Indo-Pacific Oration II

Thank you Mr Joshi. High Commissioner, Excellencies, ladies andgentlemen. I'm delighted to be back in India and among friends, as always inthis great nation.

Today I had the pleasure of productive meetings with PrimeMinister Modi, and the Minister for Defence and Finance Mr Jaitley, and mycounterpart, the Minister for External Affairs Sushma Swaraj; and thesemeetings added to our deep and growing friendship.

Two years ago, I gave a speech here in New Delhi in which Idescribed Australia's increased focus on the Indian Ocean.

At that time, I embraced India's role as an emerging great powerand likeminded partner in the region and beyond.

In the intervening period, Australia and India's bilateralrelationship has continued to strengthen, especially in the strategic andsecurity spheres.

In June, Australia and India conducted our bilateral navalexercise, Ausindex, for the second time, on this occasion off the coast ofPerth, where my electorate is situated.

In fact, the western boundary of my electorate is the Indian Ocean– so I call Perth Australia's Indian Ocean capital.

Here's an historic fact - South of Perth is a town calledAustralind. It was founded in 1841 andits name derived from a combination of "Australia" and "India" for Australindwas to be an area for breeding horses for the British Indian Army.

The settlement didn't last due to the unsuitability of the site'ssoil and weather, but the town survived and is today one of the fastest growingareas of Western Australia. Australind,a very early example of trading engagement between our nations!

Today bilateral trade between Australia and India has reachedalmost $21 billion and India is now our ninth largest trading partner and withboundless potential for growth.

As India looks to increase its energy supply and security, througha combination of traditional and nuclear and renewable sources, to support itsgrowth, Australia is well placed as a reliable supplier of resources andtechnology.

And here's another fact. It's worth recalling that the firstmobile call in India took place almost 22 years ago to the day on 31 July 1995when the Union Telecom Minister spoke to the Chief Minister of West Bengalusing hand-held mobile phones – carried on Modi-Telstra's MobileNet service –which was a joint venture between India's Modi Group and Australia's Telstra.

Our people-to-people links are also stronger than ever.

Australian residents of Indian origin are the fourth largest groupof Australians born overseas, representing close to half a million people, oralmost 2% of our total population (this from the latest Census in 2016).

Indian Australians make a strong contribution to our country,across all fields – business, science and medicine, education, arts and cultureand sports.

In June this year, Professor Rajiv Khanna, who was born in Punjab,received the Officer of the Order of Australia Medal – one of the highestawards in our honours system – for his work in immunology, in particular indeveloping innovative cellular immunotherapies to treat cancer.

India is the second-largest source of international students inAustralia – and Australia is one of the most popular destinations forinternational students worldwide.

In 2016, about 60,000 Indian students chose to study in Australia,and the number is rising as our world class educational institutions continueto attract students from many nations.

Under our New Colombo Plan – a signature initiative of theAustralian Government – since 2015, 1800 Australian students have elected tostudy and undertake internships here in India, building links that willunderpin our engagement in the region for decades to come.

And our defence officers are regularly exchanged between ourrespective defence colleges.

It is a great source of pride that our Governor General Sir PeterCosgrove is an alumnus of the Indian National Defence College.

India is a natural leader in the Indian Ocean region and globallyand we support the role it has played in helping shape the strategic andeconomic environment.

Prime Minister Modi articulated the opportunity that India's riserepresents, in his speech at January's Raisina Dialogue here in New Delhi, whenhe said:

"[India's] actions and aspirations, capacities and human capital,democracy and demography, and strength and success will continue to be ananchor for all round regional and global progress. [India's] economic andpolitical rise represents a regional and global opportunity of greatsignificance. It is a force for peace, a factor for stability and an engine forregional and global prosperity."

The changes taking place are also leading to rising strategiccompetition in the maritime region stretching from the Middle East to theUnited States.

Military outlays in our region expanded by over 5.5 per cent in2015-16, easily outpacing the one per cent overall global increase in militaryspending.

By 2020, combined military budgets in our region are forecast toexceed US$600 billion. Now this is significant, given US expenditure iscurrently at $611 billion and Europe is at US$334 billion (2016 figures).

While we do not see the types of maritime and territorial disputesin the Indian Ocean that concern us in the South and East China seas, theIndian Ocean's shipping lanes, passages and chokepoints are a key environmentof strategic competition.

Half of the world's container shipping passes through the IndianOcean.

Over 80 per cent of China's oil imports, up to 90 per cent ofJapan's oil imports and about 80 per cent of India's crude oil requirements areshipped through the Indian Ocean.

Australia and India share converging interests and similaroutlooks on the strategic changes taking place in the region and globally.

I will now outline in more detail the type of Indo-Pacific regionthat we believe will best support its ongoing development and prosperity.

Our first objective for the Indo-Pacific is for Australia to be anactive participant, in partnership with other nations, in ensuring that apredictable international rules-based order is respected and upheld, as thefoundation for peaceful cooperation in the region.

The post-World War II order has underpinned the extraordinaryeconomic growth and achievement we have seen in many parts of the world, andmore recently in our region.

The international rules-based order has allowed Indo-Pacificstates – large and small – to pursue their national interests while giving usthe tools to work together and to resolve disputes peacefully when they arise.

It is an approach that recognises competition between states, andin which states agree to rules for regulating these disputes, and theirbehaviour toward each other.

Respecting negotiated and agreed rules ensures a better outcomefor all than if countries each pursue their interests separately.

Increasingly, the rules based order is coming under pressure.

Strategic competition is leading to unilateral actions and azero-sum conception of power relations.

Rising nationalism is leading to a narrower definition of nationalinterests, and a more transactional approach to negotiations.

These factors reduce the prospect of multilateral cooperation inthe collective interest.

As robust democracies, Australia and India share a system ofgovernment where leaders are accountable and the rights of citizens arerespected.

Law courts are professional and independent, property andintellectual property rights are protected, and there are limitations ongovernment intervention in commercial and social affairs.

Democratically elected leaders learn the habits of negotiation,compromise and cooperation, including with those with whom they havedisagreements.

These democratic principles and practices, when translated intoforeign affairs, are the essence of an international rules-based system.

As a globally integrated, top 20 economy, the 13thlargest, and in our 26th consecutive year of economic growth,Australia has a huge stake in the success of the rules-based order.

Other nations that seek to continue their development must beequally interested in this order.

Collectively, we need to build and strengthen internationalinstitutions that promote cooperation and manage integrated and competinginterests in fair and transparent ways.

The maritime domain is particularly important.

Trading nations depend on free and secure maritime trade, and weuphold the rights of nations to freedom of the seas and skies.

It is important that all states respect international law,including the UN Convention on the Law of the Sea (UNCLOS), using it to guidetheir behaviour and resolve disputes. I applaud India for successfully andpeacefully resolving a long-running maritime boundary dispute with Bangladeshin 2014, under UNCLOS.

Australia is currently participating in a conciliation processunder UNCLOS to agree maritime boundaries with Timor-Leste.

This is how countries in our region need to resolve disputes,including in the South China Sea, and we continue to oppose the construction ofartificial reefs and the militarisation of those structures in the South ChinaSea.

This approach to international dispute resolution, founded onrespect for international law, sets an example that allows us to look upon thedynamic Indo-Pacific region with hope and ambition, rather than anxiety.

In the years and decades ahead, the greatest hope for peace andprosperity in the Indo-Pacific lies in all nations respecting and contributingto international law, to protect national sovereignty and strengthen the normsthat guide relations between countries.

Our region also has an important role to play in setting andupholding global rules and norms in the multilateral arena.

We need to ensure that ourregion's perspective – which is a pragmatic, results-oriented approach to themaintenance of global peace and security – is reflected in the multilateralsystem.
In that context Australia has consistently supported Indiaobtaining its rightful place as a permanent member of a reformed United NationsSecurity Council to better reflect contemporary realities.

Australia is looking to bring such an Indo-Pacific perspective andapproach to the UN's premier human rights body, the Human Rights Council,should we be elected to that Council this October.

Peace and security in the region are also best served whencountries have an economic stake in maintaining good relations.

Our second objective for the Indo-Pacific region is to expandprosperity in the region by building a dynamic, open and integrated regionaleconomy, underpinned by liberalised trade and investment.

Australia and other countries in the region have opened oureconomies to one another, have integrated trade, production and investment in adynamic regional economy – and we're all better off as a result.

The United States has led the way since the Second World War inbuilding the business environment, the commercial partnerships, qualityinfrastructure and innovation that have put the Indo-Pacific at the forefrontof the global economy.

Continuing this growth in prosperity will require ongoinginvestment in infrastructure development in the region.

And Japan has made, and continues to make, a significantcontribution to investment in our region, both commercially and throughdevelopment banks.

Japan remains the foremost donor to South East and South Asiancountries and Australia works closely with Japan to coordinate developmentinvestments in the Pacific.

This legacy has built trust, and opened the way to wider freedomand prosperity for many millions of people.

Prime Minister Abe's commitment to "a free and open Indo-Pacific"fits with many decades of consistent practice.

Increasingly, China is supporting investments abroad, in Asia andbeyond.

The Asian Infrastructure Investment Bank is one of severalinternational organisations that provide finance for urgently-needed projects.

We are pleased that, with the encouragement of Australia andothers, the AIIB has established high standards for its investment, includingopen international tenders.

Australia is helping realise this work through our seat on theAIIB's Board of Governors and our active role in the Board of Directors.

Likewise, India is giving real heft to its "Act East" policy.

India's initiative in proposing infrastructure collaboration withASEAN is a most welcome development – backed by a line of credit worth US$1billion.

We endorse the concept behind this investment – of enhancingconnectivity, in land, air, sea and cyber. The more connected our region, themore business opportunities there will be for the private sector, that includesAustralian firms.

We also welcome competition amongst investors.

Competition, and transparency and accountability in investmentdecisions, are very important in ensuring that big infrastructure investmentsare cost-effective and economically viable.

Australia's engagement with regional and other investors will beguided by these market principles.

Investment is only part of the picture: we also need to removetrade barriers to spur regional growth and prosperity.

Together, infrastructure investment and liberalised tradeintegrate economies and create higher-value production chains.

Investments are more secure and profitable in an environment thathas the dynamism and resilience provided by diversified international trade.

Australia's protectionist policies of the early and mid-twentiethcentury taught us that it leads to economic stagnation and decline over thelonger term.

From the 1980s, we opened our economy to internationalcompetition, becoming more productive and competitive in the process.

Australia is also fully integrated into the regional economy – wehave a liberal foreign investment regime and welcome the investment that hascontributed so much to our economic strength.

Collectively, ASEAN is our third largest trading partner, withtwo-way trade worth around $93 billion in 2016.

We have free trade agreements with New Zealand, Singapore, theUnited States, Thailand, Chile, ASEAN, Malaysia, Korea, Japan and China.

In June, we signed a comprehensive Free Trade Agreement with NewZealand and eight Pacific island countries.

We are working with ASEAN and ASEAN's Free Trade Agreementpartners, including India, in the Regional Comprehensive Economic Partnershipnegotiations.

In recent weeks, we launched free trade agreement negotiationswith Hong Kong and Peru and with the "Pacific Alliance" that's made up ofMexico, Chile, Peru and Colombia.

We are also in ongoing discussions with India about a proposedComprehensive Economic Cooperation Agreement (CECA).

I recognise that economic growth in India has been largely drivenhistorically by domestic consumption.

While urbanisation and the further expansion of the middle classwill continue to spur growth in India, sustained growth will require greaterengagement with the global economy.

If India maintains its current growth rate, and ensures that itsgrowth is inclusive, the prospects for many Indians to move out of povertywithin a generation are significant.

India's growing economy and its economic weight also has thepotential to help lift the prosperity of the Indo-Pacific.

Australia welcomes and support India's ambitious domestic reformagenda, including the recent introduction of a Goods and Services Tax.

These reforms, when fully implemented, will improve India'scompetitiveness, enabling it to open its markets and benefit further from tradeopportunities.

India's world class firms are already making their mark abroad insectors such as bio-technology, pharmaceuticals and information communicationstechnology.

As the second most popular destination for Indians studyingabroad, Australia has a significant role to play in providing education andtraining, as India looks to train 400 million young people by 2022.

Australia is committed to working with India as an open andconstructive economic partner.

That is why Prime Minister Turnbull announced during his visit inApril that the Australian Government is commissioning an India EconomicStrategy.

The strategy is being led by our former High Commissioner to Indiaand recent Secretary of the Department of Foreign Affairs and Trade, PeterVarghese.

It will challenge our thinking and inspire us to find practicalexamples on how Australia and the Australian government and businesses can worktogether to cement India as a priority economic partner and how we can bestsupport India's reform agenda.

We want to see India liberalise trade and investment in order torealise its economic growth prospects and increase its influence in the region.

It is telling that India's economic and strategic rise is widelywelcomed by most of the region, and is seen as a positive contributor to peaceand stability.

Like Australia, India is fully committed to supporting the role ofkey regional institutions.

So promoting and strengthening collective leadership is our thirdobjective for the Indo-Pacific.

In Southeast Asia and East Asia the existing architecture isextensive.

We must continue to support and strengthen its role in addressingregional challenges, building consensus on regional norms and rules, andfostering a spirit of cooperation.

The architecture of South Asia and the Indian Ocean isincreasingly promoting coordinated approaches, in response to shared interestsand emerging challenges.

We both participate in the East Asia Summit, which Australia seesas the most important multilateral gathering in the region, and the ASEANRegional Forum.

However we have entered a period of competition and contests –over power, wealth and ideas.

With the regional order in a state of flux, countries like Indiaand Australia need to step up our bilateral cooperation and our collectiveefforts with other likeminded countries to shape a future region in whichstrong and effective rules and open markets deliver lasting peace andprosperity.

Australia also sees an opportunity for Indo-Pacific democracies towork more closely together in support of regional stability and prosperity.

India, Japan, Indonesia and Australia, for example, are allvibrant democracies and diverse and pluralist societies, and we sharestrikingly similar ambitions and perspectives on the nature and character ofthe regional order we want to build.

Increasingly, we are working together to build trust and sharedpositions, through groupings such as the India-Japan-Australia trilateral.

Similarly, Australia and India can work even more closely togetherto support a resilient, outward-looking ASEAN – and to strengthen the East AsiaSummit.

In the Indian Ocean, we need the collective leadership ofAustralia, India, Indonesia and other partners to ensure a strong rules-basedculture is respected and to strengthen regional institutions.

We need to continue to work together to strengthen the IndianOcean Rim Association (IORA) and we welcome Indian leadership in The Bay ofBengal Initiative for Multi-Sectoral Technical and Economic Cooperation(BIMSTEC), – another bridge to closer and more productive regional success.

The United States is our trusted ally and defence, strategic andeconomic partner, and we were pleased to see the highly successful visit ofPrime Minister Modi to Washington and the obvious regard between the PrimeMinister and President Trump and his administration.

We must all continue to engage closely with China, one of the mostimportant bilateral partners for all countries in the region.

All our economies benefit from China's growth, investment andeconomic partnerships. It is in no-one'sinterest for the Chinese economy to falter.

Our objective must be to encourage China to exercise its economicand strategic weight in a way that respects the sovereign equality of states,that upholds and strengthens the rules-based order and that benefits allcountries and peoples.

We are living through a period of global strategic transition,increasing and sharpening competition, particularly here in the Indo-Pacific.

Yet we are also living in a time of extraordinary opportunity.

Together with other partners in the Indo-Pacific, Australia andIndia can harness this opportunity and shape the region's future for thebenefit of all.

We must continue to champion free and open trade, more investment,greater innovation and integration, to drive wealth and prosperity for allstates.

We must work towards a future where relations between states arepredictable and transparent, governed by a shared acceptance of the principlesof international law.

Our international rules-based order is a huge asset – one thatoffers great avenues for deepening cooperation and resolving disputespeacefully.

This is the future that Australia is invested in and in whichIndia, as much as any country, has a massive stake.

I am confident that this is a future we can achieve when ourcountries work together for enduring peace and prosperity.