14/12/2011 - 11:22

Australia should play to its strengths

14/12/2011 - 11:22

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We should be careful of adopting policies, successful elsewhere, that may undermine our national interests.

We should be careful of adopting policies, successful elsewhere,  that may undermine our national interests.

THE largely unheralded visit of Norwegian Prime Minister Jens Stoltenberg to Perth last week reminded me of how often Australia has been urged to follow the path his tiny nation has trodden.

Mr Stoltenberg was here to officially open the world’s biggest offshore industry marine simulated training centre in Bibra Lake for Farstad Shipping, a company based in Norway.

In some ways this new facility is symbolic of what Norway’s Australian admirers most cherish about the Scandinavian country’s approach to development.

Here is an example of the country’s resources-linked industry projecting itself outwardly to new markets, even as its own oil and gas sector reaches maturity.

Of course, Norway is mostly recognised here for its approach to retaining the wealth generated from its North Sea oil assets, having raised high taxes on extraction and then put them into a sovereign wealth fund, which is now the second biggest after that of Abu Dhabi.

A cursory glance at the various indices that are used to measure the quality of life in countries across the globe consistently puts Norway at the top of the field.

These are often used as examples of why we ought to follow Norway’s lead.

This was especially the case during the mining tax debate, when Norway’s use of high taxes on resources that were then directed to its future fund was highlighted.

This was odd given Norway’s sovereign wealth fund is intended for the future, when the resources run out. 

The Australian mining tax has no such mechanism, mainly because the government wants to spend the money but also because there is a huge question mark over whether Australia’s resources will run out, at least for several generations. Norway’s are much more limited in that respect.   

It is also fascinating that Norway, a comparatively socialist state, is touted as something we should aspire to emulate when Australia is pretty much breathing down its neck on any liveability list you would care to peruse.

While there’s nothing wrong with wanting to be the best, it could be argued in global terms we already pretty much are.

To use a tennis analogy, Norway and Australia are pretty much like Roger Federer and Rafael Nadal. Federer usually won when he was at the top of his game, but Nadal was younger and in history’s page they will be hard to differentiate.

On paper, and in an index, Norway might have got a lot right; but it is not perfect.

It has very high taxes, which: discourage business from establishing there; prompt the wealthy to live elsewhere; and incentivise consumers to shop outside the country. Despite being a massive exporter, it is also quite protectionist, especially in relation to agriculture.

It is also slightly hypocritical. It taxes petrol heavily to discourage its use at home, but exports vast quantities to the rest of the world.

Its high rate of employment is enviable but I have to laugh when I Googled what’s bad about Norway. One blogger put boring software engineering jobs high on his list. It did underline a perception I have, shared with many others, about the vanilla nature of life in this part of Scandinavia. 

There is also the perception that the fun police run rampant, stopping other Norwegians from enjoying themselves in any way that is not politically correct; like drinking alcohol, for instance. We have a fair dose of this ourselves, so I appreciate Norway is no orphan in this regard, but it is also far from perfect when it comes to allowing people freedom of choice.

There is, of course, the weather – the extremely short days in the depths of winter and the lack of sunlight that comes with it. No amount of protectionism, taxes or government policy can change that.

Perhaps that’s why Norwegians have to try harder to make their country perfect, shaped to some political ideal, because of the natural downside of their climate. 

Whatever the case, I’d be willing to bet that there are more Norwegian expatriates in Australia – both permanent and travelling through – than there are Aussies living there. And that is despite Australia, a nation of travellers, having four times Norway’s population.

There is no doubt that Norway has a lot of things going for it. It is an organised, democratic, liberal society, which is combining its natural resources and communal values to create a store of wealth that will help it live beyond the relatively short life of its petroleum assets.

This is what many societies from cold climates do well. Historically, they learned to pool their resources and work efficiently in the productive summer months so they can survive long and harsh winters. They can’t afford to make mistakes, which is why they are efficient but not necessarily entrepreneurial places. It is a kind of societal DNA.

Right now, Europe offers a wonderful contrast to that. Those in the warm Mediterranean regions, whose mild climate is much more forgiving, appear to think they can squander resources and live as if there is no tomorrow. 

Perhaps that is because the downside does not involve freezing to death. There is no better example than Greece, although it is not alone in economic mismanagement and short-term thinking.

It would be easy to see these as opposite ends of the spectrum and, therefore, good examples of what to do, or not to do.

But the world offers more choices than that of Norway versus Greece.

The Middle East also has fabulous resource riches and massive sovereign wealth funds, yet it is hard to see examples that we need to follow in that region.

Australia has its own unique identity. Our convict ancestry has bred independence and rejection of authority. We don’t necessarily trust governments or our leaders to do the right thing (especially with a multi-trillion dollar wealth fund). Broader immigration in the past century has tended to build on that base of self-determination.

Let’s face it, Greece today could do with more of the people who left there in the middle of the last century to establish themselves here. They were among the toughest, most resilient and entrepreneurial people in Australia’s history. 

As a result we have a much higher regard for the needs of the individual and a greater penchant for risk taking. That is why, in my view, Australians talk about wanting a fair go; which to me translates as a chance to get ahead, but not necessarily a safety net that ends up impeding all but the most cautious.

This mindset has been transported into an Australian climate that is relatively mild across the most populated regions and an environment rich with natural resources. We don’t just like to take a risk; we know we can afford to do so because the price of miscalculation is lower for us.

This doesn’t mean we can’t learn from others.

But we should also be careful about adopting policies that may actually undermine what has made Australia successful, thus far.

• mark.pownall@wabn.com.au

 

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