Ties that bind beyond the dollars and cents

The boat people from Sri Lanka just wouldn’t go away. For six weeks they have dogged Prime Minister Kevin Rudd, at home and abroad.

At home with the opposition led by Malcolm Turnbull; and abroad risking eroding Australia’s political capital with its closest northern neighbour Indonesia - and testing relations further afield, to Malaysia and beyond.

They intruded into what was to be a celebration at Rudd’s attendance at the inauguration of Indonesian President Susilo Bambang Yudhoyono on October 20. The issue occupied the two leaders at the East Asia Summit in Hua Hin five days later, and at the Apec Summit in Singapore (November 14-15).

Yudhoyono was to make an official visit to Australia. He cancelled, citing scheduling conflicts. And Foreign Minister Marty Natalegawa questioned the value of the Rudd initiative for the Asia-Pacific community.

By the measure of other headlines, you’d think the news was all bad on Australia’s relations with Asia.

Relations with China and India have been tested: with China on human rights; and India over international education, and Australia’s refusal to supply uranium.

It all seemed remote at the corporate breakfast at PricewaterhouseCoopers’ executive suite in Melbourne. Viewed across the breadth of Australia’s engagement with Asia, the outlook is much more optimistic. Compared with the rest of the world, relations with Asia over the past year have been measurably brighter.

Statistically, Australia’s engagement with its top 25 friends in Asia went up 7.9 per cent from 2007 to 2008, while its links with the rest of the world went up 6.3 per cent. In the close to two decades from 1990, relations with Asia multiplied 4 1/2 times, while links with the rest of the world grew three times. That’s the finding of the latest edition of the PricewaterhouseCoopers Melbourne Institute Asialink Index of Australia’s engagement with Asia.

“Together, Asean, China and Japan make our western partners seem almost insignificant,” says Professor Tim Lindsey, director of the Asian Law Centre at the University of Melbourne. “Our future is tied to our region.”

Says Heather Ridout, chief executive of the Australian Industry Group: “The next generation of Australians will be drawn inexorably to the Asian region - because that’s where the action is.”

The index, in its second year since its launch in 2008, measures seven aspects of engagement: trade, investment, research and business development, education, tourism, migration and humanitarian assistance. The order as presented in the index may or may not have been intended. Read with the sentiment of Lindsey and Ridout, one could be persuaded that the measures as set out in the report might suggest a leaning towards material profit.

The academic Lindsey, in public forums, has, however, consistently taken a less hard-nosed line on engaging Asia. Lindsey will be heartened by a key finding of this year’s index, which suggests a reconciliation of his conviction of friendship for friendship’s sake, and the pragmatism of business.

The report acknowledges relationships between the seven dimensions of engagement, recognising that some lead and influence others.

Education is a lead sector, “providing potential indication of future engagement in tourism and migration in the short term, and trade and investment in the years to come”. Education, an important export earner, provides a “useful insight - and perhaps an early warning system - for longer-term trends in the economy”.

In other words, cultural engagement and business can be mutually beneficial. Or need not be mutually exclusive.

Elsewhere, in the midst of the bad press of Australia’s challenges in its regional relations, other commentators have similarly argued the case.

Former diplomat Bruce Grant, writing in The Age, is of the view that Australia’s problems with India and China reflect the country’s struggle to find its cultural and economic place.

“Engagement with the region is necessary, not to change Australia’s identity but to improve the nation’s economic prospects and security,” writes Grant, a former high commissioner to India, and foundation chairman of the Australia-Indonesia Institute.

For all the pragmatic benefits of increased engagement that the PWC Melbourne Institute Asialink Index identifies, the more enduring promise in prospect is of the cultivation through familiarity between peoples of the modesty, patience and capacity to understand others that Grant would like to see.

For who can say where that might lead to, when people get together.

University of Melbourne China scholar Pradeep Taneja is as much optimistic in another commentary on the value of pragmatic engagement in Australia’s mending of fences with China.

Education has a lead role. It is Australia’s single largest services export, and the third largest export overall after coal and iron ore, earning more than A$15 billion a year.

Launching the index report was John Brumby, Premier of Victoria, which together with New South Wales has 71 per cent share of Australia’s total international education revenue.

Last year, close to half a million international students were studying in Australia, up 20.7 per cent from the previous year.

Professor Glyn Davis, vice-chancellor of the University of Melbourne, reflects in the index report on the benefits that foreign students bring to Australia-Asia engagement. “Education is a good indicator of the broader relationship (with other countries),” he says. “Strong education flows reflect broader flows, particularly in trade.” Davis cites Malaysia as example. “We know that graduates from (Australia) live and work and in many cases lead in other countries,” he says.

“People talk about the Malaysian cabinet: at one point the majority of its membership were graduates of Australian universities. That can only enhance trade between Australia and Malaysia. That can only make the Malaysian government think positively when it’s in trade negotiations with Australia.”

On the other hand, difficulties in the education relationship would, over time, flow on to affect trade. Davis worries about recent attacks on Indian students studying in Australia.

He takes comfort in the procession of leaders visiting India to cool feelings. Brumby has just come back, after a visit by Deputy Prime Minister Julia Gillard, who is education minister. Rudd spent time in Delhi on his way to Singapore for Apec.

Business takes heart in the broad relationship with Asia, as measured by the PWC Melbourne Institute Asialink Index. And not just for the dollars and cents.