By strengthening and deepening the Indian-Australian relationship, both countries can apply the lessons learned to engage better with the rest of Asia.
As the keynote speaker Corrs Partner and CEO John W. H. Denton addressed The Australia India Youth Dialogue.
Click 'text version' to read John's speech.
“At best the family teaches the finest things human beings can learn from one another—generosity and love. But it is also, all too often, where we learn nasty things like hate, rage and shame.” – Barbara Ehrenreich, U.S. essayist and author
Good morning young leaders of India and Australia. It’s an honour to be here delivering the kick-off speech for the 2014 India – Australia Youth Dialogue.
Barbara Ehrenreich’s quote gets to the heart of my message today. Family is often used as a metaphor in international relations: ‘a family of nations’, our brothers in arms, ‘fraternal relations’ and who could forget: ‘big brother’. Family is of course a critical element of South Asian politics. The Dynasties abound: The Ghandis, the Bhuttos, the Rahmans and the Zias in Bangladesh and the Rajapaskas in Sri Lanka. Why is ‘family’ as a framework for discussing international relations so useful: because in a family, you don’t have to agree on everything, but you have a bond and commonalities that can be the basis of a broader deeper and enduring relationship.
Family is ultimately about sharing those commonalities and working towards the best possible relationship, in spite of moments of disagreement or difficulty.
Whatever the make-up, or personalities in your family, you are related and connected by a special bond.
I think we can talk about ‘India’ and ‘Australia’ and ‘family’ in the same sentence – we share a common language, democratic institutions, a respect for the rule of law, we were both colonised by the same colonial master, we both have world-class higher education systems, and, most importantly, we both love cricket! Especially when we beat the Brits. We also share the same birthday so to speak – January 26th – Australia Day and India’s Republic Day, when your constitution came into force.
Beyond India and Australia, the rest of Asia is also enjoined in a series of familial relationships. Relationships that need to be cultivated if they are to grow.
While the initial ‘familial’ connection is there, both India and Australia have a lot of work to do to ensure our bonds with each other are strengthened
And we both have a lot of work to do with the rest of Asia.
As young leaders from various backgrounds, you bear this mantle of responsibility on your shoulders. And through your ongoing efforts, you will lead the strengthening and deepening of the relationship between our two countries, as well as with other countries across Asia.
I’d like to begin by discussing Australia’s approach to engaging with Asia, including India, as laid out in the recent Australia in the Asian Century White Paper, which is helpful in thinking through Australia’s engagement with India - and could serve as a model for India’s engagement with the rest of Asia. As you know India is in fact undertaking an exercise of exploring India herself in the Asian Century – a direct result of the success of the Australian white paper in sparking a national conversation.
By strengthening and deepening the Indian-Australian relationship, both countries can apply the lessons learned to engage better with the rest of Asia.
Then I would like to highlight three areas where you, as young leaders, can strengthen and deepen the Indian – Australian relationship, and in turn, the relationship with the members of the Asian family. These three areas are: firstly, in supporting frameworks that facilitate Investment and Trade; secondly, through Technological and Scientific Collaboration; and thirdly, through People-to-People Exchanges or Second-Track Diplomacy.
But before that, I’d like to discuss the Australia in the Asian Century White Paper, which was designed as a roadmap for broadening and deepening our relationships across Asia, including with India. I am proud to have been a co-author of this paper.
The White Paper sets out five broad areas Australia as a country must address to maximise its engagement with the Asian Century:
In the context of the White Paper, there is much room for growth in the Indian and Australian relationship. The White Paper identifies India as one of the five key regional nations that are most important to Australia. China, Japan, South Korea, and Indonesia are the others. India, along with China, is seen as an immediate priority. The White Paper also raises Hindi to the level of a priority language to be taught in Australian schools, along with Chinese, Japanese, Indonesian and Korean.
The White Paper is honest about the opportunities and risks that could affect the Indian–Australian relationship as India continues its rise, but the White Paper’s most important function is to serve as an aspirational guide for Australia to build a broader and deeper relationship between the two countries, as well as with the rest of Asia.
Importantly, the leading commentator tony walker of the AFR went so far as to ascribe to the white paper importance in framing a discussion about how Australia manages its relations with the region, not simply as a transactional issue such as how much financial benefit can be extracted, but to ask to what extent can integration may be possible without compromising our values and alliance relationships.
The White Paper could also serve as a useful guide for India as it seeks to encourage a national dialogue on how to build broader and deeper ties with the rest of the Asia.
In terms of specific areas in which the Indian–Australian relationship can be broadened and deepened I would argue, the first is through investment and trade.
I want to begin with investment because it’s the weaker of the two links. Trade is increasing, having risen from A$3.3 billion in 2000 to more than A$17.4 billion in 2012. Trade will continue to increase as long as the Indian economy continues its long-term growth trajectory contentedly (with some hiccups along the way) and economic reforms further open up the economy.
I’ll get back to trade in a second, but now I really want to focus on investment.
In global terms neither country is a big outbound investor. I think it’s an issue best addressed jointly.
There are major opportunities for India to attract investment through open and sensible economic policies while joining the Asian and global supply chain. Australia should be at the forefront of that process in both business and policy discussions.
India has already demonstrated through its world-class information technology companies that it understands the importance of outbound investment as a way of benefiting from globalisation. For example Indian IT companies have invested heavily in a country like Poland to service customers in Europe, the U.S., and Canada.
Interestingly, Infosys has one its largest sites outside of India in Lodz, Poland to service its clients. In addition to Poland, Infosys is also making big investments in China.
Infosys is just one example. Other Indian companies like Wipro and Tata Consulting Services also invest beyond their national borders and think like global corporate citizens. The rest of India, Inc. should take a lesson from these companies and seek outbound investment opportunities that will expand the Indian corporate footprint around the world and of course lead to more growth at home. Outbound investment should be helped along by government policies that facilitate such investment. Capital controls don’t help.
India also needs to open up to domestic foreign investment and create a more business-friendly environment. Such policy reform will bring in new technologies, know-how, and connect Indian industry to the supply chains in Asia. Openness to foreign investment will help create jobs and make Indian industry more competitive.
Australia can also take advantage of India’s large and growing educated and English-speaking demographic through increased investment in India. Australia’s investment stock in India, with 1.2 billion people, stood at A$5.8 billion at the end of 2012. By contrast, Australia’s investment stock in Malaysia, with only 29 million people, stood at A$7.9 billion at the end of 2012. I don’t need to do the math for you, but any way you look at these numbers, there is tremendous potential for Australia to increase its investment in India.
Another way to think about the potential for investment growth is that Western economies account for around 65 per cent of the total stock of Australia’s investment overseas. Japan receives another 3 per cent, China clocks in around 2 per cent and the rest of Asia, including India makes up another 6 per cent.
One way to increase bilateral investment and trade is to complete negotiations and sign a Comprehensive Economic Cooperation Agreement (CECA) between the two countries. The Agreement would facilitate a legal and political framework that will increase investment and trade.
By addressing tariff barriers and behind the border restrictions, trade in goods and services will increase. The comprehensive Economic Cooperation Agreement would encourage more investment by reducing barriers, improving transparency, and strengthening investment protections.
Both countries have been negotiating this agreement since May 2011. It has been more than two and a half years, and completing the process should be a high priority for the governments of both countries.
As young leaders from both countries with a vested interest in seeing more freedom in the flow of goods, services, people, and investment, you should raise your voices and work with other leaders directly responsible for completing these negotiations to keep political focus on the Agreement. It’s a way to ensure that negotiations stay on track.
In addition to signing a bilateral Agreement, both countries should also play a more active and constructive role in multilateral economic arrangements like the Regional Comprehensive Economic Partnership (RCEP).
In November 2012, leaders from ASEAN and their six regional free trade partners agreed to start negotiating the RCEP. The six ASEAN partners are India, Australia, China, Japan, South Korea, and New Zealand. The partnership would encompass more than three billion people with a combined GDP of approximately US$17 trillion accounting for nearly 40% of world trade.
At the moment, certain RCEP parties have insisted on a pressure valve in the form of what I can only describe as an unhelpful clause that allows for “flexibility” including “provision for special and differential treatment . . . “ for certain countries. In my opinion such flexibility clauses will work to undermine the effectiveness of the RCEP as countries will seek to opt out of certain provisions of any final agreement.
In line with domestic political pressures. This will then turn the RCEP into a weak framework.
Simultaneously as the RCEP is being negotiated, a different regional free trade agreement is also being hammered out - the Trans-Pacific Partnership (TPP). The TPP includes the United States, Australia, Canada, Japan, New Zealand, Malaysia, and Singapore, among others but does not include China or India. Unlike the RCEP, the TPP seeks to impose strict standards governing intellectual property rights, financial services, sanitary standards for food, and the environment, while promoting freer and more open trade and investment among its members.
India and Australia are involved in negotiations for the RCEP, while Australia is involved with the TPP and India is obviously studying the implications of joining the TPP.
Regardless of who joins what free trade agreement, both India and Australia should work to ensure that neither agreement ends up as sub standard and chokes growth in the region. Both countries should work to ensure that the RCEP and TPP work in tandem to ultimately create an Asia-wide free trade area instead of the two agreements competing against one another and running afoul of domestic politics that could irrevocably hurt free trade and investment and strain the familial bonds that join the nations of Asia together.
Before I move on to the next area in which India and Australia can strengthen relationships, I want to give you an example of an area where more investment and trade would be beneficial to both countries.
Infrastructure is an area in which both India and Australia can benefit from increased investment and trade. Infrastructure would greatly aid Indian internal connectivity and significantly lift the country’s growth potential - as well as connect India better to the global growth engine of East Asia, potentially through Myanmar.
Infrastructure is all-encompassing, referring to everything from roads, ports, and airports to the power grid and to warehousing facilities. The OECD splits infrastructure assets into two main categories: (i) economic infrastructure and (ii) social infrastructure. Economic infrastructure includes transport, communication, utilities, and renewable energy projects. Social infrastructure includes education, health, security, and other facilities like parks.
According to India’s 12th Five-Year Plan, approximately US$1 trillion will be needed in infrastructure investment.
This number is astronomically high, and it means there is a lot of potential for investment and trade between India to help realise India’s infrastructure needs.
Other countries like Japan are already working to make it easier for India to get funding for such projects by extending official development assistance (ODA) loans. India is one of the largest recipients of Japanese ODA. The Delhi Metro is one of the highest profile projects funded by Japanese ODA with 60% of the capital investment for phases I and II of the project funded by the Japan International Cooperation Agency. Japanese ODA is also funding the Bangalore and Chennai rail projects, as well as numerous expressway and urban development projects.
India has a real need for significant infrastructure investment and Australia can bring world-class expertise and financial resources to carrying out its plans.
Australia’s superannuation funds represent the world’s fourth-largest pool of pension savings. As pension funds require higher returns to cover rising future payouts, securing long term infrastructure investments represent an excellent way to diversify pension funds’ portfolios.
Canadian pension funds are way ahead of the curve and of Australia with some of these funds allocating more than 10% of their portfolios to equity infrastructure.
The Australia Government ‘Future Fund’, which is used to meet the government’s pension liabilities for retired Australian civil servants, allocates 98% of its infrastructure portfolio to projects in developed markets. This concentration is occurring as the Fund has increased its Infrastructure and Timber allocation from 5.9% to 8% as of September 30th, 2013. There is a lot of room for the Future Fund to increase its exposure to infrastructure projects in India and the rest of Asia, especially as the Fund and other pension funds continue to seek out higher returns.
Australia’s expertise in executing projects and establishing public-private partnerships (PPPs), as well as novel ways of funding infrastructure projects and creating less burdensome processes to get projects completed, would all be useful to India’s government as it seeks to tackle this country’s massive infrastructure needs.
The potential economic corridor running from India to China, through Myanmar, will be constructed through investment and trade. It will connect India to Southeast and East Asia and has the potential to bring major benefits to the whole region, including Australia.
Through RCEP, bilateral free trade agreements, and concerted public and private sector participation, including facilitate government policies, this corridor could become a reality. You, as young leaders, will be some of the major beneficiaries of such an interconnected region.
3Please make it a priority in your future advocacy plans.
The second area through which we can advance our relationship is through more technological and scientific collaboration.
You as a generation best understand the importance of increased collaboration in the areas of technology and science by virtue of your active involvement in start-ups, dealing with intellectual property matters, building water resource management systems, utilising the media to get your messages across to a wider population, and building networks of young innovators and entrepreneurs.
More needs to be done to increase the number of opportunities available to young leaders like yourselves and others to set up cutting-edge enterprises and conduct ground-breaking joint research that will continue to push the boundaries of innovation.
The Australia–India Strategic Research Fund (AISRF) is an excellent example of the potential for collaboration between scientists in India and Australia. The fund is Australia’s largest such fund dedicated to bilateral research and one of India’s largest sources of support for international science.
We need to create more ties between the public and private sectors to ensure that the best and brightest from both countries innovate collaboratively.
Government funding is important to kick-start such collaboration and innovation, but the private sector becomes crucial in guaranteeing such activity continues to grow and flourish.
Venture capital can play an important role in perpetuating this collaboration and innovation. Since 2006, 42 venture capital firms based in the United States have either opened offices in India or opened separate Indian units.
Some good news here is that Indian venture capital firms like Blume Ventures and Unilazer Ventures, both in Mumbai, are providing much needed capital to start-ups that could become the next Google, Facebook, or eBay. The Indian Private Equity and Venture Capital Association (IVCA) has been working since 1993 to advance the private equity and venture capital industry in India. However, given the still relatively nascent start-up industry in India, venture capital firms will remain more focused on seed investments until more Indian start-ups reach a point of critical mass. Governments at all levels need to nurture this sector now in order to reap benefits later.
Another source of collaboration and innovation will come from joint research initiatives between Indian and Australian universities. The Indian Institute of Technology Bombay and Monash University in Melbourne established the IITB – Monash Research Academy in 2008 to tackle the “grand challenges” facing India and Australia.
The Academy has established industry and research partnerships with Australian and Indian companies including BHP Billiton, Infosys, Reliance Industries, and Tata Consultancy Services. The first four graduates received their joint – PhDs in August 2013 and have undertaken research in areas as diverse as improving carbon dioxide sequestration to developing a corrosion-resistant polymer coating for aeronautical applications. The Academy currently has 130 students and is aiming to grow to 300 in the next few years.
Increasing the number of tie-ups between Australian and Indian universities, more government support, and attracting more private sector involvement through venture capital funds and companies will all be crucial to the bolstering of technological and scientific collaboration and innovation.
Mitigating the effects of climate change is one area that would benefit greatly from more technological and scientific collaboration and innovation.
Climate change is a global problem, but in the G20, Australia and India are among some of the most vulnerable to climate change.
Rising sea levels, the increased occurrence and severity of natural disasters, deteriorating water resources, increased emissions, and reduced biodiversity will have a major impact on the region’s populations.
Even under the most conservative scenarios, climate change has the potential to seriously threaten the way of life in India and Australia in a way that will profoundly affect future development.
Both countries are working together in certain areas to address the threats of climate change.
The Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia’s national science agency, and its equivalent in India, the Counsel of Scientific and Industrial Research (CSIR) have teamed up in a A$6 million partnership to improve the processes involved in producing DME, which can be used as an alternative to liquefied petroleum gas (LPG) currently used in homes. Such a ‘switch’ would go a long way to reducing both countries’ reliance on imported petroleum products, while producing less pollution.
I would recommend reviving the Asia-Pacific Partnership on Clean Development and Climate (APP), which was a voluntary, public-private partnership among nations including India, Australia, the U.S., and China, among others. The APP was created to cooperate on the development and transfer of technology that would enable the reduction of greenhouse gas emissions consistent with United Nations and other international covenants.
The APP was an excellent example of public and private sector collaboration and innovation. However, the APP and many of its projects formally and quietly concluded in April 2011. We let a forum where China and U.S. could come together with India, Australia, and a host of other nations to discuss mitigating some of the effects of climate change just evaporate. We should be supporting existing and encouraging the formation of new arrangements that can bring together key stakeholders in fighting climate change.
In the absence of the APP, more public and private sector involvement is necessary to spur collaboration and innovation in fighting the negatives effects of climate change.
Companies like Tansa Clean, an Indian start-up seeking to reduce water pollution in India by making human waste valuable, and Zenogen, an Australian clean tech company that has come up with a way to make zero-emissions products commercially viable, are examples of the innovation taking place in both countries.
Favorable government policies and some private sector seed money, along with financial and technical private sector help, will ensure that collaboration and innovation flourish in the fight against climate change.
This notion of collaboration and innovation across different levels of society brings me to my third area, which is one the most important for deepening and broadening the bonds between India and Australia, as well as relationships with the rest of Asia – more people-to-people exchanges and second-track diplomacy.
Informal and no-so-informal exchanges such as yours are part of second-track diplomacy or the ability of the private sector and individuals to influence the future priorities and directions of a country’s policies.
Joseph Montville, the U.S diplomat who first coined the term in the 1970s, said through second-track diplomacy “citizens could take some action rather than simply being bystanders while the grown-up governments acted like jerks."
While very direct in his language, Montville has the right idea. Second-track diplomacy empowers citizens at all levels of society to have an impact on their countries’ foreign relations.
As young leaders, you are all integral to the execution out of second-track diplomacy. You will have opportunities to not only take part in debates on ‘the issues of your time’ through forums like the AIYD, but you will also be looked upon and expected to shape future debates in India and Australia, as well as figuring out how to bring the Asian family closer together.
Religious organisations, NGOs, educational institutions, sport, and all the other actors in civil society have the potential to play a major role in second-track diplomacy.
As Sam Almaliki knows from working at Cricket Australia, sport can bring people together and engender engagement across both demographics and geography. Dr. Richard Downey, a British bishop, once said, “If Stalin had learned to play cricket, the world might now be a better place.” Sport, including cricket has the ability to build linkages across society where none existed before.
But it’s not only sport that has the monopoly on building such linkages.
Higher education is a great avenue through which to increase people-to-people exchanges.
Both India and Australia have world-class institutions of higher education. India’s engineering colleges, the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) are world-renowned. India has 25.9 million students enrolled in higher education, the second highest number in the world.
Australia also has a number of premier institutions of higher education recognised globally, including the University of Melbourne, the University of Sydney, and Australian National University.
Increasing the amount of two-way traffic between Indian and Australian institutions of higher education is one of the best ways to promote greater linkages between the two nations and strengthen the familial bond. Indian students currently make up approximately 10% of the nearly 347,000 international students in Australia. This number is poised to grow as Australian universities continue their outreach efforts to attract students from India and the rest of Asia.
However, there is much work to be done in getting more Australian students to study in India.
While a good sign, it is telling that 400 Australian students going over to study in India is big news. As part of the Australian Department of Education’s AsiaBound program, these students will spend up to six months studying in India. This number pales in comparison to the nearly 35,000 Indian students studying in Australian institutions of higher education.
The New Colombo Plan launched in December 2013 by the new Australian government is an important initiative. It is currently in its pilot phase, but when the Plan is fully implemented in 2015, India should be one of the many Asian destinations in which Australian students can study for up to a year. The Plan is an important step towards building more two-way linkages between Australia and India, as well as the rest of the Asian family.
There are three components to the plan that take Australian student engagement with the rest of Asia to the next level.
First, the mobility of Australian students has become a top policy priority that is raised by the Australian Prime Minister and Foreign Minister as they traverse the region.
Second, the New Colombo Plan draws from the expertise of both the Department of Foreign Affairs and Trade and the Department of Education, a collaboration that should increase its effectiveness.
Third, the Plan makes a point of bringing in the corporate and non-profit world through internships and mentoring programs being set up across the region for those awarded a chance to study abroad.
The New Colombo Plan is a good step towards building stronger and deeper relations with India and the rest of Asia, but it’s only one small part of the great potential for vibrant second-track diplomacy throughout the region.
I would be remiss when talking about deepening and broadening the relationship between India and Australia, as well as the other members of the Asian family if I did not go back to sport for a second.
Much has been made about the rivalry between India and Australia on the cricket pitch, but that rivalry has the effect of bringing the fans of the sport from the two countries closer together.
Beyond cricket, the Australian Football League, also known as “Aussie Rules”, has expanded to India. Goa hosted the second Aussie Rules national championship last month with six teams vying for the OGM Cup. The tournament was sponsored by OGM, a Perth-based mining company and the RP Group, a Kolkata-based conglomerate.
Not only is the burgeoning success of Aussie Rules in India an excellent example of sport bridging nations, but highlights the role that business and other non-state actors can play in carrying out second-track diplomacy.
Taking a step back, second-track diplomacy can be used to make progress on a range of issues that are of interest to both India and Australia, as well as the rest of the members of the Asian family. Many of the other areas ready for cooperation between India and Australia, such as climate change, investment, trade, technological innovation, and scientific collaboration would benefit tremendously from the efforts of second-track diplomacy and increased people-to-people linkages.
In the next few days, the 30 of you will discuss a broad array of topics that affect directly the relationship between India and Australia, from business ties to vocational studies
To the role the media plays in our democracies. While the governments of our two nations play a role in determining the level of cooperation between us, many of the topics you will cover during the Dialogue will benefit most from the connections you make here and subsequently how you decide to build upon these linkages.
Thinking about second-track diplomacy from this perspective.
We will see the exchange of people, ideas, knowledge, goods, and services occurring on many levels across broad swaths of society. Most importantly, these exchanges should continue regardless of any disagreement between the formal governments of our nations.
Working to increase people-to-people exchanges and relying more on second-track diplomacy will only help develop the ties between India and Australia, as well as with the rest of Asian.
As you’re formally engaging in sessions over the course of the Dialogue or sharing an informal moment over dinner or in the halls between sessions, I want you to remember that in families not all relationships are easily navigable and sometimes we encounter roadblocks that appear insurmountable. But the permanent familial bonds that bring us together are stronger than temporary disagreements. As in our families, the ultimate goal should be to work to deepen and broaden the ties that bind.
Families also grow and change over time. As young leaders from India and Australia, you are now responsible for making sure that relationship grows in a way that brings the two countries closer together.
India and Australia can together build a stronger family that will be better able to welcome new family members from all across Asia.
Australians and I believe Indians interests go beyond just a healthy Indian–Australian relationship they extend to a prosperous Indian Ocean Rim that is integrated into the broader Asian region and global family. As Barbara Ehrenreich reminds us, family relationships are not always easy and the way forward may be rocky at times as we grow closer together. However, you, as young leaders, are integral to growing and bringing not only India and Australia closer together, but the entire Asian family.
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 Click here to read Jack Ewing, “Midsize Cities in Poland Develop as Service Hubs for Outsourcing Industry”, The New York Times, 22 December 2013.
 Click here to read Rohit Sinha and Geethanjali Nataraj, “Regional Comprehensive Economic Partnership (RCEP): Issues and Way Forward”, The Diplomat, last checked 13 January 2014.
 Click here to read Regional Comprehensive Economic Partnership (RCEP) Joint Statement [from] The First Meeting of Trade Negotiating Committee, 10 May 2013.
 Click here to read Rohit Sinha and Geethanjali Nataraj, “Japanese ODA stimulates Indian infrastructure development”, East Asia Forum, 18 June 2013.
 Click here to read “Pension Funds Investment in Infrastructure A Survey”, OECD, September 2011 ().
 Click here to read Douglas Appell, “Infrastructure Investors Skirting Asia”, Pensions & Investments, 11 November 2013.
 Click here to read Douglas Appell, “Australia's Future Fund adds equity, infrastructure to power nearly 15% gain”, Pension & Investments, 23 October 2013.
 Click here to read Oliver Milman, “Climate change study finds Australia suffers more than most G20 countries”, The Guardian, 30 September 2013.
 Click here to read Charles Homans, “Track II Diplomacy: A Short History”, Foreign Policy, 20 June 2011.
 Click here to read “Chinese students come back to Australia”, 15 January 2014, last checked 16 January 2014.
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