I have long contended that Australian prosperity will come through Indonesia and vice versa. I was glad to see that QANTAS is buying a twenty percent stake in Indonesia's AdamAir . Though it may be prompted in part by Singapore's unruly airline regulation schemes, it is recognition that Indonesia's market is not only growing, but that Australian business has confidence in its economy and legal systems. Indonesia has come a long way since the corruption of the Suharto regime.

Market economies tend to max out GDP per capita as it consumes the entire population into the economic effort. Indonesia has a population of approximately 220 Billion. It is highly likely, if Indonesia continues on the path of a free-market democracy, that in fifty years time it will rival Japan for GDP and economic activity. This will place it somewhere between seven and ten times the size of the Australian economy.

One of the benefits is that we will have a multi-trillion dollar economy right on our northern doorstep to trade with. There is the added advantage of not only regional interests in economic, political and martial stability, but also in both nations prospering. If Australia is going to pursue bi-lateral trade agreements, it should create a genuine free trade agreement with Indonesia.

Not managed trade, but free trade.

Currently Australia and Indonesia are largely complementary economies, and a free trade agreement without any barrier to trade would help both nations on the path to increasing prosperity.

There are other benefits to Indonesia prosperity. A wealthy Indonesia with its political stability predicated on trading and democracy will seek regional stability in its foreign affairs. A far cry from the sabre-rattling, nationalist and arbitrary policies of Sukarno and Suharto.

Indonesia will most likely pass us in defence capability, but if it is a democratic nation that we have strong economic ties this is not a cause for concern. Especially if both our large economies are entwined. Stability will be demanded between the two nations by business leaders and consumers.

Canada and New Zealand also have benefits of being in a benign region. Canada spends approximately 1.2% GDP on its military. This is barely enough to cover salary inflation for its service men and women. Canada's vulnerabilities are protected by the American military behemoth, why should Canada over-fund?

New Zealand is in a similar situation. Australia has a regionally dominant military which covers both Australia's and New Zealand's vulnerabilities. Why should New Zealand maintain an air force with long range strike aircraft when Australia has the capability to cover that possibility.

It will be the same with a prosperous Indonesia for Australia. All our geographic vulnerabilities involve the air-sea gap between us and Indonesia. As the Suharto era Indonesia military retire, or are kicked out, a new generation of Indonesians will rise through the ranks. Rationality will replace dictatorship corruption and involvement in civil affairs. Strong defence ties between Australia and Indonesia will ensure the South Pacific is an area of political, economic and martial stability.