ADDRESS TO

ROTARY DISTRICT 9800 CONFERENCE

DARLING HARBOUR CONVENTION CENTRE, SYDNEY

22 MARCH 2001

7.30 PM

Earlier this year I met a delegation of Rotary members from

the Polio Eradication Taskforce. They told me about the program under which Rotary

International, in partnership with some other organisations, is conducting a program to

eradicate polio from the world by 2005. The Americas, the Western Pacific (including

China) and Europe are now polio free. If polio can be eliminated from the twenty remaining

endemic countries, some on the Indian sub-continent and some in Africa, it will be

eliminated from the world and no child will ever again suffer the disease. This visionary

plan is to rid the globe of polio. If it exists nowhere, it can’t be transported. It

will be eliminated.

Ridding the world of a disease which has caused so much suffering

requires strong international cooperation and is spearheaded by international

organisations such as Rotary, the World Health Organisation, UNICEF. These are

organisations with global reach. This is a global health care program. The capacity to

reach into every nation in the world, in this case for good, is an example of

globalisation. This kind of thing could not be done in previous generations.

You might think it strange to hear me use the word globalisation in this context.

Globalisation is normally used as a “boo-hiss” word these days. It is generally

invoked to complain about something – some area of economic hardship or some social

malaise. In the health area globalisation – the capacity to act internationally

through multinational institutions and to reach all the world’s people – can be

used for great good.

Globalisation is a description of the way in which the lives of citizens in different

countries all around the world can be affected by other people, or governments, or

corporations, or decision makers – how the people of the world are much more closely

connected these days. Principally they are connected because transport between countries

is much faster and more available and communication between individuals around the world

is faster and more available than ever.

The telephone which first connected suburbs now connects the world, emails have

replaced faxes which allow instantaneous communication around the world, and citizens

around the world draw on common knowledge banks and exchange common knowledge across an

internet which now literally wires home to home, office to office, business to business,

and business to consumer right around the world. Media companies keep us informed of

events around the world as they are happening in real time.

I remember in my childhood whenever a neighbour or friend went somewhere exotic they

would take photos and come home to show the neighbours who would gather for a ‘slide

night’. This was a way of showing us what other places were like, places we had not

seen and didn’t expect to see. I cannot imagine any children attending slide nights

these days. They can recognise streets in New York or Los Angeles from film sets or

computer games, most of the locations of the world are frequently displayed on television.

All of this instantaneous communication has taken a lot of wonder out of the world, but

you will never go back.

I want to suggest that ‘globalisation’ is a process, it is not a value. It

describes what is happening. In some cases this process can be a force for good – the

elimination of polio. In some cases it can be a force for ill – the export of extreme

political views. But ‘globalisation’ is not a value any more than

‘telephone’ is a value. It is a process and it will have good effects and bad

effects. Railing against globalisation is like railing against the telephone. Railing

against an outcome which may have occurred as a result of all these changes in travel and

communication and inter connectedness may make sense, talking about how it can be

harnessed or moderated for other goals makes a lot of sense, but in itself these technical

changes are not values. And what is more they are not reversible.

I think that one of the things that is worrying people about this process is the effect

that it is having on the nation state. The powers of a nation or a national government as

a consequence of these developments seem to be much more limited.

Many things are now influenced by decisions taken at an international level, for

example, allowable greenhouse gas emissions can determine how much land clearing is

allowed, or the ability of a national government to raise money and the costs of doing can

depend on international credit rating and confidence in its economic policy. Governments

seem to have less room to manoeuvre and if they have less room what hope have individuals?

This leads to a sense of powerlessness. Whatever the strengths or ills of the nation state

at least people (in a democracy) get the chance to vote the leaders in and out. They do

not get the chance to vote in or vote out the people who staff the international

organisations or national decision makers in other countries whose decisions have real

effects upon their lives.

Tonight I would like to consider this question of globalisation and national policy in

the context of the Australian Federation.

As you know we are celebrating 100 years of federation, this year, the federation which

created the Australian nation. In a real way the modern Australia was created as a

consequence of globalisation. Because of its location in the Southern Hemisphere, so far

from Europe, Australia was not discovered by European explorers until much later than they

discovered other lands for future colonies such as North America and South America. It was

not discovered until such time as transportation had improved and scientific knowledge

developed to such an extent that ships could navigate from Europe to the southern Indian

and Pacific Oceans.

European settlement came to Australia when a great global power – Britain –

decided to settle a colony in New South Wales. This was done when transport had improved

to the extent of being able to sail colonists (and convicts) around the world and when it

was possible to maintain some kind of governance in the colony connected to the

administrative centre of the Empire thousands of miles away.

Australia was established as part of one of history’s great Empires – the

British Empire. Like me, you probably grew up with a school atlas which showed the British

Empire starting from Britain across the sub-continent to Australia back up to Canada, all

coloured in red. This was the great Empire on which the sun never set. And the early part

of Australia’s modern history is the story of the colony of a global empire. As we

know in 1901 six colonies federated to form a nation. Over the course of the last 100

years we have seen that nation moving continually to greater independence and separation

from the Empire.

For example, when Britain declared war on Germany in 1914 Australia was automatically

at war because the declaration was on behalf of Britain and its Empire. Australia was in a

curious position – on the one hand it was a part of an Empire, fighting as part of

the Imperial Force, but on the other hand it was an Australian Imperial Force.

War time Prime Minister Billy Hughes said, “A man may be a very loyal and

devoted adherent to and worshipper of the Empire, and may still be a very loyal and

patriotic Australian”.

Australians commenced the war as imperial forces under British command and in many

cases were used to fill up regiments or battalions in conjunction with the British Army.

It was not until 1917 that ANZAC troops served for the first time under unified Australian

command on the Western Front initially under Field Marshall Sir William Birdwood and then

under Sir John Monash. All five Australian divisions were grouped into an Australian Corps

for the first time. Never before had all Australian troops served under a unified

Australian command and never before had each of the individual divisions been commanded by

Australian soldiers. By the end of the war there was a feeling that although the soldiers

were part of Empire they were unique and distinct and they wanted their own separate

commanders. It was under Australian command that ANZAC troops had the famous victories at

Hamel and Amiens on the Western Front breaking the German line in 1918.

As the decades passed the ties of Empire receded – with the appointment of

Australian born Governors-General, the Statute of Westminster and its adoption in 1942,

the establishment of Australian citizenship, and later the abolition of appeals to the

Privy Council. The story of much of the last hundred years was emergence of independent

nation from the colony of Empire.

Incidentally this is not just true of Australia, the twentieth century generally saw

the emergence of independent nation states and nationalism. In some places like the

Balkans this is continuing to this day.

The point of this is that the story of the last 100 years has not been a loss of

national sovereignty but an assertion of national sovereignty and increasing public

support of national sovereignty notwithstanding the ambiguous result in the Republic

Referendum of November 1999.

Let us now switch to the economic focus. A large part of Australia’s wealth is and

always has been based on international trade. A great deal of Australia’s wealth came

in the 1850’s and 1860’s with the gold rushes. Gold was a commodity to be mined

and sold on world markets. Similarly the development of the mining industry in lead,

silver, iron ore etc. was the exploitation of resources for world markets. Mining was

always an internationally exposed industry in Australia. It was never protected by tariff.

The Australian mining industry was always exposed to international trade and it survived

and prospered only because it was world class and leading edge in terms of technology and

investment.

Similarly the development of agricultural industries, particularly the wool industry,

was a result of international trade. When Australia rode on the sheep’s back it was

not because the domestic production of wool was being sold and consumed in Australia. It

was because this was a commodity produced for global markets. And the industry survived

and prospered because no one in the world could do it as well.

Australia’s economic development has always been reliant on international trade.

And its investment has always relied on international investment starting with the

financial houses of London which invested in companies and formed enterprises in the

colonies in the 19^th Century. Even today Britain is (narrowly) the second

largest foreign investor in Australia (U.S. 27%, U.K. 26%, Japan 7%). Suggestions that

somehow Australia is threatened by foreign investment or threatened by trading into

international markets are so wide of the mark. Australia is only here because of foreign

investment, and the industries that we know are here because of foreign investment in

Australia and successful trade on world markets.

But people want to know that their national leaders are batting for them. Other

countries are batting for their own national interest. And we should bat for ours. We must

bat with an eye to our interest in both the short term and long term and we should do so

intelligently.

In the past we have seen local and national producers selling into world markets. Now

we see a process that is leading local or national producers to want to consolidate to

become world scale to sell into world markets. I will take as an example here the recent

announcement of BHP and Billiton. BHP has always sold on world markets. Now it wants to

get larger economies of scale, indeed to become the world’s largest mining company,

to sell onto those markets. For the largest mining company in the world to be located in

Australia is a good thing for this country.

Companies that have assets and employees located all around the world are never really

located in one place. They do some things in one country and others in other countries. To

the extent that they have a ‘home’ it is where the Head Office is located and

mostly the location of the Head Office is identified as the place where the Chief

Executive lives.

One of the things the BHP Billiton partners said was behind their proposals was

‘access to capital markets’. This is something you frequently hear from large

companies. What it means is that a company which wants debt or equity to invest has to get

that from somebody else’s savings. These days these savings are held in pension funds

or superannuation funds. The amount of savings available depends on the living standards

(you have to be reasonably well-off to have savings) and the scale of population that has

them. The large populations of reasonably well-off people live in the Northern Hemisphere,

principally in Europe and North America. Access to capital markets mean being able to

access the savings of North Americans and Europeans, it may mean through instruments on

the New York Stock Exchange or the London Stock Exchange, it may mean through bond

markets, or it may mean attracting northern pension funds to invest down in Australia.

Geoffrey Blainey coined the famous phrase in writing about Australia, ‘the tyranny

of distance’. The tyranny of distance is being overcome by international improvements

in transport and communications. But there is a still a distance between Australia and the

large world capital markets. As a result Australian companies, particularly those that

want to expand internationally, have a pressure to gravitate to the institutions of the

Northern Hemisphere. If we want the savers of the Northern Hemisphere to bring their

saving here we have to make sure our capital markets function as efficiently as possible

to stay in the game. The Australian Stock Exchange has led the world in technological

developments, our Corporate Law is probably state of the art and the IMF has described our

system of financial supervision as ‘path breaking’ and recommended it as a model

for other countries.

But we are still a country of 20 million people in the Southern Hemisphere a long way

from the affluent population centres of the Northern Hemisphere. The North American Free

Trade area now has some 300 million people. The European Union now has some 372 million

people. These population centres provide large markets for the sale of goods and services,

they provide large markets for raising capital. From an economic point of view a larger

population is an advantage. Now, it is unthinkable that Australia would ever have a

population of that dimension but you must bear in mind that with our comparatively small

population we are just going to have to do things better and better and run harder and

harder to keep our place amongst the countries of the world.

This process of “globalisation”, the improvements in transport, communication

and technology which are linking people and businesses and lobby groups and governments

around the world has been going on a long time. It was transport and communication

advances that led to the founding of Australia and which gave it great industries in

mining and agriculture and today in financial services and tourism. And this process can

be a force for good or for ill. Some things we will like and some things we will not. But

we will not stop the process. We can try to direct and harness the outcomes.

One great outcome from the possibilities now with us would be the elimination of polio.

When Paul Harris founded Rotary in Chicago in 1905, he did so with the idea of finding

within a large city the kind of friendly spirit that he knew in the villages where he had

grown up. He sought the friendliness and tolerance he found in the Vermont of his youth.

This organisation dedicated to restoring the spirit of the village is now

multinational. Rotary itself has over 1.2 million members in 29,000 Clubs, in 161

countries around the world.

Is Rotary, a globalised service organisation, an example of the ills of globalisation?

Of course not. It is a great force for good.

Can we make other global developments work for good? Of course we can. Economic growth

is still the best poverty-buster yet invented, and in our part of the world – East

Asia – has halved the number of people living in extreme poverty in less than 2

decades.

But will these developments always work for good? No they won’t. They will have to

be harnessed, directed, and in some cases steps taken to prevent anti-social outcomes

(witness the Government’s steps to curtail interactive gaming). These developments

have speeded up the time between action and result and spread the consequences much wider.

Accordingly the capacity for good or ill outcomes has been leveraged considerably. The

stakes of getting things right are that much higher.