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Australia and China in the Asian century: address to the 2012 China Advanced Leadership Program, Australia New Zealand School of Government, Canberra



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THE HON WAYNE SWAN MP Deputy Prime Minister Treasurer

ADDRESS TO THE 2012 CHINA ADVANCED LEADERSHIP PROGRAM

AUSTRALIA NEW ZEALAND SCHOOL OF GOVERNMENT

Canberra 30 October 2012

AUSTRALIA AND CHINA IN THE ASIAN CENTURY

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Thank you, Alan, for your introduction and for inviting me back to this year’s China

Advanced Leadership Program. I was deeply honoured to be asked to speak at the event that

inaugurated the Program last year and this year is no different. And I’m really pleased that

the Australian Government, in this year’s Budget, was able to provide funding for the CALP

to continue its important work in extending and deepening Australia’s relationship with

China. I would like to acknowledge the leaders of this year’s delegation from China: Vice

President Zhou, Vice Governor Wang and Deputy Secretary-General Lu; participants of the

Program; and your interpreters. I am pleased to be able to extend the Australian

Government’s welcome to you and trust that, when you return home, you will have gained

much new knowledge, as well as some happy memories of your time here in Australia.

I would also like to acknowledge Mr John McKinnon, Secretary of New Zealand’s Ministry

of Defence and Program Director. It is a pleasure to have this opportunity to meet and talk

with you, current and future leaders and policy-makers during one of the most extraordinary

periods in economic history.

My interest in China goes back a long way, to the days of studying Chinese politics while I

was at university. That interest continues to this day, following my seventh visit to China just

three months ago. I’ve probably been to China more times than all of my predecessors

combined. During that last visit I spoke a lot about the farsighted leaders in both our nations

who laid the foundations for the strong and rapidly evolving relationship between Australia

and China. This growing relationship was one of the reasons we commissioned a white paper

- a detailed government study - on Australia in the Asian Century, which was released only

two days ago. This is a major planning document for our country - it lays down an ambitious

roadmap for Australia’s engagement with Asia over the coming decade and beyond. The

white paper aims to emulate some of the foresight of Chinese and Australian leaders past,

recognising that Australia’s future will be very much affected by our region and spelling out

a set of pathways that will enable us to face its challenges and opportunities. Nowhere is this

more evident than when we consider our relationship with China.

The coming six months will bring new challenges and opportunities for us as leaders, as

China goes through its leadership transition. Regardless of who is at the helm, our two

countries will remain intertwined. There is no doubt that strong relationships have been

formed between our leaders - past, present and future - and we will continue to build and

strengthen these relationships so we can manage the transitions that come with a close and

evolving partnership. This leadership transition comes at a time when enormous shifts are

also taking place in the economic and social fabric of your nation. As we forge further ahead

into the 21st century, China’s transformations - its urbanisation, its extraordinary mega-cities,

the growing middle class - are not just a sign of progress, they also symbolise China’s return

to pre-eminence in the global economy. The immense scale and pace of China’s

transformation, along with the rise of other countries in the region, is going to see Asia

achieve some incredible milestones in the years ahead. While the people in this room would

be very familiar with the enormity of this change, the projections remain truly staggering

nonetheless.

As the white paper released on Sunday sets out:

• By the end of this decade, Asia is expected to overtake the economic output of Europe

and North America combined to become the world's largest economic power;

• By early next decade, the combined output of China and India is likely to exceed that of

the whole Group of Seven major economies;

• By 2025, average GDP per person in Asia is expected to almost double - something that

took the United Kingdom over 50 years to achieve during the Industrial Revolution;

• By 2025, four of the ten largest economies in the world will likely be in Asia.

All this presents tremendous opportunities for Australia. Importantly, the white paper sets

out a strategic framework to guide Australia’s engagement with our region in the years

ahead. It also provides a set of pathways to ensure we have the domestic policy settings and

skills we need to advance our strong links with Asia and of course with China. I’d like to

spend the rest of my time today discussing what from my perspective as Treasurer are some

of the key findings and components the white paper. I’ll then talk about how the white paper

will help us forge closer links to the region through education and people-to-people links.

But before I do, I think it’s worthwhile talking briefly about Australia’s place in the global

economy; I hope that will help put the white paper into a more illuminating context.

Australia recently recorded 21 consecutive years of growth, a record unmatched by any other

advanced economy over this period.

Our economy is now 11 per cent bigger than it was in 2007. And we are now the world’s 12th

largest economy despite only having the world’s 51st largest population. Australia’s AAA

credit rating has recently been re-affirmed by all three global ratings agencies, most recently

on Friday night by Fitch.

Australia has an enviable combination of solid growth, low unemployment, contained

inflation, low interest rates, sound public finances and a very large investment pipeline. And

we’ve begun to convert the terms of trade boom into enduring capacity and higher export

volumes, which is in stark contrast to past booms. We know that continuing difficulties in

the economies of Europe and the US are weighing on our own region. But Asia continues to

power global growth and its medium-term growth story still has a long way to run -

supported by industrialisation and urbanisation across the region. Australia’s reform history

- along with our impressive economic performance in recent years put us in a strong position

to take full advantage of the opportunities in the Asian century. Of course, it’s not just our

strong economy that puts us out in front. It’s also our confident and capable people. We

have a highly-skilled, multi-cultural and creative population with deepening connections with

the region. Combined, the strength of our economy, the ingenuity of our workforce and our

outward-looking population all give Australia a head start in the Asian century.

As the transformations of the Asian century continue to unfold, Australia’s economy and our

community can increasingly play a part in those changes. A big part of this is about

capturing the evolution of opportunities that will emerge across all sectors of our economy as

Asia’s increasingly mobile middle class swells in size. This will entail demand for a diverse

range of goods and services, from health and aged care to education to household goods and

tourism, as well as high-quality food products. The white paper gives Australia a long-term

roadmap to navigate these opportunities - as well as some of the challenges - of the Asian

century out to 2025. It provides clear and ambitious long-term goals for Australian

governments, businesses and the broader community. Regardless of how the Asian century

evolves, for Australia to succeed, we will need to build on our capabilities. One of the things

that will be important in this respect will be continuing to lift our productivity growth. As

part of creating the right conditions for further productivity growth, and to ensure that all

Australians can contribute to the Asian century, education and skills occupy a central place in

our roadmap. Building Australians’ capabilities will mean building better links with Asia

across government, business and the broader community. Comprehensive engagement will

lead to more Australians having a deeper understanding of what is happening in Asia.

In this way, we not only build on our human capital to prepare us for the unfolding century,

we also strengthen Australia’s already deep and broad relationships in the region. Education

and people-to-people links are an integral part to gaining deeper connections, be they

economic, political, social or cultural. Indeed, improving those links has the potential to

deliver some of the biggest gains. Let me run you through them in a bit more detail because I

think they go very much to the heart of what the China Advanced Leadership Program

embodies.

As one of the five pillars of productivity, education will be front and centre of our challenge

to lift productivity growth. It will help broaden our capabilities and forms a key part of the

25 national objectives identified by the white paper to be achieved by Australia by 2025.

And, along with the other national objectives, investment in education will help lift

Australia’s GDP per person from 13th place in 2011 to the world’s top ten by 2025. The

pathways to help us get there will further improve education and training systems that are

already among the world’s best. One important aspect of this is studies of Asia and its

languages becoming a core part of school education. This is not just about learning an Asian

language, it’s about building a deeper understanding of the region and ensuring the region

better understands Australia. More Australian students will be exposed to studies of Asia

across the curriculum, and have opportunities to study overseas as part of their studies. More

Australian schools and education institutions can collaborate with others in the region. And

more Australians will be able to grasp professional opportunities abroad, and to develop in-country partnerships. At the same time, more people from our region will study, work and

live here, helping to build our links and shared understanding.

For Australia to create deeper connections with Asia, we must broaden the flow of ideas. The

white paper has many pathways for government action, both state and federal, and education

is one of the areas where much needs to be done at both levels. But it also proposes action

for the private sector and for the broader Australian community. Because the Asian century

will depend as much on the private sector and the broader community’s willingness to adapt

and transform as it will on governments. In short, we need flexible, dynamic people. It’s been

encouraging to see the impressive array of people rolling up their sleeves to get stuck into the

opportunities now emerging. But we need to do more.

We need even more people who have the skills, experience and relationships to become

leaders in the region. Leaders who are Asia-focused. Leaders from all parts of our society -

from business, academia and the community sector, with a long-term vision who can grasp

the opportunities of the Asian century and maximise the benefits of Australia’s warm

relationship with China.

Education can help us here. But establishing robust people-to-people links will also play a

large role.

The white paper provides a number of pathways that can help cultivate these links. These

pathways, among others, seek to extend Asian Century Awards (Australia Awards) to include

work placements and support mid-career sabbaticals in Australia. These pathways also seek

to strengthen the wide alumni networks of Australian-educated leaders in Asia by providing a

focal point for coordinating these networks through an Australia Awards Office. These

pathways will support high-quality private-sector scholarships that bring future Asian leaders

to Australia. And they will boost online collaboration between researchers, community

groups, students, schools and universities in Australia with their counterparts throughout the

region. In many ways, the China Advanced Leadership Program is exactly the kind of

pathway the white paper is describing. It is an invaluable asset to both our countries and

pays dividends beyond its specific focus on learning and development. It reinforces our links

both professionally and personally, building true leadership and enduring partnerships.

Ladies and gentlemen, the shape of the Asian century is, of course, not set in stone and there

may well be challenges or setbacks along the way. But both our nations start from a position

of strength and we have good reasons to be optimistic. To succeed in the Asian century

requires us to continue to show forward-thinking and committed leadership. Programs like

this nurture leadership across governments and bring our countries closer together. When I

studied Chinese politics 40 years ago, I may have hoped but could never have imagined that,

just as China has grown in economic importance to Australia, so, too, has Australia increased

in significance to China. We have arrived at this point with different histories, different

economies, different perspectives - but we should continue to see our differences as

opportunities. Our two nations have grown together as friends and partners with a deep

understanding of all that binds us, as well as a mutual respect for our differences. The

leadership of our respective countries enjoys a strong and warm relationship, and together we

have built a firm foundation for strengthening that relationship well into this century and

beyond.

When I was in Beijing in July, I had occasion to look back on the 40 years of bilateral

relations between China and Australia and see how education and connecting on a personal

level can build prosperity and spread opportunity. I can see the same forces at work here

today. The Asian century is the time for our countries - China, New Zealand and Australia -

to build prosperity and spread opportunities together.

Thank you. I look forward to your questions.