The India-Australia partnership in the Indo-Pacific – contributing to the region
Speech to the Indian Association of Foreign Correspondents – 11 June 2018
(check against delivery)
Thank you so much to you all for coming along today. I want thank the Indian Association of Foreign Affairs Correspondents for hosting me.
I’ve been asked to speak on our Indo-Pacific Partnership.
It seems to me a good starting point to reflect that both of our countries have concluded our national elections. It is a natural opportunity to conduct a stocktake about where we can take the Australia-India relationship into the future.
So I think it I’d like to approach this in three parts: first, to set out why an Australia-India partnership in the Indo-Pacific makes sense; second, to sketch out where our bilateral relationship is at from Australia’s perspective; and third, to share with you a few ideas about the next phase of our partnership.
1. India-Australia: a Natural Partnership
We talk a lot about the values of the alignment between Australia and India. We are both democracies that have flourished in the liberal, rules-based order. We share common interests and concerns. And we have very strong strategic alignment.
This is particularly important because we are facing a shifting world order; there is growing uncertainty and we are starting to see the assertive use of power and geoeconomic competition.
Australia and India have shared views about these challenges. This is nowhere more evident than the key elements of our Indo-Pacific policies.
It is worth noting Australia began to use the term “Indo-Pacific” more than a decade ago. And that is just a simple fact of geography. It represents how we see our region. We are a country that faces the Pacific Ocean on one side and the Indian Ocean on the other.
But we took this further in the 2017 Australian Foreign Policy White Paper by articulating the elements of an Indo-Pacific order which Australia would like to see.
The key elements involve:
· Strong partnerships with key regional democracies, such as Japan, Indonesia, and of course India
· Support for ASEAN, ASEAN centrality and its institutions, and particularly the East Asia Summit
· Support for an open and integrated regional economy
· Strong and constructive ties with China
· And a strong US-Australia alliance.
Our priorities aligned well with those sketched out by Prime Minister Modi at the Shangri-La Dialogue in 2018, where he highlighted the importance of open trade, a rules-based order, transparency, the rights of all states and the central role of ASEAN.
Stronger strategic relationship
There is real substance alongside our shared Indo-Pacific vision. We have seen our bilateral relationship has grown dramatically in past decade.
I am constantly impressed by the depth and diversity of the partnerships between India and Australia and am pleased to see them continue to grow.
Our strategic convergence has been underpinned by closer people to people links.
· One in 50 Australians today (2%) were born in India – a sign of the rapid migration to Australia we have seen over recent years;
· Almost 90,000 Indian students studied in Australia last year, a 25% increase on 2017; and
· Over 350,000 Indian tourists visited Australia from India in 2018 –growing at 18 per cent with similar numbers in the other direction.
And most importantly the bilateral relationship is underpinned by a very strong strategic partnership.
One symbol of that strategic partnership is AUSINDEX, our bilateral naval exercise which took place only two months ago.
The third iteration of AUSINDEX took place over two weeks in April (April 2-16). It represented the largest and most complex of its kind, involving submarines and maritime patrol aircraft from both countries. It was the largest ever deployment of Australian military assets to India.
The exercise builds on a fourfold increase in our defence engagement — from 11 defence exercises, meetings and activities in 2014 to 38 in 2018.
Alongside our defence and strategic relations, it is important to note our economic relationship is growing. Australian exports to India have doubled in the past five years to 2018 (from $A11 billion to $A22 billion), growing on an average of 15 per cent per annum – twice as fast as Australia’s exports to China (7.6 per cent). India is now our third largest services export market (at $A5.6 billion), after China and the US.
But while impressive, there is scope to do more.
2. Where we have built the partnership to date
And so over the past 12 to 18 months, one of Australia’s priorities has been to transform our trade and investment ties.
We commissioned an India Economic Strategy based on a notion that our economic relationship with India has tremendous potential for growth, currently representing only 3.6% of our two-way trade – the same as Australia’s two-way trade with New Zealand.
The report was prepared by former High Commissioner from Australia to India and former Secretary of the Australian Department of Foreign Affairs and Trade, Mr Peter Varghese. It sets out a strategy through to 2035.
The India Economic strategy has three key goals:
· That India rise to a top three trading partner for Australia;
· That we build Australian investment in India to $A100 billion by 2035; and
· That we strengthen our people-to-people links and make them as close as any in Asia, raising India to the first tier of our economic relationships.
Work is underway to realise the strategy. The Australian Government has adopted many of the strategy’s recommendations. Since its reelection, the Government has reconfirmed its commitment to building the economic relationship to the levels envisioned in the strategy.
The economic relationship forms the glue which brings countries together. That is why we are pleased that that India is doing a reciprocal strategy for Australia which was commissioned by the previous Minister for Commerce of India. It takes both sides to build the trade and investment relationship.
While growing our economic ties, both countries have taken decisive steps to elevate our strategic partnership.
We are in a stronger place of trust and understanding of each other than we were even a decade ago. There is more comfort in working together. Slowly we are shaking off our own ‘hesitations of history’ and we are looking to the future, instead of looking back.
This has consequences. A sign of how far we have come is our increasing willingness to work together in various Indo-Pacific forums. Not just established ones like EAS but also in trilateral engagements with Japan and also with Indonesia. The tempo of activity between Australia and India in the strategic sphere is growing.
And of course the Quad, which has just had its fourth iteration, and which is now developing into a substantive forum for discussion of a wide range of issues. The Quad is now accepted as one part of a strategic landscape that involves many different forms of dialogues. This is as it should be; the Quad should be important but unremarkable.
3. So where to for the coming term of our respective governments?
There is much Australia and India can do over the next terms of our respective governments to strengthen our partnership. We have built a strong bilateral relationship over the past decade. We have the basis now to work together in other forums. But I want to emphasise three significant opportunities.
i. Strengthening the economic order in the Indo-Pacific
First, there is more India and Australia can do together to strengthen the economic order in the Indo-Pacific. This has two dimensions. The first is trade and second is investment in the region, and with the latter particularly focused on high quality infrastructure development.
When it comes to trade, India is a leader and an Asian and Indo-Pacific powerhouse. For that it reason it is vital India plays a greater role shaping the regional trading order. Successfully concluding RCEP – which includes India, China and the ASEAN countries as well as Australia - will help shape the regional rules and norms governing trade, investment and the broader economy.
RCEP countries represent almost half the world’s population and over 30 per cent of global GDP. Concluding a high-quality RCEP will expand regional trade and investment. It will strengthen regional supply chains. And it will create a platform to drive ongoing economic reform. Very importantly, it deals India into regional economic integration. Australia is keen to work with India on RCEP.
And with more trade, we also need more and better investment and specifically infrastructure to help people and goods move around the region.
India and Australia are both increasing their support for economic governance and infrastructure across the Indo-Pacific. We know substantial infrastructure investment is required to keep the region moving. The Asian Development Bank estimated $26 trillion [US dollars] in investment would be required over 2016-2030.
Australia is committed, together with our partners, to sustainable, principles-based infrastructure investment that is transparent, promotes open competition, that upholds robust standards, avoids unsustainable debt burdens, targets the needs of nations of the region and unlocks the potential of private sector investment in the region.
Australia for its part has announced new initiatives across the Pacific, Southeast Asia and South Asia in the past nine months.
As the weight of global power shifts from the North Atlantic to the Indo-Pacific, strategic and geostrategic competition in Southeast Asia has sharpened. ASEAN unity is under pressure as external powers lean on the smaller, economically vulnerable members of the grouping to do their geopolitical bidding.
So we are also building on our significant diplomatic and economic relationships with Southeast Asia to build resilience and prosperity. Our recently announced Southeast Asia Economic Governance and Infrastructure Initiative, worth $A121 million to unlock Southeast Asia’s next wave of economic growth.
At the Raisina Dialogue in January this year, Australia’s Foreign Minister Marise Payne announced Australia would be supporting regional economic connectivity in South Asia through the new South Asia Regional Infrastructure Connectivity initiative, known as SARIC. SARIC will focus on the transport and energy sectors – where the economic value-add is particularly strong.
We have also made substantial investments in infrastructure in the Pacific. From a new $2 billion Australian Infrastructure Financing Facility; an addition $A1 billion in callable capital in Australia’s export finance organisation, and funding the installation of a telecommunications cable to provide high speed internet to Papua New Guinea and the Solomon Islands.
We have likewise seen India increase its contribution across the region. India is playing a significant role supporting infrastructure and economic governance across the Indo-Pacific. Minister Jaishankar has made his intention clear to strengthen India’s role in this field even further.
If both India and Australia are thinking about how best to deliver infrastructure investment in the region, there is some scope for us to pool our efforts, particularly in those parts of the region where our interests might overlap, such as in Southeast Asia.
ii. An open, inclusive and rules-based maritime order
A second area of opportunity is to shape an open, inclusive and rules-based maritime order in the Indo-Pacific. Australia and India both have large maritime zones in the Indian Ocean and significant naval capabilities. Both countries are strong supporters of UNCLOS. We can strengthen the rules-based order in regional forums such as IORA, the ASEAN Regional Forum and the EAS.
Our bilateral defence relationship – which I have already talked about - can also contribute to the regional order. We should move towards greater interoperability and aligning our defence diplomacy across the region to help shape the regional order. One way forward which Australia has suggested is to agree a Mutual Logistics Support Agreement would smooth the path towards closer defence cooperation, reflecting the high tempo in Australia-India defence activities.
iii. Responding to the threat of terrorism
A third area where Australia and India can do more is in global and regional responses to the threat of terrorism. Australia was a co-sponsor of the UNSC resolution which led to the listing of Jaish-e-Mohammad terrorist Masood Azhar. We have a growing annual counter-terrorism dialogue and are developing practical cooperation on responding to the threat in South and Southeast Asia. Prime Minister Modi has highlighted the threat which terrorism poses for all our societies during his recent visits to Maldives and Sri Lanka. We both support an effective Financial Action Taskforce which addresses the financing of terrorism.
These are just three where Australia and India have overlapping interests and where we can work together. There is more we can do in other areas. For instance, there is more we can do on technology and cyber security, with nearly all aspects of life touched by technology with enormous opportunities for innovation, growth and development but also vulnerabilities as a result.
To conclude, let me reiterate that the Australia and India have built a strong relationship. But we should also use the opportunity of a strong relationship and a strategic alignment to find more ways to contribute to the security and prosperity of the Indo-Pacific region.
The beauty of the India-Australia relationship is that we can share ideas and work together, for the greater good.
So thank you again for your time today.
I am happy to take questions.