 Good morning ladies and gentlemen and welcome to the Lowey Institute for International Policy. I'm Michael Fully Love, Executive Director of the Institute and we're delighted today to welcome back the Honourable Kevin Rudd MP for his second speech to the Institute as Prime Minister and let me welcome to Ray's Reign as well, welcome. This morning's event is being broadcast live on ABC News 24, Sky News and News Radio. I encourage people here at Blyth Street and indeed at home to tweet using the hashtag PM at Lowey, PMAT Lowey. You're pretty good at this stuff Kevin so we thought we'd try it. Ladies and gentlemen one of our main tasks at the Lowey Institute is to deepen the national debate on international issues through our own scholarship and commentary and by hosting visiting leaders and I'm pleased to say that all three Prime Ministers who have served during the Institute's decade of existence have spoken here. Indeed in the last year Julia Gillard launched the Asian Century White Paper in this room. John Howard spoke on his decision to take Australia into the Iraq War and now Mr Rudd will be speaking to us again this morning. This is a particularly important part of our job in this election year. For example Green's leader Christine Milne recently addressed the Institute on the G20 Shadow Defence Minister David Johnston spoke on coalition defence and strategic policy and of course in the first week of the formal campaign we were delighted to host the foreign policy debate between Foreign Minister Bob Carr and Shadow Minister Julie Bishop. Let me give an ad to the Lowey Institute's excellent blog The Interpreter is hosting a special series during the campaign on international issues in the election entitled The Election Interpreter. So Mr Rudd's speech is very much in that tradition. Ladies and gentlemen Kevin Rudd is the 28th Prime Minister of Australia he was also the 26th. Mr Rudd is unusual in the sense that he was a foreign policy professional prior to entering politics and he's been an unusually active and ambitious Prime Minister on international matters. For example he was extremely active within the G20 during the global financial crisis and he launched Australia's bid for the Security Council. He also outwonks the wonks which is a bit terrifying for those of us who are wonks. He recently published an article in Foreign Affairs about the US rebalance toward Asia and the need for a new framework for US-China relations. Today he will be speaking to us about the global and regional economic and security challenges facing our country. Ladies and gentlemen the Prime Minister will speak for about half an hour after he's made his remarks I'll return to moderate a short question and answer period on international issues. Let me say we're delighted to have photographers in the room I know you'll be taking some snaps in the first couple of minutes but can I ask you just to respect the space around the lectern a little bit. Ladies and gentlemen please join me in welcoming Prime Minister Kevin Rudd. Thank you very much Michael and it's good to be back at Lowey and I'd honour Frank Lowey in his great vision for the establishment of this institute quite a while ago and to add to the framework for formal foreign policy debate and security policy debate in this country. It's also good to see here industry minister Kim Carr. Good to see here my old boss Dick Wilcott where did I see you a minute before Dick there you are behind the camera up there. Distinguished former permanent representative of the United Nations, former Secretary of Department of Foreign Affairs and former boss of mine and harsh critic. Distinguished guests ladies and gentlemen when people consider how they intend to vote in our national elections their sense of personal economic security is legitimately central to their decisions but the Australian Labor Party job lies jobs lie at the very heart of our policy agenda. We understand both intuitively and analytically the importance of employment security to the security and well-being of all Australians. This has been our history for over a century this guides our policy direction today and it continues to be our lodestar for the future. Having a job is about human dignity, having a job is about economic opportunity, having a job is about family security because if there are no jobs there is no household pay packet and therefore no security for individuals and families. Having a job is the bedrock for any family dealing with cost of living pressures. We therefore know in our hearts that everything that happens in national government ultimately boils down to one core principle it's fundamentally about the economy growth and jobs. Protecting the jobs of Australia's people today building the new jobs of tomorrow and managing the transition from one to the other constitutes the number one priority of the government of which I'm proud to be Prime Minister. The truth is no economy is an island. Our economy is buffeted by the ebbs and flows of the global and regional economy of which we are an integral part and the international economy is in turn buffeted by our global and regional security environment of which we are equally a part be it conflict in the Middle East, strategic tensions in Northeast Asia or the continued challenge of global terrorism. One thing that seldom gets attention on the election trail is the critical role of foreign and security policy that they play in creating the conditions that nurture our national prosperity, our economy and jobs for all Australians. Economic prosperity is not therefore just a function of domestic policy. There is a fundamental connection between a nation's place in the world and our prosperity at home. That's what I would like to talk about here today. We live in a great country. We've always been one of the great trading nations of the world and the resources boom has delivered great growth to our economy over the last decade. But the end of the phenomenal investment phase of the China resources boom requires us to look to other sectors of our economy for additional growth opportunities for the future. In order to generate the jobs of the future, to ensure future prosperity, we must diversify our economy so that all our eggs are not in one basket. Ensuring our economic prosperity requires an intelligent, forward-leaning global and regional perspective that actually anticipates challenges and opportunities that lie ahead, not just passively responds to them. We should, whenever possible, seek to shape events. We are not a small country. We are not a poor country. We are a middle power with both regional and global interests and motivated by universal values. Early last year I gave a speech in London at the Royal Institute of International Affairs. I said that effective foreign policy should never be disempowered by a notion that we are helpless to change what is happening around us. I also said we should be mindful of history, but equally creative and optimistic and above all, resolute about the future. Mindsets left unexamined can in fact become self-fulfilling. Here I was referring to various regional doomsday scenarios about the inevitability of future conflict between China and the United States. I have never had a determinist view of history. Even less do I have one about the future of the region in which Australia finds its home. We are currently witnessing an historic shift in economic and political power from West to East. We are now living in the Asian century. This is no longer a prospect. This is a reality. Asia now equals a third of global GDP. By 2030, this will risen to about one half. And it is estimated that middle class consumers in the Asia Pacific will grow to 3.2 billion by 2030. This will mean that the Asia Pacific will account for around two-thirds of the world's middle class by 2030. These are extraordinary figures. They readily roll off the tongue. If you pause for a moment and reflect on them, they are of profound significance for us all. Their impact for our future is equally profound. China is the world's second-largest economy and is likely to be the largest before the end of this decade. India is now also one of the largest economies in the world and projected to overtake China as the world's most populous nation by 2030. Its growing middle class is estimated to reach over 600 million people by 2030. Japan remains, of course, a formidable economy. And anyone who underestimates Japan, I believe, will be poorly judged by history. Indonesia is emerging as the great economic powerhouse of Southeast Asia. With the GDP now of US$1 trillion, it's the 15th-largest economy in the world and estimated to become the fourth-largest by mid-century. It now has a consumer class of 45 million people, more than double our entire population. This is estimated to grow to $135 million by the time we reach 2030. So what does all this mean for Australia? Now, trade and investment with Asia is already a significant part of our economic landscape. Eight of our top 10 trading partners are from Asia. We share $125 billion worth of trade with China, now our largest trading partner. The United States and Europe will remain important elements of our economic engagement with the world. But our economic landscape is changing rapidly. Asia's growth, particularly China's, saw an unprecedented, sudden and sustained increase in demand for Australian resources and energy. The rise in our terms of trade was responsible for nearly half of Australia's income growth for the first decade of the century. This equation is now different. Asia is changing. China is changing. China's economy is maturing. Its growth model is also changing. China's demand for energy and raw materials is no longer growing as rapidly as it did before. It is still growing, but not as rapidly as before. This is what we mean when we talk about the end of the China-fuelled mining boom. It has one large implication for Australia's economic future, and it is this. Australia's prosperity is simply no longer assured on the back of the China-mining boom alone. As the pattern of China's economic growth changes, so too must Australia's own growth strategy for the future. It means we cannot afford to have all our eggs in one basket. The potential market represented by China's and Asia's growing consumer class is great. Capitalizing on this demand requires having a look at creating and strengthening our comparative national advantages. This is a highly globalized and highly competitive world. We should deploy all of our national talents and assets, our people as well as our natural resources, to build a new frontier of trade and investment across this vast and dynamic region we call Asia. So what would this new frontier look like? As Asia's middle class continues to grow, so too will its demand for clean green agricultural products. Global real estate firm Jones-Languissile estimated that China's second and third tier cities, the so-called China 50, make up an economy between them of $2.9 trillion US dollars. On its own, it would be the fifth largest economy in the world. Not bad for a bunch of cities put together. Australia is in a prime position to help meet Asia's food security needs, both through quality food products, innovations in agribusiness and new agricultural technologies. Australia possesses enormous potential to meet the changing patterns of Asia's consumption. Asia's middle class will also increasingly demand high quality services, financial services, insurance services, legal services, education, health, design, project management services and of course tourism. In China's case, these new opportunities represented by these 50 larger cities, for the first time in China's history, we will now have more people living in cities in China than there are living in the countryside. This is a phenomenal historical development. This is a global economic revolution unfolding before our very eyes, the 21st century equivalent of the industrial revolution of the 19th century. Positioning Australia to take advantage of these opportunities to ensure they generate jobs and growth requires investment, education, training and systemic, not episodic, engagement by governments. This government has been making significant progress, building our key relationships in Asia. We now have annual leaders meetings with China and Indonesia, a strategic partnership with India and Indonesia, and an annual two plus two defence and foreign ministers meeting with Indonesia, Japan and South Korea. These relationships have never been stronger, but there's always room to grow further. Last year the government under Prime Minister Gillard released here, the Australia in the Asian Century white paper, the most comprehensive review of Australia's regional engagement strategy for 20 years. The paper identified five key relationships, China, Japan, India, Indonesia and the Republic of Korea, and outlines a blueprint for how to progress these relationships across community, business and government through to 2025. I've already launched country strategies for Indonesia, the Republic of Korea and India, and today I'm pleased to launch our country strategies for China and Japan as well. These strategies set goals for Australia becoming comprehensively Asia literate in our schools and our universities, for strengthening links between chambers of business and commerce across the region, for further expanding government to government engagement well beyond the traditional domain of traditional diplomacy. Of course we must continue to liberalise the trade system across our wider region and the wider world as well. Australia depends on the traded sector of our economy. One in five jobs in Australia is trade related. The trade sector accounts for 42% of our GDP. Maintaining and expanding an open trade environment globally and across the region is critical to the future of jobs in our country. Securing our future economic prosperity is also about coordinated macroeconomic policy settings with the rest of the global economy. Allow me to briefly step back in time for just one moment. The time of the global financial crisis we saw many national economies fall off the cliff. Many are yet to recover from that crisis. The United Kingdom's economy today is still some 3% smaller than it was in 2007. The Euro area is 2.5% smaller than it was in 2007. And total employment in the United States is still some 2 million jobs below what it was in 2007. Australia's economy is currently 14% larger than it was when we came to government in 2007. And Australian businesses have created nearly a million new jobs since 2007. These have been strong, solid economic achievements in the period that we've been in office during a period of great global economic crisis. The crisis and the events that followed highlighted to us all that in a globalised world it is critically important that countries work together to coordinate and regulate effective financial and economic management. The elevation of the G20 from a Finance Minister's meeting to a Leader's meeting gave an unprecedented boost to these efforts. As Prime Minister, I was directly engaged in the global decision making processes that led to the G20 summit process being established in 2008. I remember well the debates at the time, some of which would have included Australia, some of which would have excluded Australia. Our diplomacy in partnership with others prevailed. And it meant therefore for the first time in our history Australia had a seat at Leader's level to the Premier Forum on Global Economic Decision Making, the first time in our history. Prospects for world growth have improved since the depths of the crisis of 2007-2009. But the road to economic recovery is at best bumpy and at worst highly uncertain. Next year Australia will host the G20, including the Leader's summit in my hometown of Brisbane. This will be a critical opportunity to promote our agenda on global growth, on global jobs and especially for global youth unemployment. Australia will take an activist role in shaping the agenda for the 2014 G20 summit in Brisbane in order to maximize jobs growth both for Australia and around the world. The two are linked. As with our domestic economic policy settings, employment will be the core organizing principle of the G20 summit in Brisbane. Ladies and gentlemen, the eternal maxim of international relations is that you can't have economic prosperity in the absence of strategic stability. The stability of our Asia-Pacific region is not assured. The Korean Peninsula is the most heavily armed military theatre in the world today. In the East China Sea, the Diayu-Dao-Sengkaku Islands dispute is impacting the political and economic relationship between China and Japan. The region of the South China Sea is more unstable and it has been at any time over the last 40 years. There remain unresolved disputes between India and Pakistan. I have said before that we have the hopes, aspirations and potential for of a 21st century regional and global economy riding on a set of security arrangements in Asia which almost at time to time seem to be positively 19th century in character. I have continued to argue that Australia must work to strengthen our regional architecture. We must work with others in the region to build collectively a shared political, economic and security agenda, a sense of common security across our wider region. As a start, this could in part be achieved through the development of a rules-based order for the Asia-Pacific. This means strengthening the East Asia summit and the ASEAN Defence Minister's meeting. The East Asia summit is the best mechanism because it involves annual leaders meetings with all 18 East Asian powers as well as India, Russia and the United States and has both a political, economic and security agenda. Once again, Australia is proud of the diplomatic role we have played in expanding the East Asia summit to include the United States. There was some opposition to this. Once again in partnership with others, our creative middle higher diplomacy prevailed. I believe the future East Asia summit should also include over time a regional dispute resolution mechanism along the lines outlined in the Treaty of Amity and Cooperation in South East Asia and the ASEAN Code of Conduct. Our security does not just depend on events in our own region. It depends on events around the world. As well as the G20, Australia now has a seat on the UN Security Council as a result of a formidable diplomatic campaign waged over four years and against considerable domestic political opposition. By those who argued, including the Leader of the Opposition, that this should not be a priority for Australia. I disagreed then. I disagree now. Most Australians also share that view. As of today, for the first time in our history, we sit on both the premier institution of global security and the premier global institution for the management of the global economy. This is a good achievement for Australia. These are achievements of which all Australians should be proud. This is our role in the world, both in its security dimensions and its economic dimensions. As with our management of the global financial crisis, so too is it an unassailable fact that this government has got the big calls right for our enduring national interests, with our wider role in the world, the G20, the UN Security Council, and the expansion of the East Asia summit to include America. Our seat on the Security Council gives us a direct say in how the world responds to key challenges to world's peace and security. This week Australia will become president of the UN Security Council for the first time in more than 27 years. When I launched Australia's bid for the UNSC on 30th of March, 2008 in New York, I said that the time had come for Australia to put our best foot forward. We have. This constitutes now an appropriate opportunity to demonstrate what I long described as Australia's creative middle-power diplomacy. Our place on the Council comes with a significant international responsibility. Today, in one form or another, the Council now meets every working day of the year. It mandates 15 peacekeeping missions around the world, deploying over 90,000 UN troops and police. In the Council, we chair the Iran, al-Qaeda, and Taliban sanctions committees, where we help to strengthen the international response to proliferation and terrorism. We're also leading efforts in the Council on Afghanistan, where we're helping manage the transition post-2014. We assume the presidency of the UN Security Council at a time when the Syria crisis is at its highest. Without doubt, Syria is now the world's greatest political crisis and unfolding humanitarian disaster. An estimated 100,000 have lost their lives and 6.8 million are in need of humanitarian assistance. This is a crisis of historic proportions. It is not just one of those crises that happen. This is of historic proportions and we are living through it and we find ourselves on the UN Security Council and in the position of presidency at this time. Neighboring countries to Syria, such as Lebanon and Turkey, are now hosting around 2 million refugees. It has been said that it is always the victors who write history, but there are no victors in wars such as these, only victims. History will judge us all on the decisions we make today, just as it judged us harshly and rightly so on Shrevebrinica and just as it judged us also on Rwanda. In the last week, I've spoken to the Secretary General of the United Nations, a Bunkie Moon, President Hollande of France and just this morning with President Obama of the United States. We have discussed how to chart a way forward. The international community is increasingly concluding that chemical weapons were used and that the Assad regime is in all probability responsible. This would be a crime against humanity and a violation of international law. It would not be without consequence. President Obama is considering options. Our priority as Australia remains working with all corners of the world through our global diplomatic network to ensure Assad allows full and unfettered access to UN inspectors. That has not been the case so far. The incident overnight where weapons were used and firing occurred against the first UN weapons vehicle is I believe a sobering reminder to the international community of what is at stake here. The crisis in Syria demonstrates to us the changing and unpredictable nature of our international security landscape. Ladies and gentlemen, national security will always be the primary priority of any government. It is a fundamental responsibility. It is an enduring responsibility. Both the global and regional strategic security landscape is without doubt changing and we need to ensure our defence forces and their forced posture adapt accordingly. It is why the government introduced an inaugural national security statement in 2008 with periodic reviews. That is why the government appointed Australia's first national security adviser in the same year to coordinate the various national security agencies of state including the Australian Defence Force. This is also why in 2013 the government established a national security strategy to articulate our objectives and how we best achieve them across government. The government has also released a forced posture review in 2012 and defence white papers in both 2009 and 2013. These assessments make clear that looking beyond our immediate neighbourhood Australia's strategic environment is shaped fundamentally by the changing global distribution of power, particularly the shift to the Asia Pacific. They also underline that our enduring interest lies in the stability of the Indo-Pacific, ranging it does from Australia's east to its north and of course to the west. This interest and the shifts in power in our region reinforce the need for an Australian posture that supports number one, Australian Defence Force operations in Australia's northern approaches. Number two, humanitarian and disaster relief operations and stabilisation operations in our neighbourhood. And number three, enhanced cooperation with the United States and regional partners. This will require enhancing the further capabilities of the Australian Defence Force and most particularly the Royal Australian Navy. Some of this work is already underway. Both army and navy are improving their coordination and developing greater amphibious capabilities to deal with regional natural disasters and other challenges. The government is also acquiring major new assets including the Canberra class amphibious assault ship, also known as the LHDs and the air warfare destroyers. The LHD project will provide the Australian Defence Force with one of the most capable and sophisticated air, land, sea and amphibious deployment systems in the world. These vessels at 27,500 tons with the largest ever ships commissioned for the Royal Australian Navy. Looking ahead at how we best orient current assets and capabilities, the 2012 Australian Defence Force posture review also recommend that the government give consideration to an alternative location for Fleet Base East currently located at Garden Island. It recommended in recommendation 14 that defence should commence planning now on how long-term options for establishing a supplementary East Coast Fleet Base at Brisbane for future submarine and large amphibious ships. The same report also recommended in recommendation 29 that defence should develop options to allow large amphibious ships to embark army units based in Brisbane and, as a lesser priority, Adelaide in addition to Townsville and Darwin. I can announce today that if re-elected the government will establish the future Navy Task Force that will provide advice to the government on implementing these recommendations and other recommendations of the Australian Defence Force posture review and the 2013 Defence White Paper that offer operational advantages, enhanced capability sustainment requirements and relieve future pressures on the current location of Fleet Base East here in Sydney. The task force will provide advice on the timing, proportions and implementation of moving some or all of Fleet Base East to Queensland and Perth and developing upgrading or expanding Darwin and Broome. Our national security challenges in the future lie to our North East, to our North and to our Northwest. That has been the strategic logic of Australia's defence policy for the last 30 years. Opposition occurred back then in relation to the establishment of HMAS Sterling in Western Australia. Up until that time we essentially ignored our challenges in the Indian Ocean. This is a continuum in Australian Defence Force policy and we intend to adhere to the recommendations provided to us by the Defence posture review. If the government has returned, a three-person task force will be co-chaired by the Chief of Defence Force and the Secretary of Defence with the Chief of Navy as an ex-officio member. The task force whose work is expected to take 24 months will provide advice to the government on implementing recommendations from the force posture review that ensure naval force posture planning optimises Australia's ability to respond to future challenges in our immediate regions to our North East, North and Northwest. The government would expect the relocation of Fleet Elements North and West to be completed by 2030. The task force will be asked to include staff from Infrastructure Australia and other relevant government agencies. This is also about defence industry, defence industry, defence infrastructure and defence jobs. This would include a major strategic decision to deploy the Navy's most important ships where they will be best placed to protect Australia's interests and quickly respond to challenges. It would ensure the Australian Defence Force would carry out effective military operations in Australia's North by basing most of the Navy's fleet closer to key army units. The relocation of fleet-based East would also deliver economic benefits for New South Wales and Queensland. It would help open up Garden Island for the possibility of exciting new uses such as greater public green spaces on Sydney's foreshore, appropriate heritage protection, as well as possibly providing births for the burgeoning cruise ship industry as a further boom to Sydney's economy. It would also create new jobs in Brisbane, Perth, Darwin, Townsville and Cairns. The naval presence in those cities would be expanded and port facilities would need to be upgraded, generating opportunities for local business and industry in supplying and supporting these naval bases. Fleet-based East currently supports a large part of Navy's active fleet, including our guided missile frigates, our frigate helicopter ships, two landing ships and two support ships. From 2014 it will be home port for the two new amphibious assault ships and by 2023 air warfare destroyers. The 2012 Defence Force posture review concluded that the LHDs and the AWDs should be based at Garden Island in the short term but recognise challenges arising from basing such large amphibious ships given the mounting operations from Sydney Harbour. Relocating some or all of Fleet-placed East to Brisbane, Townsville, Cairns, Darwin and HMA are sterling off Perth would offer benefits including locating naval assets closer to the Army's future amphibious capabilities, taking advantage of Brisbane's location as a transit point to operational areas for submarines and amphibious ships and to amphibious mounting bases in Townsville and Darwin. Ensuring the ADF can support high-tempo military operations in Australia's north and west. Addressing the capacity pressure is already evident at Garden Island which will intensify with the introduction of larger new ships and encroaching commercial activities including cruise industry requests for berth access and promoting strategic economic and social benefits in New South Wales and Queensland, the Northern Territory and Western Australia, the latter also being part of the government's overall Northern Australia strategy. To conclude, I began this morning with the ambition of conveying one key message. As much as our economic prosperity depends on what we do at home, it is also absolutely dependent on our ability to engage fully in the world through our global economic diplomacy, our political diplomacy both in Australia and at the UN, as well as the best management of our security policy footprint in our immediate region. It's vital that we understand the interconnected complexity of all the above. But still, when you boil down all the complex activities that happen in federal politics, for the average Australian there is but one truth about national government. It's fundamentally about the economy, growth, jobs and their jobs. Without a weekly pay packet families have no security. Without a job families can't get ahead. They can't pay for their kids school expenses and they can't afford a weekly trip to the movies or a week at the beach at Christmas. These are important for us all. And that is why the policy postures and decisions I've elaborated on today are deeply mindful of the economic defence in significance of these measures for defence industry and the employment conventions of each of the measures I've outlined above. That's why my core focus for the next 10 years, my core focus for the next 10 days in this election campaign and for the 10 years into Australia's future and the next three years of the next parliamentary term will be the economy advancing and protecting the jobs of all Australians. In fact, if re-elected my job as Prime Minister is to do everything possible to protect the jobs of all Australians. This week I will continue to outline the key elements of Labor's plan to prepare our economy for the challenges that lie ahead. I'll remind Australians of Labor's proud record in helping to create one million jobs since 2007 and I'll outline more practical policies to help building, help build and keep building the jobs for the future. I'll be talking about jobs in small business, in mining and agribusiness, construction, transport and the service industries. And I'll be talking about the alternatives on offer in this election as well. We are proud of the plans we've put before the Australian people. We are proud of our plans to build the economy and industries and jobs of the future. We are proud of our plans to continue to develop our defense industries for the future. We are proud of what we intend to do for the future in ensuring there is an appropriate share of business for Australian companies in our future manufacturing projects, our future infrastructure projects and our future defense industry projects as well. The JOBS Act which the Australian Government passed in recent time, which was opposed by the opposition, is an important concluding point to note. The JOBS Act is estimated to bring in between 1.6 and 6.4 billion of extra work to Australia industry, work that would bring with it more jobs. This is an important part of Australia's industry participation plans to make sure that we provide supply opportunities for Australian industry. The JOBS Act established the Australian Industry Participation Authority, which will administer participation plans and bring all government initiatives designed to improve access for Australian business, both through projects here and abroad under one roof. I say again, Mr Abbott voted against the Australian JOBS Act. I believe in batting hard for Australian industries and Australian jobs. Defense industries are critically important for Australian jobs and we are committed to supporting these industries into the future. Defense modeling indicates that Australia's defense material industry will employ around 24 to 25,000 people during 2013 to 2014. This workforce is forecast to rise to around 30,000 by the end of the Ford Estimates period. For me, each and every one of these jobs is important. For me, these industries are important. Any Australian economic nationalist would have this view. I also share this view and I've said on multiple occasions, I don't want to be Prime Minister of a country that doesn't make things anymore. That includes our manufacturing industry, it includes our car industry, it includes our defense shipbuilding industry as well. As I've explained today, the government understands that our capacity to create jobs and build a strong economy is inextricably linked to our ability to manage our position within the complex political and economic factors that play in the broader world, particularly in our own region. I'm confident that the government on the big calls, on national security, on the future direction of our economy and the role within that of our defence assets, their appropriate location across the continent and the defence industries to support them. And Australian industry participation to share in the economic benefit for all is the right direction for Australia's future. I thank you. Well thank you Prime Minister for a wide ranging and very interesting speech and thank you also for agreeing to take a few questions on international matters. Let me exercise the Chairman's prerogative and ask the first question if I may. Let me commend you again on your ambition when it comes to international matters. Can I ask you about Australia's institutional capacity to achieve its ambitions? On defence, many of us are concerned that defence spending has sunk to the lowest level since the Second World War. On the weekend I saw Mr Rabbit commit to restoring Australia's defence budget to 2% of GDP within the next decade. Would you match that commitment? Secondly, on diplomacy the Lowy Institute has argued for a number of years that DFAT is badly underfunded. If you're re-elected, would your government increase the resources available to our Foreign Service? If you go to the question of capabilities more broadly, if that's okay, Michael, and then go to your two specific questions. First is the achievements that I've just referred to which are important for all Australians. Our role in the G20, securing the establishment of the G20, our active participation in it, our use of the G20, particularly in the London Summit of 2009, which helped break the fall in the global economic crisis, a financial crisis which showed every sign of ricocheting out of control, that was done using the resources of the Australian Foreign Service and the Australian Public Service as it stands. These are fine, fine public servants. They are fine diplomats. We have among the best diplomats in the world. I do not know of a single Foreign Service anywhere in the world who doesn't want more. Let me tell you, these achievements, including the others I referred to before, have been achieved using the talents and commitment and dedication and professionalism of the folk who now work as Australian diplomats in the field. Similarly, with the campaign to secure the UN Security Council, which many people, I'm sure who have given speeches here and before, have indicated that could not be one. Because we had domestic opposition here at home and almost uniquely, Mr Abbott ran a partisan campaign opposed to Australia's membership of the UN Security Council, we nonetheless prevailed. Of course, it poses an interesting question. If he was to be elected Prime Minister of this country, what would he then do finding himself then in the presidency of the UN Security Council in the current environment? But let's not dwell on the consistency of principle question. Then you go to the other extraordinary success that we've had supported by Dick Walcott here. In expanding the East Asian Summit to include the United States, something which others regarded as a pipe dream back in 2007, a monstrous overreach of Australian diplomacy back then. By 2010, the mission had been delivered based on the capabilities of the Australian Foreign Service. So what I'll say in response to you on that is that I will do everything possible as Prime Minister if we're elected to continue to enhance the resources available to the Australian Foreign Service. One of the last decisions I took as Foreign Minister was to secure the resources necessary to establish a new Australian Consulate General in Western China. People said we couldn't do that, we did. And that Consulate General was opened up recently by Foreign Minister Bob Khan. On the question of our Defence Force priorities and defence industry and defence budget, I'm proud of what the government has been able to achieve. The naval acquisitions and the expansion of the Australian fleet is a product of some decisions taken by Mr. Howard and a number of decisions taken by us. I remember one of the first decisions that we were asked to confirm when the government was elected in 2007 was a decision to proceed with the two LHDs, the two 27,500-ton vessels that I just referred to before. I visited one of these in Melbourne at Williamstown just the other day. These are great assets for the Australian government and for the Australian Navy. And one of our first decisions was to support that and to make sure, therefore, that we have the kit and equipment for the future. LHDs, frigates, air warfare destroyers and the associated support infrastructure as well. In terms of the future of our defence expenditure commitments, then of course our objective remains to sustain defence expenditure at 2% of GDP. I saw Roger Shanahan's hand in the back, Roger Shanahan from the Lower Institute. Thanks Prime Minister. This is a question on Syria and the broader region. One of the difficulties of the Syria question is the fact that after two years, the Syrian opposition is not unified. It's not really secular and neither is it particularly inclusive. At the same time, two of the major countries that back the Syrian opposition, Saudi Arabia and the UAE, have themselves sent military forces to Bahrain to suppress pro-democracy protests. How do you reconcile an Australian foreign policy that on the one hand supports greater democracy in the region but practically supports a barely democratic opposition in Syria and at the same time supports close allies who are both autocratic, show no inclination for political reform and in fact actively suppress protests in favour of political reform? I think my overall response to your question is last time I looked the Middle East is an imperfect place and if you are aspiring for much better than that then frankly it's a bit of a pipe dream. This is an extraordinary complex set of politics which everyone I think who follows this region at any level of depth understands and there are no perfect choices. There haven't been in the past and there aren't now. What we are confronting as an international community now is a fundamental assault on all international norms by what appears to be the use by this regime of chemical weapons against innocent civilians. There is a thing called a chemical weapons convention. There may be those who technically argue that it relates to the use of chemical weapons from one state against another. Are people therefore going to argue that somehow that does not apply to a regime which may well have used those weapons against itself? Whatever is the domestic politics of Syria right now and it is complex beyond description the external principle is alive and well which is this. I do not believe the world can simply turn a blind eye to the use of chemical weapons against a civilian population resulting in nearly 300 deaths or more and some 3600 people hospitalised if you turn a blind eye to that and say that action here of one type or another may be inconsistent with action there and action there. We are losing the central big call here and the central big call is how do you send a message to every autocracy in the world contemplating the future use of chemical weapons in certain circumstances in the future either against their neighbours or against their civilian populations. With a fine sight of history I do not want to be in a position of responsible political leadership where I was party to turning such a blind eye and I won't. I'm sure you've never heard me ask a question Michael that's why you made that observation. Prime Minister you spoke a lot about geoeconomics and geopolitics and you spoke about inclusion of the US and East Asia summit. I'm wondering what you're thinking on Trans-Pacific Partnership is a US initiative that Australia is certainly supporting. Good idea to have Japan in the TPP would it be a good idea to have China in the TPP? How can you have a trade agreement for the 21st century that doesn't include China? Well I agree with you. I'm strongly supportive of the Trans-Pacific Partnership reaching out trans the Pacific and that starts stateside and ends up China side and wraps in as many economies as possible. This has been an exciting initiative as it's unfolded I welcome very much recent indications from the government of Japan that they wish to be engaged and I will urge all governments who are party to the TPP to leave the door wide open to the People's Republic of China in the future. This would be good for everybody raising all boats in the region and so if you want to know what my position is the door should be kept over for China and we should encourage the Chinese in. James Brown from the low Institute. Prime Minister James Brown military fellow here at the Low Institute when you look down the list of the issues that the Chief of Navy faces at the moment he's dealing with some serious issues like patrol boats that are breaking because they've been overworked fundamentally transforming his force by bringing in new ships rebuilding his engineering capability and trying to determine a new maritime strategy for Australia. Nowhere on that list is this move of basis to the north can I ask why your priority is so different to his and can Navy actually achieve all that it needs to in the next decade if you're asking it to move house at the same time? Well the first thing I'd say is the position I've articulated today is entirely consistent with the recommendations of the Defence Force posture review. I read out the relevant recommendations that Defence Force posture review isn't plucked out of air it actually comes up out of the Defence establishment you know that as well as I do. The second point I'd make is this we are talking about making big calls for the long-term future your description of the priorities as of today in the unfolding challenges which Chief of Navy and the Royal Australia Navy face in the immediate period ahead are absolutely right but government is required to look beyond the horizon government is required to look out 10, 20, 25 years beyond you know the lifetime for example associated with major acquisitions for the Navy the LHDs that we are just finalizing at Williamstown will be around for a long long time open question where will they be based long time in the future? So politics often is a choice between a sense of the immediate as opposed to a sense of the important and so what I'm saying to you is that you have to make big calls and the big calls that we have made as a government are big calls on the economy on the global financial crisis which is to temporarily borrow in order to inject public demand into the economy to keep the economy afloat to keep industries going to steep keep small businesses functioning and to make sure that we didn't end up with double digit unemployment in Australia that was a big call many criticized it because it would upset a few people on the way through another big call we are making is to build a national broadband network you're going to have a whole lot of people who will criticize that around the edges ask yourself a question 15 years time should Australia have a national broadband network with high speeds universal access and affordable access for all Australians country and city I think in 10 years time it'll be seen as a no-brainer ask yourself the question should we develop the northern territory our most remote location the country and Darwin through a special economic zone up there then I think we look back in 10 years time and 20 years time and we see further economic development up there by providing them with a bit of a leg up I think we'll say that was a good move as well and I make the same point about the future of our defence assets as a military person you understand full well that the overall military logic and national security logic of Australia's forced posture displacements over the last 20 or 30 years is to move our assets increasingly north and west you see that in the great debate which occurred under Kim Beasley's time I think as defence minister to establish HMAS sterling lots of folks in the Navy didn't like that at the time they wanted all to stay here there is a thing called the Indian Ocean okay it's pretty important there's a whole bunch of countries over there okay and we should actually be mindful of that and if we didn't have HMAS sterling today by Kim Beasley making a big call back then which was right where would we be today so this is not about what Navy does tomorrow next week next year it's about where Navy needs to be in 2030 and that's a big call and that's the sort of big call I'm seeking to make in this election overall big calls on the economy and the diversification to the future big calls on not having all our eggs in one basket big calls on the future of our infrastructure big calls on broadband big calls on high speed rail big calls and where our defence force assets should be in 25 years times as opposed to someone whose priorities seem to be about providing a paper and a leaf scheme of $75,000 for billionaires to have a baby that's the choice which people will make come election day PM can I ask you one final question you made the striking point Steve, Steve Loosley is up there thinking about a question and you seem to be discriminating against him no not at all let's have two final questions Steve I'm relaxed Steve Loosley right here thank you Prime Minister could I return to your remarks on Syria the horror is there you mentioned you mentioned the lessons of Srebrenica and Rwanda and I ask in a lot of the crimes that are occurring is the Australian Government prepared to refer the perpetrators to the international criminal court in the Hague for prosecution to initiate action or support action and you mentioned your conversations or your discussions Australian discussions with President Obama and President Alland is the Australian perspective on Syria shared by our allies and partners including the United States well Syria is unfolding at a pace of knots as you know and we referred to earlier the role of UN weapons inspectors there's a problem with that in terms of what this community in particular will know is the degradation of the site x days after the use of chemical weapons how is the evidence then finally indefinitely assembled including the capacity of weapons inspectors to identify of themselves who is responsible precisely I think you ought to ask yourself some basic questions as we look at final conclusions on this number one who possesses chemical weapons in Syria answer the regime number two who possesses the delivery systems capable of lodging chemical weapons in the targets in which they are lodged answer the regime I'm all for as I've said in recent days hearing the final conclusions of the weapons inspectors and they will fortify the conclusions which were emerging across the international community but I go back to the generic principle here Steve which is history will judge all of us poorly if we simply try and wave this one through as if it's just one of those other things that happen it's not chemical weapons those of us who have a mind for military history know what happened to Australian diggers in the First World War we thought we decided not to do that again after the horrors of the trenches and the use of mustard gas and the rest back then it's a hundred years since then and we have a regime now it seems using these weapons again therefore we cannot turn a blind eye on the question of the ICC international criminal court Syria based on my advice is not a party to the Rome statute in which case reference of the Syrian regime to the ICC could only occur by a resolution of the UN Security Council this is something which we will examine and partnership with our friends and allies and as for the posture of the United States and the conversation I had with President Obama this morning he is focused on the full range of options which which he is in the process of discussing with his partners and allies around the world and we are an ally of the United States I like the President of the United States driven by a core imperative here which is not allowing a message to be conveyed to the international community that the use of chemical weapons against anybody in the year 2013 is acceptable under any circumstances that is critical beyond Syria it is critical for all decent people across the world and all peoples across the world having said I'd take a few more questions I'd better leave