 Let me at the outset acknowledge the Vice-Chancellor Professor Brian Schmidt I think you're early enough in your tenure Brian for me to also offer congratulations on your appointment to lead this very important national institution. In fact my wife is the co-author of the official history of the ANU so I've been forced over the years to learn a lot more about this institution than I might otherwise enthusiastically have been interested in and it is it is not just a national asset but it plays a very unique role in the relationship between academia and government and Brian I'm sure all of us in government look forward to to your tenure. To Gordon Hain the Senior Vice President of the Asia Foundation can I thank you and your foundation for your support for this conference to Stephen Howes the Director of the Development Policy Centre Stephen you keep us on our toes you do you do very good work at the centre and I'm you know delighted to have an opportunity to participate in the 2016 Australasian 8 conference. It's a wonderful term Australasia because it captures not just the relationship between Australia and Asia what we have and more importantly what we want but it also captures that long thread of history that sits behind Australia and Asia and even longer thread of geography so I'm delighted that it appears in the title of the conference. I want to start actually with some brief personal observations. Prior to the integration of AusAid and DFAT to which Veronica referred I had been on the periphery of aid policy issues for some 35 years and like many on the periphery I had very strong views. I was a skeptic about the historical record of development assistance. Indeed I had some sympathy for the view that aid was for the most part an area of policy failure paved with the very best of intentions. Now these days I don't have the luxury of armchair the pontification about aid policy much less aid delivery. The more I've been involved in aid policy as head of the department responsible for its delivery the more nuance has crept into my views. The balance sheet today for me looks much less stark. The policy challenges are genuinely complex. It is still my view that the most important ingredients of economic success for poor countries are good policies and good leadership. No aid program can compensate for their absence but well thought through aid program certainly can contribute to their presence and today I want to focus on three things. First I want to address three conceptual issues which are central to our aid program. I want to address the link between the private sector led economic growth and poverty reduction. I want to explore the links between security and development and I want to say something about the anatomy of that difficult task of state building. Second I want to talk about how we're addressing these concepts in the very different contexts of Asia the Pacific and globally and finally I want to say something about innovation and why we want it to have a much more prominent place in our aid policy thinking. So let me start by exploring the links between private sector led economic growth and poverty alleviation. This is important because too often the debate about growth and poverty reduction turns into an either or choice between poverty and growth and of course this is a false dichotomy. Generating growth in developing countries is always a balancing act supporting overall economic development and supporting the poor to participate in that development. That's why in Australia's aid program there continues to be considerable investment in human and social development in social protection in women's empowerment and in disability inclusive development. The empirical evidence on the centrality of economic development as a driver for poverty reduction is pretty clear. I mean China is the most obvious and compelling example. More comprehensively a 2013 World Bank analysis of growth and income changes across 118 countries over four decades shows that incomes of the bottom two quintiles in the population grew at about the same rate as the average annual incomes. The report found that economic growth that lifts people out of poverty and leads to shared prosperity on average. It also helps to explain how the rapid growth in the developing world in recent decades has led to such dramatic poverty reduction. What is also becoming clearer is that poverty in a country itself acts as a handbrake on growth. In an American economic review article from a few years ago Georgetown University professor of economics Martin Revolion found that poorer countries experience lower rates of economic growth. In other words poor countries grow slower. Part of the solution comes with an emerging middle class. A larger middle class makes growth more poverty reducing. The handicaps faced by poor countries in their efforts to become less poor are very difficult to overcome. Part of the population is caught in a poverty trap and doesn't have the basic capabilities to respond to the opportunities that economic growth presents. And finally there is growing acceptance that countries with less inequality experience faster and more durable growth. There's a clear consensus that sustainable job growth can only be delivered by a larger private sector. There is also an emerging consensus on the importance of focusing on women's empowerment and supporting women's engagement in the economy and society. It generates more growth and what's more sustainable. Recent McKinsey analysis suggests that of every country were to advance gender equality as well as its best performing neighbor global GDP would increase by around 12 trillion dollars or 11 percent over the next decade. Indeed the very first line of the McKinsey report sets out exactly what's at stake and I quote gender inequality is not only oppressing moral and social issue but also a critical economic challenge. If women who account for half the world's population do not achieve their full economic potential the global economy will suffer end quote. Importantly supporting economic development involves much more than development assistance alone. The Howard government's decision in 2003 to remove tariffs and quotas from imports from least developed countries has seen imports from those countries grow at an average rate of 16 percent per year over the last decade. In 2015 Australia's two way merchandise trade with countries with which Australia has an ongoing bilateral development partnership was valued at about 33 billion dollars or more than 10 times the value of the development assistance. The government's economic diplomacy agenda recognizes that the deployment of our foreign policy trade and development instruments in an integrated manner delivers a better overall result. Aid for trade investments without focusing on stronger market access makes very little sense. The relationship between security and development has come to the fore over the last 15 years. As the UN Secretary General Kofi Annan said in 2005 we will not enjoy security without development. We will not enjoy development without security and we will not enjoy either without respect for human rights. The issue was the focus of the World Bank's 2011 World Development Report on Conflict Development and Security which produced this rather startling finding. The average cost of a civil war is equivalent to 30 years of GDP growth for a medium sized developing country. In our own region we have seen the costs of conflict. Fiji's economy dipped immediately following the 2006 coup. Conflict and instability that began in the Solomon Islands in the late 1990s had a devastating effect on the country's economy and it was only following the arrival of the Australian-led regional assistance mission to the Solomon's that the economy began to recover. And for investors stability is crucial. Conflict is a significant turn off. In the absence of security and rule of law economic development falters much of the evidence from post-conflict expenditure patterns suggests that the international community has under invested in establishing security and rule of law particularly at the early stages of post-conflict. This under investment has in turn reduced the effectiveness of investments in social and economic development. For me the complexity of the relationship between security and development assistance highlights the importance of an integrated response. Security, diplomatic trade and economic development interventions need to be deployed in a coordinated way. Again Ramsey in the Solomon Islands is a good example. It reduced it it rescues the Solomon Islands from economic and political collapse through a combination of security economic and governance assistance. Let me now turn to the vexed question of state building. In his 2014 tome political order and political decay Francis Fukuyama history may have ended but academia it appears always survives argues that the three components of a modern political order are a strong and capable state the state's subordination to the rule of law and the government's accountability to all citizens but when the state is weak and unaccountable and service delivery is poor when each of these three components is missing it is far from easy to determine where exactly we should focus our attention. The international community has understandably put a lot of focus on free and fair elections but what is the point if the public administration doesn't have to implement the policies of a winning party. It could be argued that a focus on elections alone could simply lead states to engage in rent seeking behavior or a spoils of war approach especially if you are resource rich as Fukuyama argues is the case in much of Africa. Should the international community undertake service delivery through and with the national government even though this may give it a legitimacy that it doesn't warrant what weight do we put on bolstering civil society including NGOs and other organizations that strongly support the representation accountability and transparency or should we undertake service delivery through a parallel process that weakens both the legitimacy and the capability of the national government. There are no easy answers to these questions. What makes our challenge all the harder is that there is an aspiration and expectation that development assistance or even a broader integrated approach across our foreign and trade policies can support the creation of a modern political order within a few years or a decade. Yet the creation of modern political orders has taken generations to create and refine and a final point on this for much of the last 70 years we have been focused on trying to transplant traditional British or European notions of the state across the developing world. It may be that we need to start understanding better the nature of the social contract in societies in our region so the nature of the state reflects that social contract. So what does that all mean as we allocate taxpayer funds to meet Australia's national interests? The first conclusion we can draw is that we need an approach that is deeply rooted in the local context particularly the local political context. Put simply we have learnt that the project-based approach is broadly flawed and donor or multilateral development bank led approaches don't necessarily deliver sustainable results. From these experiences the international community has distilled core principles of a development effectiveness agenda that have remained broadly consistent over the past decade. Principles such as local ownership, a focus on results, inclusive partnerships, transparency and accountability. This principles-based approach is art rather than science because none of it is deterministic. The international community now has 70 years of evidence to inform these decisions. What this does do is highlight the importance of retaining and developing our expertise and capability in aid program and management. We need to be able to make these judgments and draw on external resources to help us with these judgments. The reduction in size of the aid budget required a reduction obviously in the size of the workforce to manage it. But we recognize that delivering a high quality aid program requires a strong mix of generalist and specialist skills. And this is why we are strengthening our workforce planning to enable us to recruit and retain development professionals and sector experts. We're taking steps to improve our knowledge capture and transfer between staff and to refine our extensive program of training and mentoring of DFAT staff. I now want to turn my attention to how these principles translate into what we actually do with our aid program. Our starting point is that the challenges in our Asian region and those facing the Pacific are quite distinct. And so Australia must tailor its responses accordingly. We are also a part of a global community looking to respond to global challenges. Rapidly growing Asia has seen dramatic reductions in poverty but there are still major concentrations of poverty in middle income countries in our region. Nevertheless the expectation is that growing Asia will increasingly have the fiscal capability to meet the needs of their societies. By 2025 several major aid recipients in the region are projected to reach levels of the capital income at which Australian aid ceased in the past. The nature of economic growth is critical in growing Asia and will become more so. They are risks that countries fall into middle income traps where they stagnate with most of the population out of poverty but not continuing to develop into a broader middle class. So the choices that these governments make about their public spending will dwarf the impact of aid spending and with urbanization likely to remain a growth driver planning and spending around infrastructure will be key. What does this mean for our development assistance and broader engagement? Well first we must recognize that the growing resources available to these countries necessitate change in how aid is delivered in order for it to remain effective. This means moving away from directly financing development activities such as service delivery towards investments aimed at systemic improvements that allow partner governments to effectively utilize the increasing level of non-ODA resources available. How quickly we can move in this direction will of course depend on country context particularly the economic growth trajectory in each country. This also means that our standing as a partner of choice will be determined by the quality of our assistance not the quantity. Here Australia is well placed to support the economic reform and development agendas in the region. Our economic and broader public policy institutions are internationally recognized. Building on the partnerships at the institutional level between our economic policy makers and regulators and those in the region is a great opportunity for Australia. In what will become an increasingly contested space they will be even more premium placed on being a reliable partner. The context in the Pacific is very different to that in Asia. Pacific Island states have specific challenges because of their size, geographical dispersion, remoteness from markets and higher risk of natural disasters. Outside of Papua New Guinea the growth prospects for most Pacific Islands remain modest even with positive supportive environments, good economic agendas and benign external conditions. Only a handful of Pacific Island states are projected to be able to generate real capital growth rates above 2% per annum in the medium term. This provides us with a very different set of challenges than in growing Asia and it means that we need to entertain different options and ways of engaging. It is in the Pacific where we clearly need to deploy our foreign policy trade economic and development tools in an integrated fashion. Australia is likely to have an ongoing role in supporting some service delivery and ensuring that the benefits of growth are broadly shared and we will continue to have a key role in the security domain. There is an increasing appetite to try things differently across aspects of regional integration. There is a growing recognition that small Pacific states do not have the fiscal capability to produce the range of services expected of a modern state and that some services could and should be provided regionally. There are examples of integration from other regions that could also be considered. The organisation of eastern Caribbean states has adopted a common currency, a shared central bank and a shared supreme part, a crucial part, but not all of the solution. And the government has recently expanded the seasonal worker program and there needs to be an ongoing consideration of what more we can do in this area. While bilateral relationships are not at all the same, the world is a bedrock of Australian foreign policy. The development policy and development policy defends best practice as country led and country owned, the importance of global public goods is integral to how Australia uses its aid program to contribute to a global rules based system. Climate change mitigation, infectious disease control, and climate optimism are global challenges that require international cooperation through a mix of multilateral approaches and organisations. These tools and organisations have evolved and changed as our awareness of the challenges has changed. In some cases, also as our ambition has grown, witness new UN organisations and new vertical funds dedicated to the development of the HIV, Polio and Malaria. And of course, the previous MDGs and now the SDGs represent a core part of the 2030 agenda that spans human development, sustainability, peace and governance and inclusiveness. Development assistance alone will not be nearly enough to realise this ambitious vision. As the Addis Ababa Action financing for development makes clear, private sector investment and domestic revenue will be key elements in moving from the billions to the trillions that will be needed. This breadth of ambition and the associated financing needs simply reinforces the importance of an integrated response from Australia across security foreign policy trade and development assistance dimensions. I would like finally to offer some thoughts on innovation. The government's commitment to the innovation agenda is clear. We need to be finding ways to do things differently and better. We need to recognise the fiscal realities that make cost efficiency so central. And we need to recognise that the business as usual approach will not meet the government's objectives and aspirations. Equally, we need to recognise that both in the development assistance space and more broadly they have been examples of highly innovative practices in the past. The integrated approach adopted in the Ramsey deployment a decade ago was recognised internationally as creating best practice in post-conflict missions. Two decades ago Australia took the lead in the UN intervention in Cambodia. The first time the UN had taken over a state and functioned as its interim government. And more recently Australia has been recognised as a world leader in disability inclusive development co-chairing GLAAD, the global action on disability group. Equally importantly it's important to recognise that our role in innovation can often be best served in a supporting role. Because arguably the change that has made the most difference in the Pacific for example and PNG in the last 20 years has been the introduction of mobile telephony. Governments and donors had almost nothing to do with funding this but they did support or allow policy reforms that enable the private sector and consumers to make this change. And banks with donor help are now driving a second wave of changes through mobile banking bringing huge numbers of people into the modern economy by giving them the opportunity to save and borrow. It isn't that we were never innovative and must start now rather it is that innovation needs to become core to our business. That's why the foreign minister announced the creation of the innovation exchange in March last year which has been a catalyst for innovation across DFAT. We know that effective states supporting inclusive economic development is the only way to make sustainable and tangible differences in the life of citizens and that this is a very long game. But there is also an imperative to deliver results that make an actual difference in people's lives today. We need to think about risk in a different way and trial new approaches as we try and meet these short term and long term objectives. The short term activity led innovations are easier to trial and test. They lend themselves to using the Silicon Valley fail fast approach and we need to be doing more of these and when they succeed we need to have the architecture and the relationships in place with partner governments and the private sector so we can scale up these approaches. The innovations designed to support long term transformational change in partner countries are of a different order. Supporting economic reforms and institutional and capability development are slow burn investments and the results do not come in a predictable fashion. The Australian aid programs brought to the coalitions for change project in the Philippines contributed to the introduction of new tobacco taxation with major revenue and potential public health benefits gaining an unprecedented 58% increase in the health budget and approximately $644 million directed to more accessible health services for about 45 million people. Success in these sorts of projects often seem to rely on luck but as Seneca says, luck is where preparation meets opportunity. Identifying when these investments are failing and when they represent effective preparation that is ready to pounce on the opportunity is not straightforward. These decisions like much of foreign policy rely more on art and judgment. The ability to make the right choices in a world where there is limited evidence and much uncertainty reinforces the importance of ensuring that we have both the right internal capability and the ability to harness external capability. It's why our current focus on capability is so central. Everyone involved in the aid and development business knows that it is no science and that wishing for an automated direct relationship between a given set of inputs and a set of desired outcomes is a path to almost certain disappointment and possible ruin. Every person in this room will have tales to tell of hard lessons learned the hard way. But at the same time we must remind ourselves and remind those who would pour on the capacity of cleverly directed and delivered aid to make a difference that we do know some things about the preconditions for successful development. If we accept that, we can be confident that we can continue to learn more and build on past successes. If old ideas haven't worked or no longer work, we must abandon them for new ones. That's why the Foreign Minister has such a deliberate focus on innovation and testing new paths for the delivery of effective and targeted aid and why she has encouraged the Department of Foreign Affairs and Trade to think creatively, to experiment and to take some judicious and considered risks. And that ladies and gentlemen represents a great opportunity for all those with deep development expertise to participate in a new type of discussion. Thank you. Good morning. Thank you very much for the presentation. I'm Duncan McIntosh from the Internet Registry for the Asia Pacific. I'd like to ask about the role of the Internet and if you see a role particularly for Australian aid in two areas around the Internet's development. That is the governance and regulation of the Internet to ensure it remains open and free and is not over-regulated or fragmented. And also in the role of Internet infrastructure, particularly around submarine cables, Internet exchange points to allow for cheaper and more efficient Internet to provide a foundation for many of the development activities that you've discussed this morning. Yeah, well thank you very much. I think there is a role for governments and development assistants in both those areas. The role on governance and regulation should be a minimalist role rather than a highly interventionist role because I think those of us who value the Internet as a platform and who have a commitment to fundamental values of freedom of expression are particularly skeptical about the agenda that sits behind some of the push for greater government regulation and control of the Internet and I think we need to keep that firmly in mind. The Internet as a platform for economic development and therefore as a platform for the poverty reduction which would flow from that is clearly important now and will become even more important and therefore I think it is very important that we do include that in our thinking about what the focus of our development assistant should be and you know there again the distinction I made between how we approach aid policy in growing Asia or rapidly growing Asia even if it's going to be slowing a little bit in the medium term and the Pacific will apply in this area as well in other words what we can do in terms of infrastructure contributions in Asia I think will be different to what we would want to do in the Pacific and the only other point I'd make in this area is that this whole issue of cyber security is going to become more important not less important and when we think about the role of the Internet in broader economic development terms we obviously also need to think about what we can all do to strengthen our systems against cyber attacks and I think again there is a role for us to play particularly in the Pacific where these systems are not at all well developed. Chris Roach from the Institute for Human Security and Social Change at La Trobe University. Thank you for that talk. I'm very pleased to hear that we're talking about an art rather than a science. Just a question, the sustainable development goals are meant to apply everywhere including Australia. Do you think that one of the innovations that DFAC could be exploring is what we could learn in Australia about how indigenous issues, gender based violence, climate change, mitigation, citizen engagement might be improved and that in so doing help create a beyond aid and partnership where the future is really about us learning together about how we address common problems. Look I think that is a very good point and one of the things we have been thinking a lot about in the department is the way in which the indigenous experience in Australia and today the PM is dealing with the closing the gap report so it's a good time to actually acknowledge that. The way in which the indigenous experience here in Australia holds lessons for what we can do in parts of our aid program. We also want to involve indigenous communities more in helping us understand that and then to help us with whatever linkages and networks we might want to create. One of the things we're doing is looking at strengthening indigenous business networks which can draw on that experience and which can help people understand how common problems have been dealt with in different circumstances and I think you can apply that narrative if you like across many of the other pillars or elements of the SDGs. Peter thank you for your very interesting talk, Julia Newton House from Care Australia. I would just like to ask a question about the private sector policy in DFAT. None of us disagree that a vibrant private sector is a highly desirable outcome from development and indeed helps drive development but there's some interesting new work out of the Brookings Institute on private sector growth and jobs growth in Africa suggesting that actually it is not creating the middle class that you suggested but in fact creating a large group of working poor. Now that historically may not have been the case in Southeast Asia but the potential with the shifts in global markets for that to emerge in the future. I wondered if you would speak about the role of DFAT's private sector policy and whether there's a concern about that issue and how you might take it into account. Thank you. Well I can't comment on the Brookings study, I don't know anything about it so let me just speak a little bit about where our partnership with the private sector fits into our thinking about aid. I mean the conceptual propositions are fairly straightforward. If focus needs to be on economic growth and development as the surest means of reducing poverty then the role of the private sector is going to be fundamental because I can't think of an example of long term sustainable economic growth which has not been private sector dominated. There are examples of economic growth minus the private sector but I'm talking about a sustainable model. So I think engaging with the private sector and involving the private sector is going to be fundamental to any economic growth strategy in developing countries. So we want to work with the private sector at a number of different levels. Innovation agenda has a large space for the private sector because when we're looking at projects that are innovative or when we're looking at new ways of approaching old problems we very much want to do so in collaboration with the private sector and to learn lessons from the way in which the private sector operates. I mean you know Julie Bishop makes this observation about distribution systems in a country like Papua New Guinea where we can often struggle effectively to distribute medicines to remote areas of Papua New Guinea but you can go to the further corner of Papua New Guinea and find kids with a can of coke. Now the example in and of itself doesn't necessarily amount to very much but it goes to this broader point the return you could get with a closer partnership with the private sector. The other element that I think is important in terms of our own thinking about the private sector is the emphasis we're giving on aid for trade which is not giving aid in return for buying Australian exports which people sometimes confuse aid for trade for. This is the effort we put into building the capability of developing countries to more actively and more effectively engage in the global trading system on the assumption that a more active and extensive engagement with the global trading system will be good for economic growth in those countries. So we want to reach a certain proportion of our aid budget going towards aid for trade and we think that's very important. It's particularly important I think at a time when the trading system itself is under so much pressure and when global demand generally is so tepid and if you're looking for ways in which to boost global demand and therefore global trade then I think trying to increase the contribution that trade is making to economic growth is going to be very important. So you know for us this is quite an important part of the aid program. It's not a brand new part of the aid program I think we've been working with the private sector for some considerable period of time but I think under our recalibrated aid program it has a particularly prominent place.