Leaders on Asia | The Hon Chris Bowen MP

The case for engagement with Asia

Ellis Cowan/Asia Society

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SYDNEY, 29 September 2017

 

I acknowledge the traditional custodians of the land on which we gather today, the Gadigal people of the Eora nation and pay my respects to elders past, present and emerging.

I would like to thank the Asia Society for hosting us along with Bloomberg today. I pay tribute to everything the Society has done to promote better understanding of Asia in Australia over the last two decades.

Let me be clear and upfront from the outset.

Australia needs a step change in our economic relationship with Asia.

Our economic relationship with Asia has been integral to our twenty-six years of uninterrupted economic growth.

But Asian economies are changing, and Australia isn’t keeping up.

We need a step change in our thinking. Not tinkering, not gradualism, but a fundamental whole of government, indeed whole of nation, effort to deepen and broaden our engagement with Asia.

If we want to keep up our record of economic growth, if we still want our place in the G20 in decades to come, I can think of few more important things to do than significantly improve our trade, investment, education and cultural links with Asia.

To this audience, the importance of Asia to our economic future will be self-evident. There are any number of facts and figures I could draw on to underline why I see this agenda as so important to the economic program of the alternative Government and indeed any government in Australia. Asia’s middle class will reach 1.7 billion people by 2020, bigger than that in all of Europe and North America combined, with the increase in prosperity increasing purchasing power, demand and opportunities right across Asia.

But there are changes afoot that make the case even more pressing.

Australia has derived great economic benefit on the back of Asia’s industrialisation.

This brought a thirst for Australia’s natural resources like iron ore which has helped underpin our record run of economic growth.

But the pattern of economic growth in our region is changing rapidly.

Increasingly, growth is coming from other consumption rather than investment.

Private consumption in China is now higher than Germany's entire GDP[1].

This growing Asian middle class is hungry. They are a hungry for a protein rich and safe and healthy diet, but for much more besides.

For services, including for a world class education for their children. For travel and tourism experiences. For good quality health care.

This change represents a challenge for Australia and enormous opportunities for tourism, agriculture, education, services and retail.

Competition will be immense, including growing competition from Asian economies themselves.

If we don’t get this right, the price will be significant and the benefit of getting it right will be substantial.

As the RBA states “In the absence of a large-scale reorientation of bilateral trade patterns, the impact of any rebalancing in China from investment-driven to consumption-driven growth is, on balance, likely to be negative for demand for Australian exports, as Chinese investment is more import-intensive than consumption”[2].

In the spirit of frank talk, I put it to you that we pay Asia lip-service in Australia.

We pat ourselves on the back that we are close to Asia, and therefore understand it, ignoring the fact that Berlin, for example, is closer to Beijing than Sydney is.

We sell a lot of raw materials to China so we tell ourselves that we are doing something right. Whilst Indonesia, one of our closest neighbours and on track to become the fourth largest economy in the world, is not in our top ten trading partners.

At the same time, Australia has more foreign direct investment in New Zealand than in China, Japan, ASEAN and India combined. And our level of investment in countries like Thailand and Indonesia is, frankly, embarrassing.

Now, don’t get me wrong. None of this is to say there aren’t positive things happening. There are good Federal and state government programs. There is good work being done by organisations like the Asia Society and AsiaLink, as well as international chambers of commerce.

But my point is we need much more, in a more co-ordinated national fashion.

There has been a lack of continuity between governments. Efforts are made on Asian language literacy for example, but incoming governments cut them because they weren’t their idea. Real advances take years to pay off. Yet, one of the most important pieces of thinking in this space, the “Australia in the Asian Century” White Paper lies archived, gathering dust.

Let me be clear, to my thinking, this is not just about Australia exploiting our near neighbours for our own economic gain by selling them more stuff.

It’s also about deeper engagement to deal with the economic challenges and opportunities of our region together with our neighbours, for mutual benefit.

I am talking about what the Australian Council of Learned Academies has called “smart engagement”, in their words: “Smart engagement…means more than pragmatic emphasis on economic benefit, and working towards nurturing wide-ranging, long-term, deep and mutually beneficial relations based on the principle of reciprocity.”

And it is about matching our economic and trading agenda with our broader geo-political priorities.

Let me also be clear about what this step-change does not involve.

It doesn’t involve agreeing to anything proposed by any other country in our region which is not in our national interest.

It doesn’t involve walking away from a foreign policy approach is based around Australian values and interests.

It doesn’t involve ignoring engagement with the rest of the world, but it does involve a prioritisation which recognises where so much economic potential lies.

Rather it involves a significant increase in engagement in our region.

This is something the Opposition Leader, Bill Shorten, Shadow Foreign Minister Penny Wong and I are of one mind about. For too long, Australia's engagement with Asia has been in cruise control.

If he's elected Prime Minister, I know Bill Shorten is determined to put the foot on the accelerator.

In fact, deeper engagement with Asia is something which is a priority for many of my Shadow Cabinet and Shadow Ministerial colleagues.

Just this week, Bill and Penny were in South Korea in Japan, meeting political and business leaders. This included meetings with South Korean Prime Minister Lee Nak-yeon, Japanese Chief Cabinet Secretary Yoshihide Suga and Japanese Foreign Minister Taro Kono.

They were there reinforcing the importance of strong economic and trade ties, as well as the ongoing commitment to our security relationship given current tensions on the Korean Peninsula.

Bill will reinforce Labor’s engagement in the region in Hong Kong at the end of October.

Penny will, I believe, be one of Australia’s most significant Foreign Ministers. She has been laying out a considered and nuanced foreign policy, with due importance placed on our region, including an important contribution on Australia’s future relationship with ASEAN.

It’s also a pleasure to work with a Shadow Trade, Resources and Northern Australia Minister of the calibre of Jason Clare. Jason has also focussed his thinking on deeper links in our region.

Jason has been developing a comprehensive suite of trade policies designed to stimulate jobs, and he’ll be saying more about them in coming months.

And closer engagement with Asia is a priority for my Assistant Shadow Minister Matt Thistlethwaite, who has been of vital assistance in developing our economic policy when it comes to our region. Such is Matt’s commitment that he is undertaking a Graduate Diploma in Mandarin.

And it is not just about relevant shadow ministers.

Stephen Jones, who is Shadow Minister for Regional Services, also has a deep interest in these issues, and joined me on my last visit to Indonesia and is learning Indonesian. Luke Gosling, our Member for Solomon, speaks Indonesian and has a deep interest in particular in deepening the links between Australia’s North and Asia’s South.

And Tim Watts, the Member for Gellibrand has thought and written extensively about the importance of Asia in Australia’s future. His commitment is evident in the fact that he is been undertaking the AsiaLink Business Leaders course this year.

Tim has been an invaluable sounding board and contributor in our thinking about some of the matters I am going to address in my speech today.

In my own case, I’ve spent my four year tenure as Shadow Treasurer thinking about how we can bring about the required step-change in our economic engagement with Asia.

The trips I have undertaken as Shadow Treasurer are confined to Asia: twice to China, twice to India, once to Indonesia and once to Singapore. I’ll be going back to Indonesia next month with Jason and am planning on returning to India next January.

These visits are valuable opportunities to get a different perspective on the issues I am traversing with you today and also an important opportunity to get to know important decision makers that I hope to deal with when in Government.

I also decided at the beginning of this term of Opposition that if we were to progress the importance of Asian language literacy in the public debate that it was important to set an example. And so I enrolled myself in a Diploma of Modern Languages in Bahasa Indonesia. It’s been quite a journey! Studying a new language late at night and on long plan trips has had its moments and there’s been the odd time where I questioned whether I would get there.

But I am glad I have. My Indonesian isn’t perfect but it means I can show a level of interest and respect to my Indonesian colleagues when interacting with them. Under a Shorten Government, the Foreign Minister will have Bahasa Melayu capability, and the Treasurer will have a Bahasa Indonesia degree. I reckon that’s the first time that’s happened.

It’s also given me the capacity to preach about the benefits of mid-career learning. It’s not too late for those of us who didn’t have the Asian language bug or opportunities when we were at school.

As someone on the wrong side of 40 and with a busy day job, I can attest learning an Asian language is doable and rewarding, if not always easy.

But as important as these efforts amongst the Shadow Cabinet are, much more effort is required. I said at the outset, Australia needs a step change in thinking which might be instigated by Government but outlasts any one government and permeates across the nation.

And it is this agenda that I want to address in this speech.

Today I’m announcing that a Shorten Labor Government will embrace a new, comprehensive and holistic policy approach to Asian engagement that we will call “FutureAsia”.

“FutureAsia” will be a whole of government framework which will underpin our efforts to deepen and broaden our engagement. Detailed policy announcements that we will be making will sit beneath “FutureAsia”. I’m announcing a few of these today and we will be announcing more between now and the election. But our commitment to FutureAsia is not just an election commitment or even just a plan for the term of the Shorten Labor Government, but rather a longer term commitment to a step change in our engagement.

As Treasurer, I will be reporting annually to Parliament on progress in implementing these policies and our efforts to deepen our economic engagement in the region.

When talking about the sorts of initiatives we need to embrace to take our level of economic engagement with Asia to the next level. I’ll break them down to two categories today:

Building Asia relevant capabilities and
Regional Collaboration.

Firstly, building capabilities for dealing with and working in Asia is an urgent national priority.

This goes to language and business skills.

Increasing the proportion of Australians who can speak an Asian language is vitally important.

I say this for a number of reasons.

Firstly, if young people are learning an Asian language, they will also be studying the culture and history of the same country, increasing their level of interest and engagement.

Penny Wong put it well when she said: “What we now need to do is engage, and that means coming to terms with the variety and depth of Asia’s cultures. And … the main window into culture is language, and this is a skill that we as a nation continue to ignore.”

Secondly, more Australians learning and speaking Asian languages obviously makes it easier to do business in Asia and underlines a sense of respect for the cultures and traditions of Asian nations.

We have much, much work to do.

In Australia, most of our Asian language skills come from immigration, not education.

A few facts:

In 2015 only 4000 students across Australia graduated Year 12 with Chinese language as part of their graduation, or 0.1% of the school population. Of these, many were already native Chinese speakers.
In 2014 of the 70,000 students enrolled in the HSC in NSW, just 2.2% studied Japanese, 1.3% studied Chinese, 0.3% studied Indonesian. These figures all fell in the intervening years: it is now 1.8% who study Japanese, 1.2% Chinese and 0.2% studied Indonesian.
More Australian school students studied Bahasa Indonesia in 1972 than do today.
In the last fifteen years, the Indonesian programs at Curtin, Queensland University of Technology, UNSW, UTS, Griffith and Charles Sturt University’s Bathurst campus have all closed.

Other nations are acting. President Obama set the national goal of having one million young Chinese speakers in American schools. Achieving this goal is the mandate of the 100,000 Strong Foundation which has been endorsed by both the US and Chinese Governments. South Korea has embarked on a major national initiative to educate more Indonesian speakers. It would be a problem if Australia was standing still while other nations were going forward. For Australia to be going backwards while other nations are going forward is a travesty.

Previous governments have recognised the need to lift our performance in this regard. The Australia China Research Institute recently determined for example that what increase we have seen in Mandarin studies in schools is largely as a result of the Rudd Government’s National Asian Languages and Studies in Schools Program. But the programs have been cut before they have been able to have a meaningful impact.
But there is a better way.

The Gillard Government commissioned Dr Ken Henry to conduct the Australia in the Asian Century White Paper which identified improved Asian language literacy as a key area for improvement and reform.

The White Paper recommended that every Australian student have the opportunity to take a continuous course of study in an Asian language. That Hindi, Mandarin, Indonesian and Japanese be designated Asian priority languages, and that each Australian school develop links with one Asian school to support the teaching of an Asian language, utilising the NBN.

The goals outlined by the White Paper were ambitious and would take a long time and a huge effort to realise.

Even if every school and every student tomorrow wanted to teach and learn an Asian language, we would have a big task in sourcing and training enough language teachers.

But it is a worthy ambition. And unfortunately, nothing has been done in four years to make any progress on it. Turning around our poor record on Asian languages will take a national effort, in close collaboration with the states and territories and the non-government education sector. Co-operation and consultation with the states is key. What good news we have had in recent years is largely as a result of state initiatives. Half of all school students studying Mandarin live in Victoria, for example, so they are doing something right.

But it will also take national leadership, which is what we will provide.

As you know, we have committed to restoring the full $17 billion in Gonski education funding so that our schools are properly resourced to improve educational outcomes across the board.

This is key to achieving the other goal outlined in the Henry “Asia Century” White Paper of having Australian schools in the top 5 education systems in the world by 2025 to enable our longer term competitiveness, let alone improving Asian language teaching specifically.

Tanya Plibersek, who will make an outstanding Education Minister and who strongly agrees that we need to do better in Asian language teaching will work closely with the states and territories and in consultation with experts, on improving our track record when it comes to Asian languages. And we’ll have more to say both while we are in Government and in Opposition. We will use the COAG processes to collaborate with states and territories to lift the focus on Asian languages and work on specific programs in this field.

In order to facilitate this important national endeavour, we need the facts and we need advocates. And we need to support those who are swimming against the tide, trying to increase the level of Asian literacy.

This is what the Asian Education Foundation does. The AEF was an initiative of the Keating Government in 1992 with a mission to promote the studies of Asia in Australian schools in order to redress an essentially Eurocentric school curriculum.

In 2014 the Federal Department of Education commissioned an independent review of AEF undertaken by KPMG. The review strongly recommended continuation of AEF core funding and applauded the value for money and unique work of the AEF. The review noted that AEF’s work had high relevance for Australia’s national interests and that the need to equip young Australians to engage with Asia and develop Asia capabilities would likely languish in the absence of a national body promoting its need and supporting schools and education jurisdictions to achieve it.

However, on Budget night 2015, AEF was informed that core funding of $1.5m was no longer in the Budget. I announce today that a Shorten Labor Government will restore the funding that has been cut to the AEF and encourage it to increase, not reduce its activities.

While improving Asian engagement in our young people is vital, it is not just about the young.

I’ll be frank: the level of Asian business literacy at senior ranks of Australian business is lamentable.

There are of course notable and worthy exceptions, but we need to do better.

Now I recognise that exporting to Asia and doing business in Asia is not easy. There are often a myriad of non-tariff barriers, regulatory difficulties and cultural minefields.

But none of this is an excuse to give up. On the contrary, it is a reason to work harder.

It’s not just me who thinks that. Recently AsiaLink, in conjunction with PWC and the Institute of Managers and Leaders issued the report “Match Fit: Shaping Asia Capable Leaders”.

It found that 67% of ASX 200 board members show no evidence of extensive operating experience in Asia and 55% demonstrate little to no knowledge of Asian markets.

Now this is primarily for the private sector to fix. But just as Government and the private sector have worked together to try to address the gender imbalance on boards, with some limited success, we should work together to get more people with Asian literacy and experience on to boards.

Partly, it is about simply identifying the problem and highlighting the need to do better. But it will also take more than that.

Accordingly, an incoming Shorten Labor Government would allocate $3 million to work with the Australian Institute of Company Directors on a pilot program of mentoring Asian capable potential board directors to facilitate more Australians with Asian business experience onto our boards.

One of our major potential advantages in Australia are the Asian diasporas that have made Australia home. China and India are now our largest source of permanent migrants. This provides us with an invaluable pool of people with the understanding, links and language skills that can help us deepen links.

There are over four million people, 17 % of the population, identifying as Asian origin, and there has been little consideration or use of the broader Australian Asian diaspora as a valued partner in Australia’s economic future.

Each individual Australian of Asian heritage is an invaluable national asset in their own right. But do we as a nation co-ordinate this potential competitive advantage as well as we might?

I don’t believe we do.

I have found the argument of the Australian Council of Learned Academies persuasive here. They have argued that: “The question of how to realise Australia’s diaspora advantage in the global circulation of ideas, knowledge, people and capital is of critical importance. Isolated, piecemeal and ad hoc efforts are no longer sufficient. Australia needs to develop a strategic national approach to recognise the resources of the Asia business diasporas and develop mechanisms that enable them to contribute simultaneously to the economic interests of Australia and their country of origin.”

Other countries do better than us. In the United States for example, the US International Diaspora Engagement Alliance seeks to use diaspora engagement to promote entrepreneurship, innovation and volunteerism. Germany and Singapore also have programs designed to ensure the nation co-ordinates the significant resource that is their diaspora communities. Australia does not. This should end.

Today, I’m announcing two related initiatives a Shorten Labor Government will enact: measures to ensure we have a co-ordinated approach to empowering Asian diasporas in Australia and the Australian diaspora in Asia.

A Shorten Labor Government will introduce, under the auspices of “FutureAsia” a diaspora program based on the experience and success of the US program. This will focus first on Australia’s significant Chinese and Indian communities as well as the Japanese diaspora.

This initiative would initially include undertake scoping work that would undertake a stocktake of Australia’s Asian diaspora community particularly those with strong business and strong Asian in-country connectivity (whether through business associations or other bodies).

This would help assess the contribution Australia’s Asian based diaspora population make to Australia, particularly their economic contribution and how best we can build on current activities.
We would then look to develop mechanisms for active and authentic consultation and engagement with peak country business associations and other diaspora organisations to promote successes and lessons learned from the Asian business diasporas.

The unit would look to work with agencies across the public service like Austrade, in order to assess whether trade missions and other investment/trade related activities are maximising the reach out to successful Asian business diasporas. Ensuring Asian business diasporas are represented in trade delegations would be a good first step.

By the same token, we shouldn’t forget that there is an extensive Australian diaspora throughout the world.

At any given time there are one million Australians living and working overseas. Increasingly, these are in Asia. You can’t visit a major Asian city without being struck by the size and contribution of Australians of all walks of life. Our embassies and high commissions do a great job in bringing Australians together. But perhaps we could do better. Ten years ago, my friend Michael Fullilove, now Director of the Lowy Institute, wrote a paper which called for engaging with our international diaspora more effectively.

As Michael put it, the “Australian diaspora should be seen as our ‘world wide web’ of ideas and influence” and we should reach out to them drawing on their talent and goodwill whenever we can.

Accordingly, we will establish an Australian Asian diaspora program that builds and energises linkages with our Asian based Australian diaspora community. The final bracket of initiatives I want to address today deal with collaboration with our friends and neighbours in the region.

As I said at the outset, we don’t see the need for much closer engagement with our region as simply being an opportunity to sell more stuff or get more capital inflows, as important as trade and investment is.

Rather, by having broader and deeper engagement, we will be able to understand each other better, minimise misunderstandings about difficult issues and collaborate on joint challenges.

For example, just as Australia and Indonesia’s leaders have had a formalised Annual Leader’s meeting since 2010 and our Foreign and Defence Ministers have had a two plus two dialogue since 2012, Jason Clare and I also propose that Australia and Indonesia formalise annual meetings between our finance and trade ministers in an economic and investment two plus two.

Given the importance of education in our trading and broader relationship, our respective education ministers would likely also be involved in these meetings from time to time.

These meetings would provide a compulsory annual stocktake of the state of our economic engagement and provide an opportunity for us to knock over barriers to closer engagement.

Importantly, the meetings would not involve only the principles, of course but also many officials. Our officials would come together to plan the discussions and share thoughts on the agenda. In other portfolios I have held in Australia, I have had the opportunity to observe how closely our national security and military officials work together.

I want to see our respective economic policy making infrastructure to reach a similar degree of knowledge of each other and trust.

When it comes to collaboration, appropriate collaboration with our largest trading partner is also key.

The Chinese economy continues to undergo very rapid change. President Xi’s “Belt and Road” initiative will have profound ramifications for years to come.
We will come to office if we win the next election with an open mind as to how Australia and China can best collaborate on the Belt and Road Initiative, with a clear eyed approach to our respective national interests.

We will examine proposals on a case by case basis including considering how the Northern Australia Infrastructure Facility and the Belt and Road Initiative can best complement each other.

I also want to talk about collaboration through regional multilateral fora.

As you know, under the Rudd Government, Australia was very active in promoting the G20 as the body which should emerge from of the Global Financial Crisis as the key international economic clearing house. This was clearly partly because Australia wanted a seat at the table.

But it was also because we saw it as self-evident that the G8, which froze out important nations in our region such as Indonesia and India no longer had the necessary credibility or authority to be a serious economic decision making body.

I believe though that it is necessary to ensure that the G20, having achieved its original task of seeing the world through the global crisis, must have a refreshed and reviewed agenda.

I also think that Australia and Indonesia in particular could work in a more complimentary fashion in ensuring the G20 work load and agenda keeps the interests of our region in mind.

Accordingly, it makes sense for the finance ministers of the Asia-Pacific region in my view to meet, either in person or virtually, in advance of each G20 finance ministers meeting. This is of course not to say that we will be bound to support each other’s propositions at the G20 but simply that we have a better idea of what each other are trying to achieve and better chance at ensuring Asia’s interests are kept in mind.

As important as the G20 is though, our engagement with and through both APEC and ASEAN will be vital as well.

With the failure of the TPP, both APEC and ASEAN would have greater, not lesser importance.

The ASEAN centred proposal of a Regional Comprehensive Economic Partnership, consisting of ASEAN and each nation with which ASEAN has a free trade agreement is now the single major trade negotiation opportunity underway anywhere in the world.
RCEP was designed by ASEAN policy strategists to buttress regional trade reform and lift Asia’s growth potential in the global economy. It is not the only active, credible multilateral endeavour anywhere in the world at the moment designed to improve trade flows. RCEP is not simply another free trade agreement. It is structured to be open to easy sign-on by other partners. Importantly it incorporates a cooperation agenda, an essential element in building capacity for economic reform and mutually reinforcing regional development over time.

APEC of course has the advantage of the including the world’s two biggest economies. In fact, APEC is the first regional multilateral organisation that China ever participated in and its 21 members account for 55% of global GDP. Our long term goal should be to conclude a FTAPP that includes all the countries of APEC.

ASEAN has been as important as APEC in promoting closer economic engagement over the last two decades.

Australia was the first dialogue partner of ASEAN, in a relationship which begun in 1974 under the tutelage of, Gough Whitlam.

With Australia having been a dialogue partner of ASEAN for forty-two years now, there is merit in considering ways of promoting closer relations between Australia and ASEAN.
ASEAN and Australia enter a new phase in our relationship, with Australia hosting the ASEAN leaders summit in 2018; a very welcome development.

This development can be a catalyst for us all to consider the contours of ASEAN-Australia engagement in coming years.

One concrete and practical initiative which would help progress the conversation about ASEAN and Australia would be the establishment of an ASEAN studies centre. Together with Tanya Plibersek and Penny Wong, we are announcing today that a Shorten Labor Government will pursue the establishment of an Australia-ASEAN Studies Centre under the auspices of FutureAsia and call for tenders from joint ventures of an Australian university or universities and one or more South East Asian countries.

Australian universities host US Studies centres, China Studies centres, and Monash University hosts the Australia-Indonesia Centre while the University of Western Australia hosts the excellent Perth US-Asia Centre. But we lack an Australia-ASEAN Studies Centre. Comparable centres exist in the US, Japan, Korea and India but not in Australia.
The creation of an Australia-ASEAN Studies Centre will be a valuable way of facilitating discussion about the best way forward for Australia and ASEAN working together.

Conclusion.

Ladies and Gentlemen, how to deepen and broaden our economic has been one of my main preoccupations when it comes to policy development for the next Labor Government.

If you care about jobs and growth, you care about our relations with Asia, and you think of ways to make them better.

In Opposition, Labor has been going about the task of developing, testing and releasing policies which will form the basis of a reforming, bold and ambitious government.

We want to see growing economy which is fairer. A budget balance based on difficult but fair decisions.

We want to see an Australian Republic, confident and outward looking. Multicultural and sophisticated. Sure of ourselves and better understood in our region.

And central to this agenda is working harder on our place in the world’s fastest growing economic region.

We have been too complacent for too long. We have paid lip-service to the Asian century whilst other countries have forged ahead with policies designed to complement the economic changes under way.

We have no time to lose, and the next Labor Government intends not to waste a second. I’ve outlined today the first stages of our “FutureAsia” agenda. Today I’ve made the opening salvo of announcements. There will be more to come in areas including, but not limited to trade, agriculture, tourism and importantly, the arts. I look forward to implementing it and providing annual updates to Parliament. And we’ll build on what we’ve announced so far and do more. Members of the Asia Society will be an important sounding board as we do so.

I can’t wait to begin the work of building closer engagement through FutureAsia.

[1] https://bluenotes.anz.com/posts/2015/10/chinese-middle-class-to-double-spending-by-2030


[2] https://www.rba.gov.au/publications/bulletin/2016/sep/4.html 
 


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