Address to Sydney Institute

Thank you Gerard – I'm delighted to speak at the Sydney Institute.

And I am honoured to serve as Australia's 38th Foreign Minister at an extraordinary time in global affairs.

After my swearing in last September, I will confess to contemplating the scale of the challenge as well as the privilege that came from the commission extended to me by the Governor-General.

After four years as the Shadow Minister for Foreign Affairs and Trade, serving something of an extended apprenticeship, and given I had previously served as a Cabinet Minister, I was quietly confident of managing the workload.

However, the larger challenge of being Australia's diplomat in chief and advocate of our national interest on the world stage, loomed large. I have long pondered the actual role of diplomacy as statecraft and the responsibilities of working in that sphere of influence.

While nations have observed for centuries certain protocols and protections for the agents of other nations, the Vienna Convention on Diplomatic Relations in 1961 formalised these understandings.

The preamble to the Convention refers to:

"the maintenance of international peace and security, and the promotion of friendly relations among nations … irrespective of their differing constitutional and social systems."

I understand my role to be a relationship manager with my focus on building stronger ties between Australia and nations across the globe, with the ultimate aim of achieving peace and security for Australia and for all humankind. Not quite "world peace", but that is the unassailable summit to which all foreign ministers aspire.

Or in other words, my goal is to do the Defence Minister out of a job!

In preparation for this role I have sought inspiration – not divine but historical – from a number of my predecessors including one Richard Gardiner Casey, who was Australia's first Head of Mission in Washington in 1940, indeed our first diplomatic post outside London, and he was later our Foreign Minister from 1951 to 1960.

Sixty years ago in 1954 RG Casey wrote a book titled "Friends and Neighbours, Australia and the World". This book provides the foundation for my speech tonight.

As Foreign Minister in the 1950s, Casey believed that Australia's foreign policy was founded on:

• Our geographic and physical circumstances
• Our membership of the Commonwealth
• Our membership of the United Nations; and
• Our growing sense of regionalism – being part of Asia

Now that was a particularly acute observation for the time, and it seems to me that the Menzies Government had a prescient feel for necessary changes in direction in foreign policy, both before the Second World War when Menzies proclaimed that Australia was indeed a Pacific power, and in the years after the Second World War when he looked North, or as Casey wrote –

"…of the need for close and friendly relations with nations throughout South and South East Asia and our conscious desire to get to know and understand our countries to the North and the North West of us."

Casey's four principles have been somewhat supplanted by the absolute acceptance of our place in the world, geographically and strategically. But they remain relevant touchstones for contemporary foreign policy.

We have not forgotten our history, nor our heritage, nor our friends from the past, but we entertain no illusion about the forces at work in our region and where our destiny lies.

The Coalition's foreign policy is designed to project and protect our reputation as a strong, open, export orientated trading economy and our reputation as an open liberal democracy with a strong commitment to freedom, the rule of law and democratic institutions.

In addition to Casey's principles I have also drawn inspiration from Paul Hasluck, foreign minister from 1964 to 1969, from Western Australia, indeed a predecessor in my seat of Curtin. He said in 1968:

"Australia gives special weight to the international element in economic affairs. As a country dependent still on exports of food and raw materials, and on investment for development, Australia needs an expanding world economy and trade outlets and international monetary stability. Australia contributes economic assistance to other countries and will continue to do so. We take an active part in international affairs. We believe that continued international action in the economic field is essential in tackling world problems".

In that spirit I see a fundamental principle of our foreign policy in what I have dubbed 'economic diplomacy'.

Australians have long learned the lesson that international commerce and trade is the key to higher standards of living, and that is what we hope to promote not only for our nation but among our partners in the Pacific, the Indian Ocean and the developing nations of Asia.

I believe that building Australia's national economic strength is central to our national interest and that building the economic strength of our neighbours and our region is also fundamental to our prosperity.

1. Economic Diplomacy

If the goal of traditional diplomacy is peace, then the goal of economic diplomacy is prosperity.

Economic diplomacy is today at the heart of the Government's foreign policy.

Putting our diplomatic effort into boosting trade, growth, investment and business is fundamental in terms of promoting Australia's national interest.

And not only building our prosperity but the prosperity of our friends and neighbours.

Economic growth and prosperity encourages security, stability and peace.

Australia has always taken a clear-eyed, commercial approach to our links with foreign governments.

We invariably start with trade. There are many examples where history shows our initial efforts to build trade links with others – to satisfy commercial needs – have flourished into strong and broad-based partnerships, indeed friendships.

For example, we began our formal trade links with Japan within twelve years of the end of the Second World War, signing our historic Commerce Agreement in 1957 – an extraordinary achievement given the times.

Today, we have a critically important, multi-faceted relationship with Japan. For several decades, Japan was our largest trading partner. Today, Japan remains our second-largest.

Japan is a key partner with whom we share much – a commitment to freedom and democracy, the rule of law, similar perspectives on the global rules-based order, a commitment to nuclear non-proliferation, longstanding educational and cultural exchanges, multiple sister city connections and the like.

With China, we had a flourishing wheat and wool trade well before we normalised diplomatic relations in the 1970s. Today China is our largest trading partner and the relationship flourishes across a broad range of areas, notwithstanding our different political systems.

Through trade – through economic diplomacy, we have founded relationships with all the key states of Asia.

We built those markets up over decades, and we have diversified our trading connection into the multifaceted, multi-dimensional relationships we have today.

In contrast to the British focus of our trade in the early 1950s, today our export markets are predominantly Asian with about eight of our top 10 trading partners in the Asia Pacific.

Increasingly, we have a critical strategic partnership and friendship with countries like South Korea, India and Indonesia.

And it's a fact we have built our own prosperity over the past decade on China's industrialisation and urbanisation.

The region's long economic growth has supported our long stretch of stability and peace.

We remain critically concerned with the stability and security of South East Asia and the Pacific, and will continue to support widespread economic development to that end.

Australia's economic prosperity means we can and should play a significant role in building the economic prosperity and development of countries in our region.

Foreign aid, overseas development assistance, is also a key plank of economic diplomacy.

Since coming to office, the Government has made some significant decisions with respect to our aid program.

We've slowed the pace of growth in the aid budget in order to stabilise the budget after years of chaotic instability.

We've stemmed growth, as we have with domestic programs, as we've sought to bring our budget back to fiscal sustainability.

And we've merged the statutory authority AusAID into DFAT to align our focus, our resources, our policies.

We see development assistance sitting squarely within our national interest, aligned to our foreign policy imperatives.

Australia's peace and prosperity is directly linked to that of our neighbours and major trading partners.

Economic growth in other countries, including developing countries, creates new markets for Australian goods and services.

But instability or conflict can disrupt our trading relationships and often require Australian resources to resolve the issue.

So we will remain a significant aid donor for many decades.

We have specific responsibilities in our region – including in the Pacific – to help build greater development and stability.

We will shirk none of these responsibilities.

But we will pursue Australia's national interest in a clear-eyed way that recognises the changing economic realities in our region, and seek to derive the greatest return possible from Australia's aid investment.

Economic diplomacy is also critical to guiding our understanding of the importance of our geographic location, which I define as the Indian-Ocean, Asia-Pacific region, the Indo Pacific.

In Casey's book he recognised the limitations of Australia's geographic position.

"We in Australia were long able, under the protecting shield of the Royal Navy, to ignore the implications of our geographical position. Our contacts with Asia and the outside world were slight, and were effectively regulated by the unchallenged authority of British sea power. Asia itself was largely under the control of European countries, but it was always entirely towards Europe that we looked."

Then Casey foreshadowed the imperative to make the most of our geographic location.

"We can no longer live in this state of comfortable anomaly… Now that a new Asia confronts us, an appreciable part of our activity in the field of foreign affairs must be devoted to the task of studying and developing closer relations with our Asian neighbours."

Today we seize the opportunity afforded by our location and we must, because in large measure the world has moved closer to us.

In the past two or three decades, the world's economic centre of gravity has moved somewhat from its centuries old home in the West to the East driven by East Asia's economic transformation, particularly that of China, Japan and South Korea and the vibrant, emerging economies across much of South East Asia.

At the same time, drawing on our resources and industrial strengths, we have turned our strengths into positive opportunities to build a world class economy.

Our population is still relatively small, 53rd on the world scale, yet that still places us in the top quarter of countries when it comes to population size.

Decades of multicultural immigration has made our people and our diversity an asset in the region.

And through agriculture, manufacturing, resources, education, financial services, the opening up of our economy to international competition and outside forces, our country has been transformed.

There can be little doubt today that our 'physical circumstances' as Casey put it, have worked to our advantage.

In the 1960s massive iron ore deposits were found in Western Australia.

Huge bauxite deposits were developed in Queensland, the Northern Territory and WA.

Massive new deposits of exportable coal in Queensland added to the existing NSW black coal.

We found petroleum in Bass Strait and natural gas on the northwest Shelf – alumina, gold, diamonds, mineral sands, copper, silver, zinc.

And, as we know now, we have the largest reserves of uranium in the world and we have shale reserves.

Today we are a top 20 country against virtually every economic indicator that counts:

• 16th in the Global Competitiveness Index;
• 15th highest amount of outward investment globally (by Australian investors);
• 13th largest amount of inward-attracted FDI;
• 12th highest GDP
• 11th for ease of doing business;
• 10th largest stock exchange;
• Equal 9th on transparency;
• 7th on the prosperity index (Legatum Prosperity Index);
• 5th most traded currency;
• 5th on the financial development index; 5th highest per capita GDP;
• 4th for the number of new businesses established last year;
• 4th largest economy in Asia, after only China, India and Japan;
• 3rd for economic freedom;
• 3rd largest pool of investment funds under management around the world; and
• we're number 1 in terms of highest proportion of the population with net worth above $US100,000.

Our economy has grown each and every year for the past 22 years we haven't seen a recession since 1991.

We are a top 20 country – that's how I see us and how apt it is that we're a member of the G20 – this year we're chairing the G20 welcoming the world's leaders to Brisbane in November.

2. Historic ties and alliances

RG Casey wrote of friends and neighbours and still today a fundamental pillar of our foreign policy is our commitment to our historic ties and alliances.

The ANZUS alliance with the United States remains the bedrock of our security.

The ANZUS Treaty was signed during Casey's term as Foreign Minister, but arguably its significance, together with other regional architecture that has been created since then, has grown with time.

US involvement in our region has been central to stability and prosperity throughout Asia since the Second World War.

For nearly seventy years, the presence of the United States has been the vital stabiliser in our region that has allowed countries across Asia to transform their economies and societies.

First Japan, then the four tigers – Taiwan, South Korea, Hong Kong and Singapore.

More recently, China which has been an unprecedented economic miracle, in many ways surpassing the transformation that took place in Japan in the 1950s and 60s.

Other countries in the region, too, have benefited from long-term regional stability underpinned by the United States presence: Indonesia, Malaysia, Thailand, Vietnam and India.

While Australia continues to cement and modernise our close ties with the nations of our region, it's not been at the expense of our alliance partner, the United States.

At last November's Australia US Ministerial meeting between foreign affairs and defence counterparts, we agreed to work together to support the US policy of rebalance to the region and to work together on the full implementation of the force posture initiatives in Australia.

That includes the deployments of US marines in Darwin and an increased rotation of US Air Force aircraft in Northern Australia.

The enduring nature of our Alliance continues to demonstrate its relevance today – for example, Australia and the United States are working together on cyberspace issues and on space security.

Our US alliance is important not only in itself – but as part of our network of historic relationships with Britain, New Zealand, and Canada.

These five countries have shared common interests, objectives and values throughout the 20th Century – and continue to do so today.

Australia's security is underpinned by that close-knit group of five like-minded friends.

3. Multilateral and regional institutions

Casey referenced the United Nations – and at that point it was less than a decade old – as well as the Commonwealth of Nations – as the second and third pillars of our 1950s foreign policy.

Today, our foreign policy continues to rest on our commitment to the global multilateral system.

Our membership of the United Nations remains an important part of Australia's efforts to advance our interests in the world and our current membership of the Security Council has seen us perform with distinction on the world stage.

From its inception we recognised that the United Nations and its primary bodies, particularly the UN Security Council, had a central role in helping to establish and reinforce a rules-based international order.

Its specialised agencies are at the heart of many of our efforts to solve the truly international challenges we face – whether in security, health, the environment – in many spheres of human life.

At times – including through the Syrian crisis, now entering its third year – the United Nations has been criticised for its lack of action.

With the veto plan of the Security Council members there's a frustration over its inability to counter acts of aggression as we've seen in recent times in Ukraine.

But we continue to value the UN in tackling global security challenges that affect our interests – like the continuing spread of jihadist terror, extremism and weapons proliferation.

A good example of the utility of the United Nations is the recent negotiation – through the UN system – of the Arms Trade Treaty, which agreed common international standards that should help stem the flow of illicit arms that so often impact on the most vulnerable societies.

Significantly, since Casey's time we've seen new bodies evolve – the World Trade Organisation, the successor body to the General Agreement on Tariffs and Trade – and the G20 – to help us continue to shape and drive economic and social progress.

Our membership of the Commonwealth, too, remains important to us, although clearly the organisation, and its relative weight in our foreign policy, has changed somewhat.

It was the successor organisation to the vast British Empire.

Today it remains an important grouping, precisely because of its diversity and it has become a promoter of freedoms, democracy, human rights and the rule of law.

It is the only sizeable multilateral organisation that has no need for interpreters or translators.

We have established and strengthened links to more regional organisations and we became the first dialogue partner of ASEAN 40 years ago this year.

ASEAN is a vital institution that has played the cohesive, positive role in economic and social integration that founding fathers like Thanat Khoman, Foreign Minister of Thailand, foresaw.

We played our own positive role in pushing for the birth of APEC and through our ambitious free trade agenda we hope to realise the vision of an APEC free trade zone.

We are working with our fellow East Asia Summit members to strengthen this vital leader-led forum to ensure that it serves the region's interests in stability and prosperity. I believe it has the membership and mandate to be the most significant grouping in our region.

We are active in the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership free trade negotiations.

And for the next two years we are chairing the Indian Ocean Rim Association, an institution that brings together the 20 diverse littoral states of the Indian Ocean, and an institution I see as having a lot of promise and a lot of opportunities.

Global and regional multilateral institutions are important to Australia for our interests are best served by a coherent, predictable, transparent and collaborative international rules-based order.

4. Building stronger bilateral ties

One of the hallmarks of the Coalition's foreign policy will be the importance we place on bilateral ties with our friends and neighbours – these are the vital building blocks of our international diplomacy with our particular focus on the Indo Pacific.

Building and maintaining robust relations with our friends and neighbours, anchored in our national interest, is the centrepiece of our foreign policy today.

For example, Australia looks to develop, with China, the strongest, broadest and most resilient relationship possible.

China has benefitted greatly from the international order over the past decades seeking membership of the WTO because China understood its own interest was served by being part of the global economy.

Its economic miracle was not only a domestic one – its relied on the massive growth China was able to secure by integrating itself with global markets.

With those benefits come responsibility. All states need to work closely together, with good, consistent communication and transparency.

How we manage the rise of China, while taking account of the interests of Japan, South Korea and the United States, will be one of most important challenges and opportunities of our time.

The Korean Peninsula remains a hotspot over 60 years since the armistice was signed. North Korea's development of weapons of mass destruction, and its proliferation of sensitive technologies, poses a threat, not only to every other country in our region, but also globally.

The territorial claims and tensions over the East and South China Seas are yet to be resolved which again underlines the critical importance of building the strongest, most resilient set of bilateral relationships possible among key players.

Australia has a vital national interest in all these issues. They are too important to shy away from robust debate however uncomfortable it might be from time to time.

It is in our direct economic and strategic interest for there to be peace and stability in our region and amongst our friends and neighbours.

We look towards South East Asia to develop equally critical bilateral relationships.

The continued growth of countries like Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. It's all an important phenomenon.

Strategically and economically, South East Asia is becoming an even more vital region for us.

That is why Prime Minister Abbott's first overseas visit was to Jakarta, in company with a senior business delegation, signifiying the importance we place on a broader strategic and economic relationship with Indonesia.

Our deep framework of cooperation reflects hard work on both sides over many years to translate our many common interests into practical cooperation to the benefit of both our countries.

Indonesia is an important trade and investment partner – over 200 Australian businesses are operating there, taking up the opportunities presented by Indonesia's economic growth.

There is a strong sense on both sides that we should do more in the trade and commerce field to build to a level that better reflects the very strong potential that exists between our two economies.

But it is the people-to-people links that give our relationship the ballast, the depth, the strength, the resilience.

Australia can make claim to having the highest concentration of scholars specialising in Indonesia, outside of Indonesia, across so many disciplines – law, engineering, agriculture, music, language, photography.

About 900,000 Australians visited Indonesia last year and about 17,000 Indonesian students are enrolled to study at universities here in Australia.

At this very moment we are facing challenges in our relationship with Indonesia, mostly inherited.

And while we recognise challenges arise from time to time, as in any relationship between close neighbours, we take it seriously and we're working very hard to address them.

I am confident, given the deep and shared interests we have, that we will work through those issues.

Coincidentally my rereading of Casey's book reminds me of our early support for Indonesian independence in 1949. And indeed he states at pages 102 and 103 of his book:

"We have every desire to work closely and constructively with Indonesia as our nearest neighbour and as a leading member of the new group of South East Asian countries with which our own future is intimately bound up. We want to have the friendship and understanding with Indonesia and be on the best of good neighbourly relations with them. After all we live in the same part of the world…Australia is anxious to see Indonesia succeed in the important tasks that confront her. We want our neighbours to be peaceful and prosperous. We are trying, through our contribution to the Colombo Plan, to do what we can to help Indonesia."

The more things change, the more they remain the same.

I've just returned from Malaysia, Philippines, Vietnam and Cambodia where I was struck again by the closeness of our ties.

In these countries I was reminded of the deep and enduring bond that has been forged between us through education, starting with the vision of another one of my predecessors Percy Spender, who was Foreign Minister from 1949 until 1951. A shorter but equally spectacular stint.

For he was the father of the Colombo Plan in Australia, which among other goals, built a network of connections through a student program.

Over 30 years between 1950 and 1980 over 40,000 young people came to Australia to study in our universities, live with our families and build connections that have lasted a lifetime.

In this spirit the Australian Government has established a scheme, the New Colombo Plan, which begins this year, to build over time not only a highly professional workforce, but an Asia literate one.

Under this scheme undergraduates of our universities have the opportunity to undertake study at a university in the region and to have an internship or work experience at a business or organisation that is operating in the host country.

I want this to become a 'rite of passage' for students studying at Australian universities so that the next generation of Australian business, community and political leaders have the insights and ideas and perspectives that can only come with living and studying in another country.

This year, more than 300 undergraduate students from 24 universities across Australia, including Sydney University and the University of New South Wales, will soon set off to study abroad in the Indo-Pacific region.

This plan has been enthusiastically welcomed as a symbol and a practical expression of our deeper engagement in our region.

There is a golden thread that runs through our foreign policy from Menzies to Abbott, none more so than in the Pacific.

For Menzies realised before most others the need to focus on the Pacific, indeed as Casey notes in his book: "In a speech to the Parliament Prime Minister Menzies said:

"We will never realise our destiny as a nation until we realise we are one of the Pacific powers. And of course as a Pacific power we are principals..no secondary interests...we have a primary interest in it."

As a personal goal of mine, if I leave this role having made a contribution to a new era of peace and prosperity in the Pacific, I will have made a worthwhile contribution as an Australian Foreign Minister.

Australia has special interests and special responsibilities in the Pacific – the world looks to us to play a leadership role.

Papua New Guinea has a special focus for me – our friend, our neighbour and with an economy and a population which is growing quickly, but it has some steep challenges.

This is a relationship I'm determined to build into a mature partnership focused not only on our strong security interests, but also on the considerable economic potential and to move away from the old stereotypes which have bedeviled our relationship.

The Coalition promised to normalise relations with Fiji after years of isolation and I'm pleased that we are delivering on that promise.

For I believe it is time for a new and constructive phase in our relationship, as Fiji heads towards an election by the end of September.

On the 14th of February I visited Fiji, becoming the first Australian Minister to meet with Prime Minister Bainimarama since 2008.

I do welcome the appointment by Fiji Prime Minister Bainimarama of a new military commander for the Fijian military forces in anticipation of Prime Minister Bainimarama contesting the September elections as a political candidate and I'm pleased that our friends in New Zealand have worked closely with us and that other Pacific nations support our steps in normalising relations.

Indeed the United States have now followed our lead and have had a meeting with Prime Minister Bainimarama.

Conclusion

As Australia's 38th Foreign Minister, I'm honoured to serve in a role vital to Australia's national interest.

Today, I am driving an Australian foreign policy which shares many of the convictions of my liberal predecessors, but with a sharper focus on our region, on economic diplomacy and the temporary alliances, networks and challenges of today.

Geography does dominates our thinking, with the Indian Ocean Asia-Pacific critical to Australia's national interests.

We are a country that is proud of our values, proud of our place in the world and we recognise that our standing in the world is at its highest when our influence in our region is at its strongest.

We seek to maximize our influence by building on our historic ties and our alliances.

We seek to build our strength through economic growth, investment and development with new and emerging economies.

We recognise the importance of the multilateral system – giving us a framework of international laws in which to operate.

And we recognize that our future will be defined by how successful we are at building critical relationships in our region and across the world.

My role as relationship manager – building and enhancing relationships with our friends and neighbours is well summed up in the last chapter of Casey's book.

He writes of the challenges of diplomacy with its tempo excitingly fast and the job vastly complicated by lively and nervous public opinion and practically instantaneous worldwide communications.

That was 1954. Imagine how Casey would view the practice of foreign ministers today texting each other, not bothering with cables, SMS flying around the world and tweeting their latest thinking on international politics.

Sixty years on and Casey's book 'Friends and Neighbours: Australia and the World' is still what it is all about.