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Energising Australia-Indonesia Relations

Opening address to 42nd Indonesia Update Conference, Navigating Climate Change in Indonesia, Australian National University, Canberra, 12 September 2025

There has never been a more important time for Australia and Indonesia to be consolidating, widening and deepening our relationship. And this 42nd Indonesia Update Conference (also commemorating the 60th Anniversary of its organising angel, the ANU Indonesia Project) is a perfect vehicle for exploring how best to do so. Not just because of the usual opening sessions on current political and economic developments, with the sparks and ideas these discussions can be expected to generate. But particularly because the main topic of the Update will be climate change and the energy transitions necessary to mitigate it: no set of issues could be more topical, and few lend themselves more obviously to new dimensions of bilateral collaboration.

We meet in obviously difficult and uncertain times. We are all familiar with the volatility and fragility of the regional security environment, with China rather aggressively stretching its wings, and the US apparently hell-bent on burning its own. Leaving the rest of us trying to navigate a path between the two regional giants. In a way that on the one hand keeps alive and flourishing what for most of us is our most important economic relationship, while on the other hand recognising the utility of the balancing role the US has traditionally played in the region – a, role which, if sensibly and sensitively applied – a big ask for Trump – will continue to benefit all of us.

We are all conscious, again, of the looming stress facing the regional economic environment as a result of the insanely destructive – not least, as the economic data will make increasingly clear, for the US itself – Trump tariff war. There is real potential for effective cooperative regional push-back action through the CPTPP and RCEP treaty mechanisms, but neither have yet begun to fully realise their potential.

And I think we are all conscious, as well, of the many global and regional public goods problems crying out for effective, collaborative, collective action solutions, because none are solvable by countries, however big and powerful, acting alone: climate change, pandemics, arms control and unregulated population flows pre-eminent among them.

All these issues provide ample reason for Australia and Indonesia to strengthen our ties to a greater extent than we save sustainably achieved in the past. That we have not done as well as we could and should have has not been for want of trying, not least by many of us in this room:

  • Going right back to the beginning, there was the active and important role – albeit now largely forgotten on both sides – played by Australian trade unionists, and then the Labor Government itself in the United Nations, in supporting the birth of the Indonesian Republic.

  • In the Hawke-Keating Government years, I recall with particular fondness my relationship with my foreign ministerial counterpart Ali Alatas, as we worked together to put the unhappy mess of East Timor behind us, forge peace in Cambodia, and build new regional economic and security dialogue architecture with APEC and the ASEAN Regional Forum.

  • There was the extraordinarily far-reaching security milestone achieved, albeit unhappily short-lived, with the Keating-Suharto forged 1995 Security Agreement.

  • There has been the role of Australian universities, above although not confined to the ANU with our Indonesia Project, in generating intense and lasting personal relationships with a whole cohort of senior policymakers, including Mari Pangestu, Chatib Basri, Boediono, and Marty Natalegawa.

  • And there has been the commitment of a whole series of Australian Prime Ministers and Foreign Ministers to making Jakarta their first international port of call, and developing the warmest possible personal relationships with their counterparts, as Anthony Albanese has done with both Presidents Jokowi and Prabowo.

But for all the efforts of this kind, I think we are all conscious that there are still significant missing ingredients. On the Australian side they include:

  • A conspicuous failure by our business community to invest in and trade with Indonesia on anything like the scale appropriate to a country of its size, and above all future importance - destined on most analyses to be the world’s 4th biggest economy by 2050 if not sooner.

  • A failure to sufficiently project ourselves (mainly because of noisy opposition from some backward-looking political and media quarters) as a multicultural success story, now with a very large Asian-Australian population, and very conscious that our future lies in our regional geography, not our Anglosphere history.

  • And, in many ways most troubling of all, an almost inexplicable decline in Indonesian cultural and linguistic literacy. On the most recent figures I’ve seen:

    • the number of Australian high school students studying Indonesian in 2023 (542) was even lower than it was in 1989 (1107), when the Garnaut Report first identified ourn Asia capability challenge;
    • of the more than 1 million domestic Australian students at Australian universities in 2023, barely 500 students were enrolled in Bahasa Indonesia nationwide; and
    • only 13 universities in Australia currently teach Indonesian – a stark decrease from the 22 in the early 1990s.

On the Indonesian side, the factors inhibiting our bilateral relationship realizing its full potential include:

  • The reality that Indonesia, with its population 10 times bigger than ours, its geopolitical and economic preoccupations all focused north rather than south – with neither its defence nor its trade and investment needs remotely dependent on us – just does not see us as being in the same league as we see it, viz (as prime ministers since Keating have regularly put it) ‘There is no country more important to Australia than Indonesia’.

  • The reality that Indonesia, for all its growth and development achievements, is still a quite testing environment in terms of its recurring issues with political stability, governance standards and responsible economic management – concerns all dramatically accentuated in recent days by the rioting in Jakarta and other cities across the country, and the replacement of Finance Minister Sri Mulyani Indrawati, hugely respected here as around the world.

  • There is another Indonesian reality which will be troubling to some in our security policy community, but I don’t think should be: that Jakarta will always want to maintain political and defence relationships with China and Russia as well as the US and its allies and partners, and be unwilling to lock itself into any particular alignment box. That just comes with the territory in dealing with Indonesia, and we should not be spooked by it.

We just have to acknowledge frankly that there will always be challenges in forging a bilateral relationship with the degree of reflexive intimacy that a great many of us would like. It is still the case, as Bruce Grant and I wrote in 1991 and has been repeated many times by others since, that ‘No two neighbours anywhere in the world are as comprehensively unalike as Australia and Indonesia. We differ in language, culture, religion, history, ethnicity, population size, and in political, legal and social systems.’

All that said, it is important that we do acknowledge each other’s strengths, and what we each bring to the table in our bilateral relations and in working together cooperatively and collaboratively in multilateral settings. In global terms, despite the disparity in our population sizes, we both rank as significant middle powers, in the sense that while we are not big enough militarily or economically to really impose our policy preferences on anyone else, we are nonetheless sufficiently capable in terms of our diplomatic resources, sufficiently credible in terms of our record of principled behaviour, and sufficiently motivated to be able to make a significant impact on international relations in a way that is beyond the reach of small states.

We have been a formidable combination in the past, as in the Cambodian peace process, and can be again in addressing a whole range of global and regional public goods needs, including peacemaking and peacekeeping, pandemic and disaster response, arms control, managing the consequences of unregulated population flows, maintaining a free and open trading system– and, not least, avoiding climate change catastrophe, the central policy focus of this conference.

Both of us being significant carbon emitters and major coal exporters, we have a particular responsibility to identify, and implement, mitigation and adaptation pathways. Given the long history of this Update conference as a vehicle for tough-minded policy analysis and debate, I am sure that your deliberations over the next two days will make a major contribution to advancing those objectives.

And that in doing so you will demonstrate yet again to any remaining sceptics just how much this Australia- Indonesia relationship matters, and how much will be gained – not just for each of us, but for the wider regional and global community – by energising and strengthening it further.