Tim Watts (Gellibrand, Australian Labor Party) Share this | Hansard source

If Australia is to reap the benefits of the Asian century, we need to engage proactively with our region. The Indo-Pacific, our geostrategic sphere and our immediate sphere of economic influence, is going through a fundamental change. As the epicentre of world growth and political power shifts east, we are seeing our region grow at an unprecedented rate. The Asian century is already upon us and, over the coming decades, countries in our region will become more wealthy and more powerful.

The Asian century spans further than just China—by 2050 our region will be home to 10 of the 25 biggest economies in the world. While there is frequently much talk about the growth prospects of China and India, in a few short decades Indonesia, Japan, South Korea, the Philippines, Thailand, Vietnam and Malaysia will all be amongst the biggest economies in the world. The Professor of Strategic Studies at the Australian National University, Hugh White, outlines the change for Australia's geostrategic environment starkly, noting that only 20 years ago Australia's economy was as big as China's, bigger than India's and bigger than the whole of the Association of Southeast Asian Nations put together.

How things have changed. How things have changed in the past 20 years and how things will change even more drastically over the next 20. In two decades from now, two-thirds of every dollar of wealth created globally will come from our region. If we are to be competitive, if we want to increase our standard of living and if we want to reap the benefits of the growth of our region, we must engage with this change. We must be more open, connected and engaged with our region than we have ever been before in our history. This is not beyond us. In our history Australia has been at the centre of some of the most successful international institutions and we have been able to shape the international sphere to our advantage.

We were influential in the foundation of the United Nations and played a key role in the establishment of APEC, the APEC leaders' forum, and the G20. These institutions have played a major role in seeing economic growth in our region and across the world. As a middle power, we have an interest in ensuring that economic growth continues in our region. We also have an interest in promoting increased economic integration with the countries of the Indo-Pacific. However, there are major constraints on our region's ability to grow, and in order for our region to grow and become more prosperous over the coming decades it needs infrastructure. The scale of the infrastructure needed in our region is enormous. The infrastructure gap in our region is estimated at approximately $8 trillion between 2010 and 2020 alone. The immediate 'hard' infrastructure needs come in the form of roads, railways, ports and harbours, telecommunications and electricity grids. However, there is also a range of equally important 'soft' infrastructure components that are needed, such as policies and regulations that ensure hard infrastructure investments are sufficiently efficient and cost effective.

There is a new emphasis on trade, regional economic cooperation, interconnectivity and collective action on public problems in the Indo-Pacific. The region's ability to sustain high growth rates calls for huge investments from government, the private sector and non-governmental organisations to be facilitated by multilateral institutions. Without the implementation of both hard and soft infrastructure, the world's fastest growing region will be stunted, causing countries' domestic productivity to decline, undermining international competitiveness and halting efforts to alleviate poverty. The Asian Infrastructure Investment Bank will help fill that void, and assist governments and the private sector in funding the major projects throughout Asia that our region needs to continue to grow.

This multilateral development bank is a significant moment in Asia's recent history. The bank is, at its heart, a poverty alleviation institution, and has the potential to boost infrastructure investment in our region by more than $100 billion. The Asian Infrastructure Investment Bank will focus on investment in productive sectors in Asia, including energy and power, transportation, telecommunications, regional and rural infrastructure, agricultural development, water and sanitation, environmental protection, and urban development. The bank will work with, and alongside, existing multinational development banks on infrastructure investment in Asia.

Apart from the establishment of a specific infrastructure investment institution for Asia, an admirable development in itself, the Asian Infrastructure Investment Bank also signifies another important development—China's intent to engage positively and openly on the international stage. For years countries have encouraged China to play a larger role in assisting with development and engagement. The Asia Infrastructure Investment Bank has been multilateralised, and power has been shared across its members. This is a far cry from a unilateral investment bank acting as a tool to advance Chinese geostrategic national interests.

Some critics stress that there are still unresolved issues relating to the transparency and governance of the bank, and that Australia should not have agreed to be a part of it until those questions had been answered. Others have argued that the money should have gone into existing institutions, such as the World Bank, the IMF or the Asian Development Bank. There are also arguments, emanating predominately from outside Asia, that the Asian Infrastructure Investment Bank is a signal of Chinese expansionism, and that this institution will use projects to leverage Chinese geostrategic objectives. I do not agree with the validity of these arguments. It goes without saying that institutions of this size need sufficient oversight and governance arrangements, and that transparency is essential to the legitimacy of such institutions. While I have faith in other existing institutions active in the region, such as the World Bank, the IMF and Asian Development Bank, they have not evolved in a way that is coping with the demands for infrastructure in our region. There is space for another multilateral institution to help fund the infrastructure investments necessary to allow the Indo-Pacific to continue to grow steadily.

While there is little argument about the chronic need for infrastructure to facilitate future growth in the Indo-Pacific, some have concerns over how this can be addressed by a new organisation without the institutional knowledge and history necessary for such a monumental task. This is a further argument for Australian involvement in this institution. Countries like Australia need to take a lead role in establishing these institutions, drawing on our significant capacity-building skills and governance expertise. This calls for more collective action in our region, not less—something that the Asian Infrastructure Investment Bank overtly calls for. The bank is intended to encourage regional and non-regional membership, and many of Australia's allies in the region, and throughout the world more broadly, threw their support behind the bank some time ago—nations include the UK, New Zealand, South Korea, Germany, France, Italy, India and Singapore.

Australia was invited, very early on in the piece, to be a founding member of the bank. We could have had a very significant influence from the outset on developing the bank's core philosophy, principles, policies, value systems and operating platform. However, the dithering and stalling of the Abbott government has left us stranded on the starting line. This bill, in many ways, is another example of the model of 'good government' used by the Abbott government—a cabinet divided between those distracted by the nonsense on stilts of the Anglosphere and the more sensible elements in the government who understand the need to engage in our region, and that Australia's future lies in the Indo-Pacific, and most specifically in South-East Asia.

The deadline for founding membership had to be extended, and even then Australia just scraped in. This is no way to engage in the international arena. Waiting for other countries to lead, while we take a back seat, is not the way to advance Australia's interests in a rapidly changing region. It sends the wrong message. It says that Australia is not a confident middle power in the Indo-Pacific with an independent foreign policy and interests of our own to pursue. If we want to be seen as leaders in the region, we simply have to lead. Labor has been calling for Australia to sign up as a founding member of the bank for many months now. But for reasons not clearly expressed in the public arena, members of the government, cabinet and the National Security Committee argued, stalled and leaked against each other until it was too late to for us to have a meaningful impact on the early development of this bank.

There are obvious advantages to membership of a development bank of this kind. We could have played a part in shaping the institution from its inception. This is an institution that will enable our region to grow and prosper, but this government shrugged its shoulders and walked away. It has been an embarrassing display from the government, but a decision-making process that has become sadly familiar in the months since. It should not have been surprising that the government has been found wanting in the international arena—not willing to engage, and displaying dismissive aggression when faced with criticism. The Abbott government has trashed Australia's relationship with our nearest neighbours, excluded itself from the regional solution to the Rohingya refugee crisis and cut foreign aid to the tune of $11.3 billion. We should have expected that a government with this record would cut off its nose to spite its face and decline to be part of an institution that would be of benefit not only to the people of our region but to the Australian national interest as well. It was embarrassing that the Minister for Foreign Affairs and Trade and the Prime Minister were actively campaigning in the cabinet and the National Security Committee to make sure that Australia was not one of the first to sign up to this bank. I am encouraged that the more moderate of the Liberal Party—the few that are left—were able to turn them around. But, sadly, this is illustrative of the kind of dysfunction that reigns at the highest levels of this government. They have to be dragged to get to a position so obvious that governments, NGOs and business throughout the region are united in supporting.

When the government first announced it would not be joining the bank from the outset, former Prime Minister Paul Keating said what many in Australia were already thinking:

The government's decision to decline founding membership of the Chinese-proposed Asian infrastructure bank is the worst policy decision the government has taken since assuming office.

It is the worst because of the far-reaching implications and consequences of deciding to have nothing geo-economically to do with China at a time when China is prepared to step up to greater responsibilities in the region.

Luckily, after months of indecision and infighting, the Abbott government will formally sign up as a founding member. The reasons for joining then were just as convincing as the reasons for joining now, and Labor has been actively campaigning for months for the government to change its position. It is unclear what triggered the change of heart inside the government. However, the logic has been strong throughout. When the Treasurer recently defended the expenses accrued by the previous Speaker by flying around Europe campaigning for the presidency of the Inter-Parliamentary Union, he said:

When we're part of international organisations, no matter what they are, it is good for Australia to take a leadership role.

Surely that logic must have applied here, too, on this much more significant piece of institutional infrastructure. Not only should we be part of the Asian Infrastructure Investment Bank; we should follow the Treasurer's advice and take a leadership role. This is especially the case when the institution's intention is to support much-needed infrastructure development and the bank has been welcomed both by governments and by businesses managing ever-expanding regional and global supply chains.

It is perplexing that the discourse has revolved around who will join the bank as opposed to what the bank will do, because this bank really could have a revolutionary impact in our region. The modus operandi will be lean, clean and green: lean, with a small and efficient management team of highly skilled and staff; clean, with zero tolerance to corruption and nepotism; and green, with an emphasis on sustainability. We should support the Asian Infrastructure Investment Bank because when we are making choices about the kind of global citizen Australia wants to be we need to be thinking about playing a leadership role in our region.

In the previous government Labor commissioned an Asian century white paper, which sought to critically analyse global and regional trends and make long-term leadership commitments in response. Those decisions were political, economic and social and sought to take a long view of history and our region. There is still a copy of that document in my office, but the paper is becoming increasingly hard to find on the internet as the government has sought to purge it from the discourse—sent it down the memory hole. That says a lot about this government and its attempts to stifle the conversation about Australia's role in the region, our obligation to engage and our national interest in engaging.

Australia's future prosperity will correlate with the future prosperity of our neighbours and our region. Put even more simply, we rely on our neighbours' wealth for our own. As the countries of the Indo-Pacific region continue to become more economically entwined, this will only intensify. We can no longer put our hands over our eyes and ignore the changes going on around us. We need to adapt to the changing nature of our region. The Asian Infrastructure Investment Bank offers immense possibilities for our region. As a country that relies on a strong and prosperous region for our own prosperity, we should support it and engage in shaping its future mission. I commend the bill to the House.

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