2017 Alfred Deakin Institute oration

Thank you Vice Chancellor, Professor Mansouri, my friend and colleague Sarah Henderson the Member for Corangamite, ladies and gentlemen, good evening.

It is a delight to be here to deliver the Alfred Deakin Institute Oration, for this Institute is developing a national, indeed international reputation for research which will further our understanding of how Australian society and the world is changing.

Alfred Deakin – our second, fifth and seventh Prime Minister – was one of our more outstanding political figures in the 20th century. He had a love of learning that was evident in his public life, and as a founding father and our first Attorney-General, I was wondering on my trip here what he would have made of Section 44 of the Constitution as currently clarified by our High Court?

Back to matters at hand.

The Institute's research draws insights from multiple disciplines: political science, economics, sociology, jurisprudence and philosophy to name a few.

More than the pursuit of knowledge, the Institute seeks to shape the policy agenda, help individuals reach their potential, and advance individual and social justice in a dynamic world.

Practical wisdom derived from observation and analysis is the basis for all good policy.

The Coalition Government is seeking to achieve similar outcomes.

We are launching the 2017 Foreign Policy White Paper next week.

This will be the first foreign policy blueprint for Australia since 2003.

Now while we cannot predict the future, our White Paper will articulate and explain our interests and values, and our priorities, which we seek to advance in a contested and unpredictable environment internationally.

The White Paper will guide our external efforts and deployment of national resources over the next decade and beyond.

Good policy demands that we acquire a deep understanding of our environment and the forces shaping it.

There is a case to be made that the current range of opportunities and challenges began with a series of dramatic events that have unfolded over the past 40 years.

These include:

• the economic reforms which began in China in 1979 followed by increased Chinese participation in the global economy;
• the anti-Communist revolutions from 1989 onward which spread throughout the old Eastern Bloc;
• the non-violent collapse of the Soviet Union in 1989;
• the September 11, 2001 terrorist attacks on the United States;
• the 2008 Global Financial Crisis; and
• technological advances – as the Vice Chancellor mentions – such as the Internet and artificial intelligence that make sovereign borders less relevant and disrupt the way we live, work, socialise and interact with one another.

Governments in Eastern Europe, Latin America, China and Russia gradually embraced freer and open markets over that first decade of the post-Cold War era.

There were political and economic ramifications.

The number of electoral democracies increased from 69 in 1989 to 120 in 2000, or an increase from 41 percent to 63 percent of all countries. ¹

In that same period, and largely as a result of abandoning Communist economic policies, global GDP per capita increased from just over US$7,000 to US$9,133 over that same period. ²

Since 1989, the global economy has grown from about US$25 trillion to over US$120 trillion currently.³

The best-selling book in the international relations and political science genre in the early 1990s was The End of History and the Last Man by Francis Fukuyama.

It condensed the triumphant and optimistic mood of those years following the end of the Cold War into an elegant grand theory of history.

It characterised politics over centuries as the struggle of individuals to achieve freedom and dignity and argued that liberal-democracy and free markets were the final successful destination for all nations.

All that remained was for stubborn outliers to accept that fate, according to the author.

Just one year after Fukuyama's The End of History published in 1992, the great American political scientist Samuel Huntington penned an article entitled 'The Clash of Civilisations?' in the Foreign Affairs journal.

In that article, Huntington argued that the end of the Cold War merely signalled the end of clashes between nations with alternative political ideologies.

In a direct rebuttal of Fukuyama – incidentally, one of his former students - Huntington rejected the view that nations and cultures would increasingly embrace liberal politics, economics and values.

In Huntington's view, the decades ahead would be characterised by deep divisions between identities: by that he meant history, language, culture, tradition, and religion.

Huntington believed that differences in identity would come to the fore in the post-Cold War world and give rise to differing views on important questions such as the relationship between the individual and society, the citizen and the state, and freedom and authority.

His unhappy prediction was that the triumph of liberal-democracy over Communism would soon give way to even more fundamental disagreement between the West and the rest of the world.

International politics is not as benign or dismal as these two American political scientists envisaged.

It is neither the end of history nor are we entering an era of the clash of civilisations.

Now I mention these perspectives because they offer useful context to better understand the opportunities and challenges we will face over the next few years and beyond.

The institutions that have underpinned the great increase in peace and prosperity in the world are liberal in nature:

• competition conducted under the rule-of-law;
• open societies with the relatively free movement of people, goods and capital;
• limited role for government to intervene or determine private economic decisions;
• the peaceful management of disagreements between states according to international norms, rules and laws.

It is no coincidence that the only countries that have managed to become wealthy, high-income and fully-industrialised economies are democratic nations with liberal institutions – with the exception of a small number of oil-rich Middle Eastern states.

In our region, Japan and South Korea are model examples of strong, prosperous and stable liberal-democratic nations that came from very different cultural and civilizational roots from those of the West.

Clearly, cultural differences do not automatically preclude countries from sharing common political, economic, social and strategic values.

Even so, the emerging environment may well prove more complicated than the one we experienced before the fall of the Iron Curtain.

Since the last decade of the previous century, globalisation and the opening of markets has brought greater prosperity around the world with hundreds of millions of people lifted out of poverty.

It has been the greatest expansion of wealth in human history, and yet is under challenge from inward looking sentiment in many advanced as well as developing economies.

Schisms in the Middle East remain unresolved and that region has been the most heavily militarised in the world in terms of expenditure as a proportion of GDP since the 1990s.

Non-state actors from that region and beyond are seeking to exploit weak or unstable governments to establish Islamist caliphates within the sovereign territories of nation-states.

Russia's annexation of Crimea is the first attempt at redrawing Europe's international borders since Hitler annexed Czechoslovakia and subsequently invaded Poland in 1939.

The consequences of Brexit for the United Kingdom and the European Union are as yet unknown and will continue to unfold in the decade ahead.

Even the march of democratisation has slowed, and in recent years, has lost ground.

A number of fledgling democracies have slid back towards autocracy, maintaining the outward appearance of democracy without the rights and institutions of truly free societies.

Of the 195 countries assessed in 2016 by Freedom House, only 87 countries were rated as 'free', marking the 11th consecutive year of decline in global freedom.

Our White Paper will focus most heavily on our region of the Indo-Pacific – the Indian Ocean-Asia Pacific region, a geographic concept and space that covers our priority economic and strategic interests.

It is a region of immense opportunity, and also with some challenges.

The most immediate challenge is North Korea's illegal missile and nuclear programs and the use of those to threaten other countries.

If North Korea is permitted to retain and develop these weapons, it will be a direct repudiation of the standing and authority of the United Nations Security Council which exists as the custodian of international order and law.

Left unchecked, North Korea's actions could encourage other states to also pursue illegal weapons programs.

The region and world will then be a far more insecure and dangerous place.

Australia is urging all nations to exert maximum diplomatic and economic pressure on North Korea to compel it back to the negotiating table so that we can resolve this issue peacefully.

We welcome China's clear indication in particular that it will reaffirm the authority of the UN Security Council and fully implement the toughest and most comprehensive set of sanctions against North Korea to date.

Fortunately, North Korea is presently the only genuine pariah nation in our region.

More generally, one of the challenges will be to manage the overwhelming blessing of growing prosperity throughout the Indo-Pacific.

The most dramatic illustration of economic success in recent times is China's remarkable rise which has been occurring since reforms that began in 1979.

Its GDP has grown from just over US$200 billion in 1980 to almost US$11.8 trillion in nominal terms by the end of 2016.

Australia is a major beneficiary of China's rise, as are many other nations.

China is our largest export market and largest source of imports with two-way trade in goods and services valued at over $155 billion in 2016.

More tertiary students come to Australia from China than any other country.

China is on track to overtake New Zealand as the largest source country for incoming tourists in 2018.

Rising prosperity means that countries naturally seek to expand their sphere of influence and protect their growing interests.

In 2016, military outlays in Asia expanded by over 5.5 per cent which easily outpaces the one per cent overall increase in global military spending.

By 2020, the combined military budgets of Asian states is forecast to exceed US$600 billion, matching military spending in North America for the first time in at least one hundred years.

As one would expect, the lion-share of growth in military spending is occurring in China which currently accounts for around 40 percent of all military expenditure in East Asia.

However, China is only one of several significant powers in our region.

Even though the United States will likely remain the world's only superpower we have never seen or been in an era where there has been a powerful China, Japan and India all at the same time.

Russia will also remain a significant strategic player in the Indo-Pacific.

South Korea, Indonesia and Vietnam will grow in relative wealth, strength and influence.

The strategic composition of nations will be qualitatively different from the past, as the majority of emerging great and regional powers in the region are not allies or long-standing security partners of the United States.

This is a vastly different to the second half of the previous century when rapidly growing economies such as Japan, South Korea, Thailand, the Philippines, Singapore and Malaysia all enjoyed strong security relationships with the United States.

Australia welcomes the emergence of new powers outside our traditional network of security allies and partners.

This is precisely what a free and open order based on rules is designed to achieve, by supporting the emergence of increasing prosperous and powerful nations willingly participating in that system.

The challenge is to ensure that all nations use their growing power responsibly – that while benefiting from participation in the rules-based order they accept the responsibility of respecting and strengthening that order at the same time.

In a region where tensions over maritime and land disputes continue to increase or reignite, powerful countries must not selectively defy or circumvent international rules and laws for immediate gain.

Unequal or unfair agreements should not be imposed on smaller countries through coercion or intimidation.

There is still much to gain – and therefore much we might lose.

It is worth noting that only three of the top 20 global economies - when measured by GDP per capita terms - are currently in our region.

The majority of regional countries are yet to reach the status of fully industrialised and high-income economies.

Respect for international rules and laws by all nations – especially current and emerging powers - is essential if the region is to continue to prosper and reach its economic and social potential.

The White Paper will be ambitious with respect to the role Australia plays and the contribution we make to preserving peace and stability in the Indo-Pacific.

There are strong reasons for ambition despite the emergence of a more contested and congested region as nations rise.

Australia is currently the 13th largest economy in the world in nominal terms – about 53rd in population but 13th largest economy.

We have broken a world record this year in entering our 27th consecutive year of uninterrupted economic growth, no other nation has ever achieved that.

The majority of nations in the Indo-Pacific with large populations are rising in relative strength and influence, and we hope they will continue to do so over the next decade.

If that happier scenario eventuates however, we may well sit outside the Group of 20 largest economies in the world.

Indonesia, Pakistan and Thailand are predicted to have larger economies than Australia by 2030, if they continue on current growth trends.

Vietnam, Bangladesh, Malaysia and the Philippines will also be approaching parity with Australia in absolute economic size.

Rising powers will always seek a greater say in the conduct of affairs affecting their interests.

Even so, we will retain considerable strengths and competitive advantages.

Australia is one of the oldest continuous democracies in the world and we must continue to place a high value on our institutions and be mindful of the positive regard in which our successful democracy and pluralistic society is held around the world.

In 2007, the Association of Southeast Asian Nations (ASEAN) adopted its Charter which includes aspirations:

• to strengthen democracy;
• enhance good governance and the rule of law;
• and to promote and protect human rights and fundamental freedoms.

The ASEAN Charter reflects what has been repeated many times over six decades: domestic stability and enduring prosperity is most likely in societies with strong liberal institutions and political, personal and economic freedoms.

Although we do not seek to impose our values on other countries, the Coalition government will remain a vocal champion of and advocate for respecting international law, free societies and open economies, underpinned by strong independent institutions and the rule of law.

They are the foundations on which enduring national strength and regional peace and prosperity are built.

We have a long-standing alliance with the only superpower in the world in the foreseeable future in the United States, the roots of which are deep and continue to grow.

Under the Coalition agreement, Australia's relationships with Japan, South Korea, India and key ASEAN states such as Indonesia, Singapore and Malaysia have never been stronger.

Australia and China are Comprehensive Strategic Partners with a respectful and constructive relationship.

In addition to our international relationships and standing, we should not underestimate our national strengths.

Australia is one of the few genuinely fully industrialised and advanced economies in the Indo-Pacific.

According to the Global Competitiveness Index produced by the World Economic Forum, we are ranked 5th in the region.

The comprehensive index includes factors such as the quality of a country's institutions, infrastructure, macro-economic and micro-economic environment, population skillsets, technological readiness and innovation.

We are the third ranked country in the region when it comes to the Index of Economic Freedom – an important foundation for economic dynamism and entrepreneurialism.

We are ranked fourth in the region on the Ease of Doing Business Index.

For nations in the Indo-Pacific, we are ranked 4th by the Bloomberg Innovation Index and 5th in the region in the Global Innovation Index produced by INSEAD and the World Intellectual Property Organization.

Of the top 20 ranked universities from the region, eight are Australian according to The World University Rankings produced by The Times.

We contribute much to the growth of economies in our region.

We are the number one exporter of iron ore, aluminium, lead, coal, beef, wheat and wool.

By 2020, we are projected to become the world's largest exporter of LNG.

We are one of the largest exporters of copper, zinc and diamonds in the world.

According to Deloitte Access Economics findings, the productivity levels of 15 out of 20 Australian industries rate above the average productivity of global competitors in the same sector.

Australia is performing 20 per cent above this global average in five key growth sectors – gas, education, oil, tourism and health – and over 40 per cent in mining and agribusiness.

These are just some of our strengths and capabilities however I am not encouraging complacency.

I raise this to support the proposition that we must be ambitious when envisaging our role in the region and ensure we maximise our ability to influence the environment to the benefit of all nations.

Our White Paper will build on our strengths and shed further light on how we pursue our strategic, economic interests, and promote our values in the decade ahead.

It will also be a practical document to guide policy in a way that is relevant to the daily lives of Australian citizens.

In terms of people-to-people engagement with our region, the White Paper will continue to draw inspiration from existing initiatives such as the New Colombo Plan, which the Vice Chancellor mentioned, which I established in 2014.

As many of you are aware, there was an original Colombo Plan back in the 1950s, which enabled young people in Asia to study in Australia and gain qualifications from our universities to equip them with the skills to help them rebuild their nations after the devastation of the Second World War.

Over thirty years about 40,000 overseas students studied in Australia under the original Colombo Plan, and many of them have gone on to become business, community and political leaders in our region and in fact are ambassador for our country.

The New Colombo Plan – cunningly named the New Colombo Plan – offers opportunities for Australian undergraduate students to live in and study at institutions in any one of our 38 partner countries in the Indo-Pacific.

The time spent at international universities is recognised by our universities toward the completion of their degree in Australia.

What makes this program particularly special is that students are also offered the opportunity to undertake work experience, internships and practicums in the host country.

Companies, businesses, NGOs and government departments in these countries are offering Australian students the opportunity to see how they operate by giving them the most extraordinary chance to experience the economic, political and social life of the host country.

My plan is and will be for our students to return to Australia more Asia-literate, with new perspectives and insights, new skills – hopefully including language skills – that will better equip them as our leaders for the future.

Over the first five years of its life, from 2014 to 2018, the New Colombo Plan will have supported over 30,000 Australian students to live, study and work in our region.

Importantly, they will develop friendships and create networks and gain an understanding of the region that will last a lifetime.

This is a long-term investment in our regional relationships that will pay dividends for our country for decades to come.

Let me take a few local examples.

Deakin University has been the recipient of support for 1,115 students – the highest number for any university in Victoria – and the students are going to countries in our region, undertaking every discipline offered by Deakin.

Four students from the Waurn Ponds campus in the health sector lived and studied in India, eight students worked in civil engineering in Malaysia, in 2016, 14 students from Waurn Ponds undertook PR and communications studies in Kuala Lumpur, and in 2018 students will be in Vietnam studying mobile technology.

We've also set up an alumni program to ensure that our New Colombo Plan students remain connected with each other, but also with their host country, and each university has an Alumni Ambassador.

The Waterfront campus produced Deakin University's Alumni Ambassador, William Rathgerber who is studying architecture. In 2015 he studied in India and then again in 2016 in Seoul.

So the New Colombo Plan is all about engaging in our region by investing in our young people, the leaders of the future.

Ladies and gentlemen, we do live in uncertain times, but we also live in a dynamic time, in a dynamic region.

Australians should approach the next decade with ambition, confidence and purpose, and that is the aim of the Australian Government.

¹Freedom House figures.

²World Bank figures.

³World Bank figures.