Australia

The past few decades have seen the acceptance of a new calculus in the role that air power can - and will - play in the future security environment. This is the result of fundamental shifts in the character and conduct of war and the technology-aided ability of air power to rapidly adapt to emerging situations. Wars or conflicts that have been fought over the past half century have all been irregular in character even if the intensity, tempo and spread have been as much as, and at times more than, what could be termed high-intensity war.

This study examines the effect of climate variability and climate change on the productivity of Australian cropping farms between 1977–78 and 2014–15. The productivity of Australian cropping farms is heavily affected by climate variability, particularly the occurrence of droughts. While Australian farmers are well accustomed to managing this variability, the emergence of climate change is presenting some new challenges.
This study combines ABARES farm survey data with spatial climate data to estimate the effect of climate conditions (such as, rainfall and temperature) on cropping farm TFP (Total Factor Productivity, i.e the combined productivity of labor and capital). The study then presents climate adjusted productivity estimates with the effects of climate removed. For comparison, similar results are generated for farm wheat yields using the same data sources and methods.

This report uses three scenarios to investigate the possible response of world food prices, food production and trade to the projected increase in demand. This work builds on agrifood modelling in ABARES Food demand to 2050: Opportunities for Australian agriculture (Linehan et al. 2012a).
The uncertainties and dynamics surrounding factors such as climate change, international trade policy and biofuels policies add to the complexity of modelling global agrifood markets out to 2050. However, scenario analysis, which isolates each of these issues, allows for an assessment of indicative price and production responses over the projection period across different regions and agrifood commodities. A reference scenario is developed for this project using a set of assumptions drawn from the literature. The reference scenario serves as a starting point for the policy analysis and shows the sensitivity of the projections to changes in assumptions and parameter values.

China’s economic growth and process of urbanisation are bringing about profound changes to China’s agrifood sector. With demand for agrifood products projected to double between 2009 and 2050, China’s agricultural sector is poised to contend with the challenges of depleting natural resource and rising input costs to maintain or improve productivity growth of most
major agricultural commodities.

With the population of China expected to increase to about 1.38 billion in 2050, the nature of food demand will depend on a number of factors, including income growth and urbanization. To investigate these developing trends, this study considers demand across three different income groups: urban high income, urban medium income and rural households. An updated version of the ABARES agrifood model (Linehan et al. 2012a) was used for the analysis. This model is an economic simulation model of global agricultural production, consumption and trade. In this report, agrifood products include primary agricultural products and lightly transformed agricultural products, such as flour and meat, but exclude highly processed food items. While it is projected that the majority of China’s future food demand will be met by an increase in domestic production, there are significant challenges with which the Chinese agrifood sector will need to contend to maintain or increase productivity growth. Investment in the industry is ongoing and required to ensure the degradation and availability of land and water resources, and rising costs for intermediate inputs, do not impede production growth.

The opportunities that Chinese demand growth will provide to food producers and exporters to 2050 are significant. To fully realize those opportunities, it will be important for Australian industries to utilize the working relationships with different agents in the food supply chain in China. For example, supermarkets and hypermarkets, which have an increasing presence in
urban food retailing in China, are playing an important role in meeting the demand for high‐value products by urban consumers. With higher incomes, urban consumers are also expected to increase their expenditure on convenience foods, fast food and restaurant food. Australian industries will need to be responsive to these changes if they are to successfully compete in the
Chinese market over the long term.

The Limits to Growth “standard run” (or business-as-usual, BAU) scenario produced about forty years ago aligns well with historical data that has been updated in this paper. The BAU scenario results in collapse of the global economy and environment (where standards of living fall at rates faster than they have historically risen due to disruption of normal economic functions), subsequently forcing population down. Although the modelled fall in population occurs after about 2030 - with death rates rising from 2020 onward, reversing contemporary trends - the general onset of collapse first appears at about 2015 when per capita industrial output begins a sharp decline. Given this imminent timing, a further issue this paper raises is whether the current economic difficulties of the global financial crisis are potentially related to mechanisms of breakdown in the Limits to Growth BAU scenario. In particular, contemporary peak oil issues and analysis of net energy, or energy return on (energy) invested, support the Limits to Growth modelling of resource constraints underlying the collapse.

This paper examines the balance between China and India in 2030. The assessment also incorporates the actions of other actors such as the U.S. and Pakistan, as well as regional actors, where necessary. The assessment uses a mix of quantitative and qualitative measures, and seeks to avoid previous assessment templates wherever possible. This is a unique competition, not previously faced by our planners, and requires a unique approach.
The paper is based on the following starting assumptions:
a. A global multipolar system is emerging with the rise of China, India, and others. With a shift in the locus of global politics from the Atlantic to the Pacific, India, the U.S. and China will define the emerging global balance of power. This triangular relationship, or tri-polarity, is likely to be the most significant aspect of the emerging 21st century global system.
b. The growth of the Chinese and Indian economies over the past decade, and in the next two decades, will lead to increasingly assertive political and military strategies from both nations.
c. The increasingly assertive nature of both nations will bring them into competition with each other, as they seek global stature and access to energy resources and raw materials to continue their economic growth. There has been, and there will continue to be, a continuing technological revolution.
This will particularly manifest in the fields of information technology, biotechnology, nanotechnology, hypersonics, and materials science. This ongoing revolution will impact on geopolitics and military balances, as well as the India-China competition.
e. Significant discontinuities are possible. The National Intelligence Council (2008) has noted that historically, geopolitical rivalries trigger discontinuities more than technological change. Technology is resulting in radical change and has been a major driver. However, over the past century, geopolitical rivalries and their consequences have been more significant causes of the multiple wars, collapse of empires, and rise of new powers than technology alone.

The assessment of the India-China competition is built in four parts:
The Nature of the Competition. The first element of the balance examines the nature of the competition between India and China. Description of competition describes how both sides see the different areas of competition, as well as the importance attached to each. This also includes India-China contrasts that affect the competition, including objectives, strategic culture, differences in strategic characteristics and competencies, and the application of national resources to realizing strategic goals.

Key India-China Balances. The next part of the paper is an examination of key balances. These balances are neither exhaustive nor independent of each other. Significant issues will differ depending on the context, but were possible, each balance will include a basic assessment, and consider goals, key asymmetries, trends, and implications. The key balances are: 1. Command and Control Capability; 2. Nuclear Forces; 3. Conventional Maritime capability; and, 4. Conventional Air-land Capability.

Scenarios. Through the extrapolation of long-term trends from these key balances, three India-China scenarios have been be generated to examine how the balance could manifest in 2030.11 Key drivers and critical uncertainties are incorporated into the scenarios and described in detail. These scenarios are reviewed from both the Indian and Chinese perspectives based on strategic aspirations and the investment in military capabilities likely to be deployed in 2030. This also will highlight issues that earlier parts of the paper have not identified.

Implications. The last section will be an overall assessment of the balance in the India-China competition. This section describes where there are strategic asymmetries, and environmental opportunities for both India and China – as seen from their point of view - and where they might seek to improve the situation in their favor. Finally, it describes potential impacts on the U.S. as well as issues that require further examination.

Asia’s rise is changing the world. This is a defining feature of the 21st century—the Asian century. These developments have profound implications for people everywhere.

Asia’s extraordinary ascent has already changed the Australian economy, society and strategic environment. The scale and pace of the change still to come mean Australia is entering a truly transformative period in our history.

Within only a few years, Asia will not only be the world’s largest producer of goods and services, it will also be the world’s largest consumer of them. It is already the most populous region in the world. In the future, it will also be home to the majority of the world’s middle class.

The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity. Australia is located in the right place at the right time—in the Asian region in the Asian century.

For several decades, Australian businesses, exporters and the community have grown their footprint across the region. Today, for Australia, the minerals and energy boom is the most visible, but not the only, aspect of Asia’s rise. As the century unfolds, the growth in our region will impact on almost all of our economy and society.

An increasingly wealthy and mobile middle class is emerging in the region, creating new opportunities. They are demanding a diverse range of goods and services, from health and aged care to education to household goods, and tourism, banking and financial services, as well as high‑quality food products.

Beyond economic gains, there are many valuable opportunities for building stronger relationships across the region, including through closer educational, cultural and people‑to‑people links.

Our nation also has the strength that comes from a long history of engagement with countries in Asia. Australia’s relationships in our region are strong and robust, including with Asian nations like China, Japan, India, Indonesia and the Republic of Korea (South Korea). But in this Asian century we must enter a new phase of deeper and broader engagement.

This White Paper provides a roadmap for the whole of Australia—governments, business, unions, and the broader community—in this next phase. Our goal is to secure Australia as a more prosperous and resilient nation that is fully part of our region and open to the world.

Australia starts from a position of strength. Just as our region has a lot to offer us, we have a lot to offer our region. We have strong, world-leading institutions, a multicultural and highly skilled workforce, and a productive, open and resilient economy, which is one of the strongest in the world. These assets have been reinforced by a series of economic reforms and good decisions made over past decades, including Australia’s world-beating actions to avoid the worst impacts of the Global Financial Crisis.

Our strengths have long been reflected in Australia’s interaction with countries in Asia. Over the past 50 years, Australia’s trade with Asia as a share of our total trade has risen dramatically. Our financial, political and cultural links have deepened. We have strong relationships and close friendships with countries across the region.

But Australia’s success will be based on choice, not chance. In order to succeed, we must sustain the policy settings and pathways that have served us well. We need to reinforce our strong social foundations, including our national institutions, our cultural diversity and our outward-looking society.

We will need to do more than this—we all need to respond to the rapid changes occurring in our region.

Australians need to act in five key areas in order to succeed in the Asian century.

First, irrespective of how the Asian century evolves, Australia’s prosperity will come from building on our strengths. We need to reinforce the foundations of our fair society and our prosperous, open and resilient economy at home. We need to build on areas where we already perform well, in order to extend our comparative advantage. Critical to this will be ongoing reform and investment across the five pillars of productivity—skills and education, innovation, infrastructure, tax reform and regulatory reform.

Second, as a nation we must do even more to develop the capabilities that will help Australia succeed. Our greatest responsibility is to invest in our people through skills and education to drive Australia’s productivity performance and ensure that all Australians can participate and contribute. Capabilities that are particularly important for the Asian century include job‑specific skills, scientific and technical excellence, adaptability and resilience. Using creativity and design-based thinking to solve complex problems is a distinctive Australian strength that can help to meet the emerging challenges of this century. As a nation we also need to broaden and deepen our understanding of Asian cultures and languages, to become more Asia literate. These capabilities are needed to build stronger connections and partnerships across the region.

Third, Australia’s commercial success in the region requires that highly innovative, competitive Australian firms and institutions develop collaborative relationships with others in the region. Australian firms need new business models and new mindsets to operate and connect with Asian markets. We will work to make the region more open and integrated, encouraging trade, investment and partnerships. Firms will adapt their business models to seize the opportunities created in our region.

Fourth, Australia’s future is irrevocably tied to the stability and sustainable security of our diverse region. Australia has much to offer through cooperation with other nations to support sustainable security in the region. We will work to build trust and cooperation, bilaterally and through existing regional mechanisms. We will continue to support a greater role for Asian countries in a rules‑based regional and global order. Australia’s alliance with the United States and a strong US presence in Asia will support regional stability, as will China’s full participation in regional developments.

Fifth, we need to strengthen Australia’s deep and broad relationships across the region at every level. These links are social and cultural as much as they are political and economic. Improving people-to-people links can unlock large economic and social gains. While the Australian Government plays a leading role in strengthening and building relationships with partners in the region—with more intensive diplomacy across Asia—others across a broad spectrum spanning business, unions, community groups and educational and cultural institutions also play an important role. Stronger relationships will lead to more Australians having a deeper understanding of what is happening in Asia and being able to access the benefits of growth in our region. In turn, more of our neighbours in the region will know us better than they do today.

Success in the Asian century requires a whole-of-Australia effort, with businesses, unions, communities and governments being partners in a transformation as profound as any that have defined Australia throughout our history.

It is in the interests of all Australians—and therefore in the national interest—to develop the capabilities and connections that Australia will need, so that we can contribute to, and learn from, the region, and take full advantage of these opportunities.

The challenges ahead require sustained effort; Australians cannot build stronger relationships or learn new skills overnight, or even over five years, especially given the diversity of the countries in our region. Some actions can be taken immediately, but others require further conversation among communities across the nation, detailed planning and careful implementation over a generation.

Chapters 1 to 4 of the White Paper explain the extraordinary rise of Asia over recent decades and its likely future to 2025. They examine Australia’s place in Asia and our outlook to 2025. This sets the scene for a roadmap for Australia in the Asian century.

Chapters 5 to 9 set out an ambitious set of national objectives and pathways to guide Australia to 2025. Advancing and implementing these national objectives sets the agenda for taking full advantage of the Asian century, but achieving these objectives will require a concerted and coordinated effort from the entire community.