Address to the Japan-Australia Business Co-operation Committee
Ladies and Gentleman,
The close friendship between Japan and Australia has grown stronger with every year.
And it was, of course, Prime Minister Abe’s grandfather who paved the way for our modern relationship.
Prime Minister Kishi was the first Japanese leader to visit Australia, when he negotiated the Japan-Australia Commerce Treaty with Australia’s Prime Minister Robert Menzies.
These two leaders showed courage, and vision, to bind up the wounds of history and lay the foundations of trust which enabled the great iron ore mines of the Pilbara, and the coal mines of Queensland to provide the energy and steel which created modern Japan.
By the late 1960s Japan had become Australia’s largest export market, a status it held for more than 40 years.
And while the economic bond is now so well established that it can seem like old news, it’s worth noting that in the decade to 2014 the value of Australian exports to Japan doubled to $50.4 billion.
Australia remains key to fuelling the Japanese economy, supplying nearly two-thirds of its coal, three-fifths of its iron ore and one-fifth of its LNG, with LNG projected to rise to a two-fifths share in the next few years.
And I believe Japan’s commitment to innovation and technology can continue to inform and inspire the next chapter of the Australian economic story, as we transition from a resources boom, a resources investment boom, construction boom, to the Ideas Boom. To the era where the economy, all of our economies are founded on innovation on the most valuable capital, our human capital.
But first I want to emphasise the breadth of Australia’s partnership with Japan.
In 1976 Australia and Japan signed what has become known as the Nara Treaty - the Treaty of Friendship and Cooperation - dedicating our two nations to ‘enduring peace and friendship’.
That commitment has not wavered in forty years.
Our shared values and common interests led Prime Minister Abe and Prime Minister Howard to sign the Australia-Japan Joint Declaration on Security Cooperation, in 2007.
In my first meeting with Prime Minister Abe - at the G20 held in Turkey, in the shadow of the terrorist attacks in Paris - we discussed and confirmed our shared commitment to democracy, freedom, the rule of law, and human rights.
We recognised then, as we do today, that here in the Western Pacific we have seen the most rapid economic growth in human history. Today, already, half of the world’s middle class live here - in our region.
Our prosperity - Australia’s, Japan’s and all the countries in our region - depends on the continued maintenance of peace and harmonious relations which in turn is founded on a commitment to and compliance with the rules-based international order.
Every nation, every citizen, has benefited from this long period of relative tranquility. Some nations have grown faster than others. But all have prospered including our own.
Any actions, regardless of their motivations, which add to tensions, which disturb that harmony, will damage all our economies.
In this light, in Australia we have been heartened to see the leaders of Japan, China and the Republic of Korea recently meeting to build stronger bonds of trust and security.
Bilaterally, the Australian Defence Forces and Japan’s Self Defence Forces have worked together in providing humanitarian relief in the aftermath of devastating cyclones Haiyan and Pam in the Pacific.
Australia helped transport Japanese peacekeepers to Sudan in 2013.
And this year, for the first time, Japan joined Australia and the United States for joint exercises in Operation Talisman Sabre.
In September Australia welcomed the passage of Japan’s peace and security legislation.
And just last week Australian, Japanese and United States participated together in Operation Christmas Drop in the Pacific, bringing toys, food, clothing and educational material to remotes islands in the Pacific.
Prime Minister Abe was right when he told our Parliament last year that our two nations should walk forward together with ‘no limit’.
I look forward to strengthening our special strategic partnership in our conversations today.
But we also have differences. Australians were deeply disappointed to learn that Japan had resumed whaling in the Southern Ocean this year. The whaling issue is one of the very few cross currents in an otherwise entirely positive and mutually beneficial relationship.
But it is a sign of the strength and maturity of our partnership that we can talk about concerns like this frankly and respectfully as good friends should.
Ten days ago I launched a National Innovation and Science Agenda which is designed to ensure Australia’s successfully transitions from the resources boom to the ideas boom - based on our best resource, limited only by our imagination and commitment, the intellects and enterprise and imagination of 24 million Australians.
This is a very auspicious context in which to visit Tokyo.
Japanese firms are renowned for driving continuous improvements in manufacturing and production, constantly refining and improving processes and operations.
After meeting with the leading chief executives this morning, and just a few minutes ago, I can see why Japan is home to 40 of the world's top 100 most innovative companies, more than any other nation, according to the latest survey by Thomson Reuters.
And after touring the innovation museum Miraikan [Mee-rai-kaan] with the teacher, scientist and astronaut Mamoru Mohri, I can see why Japan’s patent output as a share of GDP is the highest in the OECD.
I also had the memorable experience of shaking hands with ASIMO, one of the most advanced robots ever created. I took a cell phone, a selfie of myself and ASIMO, and he seemed not at all upset about it, he seemed very welcoming. A very charming and courteous robot indicating the great courtesy that you’d expect from any 14 Japanese boy - which is apparently his age.
Anyway, Japanese robotic technology is being combined on a larger scale with the imaginative leadership of great Australian companies to push the frontiers of innovation.
At a lunch recently I sat next to the head of Rio Tinto’s iron ore division, Andrew Harding, who told me how his company has been working with Komatsu to build the world’s largest fleet of autonomous trucks.
The navigation systems on these trucks are so precise - that they are outperforming their conventional, manned, counterparts by 12 per cent.
Rio Tinto has also deployed autonomous drills that have cut costs by 8 per cent. Next year, they’ll complete an automation retrofit of 190 locomotives. These freight trains, each with three locomotive engines, 2.4 km long, will be the largest and heaviest robots in the world.
Elsewhere, grain farmers in New South Wales are trialling a self-steering tractor, controlled by Japan’s Quasi-Zenith Satellite System.
Australian and Japanese defence technology organisations are working together to model marine hydrodynamics.
And our universities have hundreds of research partnership agreements, including new ones we signed just today, while more than 1000 students have come to Japan under the New Colombo Plan. A really visionary program developed and established by our foreign minister, Julie Bishop.
The flow of ideas and inspiration is by no means one way.
Just ask Eddie Jones, who masterminded the Japanese Rugby team’s spectacular victory over the Springboks in this year’s World Cup.
Or visit Bendigo, in Victoria, where Australian workers build the Bushmaster mine-resistant armoured personnel carriers, four of which have been acquired by the Japanese Self Defence Force.
Or look at the Australian company Mesoblast, which last month became the first foreign company to have a stem cell therapy approved for inclusion on Japan’s National Health Insurance scheme.
Innovation, super-powered by the Internet, enabled by open markets, is transforming our world. New jobs, new industries, new products.
The changes are exhilarating, the opportunities have never been greater, and I’m so thrilled to see so many Australian and Japanese innovators, scientists and technologists, working closely together at the very edge of the technological frontier.
Innovate or perish
Now, a nation’s GDP is the product of population, participation and productivity. The three “Ps”.
So how does Japan’s economy grow in the face of declining population? It works harder with participation and productivity.
The number of working aged Japanese has fallen by 1.7 million since mid-2010, and yet those actually in work has risen by around one million.
How? Nearly all of the increase has been through the entry of women into the workforce.
Mr Abe is as determined as I am to see greater gender equity in the workplace.
The rise of female participation, advances in automation, and dynamic global production chains shows how an economy can adapt to demographic declines.
We both recognise that a key, an absolutely important key, to greater female participation in the workplace is ensuring that women do not have to choose between work and family - our recent childcare reforms in Australia are designed with that goal in mind. Ensuring that women are able to be mothers and continue in the workplace, ensuring they can balance work and family, is not simply good for the economy, it’s not simply good for the dignity and the life of the women and their children and their husbands and the nation: it addresses both. In the developed world, birth rates are highest in the countries where female labourforce participation is highest.
It may seem counter-intuitive but it’s a fact.
So the better that women can balance work and family, the more women will work, the more women will participate in the workplace, and it makes it more likely they will have children and ensure the birth rates are at a sustainable level.
Now, Japan’s per capita GDP growth rate - the economy as it is experienced at the level of the individual, the one level that really matters - has outpaced Europe’s over the first 15 years of this millennium.
Over the past decade it has fallen only a fraction short of the United States (0.5 per cent per year in Japan compared with 0.6 per cent in the US).
More broadly, looking at quality of life, Japanese homicide rates are less than one-tenth of the OECD average. Income and wealth inequality is among the lowest in the world. Japan’s public transport systems, life expectancy, and cultural amenity are up there with the very best, if not, the best.
It’s easy to lose sight of how well Japan is coping with its economic challenges. It’s never been a more exciting time to be in Australia. In Australia, we are filled with optimism. And Japan has every reason to be filled with excitement and optimism too. And you know for our own part, a lot of people have said the mining boom is subsiding, terms of trade have dropped, commodity prices are down, things are going to be very tough for Australia.
This is our 25th year of uninterrupted economic growth, longer than any other advanced economy.
Export prices have fallen for our commodities but volumes are rising and new opportunities are opening up. As many as 340,000 jobs have been created in the past year alone. As a politician, I am appropriately sceptical of all statistics, particularly polling statistics. So one should look for long term trends rather than short term numbers. Businessmen and women know that too. We have seen unemployment decline in Australia in the latter part of this year.
For another part, we are the most successful multicultural nation in the world. And, we are a genuinely multicultural nation. We have people, Australians, from every country in the world. We are an immigrant nation, a multicultural nation, that is in our essence. In my own city of Sydney alone, nearly a third of the population were born outside of Australia, and we have achieved that with remarkable harmony relative to anywhere else. There is a lot for Australians to be proud of, there is a lot for those who do business with Australia to be confident in - our prospects, our future, our dynamism, our economy.
The fastest growing markets are right here in this region.
Already, last year’s Japan-Australia Economic Partnership Agreement is delivering big returns. The value of beef exports is up by a quarter. I have to disclose that my wife and I own a cattle property, so we are very pleased by that, it’s extremely good. Cheese, table grapes and wine have also fared especially well.
Japan is also a crucial source of investment, illustrated by, among other things, Japan Post’s recent acquisition of Australia’s Toll Group. (The stock of Japanese investment in Australia is estimated to be $174 billion).
And we are both founding members of the world’s most ambitious regional trade agreement, the Trans Pacific Partnership, which promises to drive further economic integration, growth and opportunity across the Asia-Pacific.
The TPP takes aim at 21st century trade barriers that many of us did not know existed, such as “data protectionism”, which is becoming a concern for our resource companies as they analyse terabytes of data from automated operations around the world.
Just as we promote the right of free movement across the skies, and across the open seas, both our countries are working to preserve the freedom to explore, share and capitalise on new ideas.
Our National Innovation and Science Agenda is a statement of how we approach the world: minds open, embracing change, and backing talented Australians with great ideas.
It is about fostering a culture of optimism, dynamism and entrepreneurship to drive new jobs, higher wages and growth.
And we recognise the key insight that Japan has always known - our greatest assets are our people.
But we must work harder to embrace innovation to stay competitive, and I know Prime Minister Abe feels the same. Like Japan’s ‘third arrow’ of structural reform, we need to deepen competition and provide more reward for imagination and effort.
Perhaps most importantly of all, we have to make the right calls on innovation, to get the great ideas flowing and to get those great ideas to market.
The innovative companies of contemporary Japan are drawing upon a great tradition that traces back at least a hundred and fifty years.
Time and time again Japan has thrived upon adversity, and will do so again.
I’m told that one of Prime Minister Abe’s intellectual heroes is the famous 19th century teacher YOSHIDA (Yo-shee-da) Shoin, who helped to spark the Meiji Restoration.
Yoshida risked his life in an unsuccessful attempt to stow away on board Admiral Perry’s ship, in 1854. His motivation was to acquire knowledge. He wanted to learn from the culture and technologies of foreign countries and encourage innovation and progress in Japan.
With Japan on the brink of emerging internationally after hundreds of years of isolation, Yoshida knew that the best way to deal with change was not to resist it, but to embrace it. He saw that change offered opportunity not threats.
To acquire the skills and knowledge needed to survive and thrive in the new, disruptive and exciting world that Japan was boldly re-entering.
The journey to modernity which Yoshida helped inspire came from that courage.
But the spirit of brave inquiry was embodied in Prime Minister Abe’s grandfather, building bridges to Australia in the 1950s, and it is present in Prime Minister Abe.
The oil shocks of the 1970s promoted a culture of efficiency and innovation in energy supply, epitomised by today’s hybrid and electric cars.
Australia’s world-leading scientists and researchers - in biotech, agricultural science, or solar energy - have much that they can work with in Japan.
It is no surprise that Japanese firms are leading the fight against global warming. They’re already leading the field of hybrid and electric cars, and Mr Abe believes that they can increase the battery life of their ultra-long life batteries by five times.
As your Prime Minister told the Paris Conference of the Parties just a few weeks ago: “The key to acting against climate change without sacrificing economic growth is the development of innovative technologies.”
We didn’t compare notes beforehand, but if we had, it wouldn’t have changed either of our speeches because they had a lot in common - recognising the key to a low carbon world is found in more innovation, more technology and more science.
Today, like Yoshida in the prelude to the Meiji Restoration, and Prime Ministers Menzies and Kishi in the 1950s, we are once again standing on the brink of a brave new world.
There has rarely been a time in which technology has been so disruptive and the opportunities so great.
Few partnerships have been as fruitful as the one we continue to experience between our two countries.
A strong Japan is good for our region, as is a strong Australia.
There has never been a better time to be investing in the friendship between Australia and Japan.
In the wise words of Yoshida, the great 19th Century teacher:
jikko naki mononi; saykoh nahshi - to succeed, we must act on our ideas.
Thank you very much.