CEDA State of the Nation Conference

  • Speech, check against delivery
19 September 2019

I acknowledge the traditional owners of the land on which we meet today, the Ngunnawal people and pay my respects to their elders, past present and emerging.

Let me also acknowledge my Senate colleague Hollie Hughes, CEDA chief executive Melinda Cilento, Siemens CEO and the chair for tonight's event, Jeff Connolly, and members of the diplomatic corps.

It's a pleasure to speak to you tonight at this important forum on the State of the Nation. I congratulate CEDA on its 40th anniversary and on the important contribution the committee makes to generating ideas on Australian public policy.

Australia's record of economic reform at home is a proud one.

I'm particularly pleased that as a result of the Government's economic plan and responsible budget management, my colleague, the Treasurer Josh Frydenberg, was able to announce today that the federal budget has returned to balance for the first time in 11 years.

Australia's role in shaping global norms that have enabled broader economic progress is an achievement of which we should be no less proud.

CEDA's own recent report, "Connecting People with Progress" captured an important principle: Reform and economic development are not ends in themselves but must be geared towards actually making people's lives better.

Equally, global rules and norms have rightly been shaped over many decades to reflect what the international community – Australia included – has judged will deliver the best outcomes for everyone.

It is the importance of these rules and norms that I'd like to talk to you about tonight in a context you'll be familiar with – the power of competition on a level playing field governed by a code we all agree on.

Speaking to a business audience, I'm optimistic I will be among friends when I say that healthy, positive competition is something we favour.

Our international system of rules and norms has created stability and prosperity by allowing most disputes – clearly not all, but most – to be resolved peacefully and enabling commerce to flourish.

This system is under strain today as differences and disagreements emerge over what are the right kinds of rules and who benefits from them.

Nobody denies the challenge Australia faces as the distribution of economic and strategic weight, coupled with the emergence of new technologies, change our circumstances at a pace it was difficult to anticipate.

Australia's strategic ally and our largest trading partner are engaging in a period of competition, which we are approaching, in a considered and calm way, to ensure that our responses and direction are well-managed and strategically focussed.

The fact of the competition is beyond denial. But the nature of that competition itself is still variable, and with that we need to shape our responses appropriately.

Of course, competition in itself, when on a fair, level playing field, conducted within clear rules, is actually in our interests.

Australia must continue supporting a rules-based international order founded on values that enhance stability and prosperity for all people.

For Australia and for me, they include values such as freedom, openness, inclusiveness and respect by each nation for the sovereignty and independence of others.

At times that will mean speaking our minds or taking actions that are disagreeable to others.

It might seem easier not to speak or act, but it is in our long-term interest to remember our core values.

Our values are good for business because they underpin the rules and norms that support predictability and consistency, and thereby create the long-term conditions for prosperity.

Consider fairness in trade. I believe fairness is a valued Australian principle – it is part of who we are.

Trade deals rely on all parties keeping their promises and, when there are disputes, having agreed processes to resolve them justly and fairly.

Unfair dealing is anathema to countries who work within this system of trade rules, and who care about their international reputation.

An international system of rules that underpins and encourages fairness across the board has therefore allowed us to prosper.

The rules themselves, it is widely acknowledged, will need to be updated and modernised to keep pace with changes in technology and economic conditions, but the values that constitute their foundation are enduring.

Australia will need to remain clear about our values and core interests, and we continue to be active in prosecuting them.

Fortunately, we have a strong track record, regionally and more broadly, of using our diplomacy actively and effectively – a fact that is often underappreciated.

Let me give you a few examples on a quick traverse of our diplomatic history.

In the 1970s, Australia was already deeply engaged with ASEAN, the Association of Southeast Asian Nations, at that time comprising Indonesia, Malaysia, the Philippines, Singapore and Thailand.

We played a vital role as a diplomatic facilitator as these five nations put aside their own differences and signed the Treaty of Amity and Co-operation.

In 1974 we became the first of ASEAN's 10 dialogue partners. By the end of that decade, ASEAN was already a bastion of stability to the south of what was then still a troubled Indo-China.

Australia played a supportive role when Vietnam, Laos, Myanmar and later Cambodia joined the ASEAN fold.

Another 15 years on, in 2009, we signed the ASEAN Australia New Zealand Free Trade Agreement.

And this year, we have warmly welcomed the ASEAN Outlook on the Indo-Pacific, which expresses a complementary vision for our region to the one we share with likeminded partners including the United States, Japan and India.

So this Southeast Asia story of which we are part, is one of peacebuilding, prosperity and partnerships to create a stable and prosperous Indo-Pacific.

Moving further north, Australia and China established diplomatic relations in 1973, but our understanding of one another took a few years to evolve.

By the end of that decade, we had established the Australia-China Council. Forty years on, the chair of the council, Warwick Smith, is helping establish the recently announced Foundation for Australia-China Relations to further strengthen ties, harnessing the efforts of federal and state agencies, peak bodies, NGOs, cultural organisations, the private sector and the Chinese-Australian community

We have an Australia-China Comprehensive Strategic Partnership as the framework for our engagement, while our economies benefit enormously from our Free Trade Agreement.

Yes, there are differences that arise inevitably from our distinct political systems. We have not made the mistake of ignoring these differences. Instead, we are acting in our national interest, working to resolve them respectfully and always looking for areas of common ground where we can co-operate.

As is well-known, China is Australia's largest trading partner. Less often noted is the fact that Australia is China's sixth-largest source of imports.

Our goods contribute to China's manufacturing base and economic growth, while our services improve quality of life in China, especially healthcare.

Australia has also been a champion of developing international rules of the road that have been instrumental to the stability and prosperity of our region.

We were at the forefront of negotiations that produced the United Nations Convention on the Law of the Sea, or UNCLOS.

Often called "the Constitution of the Oceans", UNCLOS has underpinned stability and security in our region and around the world, including through the peaceful settlement of disputes.

With the world's third largest maritime jurisdiction, we have an enormous stake in upholding these rules and norms.

The Maritime Boundary Treaty with Timor-Leste was a landmark for UNCLOS and international law. I was honoured to be in Dili with the Prime Minister when the treaty entered into force on August 30, coinciding with the 20th anniversary of the referendum that paved the way for Timor-Leste's independence.

This conciliation under the Convention was the first of its kind.

As two democratic nations and close neighbours, Australia and Timor-Leste demonstrated the value of international law and the rules-based order.

My fourth and final example of Australia's effective diplomacy is, like Timor-Leste, one that sits close to home.

In 1971, Australia was a founding member of the Pacific Islands Forum, which has become a key part of our regional architecture. It has enabled us to work in close partnership with our Pacific neighbours to address pressing issues including our regional security, and particularly in the context of climate change.

Nearly half a century later, our communities, histories and values are deeply intertwined with our neighbours. Our future is also intertwined, more so than ever with Australia's Pacific Step-up, through which we are sharing the responsibilities and challenges of ensuring the region's sovereignty, stability, security and prosperity.

These four examples underscore my point that Australia has used its diplomatic skill to considerable effect in the past. I have every confidence that we can continue doing that into the future.

Of course, the way we exercise our diplomacy evolves, as the strategic environment, technology and economic circumstances evolve. We are ready to take a leading role in keeping the international rules and norms fit for purpose.

Where the rules need modernising, we will help harness international will to bring them up to date.

We have seen that already in the trade dispute between the US and China. As the Prime Minister and other members of the Government have said, we recognise that international trade rules need to be reformed.

There is understandable concern right now about the differences between the US and China. A trade war between the world's two largest economies is in nobody's interests. We urge both sides to resolve it, and to do so in a way that reinforces our open, rules-based trading system without undermining the interests of other nations

We recognise, for example, that intellectual property theft and forced technology transfer are wrong. Lopsided trade and investment practices are unfair.

And it is precisely to ensure that such disputes continue to be resolved in accordance with international rules and norms that we believe these rules must be modernised.

Extraordinary leaps in technology mean that the types of goods and services that are being traded under the auspices of the World Trade Organisation are in danger of being unrecognisable to rules written in an era dominated by trade in commodities.

The US-China trade dispute is but one lens for considering Australian interests. Importantly, and what we must not lose sight of, is the distinct set of national interests that is engaged in each of these relationships in their own right.

The US is, and will remain, our most important strategic ally. And I make these observation this evening on the cusp of a state visit by the Prime Minister of Australia to Washington tomorrow – only the second state visit of this administration and the second state visit for Australia following a previous visit by Mr Howard with President Bush many years ago.

China is a vital economic partner and a major power.  And Australia is continually engaging and deepening its relationships across the region –  for example with countries like Japan, India, Indonesia, the ASEAN nations.

As the Prime Minister said in his Asialink speech shortly after the election, we should not sit back passively and "await our fate" in the wake of a major power contest.

As a regional power with global interests, Australia can and must find common ground with other countries to marshal the co-operation that we need.

We did this in the late 1980s when we founded APEC to drive economic co-operation in our region, get business involved in shaping rules and push for global trade liberalisation.

We played a role in the establishment of the World Trade Organisation – we must therefore play a role in reforming it to maintain its relevance.

More recently, with Japan, we led the conclusion of the 11-nation Trans-Pacific Partnership. The TPP is more than a trade agreement. It will help improve predictable, open and inclusive rules.

To use my friend and colleague Simon Birmingham's words, this agreement has given institutional, legally binding form to Australia's view of regional economic order.

In recent weeks, Senator Birmingham has been to Beijing and Bangkok to help shape how the parties to the proposed Regional Comprehensive Economic Partnership, including China, plan to take that agreement forward.

At the same time, we are taking a proactive role in shaping rules in spheres that currently lack proper international regulation, such as space and cyberspace.

We are central, for instance, in two United Nations groups to develop rules of the road for what is acceptable conduct in cyberspace. And we will work with other countries to ensure states and non-states who undertake malicious cyber activity are held to account – maintaining the international rules in our national interest.

Of course we acknowledge there will be pressure points. There will be times when ripples in geo-politics mean business becomes more difficult in the short term.

But the goal of our effort must be stability and security on terms that are consistent with our values and long-term interests in a way that empowers our people to improve their lives.

Just as leaders of the business community seek to make their organisations competitive over the long term, you can be assured the Morrison government is focused on the long-term prosperity of the nation.

We will continue to help shape a world that remains free and fair, in which individual and collective rights are protected, and people and nations are not subjected to coercion and pressure.

That is a world in which the private sector is free to pursue innovation and develop the big ideas that will power and shape the economies and societies of the future.

Fair competition on a level playing field governed by rules – that is the world we want. It is the world to which the people in this room have become accustomed and in which many of you have prospered.

Australia has a history of helping to provide solutions. We have earnt a good name on the international stage.

This is a core message that I will take with me next week to the United Nations in New York. The Government believes the UN remains central to maintaining the rules and institutions that underpin a free, open, inclusive and prosperous global order.

This UNGA Leaders Week is focussed on climate, health, sustainable development and oceans.

We will discuss nuclear non-proliferation, counter-terrorism and justice for the victims of the downing of flight MH17 and their families.

More than ever, Australia will be active and vigorous within the international system.

There is no doubt these are challenging times. But based on our history of engagement in influencing our region and contribution to the rules, we have good reason to be confident.

And while co-operation between government and industry has always been important, the tech-advanced world of few-to-no borders in which we live, means such co-operation is more important for our prosperity and security than ever.

So I encourage you – and the communities and institutions you represent – to join me in taking Australian values to the world and in securing our interests in a peaceful, open, inclusive and free international order.

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