 Good afternoon my name is Jeff Garrett. I am Dean of the Australian School of Business at the University of New South Wales in Australia. In the US business schools tend to be small boutique MBA factories in Australia. They're industrial scale operations. I have 15,000 students in our business school. It's an enormous pleasure for me to be here this afternoon not only in this beautiful building but also right next door to the University of California DC Center where 30 students from the US Study Center are currently studying. As I used to say to them when I tried to convince them to come while your friends are tanning themselves in the beach in Sydney you can be freezing your ass off in Washington which is exactly what they're doing today and I think loving it. This is normally the graveyard shift in any in any conference but this afternoon we've got not only a juicy subject matter but an incredibly talented panel so I'd like to try to get out of the way as quickly as possible. Let me just set the scene with a couple of observations. The first one is that if you're talking knowledge economy and innovation Australia and the US there's a lot of feel-good stories out there. I think all Australians know that Australians tend to be over represented in the most innovative parts of the United States, Silicon Valley, Hollywood and Wall Street. It's also true that American innovation is adding massive value to the Australian economy at the moment. Not only I think Alan Gingel mentioned companies like Chevron and the extraordinary investments and technology investments they're making in the mining sector but also companies like GE and IBM really adding to the knowledge economy down under. But there are some challenges on the table, challenges that I'm sure our panellists will be more than happy to rise to. Big question in Australia is what happens after the mining boom? Everyone says that Australia is a smart country but it's been a lucky country, better endowed in natural resources than almost anywhere else on earth for a hundred years. Can it really transition from being a lucky country into a smart country? In the US the US obviously has been the world's leader in innovation for a hundred years, certainly 50 years, maybe a hundred years but is that really coming to an end? Can you base an entire economy on 20 something Facebook billionaires who don't employ very many people if the US is coming back as a manufacturing power? Is it doing it because of innovation or is it doing it because labour costs are low and energy is really cheap in the United States? These are big questions above all of course, I think this has also been mentioned, one perennial challenge with the knowledge economy is where are the jobs? Does it really help us after the financial crisis if corporations have learnt they can do more with less, that is they can be more productive with fewer employees? Big challenges on the table for the Australian economy, the US economy where knowledge is concerned, what have we got as a panel? Well at the far right, certainly geographically today, I don't think ideologically is Australian communications minister Malcolm Turnbull. It's all relative of course Malcolm I think. Malcolm has enormous responsibilities in the Australian government at the moment, not least of which is trying to roll out while lowering the costs of something called the national broadband network, a pretty ambitious plan set in place by the former labour government to do either fibre to the home or fibre to the node for 97 plus percent of Australian households, pretty tough when a lot of those people live a very long way from any metropolitan area. Of course Malcolm as many of you know has a very distinguished career before entering politics, among other things I was thinking when it comes to knowledge economy are being a very successful internet entrepreneur and creating and then selling a company called Aussie Mail, I thought a very clever name for an email company in Australia more than a decade ago and he also was the head of Goldman Sachs in Australia. At a personal level Malcolm and his wife Lucy who's with us today have been incredibly wonderful supporters both of the US study centre and of me personally since I returned to Australia in 2008 and I don't think I've had a chance to thank Malcolm publicly for allowing my daughter to interview him on privacy and national security matters because not only is Edward Snowden in the news but Malcolm represented a guy called Peter Wright a long time ago in Australia when the British government was trying to constrain the publication of a book called Spy Catcher. So Malcolm thanks very much for being with us. Jumping over one seat Robert Thompson is currently the CEO of News Corp. He's previously managing editor of the Wall Street Journal before that he was editor of The Times in London. I've certainly benefited enormously from listening to Robert and asking Robert questions and visits that Malcolm Binks the chairman of the US study centre and I have taken to New York and of course I always love seeing Robert because I'm of an age where somebody who looks like a tall version of Elvis Costello is always a wonderfully edifying experience for me. I don't know Jason Furman personally but by God he's got a fantastic pedigree. I was saying to him in the waiting room that Harvard economists have have been chairman of the Council of Economic Advisers for the President often. I think the first one was Paul Samuelson maybe not but also Jason's PhD advisor Greg Mankiew held that office and of course Jason has been involved in economics and politics in the US since before he was born it seems from his CV working in the council, staffing the council in the Clinton administration and then being an economic advisor for Barack Obama since the very beginning which I presume was probably about 2006 or something like that. So it's fantastic to have the chairman of the of the CEA with us. Last but certainly not least you probably can't tell at the moment why I might introduce John Daly as hop along. John is the CEO of the Gratton Institute in Australia. Australia's leading think tank which really holds government to account by doing fact based analytic work on all public policy issues. John is the founding CEO of the Gratton Institute. He happened to have an accident, tough life as it is in Aspen recently. So there are some crutches somewhere near the stage. We've agreed in advance that with a talented panel like this what I need to do is get out of the way and let them do their stuff. Malcolm Turnbull is going to speak first. I think we're going to go across this way. Malcolm first, Jason second. Robert will follow up with whatever's on his mind and then I've asked John to do if any more provocation is required to add some more provocative thoughts and I hope then we can integrate all of you into what I'm sure will be an extraordinarily fascinating, edifying and entertaining last panel of the day. Malcolm Turnbull. Thank you. Thank you very much, Jeff. And can I just say how honored I am to be invited to speak here today, the CSIS, this great forum organised with the US Studies Centre, which as you heard earlier, Jeff was the inaugural director and of course Bates Gill, its current director is here today and of course as with CSIS organised this. It's a very distinguished room. I learnt long ago that you should be very careful about making acknowledgments because the people you acknowledge accepted as their due. The one you overlook bears you a grudge for the rest of their life. Nonetheless, nonetheless, we do have some very distinguished people here. Jeff Bleich, the former American ambassador in Australia and he and Becky still very much missed. Of course, my former colleagues, Robert Hill and Brendan Nelson, former defence ministers, no less. And of course, Kim Beasley, another former defence minister and currently the Australian ambassador in Washington is here too. And with that, I will just say in the words of a great Australian sportsman, I love yous all. Now, I'm going to talk, I'm going to talk to you about the internet and in particular some of the issues we face in Australia, but the issues we face globally. But let me paint the big picture. Throughout all of our lives, except those that are extremely young, there has been a competition and a limited supply of platforms. Initially, there were newspapers, then a handful of licensed television stations and radio stations, then cable television or pay television and so forth. But these were all platforms, both for the delivery of content and above all for the delivery of the lifeblood of that content advertising. And then along came the internet. And the internet is in reality the Uber platform. The Uber platform that overwhelms all of the rest. And as its functionality and capacity has improved, its threat to the rest of those platforms gets greater and greater. Robert obviously is running what is in large part a newspaper company and he knows very well, we were looking at some slides earlier and he was complaining that there was one flipping up on my iPad that showed, for example, that right now in the United States, all advertising revenues online has 42.6% print, all of print has 7.7%. Think about it. I remember many years ago getting an offer from Bob Maxwell, no less, in the suite imperial of the Ritz Hotel in Paris, $850 million for the Melbourne age. I don't think, I'm trying to think, is it worth 10% of that today? Probably not, probably not even that much. But even television has fallen behind online. And of course that domination of the one hyper platform, the Uber platform, is set to continue in large part because of these. The domination of smartphones, the revolution, as we were hearing earlier today, of the fact that in this country 62% of Americans have access to a smartphone in Australia it's 84%. And the reality is that of the wealthiest 20% of the people in the world, 83% are online, mostly with smartphones as well as other devices. The bottom 20%, encouragingly, it's 17%. And these numbers are moving rapidly. So we are closely approaching a world in which most people, almost all the rich and increasingly a large percentage of and before too long, a plurality or most of the poor, most of the poor, will have access 24-7 to the same platform, to the same platform with devices that are getting cheaper and cheaper that have the power of what we would have called a decade or so ago a supercomputer. Now this has been incredibly disruptive. Robert's chairman, Rupert Murdoch said in the late 90s that the internet will destroy more profitable businesses than it will create. I'm not sure whether that's right or not, he might have just been going through a gloomy moment, but it has certainly destroyed a lot of profitable businesses. It has also dramatically changed almost every aspect of national security. When we think about a world in which everything is connected, an internet of things, where every machine is connected to the internet in one form or another. Obviously, the power of that, I mean, look at something like Waze, look at the application Waze. How extraordinary, think of the efforts that governments used to go to to try to work out traffic problems. Where are the traffic blockages? Cameras were installed on highways, all sorts of elaborate reporting mechanisms. Simply by having enough people with a smartphone, you know, you have hundreds of people on a particular highway, you know what the speed of the traffic is every single second. All of these technologies are coming out and applications are coming out of these devices. But in terms of national security, that vulnerability is formidable. I spoke last night briefly at the Embassy about the Snowden affair and the implications of that. The fact that one person could take away so many, it's been reported 1.8 million files, a massive amount of data is a complete transformation. It's no longer the case of the dishonest clerk in the Embassy sneaking into the Ambassador's office and photographing a couple of cables. We're now talking about the ability to access massive amounts of data and before that, of course, there was private manning. And then there's been another paradigm shift too caused by the combination of digitisation and the internet. The ability to disseminate vast amounts of information globally instantly. In the past, if a country, a corporation, an agency discovered that it was being hacked into, that perhaps that there was a backdoor in one of their systems that exposed a vulnerability, they may very well close that backdoor, they may not. They may leave it open. It may be quite interesting to find out who puts their head into that backdoor and might want to let something out of that backdoor. There are all sorts of things that you could do, but the one thing you wouldn't do is tell the world. The reality we now face is that not only is so much data being stored, because storage has become so cheap that it's not free, but its cost is day-minimus nowadays. And not only it has, as a consequence of processing power becomes so great, we can manage and manipulate that data. Some of us that have been involved with or associated with intelligence gathering in years past recall how, whether it was police or intelligence agencies, had to be very judicious about which wires they tapped. Who did they listen into? If only because of resources. There's a limit to how many telephone calls you can monitor and record and transcribe. If you're in a position to record everything and store it forever, that is an extraordinary capacity, but it also creates a vulnerability. And then the consequence of that material being made public is very different. There is a gigantic difference between the head of a government discovering that another government has been intercepting some of his telecommunications and countermeasures would obviously be taken. Discovering that in the way would have been in the case in the past and then reading about it in one of Robert's newspapers or one of his competitors' newspapers and emblazoned all over the internet, whereupon a political response is required. And this also raises big political issues for us. Of course, in Australia, as we've seen most recently with Indonesia notoriously, but it also raises very big commercial issues for the United States. The decline, very significant declines in sales by American technology companies in the last quarter in China. The NSA leaks, the Snowden revelations, will be used and are being used against American corporations very, very actively by their competitors in the world outside the United States and its closest allies, which by the way is where almost all of their future customers are to be found. The implications too of the internet for government are formidable and I have to say poorly exploited by and large to date in Australia. Many countries including the United States have done a much better job at making government data sets available. We have a handful of government data available online with an open invitation to developers to you know build their own applications. I think Todd Park who I met with this week obviously has done an outstanding job in health and will do more as the US government's CTO. The Danes have done an outstanding job, the British are doing very well. This is a very key focus for us as a new government to ensure that we get the benefit of that combination of gathering vast amounts of data as governments do, putting them into machine readable form and then making them openly available. We've seen some examples of it obviously, you know one of the great examples of course is with mass transit. You know if you talk to a transport economist a decade ago he or she would have said to you that mass transit is only effective if the frequency of the running is only really effective, if the frequency of the running is such that you don't have to look at a timetable to turn up you know if you've got people have got to look at elaborate timetables it's all too hard but with a live running data being streamed online being available to application developers any of us can look at our smartphone and see that the 10 past 10 train is actually arriving at 10.17 that's fine, have another coffee make another phone call have a more leisurely stroll to the station it enables a much more effective use of mass transit and of course there are so many applications. I just should say a little bit about Australia and the national broadband network because I know the Australians will be very familiar with the Americans won't be and I'll be I'll give this is a spin-free non-partisan account. Everywhere else in the world except for Australia the standard approach to upgrading broadband services has been for the private sector to do it and for governments to apply judicious subsidies to make up for those areas that are uneconomic you know regional areas economically deprived areas remote areas and so forth and the virtue of that is government is up for a some certain that makes a political decision and writes a check and the business and execution risk is with the private sector the profound mistake that our predecessors made was that they decided to build a national broadband network which is in fact a last mile network so from what you'd call the central office to the customers premises the to do to do it themselves and for the government to do it and to do it as fiber to the premises for 93 percent of the population this meant that all of the business risk all of the x execution risk and the two are different you know one thing is the cost of building it and then of course even if you've built it and even if you've built it within your cost for a budget then the question is is it going to generate the revenues but that execution and business risk all lies with the government and we are the only country in the world to have done that and it's an extraordinary mistake having said that as I've said to many of you before I am like the guy who gets lost driving around in Ireland walks into a pub asks for directions to Dublin only to be told if I were you sir I wouldn't be starting from here so the challenge for us is what to do about it what we've our policy our commitment is to complete the network but to do so in a more cost-effective way now one of the good things that's happened in recent years is that technology as usual has come to the rescue and there are a whole range of last mile technologies that enable you to deliver very high speed broadband and I'm talking 50 megs 100 megs and higher without having to take a fiber optic cable into the customer's premises typically by using the last few hundred meters of copper from telephone company or the high or the coax from a cable TV network and these technologies are being deployed here you've seen what AT&T has done with you verse you've seen what all the cable companies have done here with doxxus so our commitment is to complete the network and do so sooner and cheaper and if you're really interested in this subject and if not constrained I can bore for the world on this topic I'd encourage you to read the strategic review which the nbnco has recently published which is on their website the the problem is it's still going to be hugely expensive and I think the government will end up spending will end up spending about 20 billion dollars more than we ought to have done had it been undertaken in a more rational way and that's better than spending an extra 50 or 60 billion dollars which is what would have happened if the previous policy had been continued now the good news about it about having a national broadband network however uh and it doesn't have to be government owned and as you can do it the private sector can do it and does do it in many countries is that you have a single wholesale platform so you don't get those problems of vertical integration where the retail telco owns the carriage service and with all of the issues uh competition issues that arise from that so on that note I'll conclude and look forward to the discussion that follows thank you thanks very much Malcolm uh Jason Furman thanks so much and it is uh terrific to be here I don't see any American former defense secretaries but if there are apologies for not acknowledging you but want to really come back to a lot of what Malcolm talked about in terms of the role that technology and innovation plays in the economy but before I get there I wanted to step back and just talk about how we actually judge the economy and what we're trying to achieve and what our goal is and then talk about the role that technology and some of the other big trends are playing in that goal if you only let me see one statistic about the economy the one I want to look at is median family income because that tells you something about how the overall economy is doing and it tells you how those gains are translating down to the typical household and if you look at the last couple decades that median family statistic has been one of the more sobering ones in our economy the typical family's income now is lower than it was in 1997 and that's a combination of structural trends and then a deep recession layered on top of that and wages have only risen by a small amount since the 1970s if you allowed me to look at two more economic statistics you let me look at two more I then want to look at the two statistics that lead you to that typical family's income and one of that is how is the aggregate economy doing which you could look at in terms of GDP or some something that leads to GDP like productivity and then some measure of inequality which tells you where those gains are going and if you drill down you discover that that phenomenon in terms of the typical family's income is basically about half because we've seen some slowdown in our growth rate in the last several decades and about half because we've seen a very large increase in inequality over the last several decades so that not all of that growth is translating to the typical family and so I think our challenge going forward is first of all to return the economy to its full potential and the economy is healing the unemployment rate is coming down we're getting back there but once we get beyond that it's to understand what we can do to expand our potential and to understand what we can do to make sure more people share in that potential and technology and innovation and education plays an important role in both of those stories and it can play done the right way an important role for the better and done the wrong way an important role that in some sense could create some problems and challenge some additional challenges so to talk about the innovation side of it first if you look from 1948 to 2012 you look at a worker in 2012 they could produce five times more per hour as their counterpart in 1948 the country vastly richer vastly more productive than it was before you drill down and ask why that is and you can use something called growth accounting which breaks your growth down into three components and it turns out of that growth nine percent of it is because of what might be called the quality of labor education training all those types of factors 37 percent of that increase from 1948 through 2012 is that workers in 2012 have a lot more capital at their disposal because we've had decades of investment 54 percent of that improvement 54 percent of the reason why that worker in 2012 can make so much more than that worker in 1948 is that we've expanded total what economists call total factor productivity that's the total amount that you can squeeze out of a given amount of capital and labor total factor productivity is a new invention it's a new process for managing your inventories it's when the United States enters a free trade agreement with Australia or does a trade agreement with the Pacific that expands the scale of our markets that will also show up as total factor productivity growth all of these things are what show up is that and that's ultimately the most important determinant if you drill down though and look at the time periods 1948 to 1973 total factor productivity growth was 2.2 percent a year from 1973 to 1987 it slowed to 0.5 percent a year in that year Robert Solow who's a famous economist who had worked at the Council of Economic Advisors under President Kennedy wrote an article in which he says that you see the computer age everywhere except in the productivity statistics since he wrote that very pessimistic assessment things have gotten a decent amount better and that total factor productivity growth has doubled to 1 percent a year and that's I think because of a lot of the things Malcolm has been talking about in terms of the internet applications mobile devices and all of that spread out over the last couple decades but even with all of that we're still not at the productivity growth rates that we were in the 1950s and 1960s and in part that's because we're not benefiting from a lot of the pent up investments we made in World War II and things like jet engines that had civilian applications in the 50s and 60s part because we're not making public investments at the scale we were then like the interstate highway system there's a real debate in economics as to whether even that 1 percent can continue there's pessimists like the economist Robert Gordon at Northwestern who thinks that we're basically running out of ideas and doesn't think we can persist that growth rate and we're going to see some type of stagnation there's others and there's a good new book by Eric Jan Lufson and whose name I can never pronounce who argue just the opposite I tend to be more on the side of the second rather than the former I think just because an economist can't figure out what inventions are going to just define productivity growth five years from now doesn't mean that somebody else isn't going to figure it out and they consistently have and it's hard to predict innovation because it's by its inherent nature unpredictable and I think we have a lot of the infrastructure especially that technological infrastructure to foster that innovation but I don't think we should take it for granted it's not just ideas it also it's and it's not just a knowledge infrastructure it also is an actual physical infrastructure and here's Malcolm said the United States has taken the approach of really a private sector led investment in that infrastructure and if you look at the telecom just the two leading telecom companies they invest more than the top five oil and gas companies they invest four times more than the big three automakers their investments in wireless in the last five years have been up 40 percent while those investments have been flat in Europe the United States is leading in 4G and all of this creates an ecosystem in which operating systems apps the design of devices all is centered here in the United States the reason that's happened is a credit and a tribute to the private sector in our economy but public policy has played a role the research and development tax credit gives an incentive for some of that innovation the bonus depreciation and expensing that we've had in this country as a tool to fight the recession also encourage and incentivize companies to invest more and then a regulatory approach to a range of issues whether it's privacy cyber security or an open internet that establishes a light touch a multi-stakeholder approach but a basic set of rules that give consumers and companies the certainty they need to make those types of investments and those types of innovations have played an important role as well and I expect they'll continue to do so if you um I think this technology is one of the three important trends that is supporting the U.S. economy now the second one that I'd list up there is also related to innovation and there it's the innovation in terms of how we extract oil and gas from shale and as a result of that the United States has now become the largest producer of oil and gas in the world we've surpassed Saudi Arabia and we've well surpassed I we've surpassed Russia and well surpassed Saudi Arabia we now for the first time in a long time are producing more oil than we import and that's not just production that's also because of the all of the above energy strategy that has done things like more fuel-efficient vehicles more investments in renewables that have reduced our consumption at the same time the energy boom is not just jobs and energy it also is a big support for American manufacturing it's encouraging companies to come back to the United States to locate here and it's a benefit to our national security and dealing with climate change as you shift from coal to cleaner fuels like natural gas the third trend and it's one where technology shows up as well is healthcare and this is one example of where technology can be double edged a lot of the extraordinary growth of health costs in this country and around the world have been associated with innovation and a set of incentives around innovation where innovation is about the best possible cure no matter what the cost not taking into account cost recently we've started to bend the curve on the growth in healthcare and if you look at the last three years it's the slowest growth in national health expenditures measured on a real per capita basis that we have seen in this country in the 50 years that we've been recording data and Robert's newspaper was very kind to give me think about 1200 words for an op-ed on this topic and then it restrained itself to writing only a 500 word denunciation of me in its editorial the very next day but even their editorial didn't dispute the dramatic slowdown in health costs it debated the cause of it and I would be more than happy to debate with any of your editorial writers that there's a lot of causes of that slowdown and certainly the Affordable Care Act is one of them you don't need to agree on the causes though to agree that it means a lot for job creation it means a lot for the ability to grow wages and it means a lot for getting our deficit under control to having a slowing rate of growth in healthcare so you look at all three of these technology energy and health I think they'll all help create jobs I think they'll all help create better jobs I think they'll all help raise wages and then the question is will those translate back into that statistic I started with which is the typical family's income and I think there's a lot of reason to hope that they will Malcolm talked quite eloquently about the way in which everyone has access to essentially the same internet and with devices becoming cheaper often with the same devices that's not true everywhere however it's not true in our schools for example where the typical school in this country can have a broadband connection that's even slower than the one you have in your home shared with hundreds of students the next generation of education is going to rely on devices and innovations like the like your call your like your colleague and chairman Rupert Murdoch and Joel Klein are trying to do in terms of tablet computing other devices that take advantage of internet connections that we don't have in schools today and that's why it's so important that the president launched an initiative that we're calling ConnectEd and that the FCC is moving forward on to both incentivize investment in schools so they have higher speed connections but also the devices we need the equipment to run on those devices and the training we need for teachers a complementary effort around all of that so you take technology and make the right changes to make sure it benefits everyone energy is obviously can play a role also in having incomes translate and healthcare finally has been one of the things that's kept incomes and wages from growing as quickly as you'd like over the last several decades so the slowdown of it will also help those gains translate back to the typical family so in conclusion I think we're at an exciting time for our economy we've seen growth strengthen a lot at the end of 2013 I think there's a lot of cyclical factors that will benefit growth in the next couple of years like the decline in fiscal drag the fact that we continue to have potential in housing the deleveraging of consumers but we want to look past that look at 5, 10, 20 years and I think when you look at 5, 10, 20 years what you see are a lot of iPads connected to the internet a lot of a continued energy boom and hopefully a continued slower growth in the cost of healthcare I think the three of those can combine to have enormous potential for where we're going Thanks very much Jason I'm so glad that economics has moved on from endogenous growth theory and skill bias technological change and other things that no one ever understood to talk about things that seem more intelligible to the non-economist in the room Robert Thompson you've already been baited a couple of times would you like to take the bait rise to the challenge speak off the cuff the floor is yours All of the above First of all to Jason I'd like to say so you'll understand there's a deficit of 700 words that are coming your way and to Malcolm's point about some of the upheaval going on in some newspapers thankfully not our own if I were to greet and thank all the former editors of newspapers there are an increasing number of ex editors of newspapers so that would take up most of my time in fact I'm a living breathing contradiction of someone who's rather ignorant as an individual meant to be talking to you about the knowledge economy and collectively we've let you down there's no PowerPoint here so collectively we are powerless and pointless but I would like in fact not to talk about the knowledge economy which I think is spoken of a lot not to excess but a lot and focus on what I like to call a knowing economy which is a level of understanding and intuition on top of basic knowledge which alone is not enough to do it though it is essential to have it to do it for example in media there's no end of knowledge among journalists editors and media executives we're right all the time about everything as Jason knows so and Malcolm too knows that the media is right all the time about everything and yet there has been an institutional implosion of media what is it that is the difference between having that extraordinarily accumulated knowledge and failing to confront the reality of the digital change that Malcolm outlined because many a newspaper has met a dire digital fate in this country basically every paper from Boston to LA is for sale and in between them most magazines are also for sale and that's indicative of something that I mean we joke about it that we're in a transition from Gutenberg to Zuckerberg but it's true too many traditional media types knowledgeable as they are have retreated passively to pasture digitally disheveled and as always being journalists disillute so I mean it goes without saying and Malcolm highlighted it well two of the profound trends of our time the most profound trends are digitization and globalization and there's not much point struggling and swimming against those powerful tides but there's an extraordinary benefit to be derived from taking advantage of that momentum now I wouldn't deify the digital it's certainly important but we don't want to be subject to cyber-servitude because there's much discussion about the concept of big data I mean you hear about it all the time big data but in fact big data can be a large mistake because it's a metric of quantity not necessarily a divine equality and the other thing to remember which is why so many knowledgeable media types have struggled to confront contemporary circumstance technology is often a template or a canvas it is not the thing itself it's a platform and for example you can harvest data endlessly but what is the difference between wheat and meaningful stuff and of course once you have data or a certain amount of knowledge you need to really to know what to do with it within commercial and moral parameters and the Snowden leaks obviously the the moral around privacy is one of those parameters but there are various parameters that we need to contemplate and a little too profound for me to do with here today but the rate of change is exponential in communications and media I was recently at the CES in Las Vegas and of course the fashion of the moment literally the fashion of the moment are wearables and as they say what happens in Vegas stays in Vegas and one would hope that some of those wearables do indeed stay in Vegas because the idea of oversized phones worn outside your suit that's probably not a good you know fashion before comfort as they say style before substance at least I believe that but you know chunky very chunky watches but clearly bracelets actually I haven't noticed any at this table so it's probably not a trendy bunch of erudite people the telling you how much you do didn't sleep how much you how far you did or didn't walk out that that's sort of I'm not going to name the brands because it'd be for advertising and if you'd like to advertise dear brands you can pay for one in the industry general but you know the senses are going to play a more important role in our life you also know that chunky bracelets probably not the highest form of development in that sector but the other areas and Malcolm alluded to a little bit but just you know statistics because you have to have them the number of photographs that were uploaded and shared digitally in 2006 were none in 2013 about a billion a day video per minute 2007 five hours last year per minute uploaded 100 hours video that's a lot of video too much for any sensible person to watch smartphones you know it depends how you calculate it there are about five to six billion mobile phones at the moment about 1.5 to two billion of those are smartphones there'll be about according to Tim Cook of Apple there'll be about one half billion smartphones sold this year and the rate of growth in smartphone subscribers which is a more measurable statistic in India last year 52% Mexico 43, Indonesia 34, Brazil 28, Taiwan 60% Russia 38% and in other countries it was slower because the penetration rate is that much more sophisticated so these are absolutely unprecedented trends of expansion and so we know that we have that knowledge but that of itself won't get you there these are extraordinary opportunities for the knowing and so not just for the knowledgeable and definitely not for the ignorant but it's if it's not clear where you are if you don't have an economic GPS and if it isn't an environment which is for example conducive to start starting a business then people are not going to be able to take advantage of these opportunities there's a lot of discussion and there will be more in coming weeks about the rise of robots the very difficult to pronounce not the apocalypse but the job collapse and in part some of this debate will be prompted by a remake of RoboCop and you have to distinguish between movie hype and economic reality and the thing to remember because I was a correspondent for five years in Japan from 1989 to 1994 just at the end of the bubble just my luck and the beginning of the decades of decline the famous Phanik factory which is the robot factory that makes robots was actually opened in 1981 but people still talk about that Phanik factory and so things haven't moved on in quite the same way and the jobs that are going to be created are going to be generally in societies where that bit of knowing the orientation is that much more sophisticated and it's a personal level societal level and governmental level of understanding and this is not the time for the immigration debate and clearly I'm conflicted because I'm an immigrant I have the privilege of living in this great country and I have the privilege of being an Australian but when you look at the UK economy the economic figures released today were fascinating the unemployment rate was down from 7.1 to 7.4 to 7.1 there were about 280,000 new jobs created never in human history have more people been at work in the UK now partly that's a population increase but the participation rate which is key obviously is also significantly higher there in part frankly there's a government there that has cut corporate taxes and encouraged business formation but it's also an influx of highly motivated immigrants many of them from continental Europe and yet that country is conflicted by the debate over the value of immigration and it of course is not the only one as we well know but those highly motivated migrants are raising the bar and creating opportunities for others I mean every government in the world when you ask is in favour of small business some are a little skeptical when small business gets successful and becomes big business but generally speaking people try to take measures but what is the difference between a government that knows i.e. a knowledgeable government about the role of business and a knowing government that actually creates opportunities an environment that is conducive to the creation of those businesses and that's one of life's enduring little mysteries I mean one prior to going to Japan I was a correspondent in Beijing for the Financial Times for almost four years the economic reform policy was actually begun in late 1978 it was a meeting of the Chinese Communist Party it really didn't take off until about 1986-1987 because so many Chinese had the knowledge of past purges the let 100 flowers bloom movement which turned into a terrible purge it took people a few years of genuine reform a few years of watching a few years of understanding to really know that they could go out and start a business and as a part of that and the reform and the autonomy that individuals gained through those reforms you've seen the greatest uplift in economic welfare anywhere in the world in human history we can argue is it 450 million people lifted out of poverty 500 million people lifted out of poverty that's what you get the efficaciousness of knowing of people of a knowing government at that time economically if not politically and a people knowing about opportunity that they would be rewarded not punished for it and again back finally about media what can media do to take advantage of these opportunities in part it's disintermediating the disintermediate tours and you look at UGC user generated content then the U in UGC is often frankly useless or sometimes ugly but to have a knowledgeable society from which the knowingness comes you have to have a well informed society you do have to have professionally generated content and frankly Rupert Murdoch is at all of us quite rightly asking us to experiment because he firmly believes in the importance of strong newspapers of professional journalism of analysis of a contest of ideas and too many people in the media have been angst ridden in their arguments over what to do to safeguard the role of professional content in society but angst is no substitute for action and so within the media itself in providing information providing the data that is a part of big data in informing hopefully enlightening you have a platform for that knowledge and so the knowledge economy is clearly important but no country will realize its economic or its human potential unless it has a knowing economy thanks very much thank you Robert John bring it all back home we've had Obamacare, Edward Snowden epistemological differences between knowledge and knowing and Dick Tracy watches what ties all that together well let me try and tie it together with two ideas one of those ideas is innovation and the other idea is education so one of the things I think that Robert did very nicely is connect that somewhat esoteric concept of multi-factor productivity growth with the idea of incomes per household how much money do people have in their pockets how much money does a government have to provide all of the services that governments do provide and essentially as your productivity growth up goes up you have more to spend what makes productivity growth go up by definition it's about doing whatever I did yesterday somehow more efficiently or doing something today a little bit better than I did it yesterday and that is the essence of innovation innovation I think the nicest definition of it is simply good ideas successfully applied so when we talk about economic growth almost by definition what we are talking about is somehow doing whatever we did yesterday better than we did it whatever we did yesterday doing it slightly better today now the interesting thing about this if you ask about an economy is that in fact most of those things that we do that we buy that we consume all the rest of it are in fact produced inside our own country so in Australia something like 84 percent of what we consume is produced in Australia we've had an entire day dedicated to trade and international affairs unfortunately the big game in terms of economic productivity is fundamentally a domestic game and that number is about the same for the United States more than 80 percent of what United of Americans consume is produced in America and of course what that means is if you want to see your economy grow if you want to see people better off it's fundamentally about what you do in your own country now lots of things can contribute to that everything from your infrastructure as Robert was talking your competition policy opening up your economy all of those things contribute but fundamentally it comes down to what is it that is encouraging people to do something better than they did it yesterday now the other big problem in discussions about innovation and knowledge economy is everyone assumes that what you have to do to get economic growth is invent something it's not true what you have to do is do something better than you did it yesterday and if you use your eyes and played your eyes and copy that idea from someone else in fact by and large everyone is in fact better off that's why this issue of intellectual property restriction is such a big deal because if you restrict the free flow of ideas you are ultimately restricting the spread of innovation and whilst there may be justifications for intellectual property protection you need to understand the cost of it is quite material so that's why I raised that question earlier but of course the other thing that makes an even bigger difference to this and I think it's really interesting that in four speakers we haven't mentioned this is what is the capacity of your workforce to either come up with those ideas or much more importantly look at them from elsewhere and successfully adopt them because successfully adopting ideas is actually not as easy as it sounds and certainly if you look at the work that people like Hanna Shekin-Bolfman have been doing over the last couple of years and even a number of economists in the very long run the thing that will make the most difference to an innovation economy the most difference to a knowledge economy is simply put the education level of your population to what extent do you have a population that is well educated and good at adopting ideas and applying them and bear in mind when we're talking about applying them yes of course whatever you're doing in the cutting edge of IT or whatever is important but look at a national economy most of it is about construction it's about health it's about financial services it's about electricity none of this is terribly glamorous none of it sounds like a knowledge economy but that is where most of the work in any economy is done and therefore that's where the innovation matters and that's where the education level of that workforce is absolutely crucial now this I think is where the really, really difficult problem comes and this is where I think in a discussion between alliance partners between two incredibly good friends such as United States and Australia we are entitled as I hope as a really good friend to start talking about the things that other people don't want to talk about the bottom line is the American education system is in deep, deep trouble if you look at adult literacy so that looks across the population the sort of work that the OECD has been doing Australia does okay we're about kind of top quartile and the United States on the other hand is very much third quartile if you look at tertiary completion rates in the United States it was the highest so if you look at people between the ages of 55 and 64 no country in the world has as high a completion rate as the United States I remember when my very first job working for David Pennington Vice Chancellor of the University of Melbourne on education policy 25 years ago we talked about the mass education system in the United States Australia's very elite higher education system and never imagined that that would change today there are more people age 25 to 34 in Australia who have finished university or college than there are in the United States so completion rates in the United States for higher education have fallen to be nowadays more or less middle of the OECD from the point that they were 30 years ago very clearly top of the OECD and then if we look at school education overall the United States is very much third quartile the thing that matters most is numeracy education not surprisingly the ability of your workforce to analyse things is fundamentally about their ability these days to manipulate numbers and data it's a really important skill if you have people who are fundamentally numerically non-numeric they just can't do that stuff and that is the place where the United States is doing the worst I know Australia is also doing the worst but the United States is doing particularly badly in the bottom quartile and again we have and in the United States worst you have a real geographic divide you have some places like Massachusetts and Connecticut which are doing about as well as Australia they're not doing as well as Shanghai as Finland as Korea and so on but at least they're doing respectably but there are a significant number of states in the United States which are essentially about the same level as Greece that is not a good news story and we know unfortunately that doesn't matter how much technology you throw at your schools it doesn't actually make a lot of difference what makes a really big difference is to what extent are the teachers getting good performance feedback from other teachers and good performance feedback from their principals and to what extent are they well trained in the first place and to what extent to some of your brightest and best go into a school education and in both Australia and the United States we are struggling on all three of those fronts so what I'd just like to leave you with is that yes our broadband infrastructure matters yes all of these changes and the knowledge economy matters but the knowledge economy more than anything else is about education in Australia we are doing I would suggest okay but not brilliantly and the United States I would suggest has long term a very very real problem and if the history economic history of the world of the last 40 or 50 years turns out to also be true of the economic history of the next 40 or 50 years unless there is a sea change in United States particularly school and also college education it strikes me that it is likely that we will see the continue as we will see a decline in US economic performance relative to the rest of the world and it's interesting that the countries that we are talking about the most in Asia we've spent a lot of time talking about in Asia Korea has, South Korea has probably successfully managed to get to the point of too much tertiary education I think it's the only country in the world that's ever succeeded in doing that the education results out of Shanghai and Beijing can only be described as spectacular people say to me that's only Shanghai which my answer is that's 15 million people that's quite a lot my guess is that the rest of the Chinese education system will basically follow the one thing that China is very good at is experimenting finding a way of doing good way of doing something and rolling it out so in a knowledge economy can I suggest we need to worry a lot about education and that's something on which I suspect both Australia and United States have something to learn from each other and then perhaps even more to learn from the rest of the world thank you thank you John I think the Wall Street Journal has recently reported that there were more patent applications in 2013 coming out of Shenzhen than out of Silicon Valley I think we started five minutes late according to me where that means we've got about 15 minutes for questions from the audience lots of food for thought on the table who would like to address a question to the panel or to a specific panelist Yes sir we're going to, Mike's are still here great all it seems no one else was putting their hand up I'll jump in again it's John Keough from the Australian Financial Review Jason just a little bit off topic but related to the discussion I'm interested in your no scoops here big picture view on the outlook for the American economy this year is this the year get as many scoops as you can that's what I'm here for Malcolm Jason the outlook for the American economy this year is this the year that it's finally going to take off what do you see as the headwinds or opportunities for the American economy this year I'm sure I'm happy to answer that and I did a two sentence version of that I was talking more about the medium and long-term structural trends before but in terms of the cyclical outlook I think the most favorable things for the United States in 2014 are number one that will have less fiscal drag in 2013 we had to contend with the expiration of the payroll tax cut with the sequester coming into effect all told the deficit contracted by 2.7 percent of GDP the congressional budget office estimated that the sequester subtracted 750,000 jobs and took 0.6 percentage point off our growth rate going into 2014 we're going to continue to see our deficit decline but decline much more gradually you're not going to have any rounds of large fiscal restraint of the type we've seen and in fact with the budget deal we've gotten at the end of last year we have been able to buy back a substantial portion of the sequester and put us in a better place to invest and grow second I'd say housing we still have significant potential we're building about a million houses a year the steady state needs for the country just based on new household formation and depreciation is about 1.6 million houses and over the course of the next couple of years we'll probably bridge that gap so that's been a strong component of American growth for the next couple of years and it continues to have potential and then finally you've seen a long painful process of deleveraging coming out of a very deep recession we're gone a lot of the way through that process in terms of consumers reducing their debt reducing their interest payments and being in a better position to spend there's no doubt with all of that that there's a really long way to go still there's no doubt that there's a lot of challenges we still face it's important that for example we continue on the momentum of budget stability and not do something like mess up around the debt limit and the congress does its job there it's important that we'd see continued stability and financial improvement in the rest of the world in places like Europe but if we do all of that I do think the United States has a very strong private sector that's that's really ready to grow sorry Robert just one very quick question from one estimate supporter to another and given the disruption that Malcolm's been talking about from technology in your industry could you ever envisage news corporation trying to merge or buy a freeware network in Australia honestly that's the difference between knowledge and knowing okay well responded another question who's got a mic we've got lots of hands how many mics do we have with a woman in the in the second table back there could could you get her a mic please Beverly Lindsay visiting professor institute of education university of London and professor Penn State my question or comment is directed to mr. daily one there's a lot of different ways to interpret the OEC data the piece of data and one of the main factors that certainly is overlooked are the socio-cultural components of education and what's encouraged in the countries but the real the question I have is the following and for you first but perhaps the other gentlemen as well that is how do you envision education improving through various forms of technology and platforms such as MOOCs thank you firstly obviously the OECD does its best to correct for cultural socio-cultural factors secondly I would have thought if there was any country that was actually going to do well out of those socio-cultural factors it would be the United States thirdly it's it's tough to think of two countries that are socio-culturally more like each other than Australia and the United States except maybe Canada maybe New Zealand and yet we're seeing very very different results I think it is high time that the United States looked at the numbers and said these are not good numbers and we have a major problem the other thing I would add is if you look at the history of those economic growth numbers sorts of things that Hanna-Sheck and and and Vosman have been looking at whatever it is that PISA is measuring that is the precise thing that is correlating with economic growth because that's effectively what they've been using so whatever it's measuring it appears to matter and therefore if you're not doing well on that stuff it does I would suggest give you cause for concern in terms of technology as I said certainly historically technology doesn't appear to have been a major driver of improvement in school education outcomes that's not surprising and I think if you think back to your own school education the thing that matters most is the extent to which you sit there you work it out you think about it and then you are helped by a teacher and getting computing systems to the point where they can really do that is quite difficult although they're getting closer in terms of higher education we're obviously seeing a substantial shift I suspect that what we are probably seeing is the death of the lecture but not the tutorial if I can kind of you know simplify overly higher education there's a part of it which is about knowledge absorption roughly speaking reading the textbook or listening to the lecture which certainly in my experience tended to be more or less substitutes for each other and then there's a second game which is essentially as a student talking about that material with other people interrogating it being forced to ask a question being forced to answer a question essentially that human activity of thinking it through for yourself and having to articulate it it's possible to do that online but a great deal harder and it's possible to mass produce that but much much harder and I think that's the part of higher education that won't be enormously affected by the growth of online the lecture on the other hand strikes me as being in deep trouble as Alan Gingel was pointing out the other day you know if you want to learn about early medieval history you know why would you bother going to your local university why wouldn't you just pull down the material off off Yale where you know the best in the world basically does his thing and be done with it so it's a bit of a winner takes all game in terms of providing that part of the material but as I suggested that what you might loosely describe as the tutorial experience strikes me as an extraordinarily important part of higher education that's where we really learn to argue to analyze to think to question and that's the part that I don't think will be replaced by MOOCs and indeed if you look at MOOC completion overwhelmingly more or less the only people who complete these courses are people who have already been through that kind of tertiary education experience and have learned those kind of skills already thank you as Tom Friedman says it's not what you know that counts it's what you do with what you know that counts let's hope there's a role for universities to this side of the table Lucy wait for a mic if you're going to transform the way teachers are rewarded for exceptional performance you're going to run into some you know so I would have thought in the US as well as in Australia some institutional blockages where the default setting is to reward seniority in not performance so how do you go about a cultural transformation of educational systems in both countries to achieve a performance culture well I think that's could we get could we get Robert in on this one because I know that I mean certainly at least your boss Robert has been way into this topic in in New York and his work with the former commissioner of schools in New York exactly our amplifiers part of news corporation which is really starting from a Greenfield site trying to create a digital curriculum which is dealing with in part I mean obviously trying to enhance the education of every student in the US initially but also dealing with the terrible contradiction that we have kids who are digitally literate and functionally illiterate but the curriculum alone is not enough and actually amplify is working with teachers to help them understand how they can use it's not a replacement for teachers at all the role of the teacher is a crucial one and but the the culture around the teachers where the best teachers are not necessarily rewarded or promoted or encouraged financially at least or in some cases in some cities culturally in the way that's appropriate for the children and so get so removing that disconnect that's that's not our job but providing the teachers with the best possible contemporary curriculum certainly is our job and and Rupert and Joel have put a lot of money Joel Klein a lot of money and effort in into realizing that goal Malcolm Turnbull wanted to jump in yeah just make one one observation that a very a common problem in Australia and the United States is the relative shortage of students completing courses in STEM subjects so science technology engineering mathematics etc at university and this is extraordinary this is a is really a market failure because there are so many jobs available in those areas and as John mentioned earlier there is really no area of endeavor anywhere that does not require you to have a certain level of quantitative analytical skills now one of the causes of this so it is said is a lack of training in subjects like mathematics and science and of course computing science more a applied subject in the K-12 system one of the challenges there of course is a teacher who can teach effectively in a technical subject in mathematics for example and do so in a charismatic and engaging way has skills that are extremely marketable not least in my old line of business and banking so we have a very serious problem there in both countries and this is something that has to be addressed it is not going to be solved by MOOCs alone although I'm a great fan of them and rewarding and incentivizing and improving the remuneration of the most talented teachers particularly in these areas of greatest demand is critical if I may just add one final footnote to that as Cheryl Sandberg was pointing out to me last week the remarkable thing about this problem is that the percentage of women doing computing science courses has actually halved according to her over the last 25 years or so that's another big topic but you know if we have got a shortage of people with these skills one way to resolve that is to actually tap into that half of the population that are women thank you if we're to keep to about a five pass for stop time perhaps we could have two very short questions and equally brief responses bang bang in the left hand corner as I see it okay so just very quickly we've talked a lot about the platform I'm just interested do you think or does anyone on the panel think that there's a possibility and whether it matters that with all of this information available do we can actually we start to stop communicating with each other that is we can always instantly find that information that fits with our our view of the world and read it and feel happy and never have to talk to someone who disagrees with that internet promotes the end of dialogue anyone want to respond to that I was going to ask Siri what it has to say can I can I make a political observation a lot of congressmen and senators have said to me over the years in this you know for in washington and outside of washington that the proliferation of media outlets occasioned first by the development of cable television and now of course by the rise of the internet the uber platform on which there's you know potentially a almost an infinite number of channels of communication means that fewer and fewer people are into broadcasting and more and more people are into narrow casting and so that instead of Walter Cronkite bowling the news or less up the middle you can find a news channel that conforms to your own prejudices and so people aren't people aren't listening to the same message that is a that's a I think that is a real issue there are some big issues we haven't had time to touch on about the erosion of the great foundations of mass journalism I mean it's important to remember that the reason big newspapers tended to play it down the middle you know the Sydney Morning Herald I think quoting Alexander Pope was it the despising something something I'm not a wignatory and moderation placing all my glory the reason was that was not because the owners were centrist but because they wanted to get the widest range of readers and hence the maximum advertising revenue but if you can make money narrow casting then you will do that I think that does pose very very very real issues it's one of the reasons why in our system the public broadcasters the ABC and SPS which I'm responsible in a you know in a you know parliamentary way in a ministerial way I'm not I don't program them obviously but why it is so important absolutely critical that they are completely objective and fair and balanced so Robert's newspapers can be partisan left right whatever way they like that's entirely up to them but the public broadcasters have to play it right down the middle and that I think is is actually becoming more important than ever as the rest of the media tends to be able to narrow cast last question I could just back one point sorry to be brutal but there's also you're not going to have a shot at PBS are you Robert no I'm not completely related but separate point which is the distinction between origination and distribution of content Facebook has a news stream Facebook doesn't have any journalists they aggregate other people's news and so one of the to Malcolm's point in the old days you created news and around that you sold advertising now there's a content kleptocracy which takes other people's content repurposes it and generates revenue from it and that's the fundamental content contradiction that hasn't quite been resolved commercially it's our our responsibility certainly the properties I'm responsible for I'm responsible for but I think it more broadly as a society there hasn't been enough debate about that revenue disconnect and it's the it's the same at Google's same at Facebook the same at Yahoo now with Sumly which is summarizing other people's news that the new app they have and it's quite interesting you look at the bottom it says something like summarized by Sumly it doesn't tell you where that story originated okay now the last question short one anyone got anything burning they want to ask second table there the gentleman with the beard kind of relates last question for anybody on the panel who wants to take it you know this uber platform internet has made it much more efficient and productive to deliver lots of content great when that helps you deliver education much more efficiently and quickly not so great maybe when it comes to the productivity increases for you if you are recruiting terrorists if you are trading child pornography you know the list goes on of unacceptable things question is do you think that the current public policy and legal frameworks they have derived mainly from other platforms are adequate today to deal with these issues or do we need to to really look at some new approaches to how we deal with stifling the efficient delivery of these undesirable pieces of content at the same time we don't stifle innovation and and more desirable content Malcolm you have you have direct responsibility don't you for this area how do you balance it well I'm the minister I'm the minister for communications not for the minister for stifling communications I'm very much in the free speech department and I view calls to censor the internet or limit the internet with enormous skepticism and trepidation so yep there's a lot of nasty stuff online there sure is and a lot of it's in breach of the law and a lot of it regrettably is beyond the reach of the law because it's in jurisdictions you know outside of the United States or Australia for that matter having said that is a powerful force for freedom I'll make let me make a couple of observations and I'm not I mean first just I just should note that we have a very rigorous policy on child safety and you know we've having a little bit of a tussle with some of the social media platforms about how quickly they should take stuff down that is causing harm to children I think all of us even the most ardent free speech advocates draw a very strong line in the sand there but let me just let me just make this this observation every new medium has been used for bad stuff you know when the printing press was invented I've got no doubt there were people that were saying do you know this won't just be used to print bibles it'll be used to print pornography and you know seditious political material and so forth and so every every medium every platform can be used by for good purposes and and not so good purposes and boring purposes and also very bad purposes but you know freedom has to be our absolute talisman and we you know that's you guys have got a very strong first amendment culture we don't have a first amendment written in those terms but we our values don't differ from yours very much at all I do think the issue of child protection is a very significant one as I said the I think one of the most effective ways of dealing with it is is when people realize that contrary to the famous New Yorker cartoon of 93 or 4 you know which has one dog on a computer and the other on the floor and the dog at the computer says on the internet nobody knows your dog well the reality is nowadays not only does everybody know you're a dog they know what breed of dog you are they know how many fleas there are on your tail they know where you live they know who your doggy friends are and they know what you've been looking at on the internet and one of the most effective ways to deal with a lot of this this very uns you know very unsavory and criminal material is actually good old-fashioned policing catching these people arresting them you know prosecuting them convicting them and sending them to jail it's very very tough work for the police I might say you know going chasing all that stuff up it's some of the most unpleasant work but it is very important so the law the internet is not beyond the law some of the people are beyond the reach of the law but those people who break the law within our jurisdictions we should pursue vigorously but at the same time recognizing that speech you know as long as it is not abusing children or advocating terrorism or you know breaching very well understood and and legitimate restrictions on speech as long as it's not doing that we should really celebrate the freedom that this extraordinary global platform is giving not just us but many people who've never had a voice or access to knowledge and engagement before could I just say something a little as someone who runs a broadcast and company in Australia or it has one reporting to him something a little harsher than than Malcolm said I think a lot of these video aggregators frankly use freedom of speech as a cover for blatant allowance of piracy when the video aggregators if they really put as much effort into protecting children and protecting intellectual property protecting copyright as they did do into devising new ways of making revenue from video then there would be a lot less disturbing material on the web and there would be a lot more recognition of property rights and it's not that difficult to do thank you very much Robert we often think and I think today started with the the normal understanding of an alliance it's about national security it's about cooperation out there in the international system I think what this panel has driven home to me is the fact that sharing perspectives among friends trusted friends is also an incredibly important part of the Australia U.S. relationship please join me in thanking our panelists for doing so so eloquently this afternoon should we stage first base what do you want to ladies and gentlemen we just have a few more minutes remaining we wanted to have a few closing words we've asked former ambassador to Australia Jeffrey Bleich who served as our ambassador in Australia from 2009 to 2013 just recently returned to California from his post in Canberra we've asked him to make a few summary remarks and then we'll have a few closing words from the direct one of the co-directors of the Alliance 21 program Robert Hill Jeff well thank you Bates and I saw a number of you starting to gather up your materials I was one of those so I will I will keep this brief but I I do want to thank the organizers and all the participants I think it was really an outstanding program today and I also want to thank all the people in the room many of whom are the people who are who are continuing building this extraordinary relationship one person that I'd like to single out it's not here right now but I think kind of exemplifies what's strong about the relationship is Ambassador Beasley who has now served under four prime ministers in four years so that has to be some sort of record for for Australians but it goes to show a point that we always talk about which is that it doesn't matter which political party is in power in Canberra or in DC it doesn't matter which personality is at the head of any particular party we make progress together and we grow together as an alliance and and Kim and his outstanding work for our alliance I think is a is a demonstration of that when you leave a job like this there are a couple questions that you that you frequently get you know one of them is you know are you going to press the elevator button or just keep standing there because to relearn basic skills but another one that you're often asked is what are you most proud of and I have said this before in Australia but you know if I if I could reduce the time that I served in Australia down to one one thing then I would have failed as an ambassador and I would have failed our relationship now because the strength of the alliance is that it's like a marriage and no one says you know so what was the the best thing you did in your marriage this past year if you can answer that question there's probably a problem it's hundreds of things that you do together big and small where you look after each other that that give me the greatest pride and marriages are what gets you through times you know children get older they suddenly become teenagers you got you know jobs change houses change I'm going through all that right now and the and the the interesting thing is you know how do you make it through by looking to people whose values you trust who have a common purpose with you who are devoted to one another and and and who you know can make it through anything you'll be resilient together and that's what I think we picked up from today's discussion when you look at where we were four years ago there was real anxiety about the America's role in the Pacific and we heard some of that the choices that were put up and we had to click on at the beginning you know would the U.S. having been exhausted by the conflict in Afghanistan and Iraq you know having global financial crisis would we be too depleted and too distracted to be engaged in this region as we needed to be those are the questions that we faced and what we did if you look at the the results of that you know that that time what we've done in the last four years is we doubled down we reengaged in our alliance we invested in the partners and we invested in a belief that we would muddle through this together and we'd come out stronger so four years ago we made a number of major commitments and I'll just go through those because they reflect what was said at the panel first trade relationships to bind us together the free trade agreement went into force five years ago over great skepticism and criticism and and and instead as we heard from all the panelists turned out much better than anyone expected even with a global financial crisis tremendous growth in our trade relationship and our investment and and trade have been hit record highs in terms of expanding free trade we both again over great skepticism within our countries made free trade agreements with Korea and then the Trans-Pacific Partnership which is the mother of all victims of skepticism I remember when we first moved into it people said oh this sounds like a nice coalition of the willing the two of you with Brunei and then Malaysia and Peru and Chile not to denigrate those countries but not the the tremendous economic powerhouses of the world and where are we today we are we are on the cusp of closing out that agreement and it's already 40 of the world's GDP if you add Korea to it it's going to be one of the most significant trade agreements in all of in in all of world history tying together this region so that's what we did together in the last four years what do we do together on on diplomacy four years ago people were talking about its alphabet soup out there lots of different entities that are trying to be the architecture for the region none of which covers all the areas that it should and look where we went we have US signed the treaty of amity joined ASEAN the East Asia Summit we were at the leader's level we joined it during the IOR arc we reinvigorated DPEC I won't go through all the things but we are deeply embedded in the architecture of the Asia Pacific then finally security wise there was a sense that we were going to retreat from the region instead the president stood in the well of parliament and said we are doubling down on our commitment to this region and you see it in 100 different ways it's not just Marines up in Darwin got everyone so excited it's the fact that we added cyber to our treaty our alliance treaty we focus on the issues that are the real threats whether it's you know satellite collisions in near space or whether it is cyber attacks whether it is natural resource challenges so that's what we did in four years and so I listened to the problems that were addressed today and I think those are serious problems the real issues that we face today that were mentioned resource constraints in Asia not only cyber attacks but insider threats and the and the theft of cyber material and all the ways that it can disrupt our economies the talk about not just nation states and natural competition that we expect among rising powers but also the networks of criminals that that are working the other challenges in terms of rule of law and finally how we as two countries that are the largest and the 12th largest economies in the world maintain our advantage whether it's an innovation or in some of the other spaces that were discussed how do we do that as the world continues to shift under our feet I think the answer is in the next four years the same answer we've had for the last four years by just strapping our arms together even closer and recognizing that two great nations with a common purpose and tremendous devotion to one another can pretty much do anything so thank you very much well Bates has had to run off for a media engagement so on his behalf firstly thank you Jeff you are not only a great advocate for your country in Australia but you have proven to be a great advocate for our special relationship and the fact that you're still willing to pursue that is something we very much appreciate my job is to is to thank everyone can I start with CSIS for hosting us here today and for the efforts they put into making the arrangements can I thank all of our sponsors again without which this this would not be possible the Australian government yes but particularly I'm referring to the corporate corporate sponsors we thank the G'day team a consulate in LA and and and others who have from the Australian and government perspective helped this event I want to thank everyone that participates today particularly those who've come from afar but also the DC audience that's been prepared to come in and not only listen but also also participate this this program is as you would have realized during the day it's about the alliance but it's really about the the shared values the common interest that under under line the alliance the alliance the foundations for the alliance and we've been of a view that there needs to be more focus on on that because the value of the shared relationship and the and what we and what we what we have in common is what in effect sustains a legal document and we think that effort has been worthwhile and we think that today's discussions have reinforced our view we're planning to take it forward as was mentioned by Bates at a further event in effect the flip side event to this one in Canberra on June the 18th of this year and we're hopeful that we'll get a strong contingent from the United States to hear similar subjects and participate in debate on similar subjects but with the Australian bias rather than the United States bias so I look forward to seeing many of you in Canberra in June unfortunately it will be cold but not quite as cold as here to finish the day in good spirit Melissa tells me that we're hosting a reception out there where you can look at the snow and perhaps have a glass of good Australian wine and with that I close today's conference and once again thank you all for participating