I acknowledge the traditional owners of the land on which we meet, the Gadigal people of the Eora nation, and acknowledge elders past, present and emerging.

We thank them for the stewardship of our land over 40,000 years.

I want to acknowledge my colleagues here today:

• Jason Clare, Shadow Minister for Trade and Investment
• Matt Thistlethwaite, Shadow Assistant Minister for Treasury
• Tim Watts

All three are strong advocates of greater engagement in our region.

And I thank the Committee for Sydney for hosting this event.

A little over a year ago, I gave a speech outlining the importance of promoting deeper economic engagement with Asia to a Shorten Labor Government.
I argued that Australia needs a step change in our economic relationship with Asia.

Not tinkering, not gradualism, but a fundamental whole of government, indeed whole of nation, effort to deepen and broaden our engagement with Asia.
As the Shadow Treasurer, I will always have a particular focus on the importance of our economic engagement with our neighbours. But it is of course broader than that.

As my colleague Penny Wong elucidated earlier this week, our FutureAsia framework is also a comprehensive and confident plan for advancing Australias national interests and contributing to the prosperity, stability and security of the region.

Last year on behalf of Labor, I announced FutureAsia, a framework of policies promoting deeper engagement. We announced a number of policies then and indicated we would continue to announce more, and we have done so.

I also indicated that as Treasurer in a Shorten Labor Government, I would provide annual updates to Parliament on progress in implementing the policies and ensuring we are accountable for progress.

We dont want FutureAsia to sit on the shelf. Another worthy, yet unimplemented attempt to improve Australias economic success in the Asian century.
It is in that vein that I report and update you today, a year on from our original announcement, on what we have done since and what is next on our FutureAsia agenda.

But before giving that detailed update, Ill spend a few minutes on the why of Labors approach.

Labor sees deeper and broader engagement in our region as a vital ingredient for economic success.

Our 27 years of recession free economic growth will not continue without steps to improve our access to bigger markets. And we need to improve the quality of that growth as well.

I detect a certain complacency in our economic and political debate.

Yes, weve been through tough times but we have continued to grow and now our budget is on track to return to surplus so, Bobs your uncle.

But such an approach is nave. I dont want to appear downbeat because I am an optimist about our economic future: but only if we get the policy settings right.

While the mining boom is over, our terms of trade remain 40% above pre-mining boom levels.

And one thing that is completely out of our control is our terms of trade: we cant assume they will remain high.

We have the second highest household debt in the developed world and we are exposed in the event that the current international economic environment sours.

And while our headline growth figure over the last three decades has been impressive, we shouldnt be kidding ourselves that we couldnt be doing materially better.

Over the last six years, household incomes and living standards have really been in stand still.

Since mid-2012 real net national disposable income per capita a good measure of Australians living standards has not grown at all.

And productivity growth, the key to future living standards is in worse shape now than just a few years ago.

Australias open and flexible economy was built on the back of the hard reforms in the 1980s and 90s, reforms that put in place the foundations for the three decades of growth weve now endured.

The rise of Asia presents challenges and opportunities.

We all know about the opportunities.

Our location in the world used to be seen as a liability that we were too far from the engines of global economic growth.

But the tyranny of distance has been replaced with the power of proximity.

Almost nine in 10 of the next billion middle class consumers will be Asian[1].

To put this in perspective, if we can access just 1% of this growing middle class, its the equivalent of accessing a market the size of Sydney and Melbourne combined.

In the next 15 years, four of the worlds five largest economies in purchasing power parity terms will be in Asia: China, India, Japan and Indonesia.[2]
And of course, as the economies grow and the middle class grows, private consumption is jumping enormously.

Some estimate the middle-class markets in China and India in 2030 will account for $14.1 trillion and $12.3 trillion, respectively, comparable in size to a U.S. middle-class market at that time of $15.9 trillion.

This represents both a challenge and an opportunity.

I mean no disrespect to the hardworking sales and management teams of our resources sector when I note that the investment phase of Chinas growth in particular meant that high demand for our resources against a fairly limited gene pool of international competitors in many instances.

But now, as the economies transition to a more consumption and services heavy mix, Australia is just another one of scores of economies competing for business, and we are increasingly going to have to win that business on the back of our skills, understanding, competitiveness and commitment.

Our services exports to China are now greater than those to the United States and the United Kingdom combined[3].

Nearly one in every 5 dollars earned from our exports of services is from China.

There were 1.4million visitors from China to Australia, up from around 400,000 a decade ago, with Chinese tourists typically spending more per head than other tourists.

But, as I say now is not the time to be complacent. It is the time to build on what we have done and take it very much to the next level.

What weve done so far

We see our FutureAsia framework as establishing a coherent narrative that guides us and future governments for many years to come.

Twelve months ago we announced our initial down payment of FutureAsia policies.

Restoring funding to important organisations like the Asia Education Foundation so they can continue their good work advocating for better language and literacy capabilities.

Recognising the lamentable lack of Asian business and language literacy at the board level in Australia and announcing measures to better mentor potential directors with that experience to ensure that ASX companies can get the Asia capable talent they need to grow and prosper in our region.

And measures to build and energise linkages with our Asian based Australian diaspora community our world wide web of influence and ideas that can help Australian businesses connect into networks to gain the knowledge they need to expand and grow.

And weve added to this offering.

Just last month my colleague Jason Clare and I announced measures to help us tap into the vastly growing middle classes in India.

• Support-in-principle the 10 priority recommendations of Peter Vargheses Indian Economic Strategy
• Hold Annual Australia Week in India trade missions, focussing on the 10 sectors and 10 states identified in Vargheses Indian Economic Strategy. At the moment, trade missions to India are held only every two years.
• Work with the Indian Government to establish a reciprocal internship program to allow recent Australian graduates to help build the Asian business capability of young Australian professionals.

With India set to become the worlds third largest economy with a population of almost 1.7 billion people over the next two decades, the payoff could be substantial.

And last week, Tanya Plibersek and I outlined our approach to growing Australias Asia relevant capabilities.

Literacy central to FutureAsia

Growing Australias Asia relevant capabilities starts not at university, but ideally, many, many years earlier.

But we are not doing anywhere near well enough.

ANZs most recent Asia survey made it clear that for businesses potentially looking to enter Asian markets, the biggest barriers indicated are lack of knowledge and limited language capabilities for developing business relationships

If we want our children to have the skills that businesses are going to need and want to grow and expand into new markets, then Asia capabilities are a necessary condition for success.

What weve seen in recent years is nothing short of alarming.

In 2005, 1524 NSW students did Chinese in their HSC.

By 2015, despite their being 12,000 more year 12 students, that number was 832.

Only 153 were studying it as a second language[4].

I have a little party trick I engage in when speaking to audiences about how well we do as a country in Asian language literacy.

How many Australians, I ask, who are not of Chinese heritage can speak Mandarin to levels of business competence. A thousand, some people say. Five thousand maybe? Hopefully, some say 10,000 out of our twenty-five million people.

The correct answer is one hundred and thirty. And thats at most. And most of them are older than 55.

And its not just about Mandarin of course.

More Australian school students studied Bahasa Indonesia in school in 1972 that do so today, despite of course the school population being so much bigger.

And university after university has closed their Indonesian language faculty due to poor enrolments.

Other countries get it. South Korea has embarked on a major national initiative to educate more Indonesian speakers.

For Australia to be going backwards while other nations are going forward is a travesty.

There is no bright spot: whether it be Japanese or Hindi, Indonesian or Cantonese and Mandarin, we are doing really, really poorly.

Of course, its not just about learning a language.

Its about understanding the culture and the history.

Steve Cox, Managing Director Dymocksput it quite aptly when he said recently that What I would like to see students coming out with at the end of their high schooling years is that understanding of the cultural views the things that have driven societies, their belief systems, so that when you meet and you do business with somebody who is Chinese, you may not be able to speak Mandarin, but you understand some of the cultural nuances of how you communicate and what they are hoping to achieve and what you are hoping to achieve."

What we know is that its not necessarily a problem in the curriculum.

Australias school curriculum has a cross curriculum priority the Asia and Australias Engagement with Asia priority.

But there are not enough schools prioritising.

A recent Asia Education Foundation surveywith a small cohort of school leaders engaged in a project to develop global citizenship in the context of Asiain their schools found that:

• 94% rated their professional learning in global citizenship as Low; and
• 83% rated their schools achievement of including content or connections from Asia in the curriculum as Low.

We need to do better.

This is exactly why last week Tanya and I announced range of measures to build up Asian literacy and languages in our schools.
This includes:

• Establishing an Advisory Council on Asia Capabilities that will be headed up by experts from academia, the education sector, business, and not-for-profits to drive research and generate new ideas to boost teaching and learning about Asia across all levels of Australias education system;

• Offering up to 100 scholarships a year for native language speakers in Australia and for top-performers in priority Asian languages in year 12 to study teaching qualifications;
  
• Improving Asian languages curriculum materials from pre-school to year 12;
  
• Set ambitious targets and goals for Asian languages through COAG and non-government schools; and
  
• Getting the foundations right by generating nationally comparable data on the uptake of Asian languages in Australia and so we can track how many schools are using Asia related aspects of the curriculum. If you dont measure it: you cant improve it. What we measure is a sign of what we value. But we are currently not even measuring our progress with Asia capabilities.

And, in my view, most importantly of all: Putting in place a nationwide Asia Capable Schools program that will help drive a sustained whole of school change assisting and supporting 5000 principals and schools leaders better understand the economic forces occurring in our region and what kind of a workforce future businesses will need.

None of this will be easy. Improving our low levels of Asian language literacy is a big cruise ship to turn around.

But we also know this: Not trying is a guarantee of failure. Without serious government leadership we will continue to skim along the bottom, unserious about our levels of literacy and engagement.

Growing our exports is not just about FTAs

Of course, deepening economic engagement in our region is not just about lifting Asia relevant capabilities in our schools, as important as this is.
We need a whole of nation effort in government, in universities and across business.

The Liberal partys approach to economic engagement in our region is to sign trade agreements, dust the hands and claim victory.

Signing trade agreements can be good. If properly designed they open doors to new markets and lower the costs of doing business.

But its not the only driver.

If signing FTAs was the answer, then there wouldnt be 9 out of 10 ASX 200 companies not adequately equipped to do business in Asia.[5]

If signing FTAs was the answer, then we wouldnt have businesses looking to enter Asian markets citing the biggest barriers as lack of knowledge and limited language capabilities for developing business relationships.

If signing FTAs was the answer, then despite a population of 650 million, and growing by 7 million a year and nominal GDP at USD2.7 trillion, ASEANs trade share with Australia would not have stagnant in recent years.

In fact, the latestAustralian International Business Survey (AIBS)shows onlysevenper cent of businesses surveyed identified FTAs as a key reason for choosing their first overseas market.

We know that businesses that are exporting to Asia are typically doing better.

The 2018 ANZ Opportunity Asia Report highlights that 26% of businesses surveyed indicated that profit margins from Asian operations were much higher than their Australian operations.

Businesses that are producing premium, high quality goods and services for key markets in Asia are paying dividends.

This is why we dont need to just up our Asia language capabilities, but also grow our Asia relevant business capabilities.

Growing our economic relationship with Indonesia

And its why today, I can announce two further initiatives that will strengthen our ties with our closest neighbour, Indonesia.

Our relationship with Indonesia is one of our most important.

From Australias point of view the growing Indonesian Middle Class and the fact that Indonesia will be the worlds fourth biggest economy by 2050 means that our economy will benefit from much closer economic engagement with this growing economic power which is such a near neighbour.

With a population of more than 260 million, Indonesia remains outside of our top ten trading partners.

We do more trade with New Zealand, a country with a population one fiftieth of Indonesia.

It would be remiss of me to make abundantly clear that we make economic relations with Indonesia one of our key priorities.

Jason Clare and I have already announced a number of measures in relation to Indonesia, with an aim of cracking the ceiling and putting Indonesia in our top ten trading partners for the first time.

But it will take a big effort. I can announce that we will, if elected, will deliver a new independent Indonesia Economic Strategy.

We would use the Varghese report into our relationship with India as a blueprint.

The Varghese Report is a good one. It is a pity that hasnt received more attention and commitment from the current Government.

But more than that, we see it as a useful blueprint for the key market of Indonesia.

It sets out a road map and the economic opportunities that exist between our countries.

It is the most detailed report so far identifying the complementarities of our two economies, giving the Australian business community an idea of where the opportunities might lie and how best to pursue them.

We will use this report as a template to setting out the opportunities and challenges that lie ahead for Australia and Indonesia, commissioning an independent report inspired by the Varghese report, but focused on Indonesia.

This brings me to the second initiative I want to announce today.

We need to ensure we have people in leadership positions that are capable of developing stronger business ties with Indonesia.

AsiaLink released a report in August titled Match Fit: Shaping Asia Capable Leaders which found that just 14% of Senior Executives of ASX 200 companies had Asia capabilities.

There are alarmingly low levels of Asia capability on Australian boards and senior leadership teams, with 90% of ASX 200 companies and 82% of the top 30 private companies not adequately equipped to do business in Asia.

More work is also required to build the Asian business skills of young Australian professionals.

My colleague Jason Clare has already announced that a Shorten Labor Government would pursue an agreement with the Chinese Government for young Australian professionals to gain commercial experience in China.

And I can announce today that Labor will also pursue an agreement with the Indonesian Government to allow young Australian professionals to gain commercial experience in these markets by undergoing internships in these countries for up to six months.

A program that would allow 1,000 Australian nationals and 1,000 Indonesian nationals to intern in Indonesia and Australia respectively.

An Indonesia Economic Strategy, together with seeking out a new internship program with our closest neighbour to build Asia business and knowledge capability are just two additional measures that add to our growing suite of ways we will seek to grow our economic footprint in our region.

Of course, these new initiatives expand our FutureAsia offering and come on the back of Bill Shorten and Penny Wongs important initiatives announced earlier this week, such as establishing a new category of geo-economic counsellor across our diplomatic network, and establishing four new diplomatic posts in the Indo-Pacific region, with a new post in Indonesia a top priority.

Conclusion

In conclusion: this is a long road. But a necessary one. We cant solve these challenges overnight.

But we need to put in place the foundations now.

The Australian economy has experienced nearly three decades of prosperity.

But its unclear how we can prosper for another three decades unless our economic and broader relationship with Asia goes to a new level.
The stop start approach to Asia engagement cannot go on.

We need a sustained whole of government and business effort to lift our Asia capabilities.

And a future Bill Shorten led Labor Government will do its part and more, with deeper and closer engagement with Asia as an important element of our economic policy.