Varghese Report into India Australia relations - Senate Adjournment Speech
Tuesday 27 November
I rise to speak on an important issue of national significance, Australia's engagement with India. In April last year, the then Prime Minister, Malcolm Turnbull, announced with great enthusiasm that the former Secretary of the Department of Foreign Affairs and Trade and former High Commissioner to India, now University of Queensland chancellor, Peter Varghese AO, would be commissioned to study and prepare an India economic strategy. The opposition welcomed the idea and its chosen author. Indeed, Mr Varghese is highly respected among many in the Indian economic and trade communities.
The Varghese report was released publicly in July this year. At 514 pages in length, the report charts a pragmatic, ambitious and confident course for Australia's future engagement with India. It represents a truly exceptional body of research. The Turnbull government subsequently welcomed the report, and Labor announced our support for its key recommendations. But then the government buried it. Indeed, in my questioning in Senate estimates, the government admitted that it had been sitting on the report since April this year. On Friday last week—some seven months later—only after continuous pressure from Labor, and with the recent visit from India's President, His Excellency Ram Nath Kovind, did the Morrison government endorse the report and provide in-principle support. But we still have no substance from the government, and those opposite still have no coherent India strategy.
As many of my colleagues and stakeholders are aware, as a person of Indian origin and as an Australian senator, I am a long-time supporter of the Australia-India relationship. In 2015 I was honoured to receive the Pravasi Bharatiya Samman, the overseas-Indians award for building friendlier relations between our two nations. It was conferred by the then President of India, His Excellency Shri Pranab Mukherjee, and it was indeed an honour. But this importance of Australia's engagement with India cannot be overstated. If we do not move quickly, Australia is at risk of losing out to other countries that have already recognised the myriad opportunities that India will bring in the coming years.
Modern Australia and India share a common heritage and—as His Excellency President Kovind said during his visit to Australia last week—a special bond. But, as Australia has shed its colonial links, developed its own culture and economy and may soon, I hope, become a republic, India similarly bears no resemblance to what it was under the British Raj. It is an economic superpower in the making and, indeed, a republic. As Mr Varghese observed, India is changing, driven by the politics of aspiration. His Excellency President Kovind fittingly declared last week, 'We are running and soon we will be galloping.'
In this regard, the numbers speak for themselves. India is now the world's fastest-growing large economy. It is the third-largest economy in terms of purchasing power parity and it is the largest democracy in the world. By 2025, one-fifth of the world's working-age population will be Indian. In the next 10 years, India's five largest cities will have economies comparable to that of middle-income countries today. Within the business sector, sales and earnings growth among Indian companies are noticeably higher than their Australian counterparts. Over the past five years, India's stock market has seen greater performance than the ASX. Inbound foreign direct investment has increased by 19 per cent each year over the past 20 years, and India's trade has increased from 13 per cent to 40 per cent of GDP. And there is considerable room for India to maintain that rapid economic ascent. Its mean age is only 27, and 90 per cent of its workers are still engaged in the informal economy. Against that backdrop, the government of India is seeking to upskill some 400 million of its citizens, moving them from the informal economy and expanding the country's secondary and tertiary industries prowess.
As Mr Varghese observes in his report, there is no market over the next 20 years which offers more growth opportunities for Australian business than India. As Australia's engagement in India has considerable room to grow, our shadow minister for trade, Jason Clare, observed last Thursday, when speaking at the AFR India Business Summit, that, to date, Australia hasn't been hungry enough. He also rightly observed that Varghese's report is potentially as important as the one Ross Garnaut produced for Bob Hawke's government almost 30 years ago on North-East Asia. The reality is that our trade with India is comparable to our trade with New Zealand, a country not even 100th of India's size and with a quarter of the population of Delhi. While 19,000 Australian companies export to New Zealand, only 2,000 export to India. Over the past decade, Australia's exports to China have quadrupled, but our exports to India have remained stagnant—indeed, dropping by a quarter between 2010 and 2016. Varghese's report makes the pragmatic estimate that the opportunity exists to expand our export market from $14.9 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 to become the world's most populous nation and the third-largest economy, it will need more of what Australia can develop and has developed to provide a competitive advantage. In this respect, the report identifies 10 core sectors—in particular, education, agribusiness, resources, tourism, energy, health, financial services, infrastructure, sport and science and innovation—where Australia is well positioned to succeed. Beyond complementarity, the potential that India presents to improve our economy's security cannot be overstated. At a time of increasing uncertainty in the international trading system, we need to take steps to add balance and reduce our international trade risk, but developing a deep, sustainable economic relationship capable of producing increasing and long-term benefits for both countries will not happen if left to market forces alone. Government support is required, and the current government is nowhere to be seen.
By contrast, Labor has committed to supporting the report's 10 key recommendations and more, including holding annual Australia Week in India trade missions, following Mr Varghese's India Economic Strategy, working with the Indian government to establish a reciprocal internship program to allow recent Australian graduates to help build the Asia business capability of young Australian professionals, and implementing a future Asia strategy to immerse ourselves further into the Indo-Pacific region and make Australia and the region more secure. Labor's commitments will address not just the report's economic strategy but also the geopolitical congruence and people-to-people ties, which the report stresses must also be improved to achieve success.
The Australian Indian diaspora now numbers near 700,000, tripling over the past decade. One in 50 Australians was born in India—more than any other OECD country per capita. In my time as a senator of Indian origin, I have engaged actively with the diaspora at key Indian festivals, attending Diwali events in Melbourne, Sydney, Brisbane and my home state—all over the country—and seeing the growth and the opportunity to spread multiculturalism through those festivals. I think that we need to create a more meaningful relationship that can improve social utility and mobility, create jobs and foster opportunities for people in both countries, and indeed the region, to live fulfilling lives. This report needs to be commended.