Address to the Leadership Matters Breakfast. Perth



25 November 2013

Good morning, it is an absolute delight to be here. I acknowledge our Ambassador to the UAE, Pablo Kang – I think it was exactly a week ago that I saw you around midnight as you came to meet me at Dubai Airport so good to see you at breakfast in Perth – Cynthia Griffins, the US Consul General, I'm delighted to have you here too Cynthia, and the sponsors for this event. I congratulate The West Australian Newspaper for hosting this "Leadership Matters" series.

I want to talk today about leadership in the context of foreign affairs, defence and trade policy.

Last week, Senator David Johnston, a Western Australian Senator and our Minister for Defence and I were in Washington for the Annual AUSMIN meeting. This is the highest level dialogue that the Australian Government has with the United States Government and is attended by the Secretaries of State and Defence on the US side, the Ministers for Foreign Affairs and Defence on the Australian side. We share perspectives and insights and talk about our cooperation and alliance. On this occasion, we commenced the meeting by visiting the Arlington National Cemetery and John Kerry and Chuck Hagel and David Johnston and I jointly laid a wreath at that cemetery at the Tomb of the Unknown Soldier to pay tribute to all American servicemen and women who have died in the service of their country.

We were reminded that Australians and Americans have fought together, have died together in every conflict in the last 100 years. From World War I and World War II to Korea and Vietnam and the Middle East and Afghanistan. It is a very sobering moment to think of the sacrifice that so many people have made to ensure that our countries remain free.

The first time Australians and Americans fought together was on the 4th of July 1918 during World War I when our forces fought in Hamel in Northern France under the command of Australia's General John Monash.

It was not until the Second World War that our ties became inextricably bound together when the United States decided that Australia would be a base for the Pacific fight back. The 7th Fleet was actually formed in Brisbane under the command of a US Admiral but under the overall leadership of General Douglas McArthur. One million US servicemen and women passed through Australia at that time. It wasn't until 1944 that Douglas McArthur was actually commanding more Americans than Australians.

After the War, there were many leaders in Australia who thought our relationship with Britain was our pre-eminent relationship but there were equally a number of farsighted leaders who decided that for there to be peace in the Pacific and our region there had to a deeper engagement with the United States.

One such leader was one of my distinguished predecessors, Sir Percy Spender who became Minister for Foreign Affairs in the Menzies Government of 1949, (Minister for External Affairs). He believed passionately that we needed to have what he called a Pacific Pact that had to include the United States. If there were any other sort of alliance or pact in the Pacific without the United States it would be a meaningless gesture. So he was one of the key players in the Australian-New Zealand-US Alliance, known as ANZUS and the Australia-US Alliance, and was present at the signing of the ANZUS alliance on the 1st of September 1951.

62 years later, David Johnston and I reaffirmed our commitment to the ANZUS alliance as the bedrock of Australia's security and defence arrangements. It will be enhanced because the United States has announced - as you will recall President Obama announced this in Canberra in November 2011 - that the US will rebalance or pivot to the Asia-Pacific region. This is a continuation of the US support in the region since World War II, the re-building of Japan and Korea and its continuation of the presence of US military in this area. But it will be enhanced from Australia's perspective because there will be a rotation of US marines through Darwin on an annual basis. We have already had one rotation of a couple hundred marines. In due course, it will be around 2,500 marines plus aircraft in Northern Australia. This just goes to show how closely we are aligned with the United States. We are working within the US security umbrella and its a continuation of the joint exercises, the joint activities and the joint facilities that the US and Australia have had over many years.

Under ANZUS, we also have to pull our weight. We can't rely on the United States to always take the lead. We are concerned that our defence budget has fallen, as percentage of GDP, to its lowest level since 1938. So it will be a focus of the Abbott Government to increase spending on defence, to bring it from 1.4 or 1.5 per cent of GDP up to 2 per cent GDP because we, like other nations in the region, have to pull our weight when it comes to our defence and security.

It is my view that our foreign policy should be designed to project and protect our reputation as a strong, vibrant, open, export-oriented economy and protect and project our reputation as a strong, vibrant, liberal democracy. We have made a commitment to the values of democracy and a rule of law and the fundamental freedoms.

Although we have global interests as a nation, our focus must be on our region, and I describe our region, as the Indo-Pacific, the Indian Ocean Asia-Pacific, because we are bound by two great oceans – the Indian and the Pacific – and the Asia-Pacific as a definition leaves out that significant part of our world, to the north and west of this State.

So the new government will be focussing our foreign policy assets, whether it be military or defence capability or economic or trade capacity or diplomatic and foreign aid activities, not exclusively but unmistakably on our region – the Indo-Pacific.

It is my view that our standing in the world is at its highest when our influence in our region is at its strongest. There's a recent example of this. Last month, I hosted a meeting of an association called the Indian Ocean Rim Association. It has been around for about 16 or 17 years and it comprises 20 member-states from the Indian Ocean rim – from India, Indonesia, Singapore, Malaysia, Seychelles, Madagascar, Mauritius, Bangladesh, to the United Arab Emirates, Yemen, Iran and we have dialogue partners or observer partners to this 20-member association, including the United States, Great Britain, France, China, Egypt; countries that have interests in the Indian Ocean.

Australia is chairing this association for the first time in its history. In typical Aussie fashion, we decided to give some focus and dynamism to this association. At our meeting here in Perth, we set our an agenda for the next two years that recognises the increasing importance of the Indian Ocean as a major sea lane and as an area of growing economic importance. We are focussing on maritime security and issues of piracy, we are focussing on greater trade and investment, we are focussing on fisheries management, on disaster relief management and scientific and research and education and tourism. I believe with Australia's leadership in the Indian Ocean Rim Association, we will see some advances in all six areas that I've mentioned.

Another way of describing our focus in foreign policy is our attention to what I call "economic diplomacy". By that I mean we will be focussing our foreign policy efforts on building and growing the Australian economy and economies in our region through diplomacy. We are committed to liberalising trade, we are committed to creating jobs, we are committed to freeing up investment, we want to see economic growth, at home and in our region. We can do that through deploying our foreign policy principles and assets to that end and that's the focus of our international discussions. When I sit down with counterparts in our region, we talk about greater trade, greater investment, how we can grow economies, how we create jobs, how we can use our aid budget to ensure that countries are growing their economies and not continuing this aid-donor-aid-recipient relationship that we have with so many countries in this region, but transform it to equal economic partnerships.

In a couple of days, Australia will be taking over the chairmanship of the G20. On the 1st of December we become the chair of the G20 which will be held in Brisbane in November 2014. This will be another opportunity for Australia to lead on the world stage – I acknowledge the fact that Richard Goyder is heading up the B20, the Business-20 grouping for the meeting. Here is a chance for Australia at the G20 to set an agenda that will impact the globe. It is all very well for the G20 to have an agenda when we need to meet a financial crisis, but what is its role in the aftermath of a financial crisis? It will come to Australia to once more reset the agenda and we are focussing on growing economies, creating jobs, issues like investment, how to free up the private sector for investment, trade liberalisation, what do we do about behind the border trade restraints and barriers and issues like tax reform. Some developing countries have pointed out that they lose more through tax evasion than they receive in foreign aid. There are some changes that we can make to the global financial system, to tax issues that will really make a difference. So really the G20 is an opportunity for us to lead.

Australia has always been a leader when it comes to free trade and fighting tariffs and protectionism, and we'll continue to take a lead at the G20.

I remember in 1999 after the failure of the WTO round in Seattle, the Howard Government then decided to break from decades of trade policy orthodoxy and set out a new course for finding new markets for our exporters and new sources of capital for our businesses. It is not that we walked away from multilateral global trade negotiations, just that we made a pragmatic decision. We came to the realisation that we had to pursue other ways to access new markets or enhance existing markets and find new sources of capital. So the Howard Government embarked on a series of negotiations for free trade agreements with countries, particularly in our region. If we couldn't do it multilaterally we would do it bilaterally. We concluded agreements with Singapore and Thailand and notably the United States and I was chair of the Treaties Committee at the time and had quite a bit to do with our US-Australia free trade agreement. That was a significant signature outcome of the Howard years. I don't know whether everybody would realise it, but in terms of trade and investment the United States is our most significant and important economic partner.

On investment alone, the United States invests $630 billion in Australia, that is six times what the US invests in China. And Australia invests $430 billion in the United States, that is 20 times what we invest in China. There are currently about 10,000 Australian businesses operating in the United States. Through the visa arrangements that were agreed under the US-Australia free trade agreement, literally hundreds of thousands of Australians are now working in the United States.

We believe that its necessary for us to conclude free trade agreements with the North Asia giants, with South Korea, Japan and China, in that order. The negotiations with China dates back to 2005. New Zealand commenced their negotiations for a free trade agreement with China at the same time and they concluded their agreement in 2008 and trade with China and New Zealand has absolutely boomed over that time. China is already our largest merchandise trading partner, our largest destination for our exports through our minerals and resources and commodities. But we should be seeking to diversify our trading relationship with China beyond minerals and resources, although they will continue to be the mainstay, but into agriculture, into services, into healthcare, legal, professional services and beyond. Likewise with South Korea and Japan, so we are focussed very heavily on concluding these three free trade agreements, within 12 months we hope.

Mentioning minerals and resources brings me to another area of concern of the new federal government and that is that while we are so heavily reliant on exports of minerals and resources we must broaden and deepen and diversify our export profile. And so we are supporting businesses and industries accessing new markets, accessing established markets but enhancing our coverage.

One area that's often overlooked, that I think is exceedingly important, is in tourism. Our region has a middle class that is growing rapidly – India, China, Indonesia – countries in our region. As they increase and grow their economies they are increasing the size of their middle class, the consumer class, and Australia must take advantage of our geographic position. We are exquisitely located right here in the Indian Ocean Asia-Pacific region to capture the benefits of this massively increasing middle class and one way of doing it is through tourism.

I believe it's the responsibility of the federal government to make it easier for international visitors to come to Australia and to enhance the number of international visitors that come to this country. It is up to the state governments to support efforts once they get here and to attract them to Western Australia or Queensland or wherever, but it must be the job of the federal government to do what it can to increase international visitor numbers to our shores.

Currently we receive about 5.8 million international visitors each year, mainly from New Zealand. China is now number two, before the UK and the US. But we must ensure that we can capture the attention of this middle class from our region and that's why I decided we would bring the Federal Department of Tourism into the Department of Foreign Affairs and Trade. So Tourism Australia is for the first time under the Department of Foreign Affairs and Trade. It makes sense that our international engagement overseas should all be aligned, so wherever possible, our tourism representatives, through Tourism Australia, will be working with our diplomats and our representatives in the trade area. I'm trying to create a Team Australia approach so that people can come to one physical location overseas and meet all the Australian representatives. It is such common sense, I can't believe we haven't done it before but I think it is going to be quite beneficial for us when, say in Shanghai, you can go to one location – the Consul General, Austrade, Tourism Australia, Immigration, AFP, they will all be there. I spent one whole day in Shanghai recently travelling from one Australian post to another; I thought there has to be a better way of doing this, so an 'Australia House' concept is something that we will strive for.

I mentioned earlier that Sir Percy Spender was focussed way back in the 1940s and 1950s on deeper engagement in our region. He was only Foreign Minister for 16 months, so I'm not following everything that Sir Percy did, but he did leave quite a legacy in that time. Not only the ANZUS treaty, but he was also responsible for Australia's entry into the Colombo Plan. In 1950, he signed Australia up to a student program amongst Commonwealth countries that would see the best and brightest people in the region coming to Australia to study at our universities. It was his brainchild and it was called the Spender Plan for a while until they named it after the city where it was signed. It was visionary, because what it did was ensure generations of young people from the region lived here, studied here, got to know people, families, understood who we are and went back home having had an amazing experience in Australia.

I'm struck by the number of times that I'm travelling through the region and I will meet a Prime Minister or a former Prime Minister or a Vice-President or a business leader who will say to me, "I was a Colombo Plan scholar and what I know about Australia I learned through my time in your country", and they speak about it with such affection I think no amount of money or investment can replace that kind of introduction to Australia.

So, inspired by Percy Spender, I have convinced our government that we need to reinvigorate the spirit of the Colombo Plan but in reverse. So the Abbott Government has announced Australia's New Colombo Plan and what we will do is provide Commonwealth scholarships and funding for Australian students, undergraduates in our universities, to have the opportunity to study at universities throughout our region. They will spend time with their course studying in a university in a region and part of the scholarship will include an internship with a business operating in the host country.

For example, a student from UWA gets a New Colombo scholarship to study at a Singapore university in finance but also gets an internship at ANZ bank operating in Singapore. When I started talking about it with countries in the region to gauge their interest, and the interest is overwhelming. Businesses in the country, for example Singaporean businesses or Chinese businesses or Indonesian businesses, said "we want to access to your students too, why can't we be the mentors or offer the internships for them as well? So we now have next year a pilot program in four locations – Singapore, Indonesia, Hong Kong and Japan – and we will be sending about 1000 students to these four destinations and we will work through the challenges this program will present - course accreditation and student visas, you name it there are a lot of issues, to work through. Once the pilot program is completed, we will then invite other countries in the region to join in the New Colombo Plan and take a number of Australian students under this Commonwealth scheme. As I said, the response from the region has been overwhelming, already China, South Korea, Malaysia, Thailand, PNG have all put their hands up and asked that we please consider them for our New Colombo Plan scholars.

I can't think of a better way to more deeply engage in the region than to have generations of young Australians spend time becoming Asia-literate; hopefully learning a language and seeing how people live, the politics, the culture, the community life and then coming back to Australia with new perspectives and new ideas and new insights, obviously, improving our productivity and our prosperity but also developing networks and friendships that I hope will last a lifetime.

I entered politics 15 years ago now and I was driven by a desire to make a difference. I was actually brought up to believe that entering public office was one of the highest callings and that if you were given the opportunity, at some point to dedicate your efforts or energies or whatever ability you had to the betterment of your community, or your state or your country, then that was one of the most significant contributions you could make in your life. So I did it.

My hope is that through being Foreign Minister, Australia's 38th Foreign Minister, I would have the opportunity to implement policies and ideas that will build a better Australia and that through our foreign trade and defence policies we will make Australia a strong and secure nation with a vibrant economy, a vibrant democracy and importantly that Australia is a strong, positive force for good in the region and beyond. So those are my dreams, that's what I hope to do and I thank you for being here this morning.

Media enquiries