[Acknowledgements]
Its a privilege to be in Washington DC, a town full of minds focused on the big policy issues that confront us over the coming decades; on actualising the hopes and aspirations of people across the globe.
Its a privilege to be speaking to a group of such people here today and Id like to thank the Brookings Institution for inviting me to speak to you.
With the world undergoing such significant change, it is important for dialogue to exist between the Governments of all persuasions and groups like this.
Its undeniable that we are facing a slow rebalancing of global economic weight from West to East, and this is a process that will take decades to play out and it will have ramifications across the globe.
These are the early years of the Asian Century, which will reshape both the international economy and the Australian economy, with lasting and profound results.
This shift is one of the key public policy transformations of our generation.
Its a challenge that should be at front of mind of all policy makers and policy thinkers around the globe; the challenge of how to best position our economies and our people for enduring prosperity in a time of change.

First, I want to touch on the position from which Australia starts.
Right now, the global economy is facing a period of heightened volatility, largely emanating from the deep seated crisis in Europe.
No economy is immune from this, including Australia.
Australia however does face this from a position of strength.
The challenges faced by European economies are profound, and managing sovereign debt and fiscal challenges will take decisive policy leadership across the globe. This will not be easy.
While we have seen steps taken in the right direction, much work and much detail remains to come. And, as this plays out, numerous events could trigger continuing waves of volatility as markets react to real and perceived shortcomings in the steps along the way.
Policymakers here in the US have spoken to me these past two days about the challenges faced dealing with your building fiscal pressures as the end of the year approaches. And the world is certainly watching with interest how this pans out.
Against the backdrop of such volatility, as a small, open economy we in Australia have been mindful of the need to ensure that Australia is well placed to deal with the uncertainties ahead.
The right fiscal and economic decisions; our sound financial institutions; and our location in the world meant we came through the global financial crisis well ahead of most of our peers.
Our economy avoided recession and is now around 9 per cent larger than it was before the crisis.
This compares to a United States economy that is just under 2 per cent larger than it was pre-crisis. Meanwhile, the United Kingdom has contracted by around 3 per cent over the same period.
Australias unemployment is low, at 5.2 per cent, and our economy is once more growing around trend.
We are enjoying a once-in-a generation investment boom centred on the mining sector planned mining investment in 2012-13 is 2 times the actual mining investment of just two years ago.
As investments mature over time, the investment boom will be replaced with a boost to the economy from a higher ongoing level of resources production.
And our public finances are in strong shape, and we will balance the budget this financial year.
This fiscal adjustment is enabling a return to a more usual balance between the roles of monetary and fiscal policy.
Indeed, our Reserve Bank has had the room to cut interest rates recently because inflation has been contained, and the Governments budget discipline has contributed to this. And the Reserve Bank still has significant room to cut further if conditions warrant.
But, in the short to medium term, some sectors continue to face a difficult structural transition, which is being exacerbated by a high Australian dollar.
This is making it harder for some of our trade-exposed sectors to compete, albeit while providing cheaper access to imports for firms and consumers.
However, looking ahead with strong public finances, low unemployment and low inflation Australia is well-placed to withstand external shocks.
This is good for our near term prospects, but governments must also look further ahead.

It is the responsibility of governments to ensure, not just prosperity for our people now, but also prosperity for the future.
It is the responsibility of governments to look ahead, and establish the foundations for the next generations success.
For Australia, this requires looking through the remarkable resources boom we are experiencing.
It requires putting in place the drivers and foundations of economic growth that will follow the boom.
It means dealing with what are transformational public policy challenges affecting countries right across the globe today, for tomorrow.
Three are particularly relevant to our generation that are worthy of mention.
The first is the challenge of demography.
Ageing populations are putting pressure on government budgets by boosting demands for health and ageing-related spending, while simultaneously leading to declining labour force participation.
This is often exacerbated by the fact that the communitys expectations of government inevitably grow over time.
Balancing budgets in these circumstances is crucial, and its no easy feat.
Australia has been making progress by taking savings that improve the position of the budget over time and this will remain of ongoing importance.
Climate change and ensuring environmental sustainability are also posing challenges to governments across the globe.
I believe there is an imperative for leaders and governments to respond to the science, and also an imperative to act to take advantage of the economic opportunities from the move to a low pollution economy.
Countries are going about managing these challenges in different ways, but there are few who can afford to ignore them.
The third transformation, and the one I want to focus on today, is the ramifications of the shift in economic power from West to East.
This challenge also provides unique opportunities, particularly for Australia given its geographical proximity to Asia and the growing engagement between Australia and our northern neighbours.
While many will focus on the challenges, it is essential that we also focus on the opportunities that it presents.

The rebalancing of global economic weight towards the East is a transformation that has been underway for most of my lifetime, and one that will continue for many decades to come.
Precise projections of Asias growth trajectory are uncertain. However, by 2025, many are predicting that Asia will likely account for almost half of the worlds economic output.
In fact, by 2025, Asias economies could have more than doubled in size, compared with only 40 per cent growth for the US.
As Homi Kharas, who kindly introduced me today has said, by the end of the current decade, an additional 1.2 billion Asian consumers could join the ranks of the middle class and aspire for the standard of living that we take for granted today in the West. Furthermore, within a single generation the majority of Chinese could go from being poor to being middle class.
This will make Asia a dominant global consumer and will offer expanded opportunities to countries whose businesses can satisfy those demands.
As Australias Prime Minister has said: when a person first gets a car, a computer and a mobile phone, it changes their life. When hundreds of millions of people first get these things, it changes the world.
This is a time in Australias history when we find ourselves in the right part of the world at the right time; when the changes underway bring opportunity to our region.
Think about it this way: in the 1950s, only around 15 per cent of the worlds economic output was located within 10,000 km of Australia.
Today, that share has more than doubled to over one third. And by 2050, almost two thirds of total global GDP could be within 10,000km of Australia. Those figures say it all.
Its important to remember, too, that Asia is a part of our history, as well as our future.
As far back as the 1930s, Japan was our second largest export market after the United Kingdom. Forty years later, twice as many of our exports were going to Japan as to the UK.
Through the 1980s and 90s, Australia focused on lowering tariffs in our region, and today, China, Japan, the Republic of Korea, India and our other south-east Asian neighbours, Taiwan, Hong Kong and the ASEAN-5, buy around 75 per cent of Australias merchandise goods exports.
Right now, Australia is making the most of the mining boom, as Asias demand for the raw materials of modernisation continue.
Looking ahead, our relationship with Asia will go through infinite permutations over the century ahead of us.
As a medium-sized open economy, we are constantly in transition, and we need to be adaptable to take advantage of the opportunities that present.
Our determination to best maximise the opportunities ahead is why weve commissioned a White Paper process to guide how Australia prepares for the Asian Century.
We understand that the magnitude of the opportunity requires a whole of government and a whole of economy response.
Consultation with governments, business and the community will inform the final statement to be released in coming months.
So, I want to briefly discuss some of the themes from these consultations.

Our consultations have emphasised that maximising the opportunities from Asias growth requires a culture of investing in people, and robust international linkages.
These, of course, depend on the combined efforts of communities, institutions, businesses and governments.
Because prospering in Asia is not as simple as learning a single new language or one new model of doing business the challenges and opportunities are larger than that.
Economic power will be spread across the region, not land in one single country.
It wont be enough to tap into a single market when the economic opportunities of the next decades will be spread from Beijing to Bangkok and from Jakarta to Jaipur.
Economies that will thrive in the future are those with people that are highly skilled and adaptable to different markets and cultures.
Those that can establish and utilise people-to-people links; with people that can bridge the differences of timezones, locations and culture.
Those that understand that business relationships are not just the sum of transactions; but that a deeper engagement is required.
And, most fundamentally, those who understand that opportunity comes from an open mind the opportunity to learn, to gain something new; and that engagement is enhancing, not detracting.
This resonates with me as Ive always believed that an open economy and open mindedness is essential for success.
Having an open economy but lacking open mindedness can handicap businesses and the nation, and result in a narrower set of opportunities.
Australia is a multicultural nation. Since 1945, around seven million people have migrated to Australia.
Today, more than one in four of our 23 million people were born overseas; around 46 per cent were born overseas or have a parent who was; and five million speak a language other than English at home.
Australians speak over 260 languages and identify with more than 270 ancestries.
This makes Australia a society where living and working with people of many races and diverse backgrounds is increasingly the norm.
We have an open, tolerant and vibrant multicultural society.
Our consultations in developing the Asian Century White Paper have shown the importance of drawing on this foundation.
Our consultations have shown the important role of education in fostering greater understanding and adaptability. And the Governments record investments in skills and education are focused on boosting our capabilities in a global market.
Future prosperity will require our businesses and business leaders to be able to innovate and adapt.
It will also require our businesses to have the tools to trade goods and ideas with the outside world whether it be through efficient ports, or through high speed broadband connections of the sort were building through our National Broadband Network.
Australias place as a developed country in a developing region gives us advantages.
For example, the knowhow of Australian firms that have succeeded in Asian markets would make them highly valued partners for foreign firms seeking to invest in Asia.
For us, success will require an open economy where the default is pro trade policies that encourage foreign investment, and where businesses can get on with doing what they do best.
Strong institutions and a stable and growing economy so important in their own right will continue to be important to success.
Governments have a role to play, too, in ensuring deeper and broader government-to-government links with Asia.
Australia can look to build on its past successes. We had a pivotal role in developing APEC from an informal meeting to a regular meeting of heads of governments.
And, going forward, regional and international governance should continue to shift to reflect wider movements in power and economic size.
It is appropriate that we see these changes reflected in the leadership of the international financial institutions located here in Washington and further afield.
Looking forward, the East Asia Summit will also be of increasing importance.
As we all work our way through the challenges and opportunities ahead, one point that is important to remember is that the rise of Asia does not need to be one of winners and losers.
Rather, by maximising links, and through cooperation and innovation, the prosperity of all countries can be enhanced.

Policy makers often let policy discussions be framed by the next few years, but our challenge here is not to formulate a policy now, only to set and forget.
The Asian Century has a long way to run.
Our relationship with Asia, and Asias relationship with the world, will go through infinite permutations over the century ahead of us.
So the task of policy makers and of business leaders will not be constant, rather it will be ever changing.
Businesses, communities and governments who want to benefit from the opportunities ahead would be wise to start engaging with these challenges.
We should work to strengthen some of the building blocks for future success by entrenching open, innovative, adaptive and skilled societies.
And our forthcoming White Paper that explores these themes will be an important step in making the Asian Century one where Australia prospers.
[Ends]