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Unlocking our links with Indonesia

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COMMENTS

23 September 2011 10:43

Peter McCawley is a Visiting Fellow at the Indonesia Project, ANU, and former Dean of the ADB Institute, Tokyo.

The Shadow Minister for Foreign Affairs, Julie Bishop, provided a useful overview of the Opposition's views on Australian-Indonesian relations at the ANU last week.

The speech covered many topics, but one key point, easily missed because it was tucked away late in the speech, was a reference to the need to increase the level of 'twinning' between counterpart officials and organisations in Australia and Indonesia. Ms Bishop noted that this twinning should occur at a local and state level as well as at the federal level.

Part 2

The reference to local and state governments is important. Many of the promising areas of potential economic cooperation with Indonesia are, at the Australian end, locked away in state and local government agencies. A key challenge for Australian policy-makers is to unlock this potential.

Over the next 20 years or so, the prospects are that there will be an immense infrastructure boom in Indonesia and other developing countries in Asia. Indonesia will need very large investments and all of the services associated with these investments in such sectors as roads, bridges, ports, railways, electric power, schools, hospitals, agriculture, forestry, fisheries and many others.

Australia is well-placed to support the boom in these sectors — but only if departments and agencies at state and local level can be persuaded to change their mind-set and become export-oriented. Currently, the chances are not looking very good.

Two remarkable precedents in Australia point the way forward. One is Qantas. Originally, Qantas was an inward-looking state-owned enterprise, just as many agencies at the state and local government level today are inward-looking. But the far-sighted decision was taken to unlock Qantas from servicing the domestic Australian market and to encourage Qantas to compete overseas.

The result is that today — current problems for Qantas not withstanding — Qantas is a world-class airline which provides world-class services both at home and abroad.

The other precedent is in the tertiary education sector. Over twenty years ago, the Jackson Committee of Review of the Australian Foreign Aid Program recommended that the Australian tertiary education sector be opened up to the international market. The proposal was resisted at the time by conservative elements in the federal Department of Education but was supported by Foreign Minister Bill Hayden and Prime Minister Bob Hawke.

The regulatory arrangements for the tertiary education sector were greatly liberalised. The result was an extraordinary boom in the numbers of foreign students studying in Australia.

The lessons from these two experiences are that Julie Bishop is on the right track. She is right in suggesting that the links at the state and local government level should be strengthened. Let us hope that she and Tony Abbott will go further with their advocacy of plans to unlock the potential that exists at state and local government levels in Australia to build effective links with Indonesia.

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