price boom was over, increasing the importance of exports to developing countries such as India. Two-way goods and services trade between Australia and India reached $21 billion in the year through June 2011, led by sales of coal and gold, according to Australian government figures. India was Australia’s fourth-largest export market in the period.

Economic Output

By the end of the decade, Asia will surpass Europe and North America combined in economic output, Australian Treasurer Wayne Swan said yesterday. Asia’s middle class is forecast to rise by more than 2.5 billion people by 2030, he said.

“A consumer boom is fast gathering momentum,” Swan said in an e-mailed statement. “This will increase demand for a diverse range of goods and services, like health, aged care, education, tourism and financial services.”

Trade Minister Craig Emerson will become responsible for assisting Gillard in meeting the targets, the government said.

“We will continue to support a greater role for Asian countries in a rules-based regional and global order,” according to the report, entitled ‘Australia in the Asian Century.’ “Australia’s alliance with the U.S. and a strong U.S. presence in Asia will support regional stability, as will China’s full participation in regional developments.”

The U.S. is boosting its military presence in the Asia- Pacific region by deploying as many as 2,500 marines in the northern Australian city of Darwin as China’s power grows.

“We have an ally in Washington, respect in Beijing, and more,” Gillard said in the speech yesterday. “An open door in Jakarta and Delhi, Tokyo and Seoul.”

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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