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Abbott's Northern Australian idea: grand vision or folly?

By Murray Hunter - posted Friday, 28 June 2013


Thus maybe the first question that needs to be asked is; How can Northern Australia become integrated with the growing economies of Asia? Any White paper has to answer this question by showing where Australia can provide value to these Asian economies.

This may be best undertaken by studying how the successful countries of the region developed competitive economies. One of the best examples may be Singapore, as at independence in 1965, the country had no natural resources and was cut off from its natural hinterland by political circumstances, thus forced to develop in relative isolation, in some ways not dissimilar to northern Australia.

The Singapore strategy was to pick industries that had value to the region. Across the border in Malaysia, one can also see how Air Asia has expanded Kuala Lumpur International Airport as a major air hub, where 10 years ago the airport authorities had to wave landing fees to attract airlines.

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Direct foreign investment into Northern Australia may only be extractive from the region. The Chinese perceive Northern Australia as a source of minerals, where the US see the north as a military platform, which may not bring the type of investments that will rapidly develop the region. This will leave Australian business with the role in creating value for the region, say for example, partially relocating ship building and repair from Adelaide to Darwin, building a low cost airline hub into the region, develop a regional financial centre as an alternative to Singapore, develop retirement settlements for wealthy Japanese and Singaporean retirees, and develop Halal supply chain and shipping services, etc. However Singapore had a sovereign investment fund to develop the industry it needed, which Australia does not.

Thus short of any radical policy overhaul by any future Australian Government, the private sector will have to be the movers and drivers of development, where the government only facilitates.

So if the ultimate aim is to integrate Northern Australia with Asia, much deeper thinking will be required during the White Paper preparation process, although the vision itself is a good start. A Green or discussion paper is needed beforehand on such an important issue to canvass various development strategies. One of the major faults of the Australia in the Asian century paper released last year by the Gillard Government, was that it relied upon poorly defined Cultural and diplomatic strategies to engage the Asian region without necessarily offering any new value.

Australia will have to go back to this basic question about what value Northern Australia can offer Asia, and go from there. This may not be the largest capital project any Australian Government has embarked upon, but it will be the most intellectually challenging. If successful, it would cement Australia's place in the region for the rest of the century.

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About the Author

Murray Hunter is an associate professor at the University Malaysia Perlis. He blogs at Murray Hunter.

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