Thank you Michael [Wesley] for that introduction and for the opportunity to speak today.

Can I begin by congratulating the Lowy Institute for its significant contribution to policy debate on the Pacific.

We may not always agree, but I welcome Lowy’s important role in encouraging discussion and engagement on Pacific issues.

And I really appreciate the opportunity of being able to speak on "Why the Pacific Matters".

As you'd expect it’s a topic very close to my heart, and, I suspect from looking around and seeing some familiar faces, to yours too.

In a world of competing international challenges and opportunities, it is simply critical that we remain focused on our immediate neighbourhood.

Since taking up my position just over a year ago, I have visited every Pacific Forum Island nation and all the Pacific Territories that have a runway - I haven't been to Pitcairn but it’s on my bucket list.

This month I attended, with Prime Minister Gillard, the Pacific Island Forum meeting in Auckland.

In that meeting and all the meetings I've had in the region I've seen first-hand the commitment, of the Pacific peoples and their Governments to build a better future for the Pacific region.

I've witnessed the determination of Pacific Island nations to work together to confront the many challenges that our region faces.

Ladies and gentlemen, let me say, the Pacific really matters to Australia

Just as Australia matters to the Pacific.

Australia has and always will have special responsibilities in the region.

We work closely with the New Zealand government and increasingly the Papua New Guinea Government as the other large nations in the region to discharge these responsibilities. And I'd like to publicly acknowledge John Key and Murray McCully from New Zealand and Peter O'Neill and Ano Pala from PNG for their commitment to the region and the co-operative way in which they work with us together in the Pacific.

The world looks to Australia to show leadership in this region. The world judges us on our performance in the Pacific.

We are the Pacific’s major security partner.

We are the Pacific’s major economic partner.

We are its largest aid donor – around half of the world’s development assistance to the Pacific comes from Australia.

We continue to be connected by a deeply rooted network of personal, business, sporting and community ties.

Our engagement in the Pacific is underpinned by a broad range of national interests, including political, economic, strategic and security interests, as well as ensuring the safety of Australians who live in and visit the region.

Australia’s interests are intimately tied to those of our near Pacific neighbours. Our geography has dictated that we have a shared destiny.

All of our interests are best served by a stable, prosperous and growing Pacific.

The force of globalisation has meant these interests are more aligned now than ever.

But these are challenging times.

From the large, resource-rich Papua New Guinea to the tiny, low lying islands state of Kiribati, every country in the Pacific faces critical challenges.

Many of these challenges can only be tackled through regional and often global cooperation.

Climate change ranks high on the list of concerns.

While the region’s contribution to global pollution is small, the impact of climate change on the Pacific Islands will be immense.

Rising sea levels could displace whole communities.

And natural disasters are likely to be more frequent.

This is why we are working with individual countries to devise adaptation programs and build climate change resilience such as meeting the challenges of food, water and energy security. These are increasingly being seen as a part of a new security paradigm and will all have a significant impact on the Pacific.

We are working towards global solutions, ensuring the interests of the Pacific are represented in international forums, including in the G20 and the United Nations Framework Convention on Climate Change along with the UNGA and the Security Council.

Coupled with these new security dimensions are more traditional types of security challenges.

The Bougainville conflict and the ethnic tensions in Solomon Islands serves as a reminder to all of us of the awful human and developmental cost incurred when things go wrong.

The desire for a secure, prosperous and growing Pacific is a shared goal of the region; and it is the motivation behind Australia’s engagement in the region.

But obstacles remain to achieving this goal.

It has been more than four years since Commodore Bainimarama took control of Fiji through a military coup.

It was the fourth coup in Fiji in 25 years, in a nation that looked set to become a source of economic and democratic strength for the Pacific when it gained independence.

Instead, the people of Fiji are suffering under an interim government that rules by decree.

There is no freedom of the press.

There is no freedom of association.

Church organisations get banned from meeting, ILO conventions get flagrantly breached.

GDP growth for the country has been bleak for the past four years, averaging around -0.8 per cent.

Inflation has doubled in the past year, and was tracking at about 10 per cent in August this year.

Debt now stands at an unsustainable 60 per cent of GDP.¹

Poverty rates have increased 13 per cent in the past three years meaning around 45 per cent of Fiji’s population now live below the poverty line.

This is what the interim regime is doing to Fiji and its people.

At times our policy on Fiji has been criticized including by some, including even the Lowy.

What surprises me is that given all the Interim Regime is doing to Fiji with all its consequences that people choose to focus their criticism on Australian government policy.

I think those who criticise Australia’s policy in relation to Fiji need to ask themselves a fundamental question.

Are you comfortable with the way the interim regime is operating in Fiji?

Are you comfortable in the face of a very different view held by the Pacific Island Forum, and the countries of the Pacific, and the Commonwealth, the ILO, and the UN.

And if you are comfortable then own it. Own your view in the face of all the negative consequences of the interim regime being experienced today.

But if you are not comfortable then say that.

And don't say it in the context of covering a base in a longer argument which criticises Australian foreign policy on Fiji. But say it as being at the heart of the issue.

Because it is the conduct of the interim regime which is the heart of this issue.

Australia is deeply concerned about the deteriorating human rights situation in Fiji.

And let me make it crystal clear, Australia’s disagreement is with the interim government of Fiji – not its people.

For this reason, we remain the largest bilateral aid donor to Fiji and we will be increasing our aid in areas such as health and education in recognition that we cannot abandon Fiji’s people.

And of course Australia continues to represent easily the most significant source of principal investment and income in Fiji.

But aid and commerce can only do so much in restoring the damage that the Bainimarama regime has done to Fiji.

Recently, a poll commissioned by the Lowy Institute purported to show strong support for the Bainimarama regime, by the population of Fiji.

Now I can say – with all due respect to the Lowy Institute which does so much to encourage valuable debate about the Pacific – that commissioning this poll in Fiji was absurd.

If you are sitting at home, in a country where a repressive regime has stripped you of human rights and where people do get taken off to the barracks, and you get a knock on the door and a stranger asks you what you think of the government, what do you think you'd say?

The notion that this poll has any credibility is ridiculous.

Prime Minister Gillard summed it up in her comments in Auckland – democracy isn't a question for opinion polls.

You either believe in democracy or you don't.

Australia and the international community remain resolute in our call for a return to democracy and rule of law as soon as possible.

This is the only way that Fiji can be restored politically and economically.

The people of Fiji deserve the right to elect their own government.

Australia has always said that if the Bainimarama regime took just the smallest steps towards restoring democracy, we would respond positively.

Australia has led several peacekeeping missions in the Pacific and been a major contributor to disaster relief efforts over the years.

The Regional Assistance Mission to the Solomon Islands, RAMSI, which Australia has led since 2003, is considered internationally as being best practice in post-conflict stabilisation and development.

This innovative regional approach is paying dividends.

RAMSI helped create the conditions for peaceful national elections in August last year.

Its Economic Governance program helped achieve GDP growth of around 5.4 per cent in 2010.

Its support to the police, the justice system and the bureaucracy has helped to rebuild the institutions of government which were all but broken in 2003.

RAMSI’s success has been such that we are now in the process of gradually drawing down some of the mission’s activities and transitioning others back to the Solomon Islands Government.

This is being done in close consultation with the Solomon Islands Government, the people of Solomon Islands and the other 14 countries that contribute to RAMSI.

As a network of islands, surrounded by a vast ocean, another interest we share with the Pacific is maritime security.

The Pacific has complex security needs when it comes to policing its seas, combating threats like transnational crime, disaster management and fisheries protection.

It’s estimated that almost 40 per cent of fish caught in the Pacific each year are caught by illegal, unreported or unregulated fishing.

It’s costing the small economy of Kiribati millions of dollars each year.²

This is money that these small and vulnerable economies simply can't afford to lose.

Illegal fishing will only increase in coming decades as fish stocks decline in other parts of the world.

Australia’s Pacific Patrol Boat Program has made a vital contribution to maritime security over the past 25 years.

At the Pacific Islands Forum in 2009, we announced that we will be developing the Pacific Maritime Security Program, to replace the Patrol Boat Program.

We are now consulting with our Pacific partners to ensure that this new strategy will be able to address these wide-ranging threats.

At the heart of all these challenges is developing sustainable economies and employment prospects for the Pacific.

Demographic pressures will have a huge impact on the Pacific.

It is a young and fast growing population that is, in some places, running out of space.

The population of the Pacific is expected to climb to 15 million by 2035, which is a fast ascent for a region that only accounted for 4 million people 30 years ago.³

In the next 20 years, the World Bank has forecast that Vanuatu’s population will almost double while the populations of Kiribati and Papua New Guinea are expected to increase by over 70 per cent in the same period.

For PNG, this means that by 2030, it will have a population approaching 10 million, which will be a third of Australia’s.

All of this presents great challenges for planners and policy makers.

In Papua New Guinea, for example, less than 6 per cent of the working age population is employed in the formal sector.⁴

The numbers are similar across the Pacific.

But this also represents an enormous opportunity.

People are the Pacific’s greatest resource and the key to an economically strong and sustainable Pacific in the future.

This is why we see increased labour mobility and increased economic integration within the region through PACER Plus as being crucial.

It is why in 2008 the Australian Government announced the Pacific Seasonal Worker Pilot Scheme, which we have recently expanded to include Nauru, Samoa, Solomon Islands and Tuvalu.

Through the scheme, Pacific workers gain employment experience, develop new skills and earn income much of which is sent home.

After a slow start some 619 workers have come to Australia under the scheme – the vast bulk of which have come this year and– we expect numbers will continue to grow steadily.

This is a tremendously important project – both for what it means for the Pacific and what it delivers for Australia.

But the opportunities from increased labour mobility are much broader than just Pacific Islanders working in Australia.

There are significant opportunities for greater regional labour mobility, if we can give Pacific Islanders the skills to fill jobs created in the region.

The Pacific’s economy has recovered well from the GFC.

It recorded an average economic growth of 5.3 per cent in 2010⁵ and the Asian Development Bank’s latest Pacific Economic Monitor has estimated overall economic growth to be around 6.3 per cent for 2011.

A part of this good news story has been the growth of Papua New Guinea.

In fact, PNG has one of the fastest growing economies in the world, courtesy of its vast mineral deposits.

Mining already accounts for 50 per cent of its GDP and 80 per cent of its imports.

A great challenge into the future will be to manage these assets sustainably and to ensure that the people of PNG benefit.

The 30-year US$15 billion LNG project in Papua New Guinea, for example, has the potential to deliver huge economic benefits for its people.

It has the ability to turn around a distressing trend that has not seen PNG’s wealth in minerals translate to improving the lives of most Papua New Guineans.

We are drawing on our experience from our own Future Fund to help Papua New Guinea establish its first Sovereign Wealth Fund, which will help ensure the country’s great mineral wealth will support its development in the long term.

And I am greatly encouraged by the commitment of the PNG government to get the public policy right around the LNG project by putting in place the SWF.

But for those small Pacific Islands that aren't well endowed with natural resources, different problems will need different solutions.

Small, sometimes dispersed populations and markets in the Pacific will always limit the domestic economic opportunities for many countries.

Encouragingly, most small island states returned to positive growth in 2010.

But the reality is that aid will need to continue to be a part of government revenue streams in some small island states in the Pacific to keep them viable.

We are intent on skilling up young people in the region by boosting educational opportunities for all in the Pacific.

And for this, our approach must be multifaceted.

Currently, 1 million school age children in the Pacific do not attend school.

So, along with New Zealand, we've committed to the ambitious target of getting half a million more children in the region into school by 2021.

And we will do this by working with our Pacific partners to address the barriers that are preventing all Pacific children from completing a minimum of 6 years education.

The Australian government has also committed $152 million in extra funding to assist more than 3 400 students at the Australia Pacific Technical College.

And the Pacific is benefiting from the Australia Awards program.

In 2011, almost 500 Awards were offered to the best and brightest young people in the Pacific.

They will foster a new generation of leaders, who will be key to the future of the Pacific.

The Pacific is central to Australia’s international development efforts.

The Pacific matters to Australia and, along with East Asia, it will remain as our geographic focus for development.

It is where our aid program can and is making a difference.

In PNG, Australia has helped:

• Send 200 000 more children to school
• Provide half a million new text books for schools
• Triple the number of people being treated for HIV

In Solomon Islands, Australia has helped:

• More than halve the incidence of malaria since 2003
• Send 140 000 more children to school
• Improve access to water and sanitation for 24 000 people.

These are outcomes that support our Pacific neighbours.

These are outcomes that I have seen make transformational changes in the lives of people in the Pacific.

They are the outcomes that reflect the values and expectations of Australians who want to see the people of the Pacific be prosperous and secure.

Conclusion

I've focussed on many challenges today, but let’s not forget the immense opportunities for the Pacific.

With the notable exception of Fiji, it is a region where democracy is entrenched.

If countries adopt the right policy measures, the economic prospects in the region will be improved.

Opportunities abound in:

• in natural resource development
• in tourism
• and in fisheries.

And Australia will work with our Pacific neighbours to help convert this potential into success.

And we will continue to recognise that what we do and what we say has more influence in the Pacific than in any other region.

We also recognise that the world will rightly judge us on our actions in the Pacific for good or for ill.

And with this in mind we are dedicated to providing the leadership that the world expects from us.

We will continue to help bring the concerns of the region to the world stage.

And we will work in partnership with our Pacific neighbours to tackle the challenges of the 21st Century.

• 1. IMF WEO
• 2. ASPI – Staying the Course: Australia and maritime security in the South Pacific, 30 May 2011
• 3. SPC population data, Updated May 2011
• 4. World Bank (2006)
• 5. ADB Pacific Economic Monitor, Feb 2011

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