Australian Universities' International Alumni Conference
Hong Kong
2 December 2004
I thank the organisers for the invitation to give this keynote address to the AUIA Convention, and I congratulate you on the theme you have chosen The Bridge to Opportunities.
As I began thinking about how I could most usefully contribute to that theme in this keynote address, my mind went back more than half a century to 1947 precisely when I began my own university career as a law student in the University of Western Australia. And I was struck immediately by a paradox on the one hand, by how dramatically, and fundamentally, the world had changed in that time and, on the other, by how much, for me, had remained constant.
They were exhilarating times. My country had emerged as part of a victorious allied combination from the most devastating war in history, when, for a period, our own territorial integrity and sovereignty had been at stake. At home, Australia was beginning to implement a policy the vast post-war immigration program which, more than anything else, was going to change our country forever bringing an ethnic diversity, cultural enrichment and capacity for economic growth hitherto beyond contemplation.
Internationally, while the hyperbole following the 1914-1918 "war to end all wars" was absent, nevertheless there was, with the establishment of the United Nations, a vibrant optimism about the possibility of a more constructive and co-operative new world order. And certainly, the beginnings of real change were appearing. The old British Empire was starting to dissipate as part of the incipient dissolution of colonialism around the world.
On the campus one of the most exciting elements for me of this new environment was the presence of a considerable number of students from south-east Asia. It concerned me that neither they nor the local students and staff seemed to be deriving the optimum benefit of their presence amongst us. Local students' attitudes ranged between apathy and antipathy to the Asian students who in turn reacted by living and operating within their own enclaves.
To me this seemed both immoral and stupid. Immoral because these were fellow human-beings in a strange new setting who deserved our friendship and assistance. Stupid because these were people many of whom would go back and advance to positions of professional, commercial and political leadership in their countries with which Australia's future welfare, it seemed apparent, would be increasingly linked.
At first, at the personal level, I invited many of them to our own home and dined on their national dishes with them in their own digs. Then as I progressed through the ranks of student leadership I was proud to be able to establish the International Club within the University which helped to create a much more congenial relationship between students of different nationalities on campus.
That early conviction of the central importance to us of the Australia/Asia relationship has remained a consistent element in whatever capacity I have been addressing myself to the future of our country. The constantly changing environment of the last-half century has only served to reinforce my sense of the correctness of this conviction.
Let me set the scene for what I have to say about present bridges and opportunities by reminding you of the magnitude and significance of some of these changes. At the outbreak of the Second World War 61% of Australia's exports went to Britain and there was no tension between the fact of where we traded and where we looked to for security.
Now 60% of our exports go to Asia (only 3% to Britain) and our security arrangements have become increasingly aligned with another overseas power the United States which sees a significant measure of threat to security from countries in Asia.
This new lack of congruence at the level of our trading and security relationships has not yet posed major problems for Australia but there is no room for complacency about this. The obvious potential danger point is Taiwan; a fact highlighted by the remarks made in Australia in 2001 by one of the more moderate voices in the Bush Administration, Richard Armitage, the Deputy Secretary of State. He spoke then of the US expectations that Australia would be involved in the dirty, hard and dangerous work if it came to conflict over Taiwan.
As I said when speaking here in Hong Kong in January of this year there could be no more dangerous manifestation for us of the assumption in the United States administration of a flaccid, compliant Australia which is all the way with the USA. Fortunately, on a recent visit to Beijing, our Foreign Minister, Alexander Downer, put down much more realistic markers. Downer stated explicitly that there could be no assumption by any parties that Australia would join with the United States if that country became embodied in armed conflict with China over Taiwan.
While there was some attempt at the Prime Ministerial level to water down this clear statement I tend to believe, for two reasons, that the Downer position would prevail. First, it cannot be ignored that as a matter of international law reconfirmed by successive US Administrations for more than thirty years since the February 1972 Nixon Shanghai Communiqu: there is but one China and that Taiwan is a part of China." Second, legal facts are increasingly reinforced by economic realities. Two-way trade between Australia and China has been growing at more than 20% per annum for the last five years and it is estimated that within ten years China will have overtaken Japan as Australia's number one export destination.
More broadly, I believe that economic considerations provide grounds for optimism that armed conflict will be avoided on this issue. I re-emphasise my belief that the increasing integration of the Taiwanese economy with mainland China, including the residence there of hundreds of thousands of Taiwanese who are working in the more than 50,000 enterprises that have relocated to the mainland will mean that the force of economic self-interest will prevail over any temptation to political adventurism by Taiwanese politicians.
These dramatic changes in the orientation of Australia's trade and security relationships that I have adumbrated are, of course, but part of a far wider and deeper revolution in the world in which we live. If a quality audience such as this is fully to grasp the opportunities and understand the bridges to be crossed in this new world it seems to me essential that we comprehend the profound nature of this revolution and its ramifications for all of us.
For more than 300 years after the Treaty of Westphalia which brought to an end almost 150 years of continuous struggle in Europe and marked the end of an era of religious wars, the nation-state emerged and predominated as the basic unit of governance.
This Westphalian system was characterised by:
the principle of sovereignty or supreme power in the State
the importance of control over geographical territory (which had a
significant reflection in the acquisition of colonies)
national governments being the central players with economic interests being
harnessed, and if necessary, subordinated to, national goals
As I say, that Westphalian system, and those principles embodied in it,
characterised governance and relations between nation-states for over 300
years and were, in fact, substantially reflected in the United Nations
Charter drawn up in 1945 at the end of the Second World War.
But this last half-century and particularly the latter part of it has witnessed quite fundamental changes to that matrix which had come to shape perceptions of the power and roles of governments, the relations between them and their citizens.
I think we can best understand this dynamic process if we imagine the nation-state being subject to a massive and inexorable pincer movement. One arm of the pincer has been the historically unparalleled technological revolution and the associated phenomenon of globalisation. The other arm has been the dramatic political transformation that has been extending the forces of the market economy to a significantly larger proportion of the worlds population.
I consider each of these arms of the pincer in turn. The revolutions occurring in the fields of computers, telecommunications and bio-technology are transforming the processes of production, the provision of services, communication and transportation. The costs of communication, travel and transportation have been drastically lowered and remarkably facilitated. Professor Geoffrey Blainey, the Australian Historian, wrote of The Tyranny of Distance an appropriate title now would be The Death of Distance.
This technological revolution has spurred the growth of the multinational corporation and the emergence of globalisation. The rise of the multi-national corporation with the capacity to evade the jurisdiction of national governments including that of the country in which they are headquartered has involved a distinct shift in emphasis from political to economic decision-making.
Corporations can jump over what they regard as objectionable regulations and pit government against government. In fact one of the major results of globalisation has been the extension of competition from the level of firms to the level of governments. The position of governments has been compared with that of hotel landlords. If the service offered is poor or too expensive, travellers will just move on and the landlord will have to improve the service or lower the price. Similarly, internationally mobile investors will choose locations with both low costs and poor infrastructure or with high costs and excellent infrastructure they will certainly be most likely to avoid locations with high costs and poor infrastructure.
The sheer comparative size of corporations as measured by their annual sales or capitalisation compared with government budgets dramatises the power-shift. The OECD has made the point that if the top 100 economic entities were assembled in a new OECD with both private and public participation, 52 of these major players would be corporations, and 48, national governments and if the 200 nation-states in the world were pitted against the 200 top corporations the result would be even more lop-sided. An even more startling statistic is provided by the OECD 225 individuals own half of the worlds output.
The process of globalisation is accelerating. One of the single most important indicators is that, generally, the volume of world trade is growing twice as fast as the volume of world output which means, simply, that the international division of labour is deepening and the world economy is becoming increasingly integrated.
The other arm of the pincer is reinforcing this process and its dimension, I
believe, is not so well appreciated. Consider these facts:
the collapse of the former centrally planned economies of Eastern and
Central Europe
the opening up of China and its irreversible move towards a market economy
the more global orientation of India away from its previous more restrictive
attitudes and tilt towards the former Soviet Union
all of this has meant that an additional 40% of the worlds population is
becoming increasingly integrated into a globalised world economy.
Now, one of the most profound implications of all these developments is that the capacity of many national governments to sustain the revenue base necessary to undertake the services expected of them by their citizens is becoming increasingly at risk. And remember that this risk comes after a century that witnessed an enormous expansion in the scope of national governance.
At the beginning of the 20th century, Governments of European states taxed and spent somewhere between 5% and 10% of GNP. At the close of the century between one-third and one-half of the GNP of industrialised countries passed through the public exchequer. The main force behind this expansion of the public budget has been the substantial growth of publicly provided services and infrastructures, and income redistribution through the welfare state.
The indisputable fact is that the increased mobility of capital can undermine the capacity of governments to do their job of providing effective governance either by themselves, through market forces or the civil society.
Income distribution is shifting towards capital away from labour, the distribution of capital assets is more skewed and concentrated so that the income tax base is more unequally distributed nationally and globally. And the tax rates that can be applied may be lowered because of competition between governments and the capacity of those with wealth to organise their affairs to minimise tax.
As a practical matter the threat of loss or serious erosion of the tax base is as difficult as it gets in terms of providing good governance. This is not just a question of the capacity to provide services but goes to the very stability and workable cohesion of society. How to handle this problem in an equitable and efficient way will be one of the more important questions in this new century.
More broadly, it should be clear from this analysis that the governments of nation-states do not now have the same characteristics or operational environment, nor importantly, the same capacities as the Westphalian model. We are in an uncertain state of flux where it is possible to discern two distinct strands of devolution of responsibility away from national governments. These two strands are working from opposite directions:
a move towards more supra-national and inter-governmental responsibility on
significant issues and
within nations a greater emphasis on the importance of the civil society.
On the first point, there is a considerable degree of ambivalence by a
number of Governments, including in my country, in facing up to realities
and nowhere is this more evident than on the question of environmental
pollution. Like capital, pollution is mobile across borders. The facts about
the threat of global warning are becoming increasingly indisputable. It is
global in its impact and therefore requires constraints upon the exercise of
individual nation-states' sovereign powers a form of supra-national
governance. There have been some tentative steps in this direction the
Kyoto Protocol but the measure of our collective maturity will be how
quickly we transform those steps into an effective supra-national mechanism.
Just as we can see mixed, and at times, contradictory elements in this process of exogenous pressure on the nation-state so is the internal picture confused and characterised by its own contradictions. National communities are apprehensive about the rate of change impinging on their lives and the opportunity for, and security of, employment; they are increasingly sceptical or distrustful of the political process. They are aware with varying degrees of precision that the knowledge economy is becoming more important intrinsically, and in terms of its impact on traditional economic sectors but they are unaware of precisely what this new economy means for them.
They covet the relatively cheaper products of the technological revolution gadgetised cars, coloured TV, an array of digital diversions while they ponder, at least subconsciously, the loss of certitudes of an earlier age. All of this is reflected in a set of conflicting, indeed contradictory demands on the one hand for more, and on the other, for less government.
All of this new complexity and uncertainty has been immeasurably compounded by the events of 9/11 and its aftermath. There was nothing in our collective experience, no textbooks, to which we could turn for guidance on how to handle this new threat of international terrorism so tragically exposed on that day. In the past, threats to the security of a nation-state and the safety of its citizens had come from another nation-state clearly identifiable within recognised borders. And in the most recent experience of prolonged threat the Cold War the valid assumption that your opponent would not willingly encompass his own destruction had provided the ultimate, effective, safeguard against the employment of weapons of mass destruction. Those fundamentals of all previous defence and security planning went out of the window with 9/11.
My friends, I could talk and we could discuss for hours where I believe the United States has got so much terribly wrong as it has developed its responses to the historically unparalleled threat of international terrorism. But, for our purpose today, I want to mention only two matters that I believe must be regarded as critical to any sensible long-term attempt to meet this challenge.
First, the developed world must constructively address global inequalities in income distribution and the endemic poverty this entails. This issue was reinforced earlier this year by the President of the World Bank, James Wolfensohn (The Australian 13 February 2004):
In our world of 6 billion people, 1 billion own 80% of global wealth, while another 1 billion struggle to survive on a dollar a day. Two billion people have no access to clean water; 150 million children never get the chance to go to school, more than 40 million people in the developing countries are HIV-positive, with little hope of receiving treatment for this dreadful disease Over the next 25 years, about two billion people will be born but only 50 million of them will be in the richer countries. The vast majority will be in the poorer nations: born with the prospect of growing up into poverty and unemployment and growing up in a world that they will inevitably view as inequitable and unjust. Terrorism is often bred in places where a burgeoning youth population sees hope as more of a taunt than a promise.
Second, there should be a concentrated attempt to identify and then, in a manner appropriate to this particular circumstance, provide support to the many individuals and groups throughout the Islamic world to whom the tactic of terror is repugnant. This should be done in the context of a demonstrated commitment to meeting the legitimate aspirations of peoples in that part of the world, including, particularly, a resolution of the Israel/Palestinian dispute which entails the establishment of a viable Palestinian economy.
My friends that is a brief picture of the dramatically changed and challenging world facing the international alumni of Australian universities. In a sense you are uniquely equipped to handle those challenges because far more than most people your own lives have embodied and reflected the essential nature of the changes I have been talking about.
Before I develop that point further, let me say how thrilled I am that so many hundreds of thousands of overseas students, particularly from Asia, have made and are continuing to make this decision to undertake tertiary education within the Australian system. Of the 136,252, foreign students enrolled in this sector last year 110,362, or 81%, were from Asia. Australia's rising share of the international market has been particularly reflected by the growth in two areas business studies in which 36% of all students in Australian universities are foreign and information technology where the figure is 20%.
Through your very decisions to study abroad and your experiences as students in another country you have had the direct opportunity to appreciate that to think of your membership of society in terms limited by national boundaries is no longer adequate. We in Australia hope of course that your time with us will have led to your understanding us better, recognising the fallibilities within our society but appreciating what I believe are our basic decencies and strengths.
Like every country we have our own xenophobic racists who, for a brief period, helped to sustain the flickering flame of Hansonism. But you will know, and share our pleasure, that this repugnant feature of our political landscape has been extinguished because it was not viable in this land of migrants. No other nation in history in such a relatively brief period has so peaceably transformed itself from a virtually mono-ethnic society (98% Anglo-Celtic origin) to one comprising now millions of people who have come from, or are the children or grandchildren of those from, more than one hundred and fifty countries and I am pleased to say that the fastest growing component of our new citizens is arriving from Asia. The traditional Australian concept of "the fair go" which could never be truly meaningful while we were encumbered by the White Australia policy is now more fully reflected in the predominant Australian attitude that no person should be discriminated against on the basis of race, colour, creed or sex.
Australians also understand now the truth of what I asserted, against considerable scepticism, when I became Prime Minister in 1983 that the economic future of our country depends upon us becoming increasingly enmeshed with Asia. The statistics I have already mentioned (60% of our exports to the region) establish, beyond doubt, the accuracy of this prediction.
And so I hope that you, the alumni of our universities, will be ambassadors and facilitators for Australia; ambassadors for a better understanding between our peoples and facilitators for widening and deepening economic and cultural relations between our nations. And may I note in passing one of the very important contributions Australian students have already made to our community in the example they have set by their, and their families', commitment to the importance of education reflected in an excellence of academic achievement out of proportion to their numbers.
But as important as these things are for our mutual benefit, I want to conclude by suggesting that you and all of us who have had the benefit of education within our system and, in one form or another, a kind of lifelong education have even broader opportunities and responsibilities. The pursuit of self-interest is entirely legitimate. It is the only consistent mainspring of achievement in history the eye on the main chance. But as relatively privileged members of the civil society it is our responsibility to ensure that there is a wider prism in the other eye.
I remain as deeply convinced as I was in 1947 that we are all members of the one human family each with responsibilities to the other. We were not all endowed with equal talents, or opportunities, but certainly everyone on this earth has an equal right to a decent standard of food, clothing, shelter and education. The bridges we have to cross to achieve that outcome span increasingly troubled waters as I have outlined earlier. On the other hand the technological revolution has also provided the capacity and the opportunity, unparalleled in history, to uplift the standard and quality of life of all mankind.
We who, in so many ways, are the beneficiaries of that revolution, should understand, better than most, the truth that our chances of creating and sustaining optimum economic and social conditions for ourselves and our own peoples is dependent on the creation of an internationally equitable and peaceable environment. If moral considerations are not enough to make us seize every opportunity to advance that goal, enlightened self-interest should be.