INSTITUTE OF INTERNATIONAL AFFAIRS ANNUAL DINNER

WELLINGTON CLUB

Giff Davidson, distinguished guests, ladies and gentlemen

Thank you for the invitation to address your Annual Dinner.

I am also pleased this evening to be presenting awards to the media for excellence in reporting on international relations.

Usually it's me who is on the receiving end from our colleagues in the media.

So it's nice to return the compliment for once, and to commend work which serves to inform New Zealanders about our foreign relations.

The more that we, as a nation, understand international trends, the greater is our capacity to gain advantage from them.

As any board-rider will tell you, the difference between surfing and being swamped lies in anticipating the waves before they are upon you.

The New Zealand Institute of International Affairs plays an important role in keeping New Zealanders on top of international events.

Institute meetings, publications and seminars have for many years provided a source of excellence and rigour for community debate on foreign policy questions in New Zealand.

But while the Institute's commitment has been constant, the same cannot be said about international affairs.

The old concept of separate sovereign nation states, wheeling and dealing like dancers at a Vienna Convention ball, is out of date, if not yet out of fashion.

We live in a globalised world economy.

It is kings no longer, but the new monarchs of media, modems and mass mobility which increasingly govern the wealth of nations.

Individual countries, no matter how large or powerful, cannot themselves deal with such transnational issues as climate change, capital flows, resource conservation, and drug trafficking.

New, or should I perhaps say "old" concepts of community and cultural values are re-emerging as icons of identity.

The role of Government in international relations is increasingly one of identifying and aligning self interest with the values most of its electorate hold to be important, and then protecting and projecting those values into its dealings with other Governments and international organisations.

The values which define us as New Zealanders have found recent expression in the Agreement between the parties to our Coalition Government.

The fundamental principles specified in that Agreement speak of a "special New Zealand identity (which) has been the source of our values and determines the direction we should be taking".

One recurrent value which lies at the heart of the Coalition's policies - both domestic and external - is that of Investing for our Future in an outward-looking manner.

In purely financial terms, investing is all about deferring consumption now, in order to derive a positive return in the future.

In political terms, the concept is not much different.

Issues arise from time to time where a responsible Government has to stand back, stimulate debate, and invest political as well as financial capital in issues of long term significance.

That process is rarely popular or easy.

But it is essential to tackle difficult issues if we are to achieve sustainable growth and security in the years ahead.

On the domestic front, the current debate about our ageing society, and the implications for retirement income and health care for the aged is just such a policy issue.

The Government is gaining more brickbats than bouquets for agreeing in the Coalition talks to put this very important issue on the public agenda.

What's more, some commentators are quick to suggest a deep political significance in the a range of views presented by Coalition Ministers on the subject.

Such suggestions are superficial and miss a crucial point.

We acknowledged in advance that as the concept of a savings based retirement scheme was not agreed policy, and as it was the public who would be making the decision, that Ministers and MPs were free to express their own views.

We followed exactly the same approach with the referendum on MMP.

As Leader of the Government, I welcome the debate.

I welcome too the fact that by holding the September referendum New Zealanders will be better informed on this key policy issue, and New Zealand therefore will be better placed to make the right decision.

New Zealand is not alone in facing such issues.

The forthcoming G7/8 Summit in Denver later this month will have the implications of ageing populations on the agenda.

In my recent discussions with Chancellor Kohl, and Prime Minister Hashimoto, as well as discussing international relations, we also spent time on this key social policy area because of the impact it has and will have on their economies.

It all comes back to the point that in a global economy, foreign policy is often the application of domestic issues writ large.

Clearly, this connection applies in the economic sphere.

The Coalition Agreement commits the Government to ensuring "an economic climate that is conducive to sustainable development and growth", and to maintaining "an open, internationally competitive economy to support a strong export sector".

This audience, I am sure, is well aware of the critical importance of international trade, technology, and investment to New Zealand.

Our approach in this area will continue to take a long term view of New Zealand's interests.

Coalition policies - domestic and diplomatic - will continue to be invested in pursuing stable and orthodox economic policies at home, and open, fair and remunerative markets abroad.

I spoke recently of that great American phrase "making the hard yard".

In baseball, American football, rugby or netball, it is that extra bit of sustained effort that makes the difference between going backward, and moving forward, between winning and losing.

Between now and 2000, the international community including New Zealand, has some hard yards to make in the area of trade and investment rules.

The participants in APEC - the Asia Pacific Economic Cooperation Dialogue - have made a good start in establishing individual and collective action plans for liberalising trade and investment.

Now, we need to consolidate that good start.

Under the Coalition Government New Zealand will remain at the cutting edge of APEC - persuading others, and showing by example, that growth and stability in the Asia Pacific region will be secured as we progressively move our economies and people towards greater openness with each other.

Similarly, in the World Trade Organisation, New Zealand will continue to invest our efforts in building momentum towards the launch of a new set of multilateral trade negotiations in 2000.

New Zealand's year of chairing APEC in 1999 will give us the opportunity, and responsibility, to encourage further progress towards a more open and liberal trade and investment environment.

Like William Webb Ellis, on the grounds of Rugby school, we intend to pick up the ball, and run with it.

There are some, I acknowledge, who feel essential elements of New Zealand's sovereignty are threatened by the WTO, APEC and the proposed OECD Multilateral Agreement on Investment.

I strongly disagree.

In an interdependent world, pure sovereignty - the complete control of one's own affairs - is not possible.

If as individuals we chose to live in society, and gain the benefits that flow from that, then we must also respect the rules of that society.

Even anarchists drive on the correct side of the road, if only for purposes of self-preservation!

The same principle applies to nations.

When we talk of living in a Global Village then we have to understand the implications of that.

If we want other countries to buy our exports, respect our culture and share with us their technology, goods and ideas, then New Zealand needs to be a good international citizen.

In subscribing to international norms, in the economic as well as security spheres, we share opportunity in order to gain security.

We expect no less of other countries.

Our trade relationship with Australia - CER - is a very good example.

It involves both countries reducing their sovereign rights in key trade areas, in order to gain the greater benefits of trade and economic growth.

An equally compelling example is the development of the European Union over the past 40 years.

There has been the gradual harmonisation of policies almost across the board and the transfer of considerable authority from national Parliaments to the European Commission in Brussels.

The commitments we, and other World Trade Organisation members have negotiated, are a similar investment in security of access, and fairness in international trade law.

In the case of the OECD Multilateral Agreement on Investment, for example, New Zealand's approach is to reserve and retain the existing regulatory controls we have over foreign investment into New Zealand.

Recent claims to the contrary by Mr Anderton of the Alliance are both incorrect and mischievous.

We will be reserving the right to screen and, where appropriate, decline foreign investment proposals as we do now.

The provisions on foreign investment in the Coalition Agreement will also be secured as part of New Zealand's approach.

With close to one third of working New Zealanders deriving their jobs directly or indirectly from foreign investment we need investment.

And we need - against strong international competition - to retain New Zealand's deserved reputation as a stable and attractive base for overseas investment.

History is littered with examples of countries - such as Albania and North Korea - whose self-imposed rejection of foreign investment condemned their economies to stagnation and their people to poverty.

This is not a path which the Coalition intends to pursue.

The question has been raised as to whether a more informed debate about international relations would be achieved by giving Parliament a greater opportunity to be informed of and discuss major Treaties.

Proposals in this area have come from a variety of individuals, groups and parliamentarians.

The issues are complex.

Important constitutional questions are involved.

Nevertheless, I am prepared to consider the suggestions further and Foreign Minister Don McKinnon will be talking to other parliamentarians about this.

Any development in this area needs to retain the essential separation of the powers of the Executive and Parliament.

At the recent launching of New Zealand's second ANZAC frigate, Te Mana, I observed that by investing in our security, we enhance our capability to defend the peace.

There is never an easy time, except when it is too late, to secure the funds necessary to retain a credible defence capability.

In a political or public debate, hospitals win over guns every time.

An irresponsible Government, one which does not believe in investing for the future, would be tempted to take the easy way out.

The easy way would be to subscribe to the view that with no immediate territorial threat facing New Zealand we need no military capability.

I - and the Government I lead - do not share that view.

The protection of the nation, its sovereignty and the national interest, is a fundamental responsibility of Government.

Most New Zealanders I believe would acknowledge that responsibility.

I discount the view that New Zealanders do not care about defence.

The extent of public debate on the subject if anything, points to a healthy and informed public interest in the role of the New Zealand defence forces.

There is probably more consensus on this subject than most commentators have acknowledged.

Should we be able to protect and enforce our sovereignty over New Zealand's huge Exclusive Economic Zone, in order to conserve fisheries resources and stop illegal fishing? I believe so.

Should New Zealand be able to effectively deliver disaster aid and reconstruction assistance to the vulnerable Island economies of the Pacific region? I believe so.

Should New Zealand be prepared to play a role in United Nations and multilateral operations to make and keep the peace, protect innocent citizens, and rebuild economies and communities shattered by war?

If New Zealand has a role and a responsibility in this area, do we believe that the young men and women we send should be well trained and equipped to do their job effectively and safely? I believe so.

If we are a trading nation, should we be helping to support the stability and security of the Asia Pacific region which provides 70 per cent of our exports and imports? I believe so.

And so do most New Zealanders.

Polling carried out for the Ministry of Defence on a nationally representative sample, over a period of three years, indicates that over 70 per cent of New Zealanders believe it is either fairly or very important for this country to have strong and effective armed forces.

Support for New Zealand's active role in United Nations international peacekeeping remains high - at 78 per cent.

Ninety per cent of those surveyed thought the security of Australia was very or fairly important to New Zealand, and 83 per cent thought the same for the South Pacific region.

Nor is this support confined to older New Zealanders.

The proportion of those surveyed aged under 30 years who felt that a strong and effective defence force is important has risen from 56 per cent in April 1996 to 71 per cent this year.

My Government's broad intention is to ensure that the equipment decisions which will be taken over the next years will enable the effective capability of the New Zealand Defence Force to be maintained.

In doing so we will need to balance defence investment on the one hand and the pressing domestic and social spending priorities of Government on the other.

The facts are that with a growing economy, our core national defence responsibilities can and will be achieved without sacrificing the Coalition Government's commitment to lifting investment in health, social and educational outcomes.

Just as we are investing in conventional defence, so too does New Zealand's commitment to disarmament and arms control remain a core national value.

In a few days time we will see the tenth anniversary of the enactment of the New Zealand Nuclear Free Zone, Disarmament and Arms Control Act 1987.

The last decade has seen real progress in the long road towards eliminating weapons of mass destruction.

The Chemical Weapons Convention, which entered into force in April this year, has banned this entire class of weapons.

Talks are underway to strengthen and add verification provisions to the Biological Weapons Convention.

And, at long last, serious negotiations have commenced to achieve a treaty banning anti-personnel landmines.

I welcome the decision of the new Blair Labour Government in the United Kingdom to phase out and cease the use and production of such weapons.

We have already done so.

If we, as a world community can make progress in such areas, then surely it is not beyond our capability to achieve the elimination of nuclear weapons.

The Cold War has ended, opening the way for reductions in both tension and nuclear stockpiles - particularly in Europe.

The Nuclear Non-Proliferation Treaty - or NPT- has been extended indefinitely.

The adoption of the Comprehensive Test Ban Treaty, and its signature by all five declared nuclear weapons States, gives confidence that the era of nuclear test explosions is over.

But there is still a long way to go.

New Zealand, for one, wants to see negotiations start this year on a cut-off treaty to halt the production of the fissile materials used to make nuclear weapons.

In today's world, there can be no logical justification for the use of nuclear weapons.

We want to see the nuclear weapons States live up to their obligations, under the NPT Treaty, to pursue and bring to a conclusion negotiations leading to complete nuclear disarmament.

Together with like-minded countries we will be working, through our new Disarmament Ambassador in Geneva, to keep the pressure on for meaningful progress in this area.

The knowledge to make such weapons can never be 'disinvented'.

But the will and capability not to use them is in our hands.

If the world can ban chemical and bacteriological weapons, there seems every reason to seek, and one day achieve, the same negotiated outcome for nuclear weapons.

Under the Coalition Government, New Zealand will remain at the fore of that effort.

I can think of no greater investment to bequeath to our children than that we were the generation which stopped, and then rolled back the tide, on weapons of mass destruction.

No discussion of investing for our future through foreign policy would be complete without at least touching on two further values which are central to the New Zealand way of life: namely the environment, and the importance of individuals, families and communities.

Both are weighty areas.

Each would warrant an address in its own right.

But let me just say - New Zealanders are, at heart, a nation of environmentalists.

We care deeply about the habitat we live in and which we will bequeath to our children.

In areas as wide-ranging as biodiversity, control of hazardous substances and climate change, New Zealand will remain substantively engaged in international negotiations.

A top priority this year will be contributing to a successful outcome to negotiations on greenhouse gas emissions after 2000.

Right now, the prospects for an agreed settlement are uncertain. Huge stakes are involved.

Our objective is to ensure that any new reduction commitments are workable, equitable and enable a fair sharing of the burden within and between both developed and developing economies.

We will continue to work with like-minded countries, including Australia, to achieve an outcome that we can all live with.

We are not going to rush in to accept new and costly economic obligations if there is no prospect of these achieving the required emission reductions because other countries offset them.

Such a course would only sacrifice the future competitiveness of New Zealand's economy and industry.

The work and discussions we have underway - ably led by Simon Upton - will assist the Government to form a rational view of where our interests lie as the negotiations intensify over the coming months.

And, of course, we are a nation that upholds the rights - as well as the responsibilities - of individuals, families and communities, both domestically and at the international level.

I want therefore to place on record now the good wishes we extend, and the encouragement we derive, from the developments underway in our close friend and neighbour Fiji, as its Government and people work through the difficult and complex task of revising their constitution.

Fiji can count on New Zealand's support and friendship in its endeavours to achieve a revised constitution which is acceptable to all the communities in Fiji and which, in turn, can become a catalyst for Fiji once again resuming - if it so chooses - its place as a valued member of the Commonwealth.

Ladies and Gentlemen.

I have attempted this evening to outline some of the principal values which lie behind the Coalition Government's approach to some selected areas of New Zealand's international relations.

All of us here - from government, media, business and the public - share an interest and play a role in forming New Zealand's values, and in carrying out New Zealand's links with the wider world.

If from time to time we engage in debate, and have differences over policy, then that is a good thing, for it proves the value and vigour of our democracy.

The opportunities that lie ahead for New Zealand to make its way successfully in the world are in my view limited only by our capacity to take advantage of them.

I hope this evening you will share some sense of the options and the opportunities which we are determined to pursue in order to protect and project New Zealand's interests and values in the wider world.

Thank you.

ENDS