The loneliness of the long-distance city

Australia is escaping the tyranny of its remote location. But can it turn isolation to its advantage?

MELBOURNE - Nearly 30 years ago Geoffrey Blainey, an economic historian at the University of Melbourne, wrote a book called The Tyranny of Distance. In it he explained how the extreme distance of Australia not only from any other substantial economy but also from the mother country, Britain, had shaped the country's history.

For example, the vast internal distances within Australia meant that the main cities developed independently of each other, even to the extent of building railways of three different gauges - the final conversion to a single standard has been completed only in the past few days! And externally it took a long time to reorient the economy towards the US market rather than the UK. Indeed, Australia's belated assertion of independent nationhood, as it moves inexorably towards becoming a republic, could also be seen as further illustration of Professor Blainey's theory.

But it might also be one of the last illustrations, for in a very real sense Australia is escaping the tyranny of distance. Advances in two technologies have greatly reduced the country's sense of isolation: the cost of air travel has halved in the past 20 years while the cost of telecommunications has fallen by a factor of 10. Both costs will continue to fall, with the possibility that a phone call or fax to Australia from Britain will cost little more than local call.

And that is not all: distance, or rather the isolation that distance provides, may be becoming a positive advantage. As world population continues to grow, places with low population densities exert a powerful attraction. If Australia can benefit from this attraction, Professor Blainey's thesis will be turned on its head.

The overcoming of distance holds important lessons not only for Australia but for any community that feels itself to be disadvantaged by geographical estrangement from the main economic powerhouse of the region: Newfoundland, for example, southern Italy, Northern Ireland or Scotland. Falling airfares may not revolutionise the economy of the highlands of Scotland (though they have greatly benefited the Republic of Ireland), but if one could, for example, ring anywhere in the UK for the price of a local call, this would have an enormous impact for any large user of telecommunications.

Australia still has some way to go in crunching down the twin costs of airfares and telecommunications. A phone call of more than 200 miles still costs twice as much as it does in the UK. While airfares have fallen as a result of deregulation, they are not yet down to US domestic levels. These kinds of costs are absolutely vital to the economic health of peripheral regions.

Nevertheless, this great, empty country is already providing interesting examples of the way in which falling communications costs in particular enable new cross-border trade in services. Perth, a city of 1.2 million in Western Australia, is the most isolated large city on earth. There is no human habitation with more than a few tens of thousands of people for the best part of 2,000 miles in any direction. It is closer to Jakarta than Sydney. There is a company based in Perth, EMS Control Systems, which installs and then monitors the controls for the air-conditioning, lighting, lifts, parking, tenant access, and security in large office blocks.

The control of these systems is done from Perth. An operator studies a monitor, and with a couple of keystrokes can make an adjustment to the temperature or humidity of the building. Through such precise control, large savings in energy are possible.

But not all the offices being monitored are in Perth, or even in Australia. No fewer than 50 office blocks in Singapore are controlled from the consoles in Perth. The first block in Peking (appropriately, the headquarters of the Institute of Air-conditioning) is being fitted out at the moment. And there are other contracts in Malaysia, Sri Lanka, Indonesia and Taiwan. There is no tyranny of distance here - maybe of time zones, but Perth happens to be on the same time as Singapore and so may have a comparative advantage in servicing buildings there.

There is, however, a big difference between conquering the disadvantage of distance and creating a positive advantage out of remoteness. If the latter is going to happen anywhere, Australia is certainly the best place to look. It has 0.3 per cent of the world's population, but 5 per cent of the world's land mass and 34 per cent of the land mass of the Asia/Pacific zone. What evidence might there be?

In marketing terms, there are clear signs of success: several Aussie consumer products have been branded successfully with a Wide Open Space image. These include films such as Crocodile Dundee and Priscilla, Queen of the Desert, along with numerousbeers. But exploiting an image of isolation is hardly the same as exploiting the reality.

The area where the attraction of isolation is most obvious is tourism. The open beaches of Australia are enormously seductive to visitors from east Asia. Much of the hotel property on the Queensland coast has been bought up by Japanese and other east Asian interests and is managed to service this need. Tourism is now the world's largest industry, and in Australia wages in tourism have risen above those in manufacturing. The danger is thatdevelopment needed to service tourism may wreck the very isolation that drew the tourists in the first place. That has happened in parts of Queensland.

Tourism aside, what other, more 21st-century uses of geography might there be? In Western Australia, the business community sees itself very much as a service centre for places such as Singapore, Malaysia and Indonesia, all of which are on its time zone. The Australian Institute of Management is opening regional offices.And pilots from the region are trained at Perth airport as costs are lower and there is less air traffic congestion.

The eastern states do not seem to have looked northwards so much for business opportunities. There are a couple of bright spots. One is higher education, where some Australian universities are targeting their "export marketing" to East Asian students, and are developing screen-based learning packages for their own domestic students who happen to live far from a city. Another is international fund management, where portfolio investments in East Asia are managed out of Sydney and Melbourne.

Australia is only just beginning to work out how to create a comparative advantage from its peripheral location. But perhaps in 10 years' time there is a sequel to be written to Professor Blainey's book, called The Charm of Isolation.