Andrew Leigh

Dinner Speech to the Japan Update

Australia-Japan Research Centre

Australian National University

Canberra

21 September 2016

Let me start by thanking the Australia-Japan Research Centre for inviting me to speak here tonight. In 2014, the Japanese and Australian Prime Ministers Abe and Abbott expressed their strong support for the Australia-Japan Research Centre in promoting research collaboration and intellectual exchanges between Australia and Japan on political and economic relations. Both sides of politics strongly support the Australia-Japan relationship as well as the great work of the Australia-Japan Research Centre.

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But I want to start tonight with the story of Sacarnawa Deconeski. Sacarnawa was the first recorded Japanese resident in Australia. He settled in Queensland having reached Australia in 1871, applying for naturalisation in 1882.Although most Japanese settlers in the late 1800s worked as pearlers in northern Australia, Sacarnawa was different. He was a professional acrobat.

After travelling around Australia as an entertainer for many years, in 1875 Sacarnawa married a woman from Melbourne. As many of us do in later life, Sacarnawa gave up acrobatics. He and his wife set up a farm in Far North Queensland near the town of Herberton. At its height, Herberton was the richest tin mining field in Australia and was home to 17 pubs. In case you’re wondering, Canberra has 56 pubs and clubs, but on per capita terms Herberton was doing pretty well for a small town.

By the start of Federation, Australia had 4000 Japanese immigrants, mostly based in Townsville where the Japanese Government had established its first consulate in 1896. During Australia’s shameful period of the White Australia Policy, the consulate closed in 1908 and it wasn’t until 1966 that consular offices reopened in Brisbane and, eventually, in Cairns, too.

I was reminded of the acrobat Sacarnawa Deconeski when watching the amazing Japanese gymnast Kohei Uchimura win two gold medals in Rio just recently. With 15 gold medals, Kohei is widely considered to be the greatest gymnast of all time. Although I have very little in common with Kohei, I did read the other day that he is a huge Pokemon Go fan. I am proud to say that I am the first Australian politician to capture a Pokemon in the Australian House of Representatives on a parliamentary sittings day. Whether it’s through winning gold medals or catching Pokemon, I suppose we all change the world in our own way.

Japan has had 24 Nobel Prize winners since 1949 in physics, chemistry, medicine, literature and peace. In the field of natural science, Japan has had more Nobel Prize winners than any other country after the US. Japan is famous for writers like Kenzaburo Oe and Haruki Murakami, famous for composers like Fumio Hayasaka and Toru Takemitsu, famous for directors like Akira Kurosawa and Hayao Miyazaki and, most importantly, famous for its beers and whiskeys like Asahi, Kirin and Nikka. As a long distance runner, I always come back to Haruki Murakami’s famous book What I talk about when I talk about running. While running the London Marathon earlier this year I was reminded of his quote that “Nothing in the real world is as beautiful as the illusions of a person about to lose consciousness”.

Australia, like all countries, have benefited immensely from Japanese culture and society through our longstanding friendship with Japan. And, of course, Australia has benefited immensely from our economic relationship, too.

Japan is Australia’s second largest trading partner with over $70 billion of two-way trade every year. According to the 2011 census, more than 50,000 Australian residents claimed Japanese heritage with more than 75,000 Japanese nationals living in Australia for a period of 3 months or longer. Japanese remains the most widely studied language in Australian schools and universities. Around 360,000 students study Japanese from primary to tertiary level, which ranks Australia fourth in the world in terms of the number of Japanese learners. Japan is also Australia's largest source of investment from Asia and our fourth-largest overall, with an investment stock of around $174.7 billion.

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As many of you know, we recently had an election here in Australia. While I don’t recall the exact outcome – and if you’ve been watching Parliament recently I’m not sure the Government recalls the outcome either – I was fortunate enough to be given the shadow portfolio of trade in services. This is the area I want to focus my remarks on tonight, not only because trade in services will be increasingly important to the Australian economy but because an increased focus on trade in services has the potential to deepen the relationship between Australia and Japan.

Services are vital to the Australian economy. They account for 73 per cent of our GDP on a value-added basis and employ four out of five Australians. Services are also critically important to Australia’s trade. 22 per cent (or $125 billion) of Australia’s trade is trade in services. It has also grown much faster than our trade in goods. Exporting services into large overseas markets like Japan will also be important to the Australian economy’s transition from the mining investment boom to a more services-based economy.

Trade in services with Japan should play a particularly important role in this transition and there are many ways in which our trade in services with Japan could be increased and strengthened.

First, our trade in services with Japan is much smaller than our trade in goods. Japan is Australia’s second largest trading partner in merchandise trade but only our eighth largest trading partner in services trade. Two-way services trade with Japan totals more than $5 billion a year, primarily in travel, transportation and business services like legal, accounting, management, engineering and R&D. Education also features prominently, with 12,960 enrolments by students from Japan in 2015. There is great potential to increase our services trade with Japan to the same level of our trade in goods.

Second, Australia has a free trade agreement with Japan and we cooperate with Japan through the WTO, TPP, RCEP as well as the G20, APEC and ASEAN+6. But while cooperation across so many forums is to be commended, it also represents a complex patchwork of agreements that Australian and Japanese businesses have to navigate. This so-called ‘noodle-bowl’ effect is observed both regionally and globally. It is not unique to Australia and Japan. But addressing this fragmentation will be critical to reducing the cost of trade and the cost of doing business between our two countries.

Finally, and most importantly, I’m concerned that all too often when it comes to trade we seem to measure success not in terms of liberalising trade but in signing deals. As I’ve said before, just as anyone can sell a car in five minutes, anyone can sign a bilateral trade deal. The question isn’t whether the Trade Minister can get the handshake, it’s whether the agreement delivers genuine trade liberalisation.

Australia and Japan’s negotiations in the Trans-Pacific Partnership (TPP) are perhaps a case in point. Within the annexes of the TPP, the areas where Australia and Japan have the most exemptions are also two of the areas in which Australia and Japan have the most bilateral services trade, namely trade in business services and transportation services. Japan has a range of exemptions in the TPP over business services including agriculture services, livestock services, employment services, legal services, accounting services, services around vocational education and training and so on. Japan also has restrictions in transport services in maritime, airlines, freight, rail and roads. Australia is a bit better, but nothing you’d brag to your friends about.  Australia has restrictions in regards to airlines, maritime transport, coastal shipping, health services, communication services, foreign fishing services, patents, migration services, design services and restrictions on company auditors and liquidators.

The magnitude of these restrictions, of course, varies from one exemption to the next. But looking at the whole package, staff at the World Bank estimated in January this year that the TPP, if fully implemented, would raise Australian GDP by 0.7 per cent and Japan’s by around 2 per cent by 2030.

In summary, both Australia and Japan could do better in boosting genuine trade liberalisation in services, reducing the complexity of our patchwork of trade agreements and increasing our trade in services to the same level of our trade in goods. I’m optimistic we can achieve this.

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To conclude, for those of you who do the Canberra to Sydney drive as often as me, when you arrive into Canberra you see a large sign proudly identifying Canberra as the sister city of Nara, the capital city of the Nara Prefecture located in the Kansai region of Japan. Instrumental in the first contact between Canberra and Nara was Father Tony Glynn, an Australian Marist Brothers Priest who lived in Nara following the Second World War. His tireless efforts helped to establish the foundations for future exchange. Father Glynn was highly regarded by the Nara community. Upon his death in 1994, a group of Nara citizens made a film about his life and work and a memorial hall was built in his name.

The genesis of community ties between Canberra and Nara is through our educational institutions. It is through forums like the Japan Update that we continue this tradition and shine a light on the path forward for further strengthening the Australia-Japan relationship. 

* My thanks to Adam Triggs for his invaluable assistance in preparing these remarks.

ENDS