Asialink – National Centre for Asia Capability

Speech, check against delivery

8 July 2013

Introduction

Thanks very much for having me.

It's an honour to be here with Asialink today.

For twenty years, Asialink has been building ties between Australia and the countries to our north.

Helping us understand our region.

And helping our region understand us.

Make no bones about it: Asialink's mission is of central importance to Australia.

Our success in building our national relationships with Asia will be one of the determinative factors in our broader national prosperity in the decades ahead.

As Australia's new Trade Minister, building links with Asia will be one of my central missions, too.

If you go back a few decades – to before the 1970s – Australian trade ministers might have focussed their efforts on other parts of the world.

From Federation until the late 1960s, the United Kingdom was our most important export market.

The UK took more than half of our exports in 1901, a proportion that declined, but remained in front of any other nation, until 1964-65.

In the post-war period, the United States became of vital economic importance to Australia.

It still is – for example, it remains far and away the biggest investor in this country.

But from the 1970s on, as everyone in this room knows, Australia's reality has not been so simple.

From 1966-67, Japan was our biggest export market.

That held true until 2009-10, when China took over as our lead export market.

Today, seven of our top ten trading partners are in Asia.

In years ahead, our relationships with those countries will only grow.

And I have no doubt that other Asian economies will become increasingly significant to Australia's prosperity.

So for me, as Trade Minister – our ties with Asia are in the absolute front row of my priorities because they are in the front fow of our nation's priorities because they are in the front row of our nation's priorities.

The mining boom

As the Prime Minister has made clear over the past week, 2013 marks a turning point in our economic relationship with Asia.

We are no longer enjoying the unprecedented boost to minerals prices – with those flow-on benefits to revenue – of recent years.

All the benefits have not disappeared, of course.

But much of the intense, investment phase of the resources boom is behind us.

That fact alone represents a major new practical challenge for us.

In that context, we can't fall for the idea that we can rely on a future driven by our rich mineral and energy inheritance.

We have two challenges – two ways in which we can respond.

Firstly, we have to encourage diversity in our economy.

As the Prime Minister has said, we have to develop a plan to grow jobs out of other sectors – manufacturing, tourism, education, the broader services sector and agriculture.

And secondly, we need to boost our national competitiveness to help support growth outside of the mining sector.

As we take on both of these tasks, we need to look to Asia.

Opportunities are arising every day across Asia – opportunities that can be taken up by Australia.

I saw this first-hand when I want to China in 2011, during a business delegation led by my predecessor as Trade Minister, Craig Emerson.

What we wanted to do was encourage Australian business – more than 100 different Australian business representatives came with us – to see the opportunities in China, outside minerals and energy and beyond the major cities of the eastern seaboard.

We travelled to Chengdu, Chongqing, Wuhan, Changsha and Guangzhou.

Four of those cities had a population as large or larger than London.

Each of them was a hotbed of activity.

An incubator in the next stage of China's economic transformation.

As China moves – from an export-driven economy to one defined by a large, predominantly urban middle class.

That surge in growth and activity continues.

By 2025 – there will be 200 Chinese cities with a population of more than 1 million people.

Compare that with the 35 European cities with populations at that mark or greater today.

If China can make the transition it knows it needs to make, and Chinese incomes and living standards keep rising, private consumption in China stands to more than double.

From US$2 trillion in 2010, to US$4.8 trillion in 2015.

For Australia – and other countries in the region – the benefits of that growth are there, even as the huge revenues of the mining boom taper off.

Wine consumption, for example, up from 700 million bottles in 2002 to 1.6 billion in 2011.

Chinese tourist departures from 16 million in 2002 to 83million in 2012.

And Asia's change isn't just about China.

There's of course Japan, Korea, India, Indonesia, Malaysia, Vietnam, Thailand, Singapore, the Philippines.

The economies of Asia are some of the largest, and fastest growing, in the world.

By 2025, Asia is expected to account for almost 50 per cent of the world's GDP.

Those numbers tell us something very important as we move into a post-China mining boom period.

Opportunities in Asia are much wider than just exporting commodities.

Our challenge is to diversify our industries, to make investments that ensure that we can participate in Asia as it continues to grow richer.

And to make sure we are competitive – so that we maximise our prosperity even as other nations also plug into the Asian Century.

Building our Asia capability

One of the ideas that came through the Australia in the Asian Century White Paper most strongly was this notion of "Asia capability".

That wasn't a phrase or concept unique to the White Paper.

It was an idea shared by Asialink, reflected in your taskforce, chaired by Mike Smith.

What we mean by "Asia capability" is the skills, abilities and attributes that will help us expand our understanding of, links with, and ability to work with Asia.

Those skills that will drive our economic and jobs growth in the years ahead.

Of course that includes language skills – they are of inestimable value in working with the countries of our region.

But it also includes cultural understanding, insights into the way in which the different societies of our region operate.

Their business structures, their personal aspirations, their philosophical underpinnings.

So today, on behalf of Prime Minister Rudd, I'm pleased to announce funding to support the development of a new National Centre for Asia Capability.

The creation of this National Centre was identified as a priority by Asialink's taskforce, which included some of Australia's most senior business figures.

And involves the commitment of $60 million over ten years, including $35 million by the Federal Government.

It will work to develop Asia capabilities through training across Australia and in the region.

It will build better knowledge of Asian business practices through research.

And it will be a leading voice in the vital national conversation on the importance of Asia capabilities in our business sector.

The centre will be managed by Asialink with hubs in both Melbourne and Sydney.

I congratulate Asialink on this world-leading initiative.

I can think of no organisation with a more distinguished history of developing the ability and mindset for engaging with Asia.

I know the Centre will play a crucial part in giving Australia's workforce the capability it needs to realise its potential in Asia.

In that work, one of the most important countries for Australia – for reasons that are obvious – is Indonesia where our Prime Minister visited last week.

The importance of Indonesia

Twenty years ago, after a visit to Jakarta, Paul Keating said:

"No country is more important to Australia than Indonesia.

"If we fail to get this right, and nurture and develop it, the whole web of our foreign relations is incomplete."

Twenty years ago, that was something of a headline-grabbing statement.

In 2013, it seems a self-evident truth.

Today, Australia and Indonesia are close neighbours, strategic partners and firm friends.

Indonesia is a rising regional power, and an emerging global player.

During his visit, the Prime Minister announced Australia's nominee for our first Jakarta-based Ambassador to ASEAN.

ASEAN is at the centre of the region's security and economic framework, and Indonesia is a central player within ASEAN.

We already have strong ties, but of course, we can do more to build an even stronger and more comprehensive relationship with Indonesia.

Indonesia is in the front tier of the critical relationships in Asia we need to maintain and build.

That's why, during his visit, the Prime Minister released a country strategy on Indonesia.

The Indonesia strategy is the first of five country strategies which will be released in coming months.

The others will be with China, India, Japan and Korea.

It outlines a vision of where Australia's relationship with Indonesia should be in 2025.

And how we – as a community – intend to get there.

It reflects the views of Australians, collected during nationwide consultations over the past few months.

Those consultations highlighted a good appreciation of why Indonesia matters to us – a close neighbour and an emerging global player.

And that strengthening Australia's relationship with Indonesia must be a first-order priority for governments, business and the community.

To do this, we will need to develop and harness new skills relevant to Indonesia.

We will need to build our Indonesia capability.

In education, there is an imbalance to redress.

Already well over 100,000 Indonesians have a degree from an Australian university.

But many Australian students are yet to meaningfully engage with Indonesia.

This is why the Government has funded grants under the AsiaBound program for more than 400 Australians to undertake study in Indonesia.

We have committed additional funding – $288,000 – for the BRIDGE school partnerships program, to support 32 Australian teachers to visit Indonesia.

And the Government has made $10 million available to fund the Lowy Institute's Engaging Asia program to support new research, dialogues and partnerships, and strengthen the Institute's focus on Asia – particularly Indonesia.

Study trips and exchanges deepen knowledge.

They strike up friendships.

They build a personal connection.

And provide anecdotal evidence and experience that is much more eye-opening, enduring and educational than anything a textbook can offer.

Indonesian language skills will be important.

But beyond language, we will need a greater understanding of Indonesia's culture, society, business and economy, stretching across the entire Australian community.

The Prime Minister also announced that our embassy in Jakarta will be hosting OzFest Indonesia from January to April 2014.

OzFest features a range of events that will showcase the best of Australian performing and visual arts.

Our great national passion for sport.

And our world-class science, education and innovation.

The Government hopes, for the people of Indonesia, it will be a window into our nation.

For me, my focus will be on building a stronger trade and investment partnership with Indonesia.

Australia and Indonesia are progressing negotiations for an Indonesia-Australia Comprehensive Economic Partnership Agreement.

The IA-CEPA will be more than a standard Free Trade Agreement.

Both governments have committed to pursuing a comprehensive agreement that will not only create bilateral trade and investment opportunities, but also enhance economic cooperation in areas which will be key drivers of economic growth – such as skills development and agricultural productivity.

The IA-CEPA will build on our existing FTA with Indonesia – the ASEAN-Australia-New Zealand FTA.

And it will complement our joint efforts to promote greater regional economic integration through the Regional Comprehensive Economic Partnership (RCEP) negotiations.

We both believe in the benefits of bringing our two economies closer together.

But looking at the statistics, we have a lot more to do to put Indonesia on the radar for Australian businesses.

While there are more than 250 companies operating in Indonesia with strong Australian links, there is enormous potential for growth.

Two-way trade only totalled $15 billion in 2012.

And in two-way investment, Indonesia is outside our top ten partners.

We can – and we will – do better than this.

Building our Asia expertise – our Asia capability – is a key step on this road.

So I'd like to thank Asialink for all their efforts – and wish them all the best as they work to establish the new Asia Capability centre – and work to build the Asia skills of all Australians.

Thank you

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