Australian Government coat of arms

Prime Minister of Australia

The Hon Malcolm Turnbull MP

Remarks to US Chamber of Commerce Breakfast

19 January 2016

Washington DC

Prime Minister


Well thank you very much, Myron, for that very warm welcome. And can I second the praise you have rightly bestowed on our Ambassador, Kim Beazley. Kim finishes six years of remarkable service here together with his wife Suzie, they have been extraordinary representatives of Australia here in the United States.

For all of the 33 years Kim has served in public office – as a member of parliament, as a Minister of Defence, Communications, Finance and other portfolios, as Leader of the Opposition and Leader of the Labor party, and now for six years as Ambassador here, for all that time, Kim Beazley has been a passionate advocate and loyal supporter of the Australian-American Alliance.

Kim has understood that deep in our respective DNAs there is the same commitment to freedom, to  the rule of law, to respect for the individual, for enterprise. We share the same values and that is why, again and again, we are on the same side in the struggles that will determine the future of the world and the prosperity, the security for our children and grandchildren.

Kim and Suzie have been great pillars of that Alliance while here and I want to as the Australian Prime Minister, acknowledge them again here for their remarkable service.

I should also note that John Berry has been a wonderful United States Ambassador in Australia - his charm, his charisma, his infectious sense of humour quickly endeared himself to Australians. The American Ambassador is a very important part of the United States representation anywhere in the world and America is obviously very well known to Australians, we are very close. So for an American Ambassador to make such  an impact so quickly, it takes a very charismatic individual and John and Curtis have done that remarkably well during their time as Ambassador in Australia.

Now let me talk about the future, and why we should be optimistic. I know it's easy to be gloomy, particularly when you've got a contested election going on, it always promotes a bit of anxiety.

But let me say to you, the United States has every reason to be filled with optimism and enthusiasm for the future.

We live in the most exciting times in human history. The pace of change has never been so rapid. We have seen remarkable changes in our lifetimes that would have been unimaginable a few generations ago.

Forty years ago, when I first came to the United States, China was barely a participant in the global economy, barely engaged. Today, it is the world's second largest economy. Some people say it is already the largest - it will no doubt be the largest in due course.

But what an extraordinary transformation. Hundreds of millions of people lifted out of poverty there, but not just there, consider the extraordinary progress in Indonesia, and I acknowledge the Indonesian Ambassador there. Remarkable growth in the economy there, doubling of GDP per capita. You see that right thought East Asia, through the subcontinent.

We are seeing a transformation in world affairs, which is driven by, supercharged by technology. It is supercharged by the digital technology, which was in large part imagined, developed, created, here in the United States.

It's not so long ago that people were saying America, it was all over. It was in inexorable decline. The digital world, the modern digital economy driven by technology was imagined in the United States. The United States leads in that digital world, not by force of power, but by force of innovation, by force of imagination, by a force of intellect.

And so the message really is this: if we in Australia, in the United States in developed countries, if we want to maintain our high wage, generous social welfare net first world economies, then we have to be more innovative, more entrepreneurial. 

We have to look at volatility and disruption, and treat it as an opportunity rather than as a threat. We have to make volatility our friend.

And that is why when I became Prime Minister I quickly launched a new Innovation policy for Australia. Because I know that the jobs of our children, our grandchildren, will be underpinned by the most important capital - which is human capital.

So we need to be more innovative at every level. We need to do more coding, more science in schools, we need to get our universities collaborating more with industry. We need to collaborate across borders and we will be announcing our further collaboration between our peak health research institutes between America and Australia in the course of the day today.

But all of that requires, in many respects, a change of culture. It requires a move away from excessive deference; it requires a move away from the attitude that says we've always done things this way, and a fear of doing things differently.

Right across the board, innovation is the key to our success, and to your success. It is the key to America's success. And that is why when we come to America, and I felt like this 41 years ago, and I still feel like that today, I'm always energized by the enthusiasm of this country - by a new world constantly reimagined by entrepreneurship, and innovation.

Now, let me say a little bit about some of the dark clouds that Myron mentioned earlier. A sluggish world economy, he talked about China.

Well, China is going through an economic transition. It has had an economy that has been driven for many years now by – deliberately by government policy - been driven by investment and by exports, but above all, by investment.

There has been a process of financial repression where, in effect, householders have been disadvantaged, they've been getting negative real interest rates, in effect subsidizing the investment sector in particular, development companies generally related, or connected to local governments, state owned corporations. 

And this is clearly been unsustainable, it has been identified as unsustainable by the Chinese leadership for many years, at least two 5-year plans ago, a rebalancing was called for. Wen Jiabao spoke very cogently about it in 2007.

But along came the Global Financial Crisis, and of course China reacted to that with a massive stimulus, which of course we were great beneficiaries of. Many commodity exporting countries like Indonesia were great beneficiaries of that, because of course, there was, from our point of view, China was buying the makings of steel, iron-ore and coal. Prices ran up enormously as always is the case. The supply response came and now of course the investment boom has to slow down, because there becomes a limit to how long you can keep on investing in a directed economy and a government directed economy, without creating more and more unsustainable levels of debt, and without destroying more and more value.

So this rebalancing has to happen. It is overwhelmingly a good thing. It's obviously not good for the price of iron-ore or coal, but nonetheless the volumes remain high and as more of the GDP of China, more of China's wealth finds its way into Chinese households, they will become like households in the United States or China, much greater consumers.

And so we're seeing in Australia, considerable growth in our export industries, our export sectors, exporting to China. Tasmania, our smallest state, which has had a tough time economically for a very long time, is seeing real growth, really substantial growth now driven by this Chinese consumer demand. And that of course has been underpinned by a China-Australia Free Trade Agreement, which our Government has recently concluded.

So my point about China simply is this - yes, you are seeing an adjustment, these adjustments are never as smooth as you would like. It's not like a racing car driver changing gears, there's going to be some clunky-ness about it, some fits and starts. 

But overwhelmingly this is a change that had to happen. It was always going to have to happen, the can has been kicked along the road for political reasons and circumstances for a long time and as that adjustment occurs, I have no doubt it will be good for China and good for the rest of the world.

It will be good for America, because all of the services, whether it is education, whether it is entertainment, all of the high end manufactured goods that Chinese consumers will seek to acquire will be supplied from all around the world - from Australia and of course in large part from the United States, so this is a very big opportunity for us all.

Now let me turn now to the question of free trade more generally, and I know that TPP is a controversial issue in this city - it is a very political issue and far be it from me to give advice to other politicians, although as a politician I can say everyone gives politicians advice - it's the one thing we receive in abundance.

But I'd simply say this – the TPP is a very critical part of America's continued presence in the Asia- Pacific. It is a very important element in the maintenance of the United States as the credible, strong, consistent enduring guarantor of the rules based international order. It sets a very high bar. It encourages countries to reform.

I've mentioned the Ambassador from Indonesia a couple of times, I'm not picking on you, Sir, but Indonesia is a very good example. A charismatic, reforming President - President Jokowi - obviously seeking to deal with vested interests, strong vested interests, as is always the case with economic reform.

The TPP offers a powerful argument in his armoury to argue for reform because he can say, and his very capable Trade Minister Tom Lembong, would say exactly the same, 'Look the Vietnamese have entered into the TPP, they're going to get all of these advantages, if we don't get on-board we'll be left behind'.

And so the pace of opening markets, of ensuring that you have greater transparency, better transparency for business, for investors, stronger rule of law, all of those things that are absolutely critical to the peace and stability the United States has underwritten in our region for so many years, all of those things need to be built on and the TPP is a key part of that.

Now I know there will be economic analysts that will say the TPP will only add a very small percentage to a given countries GDP, to our GDP or America's GDP. Well, without being unduly critical of economists, I think often they miss the things that are hard to measure.

And what is significant is the stability, the prosperity, the growth of which I spoke in our region, which is unprecedented in human history, could not have occurred without the strong position, the strong presence of the United States.

The United States – Pax Americana –has underwritten that growth and everybody benefited, every country in the region – China, India, Korea, Japan, Australia, Indonesia – every country has benefited from that. But that needs to continue to be worked on, and the TPP is a critically important part of that.

Now, some people will say 'Well, you open markets even just a little bit more, who knows what will happen'. What an extraordinary counsel of despair, really.

You know, standing back and as a good friend of the United States and as Myron said, somebody who has been familiar with this country and been involved with the United States for most of my life,  It is remarkable to see, to imagine why Americans would ever be fearful of open markets.

You know, the United States has created globalisation. The United States, the ingenuity, the entrepreneurship of American companies has created the Digital World. The technologies that supercharged this prosperity were written and directed in the United States. There is, everywhere else in the world where people are concerned about globalisation; they are concerned about the United States. Why would Americans be afeared?

Americans should be so proud of what they have achieved. So proud of the prosperity their commitment to freedom, to open markets, to rule of law around the world has delivered. And so confident, that as those markets are opened, their businessmen and women, their entrepreneurs, their scientists, their engineers will be able to compete with the best – and outpace most of them.

The reality is, the TPP offers opportunity to the United States. There is very little at risk from freedom for such a strong, innovative economy as this.  And there is so much to gain in our region because I say to you that the more we can tie the economies of our region together – the more connected they become, the more transparent they become, the stronger and more reliable the rule of law is in each country, the more of that interdependency – the greater the cost of anyone seeking to disrupt them.

The TPP is important for the world, it's important for our region, it's important for America, it is critically important as a vital building block in ensuring the ongoing stability and prosperity of the Asia-Pacific, and that is the driver of the global economy today.

There is already, already over a third of the world's middle class living in East Asia. It won't be long before there is more than half living there. That is where the growth is coming from and America, a great economy, a continental economy that looks both to the Atlantic and the Pacific, a Pacific economy, and America will be a great beneficiary from that.

So, when I'm speaking to some of your legislators later today I'll be encouraging them to support the TPP. Not to lose sight of the wood for the trees, not to get lost in this detail or that detail or that compromise, because the big picture is: the rules-based international order, which America has underwritten for generations, which has underwritten the prosperity and the economic growth from which we have all benefitted, the TPP is a key element in that.

So thank you very much for coming to hear me today. We're very confident of the future in Australia.  We've got good jobs growth, we've weathered the decline in commodity prices, the decline in our terms of trade, our economy is adjusting well.

Yes, there are some challenges ahead, but I believe the world offers such opportunities. These are the greatest opportunities of our time. Change is always exciting. Volatility is a time of opportunity, not something to be afeared of.

And you know, the only limits of what we can achieve in my country and indeed in yours – the only limits - are the limits of our imagination and our enterprise, and I believe that Australians and Americans have an abundance of both.

Thank you very much.