Australia and New Zealand and the Brexit decision - 15th November 2016

I have recently spent several weeks in Australia and New Zealand.  One topic raised by many of those I met was the result of June’s UK referendum on EU membership.  People in the Antipodes are very interested in what is happening, and also what it means to them.  Being 18000 kilometres away also lends some perspective to anyone from Europe with views on the referendum outcome.

The attitude of almost all I spoke to was bafflement.  Why was the UK about to quit the European Union?  What did the British think about the future of trading relationships?  Had people in Britain reverted to a ‘little Englander’ mentality?  Everyone to whom I posed the question “how would you have voted” said they would have wanted to stay in the EU – and I only posed that question to those of British extraction (of whom I met a number, perhaps inevitably more in New Zealand than Australia).  There was also some amazement at the way in which old Commonwealth ties with Australia and New Zealand seemed to have been brought into some of the Brexiteers’ arguments – “Australia is keen to sign a free trade agreement with the UK” and so on.

If we look at the trade data we can see that the economic world has changed.  Statistics from the Australian Department of Foreign Affairs and Trade (DFAT) for 2014 show that Germany is a bigger gross partner in goods than the UK – at twice the level of exports to Australia, although the UK imports more.  But in total, trade flows between the UK and Australia are worth AUS $ 10 million each year, whilst the value is AUS $ 18 millions with Germany.  The picture for New Zealand is not that different.  In total 6% of New Zealand’s exports are to the UK – but a further 8% are to the rest of the European Union.  Trade with the UK is just not that important now for either of Britain’s traditional cousin countries in the Antipodes.  In relation to Australian exports of goods, Britain lies in 8^th place as a consumer, after China, Japan, South Korea, the USA, Singapore, New Zealand, and Malaysia.  And amongst countries exporting goods to Australia the UK lies in 10^th place – after China, the USA, Japan, Singapore, South Korea, Germany, Malaysia, Thailand, and New Zealand.

The UK holds a slightly more important place in New Zealand trade – the UK is the fifth biggest buyer of New Zealand goods and services (after Australia, China, the USA and Japan), but it falls down the ranks of those exporting to New Zealand, coming after those four countries but also Germany, South Korea and Malaysia.

Over half of Australia’s exports are minerals and raw materials – and the country that is hungriest for these is China.  New Zealand’s exports are more orientated to agricultural products – but once again the prime market is China, particularly after scandals there over contaminated milk led to increased demand for ‘pure’ products from a reliable source: I saw a huge new milk powder factory on the Canterbury Plains near Christchurch built specifically for this purpose.

Australia and New Zealand have re-orientated their economies since the old days of Imperial Preference.  The notion of a Commonwealth free trade area has been raised at various Commonwealth Heads of Government meetings over many years – and was raised again in support of arguments for Brexit.  But today’s reality for Australia and New Zealand is that trade agreements with nearby Asian countries are of considerably greater significance.

But the bafflement on the part of the people I met in Australia and New Zealand was not just about economic factors.  Many people in Britain still see Australia (and more particularly New Zealand) as a version of England.  Older people in the UK (more likely than the younger population to vote to leave the European Union) still remember the £10 passage and the ‘White Australia’ policy (which was actually abandoned 50 years ago in 1966) which helped to preserve an English flavour to the country.  But although those of English ethnicity remain the biggest minority group in Australia, the total of the next seven groups (Irish, Scottish, Italian, German, Chinese, Indian, and Greek) outweighs the English.  Australia is more of a multicultural society than many people imagine – and whilst elements of the population still look to the UK as some distant version of ‘home’, many others look to Italy or Greece, Ireland or Germany.  They are anxious about what a British separation from the rest of the European Union might mean.

This seems to be acutely felt in New Zealand where, in a small country (in terms of population) there has been a long tradition of young people gaining ‘OE’ – overseas experience.  There are even government web sites providing advice on how to make the most of an extended period of working abroad.  The UK, and particularly London, has traditionally been the main base for OE – in part because of the ease with which it can be used as a base for trips to visit other parts of Europe.  But, as one taxi driver put it to me, if travel between London and the rest of Europe becomes more bureaucratically encompassed then perhaps young New Zealanders will look elsewhere for their ‘OE’.

In fact they are already doing so.  More and more are visiting China, Vietnam or other parts of East Asia.  And that is a reasonable reflection of geopolitical and social realities for both Australia and New Zealand.  As with their trade flows, and patterns of inward investment, they are now orientated to the rest of the west Pacific rim – and much less to a distant Europe.  I was particularly impressed by the dependence of the New Zealand tourist industry on Chinese visitors  - I encountered many more Chinese than English, for example.  And in many places in New Zealand leaflets are now being produced in Mandarin as the principal second language.

So in both Australia and New Zealand there is surprise at the outcome of the UK’s June referendum on EU membership: surprise based on a feeling that many in Britain are harking back to a vision of a past series of relationships that has now been drastically transformed.  Connections with the UK (except perhaps over cricket and rugby) are not the priority that they once were.

But perhaps the perception of the UK from the Antipodes has itself been affected by the referendum debate.  When one Australian tourist I met in New Zealand found out where I was from she exclaimed “England? Isn't that full of blacks (sic) now?”  Thus populist political rhetoric reaches the other side of the world.