Address to ACFID Chairs and CEOs Dinner

Speech, E&OE, (check against delivery)

Park Hyatt Hotel, Canberra

30 October 2013

Good evening. Meredith. Thank you very much for that introduction.

Your excellencies, my parliamentary colleague Senator Brett Mason, who I'm absolutely delighted to say is working very closely with me as the Parliamentary Secretary for Foreign Affairs with particular emphasis on our aid program, to the ACFID members and friends. It's an absolute delight to be here this evening.

My six weeks as Foreign Minister have been somewhat of a baptism of fire, with visits to the United Nations - I was sworn in on the Wednesday and on the Monday I was chairing the UN Security Council and I said, well, isn't that what all foreign ministers do?

I've been to APEC in Bali and Jakarta, New Zealand, Singapore, Japan, Korea and Hong Kong in the first few weeks, and I've met with the Foreign Ministers, often with the Presidents and Prime Ministers of all of our neighbours, most of our region, our key allies, the Security Council P5, the G20 and, in many instances, I've met them on several occasions. With some it's got down to "oh, it's you again".

This has given me a real understanding of some of the issues that we face and some of the challenges that we must overcome.

Tomorrow I am holding the Australia-India Foreign Ministers' Framework Dialogue with the Indian Foreign Minister in Perth, and on Friday I'll join about 16 foreign ministers from across the Indian Ocean region to chair the Council of Ministers meeting of the Indian Ocean Rim Association.

There are 20 members of the Indian Ocean Rim Association. Australia's chairing this organisation for the first time in 13 years and the countries and foreign ministers have come from India, Indonesia, Malaysia, Singapore, Iran, Madagascar, Seychelles, South Africa and all the countries in between, countries whose shores are lapped by the Indian Ocean.

My most recent overseas visit was to North Asia, a region of central strategic and economic importance to Australia. In Korea, a very strong friend and with important security and economic links, I attended the Seoul Cyberspace Conference. In Japan I met with the Prime Minister, Foreign Minister and other leaders, a country with which Australia continues to share so very much, our closest partner in Asia.

Trade and Investment Minister Andrew Robb has followed the Prime Minister's lead and injected fresh energy into getting some ink on some of the critical bilateral trade deals that Australia's now been negotiating for many years, several years in some instances, and my Parliamentary Secretary Brett Mason has been to Tokyo for the Pacific Alliance Leaders Meeting. He visited the tsunami-affected areas around Sendai and he's turned the sod to mark the start of the construction of a bridge in Vietnam - and this, by the way, is the single biggest Australian aid project in mainland South East Asia, and the flagship of economic cooperation with Vietnam.

So as a team, my colleagues and I are committed to building deeper relationships, criss-crossing our region, deeper relationships that will be pivotal to our success in terms of national prosperity and security for the 21st century.

The Government has made and has started to implement some significant decisions with respect to our aid program in our first few weeks of office. We have begun a review of the aid budget, we've announced the integration of DFAT and AusAID to better align our foreign trade and development policies programs within a more coherence framework, and government remains deeply committed to being a major player in international development assistance.

We're one of the most generous per capita aid donors in the world, and this won't change. We will continue to deliver aid worth around $5 billion every year, and that's increasing. At that level of funding, Australia is likely to be the eighth largest donor in the world, given that we are the 12th or 13th largest economy.

The particular focus of our aid program is and will remain our own region. Of course, it will continue to take into account countries where we have an enduring interest - Afghanistan, Pakistan and in Africa. But there are two main reasons why our focus is unmistakably on our region, the Indian Ocean - Asia-Pacific.

First, as a strong, prosperous nation in the region, we have a responsibility to play our part in ensuring peace and prosperity for the region, and secondly, because it's in our national interest to support greater growth and equity in our region, our neighbourhood.

I am deeply conscious of the obligations that Australia has to help alleviate poverty in our region, but I'm also very much aware that the greatest tool for poverty alleviation is not one individual aid project, but rather broader economic development and aid for trade initiatives to build livelihoods, provide jobs and grow economies that can then support sustainable communities.

There are two quite staggering examples of this approach right on our doorstep, countries integral to Australia's future and economic growth and prosperity, and the first is China. Deng Xiaoping's decision to gradually integrate China into the international economy is a key example.

You talk about global poverty reduction figures. Well, perhaps the greatest achievement in alleviating poverty in our time has been the changed circumstances for hundreds of millions of people living in China. Embracing liberal economic policies and grasping at opportunities offered by international trade liberalisation have lifted over 500 million Chinese people out of poverty in just two decades.

In Indonesia, our close friend and neighbour, Indonesia lowered its trade barriers and opened up to the global economy in the 1980s and 1990s and it has reaped the benefits. Between 1990 and 2011, the number of people living in poverty in Indonesia more than halved. Almost 60 million people were lifted out of poverty over those two decades. They are the countries impacting on the statistics about decreasing global poverty.

The realisation that economic development has played a central role in making significant changes to the way people in our region live, lies at the heart of the changes that we're making to our aid program.

It's the heart of our foreign policy approach as well, what we're calling economic diplomacy. If economic growth and poverty reduction are to be long-lasting, we need to support functioning states and a strong and growing private sector to ensure job opportunities, as Meredith has indicated. Where economic development has been uneven, aid is a vehicle to re-establishing and supporting viable functioning states.

But this fact remains: the need created by poverty is always going to dwarf the available bucket of overseas development assistance, so we must absolutely leverage private sector investment to get results and work towards broader economic reform which will help make growth and poverty reduction permanent in our partner countries.

To do this, we must tackle infrastructure deficiencies that prevent developing economies from fully engaging in global markets so they can address bottlenecks in productivity and accountability, facilitate the conditions for job creation, for jobs are key, access global supply chains, consider innovative financing options.

The Government's approach of economic diplomacy brings our aid program together with our foreign and trade policy priorities in the pursuit of broader economic development, which will not only support prosperity and growth in Australia but of course in the wider region.

On 8 October, the Prime Minister announced that we would co-fund a project to tackle growing infrastructure needs in the APEC region, and we are contributing $3 million towards a pilot public-private partnership centre in Indonesia. The centre will help the Indonesian public sector to identify infrastructure needs and to build expertise in designing and managing public-private partnerships to deliver better infrastructure quickly and more affordably, and we hope that this will become the first of several such centres throughout the region.

With more than $8 trillion worth of infrastructure needed in the APEC region by 2020, Australia could turn this backlog into a significant economic opportunity for us, and importantly, contributing to greater opportunities for people of the region more widely.

I mentioned earlier the construction of the Cao Lanh Bridge that Brett visited in Vietnam. Now, this is an example of economic diplomacy in action. The project will transform local economies and enterprises and open up the movement of people and trade across the Mekong Delta all the way to Bangkok. The bridge will create opportunities for the local economy in the Dong Thap Province across the Mekong and attract private sector investment including opportunities for Australian businesses.

Focusing on economic growth doesn't always have to mean large scale economic infrastructure and reform. In Papua New Guinea, the Australian Centre for International Agricultural Research, ACIAR, now, this is one of the jewels in our portfolio. ACIAR is spreading the economic benefits of agriculture through a scheme in PNG called Lus Fruit Mamas. I love that name. Land owners and their families can collect fallen palm oil fruit and redeem the fallen fruit against a card for collecting payment.

And there's been an impact study of this and some other associated ACIAR work and its benefits have been assessed at around $57 million or more to the PNG economy, collecting loose fruit. It's particularly beneficial to women as it creates a separate income stream and gives the women the means to transform their lives and the lives of their children and their communities more generally.

Aid is a powerful tool in our statecraft designed ultimately to protect and extend Australia's broader interests and we must use it to make the most significant impact abroad and also at home. It is a portfolio of investments and like any professional financier, the government will apply a scientific and methodical approach to our investment decisions so we can achieve the greatest outcomes, the best dividends.

Australia clearly has a national interest in the way these investments are directed and an integrated DFAT and AusAID will be better placed to pursue that goal from a broad strategic perspective, both in terms of trade and investment and in terms of stability and prosperity in our region.

To achieve our objectives, we need to be honest about our resources and effective in spending our aid budget. Like any country around the world, we need to work from a funding base we can afford. Prior to the election, the Coalition announced growth in the aid program would be at CPI. This recognises the fiscal realities within which the new government is working.

We've affirmed our commitment to the goal of increasing foreign aid to 0.5 per cent of gross national income. However, there must be a primary focus on the effectiveness of our aid spend. The emphasis of the spend should be on the quality and as our overall economic policies increase our national income, the actual aid dollar will increase in real terms.

While our aid budget continues to be around $5 billion, we are the biggest in the East Asia-Pacific region. So this provides us with tremendous potential to dramatically improve opportunities for people in our region. And while the government's been considering the allocation of announced ODA budget savings, these reductions will be managed sensibly and methodically with a keen eye on maintaining and improving results with more rigorous and streamlined approaches.

Final decisions haven't been made and I'm working closely with the department and AusAID, but there are clear principles driving the government's approach to the budget and to this program underpinned by the imperative of sustainable economic development. And the principles are based around our priorities.

We are operating from the premise that a high quality aid program is essential to achieving the national interest objectives that we have for this country. Our aid program will be designed and implemented to support Australian foreign and trade policy which is dependent on a safe, secure, and prosperous region. So within this broad context, the demand for efficiency and effectiveness is clear.

We'll be strengthening performance measures and introducing rigorous benchmarking, which I see is the next logical step in the progression of the aid program. This was a major recommendation of the review into aid effectiveness, which is yet to be implemented. And I note that recommendation 39 of that review reads: "the scale up of the aid program to 0.5 per cent of GNI should be subject to the progressive achievement of predetermined hurdles".

In its explanatory notes it went on to say, "it is sensible to recognise that the upward trajectory to 0.5 per cent of GNI is steep and challenging. It makes sense that budget appropriations each year be contingent on things going to plan and existing monies being spent effectively. Failure to achieve a hurdle or to fully achieve it must have consequences. For example, the government could reduce the rate of increase or withhold all or part of the funding unless and until the hurdle is achieved".

We have a responsibility to ensure we are spending taxpayer money well and to ensure continued public support for an aid budget that will increase each year. We aim for the strongest possible performer to examine how much we give, where, how, and why to make sure our aid is delivered as efficiently and effectively as possible and to measure the outcomes.

Do we continue to deliver millions of dollars each and every year to countries that will not meet or even come to close to meeting their millennium development goals without making any adjustment to what we've been doing or what we've done in the past? Or do we acknowledge that there must be a better and more creative way to get better and more creative outcomes.

I want to see a strong performance culture and we'll look to adjust our investment decisions based on effectiveness. This recognises that we need to use our funds as effectively as possible and this will apply to all our aid partners. We will look to introduce mutual obligations between the Australian Government and our partner countries. This way all parties will be accountable for outcomes and we can adjust with incentives the right policy settings and investments.

While the details about these changes are yet to be announced, and Brett Mason and I still have a lot of work to do, I do see this as a change process that offers enormous opportunities for ACFID and its members. Benchmarking will be a consultative and collaborative process. I'm looking forward to working actively with you and consulting with you and all ACFID's member organisations so that you can feed into the process of developing robust and appropriate performance measures. And Brett Mason will be working with me on this.

It's our belief that we need benchmarks for all our partners and the government recognises the experience and the expertise of NGOs and the critical role of civil society development. So we're looking forward to an invigorated relationship with the NGO sector and we hope a new discipline and rigour in the way we do business together.

Branding of our work is also important. Branding is a key mechanism for enhancing the visibility of the Australian Government's international development initiatives. It's also a powerful tool in the diplomatic toolbox. It's a visual and clear way to see Australian aid in action. It helps project a positive image of Australia in the countries where our aid and development programs operate, reinforces Australia's standing as a model international citizen and a good neighbour, and strengthens the aid program's contribution to wider foreign policy objectives. And it also gives the Australian public a tangible and clear indication of where taxpayer dollars are being spent.

We will have a renewed focus on education as part of the principles driving our reform. Education and training will be one of our key priorities in both and foreign and aid policy. As Nelson Mandela said, education is the most powerful weapon which you can use to change the world. We'll build on the success of initiatives like the Australia-Pacific Technical College and the Indonesia School Building Program where appropriate diplomats will advocate for education reforms and more effective education spending by partner governments. Vocational training investments will match with the needs of the local private sector.

In foreign policy, we are implementing an initiative to permanently boost our connections with Asia and build long term capacity and personal and business and academic links across the region. The New Colombo Plan provides Australian students in their undergraduate years with the opportunity to study at a university in our region and complete an internship with a business or other organisation operating in the host country.

This builds on the original Colombo Plan that was introduced by the Menzies Government in Australia which over 30 years saw about 40,000 young people from the region come to Australia, study in our universities, live here and learn more about Australia. It's had an enormous impact in terms of building leadership and governance and capacity across the region and engaging with our neighbours.

Time and time again, when I mention our New Colombo Plan to our partners in the region, there will be an enthusiastic response from a prime minister, a vice president, business leaders who say I was a Colombo Plan scholar. It made the world of difference to my life and my outlook on Australia has been shaped by my time spent here as a student.

We want to ensure that we give Australian students the opportunity backed by the Commonwealth Government to take part in what would be an extraordinary experience - living, studying and working in your undergraduate years in a country in our region. And education investment is a priority but it's also two-way, providing scholarships to students to study in Australia, the Colombo Plan in reverse will be a priority for us. So we want to see Australians studying in our region, students from our region studying in Australia.

I'm also keen to focus our aid scholarships on opportunities for young women and girls, an investment that can pay extraordinary dividends. An educated girl is a girl who has the tools to change not only her community but to change the world. Education and its long-term social and economic benefits will be an important part of our aid and soft-power diplomacy efforts and scholarships will be a signature policy.

So to conclude, Australia will continue to deliver around $5 billion in aid each year with the budget increasing in line with inflation. The Government will continue to support a strong aid program that can help alleviate poverty and lift the living standards of vulnerable people overseas.

Our approach builds on our government policies that first committed Australia to the Millennium Development Goals in 2005 under the stewardship of my predecessor, Alexander Downer. We know that different and endemic constraints to growth from poverty reduction exist in many of our partner countries. We already know that under-investment in girls, weak governments, low education and poor health, constrains the ability of economies and communities to grow. We know that.

And that's why we continue to work in these areas. Yes, the face of Australian aid is changing and changing for the better. Brett Mason and I are determined to ensure that it will be more active, forward-facing and focused on contributing to sustainable economic development. Australia's aid program will be driven by government and delivered through NGOs, business and trade partnerships and enterprises and other community organisations with proven records of delivering results.

The relationship with ACFID and member organisations will continue as a strong partnership with government. Australia's reputation across the globe in delivering outcomes and being a generous and effective aid partner will continue and I hope increase. We will be pursuing a shared goal of greater equality between societies and that goal must be achieved through rising living standards in developing countries.

Aligning aid, diplomacy and trade to work for Australia's national interests and managing what I will call our portfolio of investments in the wisest and most effective way will enhance economic growth and reduce poverty. As we implement our reforms of the aid program, Brett and I look forward to a deeper engagement with ACFID and the NGO community.

Thank you for having me here this evening.