Former PM Howard: Australia Owes More to Japan than China

Former Australian Prime Minister John Howard questioned the too much premium given by Australia to China.

He warned in a speech at the Chamber of Minerals and Energy WA lunch on Tuesday that Australia should not be mesmerised by China, and pointed out that in the last 40 to 50 years, Australia owed more to Japan than China.

However, he admitted that in recent years, China had overtaken Japan and became the best market for Australia.

"There is no reason why that shouldn't continue, there's a reasonable expectation that that should continue, but we shouldn't lose reality when it comes to China," Mr Howard said.

"The idea that China will continue to grow exponentially and overwhelm the United States is misplaced.... We need to have good relations with China, we need to be pragmatic in our dealings with China," he added.

Mr Howard said at the same time, that while recognising the value of China to the present Australian economy, Canberra should retain very close relationship with the United States.

He also touched on the minerals resource rent tax and carbon tax, calling the carbon price of $23 a tonne absurd and could cause potential damage to the resources industry.

Mr Howard said a super profits tax was a repugnant idea because in the past three decades, other sectors of the Australian economy have made larger profits than the mining industry, but the previous governments did not entertain the idea of a super profits tax. Instead, the past governments operated on a rate of tax for all which everyone should pay.

The former prime minister said the biggest threat to the country's mining industry were bad policy and industrial relations that favour collective bargaining.

He cited the abolition of individual contracts, the grant of increased rights of entry and almost exclusive reliance on collective bargaining as very damaging to the Australian economy.