Senator The Hon Mathias Cormann
Minister for Finance
I am delighted to have the opportunity to speak to you about the relationship between Australia and Germany and where I think it could and should be heading moving forward.
My strong belief is that we can and should be doing much more together than we are now.
I see tremendous opportunities to lift what is a warm and friendly relationship to a new level. There is a lot of unrealised potential between us.
We need a more modern and a more substantial relationship which much better reflects our common interests and values, the size and complementarity of our two economies and the important roles both Germany and Australia play in our respective regions and globally.
It is a real privilege to address this topic at the kind invitation of the prestigious Konrad Adenauer Stiftung.
Since its establishment in 1955 the Konrad Adenauer Stiftung has played a very important role in Germany’s intellectual life, promoting freedom, peace and justice in the spirit of the Christian Democratic Union.
We also appreciate greatly that the Konrad Adenauer Stiftung has taken such a close interest in Australia. We appreciate in particular the work aimed at raising awareness of Australia in Germany, identifying ways in which we can build on the solid foundation of our current relationship.
Our current relationship is solid, but it is not as yet as strong and as broadly-based as it could be and as it should be.
Consider this: We are the 4th and 12th largest economies in the world. We are key players in our respective regions. We are like-minded on international issues and share so many core values.
Yet our government-to-government architecture is surprisingly undeveloped.
Our trade and investment relationship is not as large as it could be, especially given the complementarity and size of our economies. And we could be doing significantly more in promoting education, research, cultural, media and other links.
We have, perhaps, traditionally found it too hard to attract each other’s attention, notwithstanding common interests and shared values. As Herr Dr Wahlers mentioned earlier, perhaps many people in Germany think that Australia is just ‘zu weit weg’ – too far away.
That is why, when Chancellor Angela Merkel made her historic visit to Australia in November last year, she and our Prime Minister Tony Abbott decided to create the Australia-Germany Advisory Group.
Both leaders recognised that, despite the genuine warmth between Australians and Germans, our relationship has not kept pace with the times.
The Australia-Germany Advisory Group’s mandate is to come up with concrete actions paving the way to a stronger partnership.
With my colleague Minister of State Professor Maria Böhmer I will co-chair the first full meeting of the Advisory Group tomorrow.
The Group comprises Australian and German leaders in industry, business, science, strategic policy and the arts.
Its recommendations will be considered by Prime Minister Abbott and Chancellor Merkel around the time of the G20 Summit in Turkey in November.
I come to this task as someone who has a particular fondness for Germany. I was born in the German speaking part of Belgium and grew up watching German television and following German politics very closely since the early 1980s. It was during my second year at law school in Belgium back in 1989 that the Berlin wall came down and that a very exciting period in European history began.
With friends, I came to Berlin just before Christmas that year to be in a small way part of that history. It is a real credit to Germany how much has been achieved over the past 25 years since German re-unification, building on the tremendous success of West Germany in the post war period, developing a prosperous and peaceful nation at the heart of Europe.
Ladies and Gentlemen, I want to make the case today for a more ambitious relationship between our two countries.
It seems both obvious and natural. Our peoples are inherently ambitious.
Ambitious for themselves, their families and their countries. And ambitious too for a better, more prosperous and more secure world.
How could we as Australians and as Germans not be more ambitious for our bilateral relationship?
We have some excellent foundations to build on, but we also have gaps that should be addressed.
Australia is a key player in the Asia-Pacific region, with an economy that is highly integrated with its region and which can boast nearly 25 straight years of economic growth.
Germany is the leading economy in Europe and a key member state of the European Union. The European Union as a block remains the largest economy in the world and is very important to Australia, especially in trade and investment terms.
Yet our two-way trade is in no way commensurate with the economic weight of both our countries. In the 21st Century it is no longer good enough to sit back and conclude that there is nothing we can do, because we are “zu weit weg” (too far away) from each other.
Germany is our tenth-biggest two-way trading partner, the second-biggest in Europe after the United Kingdom.
Our current trade relationship is somewhat unbalanced to put it mildly. Annual two-way trade in goods and services is worth about $17 billion at present, with German exports to Australia roughly $14 billion and Australian exports to Germany at about $3 billion.
Believe it or not, Australia’s single largest export to Germany is gold coins. Please do keep buying our wonderful gold coins but surely we could set some stretch targets and do some more business across a wider range of areas.
You might be surprised to hear that Australia is a larger investor in Germany than Germany is in Australia.
Australian investment in Germany is about $60 billion, whereas German investment in Australia is only $40 billion. To put these figures into perspective, two of Germany’s neighbours with much smaller economies – the Netherlands and Switzerland – have similar or bigger total foreign investment stocks in Australia than does Germany.
We are very like-minded on international issues and share so many core values. Yet as I mentioned earlier our government-to-government dialogue is not as developed as it should be.
Our strategic dialogue has been far too ad hoc. We need to broaden and deepen our dialogue into areas like counter-terrorism and perhaps also share views on social challenges associated with immigration and integration.
We are already doing some great work collaborating with each other in higher education, science and research. Indeed, we had a presentation on some exciting and very successful case studies at Humboldt University earlier today.
However, we could be doing significantly more in promoting education, research, cultural, media and other links.
There is much we can do to strengthen our tertiary and vocational education linkages.
Education is Australia’s third largest export after iron ore and coal, yet enrolments from Germany in Australian universities – and we do have some of the best in the world – are actually dropping.
While there are many factors at work here, it is not a healthy statistic, and one which we would like to reverse again.
Let me also assure you – there is plenty of good news too.
People-to-people links are strong.
Nearly a million Australians have German ancestry, out of a country of only 24 million. Germany is a key market for tourists and working holiday-makers to Australia. Around 180,000 Germans visit Australia each year as tourists.
And around 27,000 young Germans experience life and work in Australia under the Working Holiday Visa program. We warmly welcome this.
Over 480 German companies have a presence in Australia. We welcome – and would like to see more – German investment into Australia.
The Strategic Partnership Agreement between Germany and Australia signed in Berlin in January 2013 provides for cooperation across foreign policy, aid, science, research and defence.
Science and technology exchanges are frequent. Germany is Australia’s fourth-largest science collaboration partner, measured by the number of joint publications.
Our development cooperation partnership is underpinned by a Memorandum of Understanding facilitating almost $300 million in joint programs.
You would be surprised at the significant role Australian artists, musicians, writers, dancers and others are playing in Germany.
Take, by way of an example, the Intendant of the Komische Oper, Barrie Kosky. Or Simone Young, the Artistic Director of the Hamburg Opera and Music Director of the Hamburg Philharmonic. Or Nicholas Milton, who is the General Music Director of the Saarländische Staatsoper. I could go on.
Four themes to guide us
In my view there are four themes that should guide our drive for a more ambitious relationship.
First, we must move beyond outdated perceptions of artificial limitations to our relationship related to our geography. There is no limit to the potential of Australia-Germany relations.
In an inter-connected world, we are closer than ever – geography is no longer an excuse.
Our people-to-people connections are already strong. And breakthroughs in technology will continue to make our worlds closer.
For example, developments in the ‘cyber physical age’ – that is, the convergence of ICT technology with business processes (or what Germany calls ‘Industry 4.0’) – are creating opportunities uninhibited by distance.
The rise of global value chains and digital delivery in manufacturing communities provides new reasons for Australia and Germany to work together for positive commercial outcomes.
According to the OECD, over 70 per cent of world trade is structured within multi-national corporation global value chains. Income from trade flows within global value chains doubled between 1995 and 2009. Global value chains are now an integral part of the global economy and will only grow in importance over time.
Germany has one of the world’s largest, most competitive and innovative manufacturing industry sectors. Its technological leadership in industrial production research and development mark it as the global exemplar in the development of Industry 4.0.
Whether it is through people-to-people links or the capacity to take advantage of global value chains in an Industry 4.0 framework, there really are ‘no limits’ to the Australia-Germany relationship.
My second theme is leverage. We can leverage our ties to boost Australia’s interests in Europe, and Germany’s interests in Asia.
By leveraging our respective geographic advantages, we can build a more vital bilateral relationship. The surest path to do this is to ‘regionalise’ our interaction.
During her visit to Australia in November 2014, Chancellor Merkel recognised this herself. She noted how interesting it was to view the countries of Asia from a different vantage point.
Both Germany and Australia are intimately involved in one of the most consequential and significant developments of our age, the rise of China, the rise of other Asian powers such as India and Indonesia and the re-emergence of Japan.
I would not presume to suggest that on the whole Australians necessarily know more about China than Germans do, or even that Australian China specialists know more about China than German China specialists do. But because we live in Asia, China is always in the forefront of our minds, just as Europe is always in the forefront of German minds.
Therefore, German leaders, when they deal with their Australian counterparts, are dealing with people who spend part of every day, thinking about China. The same is true of Southeast Asia, This is where we live. It helps us to have some of the German genius involved in Asia. But we can also help Germany in its own Asian journey, just as Germany can help us as we navigate through the complex currents of contemporary Europe.
Because at the same time, Australia has important strategic and economic interests in Europe, which Germany can help us to better understand and prosecute.
We can build up this mutual partnership, based on ‘regionalisation’, by strengthening our dialogues on strategic issues, by instituting more regular minister to minister interaction, by introducing an Asia Dialogue involving senior officials and by harnessing the expertise of think-tanks.
My third theme is complementarity. Australia and Germany are complementary partners.
Our business connections are complementary, particularly through Australia’s interest in Germany’s expertise in high-end manufacturing. Many of the over 480 German subsidiaries in Australia are working in manufacturing.
In energy, as I have noted, Australia is a major energy supplier while Germany is a major consumer. We have a natural mutual interest in a closer dialogue on the management of global energy markets and promoting energy security.
And on global security issues, we share both threats and perspectives, which leads me to my fourth theme.
Security: It’s a riskier world. Like-minded countries must work together for security.
Australia and Germany are intrinsically like-minded actors when it comes to protecting our security interests in a world where the threat is more diffuse and difficult to defend against than ever.
On geo-strategic issues Australia and Germany often have a common view, looking at the same world from different ends yet reaching the same conclusions.
We are both strong, fundamental members of the United States alliance system. Germany through NATO and Australia through the web of US Pacific bilateral alliances.
We understand the responsibilities of alliance and we don't shirk them. We take them seriously. But we also understand the vital contribution this alliance system makes to providing a great deal of what global security and stability there is.
Our respective alliance commitments reflect not only our interests, but our core values. We share deep values of democracy and human rights, just as we share deep interests.
The scourge of foreign terrorist fighters represents a perversion of a religion and seeks to destroy the progressive societies from which many of their recruits are drawn.
Australia and Germany can act as leaders in countering violent extremism within our respective regions, and share best practise with each other.
Even in Europe, where Russia’s actions in Ukraine challenged the continent’s stable order in a way not seen for many years, Australia and Germany have been in lock-step. Australia saw clearly that Russia’s actions fundamentally challenged western democratic norms.
Australia has stood firm with the EU by implementing our own financial and sectoral sanctions against Russia consistent with those introduced by the EU, the United States and Canada.
Our security interests are also converging in the Asia-Pacific.
Comments by both the Australian Defence Minister Kevin Andrews and German Federal Minister for Defence, Ursula von der Leyen, at the Shangri La Dialogue on Asian security in Singapore demonstrated our recognition of an increasing global interdependence.
For example, Dr von der Leyen said: “in a globalised world, economic well-being is interlinked and so is our security. Stability and security in East and Southeast Asia is first of all your concern but, it is ours too. We Europeans are ready to share our experiences and we are ready and willing to learn from yours.”
And Mr Andrews said: “Over time, the term ‘Asia-Pacific’ had come to symbolise the main focus of Australia’s strategic interests and economic priorities. But in more recent years, we have come to realise that we must consider our region in the context of the vast pace of globalisation, as well as the mutual dependencies that exist between it and the rest of the world.”
The key message is that Australia and Germany share security concerns and a commitment to do something about them.
Australia as a partner for Germany
Clearly, I believe Australia and Germany should do more together.
But really why is this in Germany’s interest? Why should Germany engage more with Australia?
Despite the often prevalent imagery of Australia, it is not just a land of sunshine and beaches, sharks, spiders and bushfires.
Australia is one of the most diverse and democratic, yet cohesive and successful societies in the world.
As I mentioned earlier I was born in the German-speaking part of Belgium and came to Australia as a migrant about 20 years ago and today I have the opportunity to serve and contribute as part of our national government.
My story is not unique. Almost 28 per cent of Australians were born overseas. A further 20 per cent of the Australian-born population had at least one parent born overseas.
In Australia, if you put your shoulder to the wheel, work hard, embrace the people and share our values – in short if you join Team Australia and have a go – there is no limit to what you can achieve.
The success of Australia’s immigration story is absolutely remarkable.
We are a modern, vibrant economy.
Australia is a stable and secure trade and investment base with direct access to the world’s most dynamic growth markets in the Asia-Pacific region.
Australia has a triple A rating and is forecast to be one of the best performers in the developed world this decade.
Australia-Germany collaboration – room to grow
In science and technology, research and development, business and education, Australia and Germany already have a sound base of cooperation.
Major fields of Australia-Germany joint research publications are physics, biology, clinical medicine, earth sciences, basic medicine and chemistry.
For Australia, Germany provides a key entry point for technology collaboration, on top of its impressive track record in commercialising innovation.
There are numerous examples of our science and technology collaboration leading to direct commercial benefit for both countries.
- BASF, which in July 2012 opened its global mining research and development centre at the Australian Minerals Research Centre in my home town of Perth, Western Australia
- REMONDIS, one of the world’s leading water and environmental service companies, which is among the top 5 companies in Australia’s waste management market; and
- Boehringer Ingelheim, which has around 990 hectares of duboisia plantations on the east coast of Australia. Dried duboisia leaves are shipped to their plant in Germany for the production of Buscopan®, a well-known consumer health care product.
Germany’s expertise in high quality manufacturing and industrial know-how is well matched with Australia’s resources, flexible business models and stable operating environment.
We are looking for more foreign investment in sectors such as agribusiness and food, major infrastructure, tourism infrastructure, resources and energy and advanced manufacturing, services and technology – sectors in which German companies are well-placed to help deliver.
Australia is ‘open for business’
Through the Government’s efforts domestically and internationally, Australia is ‘open for business’ and working to build an even more attractive investment environment.
Domestically the Government has pursued a strong deregulation agenda, accelerating and streamlining project approvals, lowering the overall tax burden for business and planning record levels of infrastructure investment.
On the international front over the past 12 months Australia has concluded a powerful trifecta of free trade agreements with three of the world’s biggest economies: China, Japan and Korea.
We are also well advanced in negotiations for a Free Trade Agreement with India and the Trans-Pacific Partnership.
We are exploring with European institutions the opportunity to negotiate a European-Australian Free Trade Agreement. Australia and the EU are already solid trade and investment partners.
The EU is Australia’s second largest trading partner and largest source of foreign investment. Australia is also a substantial market for the EU, as the EU’s 7th largest market for services and 15th largest merchandise export partner.
Without an FTA, we cannot build our economic relationship to its full potential. The support of the German business sector will be important to increase awareness of the benefits of an FTA in promoting economic growth in Australia and Germany.
What will success in strengthening our relationship look like?
Let me briefly turn to the task set for the Australia-Germany Advisory Group. How will we know when we have been successful on this project?
I would like to think that when we look back in 5-10 years, we will be able to say that this was the moment when we really got serious about lifting our ties to a new level.
There are some initiatives I believe we should at least consider:
- Firstly, I hope we will be able to advance an economic agenda which takes Australia’s contribution to our trade relationship beyond our current gold coin export successes. We should methodically identify any current material barriers to a stronger trade and investment relationship and progressively eliminate them. Removing trade impediments and unnecessary red tape will help strengthen our business engagement. We may want to explore opportunities to cooperate in other markets, for example on the provision of vocational training services into Asia. It may be worthwhile to sustain Ministerially led annual trade delegations, alternating between our countries. Australia is also keen to host the Asia-Pacific Conference of German Business in 2018.
- Secondly, a more regular high level ministerial dialogue, including perhaps what we call an annual ‘two plus two’ exchange of foreign and defence ministers. We have such engagement with the US, China (via an annual dialogue involving a number of ministers), with Japan and with the United Kingdom – four of the world’s five largest economies. This would be a tangible structural strengthening of our strategic interaction.
- A deeper and more sustained strategic dialogue on a range of issues at an official and at a think tank level, including on counter-terrorism, de-radicalisation and community resilience, cyber security, space, energy security and on geopolitical issues ranging from the Middle East to Russia and China.
- Deeper people to people exchanges, ranging from targeted secondments of officials, to an intern program between our Parliament and the Bundestag, to deeper collaboration in the arts. We need to find better ways to encourage and sustain Australians and Germans studying in each other’s universities.
- Across many areas we should share our knowledge to see what opportunities can flow from working together with more energy and enthusiasm. Why not, for example, get a joint working group together to focus on energy opportunities -- everything from LNG, jointly developing enabling technologies; harnessing renewables. Let’s make this a shared Industry-Government exercise. The task would be to say, 'find the opportunities for us to work jointly on energy matters
I’m sure my colleagues on our Australia-Germany Advisory Group will come up with more ideas.
The key point here is that it is time to stop fretting about the flying time between our two countries. Instead let us focus on the opportunities that come from collaboration.
Conclusion – let’s get to work
In conclusion – the time is right for Australia and Germany to build a closer relationship.
I have sought to identify four themes which can help frame these efforts – ‘no limits’, ‘leverage’, ‘complementarity’ and ‘security’.
The theme of ‘no limits’ sets the bar as high as it should go.
And the themes of ‘leverage’, ‘complementarity’ and ‘security’ illustrate how we can work more effectively together in areas as diverse as science and technology, the arts and sport, countering terrorism and taking advantage of global value chains.
Through the work of the Australia-Germany Advisory Group, I will do everything I can to help move the relationship between Australia and Germany to where it should be.
Working together we can make it happen.