SPEECH - ADDRESS TO PACIFIC CONNECT FORUM - 6 SEPTEMBER 2018

I acknowledge the Traditional Owners of the land on which we meet, and pay my respects to Elders past and present.

Firstly, I would like to thank Global Access Partners and the ICDP for their invitation to speak here today at this auspicious and very timely forum, given the meeting of Pacific islands leaders occurring around this time.

I would also like to acknowledge Peter Fritz and Catherine Fritz-Kalish for their ongoing commitment towards facilitating dialogue on issues of strategic importance.

I am proudly of Fijian descent, and have a deep and abiding interest in the success of the Pacific and the role of Australia in being a part of that.

The nations of the Pacific nations are our neighbours and our friends, and it goes without saying that Australia’s relationship with the Pacific Island nations is a very important one.

This is why our Shadow Minister for Foreign Affairs, Senator Penny Wong, Shadow Minister for Defence, Richard Marles, and our Shadow Minister for International Development and the Pacific, Senator Claire Moore, have been consistent and vocal advocates for deepening our engagement and investments in the Pacific.

In the time available today I want to offer some personal observations in three principal areas:

  1. the importance of having a framework against which Pacific nations can identify their connectivity priorities and plan for them;
  2. the opportunity for Pacific nations to leverage disruptive technologies to leapfrog existing delivery models; and
  3. the importance of capacity building to ensure emerging nations can make the best of what connectivity has to offer.

I hope in turn these make a modest contribution to the discussion here today.

The power of connectivity in enabling digital trade

Digitisation is, in every respect, a remarkable and profound shift from the world of thirty years ago.

Prior to the first industrial revolution, the GDP of nations was largely a function of population.

Whether you lived in the east or west, the average worker produced a similar output. Or to put it another way, the more people a nation had, the more it would produce.

This helps explain why China was the world’s largest economy for much of the period leading into the mid-eighteenth century.

This changed with the first industrial revolution which commenced around 1760.

The discovery of congealed energy and steam power led to new methods of production that delivered step changes in productivity.

Those who had access to technology and capital, and the capacity to leverage them, would go on to do well. In contrast, those who did not would stagnate and be left behind.

As a result, we witnessed several centuries where population was no longer a determinant of economic weight, and significant differences between the relative productivity of nations emerged.

However, this began to revert in the 1990s as the internet began to reshape the way information, knowledge, capital and goods would flow across borders.

The former Prime Minister, Paul Keating, made the important point that once the productivity inducing inputs of capital and technology became near ubiquitous, it was only a matter of time before the large states, by way of population size, once again became the large states by way of GDP.

When we look towards Asia, we see this reality playing out.

The economies of China, India and Indonesia continue to grow rapidly, and the relationship between population and GDP is being re-forged.

In the context of this forum, if you accept the proposition these trends appear likely to hold, then it is prudent to ask:

How can smaller regional nations use connectivity to make the best of the growing middle class that will result from this shift?

            And:

What are the relative advantages of smaller nations in a world that is returning to scale?

Wherever the trajectory of that answer might lie, connectivity and the ability to leverage new technologies will play a crucial role.

Digital inclusion in the Pacific

As Global Access Partners have noted, in 2017 more than 50 per cent of global internet users were located in the Indo-Pacific. Yet, only 46.4 per cent of households in the Indo-Pacific were connected to the Internet in 2016.

In comparison, the Australian Bureau of Statistics reports that roughly 86 per cent of Australian households are on the internet. In households with children under the age of 15 that figure rises to 97 per cent.

To place the importance of bridging this difference in context let me point to the following research.

A study by The World Bank found that for every 10 per cent increase in broadband penetration GDP increases by 1.21 per cent in developed economies, and 1.38 per cent in emerging ones.

A separate study by the OECD found that GDP per capita growth is 2.7 to 3.9 per cent higher after the introduction of broadband.

In formulating Pacific strategies for digital inclusion, the framework developed by RMIT and Telstra could be a useful starting point.

As part of this work, researchers defined digital inclusion across the three dimensions of access, affordability and digital ability.

In Australia, one of the key challenges is the digital engagement within longstanding demographic segments, whom for a variety of reasons, are missing out on the benefits of the internet.

But in other nations the issues of infrastructure access, and the quality of existing connectivity, may have primacy — as might the use of connectivity to improve the participation of women and girls in society.

What we see is that each country will be at a different stage of their journey and therefore policy prescriptions will differ.

Nonetheless, perhaps as a starting point, it would be useful to have framework by which nations — or regions — can collect data in a consistent manner, identify priorities, and use those insights to develop policy responses which aim to deliver the most benefit at the least cost.

Opportunities to leapfrog existing delivery models

Undoubtedly one of challenges Pacific nations will face is how to construct and integrate new digitally-enabled services.

The availability of flexible cloud services, data analytics, block-chain technology and the internet of things offers tangible opportunities to deliver better and cheaper services using the internet.

By not having to deal with the constraints of sunk costs and highly entrenched legacy arrangements, Pacific nations may in fact preserve greater flexibility to adopt new technologies as a starting point — bypassing less effective and more capital intensive approaches that were commonplace before those technologies came along.

Take blockchain for example.

In any given society we have multitudes of transactions that require an institutional intermediary – for example a bank or a law firm.

Blockchain offers a technology solution to provide the identification, assurance and security that an intermediary would often perform.

There will also be similar opportunities in expanding the supply chain infrastructure that supports e-commerce and job creation.

And on this point I want to focus on an agency in the Communications portfolio that does not get as much air time as NBN or media: Australia Post.

Australia Post is an iconic institution that finds itself in the midst of this e-commerce boom, with a report by Access Economics finding Australia Post facilitates over 80 per cent of Australia’s $14 billion e-commerce market.

It is one of the most trusted brands in the country, with 3 in 4 Australians considering it to be a core part of our national identity.

Every day the company is helping new small businesses to be created, and existing small businesses to grow.

We are very fortunate to have Christine Holgate leading Australia Post.

In her first twelve months Christine has instilled a sense of optimism about what might be possible, demonstrated a distinctive empathy for the role of Australia Post in the community, and shown her determination to find new ways to grow the business by exploring opportunities that might otherwise have been left untouched.

At present, the traditional letters business in Australia Post is in structural decline and this trend is not going to reverse itself.

Therefore, the success of Australia Post in e-commerce plays an important role in cross subsidising the postal services and social presence which many regional communities in Australia value.

Over the past decade Australia Post has achieved this through the growth of domestic parcel volumes.

Over the next decade we expect the Asia Pacific, and in particular China, will play a bigger role — and this is why Labor attaches a great deal of importance to the future success of Australia Post in the region.

Outbound parcel volumes to Asia are growing at a very fast pace and we need our small and medium sized businesses to be driving this growth.

In reflecting on Australia Post it reminded me how quickly things can change.

In the not so distant future we will have high speed 5G networks, driverless cars, aerial drones and data, all coming together with the potential to reshape how we conceptualize transport, asset ownership and the last mile delivery of physical goods.

New phenomena such as Uber have taken idle assets such as privately owned vehicles and put them to work in the real economy — from ridesharing to food and grocery delivery.

Many people have spent time thinking about the disruption of the letters business and what the future might hold.

Yet given the innovations I just spoke about we cannot discount the possibility of delivery itself being disrupted.

We simply don’t know what the future holds with any certainty.

However, I want to use this example to focus on the flip side of that equation —

What is sometimes considered a disruption in one region can be a sensible starting point in another.

This should offer pause for thought as to what opportunities that entails.

Rather than playing catch-up and following existing development paths, emerging pacific economies may, in certain areas, have the opportunity to leverage connectivity and disruptive technologies as a means to move directly into cheaper and more flexible forms of service delivery.

I don’t want to overstate this or make it seem straightforward.

But at the same time, I do not want to understate the importance of such opportunities either. They are there for the taking if the infrastructure fundamentals are in place.

The importance of capacity building

As Minister Rico of Samoa said just now: “no one country can go it alone on digital transformation”.

Central to all these efforts will be sustained commitments in capacity building.

For many years, a portion of Australia’s annual contribution to the International Telecommunications Union (ITU) was earmarked for this purpose and used to deliver support in areas such as course development at the University of the South Pacific, and development of communications laws and regulatory systems in Tonga.

And in my previous life as a telecommunications lawyer, I had the privilege of working on a variety of capacity-building projects in the Asia-Pacific region, including in Samoa as part of an initiative to establish a communications regulator and stimulate mobile competition.

These experiences have left a lasting impression on me about the value of knowledge and skills transfer to our Pacific neighbours and the good which we can achieve.

When I speak of capacity building, I refer to the process by which individuals and societies develop the ability to achieve their own objectives. 

Such communities are better prepared to respond to whatever opportunities or challenges come along.

In a world where the pace of technological change continues to increase, it would be fair to assume that such opportunities will come by more regularly.

This can only lead me to conclude that the glass is half full if we can get the fundamentals of connectivity right.

I wish you all the best in your deliberations at this forum.