26 October 2011
Thank you, Mr Waki, for the kind introduction. It is indeed a great honour for me to be here at the National Press Club as Australian Ambassador. I certainly never dreamed that would happen when I first set foot in Japan in 1978 on a visit sponsored by the Japan Foundation.
I want to start, if you will allow me to do so, by saying a little more about myself and my connection with Japan. That's because I want to explain that for me, this is not just another posting; and my work is more than just a job.
I have been fascinated by Japan since, at the age of eleven, my father told me that if I was going to learn a language it should be an Asian one. I have spent more than eleven years in this country out of the thirty-three that have passed since I first came here. I have been here both as a student at a Japanese University, studying Japanese literature and history and living with a Japanese family, and as a diplomat in each of the last three decades. I genuinely think of Japan as my second home. So for me, the Australia-Japan relationship is not just a professional interest; it is something about which I am personally passionate as well.
My job, of course, is not simply to work to improve the relationship between Australia and Japan; it is to represent Australian interests in this country. That can mean giving tough messages as well as welcome ones.
But I am, it has to be said, very lucky. It is very difficult to find two countries in this region, or indeed the world, today that are bound together by such common interests and strong complementarities. In the vast majority of cases it is reasonable to claim that Australia's national interest is Japan's national interest, and that which is contrary to Australia's national interest is contrary to Japan's national interest. So I expect the vast majority of my job to be about developing ways for us to work more even closely together for the benefit of both our countries, of the region, and of the world.
But given the uncertainties the global community is facing, that will not necessarily be an easy goal to pursue.
The world is facing huge economic uncertainty. In the US and Europe, economic growth is weak, unemployment remains high, markets are volatile and sovereign debt levels are unsustainable. The current uncertainty surrounding the Euro is exercising the minds of all nations, Japan and Australia among them.
These immediate events are taking place against the backdrop of broader, more systemic change. While the United States will remain for the foreseeable future the world's largest economy, others are making headway. These are the so-called emerging economies. It is through their emergence that the global balance is changing. This, in turn, is changing dynamics within our existing multilateral institutions. As a result, new bodies such as the G20 and the East Asia Summit have sprung to prominence, and significant structural changes have happened in bodies such as the IMF, empowering a wider range of countries to have an active say in managing world affairs.
Regional developments are also clamouring for attention. The rise of China, India and other emerging economies in our region is bearing out the idea that this will be the Asian 21st century. For both Australia and Japan, this region is our region; and its future is our future. The positive potential of these changes, which have already lifted hundreds of millions from poverty, is huge; but like all changes of this magnitude, they are creating new strategic and political realities, which will require adjustment from all parties.
At the same time, Japan faces problems that we cannot even imagine. Australia's Prime Minister Julia Gillard stood in this place in April this year and committed Australia to stand side by side with Japan as it recovered from the Great East Japan earthquake, and the tsunamis and nuclear disaster that came with it. That recovery is, we acknowledge, a mammoth task; and we remain pledged to assist wherever we can.
While the Prime Minister was able to be the first foreign leader to visit the disaster-affected area, I will be heading to Minami Sanrikucho myself this weekend, along with people from the Australian Embassy community in Tokyo, to participate in the "recovery market" there, as a further symbol of our commitment to build that relationship.
Beyond the immediate problem of the recovery, we recognise, too, that Japan faces deep-seated economic, fiscal and demographic issues. I will say more on this later. For now, let me just note that we need Japan to deal successfully with these challenges. My first key message today is that a strong, confident Japan that turns its face outwards to the world and plays a full part in regional affairs is a vital national interest for Australia.
Ladies and Gentlemen
The circumstances in which we are trying to build on our already excellent relationship are, as I've said, challenging and interesting. But - and this is my second key message - I am optimistic about Japan's future and the future of the Australia Japan relationship. Let me explain why.
Australia's firm view is that in such challenging and interesting circumstances it is important that we act constructively to build our own future. To borrow the words of our Foreign Minister, Kevin Rudd, we need "not to simply adopt a passive posture, waiting for the next crisis to arise. This is basing foreign policy on hope rather than reality." I believe firmly Australia and Japan cannot retreat and wait for others to show leadership. We must be part of the solution.
There is little doubt that we can have a much greater impact on the key regional and global issues that we face if we act together. It was that realization, as long ago as the late 1980s, that led Australia and Japan to take the initiative together in promoting Asia Pacific Economic Co-operation – or APEC.
Much more recently, we have displayed a similar ability to shape important international debates in line with our common interests. Our two countries have been collaborating successfully in recent times in pursuit of the ultimate goal of a secure world without nuclear weapons – a high priority for the Australian Government and an issue on which Foreign Minister Rudd places great importance.
Japan brings huge capabilities and assets to such co-operation. It has become fashionable to focus on the rapid rise of other economies as in some way detracting from Japan's own. But this pessimism ignores Japan's huge technological and industrial strengths; its highly educated and well-organised population.
We should not be surprised if economies with far larger populations ultimately grow bigger than Japan's economy. Indeed, it would be surprising if they did not. Rather we should marvel that it has taken so long for this to happen. Per capita income, too, is important, because it tells us about the relative productivity of workers in each economy. Never let us forget that Japan's economy is of the same order of magnitude as China's and much larger than India's with only a fraction of the population. Japan's economy continues to make it a serious player in world events.
But it is not only its economic weight that makes Japan a valued partner for Australia. We share values of democracy, rule of law and respect for contractual obligations, and free market economics; and we do so not only because we believe they are right but because we know they make our societies stronger. And, recognizing America's long history as a force for stability and peace in the region and the world, we are both close allies of the United States. Again, this makes us natural partners.
Ladies and Gentlemen
Japan and Australia already co-operate closely across a wide range of issues. But the next five years will raise more of these – whether it is developing a framework to allow all the countries of our region to develop economically together without the threat of war, through mechanisms such as the East Asia Summit; reinforcing mechanisms such as the G20 which, by allowing greater representation of developing economies and economies in this region, enhance the management of the world economy; or helping the world come to terms with the threat of climate change through joint action to reduce greenhouse gas emissions.
Building the basis for co-operation
Instinctive co-operation requires an instinctive understanding of how our interests coincide. In a number of fields, we are in the process of creating the building blocks for that enhanced understanding. I want to spend the next few minutes talking about just a few of these.
The obvious place to start is our trade and investment relationship. Simply put, this is huge; and it is huge for both countries. It is one of the best illustrations of how trade is a win-win activity.
What our huge trade and investment partnership also shows, though, is that deeper cooperation can bring even greater benefits than simple buying and selling.
People talk a lot about Japan's low self-sufficiency rate in food production. But energy is just as important as food – for without energy food could not be transported to where it is needed. Nor would Japan be able to produce the excellent and highly competitive manufactured goods that it needs to sell.
As many of you know, Japan's energy self-sufficiency stands at around only four per cent. And yet, for the past fifty years, Japan has prospered. I would argue that in effect, it has done so by thinking differently about the word "self" in "self-sufficiency." Effectively, Japan has secured reliable sources of supply in large part by expanding its definition of "self" to include its relationships and investment by its companies in a large, friendly and reliable partner: Australia.
It is no exaggeration to say that when you in Japan switch on your lights, you should think of Australia. A huge proportion of the electricity produced in Japan comes from Australian coal, natural gas and uranium. In fact, Australia has for many years been one of Japan's largest suppliers of energy. And Australia's supply of energy to Japan is set to become even more important over the next few years as new natural gas fields come on stream and other sources of supply decline.
Looking to the future, new areas of mutual interest are already emerging, including rare earths. Australian companies, Lynas Corporation and Arafura Resources, will start producing rare earths in the near future. I am pleased, that Australia's Lynas Corporation, with the support of JBIC, has signed a strategic alliance with Sojitz Corporation to secure additional supplies of rare earths products for the Japanese market.
Australia and Japan are also expanding cooperation on clean energy technologies, including carbon capture and storage, which has particular implications for the export of our coal. The recent establishment of the Japan Office of the Global Carbon Capture and Storage Institute, an Australian Government initiative, will add momentum to this development.
So when we in Australia say we are committed to providing safe and stable supply of energy and other resources for the long term, history proves that these are not empty words.
But this is a two-way street – again, a win-win equation. When we in Australia think of our own current economic prosperity, we, too, should think of Japan. Many of our strongest industries have been built not only because of Japanese demand, but because of Japanese investment and partnership with Japanese companies. The total stock of Japanese direct investment in Australia has doubled over the past five years.
I know, particularly at this moment, that security of energy supply is an ongoing source of worry for Japan. Let me be very clear: Australia remains committed to be a secure source of supply for Japan; but more than that, the structure of our relationship in this field – with the major involvement of great Japanese companies such as Inpex, Mitsubishi, Mitsui, Marubeni, Itochu, Sojitz and many more, means that that will in any case happen naturally.
It is a major priority for me as Ambassador to do anything I can to encourage such relationships and allow them to flourish. That's why I think that it is so important that we move quickly to conclude the free trade agreement that we have been negotiating for more than four years now. That agreement is absolutely critical to expanding our concept of what is possible as a result of our huge economic complementarities.
Agriculture is one of the key issues to be dealt with in the FTA negotiations between Australia and Japan. I would like to see the debate on agricultural trade between Australia and Japan move past the constant repetition of entrenched positions, and into an area of positive thinking about the future. I am not here to criticize current Japanese policies as such – indeed, Australia was very heartened by the release of the Japanese government's Basic Policy on Comprehensive Economic Partnerships in late 2010.
An FTA will strengthen Japan's food security – as I have said, it will effectively expand the "自" in "自給率". It will encourage further investment by Japanese companies in Australian agriculture and food processing facilities – and will allow those Japanese companies to be more profitable in exporting back to Japan healthy, safe product that meets Japan's high standards. It will reduce costs to Japanese industry, government and consumers. It will allow for wider choice in food products. And most importantly, it can strengthen Japan's agriculture sector, as long as the right policy settings are put in place.
Maybe it seems counter-intuitive to state that reducing protection can strengthen Japanese agriculture. Well, one thing is certain, protection does not work. Even in the terms used here in Japan to define success – for example food self-sufficiency. Protecting the sector has seen the food self sufficiency rate in Japan drop to 39 percent in 2010, down from 79 percent in 1960. If policies of protection continue, the only foreseeable outcome is continuing decline.
Let us be very clear on one thing. It is not in Australia's interests, nor anybody else's, for Japanese agriculture to be destroyed – and it isn't going to happen, least of all through an FTA with Australia which is already producing at close to full capacity. The Food and Agriculture Organisation of the United Nations - a body in which Japan and Australia share a very close and collaborative relationship - has said that by 2050 the world will need to increase food production by 70 percent in order to feed a global population of 9.3 billion people. This is not a small problem and nor is it confined only to developing nations - in fact, it is one of the greatest global challenges we both face.
Japanese and Australian farmers will be a vital element in meeting this challenge. They will need to produce more; they will need to produce it efficiently and sustainably; and they will need to be able to send their food quickly and cheaply to where it will be consumed - whether this is to a domestic market or overseas.
The other factor that should not be forgotten is that in an environment of very tight supply it is buyers, not sellers, who will be drawn into competition with each other. An FTA with Australia will provide Japanese buyers with the advantage that it is easier for Australian producers to sell to Japan than to competitors who want the same product. This will enable Japan to secure and lock in crucial supply chains, with a reduced risk that Australian producers will look to and conclude long-term agreements elsewhere.
It is therefore hardly surprising that the Japanese government is considering its position in the agricultural trading environment and is considering introducing measures to allow agricultural reform and trade liberalisation, which will allow the Japanese farmer to compete globally and become stronger and more productive. We welcome any move in that direction, not just because we think it will be good for Australia but because we firmly believe it will be good for Japan.
It is true that if Japan embarks on an ambitious road to trade liberalisation and agricultural reform, Japanese agriculture will change. But my view is that it will, in the long term, change for the better. It will become stronger, more competitive and more productive – in the same way that Japan's manufacturing sector responded to external competition by becoming the world's best.
The second key area I want to talk about is our strategic partnership, which draws heavily on the fact we are both close allies of the United States of America.
The first thing I'd like to say here is that growth in this area over the past several years has been truly remarkable. When I was first posted here in the 1990s, many Japanese officials sounded genuinely puzzled about why we would want to talk to them about regional security issues. Now, Australia is the only country other than the United States with which Japan has an annual 2+2 meeting of foreign and defence ministers. It is the only country other than the United States with which we have signed an Acquisition and Cross-Servicing Agreement (ACSA). And we are working towards further agreements, including on sharing of information, that will enable us to co-operate still more closely – and build our trilateral relationship with the United States.
That's all great, and we want to work more on developing the framework within which we operate. But we also need to remember that the test of the importance of such relationships is what they deliver in practice. Here, too, I'm pleased to be able to say our strategic relationship with Japan has proved its worth.
As I'm sure you know, Australia was the only country other than the United States that provided strategic airlift capacity to Japan in the aftermath of the March disasters – an Australian C17 aircraft, working with the US forces and the Japanese Self Defence Force, delivered more than 500 tonnes of relief supplies and equipment, as well as personnel, around the country in the first two weeks after the disaster. And when firefighting equipment to assist with the nuclear accident at Fukushima was brought to Japan, two more Australian C17 aircraft carried the equipment, which landed at a US base, and was transported to Fukushima on SDF trucks. This is the reason we will aim to put in place a new framework of agreements: so that when it really matters, we're able to deliver practical results.
I would hope that in five years' time, we will have achieved two further things in the area of strategic and defence co-operation. First, that we will have an even better legal framework of agreements defining an even more comprehensive relationship. Secondly, that we will be doing more and more to make those agreements live in action, working together to save lives and improving the quality of life. Such co-operation might take place either in our own countries or in third countries – in the way, for example, that Australian soldiers have provided security for Japanese Self-Defence Force Engineers in Iraq, or airlift capacity for Japanese medical teams in Pakistan.
In this regard, we are very interested in current debates happening in Japan – particularly on issues such as the principles on participation in peacekeeping operations overseas and the principles on export of defence-related items. These are obviously issues on which Japan has to have its own debate, and make its own decisions.
I do want to say very clearly, though, that from Australia's perspective, if Japan reaches decisions that result in it being able to take a greater international security role, we would welcome that. Japan is our closest security partner in North East Asia, and we look forward to being able to do much more together in the future.
There are, of course, many other areas I want to touch upon. For example, there seems to me to be great scope for better bilateral co-operation on Overseas Development Assistance, particularly in our own region. By 2015, Australia's budget for Overseas Development Assistance will be four times the size it was in 2007. On current trends, by that time our official aid budget could well exceed that of Japan. Again, Japan and Australia have different and complementary strengths. We should be working closely together.
Likewise on climate change, we face many of the same challenges – and our trade and investment relationship itself, with its huge energy component, will need to adjust over time to ensure its sustainability. Australia, as you will know, has recently introduced a carbon price regime, and is moving towards emissions trading. We will want to stay closely in consultation with Japan as it develops its own mechanisms. There is much we can learn from each other in this field.
But time is moving on, so I will limit myself to talking about the area I consider one of the most important of all – people to people relations.
Again, this has developed hugely over the years. Australian and Japanese people have deepened their understanding of each other's country.
A number of things have contributed to that change. Crucially important has been a great number of tourists in both directions. The number goes up and down, but it has been significant over the long run.
Education has been important too. It was rare in the late 1970s and early 1980s, when I was doing so, for Australians to learn to speak Japanese. But now, as many people here will know, Japanese is taught from primary school through to university, and is, in fact, still the most widely studied foreign language in our school system.
There have been other key contributors. The Australia-Japan societies active in many parts of Japan and their counterparts in Australia continue to play an important part by keeping communication alive and taking young people on exchange programs in each direction. And so do the frequent visits by contemporary artists and musicians that take place. The role of charitable organisations such as Rotary and the Lions club also deserves recognition.
The widespread grassroots response to Japan's March disasters demonstrated how strong these people-to-people links were, quite independent of what governments do.
But I would have to say that this is both the most important area for the long-term future of the relationship, and one on which we will need to continue working harder. Significant numbers of Japanese students do travel to Australia.
But from the Japanese end, at least, tourism has declined significantly – with just over 300,000 Japanese visitors to Australia in 2010. It is through the personal experiences our people have in each other's country that their perceptions are shaped. We need to maximise this.
That is why another of my goals for the next five years is that the Australian Embassy should do whatever it can to reinvigorate educational and people-to-people links. I want Australia again to become a preferred destination for Japanese tourists, and more students to travel in both directions. In particular, I want the positive experiences enjoyed by Japanese students in Australia to become a real incentive for other young Japanese people to travel overseas; both to Australia and to other countries. I repeat: It is a key national interest for Australia that Japan should maintain an outward-looking posture.
A crucial part of achieving greater people to people exchange is to address the issues of airline capacity and passenger convenience. Airfares between Australia and Japan have become cheaper since Jetstar began its operations. And allowing flights to and from Australia to use Haneda airport is a major step forward in increasing the attractiveness of this route for passengers.
We also need to change the way we think about tourism, to recognise that both countries benefit from travel in both directions. Rather than simply trying to increase inbound tourism, we need to think together about the benefits of two-way tourism, and set ourselves joint targets for visits in both directions. Again, this is win-win thinking appropriate to the kind of partnership we have.
You may well be aware of a number of announcements made by the Prime Minister during her visit in this area – including scholarships for Japanese students to go to Australia and a program to encourage exchanges between educational institutions. We are also working on a feasibility study for a program similar to the Japanese Government's excellent "JET" program, to bring young Japanese people to Australia as Japanese teachers. And there are strong possibilities for exchange of ideas in the areas of international education – where Australian universities are world leaders – and on technical and vocational education, giving young people the skills that employers want in the workplace. I am strongly committed to following through in all these areas.
Australia's universities, language, business and hospitality colleges not only have enviable worldwide reputations, but also have a long history in educating Japanese students, and are ideally positioned to help support Japan's current, often-cited need to create a generation of more globalised workers, managers, leaders and administrators.
Australia and Japan are natural partners. We are leaders in our region. We share deep bilateral economic, political, strategic and cultural links built by far-sighted business people, politicians and educators over more than a century.
We also understand clearly, too, like the Japanese government, that in any major relationship there will be some points of disagreement. As you are all aware, the Australian and Japanese governments do not agree at all on the issue of whaling; and I will continue to be firm in pressing Australia's point of view on that issue. It is important and heartening, though, that both the Australian and Japanese governments agree that such issues should not detract from the highly beneficial bilateral relationship we have.
Today, I have outlined the next steps we need to take; a free trade agreement and closer cooperation on defence and security, education and climate change. If we can build together an era of instinctive partnership, this will help underpin the security and prosperity of both our nations and of our wider region in the years to come.