WEBVTT 1 00:00:00.000 --> 00:00:05.760 Good afternoon, everybody. My name's Roe Mueller, and I have the happy privilege of introducing our guest speaker this afternoon. 2 00:00:08.000 --> 00:00:16.640 Our speaker is an economist, and he works for Australia's chief trade promotion agency. 3 00:00:16.940 --> 00:00:19.780 It's part of the portfolio of the Department of Foreign Affairs and Trade, 4 00:00:20.520 --> 00:00:26.340 and it's in the business of helping our businesses export overseas 5 00:00:26.340 --> 00:00:31.860 and find a place in what is an incredibly competitive arena, 6 00:00:35.800 --> 00:00:39.260 and it's growing more competitive by the day. 7 00:00:40.100 --> 00:00:43.980 In the past, many people may not have been interested in this area. 8 00:00:44.040 --> 00:00:48.060 In fact, many people have not been interested in economics per se. 9 00:00:48.440 --> 00:00:50.660 It's been called the dismal science. 10 00:00:51.220 --> 00:00:54.100 People make jokes about economists all the time. 11 00:00:54.100 --> 00:00:56.220 They say, you know, economists do. 12 00:00:56.340 --> 00:00:56.940 They do it with models. 13 00:00:57.760 --> 00:01:01.120 If you lay them all end to end, they still don't reach a conclusion, 14 00:01:02.020 --> 00:01:06.500 and they're the only people who can win Nobel Prizes. 15 00:01:06.640 --> 00:01:12.340 You know, two economists can win a Nobel Prize for having completely different answers to the same question. 16 00:01:13.160 --> 00:01:20.720 But today, I'm happy to introduce Tim Harcourt, who is a slightly different type of economist. 17 00:01:20.760 --> 00:01:25.520 He's a person who can speak plain English and make it interesting for everybody, 18 00:01:25.520 --> 00:01:31.940 and he can explain what is really a crucial area for Australia today, 19 00:01:32.080 --> 00:01:34.200 because the world has changed significantly. 20 00:01:34.360 --> 00:01:35.820 We are a trading nation. 21 00:01:35.940 --> 00:01:36.980 We depend on trade. 22 00:01:37.740 --> 00:01:40.300 Over 90% of our trade goes by sea. 23 00:01:40.380 --> 00:01:41.120 We are an island. 24 00:01:41.540 --> 00:01:47.220 We're very dependent for income on what we can produce, services we can provide, 25 00:01:47.540 --> 00:01:51.080 and we've seen a lot of continuity and change over the last 100 years 26 00:01:51.080 --> 00:01:53.760 in terms of our strengths and our comparative advantage. 27 00:01:54.440 --> 00:01:54.960 Thank you. 28 00:01:54.960 --> 00:01:55.020 Thank you. 29 00:01:55.020 --> 00:01:55.040 Thank you. 30 00:01:55.520 --> 00:01:56.160 Thank you. 31 00:01:56.240 --> 00:01:59.300 I work for the University of Sydney, and I teach trade policy. 32 00:01:59.460 --> 00:02:04.140 I also work in the private sector in trade, and I help companies trade across borders. 33 00:02:04.560 --> 00:02:08.580 It's often difficult to explain to people, to students, for example, 34 00:02:08.740 --> 00:02:14.840 what a free trade agreement is and what it means, what trade policy is all about. 35 00:02:16.760 --> 00:02:21.040 It's difficult sometimes to explain to clients, and yet they're in the business of exporting. 36 00:02:21.260 --> 00:02:25.300 They're in the business of manufacturing, distributing, supplying across borders, 37 00:02:25.520 --> 00:02:30.940 but they often understand a very narrow portion and really not the landscape of trade. 38 00:02:32.700 --> 00:02:40.720 So I rely personally, I have to say, on reading a lot of what Tim Harcourt puts on the website of Austrade. 39 00:02:40.860 --> 00:02:47.620 And if you'd like to see what he writes about, have a look at the Economist's Corner on the Austrade website. 40 00:02:48.160 --> 00:02:55.060 He is, as I said, the chief economist of Austrade, and his job is to analyse the global economy, 41 00:02:55.520 --> 00:03:01.000 and he helps Australian exporters and Austrade, sorry, exporters export, 42 00:03:01.200 --> 00:03:03.340 but also Austrade devise its global strategies. 43 00:03:03.700 --> 00:03:07.180 Because, you know, from our perspective, it's a very large country here, 44 00:03:07.320 --> 00:03:11.640 but actually we're less than one third of 1% of the world's population. 45 00:03:12.080 --> 00:03:13.420 We're a very large island. 46 00:03:13.560 --> 00:03:16.060 We're a very small population, so we have to find our strengths. 47 00:03:16.500 --> 00:03:20.180 We need to see where we fit in the world that's changing all around us, 48 00:03:20.280 --> 00:03:22.120 and it's a deeply competitive world. 49 00:03:23.420 --> 00:03:24.820 So in order to do that, 50 00:03:25.520 --> 00:03:26.140 Tim travels the globe. 51 00:03:26.420 --> 00:03:28.120 He is the airport economist. 52 00:03:28.420 --> 00:03:32.140 In the past four years alone, he's travelled to over 40 countries. 53 00:03:33.900 --> 00:03:39.300 And an example of one of his publications is on the wall there, Beyond Our Shores, 54 00:03:39.360 --> 00:03:42.260 but he has a new book coming out called The Airport Economist, 55 00:03:42.260 --> 00:03:43.860 and I believe it's coming out early next year. 56 00:03:44.000 --> 00:03:47.460 I can't show you the copy, but I can show you a copy of What's Behind Us, 57 00:03:48.020 --> 00:03:50.220 which is available in the tent. 58 00:03:52.120 --> 00:03:55.220 Prior to that, Tim worked as an economist. 59 00:03:55.520 --> 00:03:55.700 He's a professor at the University of Sydney, 60 00:03:55.700 --> 00:03:56.640 and he's also the director of the Reserve Bank of Australia 61 00:03:57.620 --> 00:04:00.500 and the Australia Industrial Relations Commission. 62 00:04:01.980 --> 00:04:04.080 But I also have to... 63 00:04:04.080 --> 00:04:06.080 First, I'll welcome myself back to Adelaide, 64 00:04:06.100 --> 00:04:07.020 because I once lived here, 65 00:04:07.080 --> 00:04:10.000 even though I have lived most of my life in Sydney and Canberra. 66 00:04:10.080 --> 00:04:12.820 So I'm very happy to be back, because I love this place. 67 00:04:13.240 --> 00:04:15.480 But also I have to welcome Tim back to Adelaide. 68 00:04:16.940 --> 00:04:19.560 Tim was educated at the University of Adelaide, 69 00:04:20.880 --> 00:04:25.500 but he also has an association, as I know, with the University of Sydney as well. 70 00:04:27.320 --> 00:04:31.080 Without much further ado, I think you're going to really enjoy this. 71 00:04:31.420 --> 00:04:34.000 And I won't make too many jokes at your expense. 72 00:04:34.080 --> 00:04:35.700 I'll just simply introduce Tim Harcourt. 73 00:04:36.640 --> 00:04:37.160 APPLAUSE 74 00:04:38.600 --> 00:04:39.400 Thanks, Rowena. 75 00:04:40.620 --> 00:04:44.660 Well, thanks very much, Rowena, and great to be back in Adelaide. 76 00:04:45.000 --> 00:04:50.420 I thought I'd just start with three confessions before I begin. 77 00:04:51.500 --> 00:04:54.360 First of all, I am an economist. 78 00:04:54.420 --> 00:04:55.480 That's a confession in Adelaide. 79 00:04:55.500 --> 00:04:56.560 It's a confession in itself, in a way. 80 00:04:57.220 --> 00:05:01.180 I do have a number of PowerPoint graphs and slides, 81 00:05:01.360 --> 00:05:04.240 because economists tend to be slide junkies. 82 00:05:04.820 --> 00:05:07.580 You know, Ben Cousins has got his vices and I've got mine. 83 00:05:08.440 --> 00:05:10.880 But the slides will be available to all of you. 84 00:05:11.900 --> 00:05:15.400 We did have a couple of problems with the slides before, 85 00:05:15.560 --> 00:05:17.840 but Hagi's been on the job and we're about right. 86 00:05:18.540 --> 00:05:19.960 When I was at the ACTU, 87 00:05:20.060 --> 00:05:23.220 I was about the only person who could do PowerPoint initially. 88 00:05:23.800 --> 00:05:25.480 And at one of the ACTUs, 89 00:05:25.500 --> 00:05:26.880 the ACTU Congresses up in Brisbane, 90 00:05:27.440 --> 00:05:30.080 I was sort of the... like the Wizard of Oz, 91 00:05:30.240 --> 00:05:33.840 the person behind the curtain putting up the images on the screen. 92 00:05:33.980 --> 00:05:39.860 I remember when the left walked out of Bill Ludwig's speech at the AWU, 93 00:05:39.960 --> 00:05:43.820 and so suddenly you saw 500 people walk out of the Brisbane Town Hall 94 00:05:44.420 --> 00:05:45.760 in protest against Bill Ludwig, 95 00:05:45.880 --> 00:05:48.440 and I put up on the thing, free beer upstairs. 96 00:05:49.020 --> 00:05:49.540 And... 97 00:05:50.300 --> 00:05:50.820 LAUGHTER 98 00:05:51.740 --> 00:05:54.600 Bill Kelty never let me near PowerPoint again after that. 99 00:05:54.880 --> 00:05:55.400 LAUGHTER 100 00:05:55.500 --> 00:05:58.860 The last confession I have to make, 101 00:05:58.860 --> 00:06:04.160 and that's quite appropriate to make it here in South Australia. 102 00:06:04.520 --> 00:06:08.980 I grew up in South Australia, but there is some Sydney origins, I must confess. 103 00:06:09.740 --> 00:06:14.460 And that goes to my last confession, which is I'm not a real Harcourt, actually. 104 00:06:17.120 --> 00:06:20.280 My grandfather's original surname was Harkovitz. 105 00:06:20.700 --> 00:06:25.100 My father used to tell me when we were a kid that our origins were Transylvanian. 106 00:06:25.500 --> 00:06:27.340 And I used to think he was making it up. 107 00:06:27.360 --> 00:06:29.940 It reminded me of Dracula and the Count on Sesame Street, 108 00:06:30.060 --> 00:06:32.100 and I never thought there was such a place. 109 00:06:32.300 --> 00:06:36.460 But courtesy of Austrade, I did go to Transylvania a couple of years ago, 110 00:06:36.600 --> 00:06:39.900 and I found out all about the history, how it was once part of Hungary 111 00:06:39.900 --> 00:06:42.320 and once part of Romania, and the borders kept changing. 112 00:06:42.940 --> 00:06:47.480 And I've found generally that if I'm talking to Frank Lowy, I say I'm Hungarian. 113 00:06:48.060 --> 00:06:50.800 And if I'm talking to the ambassador for Romania, I say I'm Romanian. 114 00:06:51.080 --> 00:06:54.220 And I tend to use as much of my background as possible 115 00:06:54.220 --> 00:06:56.680 to further the interests of Australian trade. 116 00:06:57.680 --> 00:07:02.320 And what I found out was that my grandpa, my dad's father, 117 00:07:02.500 --> 00:07:08.080 his name was Koppel Harkovitz, and his mother was very religious 118 00:07:08.080 --> 00:07:11.120 and wanted him to be a rabbi in the family tradition. 119 00:07:11.760 --> 00:07:17.200 And he was going to a yeshiva, a Hebrew school, to train him to be a rabbi in Bondi. 120 00:07:17.840 --> 00:07:21.660 And he used to duck out and watch the Bondi Lifesavers. 121 00:07:21.760 --> 00:07:24.200 And he decided he wanted to be a Bondi Lifesaver. 122 00:07:24.220 --> 00:07:25.520 He wanted to be a true blue Aussie. 123 00:07:26.080 --> 00:07:27.780 So he went down there and said, 124 00:07:27.860 --> 00:07:30.280 My name is Koppel Harkovitz, I want to be a lifesaver. 125 00:07:30.820 --> 00:07:32.820 And with his beard and ringlets and everything, 126 00:07:33.060 --> 00:07:37.080 the Bondi Lifesaver Club were a little bit perplexed and said, 127 00:07:37.220 --> 00:07:39.640 Look, Koppel, we're all right for now. Don't call us. 128 00:07:39.700 --> 00:07:42.240 We'll call you if we need any more lifesavers. 129 00:07:42.680 --> 00:07:46.060 So he went into Sydney and he changed his name to Ken Harcourt. 130 00:07:46.140 --> 00:07:49.200 He went back the next week and he said, G'day, I'm Ken Harcourt. 131 00:07:49.240 --> 00:07:50.820 I want to be a lifesaver. And they said, Ken, beauty. 132 00:07:50.960 --> 00:07:52.580 We're looking for people. In you go. 133 00:07:53.160 --> 00:07:54.060 So he became... 134 00:07:54.220 --> 00:07:55.300 He became a Bondi Lifesaver. 135 00:07:56.420 --> 00:08:01.020 And I always wondered when... about changing the name, 136 00:08:02.500 --> 00:08:04.840 because Harry Markovitz won the Nobel Prize. 137 00:08:05.080 --> 00:08:07.180 And I used to say to my dad, Harkovitz, Markovitz. 138 00:08:07.580 --> 00:08:09.900 Well, one letter off, we could keep it. 139 00:08:10.540 --> 00:08:12.200 And I went to my grandfather and said, 140 00:08:12.320 --> 00:08:13.800 Pop, why did you change the name? 141 00:08:13.980 --> 00:08:15.840 And he said, Well, I didn't really change the name. 142 00:08:15.900 --> 00:08:19.580 I was just going from the Goldbergs to the Icebergs. 143 00:08:19.680 --> 00:08:21.780 And that's how we ended up. 144 00:08:21.860 --> 00:08:23.620 So for that reason, 145 00:08:23.620 --> 00:08:27.380 we chose a beach for the cover of Beyond Our Shores 146 00:08:27.380 --> 00:08:30.500 to celebrate the rabbi-turned-lifesaver. 147 00:08:31.380 --> 00:08:33.120 Unfortunately, the week we launched the book 148 00:08:34.000 --> 00:08:35.800 was the week of the Cronulla riots. 149 00:08:35.900 --> 00:08:37.480 So we had a bit of explaining to do. 150 00:08:37.680 --> 00:08:39.860 But anyway, the book's available. 151 00:08:40.660 --> 00:08:43.320 What I thought I'd do in my talk is, first of all, 152 00:08:43.320 --> 00:08:46.260 talk about some of the themes in the book. 153 00:08:46.340 --> 00:08:51.020 One is the big picture, the macroeconomic issues facing Australia. 154 00:08:52.280 --> 00:08:53.600 Secondly, I wanted to look at the issues that are affecting Australia. 155 00:08:53.600 --> 00:08:54.980 I wanted to look at some micro issues. 156 00:08:55.660 --> 00:08:58.840 And then finally, I wanted to turn to some cartoons and pictures 157 00:08:58.840 --> 00:09:01.900 because I know as much as I'm excited about economics, 158 00:09:02.260 --> 00:09:04.360 not everyone else shares the same view. 159 00:09:04.440 --> 00:09:07.880 So I've got a few pictures later if you can put up with the economics. 160 00:09:08.180 --> 00:09:11.720 But I thought I should start with the big picture. 161 00:09:11.760 --> 00:09:14.980 And I think one of the important things about Australia 162 00:09:15.720 --> 00:09:18.220 is that in the last quarter of a century, 163 00:09:18.300 --> 00:09:20.460 we've really opened up to the world. 164 00:09:20.500 --> 00:09:22.920 We're a very close place for much of the 20th century. 165 00:09:23.600 --> 00:09:26.920 And I think it was when Paul Keating floated the Australian dollar. 166 00:09:27.320 --> 00:09:29.440 If you read Paul Keating's memoirs, 167 00:09:29.440 --> 00:09:30.920 it was he who floated the Australian dollar. 168 00:09:31.460 --> 00:09:33.580 If you read Bob Hawke's memoirs, 169 00:09:33.580 --> 00:09:35.880 it was Bob Hawke who floated the Australian dollar. 170 00:09:36.380 --> 00:09:39.420 And I've read Mark Latham's book a few times 171 00:09:39.420 --> 00:09:42.620 and I can't find any mention of the exchange rate in the book. 172 00:09:42.720 --> 00:09:46.720 But certainly there's a lot of debate about it. 173 00:09:46.760 --> 00:09:50.460 But certainly I think that decision opened up the Australian economy. 174 00:09:50.700 --> 00:09:51.640 Tariffs came down. 175 00:09:51.880 --> 00:09:53.320 And we decided that... 176 00:09:53.320 --> 00:09:55.700 that the rest of the world didn't owe us a living. 177 00:09:56.120 --> 00:10:00.520 And I'm quite conscious that as much as economists, 178 00:10:01.220 --> 00:10:02.620 most of them are true believers 179 00:10:02.620 --> 00:10:05.540 when it comes to the importance of trade and openness, 180 00:10:06.260 --> 00:10:08.380 not everyone has the same view. 181 00:10:08.600 --> 00:10:12.160 And when I joined Austrade from the ACTU, 182 00:10:12.800 --> 00:10:17.480 there was a huge protest against the World Trade Organisation 183 00:10:18.240 --> 00:10:19.400 called the Battle for Seattle. 184 00:10:19.460 --> 00:10:22.420 And then there were similar protests in Genoa, 185 00:10:22.420 --> 00:10:23.600 elsewhere, Melbourne. 186 00:10:23.780 --> 00:10:25.020 Melbourne put on a pretty good protest. 187 00:10:25.160 --> 00:10:25.880 We're as good as... 188 00:10:25.880 --> 00:10:28.220 We're world's best practice when it comes to protests. 189 00:10:28.860 --> 00:10:32.300 And I was quite conscious that economists had a pretty important job 190 00:10:32.300 --> 00:10:34.300 to explain the benefits of trade. 191 00:10:35.020 --> 00:10:37.440 And we shouldn't just preach the converted. 192 00:10:37.820 --> 00:10:42.120 And one thing that I noticed when you take Australia as a case study, 193 00:10:42.240 --> 00:10:44.800 since we opened up, since we floated the dollar, 194 00:10:45.620 --> 00:10:46.660 reduced tariffs and so on, 195 00:10:47.420 --> 00:10:51.020 Australia's per capita GDP growth, that is incomes per household, 196 00:10:51.020 --> 00:10:56.000 is now growing stronger than our counterparts in the OECD 197 00:10:56.000 --> 00:10:57.320 in the United States. 198 00:10:57.500 --> 00:11:01.020 So whenever there is a major protest against the WTO, 199 00:11:01.080 --> 00:11:02.920 I bring along this slide and everyone says, 200 00:11:03.040 --> 00:11:04.120 oh, why didn't you tell me, Tim? 201 00:11:04.200 --> 00:11:06.440 And they put their placards down and so on. 202 00:11:06.540 --> 00:11:08.700 So I think it's quite important to remember 203 00:11:08.700 --> 00:11:11.320 that Australia is a very important case study. 204 00:11:11.800 --> 00:11:16.400 As a result, we've now got a position in the world economy 205 00:11:16.400 --> 00:11:18.480 where it's firing on all cylinders. 206 00:11:18.560 --> 00:11:21.000 It's probably the first time since the war 207 00:11:21.000 --> 00:11:23.620 and since the 1970s that we've had a world economy 208 00:11:23.620 --> 00:11:26.200 where we've got growth across the board. 209 00:11:26.380 --> 00:11:28.960 And a lot of that reason has not just been 210 00:11:28.960 --> 00:11:33.160 the traditional American-European-Japan story, 211 00:11:33.240 --> 00:11:36.100 but also a lot of the emerging economies, 212 00:11:36.280 --> 00:11:39.620 China, India, Latin America, the Middle East, 213 00:11:39.660 --> 00:11:43.300 a lot of the economies outside the G7, outside the G8, 214 00:11:43.360 --> 00:11:44.540 that are playing this role. 215 00:11:44.780 --> 00:11:48.100 And as a result, Australia's been very well placed. 216 00:11:48.880 --> 00:11:49.980 When you look at... 217 00:11:49.980 --> 00:11:52.460 export growth, certainly in terms of value, 218 00:11:52.620 --> 00:11:57.200 we're involved in, at the moment, in the midst of a resources boom 219 00:11:57.200 --> 00:12:01.060 and we're a big beneficiary of this openness in the world economy. 220 00:12:01.600 --> 00:12:04.340 One thing that's quite noticeable too is... 221 00:12:04.340 --> 00:12:10.020 I remember when, at the time of the Sydney Olympics in 2000, 222 00:12:10.340 --> 00:12:12.720 the head of Hewlett-Packard came out to Australia 223 00:12:12.720 --> 00:12:16.020 and she said that Australia was too old economy. 224 00:12:16.800 --> 00:12:19.240 We just had to close down our mines and farms 225 00:12:19.240 --> 00:12:22.500 and become an exporter of hardware like Taiwan. 226 00:12:22.980 --> 00:12:25.160 Otherwise, the dollar will hit 30 cents. 227 00:12:25.940 --> 00:12:28.340 And, of course, since she said that, 228 00:12:28.400 --> 00:12:30.380 the prices of all the things that we export, 229 00:12:31.540 --> 00:12:34.340 commodities and so on, has rocketed to all-time highs. 230 00:12:34.640 --> 00:12:37.020 And the prices of the types of things that we import, 231 00:12:37.240 --> 00:12:40.300 particularly in the IT sector and manufacturers, has actually fallen. 232 00:12:40.740 --> 00:12:43.600 And the dollar hasn't been 30 cents, quite the contrary. 233 00:12:45.160 --> 00:12:49.100 Now, I made this point at a function at Taronga Park Zoo, 234 00:12:49.100 --> 00:12:52.020 because since the price of bananas has stabilised, 235 00:12:52.040 --> 00:12:54.040 you can give talks at Taronga Park Zoo now. 236 00:12:54.320 --> 00:12:56.860 And it was to an IT crowd. 237 00:12:56.960 --> 00:13:00.220 And I made this story about the terms of trade and this trend. 238 00:13:00.500 --> 00:13:03.900 And then I realised that he was the chairman of Hewlett-Packard Australia, 239 00:13:04.020 --> 00:13:05.600 so I sort of had to quickly change. 240 00:13:05.800 --> 00:13:08.900 But I think the key thing is that the types of things that we do 241 00:13:09.740 --> 00:13:13.040 has benefited us, but also, in many ways, 242 00:13:13.080 --> 00:13:17.440 where, if you like, new economy and old economy clothing, in a way, 243 00:13:17.460 --> 00:13:18.360 a lot of our... 244 00:13:19.100 --> 00:13:20.540 A lot of the clients we see at Austrade 245 00:13:20.540 --> 00:13:24.000 are people that provide technology and components and training 246 00:13:24.620 --> 00:13:29.160 and knowledge capital to the resource sectors of Brazil, of Russia and so on. 247 00:13:29.240 --> 00:13:33.520 So often it's not a matter of an old economy-new economy dichotomy. 248 00:13:35.200 --> 00:13:38.380 However, there is a bit of a story to tell too. 249 00:13:38.540 --> 00:13:40.740 I wrote a piece for the Financial Review called 250 00:13:41.340 --> 00:13:42.520 Taking a Walk on the Supply Side. 251 00:13:43.000 --> 00:13:46.760 Basically, we've seen massive growth for resources, 252 00:13:47.020 --> 00:13:48.600 but export volumes 253 00:13:48.600 --> 00:13:51.960 haven't grown as fast this decade as they did in the past. 254 00:13:52.040 --> 00:13:55.240 And there's been a lot of debate about why this is so. 255 00:13:55.760 --> 00:14:00.060 Many people talk about bottlenecks and infrastructure difficulties 256 00:14:00.060 --> 00:14:02.200 in Western Australia, in Queensland. 257 00:14:03.560 --> 00:14:06.260 But I think there's another story in a way, 258 00:14:06.340 --> 00:14:10.240 because I think, like Aussie rules and rugby league and rugby union, 259 00:14:11.440 --> 00:14:14.440 Australia's greatest contact sports are federal-state relations. 260 00:14:14.940 --> 00:14:18.280 So if you pin it on bottlenecks, treasurers can beat up premiers, 261 00:14:18.280 --> 00:14:19.700 and vice versa. 262 00:14:20.100 --> 00:14:22.040 And when you look at a lot of the investment 263 00:14:22.040 --> 00:14:25.660 that is currently being undertaken in the resource sector, 264 00:14:25.760 --> 00:14:28.720 a lot of it hasn't quite come through to our export sector yet. 265 00:14:28.880 --> 00:14:32.160 And in a very good paper by David Gruen of the Treasury, 266 00:14:32.240 --> 00:14:34.060 he's actually found that in the last resources boom, 267 00:14:34.220 --> 00:14:36.820 there was a big impact on investment, 268 00:14:37.020 --> 00:14:40.080 and it took a long time to feed through to export volumes. 269 00:14:40.920 --> 00:14:44.780 The story with agriculture again is another supply-side story. 270 00:14:45.580 --> 00:14:47.840 The Reserve Bank has now become amateur, 271 00:14:47.840 --> 00:14:48.320 and it's a bit of a bit of a 272 00:14:57.540 --> 00:15:04.680 It's taken a long time for land to recover, 273 00:15:04.860 --> 00:15:08.240 even though the ABEAR data's reasonably optimistic now. 274 00:15:08.740 --> 00:15:12.480 And the other thing that's occurred in Australia 275 00:15:12.480 --> 00:15:14.820 with the float of the dollar and so on 276 00:15:14.820 --> 00:15:17.820 is that we've got a more diversified export sector, 277 00:15:18.880 --> 00:15:20.740 manufacturing surprised a lot of people. 278 00:15:20.780 --> 00:15:24.340 A lot of people thought that we'd never get manufactured export growth 279 00:15:24.340 --> 00:15:25.360 when tariffs came off. 280 00:15:25.560 --> 00:15:27.220 And the same with services. 281 00:15:27.920 --> 00:15:30.980 I remember when I started university here at Adelaide, 282 00:15:31.720 --> 00:15:35.140 and a friend of mine in my class was Stephen Crowley, 283 00:15:35.180 --> 00:15:38.040 whose mother had been elected to the Senate 284 00:15:38.920 --> 00:15:40.260 with the Bob Hawke landslide. 285 00:15:40.720 --> 00:15:44.380 And I'm always remembering that South Australia 286 00:15:44.380 --> 00:15:45.920 was the first place to give women the vote, 287 00:15:45.980 --> 00:15:47.720 but it took about 80 years for them to elect. 288 00:15:47.840 --> 00:15:49.360 And I remember that woman in federal parliament, 289 00:15:49.460 --> 00:15:50.080 which was Rosemary. 290 00:15:50.480 --> 00:15:51.820 And she was a medical doctor, 291 00:15:52.440 --> 00:15:53.760 and she'd been elected to the Senate. 292 00:15:53.880 --> 00:15:55.600 And Stephen and I were young, 293 00:15:55.980 --> 00:15:58.320 you could say sort of smart-arse economics students 294 00:15:58.320 --> 00:15:59.140 about to start uni. 295 00:15:59.540 --> 00:16:00.480 And we said to her, 296 00:16:00.520 --> 00:16:01.860 well, Rosemary, there's a recession on. 297 00:16:02.180 --> 00:16:03.940 Where are the jobs going to come from? 298 00:16:04.020 --> 00:16:05.140 Where's exports going to come from? 299 00:16:05.540 --> 00:16:06.620 And she said, tourism. 300 00:16:07.200 --> 00:16:08.600 And we laughed like buggery. 301 00:16:08.720 --> 00:16:09.880 And we said, oh, you've got to be kidding. 302 00:16:09.980 --> 00:16:11.960 Tourism, what, day trips to Burra Burra? 303 00:16:12.000 --> 00:16:13.400 You've got to be, you know, we just thought it was a laugh. 304 00:16:14.060 --> 00:16:17.400 But of course, you can see from the evidence since, 305 00:16:17.500 --> 00:16:17.820 but of course, you can see from the evidence since, 306 00:16:17.840 --> 00:16:21.280 services, tourism, education, professional services 307 00:16:21.280 --> 00:16:23.740 have been a very important export for Australia. 308 00:16:24.600 --> 00:16:26.780 And, you know, when I first came to Australia, 309 00:16:26.940 --> 00:16:28.260 I'd give a lot of talks at universities, 310 00:16:28.260 --> 00:16:30.840 and people would say, oh, why don't you get out of universities 311 00:16:30.840 --> 00:16:32.020 and go and meet real exporters? 312 00:16:32.100 --> 00:16:33.940 And I'd say, well, universities are real exporters. 313 00:16:34.060 --> 00:16:38.280 And in many ways, we've seen reasonable diversity 314 00:16:38.700 --> 00:16:39.880 across the different sectors. 315 00:16:39.980 --> 00:16:42.760 And it just shows you it's OK to have a doctorate in parliament 316 00:16:42.760 --> 00:16:43.280 now and again. 317 00:16:43.460 --> 00:16:44.600 They don't all have to be economists. 318 00:16:45.040 --> 00:16:47.740 And that was a point I often used to make when I went to Malaysia. 319 00:16:47.840 --> 00:16:49.260 particularly in the previous regime. 320 00:16:51.100 --> 00:16:54.300 Australia's attitudes towards Asia, we once were worriers. 321 00:16:54.440 --> 00:16:56.080 We talked about the tyranny of distance. 322 00:16:56.620 --> 00:17:00.160 But in many ways you could say the tyranny of distance, 323 00:17:00.280 --> 00:17:02.460 a phrase coined by Jeffrey Blaney, 324 00:17:02.540 --> 00:17:05.440 has been replaced by the power of proximity, if you like, 325 00:17:06.280 --> 00:17:11.140 in terms of Australia being at the right place at the right time. 326 00:17:11.760 --> 00:17:14.000 They say we're the lucky country but in many ways 327 00:17:14.000 --> 00:17:16.620 we made our own luck to position ourselves for this. 328 00:17:17.780 --> 00:17:23.120 access economics has done some very important work on growth in Asia and basically what access 329 00:17:23.120 --> 00:17:31.200 says is that when Japan from the 1950s through to 1970 were industrialising they were driving 330 00:17:31.200 --> 00:17:38.680 the resources sector in Australia and export sector they grew very fast from 1970 onwards 331 00:17:38.680 --> 00:17:45.480 they've still grown but not at the same rate and when you look at similar countries in Asia 332 00:17:45.480 --> 00:17:51.460 they've all played that role in driving our export growth further if you take the ASEAN 333 00:17:51.460 --> 00:17:57.380 economies at the bend in the boomerang Taiwan and Korea up more up towards the bend and perhaps 334 00:17:57.380 --> 00:18:03.520 China and India now at a place where Japan was in in 1950 and that's certainly been something 335 00:18:03.520 --> 00:18:09.060 that's been watched very carefully that's known sometimes as the export boomerang there's another 336 00:18:09.060 --> 00:18:15.380 hypothesis around apart from giving us Malcolm Turnbull Goldman Sachs 337 00:18:15.380 --> 00:18:23.040 gave us the BRICS hypothesis which talks about Brazil Russia India and China played an important 338 00:18:23.040 --> 00:18:30.900 role in the future of the world economy on current projections when you look at the BRICS economies in 339 00:18:30.900 --> 00:18:37.120 terms of Australian exporters certainly there's a China and India story going on I find it a little 340 00:18:37.120 --> 00:18:43.240 bit harder to get Brazil into the press unless the Socceroos play play Brazil in the World Cup 341 00:18:43.240 --> 00:18:45.280 and whenever I write something nice about 342 00:18:45.380 --> 00:18:49.380 Russia Putin always put someone in jail the next week so it's a little bit of a hard sell but 343 00:18:49.380 --> 00:18:54.880 certainly there are certain sectors in railways and energy where we're doing okay but there's no 344 00:18:54.880 --> 00:18:58.780 doubt that there's a bit of a China and India story there's an X story amongst the BRICS 345 00:18:59.300 --> 00:19:03.300 Saul Eslate from ANZ has written a very good paper that he gave in Brazil a couple years ago 346 00:19:03.800 --> 00:19:09.060 on the importance of China and India one thing that Saul says is that we shouldn't get carried 347 00:19:09.060 --> 00:19:14.100 away we have seen this before before I went to a kibbutz and ruined their productivity 348 00:19:16.060 --> 00:19:37.200 Ukraine 349 00:19:45.380 --> 00:19:48.640 on India in terms of per capita GDP. 350 00:19:49.840 --> 00:19:52.500 Deng opened up soon after Mao died, 351 00:19:52.660 --> 00:19:58.180 while India ran a reasonably economic nationalist project 352 00:19:58.180 --> 00:20:01.760 under the Nehru-Gandhi dynasty until about 1991, 353 00:20:01.920 --> 00:20:04.980 where they did a little bit more reform on the openness side. 354 00:20:06.360 --> 00:20:10.160 There's a big debate over where you rank, China and India. 355 00:20:10.960 --> 00:20:12.540 Economists get very hot and sweaty 356 00:20:12.540 --> 00:20:16.880 about whether you measure GDP at market exchange rates 357 00:20:16.880 --> 00:20:18.740 or purchasing power parity, 358 00:20:18.860 --> 00:20:21.640 which is basically measuring their economy 359 00:20:21.640 --> 00:20:23.280 against their own living standards 360 00:20:23.280 --> 00:20:26.620 and at their own prices at their own exchange rates. 361 00:20:26.800 --> 00:20:29.040 And when you look at purchasing power parity, 362 00:20:29.160 --> 00:20:31.580 India does a little bit better relative to China. 363 00:20:32.400 --> 00:20:35.500 And the economists came up with a good way of measuring this. 364 00:20:35.560 --> 00:20:37.200 They call it the Big Mac Index, 365 00:20:37.880 --> 00:20:41.340 which is the cost of buying a Big Mac in your own country 366 00:20:41.340 --> 00:20:42.100 at your own currency. 367 00:20:42.540 --> 00:20:44.640 So if you follow that logic through, 368 00:20:44.740 --> 00:20:48.280 you can have fries with your poppadom or with your dim sin, 369 00:20:48.380 --> 00:20:49.280 so you're in good shape. 370 00:20:49.720 --> 00:20:53.100 One thing with India, however, is that it's doing quite well, 371 00:20:53.140 --> 00:20:55.340 is it's racing ahead of China in terms of services. 372 00:20:55.660 --> 00:20:58.460 And India's got a lot of very strong national brands, 373 00:20:58.680 --> 00:21:02.480 Infosys, Tata, that have actually been reasonably successful, 374 00:21:02.660 --> 00:21:04.880 so that's quite a good story for India. 375 00:21:05.220 --> 00:21:07.320 I go to India a lot now with Austrade, 376 00:21:07.340 --> 00:21:09.240 and I'll give you a bit of a tip 377 00:21:09.240 --> 00:21:11.580 when you are doing trade missions to India. 378 00:21:12.000 --> 00:21:12.440 India. 379 00:21:12.540 --> 00:21:15.360 If you get a choice of going with Bob Carr or John Howard, 380 00:21:15.500 --> 00:21:16.820 I'd go with Bob Carr. 381 00:21:17.060 --> 00:21:17.940 It's for this reason. 382 00:21:18.060 --> 00:21:19.120 When I went with Bob Carr, 383 00:21:19.620 --> 00:21:22.500 he likes to read Proust and Gore Vidal and so on, 384 00:21:22.560 --> 00:21:25.280 so I got all his cricket tickets and went to all the test matches. 385 00:21:25.640 --> 00:21:27.900 But when I went with John Howard, 386 00:21:27.960 --> 00:21:29.920 I didn't have a chance because he's a cricket tragic, 387 00:21:30.040 --> 00:21:32.060 so a bit of a tip if you go. 388 00:21:33.880 --> 00:21:35.480 Now, that's the macro side. 389 00:21:35.560 --> 00:21:37.540 I wanted to turn a little bit to the micro side. 390 00:21:38.440 --> 00:21:41.800 In many ways, before reform, 391 00:21:42.540 --> 00:21:43.320 it was very closed. 392 00:21:43.840 --> 00:21:46.560 It was only thought of exporting was only something 393 00:21:46.560 --> 00:21:48.620 that basically miners and farmers did. 394 00:21:49.420 --> 00:21:51.500 Manufacturers mainly looked at the local market. 395 00:21:52.860 --> 00:21:54.900 Exporting was something they sort of did as an afterthought, 396 00:21:54.980 --> 00:21:56.360 maybe if the economy was slow 397 00:21:56.360 --> 00:21:58.340 or they wanted to get rid of excess stock. 398 00:21:59.060 --> 00:22:01.460 But since the opening up of the economy, 399 00:22:01.580 --> 00:22:04.900 we've actually seen a stronger growth in exporters 400 00:22:04.900 --> 00:22:06.640 who are sort of part of the exporting heartland. 401 00:22:06.760 --> 00:22:09.720