MICHAEL BRISSENDEN                 The diplomatic relationship between Australia and Indonesia is slowly rebuilding after the executions earlier this year of convicted drug runners Andrew Chan and Myuran Sukumaran.

Yesterday the Indonesian Defence Minister told AM he believed defence ties between the two countries were "very good".

And this morning Foreign Minister Julie Bishop has held a breakfast meeting in Sydney with her Indonesian counterpart, Retno Marsudi.

Well, the Foreign Minister joins me on the line now.

Julie Bishop, good morning.

JULIE BISHOP          Good morning, good to be with you.

MICHAEL BRISSENDEN                 We do have a somewhat fractious relationship, it has to be said, with our nearest neighbour. Has it recovered? How would you describe it right now?

JULIE BISHOP          I've just come from a very warm and constructive meeting with Indonesia's Foreign Minister, Retno Marsudi. We discussed a range of issues of mutual interest and benefit.

We were particularly focussing on our trade and investment relationship. Andrew Robb will be leading a business delegation to Indonesia shortly. Barnaby Joyce will also be visiting at some point to discuss expanding our agricultural ties.

I'll be Indonesia in mid-October as Indonesia is taking over from Australia as chair of the Indian Ocean Rim Association - 20 nations in the Indian Ocean, - and we discussed ways that we can work together on economic trade and security issues.

We also discussed counter terrorism and foreign fighters.

So, as always, my meetings with Indonesia's foreign ministers cover a whole range of areas of mutual interest and benefit and of course, we also discussed our education ties.

Indonesia is one of the most popular destinations for our Australian students under the New Colombo Plan and almost 2000 students from Australia have been funded by the Australian Government to go to Indonesia over the period 2014 to 2016.

So these people-to-people, business-to-business, government-to-government links are strong and growing.

MICHAEL BRISSENDEN          Nevertheless it has been a difficult few months, hasn't it? Is there any lasting damage?

JULIE BISHOP          I don't believe so. There are tensions in the relationship from time to time. We are two very different countries but we are neighbours and we both realise that we need to get along, we need to align our interests and we're doing that exceedingly well.

The personal contact between Australian Government ministers and our counterparts is very important and that's why Retno Marsudi and I keep in constant contact. We're text buddies, much to the chagrin of our diplomats. We keep in contact on a very regular basis by phone, by text and of course, we're meeting each other in a couple of weeks at the UN General Assembly Leaders' Week.

MICHAEL BRISSENDEN            What about the lines of communication between the Prime Minister and the President? Are they open again?

JULIE BISHOP          Yes, they are fine. We have lines of communication at all levels. It is one of the most diverse relationships across about 60 different areas of endeavour. Australia and Indonesia have dialogues, workshops, summits, lines of communication - so it is a broad, diverse and deep relationship.

It has its challenges from time to time but the overall relationship is in good shape.

MICHAEL BRISSENDEN             So they're having phone conversations again because there was a point where they weren't?

JULIE BISHOP          Well, that was over the - as I understand it, over the decision of Indonesia to carry out the execution of two Australian citizens, Mr Chan and Mr Sukumaran. At one point there was some difficulty in speaking with our counterparts but this has all been resolved so the relationship is in very good shape.

MICHAEL BRISSENDEN             Okay, earlier this week the Indonesian Government announced that it was scrapping visa fees for Australians travelling to Indonesia, now this is a constant source of frustration for many Indonesians coming to Australia, that they don't have the reciprocal rights. Will Australia be doing the same?

JULIE BISHOP          No, Australia has a policy of no exceptions to our visa requirements and I spoke on this issue with Retno Marsudi just a moment ago and she explained that they would love to provide Australia with the visa exemption but unless they got reciprocity, they wouldn't be able to do so. And I explained to her that it was Australia's policy not to provide any exemptions to any countries over the requirement to produce a visa.

And so I understood, and she understood our position, that if Australia were to make an exemption to Indonesia, Indonesia would of course grant us the same exemption.

But our policy is across the board, there are no exemptions to the requirement to have a visa.

MICHAEL BRISSENDEN               Okay, can we turn to the conflict in Iraq and Syria. Last night General David Petraeus, the former commander of Coalition forces in Iraq, added to the call for Australia to join the bombing campaign against Syria. Now the Prime Minister this morning says a decision will be made next week.

There's not much doubt that the Government is inclined to do it, is there?

JULIE BISHOP          General Petraeus was very optimistic about the impact that the Coalition was having in Iraq, and he was of the view that there is an inescapable logic that if you are attacking Da’esh and seeking to defeat this terrorist organisation in Iraq, you must appreciate that it is actually one theatre of war because Da’esh is operating across the Syrian/Iraq border. And so he was supportive of Australia taking that role but of course, it's a matter for our country.

We are discussing it with other Coalition partners. We're seeking legal advice and it was a very good opportunity for me yesterday to talk to General Petraeus, given his background as commander of the US forces in Iraq and Afghanistan. As a former head of the CIA he has a unique insight into the complexities in the Middle East.

But he was very optimistic about what the Iraqi Government is doing at present, making some significant reforms to reassert its authority. In Syria he believed that there were many people fighting with the terrorist organisation for opportunistic reasons and if, and when, a credible moderate force began to make an impact in Syria, some of these fighters could be enticed to rejoin a moderate force.

So we haven't made a decision yet but it was very interesting to hear General Petraeus' views on this.

MICHAEL BRISSENDEN                 He also suggested earlier in the week that the US should co-opt moderate members of Al Qaida's Al Nusra Front, in its fight against Islamic State in Syria. I mean, where is all this heading? Is there a danger that this is all going to spiral out of control further?

JULIE BISHOP          Well, that was the point I just made.

He believes that many of the people fighting with the terrorist organisations are doing it for opportunistic, not ideological reasons, so if there were a credible moderate force, then some fighters could be enticed to rejoin this moderate force and that was the point he was making. It's happened before in other theatres and so it's something that he thinks is worth considering.

But of course, we are part of the Coalition carrying out air strikes in Iraq. We're making an impact. Da’esh is operating across the border, they are planning and launching their attacks on Iraq and on the people of Iraq from Syria. So there are a number of countries that have already joined with the US to carry out air strikes in Syria to take out the Da’esh bases in Syria that are launching these attacks on Iraq.

MICHAEL BRISSENDEN                 Okay, just quickly on the Canning by-election which is coming up. Now you have obviously been there a lot, being a prominent West Australian Liberal.

Tony Abbott says it's not about him. No one else sees it that way, do they?

JULIE BISHOP          Well, in fact the people of Canning believe it's their opportunity to elect a representative to be their voice in Canberra - and after the sad and untimely death of Don Randall, a very popular Liberal member, the people of Canning have an opportunity to choose a new Member of Parliament.

MICHAEL BRISSENDEN                 They've got an opportunity to have a swing at the Government too, haven't they?

JULIE BISHOP          But the by-election will not change the Government. We continue in government. This is an opportunity for the people of Canning to elect a representative to be their person in Canberra for years to come.

So we don't take the seat for granted. It will be a tough fight but we have an extraordinarily good and strong candidate in Andrew Hastie. He will be a strong voice for the people of Canning and I hope that the people of Canning see in him, someone of the character and temperament and with the leadership skills that will make them proud to have him as their member.

MICHAEL BRISSENDEN                 Nevertheless, how much will you and your colleagues read into a big swing, if there is one, against the Liberal?

JULIE BISHOP          Well, my job is to ensure that there is not a swing against us and we're working as hard as we can to ensure that Andrew Hastie is elected as the member for Canning and I'll be there today, tomorrow, over the weekend until we return to Canberra, supporting Andrew Hastie because I think he's one of the most outstanding candidates I've seen on either side of politics.

MICHAEL BRISSENDEN                 What's an acceptable, what's an acceptable result then? I mean, in a percentage of you know, you've got a 12 per cent buffer there. What if you had an 8 per cent swing against you?

JULIE BISHOP          Yes, but in 2010 it was a 2 per cent margin. There was a significant swing to us in 2013 because there was a great desire on the part of the people of Canning to get rid of disastrous Rudd/Gillard/Rudd government.

The policies that we took to the 2013 election resonated exceedingly well in Canning. The debt and deficit of the Labor Government, the border protection policies, scrapping the mining tax and the carbon tax were very popular policies so we had a significant swing in Canning and Don Randall also would have attracted a pretty solid personal following.

So there will inevitably be a swing against the Government. I believe that happens in by-elections as incumbent government but I'm hoping that our candidate, Andrew Hastie will be seen as the preferred member and that he'll receive a solid vote.

MICHAEL BRISSENDEN              Okay, Julie Bishop, we'll leave it there. Thanks very much for joining us.

JULIE BISHOP          Thanks Michael.

MICHAEL BRISSENDEN                 That's the Foreign Minister, Julie Bishop, there.

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