Date:7.48 PM TUESDAY, 21 October 1997
Member:Gallop, Dr Geoff
Page:7116 / 1

national Government of Australia and the national Government of Japan. I am pleased to say that the Japanese regard Australia as one of their strongest allies in the Asia-Pacific region. That was confirmed recently by the visit of Japanese Prime Minister Hashimoto to Australian Prime Minister John Howard in Canberra. The Japanese are very keen for Australia to be part of the Asia-Pacific region. They believe that the Asia-Pacific region should be defined by the people who live in that region and by the countries that form part of that region rather than by some definition of what constitutes Asian values. They are keen to see a regionally defined Asia-Pacific rather than an ethnically or politically defined Asia-Pacific, and because Australia brings its own diversity to that region, they are keen to see us sit on the Asian side of the great political forums that exist in that region.

They also believe that the strong links between Australia and the United States of America are important. They believe that the United States should play an ongoing role in the Asia-Pacific area and that because of Australia's links with the United States, it is a natural ally. In addition, they are very keen to engage China and to be involved in China, and they believe that the Australian Government and Australian businesses have set an example in engaging China in a constructive way.

The relationship between Japan and Australia at the national government level is a matter for the Federal Parliament rather than the State Parliament, but it is important to note the positive relationship that exists between our two countries. What underpins it all is that our countries have vigorous and strong democracies, and that facilitates an easy dialogue between politicians and business leaders from Japan and Australia.

The second heading is the economic relationship between Australia and Japan as mediated by the major Japanese trading companies. The two largest Japanese companies from our point of view are Mitsubishi and Mitsui, and companies such as Marubeni, which have been involved in the development of Western Australia and Australia for many decades. After the Second World War, a complementary economic relationship developed between Japan and the resources industry in Australia, which was organised basically by those major trading companies, and with the support of State and Federal Governments over many years they have come to play a major role in the Australian economy and will continue to do so.

The role of those major trading companies in Australia tends to be fixed. They consider that the Australian market has matured. A massive rate of market growth will not occur in Australia as we have a small population divided by the geography of our country. However, some of the emerging economies have a high rate of consumption demand because of their significant populations. Nevertheless, they still see Australia as an important base in which to invest in the minerals sector, the foodstuffs sector, and the important resources industries generally. This helps to provide raw materials for the Japanese economic machine. Of course, examples arise of Japan investing in our manufacturing industry, most importantly in the motor car business, and we are pleased to see that continue in Australia.

However, not a lot is happening in that relationship as mediated by the major Japanese corporations. They are happy with the established pattern and are pleased that Australia can provide what they believe to be their necessary requirements. They have established headquarters here. Major investments will be considered when it is felt that such investment will produce a good return. However, those corporations will not diversify greatly from that established pattern in the short term. Ways and means may be available to encourage more diversity, and we should be pursuing that, but stability in this pattern leads us to conclude that significant change will not occur in the short term.

I turn now to the third level of the Japanese-Australia relationship, a subject of fascination for me, in which great dynamism is found with factors leading to change and further development. The third level of the relationship is what I call the person to person, region to region, city to city and business to business relationships. One of the best examples of this is the sister state relationship between Western Australia and the Hyogo Prefecture in Japan which has been in place since 1981. The prefecture has established an office in Perth, and the Western Australian Government has set up an office in Kobe which is linked to our Tokyo office.

When I visited Hyogo recently, I took some interest in the earthquake reconstruction. I visited Awaji Island where the epicentre of the earthquake struck, and one can see the fault line; 70 centimetres of land has risen above ground level and tilted to the right, and this caused the great tragedy throughout the Kobe-Awaji area.

The prefecture Government has initiated a major reconstruction program, and little sign can be found of the earthquake itself in Kobe. Certainly, one can see the fault line at Awaji Island. The Government of that region wants to set up trade zones and, through deregulation, encourage foreign businesses to participate in the reconstruction which is seen as a part of their overall economic plan. Already Western Australian companies in the housing construction business are involved in some relationships in Kobe; in fact, Midland Brick paving stones can be seen at the Port of Kobe. As they reconstruct, they are keen to further develop the sister city and business relationships which have emerged. An economic relationship has naturally emerged from the political relationship.