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Thursday, 24 May 2001
Page: 27093

Mr ANDREW THOMSON (10:54 AM) —In the last two weeks, the Australia Japan Business Cooperation Committee held a conference. That committee is the most important non-governmental group bringing the two nations together. In the context of this conference—which is a regular event; and this time it took place in Australia—there was some academic and other commentary concerning the relationship between our two countries. Two academics in particular said very stridently that the relationship is very stale. They said that nothing is happening, it is a fairly old-fashioned relationship and that, therefore, `something needs to be done'. You often hear the phrase `something needs to be done' in the corridors where public policy is made. In fact, we probably utter that phrase several times a week here in Canberra about a multitude of topics.

In the case of the relationship between Australia and Japan, I suggest that there are a couple of areas where we could pursue something slightly different in terms of cooperation and policy than has been thought of before. I speak in particular of the most difficult issue between the two countries—trade protectionism. For years the political system within Japan has been based on the protection of very inefficient agricultural practices—that is, Japan's farmers are operating on a scale that is far too small to compete. The notion has been brought into the argument that protecting Japanese agricultural production is buttressing a way of life—that it has some sort of social role in keeping Japan stable and so forth. It is very easy to say that, but the system of patronage and support within the dominant political group, the so-called Liberal Democratic Party in Japan—and it is less a party than a collection of various agricultural, industrial and, in some cases, bureaucratic interests—is built very strongly on protecting farmers. Likewise, there is quite a clear gerrymander in the weight given to votes in country versus urban electorates. That is astonishing in the modern world. However, the blunt reality is that this is not going to change soon, and so the interests of Australian agriculture and Japanese consumers are not going to be easily meshed in the future.

Some things are happening on the border of this, outside the politics. For example, in the eighties and nineties, large supermarket chains, fed by very cheap capital, lost their heads and went about establishing as many new branches of supermarkets as they possibly could. They bought land in the new suburbs, threw in their brand, erected supermarkets, extended their existing inefficient distribution systems to these supermarkets, and just sat back and thought, `We'll try and compete with each other for as much market share as possible.' Now that there is a very severe credit squeeze in Japan—it has been on foot for years now—the supermarket chains are finally being forced to divest themselves of these hopeless new supermarkets on the edges of the cities, and so they are up for sale. The opportunity arises, therefore, for Australian investors—farmers or anyone else—to literally buy themselves a supermarket in Japan. Likewise, many other distressed assets—commercial buildings, golf courses, and so forth—are for sale. Surprisingly, there are no barriers to foreign investors buying them.

One thing that we should think about—and not necessarily as a government intervening to encourage it—is to see some purchases of shelf space, if you like, for Japanese consumers directly by Australian farmers, producers, intermediaries and so forth. Two large foreign retail chains have set up mega-stores in Japan—Carrefour, a French chain, and Costco, which I think is American—and they are revolutionising the distribution chain in terms of fresh food, often importing it, despite the difficulties at the border, and putting it on the shelves very attractively. In the past it was said that it was impossible for a foreigner to tempt the Japanese consumer, but that is being proved wrong. There is a lot of advantage there waiting for Australian farmers and food producers if capital can be mobilised and some decisions can be made to acquire that sort of shelf space right in the face of the consumers whose favour we chase. (Time expired)