JULIE BISHOP: Ladies and gentlemen, I simply love Hong Kong.
Thank you to Andrew, Jacinta and the Australian Chamber of Commerce team for hosting us here today and for the work that they do in supporting the 1,400 or more members of the Chamber, who represent the strength and the diversity of the Australia-Hong Kong relationship. And also a special shout out to Ian Robinson. I understand there’s an important birthday coming up this year too, Ian, and thank you for all the work that you’ve done in founding this extraordinary chamber.
I have visited Hong Kong many, many times over the years as a tourist, as a student, as a lawyer, as a politician, but my first visit in the late 1970s remains a vivid memory. My sister and I were university students and we went on our first overseas trip together to Asia. We traipsed through Singapore, Malaysia and Thailand and our final destination was Hong Kong. On our last evening we pooled our Thomas Cook travellers-cheques and booked dinner at The Peninsula. I believe the maître d’ flinched just a little as he seated two Aussie chicks in our Balinese batik sun frocks and sandals, utterly hideous fashion statement, at Gaddi’s, which was one of the finest dining rooms in the world. But the waiters treated us like princesses, the height of Hong Kong sophistication meeting the height of Australian informality, and I knew from that moment that this was my kind of town.
Australia and Hong Kong have deep and long-standing connections, including through our common British heritage, and we both mark the 26th of January as the beginning of British rule. In our case 1788 with the establishment of a penal colony in New South Wales, in your case, 53 years later in 1841 with the British occupation after the first Opium War.
The idea of Hong Kong is timeless; a quintessential global trading hub, a free port with few tariffs and duties and very little regulatory interference. A place that’s so easy to start a business and do business, a place that has been able to transition with great agility from a manufacturing hub to a services hub – a financial services hub in particular – and a place that attracts some of the best and brightest talent from around the world. An idea that has led this small island city to be one of the wealthiest per capita communities on the planet and a significant global economy in its own right. The idea of Hong Kong is to be treasured, to be promoted, defended, protected within the ‘one country, two systems’ concept.
Australia and Hong Kong have a very rich and diverse relationship in terms of trade, commerce and investment. Hong Kong is our sixth largest export market, Hong Kong is our fifth largest source of foreign direct investment, and that will only grow as the result of a free trade agreement between our two economies. Way back when I was Shadow Minister for Foreign Affairs and Trade, in Opposition, I championed a free trade agreement between Australia and Hong Kong. On coming to government in 2013 we focused on free trade agreements with China, Japan, South Korea and of course the Trans-Pacific Partnership, the TPP-11.
But a free trade agreement with Hong Kong was always at the top of my mind, and when we released the Foreign Policy White Paper in November of 2017, as Andrew pointed out, the first foreign policy review in 14 years, it set out a framework of what we saw as Australia’s foreign policy priorities, interests, and our values, that would guide our foreign policy over the next decade and beyond. A key objective of the White Paper was negotiating a successful free trade agreement with Hong Kong. So, personally, I am absolutely delighted that Australia and Hong Kong have been able to conclude negotiations and that we expect, hopefully, a signing of this free trade agreement in coming weeks. This represents a significant milestone in our relationship, but, importantly at this time it sends a very powerful message to the world that Australia and Hong Kong are committed to free and open, liberalised trade.
I thought that this afternoon I would give you some perspectives of mine, as a former Foreign Minister and as a currently serving Australian politician, about some of the political developments in Australia and some of the international trends which are emerging.
Shortly after our most recent and all-too-regular leadership upheavals, I attended an international summit meeting with political and business leaders, and one Foreign Minister said to me: What is it with Australia? You are so highly regarded as a well-governed country, you have a strong and competitive economy, you have a lifestyle that is the envy of the world. Yet, if you talk to an Australian, they’ll tell you they’re the worst-governed nation on earth, they have the worst bunch of politicians, and that given you’ve had seven Prime Ministers in about 11 years, the place is in chaos! I disagreed with the analysis. Part of it was true, but I disagreed with the analysis. Nevertheless there is a disconnect in Australia and the more the public lose confidence in our political process and the greater the deficit of trust between the political class and the public, we see more politicians coming up with populist, short-term policies, that might win you votes in the short-term, but in the longer term they only add to the lack of confidence and the mistrust.
We are not alone in this phenomenon. There was a very important piece of work done by the Washington-based Pew Research Centre back in 2017, and they surveyed 38,000 people across 38 countries, including Australia, about forms of government and democracy in particular. Now, the good news for Australia is that of those surveyed 88 per cent said they thought democracy was a good idea. Only 40 per cent indicated a strong preference for democracy.
When they were asked about what sort of alternative government would you prefer, about 40 per cent said they would like to see Australia governed by an unelected panel of experts. That was meant to be the Cabinet, but anyway. Another 19 per cent said they would be happy with a strong leader who was unconstrained by parliaments and courts. Twelve per cent said bring in the army, they’d like to see military rule.
Now, while I find it alarming that a significant minority of Australians appear to be comfortable with military or civilian dictatorship, there was an even more worrying finding. When asked: How much trust do you have in your government to do the right thing by your country? About 40 per cent said they had some level of trust, seven per cent said they have a high level of trust. Seven per cent of those surveyed said they had a high level of trust in the government to do the right thing by the country.
I think this is a general malaise about politics. I don’t believe it’s a seriously considered analysis of ditching our democratically-elected parliament and embracing autocracy. But nevertheless, it does give us cause for concern – and that disconnect between the public’s expectations of what governments should and shouldn’t do and what we actually deliver. There is a conundrum: some people believe that government does too much, that government is interfering in our lives and should get out of our lives. Others believe that government is not doing enough, that government should be able to solve society’s ills. Others still believe whatever government is doing, it is wrong.
So it’s incumbent upon us to explain the limits of what governments can and can’t do and to have the courage to articulate longer-term policies, beyond the 24/7 media cycle, beyond the electoral cycle, longer-term policies in the national interest of the country. Because if people continue to believe that governments should be doing more than it is possible for them to do, and that politicians promise what cannot be delivered, then we risk a permanent state of dissatisfaction and mistrust.
The truth is individual choices, the choices we make as individuals, have a far more profound impact on our lives than the majority of decisions taken by politicians in Canberra. But there is a real need for us to build trust in our institutions, to support our democracy and to raise the level of public and political debate. The politicians have a lot of work ahead of them. You only have to watch Question Time to see the tone and level of debate in Australian politics. But we owe it to the Australian public to give them confidence in what is one of the longest-standing democracies in the world today.
I also think that, to an extent, we’re suffering from our success. As Andrew said, we are entering our 28th consecutive year of uninterrupted economic growth. That is a world record. No other country on earth has come close to 28 consecutive years of uninterrupted economic growth. It also means that nobody under 45 has ever experienced a recession or anything like it. Unemployment is at 5 per cent. There are immense opportunities for work in Australia. We have one of the highest standards of living in the world. We’re regularly, consistently, in the top three nations in terms of the Human Development Index, with Norway and Sweden and we have a significant social security net. And that success makes it difficult for politicians to argue for long-term structural reform, particularly if it means any reduction in government support or any withdrawal of entitlements or any perceived or otherwise, reduction in the standard of living.
I also think that there is a concern across Australia – and again, not confined to Australia – but concern about the impact of what we call the Fourth Industrial Revolution, and whether government is sufficiently preparing us for it. By that I mean the advent of automation, artificial intelligence and robotics, the Internet of Things, that is disrupting the way we live, the way we work, play, engage.
Just this week I met with a consortium of lawyers in Perth – in fact, representatives of Herbert Smith Freehills and King & Wood Mallesons – and this consortium is developing digitised legal practice. Take smart contracts, for example, that will be embedded with code so that the contract self-activates, you get rid of the middleman. It’s artificial intelligence taking over the legal practice. I laughed at the thought of artificially intelligent lawyers until I thought of artificially intelligent politicians. There’s material for a stand-up comedy routine there but I think I’m going to have to work on it.
Anyway, the good news is though, that humanity is not redundant in this fourth industrial age, at least not according to a recent World Economic Forum report called The Future of Jobs in 2018. This was a report that surveyed some 300 companies across 20 countries and represented a combined workforce of, say, 15 million people. All of the companies surveyed named four technologies that will absolutely disrupt their business and their industry in the next few years: widespread availability of high-speed mobile internet, artificial intelligence, the greater use of big data and cloud-based technologies.
About 50 per cent of the companies surveyed said that they would be reducing staff numbers over the next few years over the next four years because of automation, because of technology. About 40 per cent said that they would actually be increasing staff because they’ll be using technology to augment the work of their employees. Twenty-five per cent of them said that over the next few years there will be new jobs and new roles in their businesses and industries, that currently don’t exist, because of the advent of AI, automation.
The report also went on to say that by 2022 a million jobs would be lost in these industries surveyed, due to technology, but 1.75 million would be created because technology was supporting greater productivity and efficiency and there was a greater need for humans skilled in interacting with machines. But it is an issue that is concerning Australians and governments need to be vocal on how we can harness the excitement and creativity of technology.
There is another issue that has caused a lot of political upheaval in Australia in recent years and that’s energy policy. The cost of electricity has been a subject of political debate for a long time in our country, and the issue of climate change. Without doubt it was a platform that Kevin Rudd used to defeat John Howard at the 2007 election and it’s been an issue that has divided parties and the public ever since and caused a lot of political upheaval.
I think the closest that we came to a consensus on climate change and energy policy was the National Energy Guarantee, which was designed to provide affordable, reliable power and give certainty to the electricity generators so that they could make the long-term investment that is required. It is no longer Coalition policy and I don’t see an immediate solution to the impasse. But I think that in future there will be some kind of National Energy Guarantee, some kind, because we have to give generators the confidence to invest in Australia. As we see in the closure of coal-fired power stations, the advent of renewables, not yet a debate on nuclear power, we need to have an energy policy that does deliver affordable, reliable energy that allows us to meet our international obligations.
As we enter the period in the lead-up to the election the different policy positions of the two sides of politics in Australia are crystallising. The Liberals and Nationals, the Coalition, will be focusing on job creation, on economic growth, on lower taxes, on budget reform, on ensuring that we have a budget surplus so that we are in a position to fund the necessary essential services upon which Australians rely. And Labor increasingly emboldened to talk about higher taxes, a greater role for the unions, more regulation, and I’m surprised that they’re promoting policies like reforms to the capital gains tax, to negative gearing and imputation credits and the cash refunds. I think these will be issues that will actually define the next election.
The political environment is challenging for the government. There have been consistent opinion polls showing a Labor win, albeit with a very unpopular leader. But opinion polls this far out from an election are not conclusive, and my very strong advice is: do not give up on us. That would be a mistake. Big mistake.
Ladies and gentlemen, perhaps I could turn to some international issues, for there are risks out there and Australia, integrated into the global economy, is affected by the trends and the events that we see worldwide. The rise of populism and economic nationalism is giving rise to zero-sum anti-globalist sentiment, and populist leaders are arguing that global trade has benefited some nations to the detriment of others and that protectionism is the answer. Policy-makers must argue against this and remember the lessons of history because global trade benefits all. It is a rising tide that lifts all boats.
The recent US-China trade conflict is of course a concern, but I have been confident for some time that we will see a peaceful negotiation that resolves some of the outstanding issues. And I’m heartened by what President Trump has said recently about the talks in Washington. I think if you put the rhetoric aside, we are likely to see the emergence of a US-China free trade agreement which would undoubtedly be to the global benefit. Sure, there are issues like cyber-security that need to be resolved, but overall, I believe that both nations appreciate the importance of their economies to global peace, stability and security.
We’re always on the lookout for a ‘black swan’ event, a rare and unforeseen event that can have significant effects, cause immense upheaval, and by their very nature they are unpredictable. But recently we’ve been hearing more about ‘grey rhinos’. Grey rhinos are risks that are obvious but that the majority are ignoring or refusing to see. And President Xi Jinping referred to both metaphors, black swans and grey rhinos, in a recent speech to the Chinese Communist Party. In retrospect, if you look at the global financial crisis of 2008, that was described as a black swan event, but there were a significant number who had the foresight to predict the US sub-prime meltdown. So in retrospect it was a grey rhino.
There are some current grey rhinos on the horizon – the increase in private and public debt in many nations since 2008, of course the US-China relationship, the struggle to find an orderly Brexit that will impact not only the UK and the EU but globally, and the capacity of governments to support the financial markets should another banking crisis erupt. These are some of the risks that are ahead of us and we need to take action now and implement policies to smooth the imbalances.
There’s another risk that is of great concern and that is the decreasing support for the international rules-based order. That is, the framework of alliances and treaties and conventions and norms underpinned by international law that has evolved since the Second World War. It’s an order that was established and championed and guaranteed by the United States and its allies, but it has undoubtedly been of benefit globally, and some nations are choosing to cherry-pick which parts of that order apply to them and which parts they’ll ignore.
It was designed to create a world out of chaos and it has to the extent that we haven’t had a Third World War and we have seen the greatest rise in human prosperity in living history over the last 70 years. And those nations that stand to benefit most and have benefited most from the international rules-based order ought be the staunchest advocates to support it and keep it.
Australia, as an open export-oriented market economy, as an open liberal democracy committed to freedoms and the rule of law, should and must be a strong advocate for the international rules-based order. Sure, there need to be changes, and where change leads to better outcomes we will support it, but we should not lack courage in supporting those aspects of the rules-based order that have provided us with relative peace, stability and prosperity, and Australia has benefited enormously from it.
Ladies and gentlemen, I want to wish you a very happy Chinese New Year. Now, while some might have referred to 2018 as a Dog of a Year, I feel sure that the Year of the Pig will bring great resilience and determination, and courage from our policy-makers will be a feature of 2019.