PIVOT TO INDIA: WHY AUSTRALIA'S RELATIONSHIP WITH THE SUB-CONTINENT NEEDS TO STEP-UP - Address to the AIIA, University of Tasmania, Hobart, Tuesday 26 February 2019


I pay respect to the traditional and original owners of this land, the muwinina people, to those that have passed before us and acknowledge today’s Tasmanian Aboriginal community who are the custodians of this land.

Last year I had the privilege to visit a very special and historic place in India. I stood at a memorial, on the edge of the Kidderpore port along the Hoogley river in Calcutta, to pay my respects to the significant contribution Indian indentured labourers made when they left on crowded British ships to help build the colonies between 1834 and 1920.

The memorial’s square block of black marble commemorates their resilience, determination and pioneering spirit; and the significant contributions made in their adopted countries.

These indentured labourers included my great-grandparents, and their adopted country was the sugarcane rich Fiji.

As I stood on the river’s edge, I thought of the hundreds of ships that would have sailed down that river during the time of the British Raj, carrying thousands of Indians who were leaving their home country on long, treacherous journeys to new frontiers; places unknown.

It was these Indians that laid the foundations of the common history that we, as Australians—indeed Tasmanians—share with India.

The influence of this era on Tasmania’s development is still seen today.

For instance, you might not know that Howrah is named after a suburb in Calcutta, originally established by Captain James Fielder in the 1830s—following his return from the East India Company.

While our famous Australian verandas are named after the Hindi word veranda and were inspired by Indian architecture copied during the British Raj. And Entally House near Launceston was similarly named after a place in Calcutta. We also stood side by side the battlefields of World War 1.

But a great deal has changed over the past 100 years. As two strong, democratic nations, we have both developed our own independence and cultural diversity.

Today Australia is no longer an outpost of the Empire, and nor is India.

Today Australia does not find itself at the antipodes but in the heart of the Indo-Pacific with more Indian residents than any other OECD nation.

And today India is an economic superpower in the making.

Unfortunately, the strength of our ties has not kept pace.

But why should we seek a deeper relationship with India, and how should we go about it? This is what I want to discuss with you this evening.

In short: because there is no country over the next 20 years which offers more opportunity for Australia, Australian businesses, and our region.

Following sustained economic and infrastructure reforms which kicked-off in the early 1990’s, India has progressed to become the world’s fastest growing major economy both economically and in population terms—on track to be the world’s third largest economy and most populous. 

It has a demographic advantage, with a median age of only 27. Tech-savvy millennials keen for knowledge.

In fact, by 2025, one-fifth of the world's working age will be Indian. And its expanding consumer class are hungry for services and consumption.
This presents a myriad of opportunities for Australia—and Tasmania.

But Tasmania’s trade with India remains stagnant. According to the Department of State Growth, in 2013-14 India was our 5th largest export market (at about $205m); by 2017-18 it had fallen to our 11th (at about $130m).

Tasmania is not alone in this regard. To date, government efforts to invigorate relations have resembled a patchwork rather than concerted effort.

Almost a decade ago, then-Minister for Foreign Affairs, Stephen Smith observed that previous governments’ approaches to India resembled a T20 cricket match: “short bursts of enthusiasm followed by lengthy periods of inactivity”.

In short, there has been a lack of consistent political will.

If we don’t step-up, Australia is at risk of losing out to other countries that have already recognised the complementarity India can provide in the years ahead.
Our relationship is therefore at a turning point and what we need is a roadmap that leads to a stronger economic partnership.

No one has led India’s economic policy for Australia more powerfully than former Australian High Commissioner to India and Secretary of the Department of Foreign Affairs and Trade, Peter Varghese AO.

His India Economic Strategy Report to 2035 charts an ambitious and confident course for Australia’s future engagement with India, which must be taken seriously.

(Labor has announced its support for his key recommendations.)

Why Now?

Before I share how I believe his work will help invigorate Australia-India relations, it is first important to answer the question, why now?

Australia is approaching its 28th year of consecutive economic growth—by far the longest of any country in modern history. The last time our economy took a turn, internet browsing had just been invented.

While the sources of this growth have been manifold, the central driver has been our riding the wave of the Asian Century. 3 in every 4 dollars we make from overseas trade comes from Asia.

In the space of 30 years Asia has seen unprecedented transformation. According to World Bank figures, in the 1980’s almost 80% of Asia lived below the poverty line; that figure is now closer to 2%. We have seen average incomes increase and a new middle class emerge.

But our policy approach to this Asian Century is unlikely to work for us in the future: headwinds are on the horizon.

To date, the growth we have experienced from Asia’s rise has been overwhelmingly driven by China’s remarkable development, which brought with it a voracious demand for our commodities (coal and iron ore) and services (tourism and education).

This has dominated our international economic and geopolitical strategy.

Today, we are one of the developed world’s most China-dependent economies.

In fact, not since the United Kingdom in the 1950s, following World War II, has a single country’s market had such a profound impact on Australia’s economy.

It is clear that we need to spread our exposure to economic risk and build on existing policies, such as from the Gillard government’s Asian Century White Paper, and develop a more nuanced approach to the Indo-Pacific region.

More broadly, Australia, and India, have benefitted from Asia’s rise occurring in coherence with a rules-based international order that has played a key role in shaping international cooperation and stability.

Particularly, through post-war institutions such as the United Nations, World Trade Organization, and the World Bank.

But as economic weight shifts, so does the potential for its geopolitical counterpart to do the same.

And as Asia forges its own path and moves beyond Western markets, it will develop more room to shape its cross-border relationships, and the norms and rules that govern the flows of people, goods and services.

This is most evident with China, whose actions across the region, further afield and in international institutions demonstrate that they do not always agree with those countries backing the existing rules-based order.

China is and will always be important to Australia. But, to safeguard our ongoing prosperity and security, that of our region, and to promote peace, we need to forge stronger bonds with our Indo-Pacific neighbours.

This will be at the heart of Labor’s FutureAsia plan, which will include:

  • Improving the teaching and take up of Asian languages in our schools;
  • Bolstering our diplomatic infrastructure;
  • Leveraging our diaspora communities;
  • Reciprocal internship programs with both China and India to improve the Asian business experience amongst Australian entrepreneurs and managers; and
  • Maximising trade opportunities including making Australia/China week and Australia/India week annual events and tackling behind the non-tariff barriers.

As Penny Wong noted recently:

Australia wants a region which retains a system of institutions, rules and norms to guide behaviour, to enable collective action and to resolve disputes. A region in which those seeking to make or shape the rules do so through negotiation not imposition. A region with an open trading system and investment transparency to maximise opportunity. A region where outcomes are not determined only by power.

So ‘why now’ with India is not just about is not just about diversification, it’s about recognising that both Australia and India share values and interests in regional intuitions and upholding an international rules based order.

The Varghese Report

Just as Australia regards itself as a modern, multicultural melting pot, with overarching shared norms; India too is rich in diversity.

You might not be aware that India has 22 officially recognised languages, at least nine recognised religions, and, like Australia, significant climate variability between its north in Kashmir and its south in Tamil Nadu.

It is an aggregation of very different state and regional economies.

So we can’t approach India with a one-size-fits-all strategy.

For perhaps the first time, we have in the Varghese Report an appropriately tailored strategic long-term blueprint.

Mr Varghese focuses the heart of his strategy on three thematic pillars—economic relations, geopolitical convergence, and people-to-people links—across ten key sectors where our competitive advantages match India’s current and projected needs; and in only ten of India’s 27 states.

Pillar 1: Economic Relations

On his economic pillar, he makes a cautious estimate that an opportunity exists to expand our export market from about $15 billion to as much as $45 billion over the coming decades, and for our investment in India to rise tenfold.

The report emphasises that our economies are complementary: as India continues to advance towards becoming the world’s most populous nation—its third largest economy—it will need more of what Australia can—and has—developed a competitive advantage in providing.

And there is considerable room for to India to continue its economic rise:

  • As I said earlier, India is an incredibly young, populated country;
  • 90 per cent of its workers are still engaged in the informal economy; and
  • Perhaps most astonishingly, India’s government is seeking to upskill 400 million of its citizens moving them into the formal economy and expanding the country’s secondary and tertiary industries’ prowess.

Against that backdrop, Mr Varghese rightly begins by focusing on education as the flagship sector.

As a world-class education provider, there is no sector with greater promise for Australia in India than education. This is especially so for Tasmania.

Tasmania’s two largest source countries for international tertiary and vocational students are China and India.

But it is India which presents the most opportunity:

  • It’s tertiary-age population is the largest in the world; and
  • Whereas China’s 15-29 year old demographic is projected to decrease in the coming decades as its population ages—a legacy of the One-China policy—India’s, on the other hand, is projected to increase by in excess of 16million.

As India takes steps to ensure its youth are equipped to enter the workforce and respond to technological change, it will need to look abroad to bridge its domestic capacity gap.

Australia—indeed Tasmania—can step-up and fill that much needed capacity.

Moving beyond education, he then identifies three lead sectors (agribusiness, resources and tourism) and six promising sectors (energy, health, financial services, infrastructure, sport, science and innovation).

These also present significant opportunities for Tasmania.

  • For example, our clean, green GMO-free agribusiness industry is well placed to capitalise on India’s rising wealth and demand for quality produce;
  • Hydro Tasmania and our other green energy companies are well placed to offer consulting services as India continues its remarkable pivot towards a green energy future; and
  • Of course, we project a lifestyle that is the envy of the world which, coupled with our beautiful natural environment; vibrant culinary and arts scenes; and unique, shared history, makes us an ideal tourism destination;
  • And, of course our oceans, where scientists at our own IMAS at the University of Tasmania have been working alongside Indian counterparts on ground-breaking discoveries as members of the International Ocean Discovery Program.
Pillar 2: Geopolitical Convergence

Turning to the second pillar, geopolitics, as I mentioned earlier, it is axiomatic that India and Australia share a common interest in the continuation of a rules-based international order to ensure peace and stability in the region.

And clearly, working cooperatively at the multilateral and regional levels where our interests are similar can promote our partnership and shared commitment to that international order.

This is why I agree with Mr Varghese that India should be brought into APEC and Asia-Pacific discourse.

I also agree that we should proactively work with India in regional and international fora, such as the East Asia Summit, Association of Southeast Asian Nations (ASEAN), International Energy Agency, and United Nations Framework Convention on Climate Change.

On security, India—like many countries in the region—is bolstering its defence capacity.

While an impetus for India is its land-based borders and related disputes, such as with China and Pakistan; another is maritime security, on which we both place great importance on the maintenance of a peaceful, open Indian Ocean.

In fact, from 2014 to 2018 our joint defence activities have more than tripled—from 11 to 38. This has helped us develop a better understanding of our respective capabilities and strengths, and where we can improve.

The importance of these activities cannot be understated. From a maritime perspective alone, about half of our trade passes through the Indian Ocean, including energy products.

Accordingly, we should engage in a long-term commitment with India to consider it in broader strategy-making, and cooperate to ensure that the Indo-Pacific’s maritime environment remains stable.

Labor also thinks India should become a permanent member of a reformed UN Security Council.

Pillar 3: People-to-People Links

Varghese’s third pillar is probably the most important over the long-term.

Our people-to-people links with India are a national asset.

India’s young are a tech-savvy generation who make up much of the country’s 500-million internet users.

These are millennials with a thirst for knowledge and intrigue about the world they live in.

While Australia’s Indian diaspora now numbers 700,000 strong—tripling over the past decade. 

1 in 50 Australians were born in India, more than any other OECD country per capita. 

Forging stronger people-to-people links will be key to shaping the awareness of these young people, and their perceptions of Australia.

However, unlike other diaspora’s (e.g. China’s, the US’s, and European), India’s integration is still nascent—a product of it’s recent, rapid development.

To promote deeper integration, we need to support leading professionals, young leaders, and scholars who can help strengthen ties between Australia and India.

The Australia-India youth dialogue is a good example of this. Each year it brings young leaders from Australia and India together to collaborate, network and strategise on how to build the bilateral relationship.

During my time in politics I have had the privilege of engaging and promoting dialogue with the subcontinent and I have developed a keen awareness of the value that an engaged diaspora can deliver.

We should consider the diaspora—as Mr Varghese says—

as a network which can open doors, help navigate Indian business culture, enhance the community’s understanding of contemporary India and contribute to Australia’s public diplomacy in India. 

Because it is human interactions and relationships that form the foundation of every diplomatic and economic link.

Relationships which enable nations to work together in the pursuit of shared goals and interests.

100 years ago, when my great grandparents departed India for new frontiers, there was no knowing what an incredible, positive contribution the Indian diaspora would make across the globe.

It is a contribution for which we here in Tasmania are all better off.

I would like to end with an inspiring quote from Mr Varghese:

“Taking the relationship with India to the level it deserves is a long haul journey. It will take leadership, time, effort and consistent focus… If we get it right we will both enhance the prosperity and security of Australians and help realise the aspirations of the 1.3 billion Indians who sense their time has come and a better life is within their grasp.”