 Needless to say, the remarks that I made today are mine and should in no way be seen as representing an Australian government view. My task today is to give you some idea of what Australian foreign policy might look like under the new Abbott government, which was elected to office on September 7th with a commanding majority in the House of Representatives. Results in the upper House, the Australian Senate, are still to be finalised, but at this stage look less rosy for the incoming government. It seems very likely that the new Prime Minister will be forced to rely on deals with a motley crew of minor parties and independents to pass his legislation. It's also possible that, facing probable frustration of his political agenda in the Senate, Prime Minister Abbott might take the country to a double dissolution election in the next 12 to 18 months in an effort to clear the decks and so enable him to follow through on the central political promise of the campaign, and that was to repeal the Labor government's carbon tax. In Australia's upper House, a veritable potpourri of single-issue candidates has risen through the system to claim senatorial rank. One from the Motoring Enthusiasts party has apparently posted a video of himself using kangaroo feces in a fight with friends. Another from the Australian Sports Party has no agenda other than the promotion of sport in the country, and it's a sports mad country anyway. Yet another advocates the complete lifting of gun controls. Never before has the former Prime Minister Paul Keating's jibe about the Senate containing unrepresentative swill looked more accurate. In speaking today on Prime Minister Abbott's foreign policy, I can of course only offer some very broad judgments. The government has only just been sworn in earlier today, Australian time, and understandably there have been no major set-piece speeches or tour d'orisons from senior ministers, from which we might divine any coherent philosophy in how the government and its senior leaders will approach the strategic challenges of the day. History of course inevitably has many surprises up its sleeve, and prophecy I believe is in any case the business of charlatans. I'm more interested in the tectonic forces of history that move beneath the surface of political events, and so for that reason we can find my remarks to the context in which the government has come to office and some of the broader themes and outlooks which might inform its approach to the world. The general theme I suspect, you won't be surprised to hear this, is that I think there's likely to be more continuity than some might expect in Australian foreign defense policy. It's a long time since there's been any serious disagreement between the two major political parties in Australia over the direction of Australian foreign policy. Commitment to the American alliance and the imperative of engagement with Asia remain bipartisan fates. Nevertheless differences of emphasis do arise in the light of changing external circumstances. In so far as the white paper, the Labor government's white paper Australia in the Asian century is concerned, there may well be certain changes and adjustments from the new government. Abbott has spoken of a new Colombo plan to increase cultural exchange amongst Australian and Asian universities. The Colombo plan was a policy introduced by the conservative government in the early 1950s to bring Asian students to Australia. So too is there likely to be some changes with respect to how Australia uses the remainder of its term on the UN Security Council, although the government hasn't outlined any of these yet. This was a diplomatic triumph for the Labor government, but Tony Abbott was not entirely supportive. Abbott has also put a very recently protectionist sentiment among some of his national party colleagues, the rural constituency in Australia, put that protectionist sentiment back in its box and stated unequivocally that he welcomes foreign investment. But Australia's foreign aid budget seems likely to be cut to allow the government to focus on its domestic domestic priorities, such as a hugely expensive paid parental leave scheme. Most important, however, is the question of how the new government handles the strategic moment, with power gradually shifting from west to east. The Indo-Pacific area is going through a period of rapid strategic and economic growth. Many of the countries in the region are, of course, modernising, with all the attendant social, cultural and fiscal stresses that that process entails. Assertive nationalism is well and truly in the air. How Australia responds to these changing dynamics will be a matter of crucial importance in ensuring that the region continues to enjoy continuing growth and strategic stability. So let me look first then at the context in which the government has come to office and a little bit of background about the new Prime Minister. Tony Abbott's election is only the sixth time since the Second World War that an opposition has won office. That tells you something about the stability of Australian politics. But it's a remarkable achievement for Abbott and the Liberal National parties, especially when one considers it's a thumping win that Labor enjoyed in 2007 after 11 years of the conservative Howard government. But Labor quickly fritted away its electoral goodwill with a diabolical saga of managerial incompetence, broken promises and worst of all for a party in power, seemingly endless, rancorous and indeed poisonous in fighting. In the space of two terms of government, the Labor Party dumped its Prime Minister twice, then reinstalled one of them in the hope of rescuing a sinking ship and this only 75 days out from an election, but it was too late. Its leadership instability was like a weeping wound in the party's credibility that now sees its dispatch to the political wilderness. True, Labor's defeats two weeks ago was not as bad as had been expected under the leadership of Julia Gillard, but it remains the case that Labor, despite achieving some significant legislative wins during its two terms, such as carbon pricing, the mining tax and national disability insurance scheme and significant education reforms, as well as the fact that it shepherded the nation successfully through the global financial crisis in 2007-2008, nevertheless the party was unable to weave this into any kind of narrative about purpose and power. The great tragedy for the Federal Labor Party in the past six years has been its inability to craft a story about where it was taking the country and why. The White Paper, Australia in the Asian Century, made significant gestures towards this kind of story, but it lacked a real champion in the Cabinet and the wider public to both own and proclaim the narrative. Like many governments across the Western world, Labor fell victim to a relentless 24-7 news environment which thrives on crisis and scandal, allowing a government that falls under its spell precious little time to set out a long-term agenda for reform. Before going on to speak more directly about what we might expect from Abbott in terms of Australia's relations to the world, let me offer a few remarks about the man and the style that Abbott replaces. What has been remarkable, I think, as well in the last two weeks since the election has been the way that determined effort on Abbott's part to stress a calm and methodical transition to government is widely expected to bring a sense of stability and certainty back to Australian politics. Of course, whether or not he can do that in this particular media environment is another question. Apparently, there are to be fewer press conferences under the government because in his view there's been too much frivolous political banter in Australian politics. As one editor has recently observed in Australia, it's as if Abbott recognises Tallyran's wise advice, above all gentlemen, not the slightest zeal. Abbott, in a surprisingly under-reported speech at Oxford University last year, set out his thinking on decision-making under a future coalition government. He said, and I quote, effective decision-making involves the assimilation of expert advice. It's not simply doing what one set of experts advises. It's not simply picking the most authoritative of competing sets of advice either. It's neither contracted out nor conducted in isolation. It involves engaging with the relevant experts and assimilating their arguments, but the person who will take responsibility has to actually make it. I suspect that that sort of approach reflects a reaction both to Rudd's frenzied approach to office, and also a reflection of Abbott's previous experiences and minister in the Howard government. Rudd's style seemed to elevate busyness as an art form, crucifying the public service in the process and turning the art of policy-making into one of chronic ad hocary. In the recent election campaign, Rudd fell quickly back to his old tricks, airing bizarre policy thought bubbles on the prime ministerial plane, which were rarely, if ever, run by his senior cabinet colleagues. It left many wondering about the rather tenuous grip that Rudd seemed to have on reality. The cabinet process, like so many around him, was treated with contempt. He was, in many ways, the human equivalent to the Catherine Wheel firework that we used to have his kids on firecracker night. This was the one that used to be pinned to the backyard fence, but then once lit, spun so wildly that it was not uncommon for it to spin right up its axis and hence off the fence altogether. In the process, scattering the kids, burning the dog, running up the nearest tree and leaving in its wake a general scene of carnage, mayhem, and chaos. In terms of ego, energy, and background, Rudd was a beast unlike anything seen in Australian politics, except perhaps for the former foreign minister, Herbert Beer Evert, an equally tireless minister prone to feverish activity on the world stage and who was also obsessed with machinery, machinery of government. Or perhaps Billy Hughes, the prime minister during the Second to the First World War, whose poisonous undermining of colleagues and the Labor Party more generally earned him the label of rat. It should not be forgotten that Rudd's ascension to the Prime Minister's ship in 2007 defied post-war political history, with the exception of Bob Hawke, Labor Prime Minister in the 1980s, and of course Hawke had been a prominent figure in Australian politics since the late 1960s. With the exception of Hawke, each of Australia's post-war Prime Ministers had been in Parliament for around 20 years before they made it to the Lodge, Australia's Prime Minister of Residence. That gave each of them a long period in which to formulate their ideas about the nation and its place in the world. Each of them had to address the great questions facing the country in that period. Its transformation from a white British nation to a multicultural community, from dependence on the great and powerful friends, Britain and America, to self-reliance in defence and foreign affairs, from suspicion of Asia to comprehensive engagement with it, from bastion of protectionism to free market fire. Rudd however was elected to Parliament in 1998 and though he boasted an impressive diplomatic and public service background, he had not had the political blow torch applied to the belly in the same way as his predecessors. And Rudd in a sense recognised this. In one early speech as Prime Minister, he drew on the examples of John Curtin, who was Australia's wartime Prime Minister, Winston Churchill and Nelson Mandela to demonstrate that as he put it, setbacks become the most important turning points in people's lives and careers. But where Curtin had overcome alcoholism and depression, Churchill is wilderness years in the 1930s and Mandela, his 20 year imprisonment on Robin Island. Rudd offered up his loss at the 1996 federal election, that was his first attempt at entering Parliament as his own time of learning. I think that that served to underline the different context out of which he emerged. But he did come to the job as probably one of the best prepared Prime Ministers on foreign policy matters, except perhaps for Gough Whitlam in the early 70s. He was the first Prime Minister to speak an Asian language at a time when the rise of China dominates the Australian strategic and economic imagination. And yet China policy was largely a disaster on Rudd's watch, witnessed the leaks which showed his candid assessment of Chinese maneuvering in Copenhagen at the Climate Change Summit, where he equated China's behaviour to that of copulating rats. Yet more unsettling for the Chinese was the hawkish language Rudd had inserted into the 2009 defence wire paper about China's military modernisation posing a threat, even warning of potential military conflict. Then there were the revelations via WikiLeaks of a lunch with Hillary Clinton, where he called himself a brutal realist on China. In front of the then US Secretary of State, Rudd depicted himself as more hawkish than the hawks, pressing he said for a multilateral engagement with bilateral vigor. He reportedly told Clinton that such an approach would integrate China effectively into the international community and allow it to demonstrate greater responsibility. But he added that he was prepared to deploy force if everything went wrong. He was trying to be more hawkish than the hawks. As former Labor Foreign Minister Bill Hayden remarked at the time, the United States does not need inciters, but cautionary restraining influences among its friends and allies in this part of the world. The point, but the posture amongst Rudd for headline grabbing big picture vision, such as his idea for an Asia Pacific community, some of you will surely remember this was going to be an Asian style EU or NATO. Cannot hide the fact that his ideas were often half baked or worse, the basic diplomatic groundwork was not first laid throughout the region. Key Asian capitals were given no prior briefings of Rudd's Asian vision. And of course, the idea failed to gain any traction. In fairness, it should be noted that Rudd did have some success in encouraging the US to help balance China by taking its seat at Asia's premier diplomatic forum, the East Asia Summit. The point of today, of course, is not to give a post-mortem on Labor, it's perhaps worth noting however that Rudd does remain on the back bench of the Labor Party. I think it'd be very difficult for a new leader of the Labor Party to recast the image while you have this sort of brutus figure on the back with the dagger concealed in the toga ready to strike at any moment and whispering in the ears of the press gallery. Abbott restores the status quo, I guess, in terms of experience brought to the job of prime minister. Elected to parliament in 1994, he brings senior ministerial experience to the job. During the Howard government, he was variously minister for health and then employment and workplace relations. Prior to his career in Canberra, he was a Catholic seminarian and then later a journalist with the bulletin magazine and the Australian newspaper where he wrote editorials. In the early 1990s, he worked as an advisor to the leader of the opposition, Dr. John Huston. Now, Huston is remembered for a number of reasons. It was the last opposition leader in Australia to set out a detailed policy platform so far ahead of an election. In Huston's case, it was over 12 months before the election of 1993, but his policy platform, which was called Fight Back, was deemed so radical at the time. He proposed a 15% VAT, which would include 15% on food, subsequently taken off when John Howard introduced the GST. And he was proposing a dramatic overhaul in industrial relations policy. Labor prime minister at the time, Paul Keating, even though he was coming from a background where there were record high interest rates and the economy was only just climbing out of a recession, Keating was able to paint Huston as a radical extremist and Huston, one, lost the so-called unloosable election of 1993. So Abbott watched that in a lot of complaints in Australian politics in recent months about Abbott not detailing his agenda and keeping everything under wraps. That, I think, was a searing experience for him, seeing John Huston demolished in the parliament and in the public. Abbott was one of the leading lights for the Australians for constitutional monarchy throughout the decade of the 1990s when the idea of an Australian republic was sent to stage in Australian public life. He spoke of Australia probably quite accurately being a crowned republic. He's a former Rhodes Scholar and he retains a great affection for his time at Oxford. In a speech to Queen's College late last year, he confessed to his abiding affection for Britain and the foundational role he said that it had in the making of Australian culture within a multicultural reality. In fact, his recollections of when he flew back to Britain to take up his Rhodes scholarship in the early 1990s are worth quoting. It's what he said in his speech in mid-December last year in Oxford. Speech that really hasn't got much attention in the Australian debate. He said, when the plane, bring me back to Britain, flew up low up the Thames and I saw for the first time as an adult, remembering that Abbott was born in Britain, when I saw for the first time as an adult, Westminster Abbey, the Houses of Parliament, St Paul's Cathedral and the Tower of London, I had a sense of belonging. Not because I was born here, he said, but because our culture was. He talks of Britain, again in that speech, being somewhat different to our own country, but hardly foreign. It's a very rare, I think, for a leader in a post-imperial era for Australia to give voice to this kind of language, not even John Howard indulged in that kind of sentimentalism. And it explains why the word anglosphere is the most common one to describe Tony Abbott's view of the world. Note, however, that he's been running from it ever since. He said to one journalist, I know that when I use this term anglosphere, it provokes a Pavlovian response. And he said it's better not to provoke Pavlovian responses. Abbott got his sporting blue at Oxford in the boxing ring, not on the lush ground of Twickenham. Although often dismissed as something of a bobber boy unfit for high office, many in the press depicted Abbott as a right-wing throwback to a bygone era, a figure who's simply unelectable as Prime Minister. Nevertheless, he does have a reflective side. Labor and much of the left in Australia have obviously badly underestimated Abbott's appeal to the middle ground, it's just the reality. I think this represents something of a chronic intellectual failure for the Australian left in general. Their speed in riding off Abbott mirrored the same verdict delivered on John Howard when he returned to the opposition leader's job in 1995. And John Howard famously said, this is Lazarus with a triple bypass. That too goes as opposition leader in the 1980s. Howard then went on to win four elections. Now to foreign policy under an Abbott government. As Margaret mentioned, foreign affairs was not a major factor in the campaign, except where Indonesia's reactions to Abbott's proposed policy on asylum seekers was concerned. I'll speak about that in a minute. There was a brief scuffle between the two party leaders over the West's response to the Syrian civil war, in which Abbott voiced his caution about any American military intervention. But the factor here is really does foreign affairs play a major role in the Australian campaign. In fact, in recent decades, there's only been one election where foreign policy played a major role and that was the Vietnam election of November 1966. But it might be worth looking at the occasional forays into foreign policy that Abbott has made as an opposition leader. In that role, as I mentioned before, he was so ruthless and so effective in destroying the credibility of Labor's domestic agenda that he barely had to lift his gaze to the world beyond. Yet in two major speeches in the middle of last year, one in Washington and the other in Beijing, voters were given something of a glimpse into how Abbott understands Australia's place in the world. I think the picture is somewhat mixed. Abbott has placed on the public record his respect for John Howard's victim that Australia does not have to choose between our history and our geography, but should benefit from both. These two speeches, which I think really are the major speeches that he gave on foreign affairs in his time as opposition leader, showed, I think, his initial interpretation of that formula about Australia, not having to choose between its history and its geography. It was telling, obviously, that his first major trip as the then alternative Prime Minister included both America and China. Clearly, I think he feels the sentimental call of the old, great and powerful friend, but he also, obviously, feels the gravitational pull of the Asian economic giant. Like other leaders before him, he had some difficulty in reconciling Australia's European inheritance to its Asian future. In Washington, Abbott told the Americans, it might be said what they wanted to hear. Trying to raise his voice above the din of doomsayers and dissenters, he rejected the claim that the United States was in decline. It was still, he said, an exceptional nation, but he did much more in that speech than try to prop up the pillars of American nationalism. Abbott's description of America as family and his contentious claim that, quote, few Australians would regard America as a foreign country was not only more pro-American than John Howard, it rewound Australian alliance rhetoric back to the period of the late 1960s. After all, it was conservative Prime Minister John Gorton in the late 60s and later in the early 70s, Labor's Gough Whitlam, who moved Australia's relationships with Britain and America onto a new, more foreign footing. With Britain trending towards membership to the European community, with America at that time signaling its intention to play a more limited role in Asia after the shock of Vietnam, these governments saw no reason to maintain the intimacy of old. Australia would henceforth begin to treat America and Britain just as it treated France, Germany and Japan. And really the pattern that was established by those Prime Ministers, Whitlam, Fraser, Hawke, Keating, all to a greater or lesser extent, comprehensive engagement with Asia was their watchword. Yes, the American alliance was number one in terms of Australia's security, but none of those Prime Ministers did anything substantial to give the alliance more content in that period, because Asia was seen to be the dominant policy priority. Successive Prime Ministers also learnt the harsh lesson that America did not necessarily share the same interpretation of ANZAS, the ANZAS Treaty, when it came to consulting Australia on matters of vital regional interest. A generation of politicians and policymakers in Australia learnt the hard way that to treat America as family was a recipe for Australia not being taken seriously. Abbott's speech in Washington had snippets of realism. He warned that America could not take Australia's support for granted, and he said that Australia and America would not always share identical interests. But their impact was lost amidst the casual, strategic waltz through the world's trouble spots and washed away by Abbott's sentimentalism about the common values born of the Anglosphere. Having extolled the benefits of the Anglosphere in Washington, Abbott then had to find a way of connecting to his Chinese audience. In Beijing, he defined Australia as an immigrant society from its founding in 1788, and asserted that those of Chinese ancestry in Australia appreciate, he said, Australia's British heritage. Its language very, very similar to Bob Hawke, when Bob Hawke was putting his shoulder to the wheel of advancing multiculturalism as an official policy in Australia in the 1980s. But this idea of the Anglosphere, of course, carries very uncomfortable baggage for Australia in Asia. And in China, Abbott tried quickly and quietly to bury the foundational principle of Australia's British past. That is the ideal of the White Australia policy, Australia's restrictive immigration policy that was designed to keep Asians out. It was in place from 1901 and was only progressively dismantled between the mid-60s and early 70s. He labelled that policy an embarrassment. Pentagon planners would have bristled at Abbott's acceptance of Chinese military modernisation in that speech, but they would have liked his tough talk on the South China Sea. Although, like most Western leaders, he expressed hope for greater political liberalisation in China, he argued in that speech that the Chinese people would prosper even further if they enjoyed the rule of law and the freedom to choose their leaders. He acknowledged, nevertheless, that shared interests between the two countries would trump ideological differences. Former Prime Minister's Whitlam Fraser, Hawke Keating and Howard all understood this. Abbott's proposal for an Australia-Chinese leadership dialogue I think can only further build trust and confidence between the two countries. Indeed, as some have recently argued in the Australian press following the election, it's likely that Abbott's position on China will play well in other Asian capitals, particularly the democracies, Japan, South Korea, India, Singapore, Malaysia and Thailand. But like Prime Ministers before him, Howard, Rudd and Gillard, Abbott seems reluctant to face up to the harsh realities of a world where America might not always be preeminent. In fairness, he probably won't have to, with American power likely to remain dominant in the region for decades to come. When in Washington, Abbott said he doesn't want to face the prospect of quote, what a shrunken America might mean. I was just a faint whiff of anxiety in that sort of comment that was reminiscent of comments again in the late 60s and 70s when Australian leaders faced a more multipolar world, more fluid world in that period where they couldn't rely on that umbrella of great power protection. Nevertheless, he did talk in Beijing about the American alliance being centrally about building trust rather than picking sides. And interestingly in that speech too, he eschewed the Cold War language of containment, China. The question, as always, of course, is whether the strategic circumstances of the future will allow Abbott the luxury of maintaining a sharp divide between the two sides of his worldview, his realism and his sentimentalism. Initial reactions from Asian partners have been positive. Julie Bishop from Western Australia becomes the nation's first female foreign minister and has won a lot of praise throughout the region for engaging senior leaders in the business communities in various Asian countries. One expert in China, the deputy director of the Center for International and Strategic Studies at Beijing University, has said and I quote, Tony Abbott is pure Aussie, it seems to me. By this he went on, something that would bristle up business in Australia. I mean that he's not broadly exposed internationally. I'm sure Tony Abbott would bristle at that. But he might prove more dedicated than his predecessors to an Asian policy rather than a China-only policy which might work out nicely. Now, this dismissed easily as somewhat a superficial comment but there might also be something to it. It's important to recall that John Howard when he came to office in 1996 also was not well known for his views on foreign policy. Paul Keating said famously in the 1996 election campaign that Asian leaders would not deal with John Howard. And yet as prime minister, after a few early wobbles, he was very successful in his Asia policy, particularly in sowing a number of bilateral free trade agreements. There was a less of an emphasis on multilateralism and I suspect that will probably continue under Abbott. But nevertheless Howard was able to manage sort of walking and chewing gum at the same time if you like, these two dimensions of Australian foreign policy, the engagement with Asia, particularly China and the American Alliance. I think obviously the two sides of the Howard doctrine were not quite equal. After all, the American Alliance constitutes shared values, shared history, the relationship with China for Howard was a pragmatic conjunction of interests. All right, so I think that needs to be borne in mind. A highly respected Australian observer Malcolm Cook said that Australia's major partners including China recently said this might welcome a less exciting, more stable and less personalized Australian government than a Rudd government. With the coalition able to focus on presenting themselves as a safe and adult alternative. One thing is for certain, Abbott will support the US pivot to Asia and its consequences for Australia. His Alliance first policy will find much support in a region where many US allies are calling for America to continue its engagement as a counterweight to growing Chinese influence. Now, coming towards the end of remarks here, but I think it is worth stressing again the significance for Australia of this US pivot to Asia. Now, many of you will recall that during his visit to Australia in late 2011, Obama announced that 250 Marines would be deployed to Northern Australia starting last year in 2012 that will develop into a rotational presence of around 2,500 Marines here around Task Force. The significance of this, of course, is for the first time Australia hosts a permanent US military presence on its soil. Something that it has wanted since the end of the Second World War. Now, of course, the vast majority of US troops in the region will continue to be based on Guam, Okinawa, and in South Korea. But the announcement came with a new language about the Australia-US alliance and American regional policy more broadly. Senior officials in the National Security Council and the White House emphasised that Obama's aim to restore America's alliances in Asia and raise it standing in this part of the world. They also used a very new language about the alliance. They said that if we were not coming, the Americans said, to a far-flung part of the world, there was no more sense of describing Australia as like a southern anchor for US policy in Asia. Very different language to the way in which the Americans have spoken about Australia in terms of their Asia strategy. Deputy National Security Advisor Ben Rhodes said they were taking the alliance to the next level. Now, obviously, part of the context here is to put that development in the broader context of the US global force posture review and its state of desire for a more nimble and more geographic and dispersed US presence throughout the region. That might mean a quicker response time for humanitarian and disaster relief, but the emphasis on maintaining security in the region indicated, of course, that that announcement had won overriding and binding context for the rise of China. For Australia, the implications are clear. Canberra is locked into an intensifying American grand strategy in Asia. Only time and circumstance will tell whether that means Australia now has less freedom of action in the event of any possible military crisis between the US and China. As a senior Australian journalist put it, the new US military presence means that Australia becomes part of a regional tripwire, ensuring that Australia will be inevitably caught up in any military contingency. And so while China was at the forefront of the discussion of this, I suspect the risk of political instability in Indonesia was also driving Australian policymakers at the time. And indeed, relations with Indonesia are already off under the Abbott government to a somewhat rocky start. I suspect this is a bit of public skirmishing, but it is worth noting, I think, the Indonesian foreign minister has poured cold water over Abbott's election campaign promise of turning around boats of illegal asylum seekers and turning them back into Indonesian waters. Likewise, his idea of going to Jakarta and other places in Indonesia and buying up these leaky vessels has also been given short shrift by the Indonesians. That's been dismissed as an insult to Indonesian sovereignty. Abbott will need to be very careful here. His election rested on the increasingly shrill cry of stopping the boats, but it's likely that that will come up uneasily against the realities of maintaining stable and close relations with Jakarta. The advent of multi-party democracy in Indonesia, economic reforms and cooperation with Australia and others in fighting terrorism have all been positives in Indonesia, but such progress alone cannot be assumed to guarantee long-term political stability. Social dislocation, urban sprawl and large-scale internal migration will put that stability to the test. Then, of course, there is the ongoing challenge for Jakarta of the various successionist movements, especially in Aceh and West Irian. The new prime minister is due to be in Indonesia for an APEC meeting in early October, but there's even talk of him going before that. But he did say in his first press conference just the other day, Indonesia, he said, is Australia's single most important relationship. In terms of defence spending, Abbott's promise to reverse the decline, the Labor Party had allowed us to drop to 1.59% of GDP, many commentators pointed out that this was the lowest defence spending since 1938. And yet at the same time, Labor had embarked on an ambitious policy of building new submarines and modernising the Navy. Rory Medcar from the Lowe Institute has pointed out the inherent risks to this drop in defence spending, namely, copping criticism from the United States. Former Deputy Secretary of State Richard Armitage who's never been backward in coming forward with his comments on various aspects of diplomatic relations, warned that Australia will lose respect and be seen as a free rider unless it spends around 2% of GDP on defence. Now, I recall that Armitage was also the one who said that if there was ever a conflict between the United States and China over Taiwan, he would expect Australian blood to be spilled on the beaches alongside their American ally. It's probably true, I think, as Hugh White, one of Australia's leading strategic analysts has commented recently, so it's probably true, I think, that Armit will maintain a certain flexibility and pragmatism in his foreign policy. I know that's a bit of a motherhood statement, but that, again, is in line with John Howard's approach. Events and the strategic situation demanded. The question is what form the pragmatism may take. Some commentators argue that because the American pivot to Asia has taken on a new intensity and urgency, even though Syria, of course, has shunted American attention firmly back on the Middle East, it will not be possible for Abbott to walk that fine line between the US and China. That is to maintain the sense of having an ally in Washington and a friend in Beijing, as Julia Gillard put it. My own view is that much of the recent strategic chatter in Australia about the need to make a choice is probably not helpful. As Ross Terrell, a China watcher, observes, he said such talk is unhelpfully abstract. Terrell adds, he says, he knows of no crisis since the Whitlam era in the 1970s, in which Canberra has had to make a damaging choice between the United States and China. He went on to say, the view that Australia has to make a choice underestimates its ability to say yes or no to a particular request without the sky falling down. Or as the current head of the Foreign Affairs Department in Canberra, Peter Varghese, observed earlier this year, Australia doesn't want to be put in the position where we have to choose between the US and China. We wish to see a strong and stable US-China relationship. As I stated at the outset, it's how the new Abbott team looks out on the strategic picture in Asia that will be crucial. The processes of modernization and the rise of nationalism pose big challenges. Although it's entirely understandable that China will seek more strategic heft as its economic power increases, we should resist the temptation to mark a simple teleological line between China's fiscal power and its willingness to throw its military muscle around. Too many assumptions are built into these kinds of conclusions, not least the fact that Chinese capitalists have not yet experienced the normal booms and busts of capitalism. They've not been tested by major economic recession or indeed a great depression. China wants, above all, an external environment that does not hinder seriously its internal development. It has significant domestic challenges, not the least of which is catering to the needs and aspirations of a rising middle class, environmental degradation and calls for greater political liberalization. Over and above all of this is the question of how nationalism will play out in China. What form will it take? As the Communist Party leaders continue to empty out the post-1950s revolutionary myth, how will they create a sense of community? We've already seen some evidence, most notably in the Chinese government's criticism of Japanese history textbooks, its actions over disputed islands in the South China Sea, its treatment of ethnic minorities in the country, the Chinese nationalism can very quickly take on an anti-Western hue. As the historian, Neville Meany and others have noted, the new nationalist myth is primarily concerned with 5,000 years of continuous history with a special focus on the last 200 years of humiliation at the hands of the West. All of these questions and issues suggest a strategic picture in the region that remains in flux. It's a time of transition, probably as challenging for Australian politicians and policymakers as the emergence of a new multi-polar world in the early 1970s. So although Tony Abbott's official focus as Prime Minister will be decidedly domestic, he will doubtless discover that the pool of regional and world affairs will consume more and more of his time as his term in office evolves. Thank you very much.