Griffith Asia Institute: Julie Bishop Speech
25/10/11
20 October 2011
Address to Griffith Asia Institute perspectives: Asia Seminar
Gallery of Modern Art, BRISBANE
E&OE…
Thank you Andrew for the introduction, and I acknowledge this evening the presence of the Chancellor of Griffith University Professor Forde, Vice Chancellor Professor O’Connor and my very good friend and parliamentary colleague the Hon Teresa Gambaro, the Member for Brisbane, Distinguished guests, ladies and gentlemen.
It has often been said that geography shapes destiny and I would argue that for Australia this is the case more than at any other time in our history.
As a nation we are exquisitely positioned to reap the benefits of the re-emergence of Asia as a global economic and strategic powerhouse.
Already the influence of Asia’s economic development is reaching down into Australian society, altering the balance of our economy and consequently our workforce.
Given the unique set of opportunities and challenges presented by the re-emergence of Asia’s giants it is appropriate that Australia should conduct a whole-of-government inquiry into the implications of Asia’s increasing development and the future of our ties with our historic partners in the region.
Australia must maintain a clear focus on Asia, and I define Asia as the Indian Ocean/Asia Pacific, and we must commit to broadening, deepening and diversifying our engagement with the nations of Asia.
While I welcome the Government’s latest initiative in the form of a White Paper on Asia, titled Australia in the Asian Century, I remain sceptical as to whether its recommendations will be ever implemented by this Government.
As Dr Ken Henry can attest after his Henry Review on taxation was largely shelved, a government commissioning a review or White Paper is very different from a government actually implementing key recommendations. As this Government has shown time after time, its affection for reports and committees is not matched by a fondness for action.
More concerning was the Prime Minister’s statement in relation to the proposed White Paper on Asia that “Australia hasn’t been here before”.
Well that may be the lamentable understanding of a national leader who claims that foreign policy is not her passion, it does overlook the significant investment that previous Australian governments, businesses, professionals, universities and other institutions, groups and organisations have committed over decades to the development of strategies to deepen our engagement in Asia.
Indeed some of my more challenging work as the Managing Partner of law firm Clayton Utz in Perth during the early to mid-1990s related to our focus on building and maintaining a network of prominent legal practices throughout the Asia Pacific. This network, still going strong today, was a serious investment of time and resources as we developed strategies to expand legal practice into the many and diverse jurisdictions and legal systems in Asia.
We experimented with, discussed, negotiated and adopted many ideas to enhance our engagement in the region drawing on the experience particularly of our corporate clients and other sectors of the Australian economy who were likewise engaged in developing and implementing Asia strategies.
My lasting impression of this experience, which involved visiting law firms throughout the Asia Pacific region and beyond and meeting their clients and their staff, was the need to maintaining stable and consistent relationships that would prove to be enduring.
In its own way the efforts of my law firm, and that of many others over 20 years ago, were pioneering and representative of the efforts of so many Australians who have grasped the significance of our place in the world and the opportunities it presents.
The Liberal Party has a long and proud history of engagement with the countries of Asia, dating back to the 1930s and the days of Joseph Lyons and the United Australia Party.
It was during these days that Australia first started to think seriously about its place in Asia and develop its own ties with its near neighbours, separate to those that existed by way of Australia’s relationship with Great Britain.
Under Lyons’ leadership, Australia conducted its first official visit to Asia with the Minister for External Affairs John Latham leading a ‘Goodwill Mission’ throughout the region.
Aware of the potential economic benefits Asia presented, the government assigned trade officials to Japan, Shanghai and the Netherlands East Indies.
This was further strengthened under Sir Robert Menzies, who appointed Australia’s first diplomatic representatives to Japan and China in 1940 and 1941 respectively.
A proud and loyal supporter of the British Commonwealth, Menzies nonetheless saw the urgency of Australia developing its own diplomatic contacts with foreign powers, particularly in the Asia Pacific.
In a speech to the nation in 1939, Menzies called on Australia to see itself as a principal of the Asia Pacific Region. It was his view that Australia’s foreign policy should be directed towards cultivating friendly relations with our neighbours, promoting development and stability in the region, and encouraging every means of peaceful economic and financial cooperation.
These were the principles that lay at the heart of his decision to enter into a comprehensive trade partnership with Japan in 1957 – a courageous decision given the war with Japan that had taken place in the intervening period.
Menzies understood that “an economically revived Japan would become a trading nation of much significance” to Australia, and how right he was.
It was essential, he thought, that Japan become a confident member of the international community, enmeshed in the global trading system, if it were to withstand the destructive spread of communist ideology or retreat to the thinking that dominated the days leading up to war.
It was a sign of the Menzies Government’s vision and determination that these trading arrangements came into being, despite the strong opposition at the time from the then Labor leader Dr Evatt.
This initiative not only proved to be the driver of Australia’s post-war economic development, but it was the first bold attempt by our nation to link our economy to the emerging markets of North Asia.
The Liberal Party’s focus on Asia continued under the guidance of Sir Paul Hasluck, the Minster for External Affairs, later the Governor-General and the first member of my federal parliamentary seat of Curtin in Western Australia.
As described by Ben Porter in his biography, Hasluck’s foreign policy objective was to have “Australia accepted as an equal member in the affairs of Asia, for Australia to display greater understanding of the needs and interests of the region and also to play a more active and constructive role in its affairs”.
To Hasluck, “Friendship with Asia, reciprocal trade, closer cultural relations and a clearer understanding of Asia and its people” were at the forefront of Australian foreign policy.
The importance of Australia’s relationship with Asia for our economic prosperity and security remains a constant in Liberal Party foreign policy.
The Howard Government embraced and enhanced this policy.
Terrorist attacks against Australians in Bali and Jakarta highlighted the fact that Australia’s security and the safety of its people could only be achieved through close cooperation with neighbouring countries.
At the height of the Asian Financial Crisis, it was the Howard Government that advocated Indonesia’s interests to those overseas who called for counterproductive austerity measures.
Australia was one of only two countries that contributed to all three International Monetary Fund assistance packages to help the worst affected countries in Asia.
Australia also played a lead role in the international response to the 2004 Boxing Day tsunami, with the Howard Government’s $1 billion commitment to Indonesia reported to be the largest donation ever by an Australian Government.
Howard succeeded where others had failed in gaining Australian membership of the important East Asia Summit.
As Prime Minister, he brought Australia closer to China than any other leader, before or after, without jeopardising our close and enduring friendship with the United States. In doing so, Howard achieved a balance between Australia’s strategic and economic interests that was the envy of many countries.
The Liberal Party’s strong legacy of constructive engagement with the countries of Asia shows that we are well placed to advance Australia’s interests in the region during this period of immense fundamental change.
While Prime Minister Gillard may not have been here before, there is a wealth of experience and a body of knowledge and understanding within our public service and particularly the Department of Foreign Affairs and Trade built up over decades that should have been drawn upon for advice, direction and guidance in relation to a strategy for Asia long before the Prime Minister called upon the former head of Treasury to undertake a White Paper exercise.
The focus of the White Paper is economic, and that is understandable. Indeed of all the startling statistics, forecasts and predictions relating to the economic growth of Asia in the 21st Century perhaps the most compelling are those based on demographics.
For example, the total number of middle class consumers in Asia is expected to grow by more than 1.2 billion people by 2020. According to the Australian Treasury these forecasts “would mean that by the end of this decade Asia would have more middle class consumers than the rest of the world combined, with China surpassing the United States as the world's single largest middle class market in dollar terms".
China's middle class is already estimated at 157 million people but this figure represents just 12 per cent of its current population.
The consumer purchasing power of China's middle class is becoming increasingly evident. According to the East Asia Forum, China already accounts for 25 per cent of the world’s luxury goods sales.
It is the world's biggest mobile phone market with an estimated 700 million subscribers. Last year, Nokia's net sales in China were more than three times the United States.
In the years between 2000 and 2010, the number of mobile phones increased from 16 per 100 to 188 per 100 urban households in China. Sales of other goods such as computers and microwave ovens also rose sharply during this period.
A similar transformation is underway in India, with a middle class now estimated at more than 200 million people.
According to a recent OECD working paper, "India could witness a dramatic expansion of its middle class, from 5-10% of its population today to 90% in 30 years. With a population of 1.6 billion forecast for 2039, India could add well over 1 billion people to its middle class ranks by 2039".
Closer to home, Indonesia has benefited from a decade of sustained economic growth. International Monetary Fund figures show that Indonesia's gross domestic product is now greater than Australia’s based on purchasing-power-parity.
According to one estimate, Indonesia’s middle class has grown from 1.6 million in 2004 to approximately 50 million today, and this number is estimated to reach 150 million by 2014.
The rise of Asia’s middle class presents significant opportunities for Australia outside of the mineral resources and soft commodity sectors.
Opening up regional markets to Australian services is particularly important if the benefits of Asia’s economic growth are to be spread evenly throughout our economy.
Whereas Australia’s mineral resource exports increased by 25 per cent in 2010, the export of services declined.
The potential benefits on offer in this area are enormous, as demonstrated by the changing composition of Australia’s tourism consumers.
In 2010, China overtook the United Kingdom to become Australia’s most valuable tourism market. Its contribution to the Australian economy was over $3 billion, up almost 20 per cent on the previous year.
The ‘total inbound economic value’ of the Chinese market has increased by 17 per cent on average per year since 2001. Arrivals are now three-times their 2001 level.
The importance of the Indian market to the Australian tourism sector is similarly significant contributing $800 million to the Australian economy last year. It is expected to climb from Australia’s ninth most valuable market in 2010, to our fifth most valuable in 2020.
With the number of established and emerging markets in our region, the Coalition’s foreign policy draws on the broad opportunities and challenges that Asia presents.
We are particularly focused on finalising bilateral free trade agreements with a number of key economies in the region including China, Japan, South Korea, Malaysia, India and Indonesia.
Our first priority, if we were honoured to be elected to government, would be to repair and strengthen Australia’s relationship with key friends and partners in the region that have been damaged under the current government.
Having admitted a lack of interest in foreign policy early in her term, the Prime Minister has set out to prove it.
Traditional diplomacy at the government-to-government level has suffered some embarrassing set backs under the Rudd-Gillard Government, and the examples that I am about to give you have all been verified to me by diplomatic friends we have in the region.
Take our nearest neighbour, Indonesia. In announcing her proposal for an East Timor processing centre for asylum seekers Prime Minister Gillard breached a longstanding agreement between Australia and Indonesia that we inform each other before any major policy changes that impact upon the other’s interests.
This breach of trust was again repeated with the Government not informing Indonesia of its proposal to reopen the Manus Island detention centre on Papua New Guinea, nor its agreement to engage in a refugee swap deal with Malaysia.
The most damaging was its decision, taken without warning, to ban live cattle exports to Indonesia.
It has been reported that Australian and Indonesian officials first heard about the ban on exports from Radio Australia rather than from the Government. Indeed this was so asserted by Richard Woolcott, a distinguished former Secretary of the Department of Foreign Affairs and Trade, and to me it simply defies belief.
That the Government would impose a ban on a vital export to Indonesia in response to a television program and an email campaign is bad enough, but to cause damage to our foreign relations in an attempt to shore up the Prime Minister’s flagging domestic support is unforgivable.
Reports that no cabinet submissions were considered by the Government in making this decision, particularly from the Department of Foreign Affairs and Trade, and the scant regard the Government displayed towards the sensitive issue of food security in Indonesia is also deeply troubling.
To think that our Foreign Minister learned of this Cabinet decision when attending an international meeting in Budapest and had to seek out the Indonesian Foreign Minister over morning tea, as he also happened to be at this meeting, to inform him of this decision that so affected Indonesia is worthy of an episode of Yes Minister.
A no surprises approach is a matter of simple courtesy and respect.
In Opposition, Mr Rudd was fond of paying lip service to the importance of good diplomacy. In a 2001 speech at the University of Melbourne, he stated that a secure Australia means doing old things better – “old things like having decent relations with our neighbours and the region at large”.
By this standard, Australia is far less secure under the Rudd-Gillard Labor Government than at any time in recent history.
As Prime Minister, Mr Rudd embarrassed Japan by re-announcing, without warning, on the eve of an official visit by the Japanese Foreign Minister, and on a morning television breakfast show, that the Australian Government was taking Japan to court over whaling.
This incident followed the decision by Mr Rudd to exclude Japan from his first visit as Prime Minister to Asia which caused tensions.
He also antagonised Australia’s Asia Pacific partners with his unilaterally conceived and promoted Asia Pacific Community concept, which eventually stalled through lack of support from our regional partners.
Again the courtesy of prior consultation was missing in action.
According to reports, this announcement was done without advance consultation with any other country, including Southeast Asian nations, leading Singaporean officials to label the idea as dead on arrival.
As Indonesia’s Foreign Minister said, his country was “trying to avoid another layer, an out-of-nowhere construction not in concert, not in synergy with what we have”.
Labor’s refusal to sell uranium to India, at the insistence of the ALP Left, likewise continues to damage our crucial bilateral relationship with the Indian Government.
To India this is a matter of trust and until the in-principle agreement the Howard Government had with India over the sale of Australian uranium is reinstated we cannot expect significant progress in our bilateral relations.
On a recent visit to India I met with the Indian Trade Minister, Minister Sharma, and the issue of the sale of Australian uranium was the first matter we discussed.
Mr Rudd’s approach to China has been somewhat perplexing. From his profanity-laden description of Chinese negotiators at the Copenhagen climate change conference, to his public lecturing of China over human rights at Peking University before he had met with the President, and the Defence White Paper which implicitly identified China as a military threat to Australia it has all caused concerns.
Traditional diplomacy matters and a mature, consistent and stable dialogue with our neighbours and the countries in our region is imperative.
We must rebuild Australia’s reputation as a consistent and stable partner and friend, with a focus on mutual respect and understanding.
Chief amongst Australia’s relationships requiring renewed focus include the United States, Japan, China, India and Indonesia.
Our narrative around Asia’s economic re-emergence should not be just viewed however in economic terms, or opportunity and reward. It should also encompass other issues as there are significant challenges that must be managed with consistency, coherency and maturity.
While traditional diplomacy engages the government with other governments in our region, one area that requires enhancement and refinement is the field of public diplomacy.
In this context, by public diplomacy I mean promoting our national interests including our national security through greater understanding of, advocacy with, listening to and influencing countries and peoples in our region.
Much more must be done to broaden the dialogue between Australian citizens, Australian institutions, private groups and other diverse interests and elements within our society and their counter-parts in countries in Asia.
At the next election the Coalition will be putting forward a number of policy initiatives designed to advance our interests in this, the Asia Century. Without pre-empting policy announcements let me give you a taste of my thinking.
I have long argued that mutual understanding and engagement with our region can be achieved if Australia can commit to the exchange of information, ideas, values and beliefs that can occur through greater two-way student exchange.
My personal experience – I undertook a sabbatical at Harvard Business School in 1996 – made a profound impact on me, living and studying with 180 students from across the globe.
I note that today US Secretary of State Hillary Clinton in her visit to Libya announced the support that the United States would give to the Libya post-Gaddafi and she focused as a key theme of her speech on the re-establishment of the Fulbright Scholarship program in Tripoli.
While many student exchange programs are supported through private sector organisations and our universities – and I most certainly pay tribute to Griffith University for its Asia Studies programs and other programs within the university that engage deeply with Asia – government support for student exchange programs is limited.
I believe that government sponsorship of a significant two-way student exchange is worthy of consideration particularly given the ongoing benefits to Australia of the Colombo Plan, introduced by the Menzies Government and that operated from 1951 to 1985. The Colombo Plan was of course primarily focused on bringing students to Australia and not supporting Australians studying overseas.
I believe the time has come for greater two-way exchange, indeed this is an idea whose time has well and truly come.
For Robert Menzies, education was one of Australia’s great competitive advantages and an asset for peace and development in the region.
Menzies believed that until the gap in living standards between the great industrialised nations and those of the emerging economies was addressed, tensions which threaten the peace would continue.
Through the Colombo Plan, the Menzies Government reached out to our region, drawing in the best and the brightest students in the region to universities in Australia.
Students who came to Australia under this plan developed a lasting impression and an understanding of our country and its way of life. It built a legacy of enduring friendships and understanding between peoples and countries in our region. Students gained a precious insight into Australia’s political process, our values and our interests.
Many Colombo Plan recipients have assumed positions of leadership in the region. Indonesian Vice President Dr Boediono, is a recipient of a Colombo Plan Scholarship and an undergraduate of the University of Western Australia; Indonesia’s Trade Minister and Foreign Minister both graduated from the Australian National University.
I think it would be a worthwhile exercise to try to renew contact with the Colombo Plan alumni from 1950 to 1985 given that no complete record exists.
I think this represents a lost opportunity of continuing engagement with a significant body of people who have a deep understanding of Australia.
Strengthening alumni associations of students who study in Australia generally could contribute significantly to our efforts in public diplomacy.
A new scheme that captures the ideals and spirit of the Menzies era is again needed but whereas Menzies brought students here, we must now work to send our students overseas to study.
For example, while over 17,000 Indonesians are currently studying in Australia, only 150 Australians have ventured the other way. It is a similar story with other countries in our region, and there are an increasing number of universities in Asia that are world class, including in Singapore, China and Japan.
Given the opportunities and challenges that Asia’s re-emergence will present, increasing the number of two-way student exchanges between Australia and the region will not only help promote greater understanding and awareness, but also open up a new generation of networks that Australia can draw upon in the future.
It is essential, I believe, that we have a body of young people who have not only enriched their own experience and expertise but also that of our nation by studying at educational institutions in Asia. It would send a powerful message that we are truly interested in establishing enduring people-to-people links.
Getting the people part right includes an appreciation of the languages and culture of countries in the region. I also believe it is time for mandatory second language education to be incorporated into our national schools curriculum.
I am concerned by the decline, for example, of Australia’s Indonesian language capacity. Indonesia is our nearest neighbour yet according to a recent audit, 99 per cent of high school students who study Indonesian have dropped it by their final year. This trend is matched at a tertiary level in other Asian languages.
As Minister for Education in 2006 and 2007, I recognised the strategic importance of building up our foreign language capacity including foreign language teaches if Australia’s national interest were to be advanced and I launched an initiative to reinvigorate our efforts in recognising the value of a second language culture within our education system.
It would have other long term economic benefits. As Saul Eslake, program director at the Grattan Institute, has rightly stated, Australia won't capture the potential benefits from "the emergence of the world's largest middle class if more of our services businesses aren't staffed and led by people with Asian experience and Asian language and cultural skills".
Cultural diplomacy, with exchanges in sport and the arts must also be a focus of our future investment in our region.
Ladies and gentlemen, in the tradition of Liberal governments of the past we will focus on the process of forging new ties between Australia and the countries of Asia that will be needed in this, the Asian Century.
Only through embracing ideas at home and through smart diplomacy abroad that focuses on Asia can Australia properly prepare itself for the changes that lie ahead.
Our geography is most certainly our destiny.