Australian American Leadership Dialogue Gala Dinner 2015
National Gallery of Victoria, Melbourne
Saturday 8 August 2015
Well, thanks very much Michael. And it is wonderful to be here, for Lucy and me to be here at the Dialogue again. And can I just say congratulations to the Scanlans for establishing this extraordinary institution. Let’s give them a round of applause. There are very few private individuals that have had such an enormous impact on relations between two great nations, and in particular between our nation and the United States. It is an extraordinary achievement over 23 years.
Now, my friends, there has never been a more exciting time to be alive. The old order has never changed so fast, nor yielded so much to the new as it does today. Many would say this is a great time to be young. Well, so it is, but it’s always a good time to be young. But there has never been a better time to be old. And that is not just the consolation of despair. The prize of youth was time, time for change to occur, for better things to emerge. But now we don’t have to wait so long. Some of the largest and most influential businesses of our time would still be in school if they were humans.
Uber, most recently valued at $50 billion, utterly disrupting the taxi industry and associated monopolies around the world was founded in 2009, so it’s in the first grade. AirBNB, recently valued at $24 billion, which is doing the same for accommodation founded in 2008, that’s in the second grade. Twitter, with a market cap of $18 billion, 400 million users, founded in 2006, it’s in the fourth grade. Google, market cap of $450 billion, arguably the most transformative single company of them all, founded in 1998 is in the eleventh grade trying to work out which college to go to.
Facebook, a market cap of $268 billion, with over one and a half billion accounts, with nearly 70% of all Australians with a Facebook account, founded in 2004, is in the sixth grade. Founded in the same year as Google was Ali Baba, dominating China’s online market with a market cap of $200 billion. Its American counterpart, Amazon, is four years older, so it’s celebrating its 21st, and it has a market cap of $250 billion. And even Apple, the largest company in the world by market capitalisation, whose $650 billion now, down about 100 from its high, whose imagination has in large part created so much of what we call the modern world, is not yet 40. If it were a human, it would still qualify for the Australian/American Young Leader’s Dialogue. Unlike Microsoft, which at 40 would be one of the very youngest members of the Dialogue itself.
And the decline of the old order has been as rapid as the rise of the new. Newspapers, we all know what a sorry story their economics have been. You know their advertising revenues peaked in 2006, more than a decade after the internet became widely commercially available.
Now, the rise to global dominance of these online giants, these digital giants, all within the space of 40 years, does seem almost miraculous. And yet they pale alongside the scale, the complexity, and the significance of another momentous change, and that is the rise of China. Barely engaged in the world economy 40 years ago, China is now the world’s largest economy today, or will be before too long. From a Chinese perspective of course that’s more of a return to the natural order of things. In 1820 Angus Maddison’s estimate, you’re all familiar I’m sure with his extraordinary work, in 1820 their share of global GDP was estimated to have been 33%. By 1970 it was 5%. It’s not so long ago. It was 5% of global GDP, the largest country by population in the world. It had basically checked out. Today it is nudging 20%. Similar observations can be made about India trailing China in growth but on a similar trajectory.
Now, it was inevitable that those countries would, it was nearly inevitable, and I think it is now inevitable, that those two giants of our region, in people, resources and territory, would acquire and wield comparable economic and in due course strategic power. It’s less a new normal than the old normal restored. Convergence, globalisation, supercharged by the power of technology and the internet, are transforming our world at a pace humans have never seen before. And that’s what’s so exciting. This is the most exciting time to be alive.
The challenge for all of us, whether we are politicians, public servants, ambassadors, captains of industry, the challenge for all of us is how do we maintain our high wage, generous social welfare net, first world developed economy in the face of this extraordinarily expanding global market? How do we do that with so much more competition, with so much volatility, with so many things that are uncertain?
Well, the one thing we must do is ban forever the idea that we can proof ourselves against the future. ‘Future proofing’ is a term we should cast aside. We should cast inside ‘not invented here’. We should cast aside ‘We’ve never done things like that before’. We should regard deference, my friends, as death. We need to be as nimble and agile as we possibly can. We need to see volatility and change and disruption as opportunities, not as threats. And that is why the United States, written off by so many experts, about to be subsumed by the economic power of Japan and then China, written off, has developed, produced these dominating, global businesses of the new digital age, it’s done that because it was flexible, it was nimble, it was agile and it’s free, my friends, the values that we share, the liberal values, with a small L for the benefit of my friend Mr Shorten and his friends, the liberal values we share of freedom, of freedom, initiative, they are the ones that have enabled America to remain strong and become stronger, and they are the ones that we draw upon for our future too. This is an environment in which flexibility and agility and opportunity, optionality, is more important than it has ever been before.
And you know, we have here in this room tonight two men who have done an enormous amount for our country, and for other countries as well, and for our friends in America, but two men that have done an enormous amount for our country in building the bases to enable us to engage with these great opportunities. And of course I’m talking about one former Trade Minister, one current Trade Minister, Mark Vaile and Andrew Robb. Mark, who as Trade Minister was responsible for the Singapore free trade agreement, the Thailand free trade agreement, and of course the US free trade agreement. And Andrew Robb who, building on the work that Mark started when we were last in government, has completed the Japan free trade agreement, the South Korea free trade agreement, the China free trade agreement. The opportunities those openings to trade give us, the extraordinary benefits they confer upon us, because after all, it’s hard for us not to get a good deal in a free trade agreement, let me tell you, we have so few barriers to trade already, we have so few barriers to trade. So almost invariably a free trade agreement is going to be a big winner for Australia. Mark and Andrew have done an extraordinary job setting Australia up, not just for 2015, but for generations to come. And let’s give them a round of applause too.
Now, I want to talk now a little bit about the way in which we need to lead. Not companies, or just companies or governments or departments or universities, but what does leadership mean in an age of volatility? How do you as a leader confidently embrace volatility? How do you make an opportunity out of something that most people see as a threat?
The first thing you’ve got to do is to focus on the opportunity, not the threat. Appealing to people’s fear and anxiety is a low road that leaders should never go down. We have got to recognise that if we simply roll ourselves up in to a little ball frightened by all this change, then it will indeed sweep over us. We have to be on the balls of our feet, we have to be agile at all times.
And that means in the organisations we run, whether they are big or small, we have to ensure that there is no blame culture. And what I mean by that, is a culture, an organisational culture where people have very modest rewards for doing something well, but serious penalties if something goes wrong. What does the rational actor do? Nothing at all. He or she manages things up like a sort of unexploded piece of ordinance so that somebody else can deal with it safely out of their way.
We have to have a culture, not just a government culture, a corporate culture, a national culture, that recognises that we are constantly on the edge of innovation, and that we are always experimenting. In a sense, everything is in beta. And so many politicians here, I see Kevin Andrews and so many of my other colleagues from both sides of the House are here. When we are asked by journalists, “Minister, will you guarantee that this will work?”, the answer should be “No, I absolutely cannot guarantee this. What I can say to you is that this is the best policy response we can come up with the moment, and if it is less than successful, or if we think we can prove it, we can change it”. In other words, be absolutely frank about the nature of the environment we’re in.
The other thing we’ve got to do is to stop talking down to people and treating like they are dumb or idiots, disrespecting them. Our audiences, whether they are the citizenry at large for politicians, or your customers if you’re in business, are smart. They’re a lot smarter than most people think. And we respect them by explaining issues. By setting out, describing the nature of the problems that we face, accurately, fairly obviously in a form that’s comprehensible, there’s no point baffling people with jargon or technicality. And then explaining what the options are. If we do that, leadership will be trusted, and leadership will be trusted with the future.
Now, coming back to the fundamental question, how do we maintain that high wage, generous social welfare net economy? How do we do that? How do we in Australia do that in particular? The answer is very, very clear, but very hard to achieve. The answer is that we have to be smarter, more agile, more technically sophisticated, we have to be far more efficient. We have to be above all else highly competitive. There is no reason why we can’t do that. We have a country that some of the brightest people in the world want to live in. We have a desirable place to live. We’re an attractive place to live. We have some of the best universities in the world. We have a culture which is perhaps not as non-deferential as I would like it to be, but still is less deferential than most. We have every potential to be as innovative as any country could be.
And while we have not developed a Google or a Facebook, and it’s unlikely that we ever will, Australian innovation is to be found all over the world. It’s a very, very long list that many of you are familiar with some of the technology companies, Atlassian, MYOB, so many software businesses. It is pharmaceuticals, biotech. One company which always appeals to me from my days as Water Minister, a company called Rubicon Water founded in Victoria, has the world’s leading technology for managing gravity fed irrigation systems. Australian company, and it has customers all over the world, often in, as you can imagine, in countries which are very poor, where the better management of water is vitally important.
We have some of the best science, some of the best business people in the world. What we lack, in my view, is a national commitment to innovation. What we lack is an agreement that we want to be an innovation nation, that we want to be, we want to make innovation part of every business, every firm, large or small. So it’s not just limited to starting a new technology business. It is in every enterprise, it is a change of culture. Mentoring is very important. We had a terrific discussion about that with the young leaders earlier. It’s very important for women in technology, who often feel that they, well, they do feel quite rightly that they’re discriminated against, or it’s not as welcoming an environment to them.
But above all, if we could get up tomorrow and say whether we are leaders or the youngest person in the office, we are going to look at everything anew, we are going to have an open mind for everything we do. Then all of us will become vastly more competitive, more imaginative, more innovative. So much of this issue is cultural. We’ll have government programs here, and changing laws, we’ve done some great things with our government changing the laws on employee share schemes, and we’ll have crowd funding legislation out shortly. All of that is important, but nothing is more important than culture.
And so I’m really pleased to be here with the Leadership Dialogue this weekend, because this weekend has been all about innovation. It’s been all about breaking the mould, it’s been all about looking at things anew. If we stay on the balls of our feet, if we focus on doing something different tomorrow than we did yesterday, if we are not afraid of the future but embrace it, then we will be the greatest beneficiaries of this vastly more open more competitive global economy. Thank you all very much.
NB: On Tuesday 15 September 2015 the Honourable Malcolm Turnbull was sworn in as Prime Minister of Australia.