CEDA Queensland

Speech

Speaker: Philip Green, First Assistant Secretary AMD, Department of Foreign Affairs and Trade

8 November 2018

Thank you for that kind introduction.

[Acknowledgements - TBA]

It’s a pleasure to be here in Brisbane with CEDA, an organisation that has long understood the importance of national economic development.

Over an extraordinary 27 year-long run of continuous economic growth, driven and embraced by governments and Australian business alike, domestic economic reform and the opening of our nation to overseas markets all over the world have been great enablers for ordinary Australians.

Our open, competitive, innovative economy has, over the past three decades, flourished amidst globalisation, and Australians and Australian living standards have benefited as a result.

CEDA members will be pleased to hear that even as the international environment becomes more challenging, the Government remains steadfastly committed to resisting the forces of trade protectionism and growing nationalism evident in some parts of the world.

As the Prime Minister made clear in Jakarta in September, the Government is determined to “keep our economy strong so we can guarantee the essential services Australians rely on, keep Australians safe and keep Australians together.”

At the Department of Foreign Affairs and Trade, we are very pleased to lead on trade liberalisation, particularly through the significant body of negotiations we have concluded or worked on over the past few years.

The China-Australia Free Trade Agreement, the Japan-Australia Economic Partnership Agreement, the Korea-Australia Free Trade Agreement, the upgrade to the Singapore-Australia FTA, the Trans-Pacific Partnership, the Peru FTA and the Indonesia Australia Comprehensive Economic Partnership Agreement, which we see as an important next step in the relationship — the Government has kept us busy in recent years with some of our most significant agreements to date.

And with the Regional Comprehensive Economic Partnership negotiations, an upcoming Australia-EU FTA, our Pacific Alliance negotiations, and others — there is a substantial forward agenda still on our plate.

But as everyone here knows, in this volatile global environment, continued trade and investment liberalisation can’t be assumed, even for a country that has enjoyed a 27 year run of growth.

27 years ago, at the time of our last recession, we lived in a different world.

The Berlin Wall had fallen, but the world’s focus was very much on the countries on either side of the North Atlantic, as it had been for several decades.

These days, our region, the Indo-Pacific — the vast part of the world encompassing the Indian and Pacific Oceans, as well as the maritime and mainland nations across Asia — has emerged as a major economic powerhouse and geopolitical centre of gravity.

As the Government made clear in its Foreign Policy White Paper last year, China and India are large parts of that story. Indonesia and Vietnam will be larger parts too as time goes on. These trends are properly understood as cross-regional, with global ramifications.

As we have in Australia, China, India and many ASEAN nations have built stronger economies on the basis of their citizens’ hard work, openness to foreign investment, their new geographic advantages and a level of economic integration.

The story does not end with economics. The relative economic weight of some of these nations means their growth trajectory has brought with it major strategic and security implications.

For Australia and Australia’s neighbourhood, those profound economic changes have created an increasingly competitive and contested world, one in which Australia will need to work hard to maintain our edge and our influence.

If anything, that reality has become even sharper over the past six months, as power dynamics between our two most important partners, the United States and China, have reached a new level.

Both the United States and China play key roles in our part of the world, including in the Pacific, and we’ve seen much greater Chinese engagement here in the past few years.

All of these themes, of course, are analysed in depth in this week’s State of the Neighbourhood report by Griffith University.

Today I want to focus fairly sharply on our immediate neighbourhood, the Pacific, because this part of the world faces particular challenges, and has unique opportunities.  My theme will be the way Australia is supporting the development of economic links with the Pacific. As I imagine all of you agree, the Pacific is a part of the world that matters very considerably for Australian interests.

This focus is timely, since the shape of our future engagement with the Pacific has been the subject of a major speech that the PM has delivered only this morning in Townsville, where he has announced a range of major new initiatives.

To Queenslanders, the importance of Australia’s relationships in the Pacific are well understood — Brisbane being a gateway to the Pacific, with most of the key air links from Australia to Pacific island nations coming into Queensland airports, and this state home to such a significant islander population.

This state has merchandise trade worth in the order of $3.6 billion a year in the Pacific.

Even if you exclude trade with the other major developed nation in the neighbourhood, New Zealand, Queensland’s Pacific trade is close to $1.5 billion — so a significant economic connection.

One statistic that shows the depth of connections Queensland has with the Pacific is that more than half of all those people who are here in Australia under the Seasonal Worker Programme are in Queensland.

Queensland also plays an outsized role in providing training to better equip the labour force of the Pacific for the future.

For example, through TAFE Queensland, this state has a particularly important link with the Pacific — in managing the Australia Pacific Training Coalition, Queensland is working to build labour capacity across a wide range of critical trades.

Diplomatically, several Pacific nations have missions here in Queensland.

PNG has both a Consulate-General in Brisbane and a Consulate in Cairns, while Nauru has a Consulate-General in Brisbane, effectively their embassy in Australia, as they have no permanent mission in Canberra.

The Commonwealth Government’s White Paper released last November made the importance of the Pacific very clear, identifying our immediate neighbourhood as one of our five core foreign policy priorities.

We committed to ‘stepping up’ our engagement with the Pacific. We are engaging with greater intensity and ambition, delivering more integrated and innovative policy and making further, substantial long-term investments in the region’s development.

Our Pacific neighbours have strengths in their considerable tourism industries, fisheries resources, labour forces, and in some cases natural resources.  In addition to this, many island nations are developing their capacity to export value-added goods.  Fiji Water and Samoan coconut oil are just two examples.

But while they have a lot to offer, many Pacific island nations face particular challenges.

They are far from the biggest global markets. They have small population bases, lower levels of educational attainment, and, in many cases, narrow industrial prospects.

Many populations are growing fast.

For example, there are 8.3 million people living in PNG today, but that number is estimated to grow to 11 million in 2030 and 17 million in 2050, if current growth rates hold true.

This could be a demographic dividend but also places additional pressure on governance and the natural environment and adds to social and economic challenges in health and education.

One in two Papua New Guineans today has suffered the effects of chronic malnutrition, which is also the direct or indirect cause of 1 in 3 deaths under the age of five.

Diseases like HIV, malaria and TB are all significant challenges.

In education, there are big gaps to close.

In PNG, only about 2 in 5 eligible students are enrolled in secondary schools, with significant legacy issues in older populations.

Only 12 per cent of Papua New Guineans aged over 25 have any secondary education.

There are many SDG targets that countries in the Pacific will not meet.

For all of these reasons, Australia is this year delivering $1.3 billion in aid to the Pacific — its largest ever aid envelope ever - and why we implement a range of programs that support development in the region.

That support ranges from infrastructure and trade assistance totalling more than $280 million in 2018-2019, to helping Pacific nations with governance and economic reform, to developing their human resources through education and training. Many of these programs are delivered in partnership with NGOs.

NGOs like Oxfam maximise the impact and reach of Australian aid, and are key partners in our joint efforts to encourage sustainable economic growth and poverty reduction. Oxfam has strong connections to local communities in the Pacific, and a deep knowledge of local context. They’ve done some great work in the Pacific, such as supporting people with disabilities to advocate for their rights in Vanuatu, and helping local communities in times of humanitarian crisis.

Many Pacific island nations are also particularly at risk from the effects of climate change.

Climate change is a very real and present day threat, a challenge with serious and sometimes unpredictable impacts for islander populations.

We are very clear on the high priority Pacific nations place on addressing climate change — through both mitigation and adaptation.

Australia’s expenditure of over $200 million in the past two years alone shows our commitment to address climate change and disaster resilience in the Pacific.

This will be an area of cooperation and economic partnership for many years to come.

An open, prosperous, and stable Pacific region is in all our interests. Two way trade between Australia and the Pacific is almost US$10 billion [2017] but growing; we have committed to PACER plus, which will increase opportunities for Pacific countries to trade, driving economic growth and job creation. 

Business engagement and trade liberalisation — as difficult, time-consuming and complex as they are — help deliver sustainable economic development in the Pacific.

We also want the Pacific to be able to access the benefits of a digital future.

Some of you here will be familiar with the Coral Sea Cable System linking Sydney, Port Moresby and the Solomon Islands.

This is a potentially transformative project in many ways.

According to the World Bank, better internet access could lift regional GDP by more than USD5 billion and create up to 300,000 new jobs in the Pacific by 2040.

As PNG Prime Minister O’Neill said, the submarine cable will have a positive impact on business engagement in PNG as well as significant social benefits, including in education and healthcare.

Likewise, Solomon Islands Prime Minister Hou [Hoe] called the new system a game changer for economic growth and development in his country.

Beyond the cable, we are involved in a range of infrastructure projects that better integrate Pacific nations into the wider international economy.

To take one example, Australia is involved in the major redevelopment of Nauru’s port. Without a modern port at present, imagine the challenge of having to offload incoming imports, container by container.

This transformational project will result in Nauru having year-round port operations able to withstand current and future climatic conditions, including access for emergency relief services, when needed.

The PM announced earlier today a major increase in our support for infrastructure development in the Pacific.

Beyond physical infrastructure, we support a range of different programs that build better business cultures and systems.

One example we support through the Asian Development Bank is the Pacific Private Sector Development Initiative, which is helping to improve the environment for business, trade and investment in the Pacific.

In Samoa and Solomon Islands, PSDI supported business law and registry reforms more than doubled the number of companies being started each year, and cut the time required to start a business from nearly a month to a single day.

The flow-on effects from that program in Solomon Islands have included something in the order of 2,000 new jobs and over USD 100 million in new investment.

In countless ways, through our aid program, we are economic partners with Pacific island nations, supporting the expansion of their economies and the development of their capabilities.

We support building links with the private sector, and with investors.

Through the Second International Finance Corporation Pacific Partnership — which runs through to 2022 — we are seeking to support the movement of private sector funds into the Pacific.

By investing USD 10 million in SolTuna, the Solomon Islands’ largest food processor, we helped the business expand.

We are working with the major Australian banks to help more islanders access the formal economy through bank accounts, and to make it cheaper to repatriate overseas income.

The economic growth and stability of the Pacific is also why we’ve worked so hard to expand labour mobility between Pacific nations and Australia.

We recognise that offering Pacific nations priority means for accessing under-staffed parts of the Australian jobs market is a great resource for countries with smaller income and jobs bases.

For many years islander communities have supported their home nations through remittances, and the Pacific Labour Scheme will deepen the flows of income and skills to those communities.

Ahead of APEC, I want to say a few words in particular on PNG. This year we’ve seen that spirit of partnership in full focus in Port Moresby, with PNG hosting its first APEC meetings this year, and APEC leaders’ week starting on Monday — supported by Australia.

I have outlined some of the development challenges, but PNG has also opened up significantly in the past quarter century, like Australia benefiting from a period of high global and regional demand for key resource and energy inputs.

Australia and Australian companies have been closely involved, because we understand that the diversification and opening of the PNG economy is in our national interest, as well as in that of our northern neighbour itself.

Ladies and gentlemen, the Indo-Pacific region is entering a new phase of opportunity and promise.

Our prosperity is linked to that of our region. We want it to be economically successful and secure. The two are interlinked.

We are very conscious that we are a Pacific nation — and that, as the PM has said, Pacific peoples are our ‘family’. Although their circumstances are unique, and there are challenges, the Pacific also stands to gain from this new phase in our wider region.

The more we can do to strengthen Pacific economies, the more resilient, more stable and more prosperous our neighbourhood — and hence our nation - will be.

Thank you.

Last Updated: 16 November 2018