In the long run

These criticisms of Australia's foreign investments policy, particularly in mining, by WA Premier Barnett are well made. They reflect a change in approach to governing Australia, particularly from Melbourne. It's important to examine the changes to Victorian Liberals as this goes to the heart of their current and recent problems - and those of the Liberal Party more broadly.

Japan and Australia set the foundation for their current relationship with an agreement in 1957. Memories of World War II were still fresh, in particular the appalling treatment suffered by Australian POWs. When then Japanese Prime Minister Nobusuke Kishi arrived in Canberra to sign the agreement he promised to lay a wreath at the War Memorial - the RSL lobbied to have the route from [Old] Parliament House to the War Memorial lined with widows, fatherless children and returned servicemen (including ex-POWs) so that Kishi could apologise to each of them directly. This ordeal was headed off by William Keys, who went on to manage the integration of the RSL within government's decision-making structures. Within a dozen years Japan was Australia's biggest trading partner.

That agreement was set in place when Melbourne was Australia's business capital. The then Prime Minister (Menzies), the Trade Minister (McEwen) and much of the Cabinet were squarely integrated with the decision-making processes and the very mindset of the Melbourne business community. Yeah, it was patronising and old-school-tie and all that, but the flipside of paternalism was that management was for the long term. The Japanese had a similar business-politics-bureaucracy axis. The article referenced above might gloss over how smooth this was, and how it might have been easier to ignore public disquiet within Australia back then, but within a dozen years Japan was Australia's biggest trading partner - and that doesn't happen without careful, long term management.

Contrast this with Australia's relationship with China. A bit of stunt work initiated by Whitlam, at a time when both countries were run by economic neanderthals. The opening up of trade and economic matters initiated by Deng Xiaoping, one of the great political and economic shifts of history, was completely missed by the Fraser Government. Hawke took baby steps, as did Keating; and just as only Richard Nixon could go to "Red China" without being red-baited by Richard Nixon, so too only John Howard could address the Chinese Communist Party's trainee cadres. Howard clearly had to change the very fibre of his being to "focus on the positives" in the relationship with China; but however much his misgivings in dealing with Asiatic Communists, he would not have been swayed by leftist human-rights nonsense when there was a quid to be made.

It's often said that Sydney's business community is focused on the short term and a bit better plugged into the world than Melbourne's, and that the last two Prime Ministers have been Sydneysiders. Australia's mining industry is still largely run from Melbourne - but not run by old-school Melburnians, fusty and paternalistic. The Melbourne business community was blown apart in the 1980s by spivs like John Elliott and Robert Holmes á Court and that guy from New Zealand (not Terry Clark, the other one). This is where Peter Costello comes in - this is his idea of the Melbourne business community, guys on the make to get a bit of short-term action and then settle down in a big house in far Kew. He didn't get where he was by listening to the sort of stuff the Garnaut family have been saying for years. This is why he's kyboshed Chinese attempts to take longterm and top-shelf stakes in Australia's mining industry - that visceral distaste for smash-and-grab raids combined with a sneer for those old Collins Street fuddy-duddies who go on about the long term, and what school did you go to?

Barnett might like the idea of a longterm China-Australia strategy but the reality is that the mining industry makes its decisions in Melbourne and Canberra, not Perth, and that the 1980s cannot be shrugged off like a bad dream. There are Liberals who sneer at Menzies and think the Liberal Party begins and ends with Howard, and while they are happy to use Barnett's stick to beat Rudd they cannot escape the failure of the Howard government to set in place a constructive, longterm strategy for China - and also India. This failure is another reason why all those Victorian Liberals who'd hoped to cruise into positions of national leadership on Costello's coat-tails were fundamentally deluded - if Costello really was all that we'd all be much better off than we are, better integrated with Asia and all that visionary, benefit-of-the-nation rhetoric would have longer staying power than a fart or a press release.

I wish there was a journalist who was across this too, rather than just bunches of press-release jockeys with no longterm perspective on our relationships with Asian powers.