PIVOT TO INDIA: WHY AUSTRALIA NEEDS TO DEEPEN TIES WITH THE SUBCONTINENT

ADDRESS TO THE AUSTRALIA-INDIA INSTITUTE

MELBOURNE

TUESDAY, 26 MARCH 2019

I had the pleasure of recently attending the Asialink Chairman’s Gala Dinner, at which the 2018 Sir Edward ‘Weary’ Dunlop Medal was awarded to Mr Peter Varghese AO: former Secretary of the Department of Foreign Affairs and Trade and Chancellor of the University of Queensland.

The award rightly recognised the enduring contribution Mr Varghese has made throughout his diplomatic career to advancing Australia’s engagement with Asia, and specifically his leadership of Australia’s new India Economic Strategy to 2035.

Indeed, no one has led Australia’s economic policy on India more powerfully than Mr Varghese—and his recent report solidifies this.

Asialink’s annual keynote address, delivered by former Foreign Minister and Chancellor of the Australian National University, Professor the Hon. Gareth Evans AC QC, cogently drove home the message that for us to engage fully in the Indo-Pacific, and to continue to prosper, we need to ensure that the number of Asian-Australians in positions of influences is reflective of the society in which we live.

The message was a clear call for Australian politicians, businesses, and academia to step up and address this uncomfortable fact that while Asian Australians make up 12% of our population, they only represent 1.5% of leadership positions across the country.

As I will discuss with you today, and as Mr Varghese makes clear in his landmark report, the long-term success of any future economic strategy may depend upon how we do indeed engage with our Indian diaspora and foster stronger people-to-people links.

Why?

But why should we seek a deeper relationship with India, and how should we go about it?

Well, the simple answer is because there is no country over the next 20 years which offers more opportunity for Australia, Australian businesses, and our region.

Let me expand briefly.

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.

Meanwhile, Australia is approaching its 28th consecutive year of 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.

Indeed, 3 in every 4 dollars we make from overseas trade comes from Asia.

In the space of 30 years, Asia has seen unprecedented transformation.

Hundreds of millions in the region have been lifted out of poverty.

More than 650 million across China and India combined.

We have seen average incomes increase and a new middle class emerge.

But our existing 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—if not the most—China dependent economies in the developed world.

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 important we continually look for ways to diversify our economy, broaden economic links across the region, 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.

Labor’s FutureAsia policy, which I will expand upon later, shall do just that.

More broadly, beyond our shared values, 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. Despite inevitable differences, we must continue to engage and work with China where we can.

But, we also must forge stronger bonds with our Indo-Pacific neighbours—India in particular.

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’ with India 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.

How: Varghese

Turning to the question of ‘how’, that’s where Mr Varghese’s Report becomes so critically important.

I am sure that many of you here today are aware of India’s remarkable economic potential and have perused the Report.

Which, I am proud to say, Labor supports in its entirety.

But in case some of you have not, I will provide a quick background.

As many of you may know, for decades Australia has gone through waves of ‘rediscovering’ India.

But each effort lacked consistent political will.

In fact, about a decade ago now, 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”.

But it’s clear today that if we continue to drift and fail to step-up, we risk of losing out to other countries that have already recognised the complementarity India can provide in the years ahead.

Our relationship is at a turning point and what we need is a roadmap that leads to a stronger economic partnership.

Mr Varghese’s Report, released in July of last year, provides that roadmap. It charts an ambitious and confident course for Australia’s future engagement with India through to 2035.

It is perhaps our first, truly comprehensive long-term India strategy.

Mr Varghese focuses 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 its 27 states.

The reasons for this level specificity are manifold, but to explain it briefly:

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 the Jammu and Kashmir administered territory 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.

Pillar 1: Economic Relations

Turning briefly to the first pillar, Mr Varghese 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 our economies’ complementarity: as India growth continues to advance 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 meteoric rise:

It median age is only 27: a demographic of 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;
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, indeed Victoria, in India than education—as I know this institute is keenly aware of.

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

But in this area 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.

We can step-up and help 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).

This presents a myriad of opportunities for Australia—and Victoria.

And Labor has announced it will hold Annual Australia Week in India trade missions, focussing on these 10 sectors and 10 states.

At the moment, trade missions to India are held only every two years.

Labor will also:

Set up a ‘Study in Australia’ education hub in New Delhi;
Restore $1.5 million in funding cut from the Asian Education Foundation
Explore options for a consortium of Australian universities to be the lead partner in the establishment of one of the six new Indian Institutes of Technology;
Promote more direct air services between Australia and India; and
Establish a Strategic Economic Dialogue where every two years the Australian Treasurer and Australian Trade Minister meet with the Indian Finance Minister and Commerce Minister to look at how we are tracking and what more we can do to deepen and strengthen our economic relationship;

For Victoria, this all of course comes on top of the Andrews government’s existing long term India strategy, which has now been in play for some time.

I commend Daniel and his government for being so proactive.

This is a strategy that has identified which key growth and emerging sectors in India to target in the years and decades to come; and which lays out a number of policies to improve the state’s people-to-people links, which I will turn to shortly.

Pillar 2: Geopolitical Convergence

But before I do, I want to briefly also address the second pillar: geopolitics.

For much of the 20th century, Australia’s engagement with Asia was restrained.

We practiced a conservative deference to Britain and its interests.

And the White Australia policy hindered our standing in the region.

The end of White Australia and key national reforms enabled us to engage with our region openly and with greater independence.

In 1989, Gareth Evans, as Labor Minister for Foreign Affairs, launched our first Asia-Pacific Economic Cooperation meeting in Canberra—having earlier played a key role in securing peace in Cambodia.

By 1991, the ASEAN countries became our second largest export market, taking 12 per cent of our exports: moving ahead of both (what was then) the European Community, as well as the United States.

And shortly thereafter, Prime Minister the Hon Paul Keating delivered a speech entitled Australia and Asia: Knowing Who We Are.

In that speech, he made an impassioned plea for Australia to remove all signs of our being a branch office of the Empire, positing that such views were “debilitating to our national culture, our economic future, and our destiny as a nation in Asia and the Pacific”.

That we needed to shed our hostility and develop our relationship with Asia and the Pacific.

At that time, our concept of Asia was different: ASEAN; the Pacific; Japan; China—which was then undergoing a series of sweeping political, economic and cultural changes.

Today, that has expanded greatly.

Keating spoke of the fading strategic structure of the Cold War, and the changing United States’ economic and strategic positioning in the region.

Today, as I noted earlier, this economic and strategic power balance is again shifting.

Keating’s clarion call is as loud today as it was back then.

Indeed, as historian, Professor David Walker observed recently, “Asia [is] a shifting idea, defined by time and circumstance in which it is discussed or envisioned, rather than by geography.”

Its inhabitants are diverse: a manifold community of identities, cultures, ideas, norms and values.

And it is clear that Australia, and the region, stand to benefit greatly through deep and ongoing Indian engagement.

Labor agrees with Mr Varghese that India should be brought into APEC and Indo-Pacific discourse.

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.

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 securing its land-based borders and related disputes; 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’s FutureAsia plan envisages these broad strategic considerations, and outlines a comprehensive regional engagement framework, which includes:

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

Pillar 3: People-to-people Links

Geopolitics aside, it is the third pillar, our people-to-people links and the diaspora of Indian-Australians, which Varghese highlights will prove most important over the long-term.

Unfortunately, it is clear though that the strength of our ties has not kept pace as India and Australia have respectively evolved.

Indeed, our diaspora is a national asset that for the longest time governments have failed to give due attention.

Instead pursuing an exclusionary focus on our links to the ‘Anglosphere’; and considering our relationship with our neighbours as transactional, rather than cultural.

Prime Minister John Howard’s famous 1996 proclamation that “[w]e do not claim to be Asian” comes to mind; as does Prime Minister Tony Abbott’s 2013 revival of imperial honours.

This is where the depths of our common history with India need to be reflected upon, so we can find a common path forward.

Shared History

Under the British Raj, Indian indentured labourers travelled to the colonies, including Australia and helped lay the foundations of the Australia’s development from colony to country.

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

For instance, you might not know that the Melbourne suburb of Travancore [pronounced Travan-CORE], only a kilometre or so from here, is named after an Indian kingdom that existed from 1500–1949.

If you venture around the suburb’s many heritage streets, you will find that their names correspond with prominent Indian names, such as Delhi Court, Madura Street, Cashmere Street and Padman Lane. And, you can take a stroll through Delhi Reserve.

And, of course, many British officials stationed in India opted to retire in Australia, bringing with them their affection for India and its charms.

This most notably includes our famous Australian verandas, which are named after the Hindi word veranda and were inspired by Indian architecture copied during the British Raj.

Or that, until long-distance undersea cables were invented, telegraphs between Australia and much of the world passed through India.

Today

And whilst we fought side by side in World War 1, 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.

Turning to the present day, Australia is no longer an outpost of the Empire, and neither 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.

Our Indian diaspora now numbers 700,000 strong—tripling over the past decade.

And today, India is an economic superpower in the making.

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

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

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

The Future

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

But government cannot do this alone. Those who have the power to invigorate our people-to-people ties, and our diaspora, need to step up.

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.

And it is why I am so delighted that Prof. Evans announced at the Asialink event that the Australian National University, PricewaterhouseCoopers (PwC) and Asialink have agreed to join forces and be the initial co-conveners of an Asian-Australian Leadership Summit.

This is an opportunity to implement a new national commitment to both recognise and break through the barriers that are holding Asian-Australians out of positions of influence.

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.

Conclusion:

I would like to conclude by sharing a personal reflection as someone of Indian origin.

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 imagined the hundreds of crowded ships that would have sailed down that river carrying thousands of Indians who were leaving their home country on long, treacherous journeys places unknown.

Unaware what the future of being ‘indentured’ would bring.

Indeed, 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 Australia are all better off.

To quote Peter 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.”

Thank you.