Thank you Simon.
It’s a pleasure to be here today, addressing the challenging topic of the current global Geopolitical Outlook.
I returned to Australia from the US via LA airport last weekend – and the protest scenes at LAX in response to President Trump’s immigration policies, provided an indication that we’re in for a challenging year.
In fact, it is apparent that we are going through a period of even more rapid change across the geopolitical landscape.
While things are always evolving and nothing ever remains the same in a dynamic international environment, last year two events in particular have the potential for fast and far-reaching change.
The first was the vote of the British people to leave the European Union – Brexit.
UK Prime Minister Theresa May has recently outlined the principles that will guide this process, which is being described as a “hard Brexit” that has far-reaching implications for the global economy.
The Brexit vote is likely to have implications for upcoming elections in France, Germany, the Netherlands and elsewhere.
The second event is the election and inauguration of the 45th President of the United States, Donald Trump.
Often described as an entrepreneur with no political experience, Trump’s campaign was based on his appeal as an ‘anti-establishment’ outsider who would shake up the political landscape in Washington – and drain the swamp.
It is fair to say that President Trump’s supporters will not have been disappointed by his early approach, at least in terms of changing the status quo.
Such events, and others, do not happen in isolation.
The world order is being challenged – economically, strategically and technologically.
History tells us that periods of great change can be disruptive and that means, while the challenges increase, so do the opportunities.
Some analysis of the underlying reasons for Brexit and the US presidential results are that many people feel they have not benefited from globalisation and a more open trade and investment environment.
This was exacerbated by the 2008 global financial crisis.
It is true that most developed countries – with Australia as a notable exception – have experienced nearly a decade of economic stagnation, at best.
The International Monetary Fund has criticised some governments for failing to undertake the economic reform to resolve weaknesses in public balance sheets – which has entrenched some advanced economies on a structurally lower growth setting.
The pace of technological change has led to speculation that we are at the cusp of a fourth industrial revolution – automation and disruptive technologies are challenging jobs and industries – particularly in manufacturing.
Technology often brings great efficiencies and change to the way we all operate – however it can be disruptive to employment markets given the rapid change in the nature of work and the skills required to perform it.
In addition to economic and technological changes, we are also seeing the long-term primacy of the United States under challenge – with the growing strength of China, militarily and economically, and US influence in the Middle East being tested by Russia and Iran.
The Eurasia Group set out key strategic concerns for 2017 as:
- President Trump’s “America First” philosophy implying a withdrawal from America’s unique and indispensable global role
- The potential for China to over-react, particularly during the upcoming political transitions this year around the 19th Party Congress, and
- A possible global leadership vacuum.
The Financial Times has also pointed to:
- the uncertainty around the future of the Iran nuclear deal, and we have heard more from the White House Administration this morning, and
- the struggle that nation-states will continue to experience against the ideologically-driven power of non-state actors such as ISIS
There are a number of current and potential conflicts that could escalate - Syria and Iraq, Yemen, the Democratic Republic of Congo, South Sudan and Ukraine.
There are tensions over the disputed islands in the South China Sea and on the Korean Peninsula with the provocative behaviour of North Korea.
A recent publication from the National Security College of the Australian National University, regarding the uncertainty that we face today, is subtitled “Don’t Panic, Don’t Relax”.
I think that’s sage advice when responding to the current geopolitical shifts.
As part of your discussions today, I suggest it is important to consider the long term trends that are behind the changes taking place.
In its latest “Global Trends” update, published last month, the US National Intelligence Council pointed to the trends that will underpin change throughout the world through the next two decades, through to 2035 -
- Ageing populations in many nations – the demographics challenges
- Persistent slow economic growth
- Technological change
- Modern conflict, often involving non-state actors
- Persistent global challenges – environmental protection, migration flows, health and education
A key part of all our work is to position Australia to be able to respond to challenges while identifying opportunities.
Securing the peace and prosperity of Australians – creating the right conditions for the happiness of our people – has always been a guiding principle of public policy.
Peace and prosperity go hand in hand – peace provides the right conditions for economic growth, and economic growth creates the right conditions for peace.
Australia has enjoyed peace on our soil for over seventy years now, and our progress – material, economic, social and spiritual – has been extraordinary.
The peace we’ve enjoyed, in broad terms, since the end of the Second World War has been transformational.
Our current lifestyle would scarcely have been imagined by our grandparents and great-grandparents, in part because of the absence of conflict between great powers in our region and beyond.
Australia has an established, deep and close relationship with the United States that is the envy of many nations around the world.
The United States is our closest partner – economically and militarily – it is our largest investor, our second largest trading partner and our indispensable security and defence partner.
It's often noted that we have fought alongside the US in every major conflict since World War I.
During the 20th century, the United States pursued its national interest through the promotion of a peaceful, predictable global environment, underpinned by a rules-based international order.
US Presidents have often reflected on the fact that these rules restrain the US in the same way that they restrain the behaviour of other nations, to the benefit of global growth, peace and security.
Australia understands this very clearly, which is why we have also established a network of relationships and security partnerships around the world including strong security connections with other key countries, Japan, Britain, Germany, France, Canada and New Zealand.
In the security and intelligence fields we work particularly closely with the United States, the United Kingdom and with international organisations such as the World Trade Organisation and the United Nations, to build international stability and promote the rules-based order.
A significant part of that work does happen through the United Nations – and particularly the Security Council, of which Australia was a member during 2013-14.
We work alongside institutions like NATO, and through bodies like the East Asia Summit – this is a critical piece of architecture in our region, which brings together the 10 ASEAN nations, as well as China, India, Japan, Korea, Russia, the United States, New Zealand and Australia in a forum where leaders can discuss both economic and strategic issues.
We are also working to secure the prosperity of Australians by promoting an open trading system and the development and maintenance of a global economic order.
Economic uncertainty is a major factor, however looking at the globe as a whole, the prosperity story is much more positive.
200 years ago, almost everyone – the vast majority of the just over one billion people on Earth – were living in what we would now define as absolute poverty.
This persisted as the global population increased, with a major turning point in the opening up of China’s economy last century.
Economic growth in China and India alone has seen hundreds of millions of people lifted out of poverty.
Growth remains strong in the Asian region as a whole, at more than five per cent.
The Asian middle class is expected to increase fivefold, from 600 million to 3 billion, by 2035.
Increasing wealth will see huge opportunities for services exports, particularly as populations age.
The capacity of the global economy to deliver more and more opportunity, wealth and better lives for people is enormous.
Those opportunities are the antidote to the feelings of anxiety, uncertainty and economic marginalisation that are driving major political shifts around the world.
We as a government – and you as corporate leaders – also need to communicate to the broader public how sustained foreign investment can support jobs, businesses and local communities.
That’s on top of the benefits to our economies from opening up market access in our trading partners.
Australia is an excellent case in point, entering our 26th year of continuous economic growth, that is unprecedented amongst comparable economies, on the back of policies that liberalised our economy and opened us to the world.
We must better explain to the Australian people the connection between our deliberate policies of economic reform, and the prosperity we enjoy today.
Real median household incomes have increased by around a half in the past 20 years.
We are an open, export-oriented market economy of 24 million people.
Our prosperity depends on our ability to sell our goods and services into the global market place.
That is why the Australian government is such an avid supporter of free trade deals, like the trifecta this government has achieved with China, Japan and South Korea.
It is why we have pushed so hard for the Trans-Pacific Partnership, and why we remain committed to looking for ways to bring its principles and standards into being.
It is why we are pursuing the Regional Comprehensive Economic Partnership, which includes the ASEAN nations and China, as a possible pathway to a free trade agreement of the Asia-Pacific.
It is also why we will actively pursue future trade deals, such as bilateral negotiations with Indonesia, India, the European Union and over time with the United Kingdom.
It is up to us, who understand the benefits of globalisation and an open trade and investment environment, to continue to advocate against protectionism in favour of an open trading system.
2017 will be a challenging year for all policymakers, governments and businesses around the world.
Economic factors, particularly the loss of jobs and the disruption to local and regional industries, is likely to continue to underpin dissatisfaction with many elected governments.
Issues such as wealth distribution and income inequality, challenge us to find ways to ensure the benefits of globalisation are more evenly shared.
People of all economic and social strata need to feel they have opportunities and a stake in what’s happening in their country.
Our Government firmly believes that our security and prosperity are at their strongest when we work within a predictable set of international rules and norms, and when we engage with the opportunities of the global economy.
People do understand that we need security and peace as our operating environment if we are going to optimise opportunities presented by this unique era.
At this time, more than ever, we need to remain advocates of the freedom offered by our system of international laws and rules, and the extraordinary benefits powered by the engine of globalisation.
I encourage you to look ahead to 2017, fully cognisant of the risks and challenges we face, but enthused by the incredible opportunities of living and working at this time in history.
I wish you all the best for your discussions today.
- Minister's office: (02) 6277 7500
- DFAT Media Liaison: (02) 6261 1555