Chapter one: Foundations for success

Fundamentally important to our ability to navigate a world of dynamic change and uncertainty are our strength and resilience at home, the hard and soft power that give us influence internationally, and the values that reflect who we are and how we approach the world. We build our international engagement on these foundations.

Australia’s values

All government policies, including our foreign policy, must give expression to, and be formed on the basis of, the values of our community.

Australia does not define its national identity by race or religion, but by shared values, including political, economic and religious freedom, liberal democracy, the rule of law, racial and gender equality and mutual respect.

Our adherence to the rule of law extends beyond our borders. We advocate and seek to protect an international order in which relations between states are governed by international law and other rules and norms.

Australia is pragmatic. We do not seek to impose values on others. We are however a determined advocate of liberal institutions, universal values and human rights.

The Government believes that our support internationally for these values also serves to advance our national interests. Societies that observe these values will be fairer and more stable. Their economies will benefit as individual creativity is encouraged and innovation rewarded.

Australia’s development assistance program similarly reflects our values while supporting our interests. Our investment in the stability and resilience of developing countries works to improve our own security and prosperity.

A strong and resilient Australia

In the decade ahead, more than ever, strong and resilient economies and institutions will be the springboard for international success. Countries that are well‑governed, innovative and outward‑looking will be better placed to seize economic opportunity and maintain community cohesion.

Our democracy

Australia is a stable and peaceful democracy, one of the world’s oldest. We have a vibrant civil society and robust independent media. Our freedoms of speech, association and religion underpin the strength not only of our economy, but of our civic life and political discourse. Our independent institutions support effective government and a dynamic market economy. Institutional independence reinforces impartiality and public confidence, and is balanced with clear accountability.

The rule of law, freedom, independent institutions and a market economy constitute the fabric of Australian democracy. They support our national strength and high‑income economy, and provide an enduring basis for social and economic progress.

We are committed to protecting our democracy and to using the advantages it bestows on our country to deliver opportunity and security for all Australians. The Government will ensure that national decision‑making is transparent and our institutions remain free from foreign interference. This is one of our most important national interests.

Community cohesion

Australia is one of the world’s most successful multicultural societies. We are a harmonious, egalitarian and enterprising nation that embraces its diversity. One in four Australians were born overseas (Figure 1.1) and almost half of all Australians were either born overseas or have at least one parent born overseas. We come from virtually every culture, race, faith and nation. We are as old as our First Australians, who have cared for this country for more than 50,000 years, and as young as the new baby in the arms of her migrant mother.

Figure 1.1 Percentage of population born overseas (select countries)

Proportion of people born overseas
Australia 26
New Zealand 23
Canada 22
USA 14
UK 13
Source: 

Australian Bureau of Statistics; United Nations

We are united by common values—freedom, democracy, the rule of law and equality of opportunity. The Government this year launched a Multicultural Statement to reaffirm its commitment to an Australia in which racism and discrimination have no place.

The Government is determined to defend our nation, our people and our values and to protect the foundation on which our freedoms have been built and maintained.

Our focus is on ensuring that Australia remains an open, inclusive, free and safe society. We will resolutely tackle extremist ideologies that incite violence to achieve religious or political goals. We will not tolerate attempts to divide Australians on the basis of race or religion.

A flexible and competitive economy

Our strong economy has been, and will remain, the foundation of our international strength and influence. We are a top 20 economy and a member of the G20, the world’s premier forum for international economic cooperation. Sound economic policy and further domestic reform are essential to improve the competitiveness, flexibility and resilience of our economy to better position Australia to compete for jobs, investment and markets in the 21st century.

By generating more and better paying jobs, a strong and flexible economy reinforces the cohesion and resilience of Australian society. It helps Australia to adjust to external economic shocks, such as financial crises or an economic slowdown in our major trading partners. It will better position the country to invest in the substantial defence, security and foreign policy capabilities necessary to safeguard our interests.

The Government’s national economic plan is designed to deliver a stronger, more diverse, economy that is ready to face the changes and challenges to come. Our trade agreements are giving Australian businesses the chance to prosper in some of the fastest growing markets in the world. We will continue to give investors commercial certainty to ensure Australia remains an attractive place to invest. We promote growth to create more and better jobs by cutting taxes, boosting education and improving infrastructure. We will take a fair and responsible approach to budget repair.

In a world of rapid and disruptive technological change, success requires investment in our human capital. We will help Australians prepare for the jobs of the future, including by promoting adaptability, resilience and innovation.

We start from a strong position. Australia has six universities in the world’s top 100, a number only exceeded by the United States and United Kingdom. Our vocational education and training are recognised internationally and offer valuable training for a productive workforce. The Government is raising the status of vocational education and training as a pathway to employment.

We also have world‑class scientific and research institutions, access to modern research infrastructure and strong intellectual property protections. We produce more than seven per cent of the world’s most highly cited research publications despite having less than half a per cent of the world’s population.

The Government’s education, innovation and science policies build on this foundation. All Australian children will benefit from an improved national curriculum and increases in education funding. The Government’s reforms will drive quality and excellence in education and ensure industry has a skilled workforce. Through the National Innovation and Science Agenda (NISA), the Government is investing $1.1 billion to encourage innovation and entrepreneurship, reward risk taking, and promote science, maths and computing in schools.

Strength through openness

Our openness to the world is vital to our economic strength. This connects our goods and services to larger, often faster growing markets. In turn, it enables Australia to benefit from the world’s best goods, services, people, capital and ideas to grow our economy and create jobs. Being open to trade and investment boosts competition, creates new wealth and supports high living standards.

Openness, of course, is a means to an end, not an end in itself. Nor is it an absolute. We exercise strict sovereign control to protect the cohesion of our society, the integrity of our institutions and the security of our borders and national infrastructure.

The Government will continue to consider the national interest when reviewing foreign investment proposals. We will balance our need for skilled migration with ensuring new migrants can integrate into our labour market and society. The Government will ensure multinational companies pay their fair share of tax.

The Government’s policies to boost economic growth and promote innovation and flexibility will maximise the opportunities that come from technological change. We recognise the adjustment costs borne by parts of the community in the face of competition and disruptive technological change. Many countries are dealing with similar issues.

Our investments in education, retraining, and employment services, and assistance to communities adjusting to economic changes, will help Australians adapt. The Government’s regional jobs and investment package supports the diversity and resilience of regional communities, including by helping people to retrain for new industries.

The Government will keep our economy open because this supports some of the highest living standards in the world. Open trade gives Australians more choices, better services and lower prices. This applies even if other countries adopt protectionist measures.

Our businesses are also more competitive through cheaper inputs and components. Competition from imports reduces the cost of many essential items, benefitting Australian consumers (Figure 1.2).

Figure 1.2 Benefits of imports to Australian households and businesses since 2000

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Figure 1.2 Benefits of imports to Australian households and businesses since 2000

Source:  Australian Bureau of Statistics; Treasury

Figure 1.2 Benefits of imports to Australian households and businesses since 2000 image description: This infographic, in three parts, shows that lower import prices have allowed households to buy more products and support a higher standard of living; that Australian businesses have benefitted from falling equipment and machinery prices; and that changes in production have pushed prices down.

Our policies to support an open economy give us the flexibility to respond to changes in world conditions, and to adopt and benefit from new technologies. Resources can be redeployed to respond to market demands, keeping us competitive and maintaining growth.

Our openness to trade and investment also drives job creation. Employment in a number of regional and rural parts of the country depends on their connection to global markets. Today, one in five Australian jobs are trade‑related. Exporting firms on average employ more people and pay higher wages than firms focused on the domestic market alone (Figure 1.3).

Figure 1.3 Benefits of trade for Australians

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Figure 1.3 Benefits of trade for Australians

Source:  Centre for International Economics; Australian Bureau of Statistics; Department of Industry, Innovation and Science)

Figure 1.3 Benefits of trade for Australians image description: This infographic, in four parts, illustrates that 50,000+ Australian businesses are involved in export, contributing $3,337 billion in export income in 2016 and employing more people at higher wages; that 1 in 5 jobs rely on trade; that 1 in 7 jobs rely on exports; and that trade liberalisation delivers $8,448 extra income a year for the average family.

Further, by supplementing domestic savings with foreign investment we create more opportunities than can be achieved from domestic savings alone. Investment from overseas improves the efficiency of our economy, including through the transfer of new ideas and technology. Australia has always been and will remain a capital importing country so we will continue to rely on foreign investment. Without it, production, employment and incomes would all be lower.

Today there is more than $3 trillion of foreign investment in Australia. Foreign‑owned companies generate large revenues and employ more than 700,000 Australians. Our world‑leading minerals and energy sector has long been powered by foreign investment.

Two‑way investment also helps connect Australian businesses to foreign markets and to global value chains, which account for about 75 per cent of global trade and investment activity. It exposes Australian businesses to international standards and best practice. Figure 1.4 shows the level and main sources of foreign direct investment into Australia in 2016.

Figure 1.4 Level of foreign direct investment in Australia (2016)

Source: 

Australian Bureau of Statistics 

Note: 

Foreign direct investment by countries not represented above totalled $211.2 billion. 

Australia’s migration program will continue to add to our economic growth, including by attracting younger, skilled workers who help offset our ageing population. We want migrants who contribute to the Australian economy, help alleviate skill shortages and enhance the size and productivity of the Australian work force. Our visa reforms will support these objectives.

Openness makes sense for Australia and for global growth and prosperity. We support an open global economy because a more integrated world will be more prosperous and more secure than one characterised by protectionism and geo‑economic rivalry.

Building influence and advancing interests internationally

The resilience and quality of our democracy, institutions and economy sit at the core of our national strength. As discussed in Chapter 8, they are also fundamental to our soft power—our ability to help shape events and outcomes internationally to our advantage through persuasion and ideas rather than coercion.

This influence is enhanced by our reputation as a good place in which to live, visit and invest and by the commercial strengths of Australia’s companies. Australia has a well‑earned reputation as a reliable trading partner. The quality of our institutions and standards enhance our international influence.

Crucial to Australia’s influence is the quality and reach of our diplomacy and development assistance, and the strength of our defence, intelligence, law enforcement and border capabilities.

Our diplomacy works to make Australia stronger, safer and more prosperous by promoting and protecting our interests internationally and contributing to global stability and economic growth. It works to open overseas markets and increase opportunities for Australian companies. Our diplomacy promotes regional stability, security and prosperity, through our work with bilateral partners and in multilateral forums.

We cannot impose our views or our will overseas. Our ability to protect and advance our interests rests on the quality of our engagement with the world. This includes the ideas we bring to the table, our ability to persuade others to our point of view and the strength of the relationships we build with other governments and, increasingly, with influential non‑government actors.

Australia’s global diplomatic network enables us to pursue our international interests and provide assistance to Australian businesses and citizens overseas, including consular and passport services. Already the Government has implemented the single largest expansion of the network in 40 years, with 12 new posts opened or announced including in China, Indonesia, Colombia and Morocco. Over the next 10 years we will open more missions, and use more efficient and cost‑effective technologies and practices to do so.

The Government recognises that Australia faces mounting international challenges at a time when the budgetary environment is tight. A strong economy requires Australia to live within its means. The Government will therefore continue to use more efficient means and cost‑effective technologies to support our international engagement, including as we expand our diplomatic network.

We will also continue to build the capabilities needed by the Australian Public Service to respond to the trends outlined in this White Paper. The Australian Public Service Commission is developing a Core Skills 2030 strategy to help ensure the public service has the foundational skills to meet the challenges and opportunities of a changing world, including by promoting an entrepreneurial culture and stronger digital literacy and communication skills.

A new Diplomatic Academy in the Department of Foreign Affairs and Trade is training Australian officials in international engagement tradecraft, including in areas such as advocacy, negotiation, forecasting and strategic planning. The Academy focuses on our agenda in the Indo–Pacific and will collaborate closely with other foreign ministries.

A complex world requires a multi‑disciplinary approach to policy development and systematic ways of thinking about alternate futures. The Government will strengthen its advanced analytical techniques capability to test policies against possible shifts in our environment.

Australia’s development assistance program, currently $3.9 billion a year—with 90 per cent of our bilateral and regional funds focused on the Indo–Pacific—supports our partners in their efforts to become more stable, prosperous and resilient.

Our assistance alleviates suffering and serves our national interests by helping countries to advance economic reform, fight threats such as extremism, guard against the spread of infectious diseases, and build resilience to natural disasters and economic shocks. We support better state capability to improve governance and reduce poverty and inequality. Our development program magnifies the influence that Australia brings to bear on pressing regional and global problems, including efforts to meet the Sustainable Development Goals (Chapter 6).

Our international weight is underpinned by a strong Australian Defence Force and a willingness to deploy hard power to protect our national interests. Our military strength is a deterrent against armed coercion and the (still low) prospect of a direct military threat to Australia. Our high‑end military capabilities enable us to monitor approaches to our territory and to respond to security crises in our near region. The Government’s substantial investments in intelligence, surveillance and reconnaissance capabilities allow us to anticipate risks in our air and maritime approaches, as well as help our partners.

A strong and capable defence force maximises our ability to operate effectively with international partners, particularly the United States. Our military capabilities also allow us to support global security, notably by contributing to coalition operations to combat terrorism. The Australian Defence Force is able to undertake humanitarian and disaster relief operations, including in cooperation with our police and disaster response teams.

As outlined in the 2016 Defence White Paper, the Government is increasing defence spending to two per cent of GDP by 2020–21 to create a more capable, agile and potent Australian Defence Force. We will increase the pattern of regular defence deployments into the region and our program of international exercises. We will expand our Defence Cooperation Program to boost our ability to work with partners.

Strong intelligence capabilities are essential to safeguard Australia’s interests. The National Intelligence Community protects Australia from security threats through intelligence collection, assessment, action and advice for Government. It also engages in extensive cooperation with overseas counterparts to respond to security threats.

Building on our investments in capability, Australia’s cooperation with our Five–Eyes partners magnifies the potency and effectiveness of our security capabilities by providing irreplaceable access to information and cutting edge capabilities.

Our international policing and law enforcement capabilities protect Australia’s interests at home and abroad from criminal activity. Together with broader law and justice cooperation and capacity building, they help to strengthen stability and governance in partner countries. The Government is investing additional resources to strengthen our policing capabilities in intelligence, covert surveillance, forensics and tactical response.

The Government ensures that our border arrangements facilitate legitimate travel and trade, so Australia benefits from rapidly increasing flows of people and goods. At the same time, we protect our security and sovereignty against those who seek to circumvent our border controls. Each week, more than 840,000 people arrive in or depart from Australia, and this number is expected to grow by more than 20 per cent over the next four years. We are investing in new technologies to meet this challenge. The Government is also ensuring our civilian Maritime Border Command has the advanced capabilities necessary to protect our maritime security interests.

In view of an increasingly complex threat environment, the Government is reforming Australia’s national intelligence and domestic security arrangements. We are restructuring and strengthening Australia’s national security community, establishing a Home Affairs Portfolio and enhancing oversight of Australia’s intelligence, security and law enforcement agencies. These reforms will better integrate our intelligence and security arrangements and ensure closer cooperation between our security and law enforcement agencies.