Konnichiwa, mate!
That's 'g'day, mate!' in Japanese. George Fisher explains why Japan's expansion
southwards might soon be changing more than Australia's familiar greeting.

Recording images for posterity on his new digital camera, Shotaro Saito skims the flickering surface of Sydney Harbour from the deck of a yacht. He knows he will soon be able to drive under the famous harbour through a $530 million tunnel built by the Japanese firm Kumagai Gumi. He knows too that many of the offices and hotels with the best harbour views are owned by Japanese business houses. At the finest restaurants and merchandise stores throughout the city his Japanese colleagues and friends gather to enjoy the superior power of the yen. On signs, menus and price tags throughout the city Japanese is the standard second language.

There are now almost 900 Japanese companies in Australia. Fifty thousand Japanese live and work here and 17,000 are permanent residents. Australia has the highest number of people learning Japanese of any Western nation. The country's relationship with Japan is crucial to how the Australian economy integrates into the Asia Pacific region.

Australia's attitude to Japan has shifted a long way in the 50 years since Hirohito's bombers lashed the northern Australian coastline. Ten years after the war Australia began exporting wool and wheat to Japan; then from the 1960s iron, coal, beef, aluminium, natural gas and uranium.

Recurring xenophobic fears of the yellow peril have long haunted Australian popular culture. But the impact of Asian investment has continued to help the Australian economy long after it had been deserted by its wartime allies. The inflow of capital from Japan has for several years far exceeded that from any other country. In 1989-90 there was a net outflow of capital from Australia to the US and Britain, but a substantial inflow ($5.17 billion) from Japan.

But unlike UK or US investors, who have put about 60 percent of their money into manufacturing, the Japanese have sunk 90 per cent of their yen into real estate and tourism. Around 500,000 Japanese visit Australia each year. Most end up on the sun-drenched sands of Queensland, where many of the multi-million dollar resorts are owned by Japanese consortia.

Shotaro, and others like him, are shaping a new future for Australia in its relationship with its geographic neighbourhood. If Australia is to break free from its blanket-hugging relationship to the UK and the US it will have to come to terms with the fact that its future lies in Asia. As Australia National University's Gavan McCorrnack notes, within seven or eight years there will be four more 'Japans': South Korea, Taiwan, Singapore and Hong Kong. All more than doubled the size of their economies during the 1980s.

Australia depends on Japanese supplies of manufactured and consumer goods - but could survive without them. Japan, on the other hand, depends on Australia for basic raw materials and would find it difficult to find substitute sources of supply. Japan, as Shotaro's parents remember all too clearly, depends on Australia for food, energy and minerals more than on any other country. In 1990 Australia supplied 40 per cent of Japan's beef and much of its wheat, barley, rye and sugar. It supplied 40 per cent of Japan's iron ore and more than half its aluminium ore.

Australia offers a steady supply of coal for thermal power stations as well as natural gas from the massive North West Shelf, being developed almost exclusively for Japan. Australia also has the world's largest uranium reserves, and Japan relies on nuclear power for a third of its energy consumption. The technology to convert to oil the huge (200 billion tonnes) reserves of brown coal in Victoria has been developed by a Japanese government-financed project.

Some commentators have encouraged an uncritical acceptance of any increased Japanese involvement in the Australian economy. Others urge caution. The Japanese economy has suffered from manipulation of land and stock prices, speculation and other forms of structural corruption, including the practice of sweetheart' deals which bypass government tender. The way social and human needs have been neglected by Japan's rulers and their ambivalence towards democratic principles are cause for concern.

Many Australians also remember the Greater East Asia Co-Prosperity Sphere, Japan's prewar drive to establish dominance in the region. Shintaro Ishihara, a Japanese nationalist, said recently that such an ideal should be revived. Ishihara added, however, that there would be no need for military action, because if surrounding countries resisted, Tokyo could simply cut off aid and technology.

Shotaro and his colleagues can look forward to travelling between Sydney and Melbourne on a high-speed train, to be financed and built by the Japanese. If they travel further westward to Adelaide, they will be able to work, play and study at the proposed city of the future, the multifunction polis (MFP), a merger of Australian and Japanese business interests.

Prime Minister Paul Keating recently announced that the Australian Government would give $30 million towards the MFP purely to retain Japanese interest. It is expected to house 50,000 people in energy-efficient 'green' houses. Industries targeted for the MFP include environmental management, telecommunications and information technology.

Many Australians are worried about the implications of a Japanese technopolis on Australian soil. It is being promoted by the Japanese Government, but behind the scenes Japanese banking, industrial and construction interests are active. Even though the MFP aims to pursue remedies for past urban industrial pollution, land salination and marine degradation, the Japanese record on such matters is far from impressive. Technopolises in Japan have been spectacular failures. One example, Mutsu-Ogawara in northern Honshu, was given such environmentally attractive facilities as an oil storage facility, a uranium enrichment plant and a waste disposal dump. No local employment was created, and the local community was virtually destroyed.

Australia has to tread a difficult path. On the one hand, if it tries to live in the shadow of its colonial past it could find itself excluded from the emerging Japan-dominated Asian trading bloc, with potentially catastrophic economic consequences. On the other, uncritical acceptance of Japanese hegemony in the region is not an option. If a blanket endorsement of Japanese plans might be shortsighted, their rejection would be political and economic suicide.

George Fisher writes for the NI in Sydney.

Gone fishing Cate Brett discovers that Japanese interests seem to match Maori ideals in the long battle for indigenous land rights. TIPENE O'REGAN gazes out across the Italian glass-top table to the lush surrounds of the swimming pool. His enemies would be surprised to find him here, up to his elbows in designer furniture. Surprised too to learn that the owner of this mansion is Japanese and he, a prominent Maori leader, is a guest. In a few hours O'Regan will head off for more negotiations with the Government for the return of his people's tribal lands. He will represent the Ngai Tahu tribe, which at the signing of the Treaty of Waitangi in 1840 held by far the largest territory in the country. Just 20 years later the Ngai Tahu had sunk into a landless poverty from which they have yet to emerge. Redressing the crafty misdeeds of the British colonialists who conquered, stole or tricked their way into possession of land and fisheries is O'Regan's mission. In this he is helped by the Japanese. Specifically, by a medium-sized Japanese conglomerate. 0'Regan sees no irony in taking capital from a nation seen by many as the neo-colonial power of the South Pacific. 'The aim has been to recapitalize us in our own landscape. As a tribal community we have been desperately short of capital for a very long time. We have friends in Japan who have dealt with us on a very generous basis, trusting in our capacity to meet our debt obligations. No New Zealand financial institution or government has ever dealt with us as honourably.' The fact that the Ngai Tahu have used Japanese capital to support the huge costs of litigation for the return of tribal lands is of no great significance to O'Regan: 'Japan is extremely interested in the business of cultural maintenance. The people we are dealing with are not giving foreign aid.' Cynics might interpret Japanese interest in joint venture fishing deals with Maori as little more than astute business strategy with an eye to the future. Maori legal claims to their traditional fisheries and the wider resource base have thrown the Pakeha (white) fishing industry into a tailspin in recent years. Given the trend in Aotearoa to cancel foreign fishing licenses inside its 200 mile exclusive economic zone, a joint venture will be imperative if Japan is to retain access to local fish stocks. The local fishing industry can also ill afford to spurn joint ventures if it wants to continue supplying the vast Japanese domestic market - by far Aotearoa's largest customer for fish products. O'Regan is scathing about Pakehas who protest loudly against such Japanese investment in Aotearoan resources, saying that most are motivated by the same ignorance and racism which has clouded Maori-Pakeha relations for 150 years. Recent and proposed investments by Japanese companies in commercial real estate and tourism has unleashed an alarming level of xenophobia among middle-class Aotearoans. By world standards Japanese investment in Aotearoan tourism and infrastructure, rural land and real estate is small change; just $270 million in the past financial year. The former Labour Government actively pursued Japanese investors as potential purchasers of state forests, telecommunications systems and tourist facilities. Pakeha concern for economic sovereignty and environmental purity has a hollow ring for the likes of Tipene O'Regan. He has seen his people relegated to Third World status in their own land. He sees yen as no different to dollars. 'I don't think total economic subservience is a necessary consequence of foreign investment.' O'Regan is convinced that the Ngai Tahu will continue to form mutually beneficial relationships with Japanese and other foreign investors who recognize the Rangatiratanga (sovereignty) of Maori people. 'The thing that makes Japan very attractive to us is that they do think very long term there. We have a planning horizon of 2030, and our major corporate associate in Japan has a planning horizon of 2025. Finding anyone in New Zealand looking past the end of the financial year is difficult. Japanese and Maori, we both see ourselves as being here for the duration.' Cate Brett writes from Christchurch, Aotearoa.