Good morning ladies and gentleman, and what a beautiful day it is in Lae and a delight for me to be back here at the yacht club.  Thank you very much to the yacht club staff for hosting such a wonderful breakfast here.

I would like to acknowledge my dear friend and Minister, Senator Concetta Fierravanti-Wells, who is the Australian Minister for International Development and the Pacific. She is and will continue to be a regular visitor here and throughout the Pacific.  I note that there are so many representatives from local government, from provincial government, from businesses, and from the non-government sector, and particularly the number of women who are here today, on the day after International Women's Day. I'm delighted to see you all here.

Our High Commissioner Bruce Davis is also on this visit to Lae, and we have our new Consul-General, Paul Murphy, who last night goes on the payroll because we officially opened the Lae Consulate-General.

I'm also very pleased to see former honorary consuls Phil Franklin and Alan McLay, and the former High Commissioner Ian Kemish, who is now in the private sector with Newcrest, so Bruce, there is life after being a High Commissioner. The reason we opened the Consulate-General here in Lae is because this is the business heart of PNG and we are delighted that we will now have a permanent presence here in Lae to assist not only the thousand Australians who live in this area but also to promote greater trade and investment ties between Morobe province and Australia.

When I became Foreign Minister in 2013, I embraced a concept at the heart of our foreign policy which I called "economic diplomacy".  Traditional diplomacy is all about promoting peace, and economic diplomacy is about promoting prosperity. In our engagement with other countries, I wanted us to focus on the really positive aspect of increasing the economic impact of trade and investment.  Wherever countries are around the world, Australia should be willing to trade and increase economic ties.  After all, Australia is the 12th largest economy in the world, but is 53rd when it comes to population size.   So we are an open, export market oriented economy.  Our economic growth, our standard of living, depends on our ability to sell Australian goods and services into the marketplaces around the world, and our economic growth depends on our ability to attract foreign direct investment to support the significant projects in mining and agriculture and tourism that employs so many Australian people.  This is a message for PNG – to be open, keep being competitive, keep attracting foreign direct investment, because it's our experience that an open economy attracting foreign investment is the way to ensure your economy is sustainable, your economy grows, and provides job opportunities for the citizens of this country.  That has been Australia's experience. 

So I tasked each one of our missions overseas – we have about a hundred High Commissions, Embassies, Consulates, around the world – I asked each one of them to prepare an economic diplomacy strategy of how our mission and our diplomats can enhance the economic ties and two-way trade and investment between their host country and Australia.   The results were impressive.  They took their task seriously and really thought it through, how they could enhance these economic ties by what we called economic diplomacy.  And I have to say, the effort from the High Commission in PNG was quite spectacular. They thought very deeply about the relationships. The focus on development assistance, trade and investment, security and defence policing and of course, the people-to-people links, and there was a particular emphasis on engaging with the private sector in PNG and ways that we can drive private sector growth in this great country.   We determined that about 20 per cent of our overall aid budget, and the single largest recipient of our overall development assistance is PNG, we decided that about 20 per cent would be directed to what we call aid for trade. Using the aid dollar to leverage economic growth.  We also decided in the case of PNG, with the PNG Government, that up to 50 per cent of development assistance would go towards productivity enhancing infrastructure.  And a number of the case studies that were provided to me are really worth reading, and I'll just share three with you this morning.

In Oro province, a number of bridges had been washed away, isolating people from markets and from other major regional centres. As part of our commitment to rehabilitating and maintaining the national road network in PNG, the Australian Government decided that we would rebuild six bridges in Oro province, it cost about $60 million. But it connected about 100,000 people back to markets, back to opportunities, and it had a particular spin off in that it connected Australian trekkers to the Kokoda track.  We saw a surge in the number of people wanting to undertake that extremely significant but rather arduous journey. 

Another example is of "chocolate diplomacy", because I happen to be a great aficionado of chocolate.  Cocoa is one of PNG's most important cash crops, and we believe that there is enormous potential for PNG cocoa to be sold around the world. So the Australian government hosted a visit from European buyers, really high end chocolatiers from Europe, to see the potential of the cocoa industry in PNG.  And I'm delighted to learn from the High Commissioner that we hosted the first ever Bougainville Chocolate Festival.  Now I can't think of a better tourism event to go to than a chocolate festival.  This is held in Bougainville to bring potential buyers and potential producers and exporters together.   I hear from Bruce it was a huge success, with many opportunities and potential exports discussed at that chocolate festival.  It was so successful that they are going to make it an annual event, and there will be another Bougainville chocolate festival in 2017.  I urge you all to attend.  Apart from the joy of being surrounded by chocolate, I think this is a real opportunity to develop not only Bougainville cocoa, which is of course a household name for decades, but also the cocoa industry more broadly.

And the third case study related to tourism. And as I look out here at this beautiful bay, with the wonderful mountains, you can see the enormous tourism potential here in Lae. Cruise tourism. Cruising is a worldwide phenomenon.  More and more people are going on cruises for their holidays for their retirement.  We would like to see PNG gain its fair share of the tourism industry.  So we funded a study to assess the impact of cruise tourism in PNG which already contributes around 200 direct jobs and is worth about six million dollars to the PNG economy.  The potential is enormous, because the cruisers, those taking cruises, spend quite a bit of money when they stop off at the ports, they look for handicrafts, cultural performances, and there are opportunities to sell goods and services.

So just these three case studies across PNG indicate that the Australian Government recognises the enormous potential for economic growth across the various range of sectors across the PNG economy.  Here in Lae, the gateway to Asia, to the Pacific, to the Highlands and the PNG Islands, there are so many opportunities, and I know Australian businesses have seen that and realised the potential here.

We are also in an area that is surrounded by rich natural resources, agriculture, coffee in particular, mining, copper, so we believe that Lae will continue to be a significant commercial and industrial hub, hence our establishing a Consulate-General here.

Yesterday, Connie and I joined three other Australian Ministers for the 25th PNG-Australian Ministerial Forum, this time it was held in Madang.  I've not been to Madang before and it is another beautiful part of PNG.  We began the day with a meeting with the PNG Australia Business Council, and I'm so pleased that Phil, and some of the representatives are here joining the Lae Chamber of Commerce in co-hosting this event.  As Phil says, we discussed some of the challenges, some of the barriers, but also the opportunities of increasing two-way trade and investment between Australia and PNG. 

Where the Australian Government can assist in advising and supporting the PNG Government to be a more open and competitive environment, we will certainly do so.  A number of issues were raised that we will take up with the Government. Fortunately there were PNG Ministers there as well, so we can discuss these matters in our high-level meetings that occur frequently between Ministers of PNG and Ministers of Australia.  During our Ministerial meeting, there was a significant focus on trade and investment opportunities as you can imagine, but also went to more core issues, such as the need to restore the PNG workforce.  There are numerous initiatives that are taking place between our two countries and I thought I'd share some of them with you.

We've made great progress on the work and holiday visa, it's ready to go. An opportunity for young Papua New Guineans to come to Australia for a holiday but also to undertake work for up to six months.

We also have a Seasonal Worker Programme, whereby workers from PNG can come to Australia during the seasons of labour demand and work, particularly in agriculture, and send remittances home. 

PNG hasn't taken up the Seasonal Worker Programme to the same extent as other Pacific island nations. For example, Vanuatu sent about 1200 seasonal workers to Australia last year, compared with PNG with about 40.  But we also have other labour initiatives, and a broader labour mobility program, across other sectors of high labour demand in Australia.  Not only in agriculture but in tourism, accommodation, hospitality, aged care, disability services – and we discussed how we could roll out a program that would attract Papua New Guineans to Australia to work in these areas where we have labour shortages. Workers could gain skills – Certificate III, Certificate IV, Australian accreditation – and then come back here to PNG and use those skills and their abilities, and their undoubted talent, to work in those areas here in Papua New Guinea.  I think we will make great progress on that. Watch this space.

The Australia Pacific Technical College has a presence here to upskill Papua New Guineans and other Pacific Island citizens who do trades in engineering, electrical, cuisine hospitality. The Australia Pacific Technical Colleges are proving to be a great success. 

We have also offered Australia Award scholarships to people particularly for postgraduate work.  Two hundred from this province have been to Australia under our Australia Awards Program.

We've also established a Pacific Leadership and Governance school, a precinct in Port Moresby, that brings together the University of Papua New Guinea and the Institute of Public Administration. A new building has been constructed, funded by the Australian Government, a beautiful new building that will join the campuses of the IPA and UNPNG.  At this school of leadership and governance, we'll be providing opportunities for the public servants of PNG to be trained, to be retrained in best practice integrity measures, ethics.  So PNG can be confident that it has an independent public service committed to the highest possible standard.  We have already had 1600 Papua New Guineas undertake courses at the Precinct.  Obviously, in temporary accommodation, as the building is not finished, but when the building is completed, we see this as an opportunity for public servants around the country to undertake more training and receive an update to their training. The idea of having satellite hubs to this leadership and governance precinct was also discussed.  So wherever you are in PNG, if you are a public servant, you will have access to these courses.

We've also asked the Australian Institute of Company Directors to be involved in the leadership and governance school, and they'll be providing courses on responsibilities of directors, the duties of directors.  That is particularly important for those sitting on boards of state-owned enterprises.

The Australian Government has a student program called the New Colombo Plan. Some of you might remember way back in the 50s and 60s there was the original Colombo Plan that brought students from South East Asia to Australia to study at our universities and gain qualifications in Australian universities and go back home with those qualifications.  Well the new Colombo Plan reverses that.  The Australian Government is funding Australian undergraduate students to live and study and work in countries in the Asia-Pacific, and PNG is part of our New Colombo Plan, as a destination for Australian undergraduates.  This year, 45 Australian students will be living in PNG, studying at universities here, undertaking work experience.  Two will be here in Lae shortly, another 15 will be following.  I want to thank the companies and organisations that have supported the NCP by giving the students an opportunity to have work experience, or a mentorship.  They have been Newcrest, OilSearch, General Electric, Plan International and the International SOS, and all are represented here today.

This is not only about giving an Australian student more of an opportunity to see our region; it's immersing them in the region.  Getting to know an important partner like PNG, understanding how the place works, getting an understanding of the politics, the community life, the business practices, and then coming back to Australia with those insights and new perspectives, and hopefully new skills, with a stronger and more informed outlook about the importance of countries in our region to Australia.

So in this way, the Australian Government is committed to ensuring the relationship between Australia and PNG remains strong and close.  There is such a deep affection between the people of Australia and the people of PNG.  We don't mind playing sport either – we've got a lot in common.

At the government to government level we maintain a very strong connection. We want to grow the links between Australia and PNG because of the economic, trade and investments here.  That's why economic diplomacy is working so well with Australia and PNG.

I want to thank all the business representatives here today and all those working in the NGO sector, for continuing to commit to a very special relationship.  Few countries can claim to be as close as Australia and PNG, while we continue to work together to ensure the most special of relationships endures.

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