Australia's relationship with Japan

I spoke in Parliament this week on the strength and importance of Australia's relationship with Japan.


23 June 2014

Australia was still a collection of British colonies when it first exported coal to Japan in 1865, before the Meiji restoration. In 1888, we were shipping Australian wool to Japan. The first Australian trade mission went to Japan in the 1930s. There must have been some consternation when our two countries signed a commerce agreement in 1957, so soon after the end of World War II. Today, Australia and Japan work closely together on security challenges such as counter-terrorism in South-East Asia and the proliferation of weapons of mass destruction, not least in the DPRK. It would probably be ironic to my grandfather's generation that the greatest Australian concern over Japan's security role in the region is its historical reluctance to assume a higher global and regional profile.



After the tsunami struck Japan, Australian Prime Minister Julia Gillard was the first national leader to visit the disaster affected region in April 2011. Australia sent a 76-member search and rescue team, donated $10 million to the Japanese Red Cross Society and deployed three C17 transport aircraft. Australian school children immediately began making paper cranes, not because the government told them to but because they felt it was the right thing to do. Soon the entry foyer of the Australian Embassy in Tokyo was filled with tens of thousands of paper cranes.

As Julia Gillard commented, Japan is also a friend, a country and a people for whom Australians today feel genuine affection and warmth. We have 100 sister city relationships and six sister state relationships. We admire the transformation of the Japanese economy from a wartime ruin with developing country status to a nation which is one of the world's largest economies with living standards higher than those of most nations on earth. That is an extraordinary economic achievement.

It was my pleasure to represent the government when I visited in 2013 to attend a major economic conference. There I met with politicians on both sides of the Japanese aisle, with business leaders and with the central bank governor Haruhiko Kuroda. I was impressed by the strategy of Abenomics, aiming to reinvigorate the Japanese economy back to the trajectory we so hoped it would follow in the 1980s, when airport bookshelves were filled with tomes about the virtues of the Japanese economic model. The first arrow of Abenomics is monetary policy, a two per cent inflation target. The second is fiscal policy, focused particularly on reconstruction efforts after the Tohoku earthquake and tsunami.

However, the most important arrow of Abenomics is structural reform. Productivity growth is what underpins growth in living standards. I commend Prime Minister Abe for his commitment to free trade. Naturally, the best way of pursuing free trade is through a multilateral trade deal. Compared to that, everything is second best. But Japan's commitment to a trans-Pacific partnership and to a free trade arrangement with Australia is welcome news, so long as those arrangements lead to greater trade flows. A study by the Productivity Commission's Dean Parham estimated that half of Australia's productivity growth in the 1990s was due to trade liberalisation, and Japan could potentially reap a similar reward. The Labor government's Australia in the Asian Century white paper noted that Japan is Australia's second-largest trading partner and our third-largest source of foreign direct investment. We provide Japan with minerals, agriculture and energy. They provide us with manufactured products and foreign investment. Our economies are remarkably complementary.

I am pleased to see the 1.5 per cent quarter-on-quarter growth in the first quarter of 2014. While we can expect some slowing of the Japanese economy as result of the consumption tax increase from five per cent to eight per cent in April, I trust the government's stimulus measures will partially offset that. Looking forward, Japan's overall population and workforce are forecast to contract, but the 2020 Olympics will hopefully act to boost consumer and business confidence in the years to come.

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