Engagement in a Changing World

The Wakefield Press released The Engaging State: South Australia’s Engagement with the Asia-Pacific shines a light on emerging forms of engagement in this the ‘Asian Century’. Below is an extract from the opening chapter.

South Australia’s engagement with the Asia Pacific region during the latter part of the 20th century continues a long tradition of engagement with politically and economically dominant nations and regions. The character of South Australia’s international engagement was profoundly influenced by British colonisation and patterns of late 19th and early 20th century migration, investment, trade and cultural development. Subsequent waves of foreign investment and the development of deep trading relationships with other nations and regions, particularly the United States, Europe and Japan have diversified South Australia’s international relationships. As the second decade of the 21st century unfolds the focus of attention is now the Asia Pacific region, particularly as a consequence of sustained high rates of economic growth in China and India which continue to fuel strong demand for South Australian commodity exports. This has been vitally important in the face of the global financial crisis which has dampened demand for South Australian exports from the United States, Britain and Europe.

Early signs of South Australia’s economic engagement with Asia emerged during the 1970s when Premier Don Dunstan visited Hong Kong and Japan to organise trade representation in those countries. Dunstan signalled the importance of building ties with the region, visiting Singapore, Jakarta, Hong Kong and Japan. He established a South Australian presence in the region through various mechanisms. Dunstan recalled, ‘In Japan we hired as agents the branch office of Elders GM, the South Australian pastoral industry giant, and other local offices were hired in due course in Hong Kong, Kuala Lumpur, Singapore and Jakarta. The agents were required to keep us informed of local market opportunities, to suggest products or processes south but not supplied, and to service South Australia businesses on their visits to the countries concerned’.

Over the last two decades there have been various attempts by policy-makers to strengthen economic and commercial ties with the Asia Pacific region. National policy settings, in particular the phasing down of tariffs and more aggressive export strategies, have forced the pace of this in South Australia. Following the lead of the Hawke Government’s economic and industry development reforms during the late 1980s and early 1990s, the South Australian Labor Government led by John Bannon looked to Asia as a source of future growth. In the midst of recession it commissioned the US based consultancy firm Arthur D Little to generate a policy blueprint – ‘New Directions for South Australia’s Economy’.

Released in 1992, the so called AD Little draft report focused the attention of policy makers on the Asia-Pacific region. The report highlighted the growing importance of tradeable services to meet the needs of the Asia-Pacific region, noting that ‘rapid economic development taking place’ in the region, ‘gives rise to many opportunities for the sale of tradeable services’ and the provision of technical assistance with infrastructure development. The seeds for the growth of one of South Australia’s fastest growing service export industries – international student education were sown at this time. The report urged the State Government to place particular emphasis on the development of trade and investment relationships with the Asia-Pacific region and ‘as a matter of urgency … improve or increase’ government representation in the region. Specifically the AD Little Report recommended that the State Government establish representation in Indonesia, Malaysia and Taiwan ‘to build closer relationships with government and industry in those countries’ and ‘to promote South Australian trade and investment and identify opportunities for joint venture and collaborative activities.

The AD Little Report was sidelined by the calamitous events surrounding the collapse of the State Bank during the early 1990s. While the change of government that flowed from the State Bank crisis ushered in a political era dominated by micro-economic reform, the incoming Liberal Government led by Dean Brown made pre-election policy commitments to engagement with Asia through the establishment of an International Business Centre with a particular focus on Indonesia, Singapore, Thailand, Hong Kong, China, Taiwan and Japan. In part, the new government justified its outsourcing and privatisation strategies as tools of engagement with major corporate interests in the Asia Pacific region. The Government’s Development Council identified the export of public services to Asia as a priority and established a Government Services Export Panel.

Outsourcing became a major instrument of international economic engagement as well as financial policy in the mid 1990s when the Liberal Government signed contracts for the management of Adelaide’s metropolitan water and waste water infrastructure with the French/Anglo/Australian United Water Consortium and the management of the State Governments information technology services to US based Electronic Data Services. To bolster exports to Asia the Government supported the establishment of a Water Industry Cluster of companies focused on export development.

Soon after re-election for a second term of government in 1997 the Liberal Government led by Premier John Olsen announced that it would privatise the South Australian electricity industry. The scale of the asset privatisation program was certain to attract overseas interest and it did. By the end of 1999 it had leased Flinders Power, a major electricity generating facility to US-based firm, NRG Energy along with ETSA Utilities, the State’s electricity distribution system, to Hong Kong-based Hutchison Whampoa group which included major infrastructure investors, Hong Kong Electric and Cheung Kong Infrastructure extent to which these relationships have underpinned net growth in the export of South Australian goods and services remains unclear.

The Engaging State: South Australia’s Engagement with the Asia-Pacific Region is edited by John Spoehr and Purnendra Jain and is published by Wakefield Press.