Today the Lowy Institute launches what I think is one of the most compelling and challenging polls we've ever conducted. It was a survey carried out across Indonesia following up on a poll we did there in 2006. The changes the poll records are remarkable, and responses to a series of new questions challenge some entrenched stereotypes about Indonesia.

But first, consider just how bad relations are with our most important neighbour. At a political level, there has been a spectacular failure to capitalise on Indonesia's remarkably smooth democratic transition and its pro-Australian President.

Instead, the relationship with Indonesia has been repeatedly trashed for temporary domestic political advantage. Whether it is asylum seekers, cows or Australian drug smugglers, Indonesia is treated like a miscreant Pacific atoll, not a country fundamental to Australia's future prosperity and stability with a population ten times our size and a larger economy in purchasing power terms. When the Government panicked and cut all live cattle exports to Indonesia, Indonesian officials weren't even consulted. Likewise when the Coalition announced it was going to turn back boats.

The tone of the relationship is often completely back to front, with a focus on how many threats Indonesia poses and how much aid we give it. Take this line from the introduction to the relationship on the DFAT website: 'Australia and Indonesia cooperate in practical ways on a wide range of international issues, including counter-terrorism, illegal fishing, people smuggling, avian influenza, climate change and interfaith dialogue.'

Or, my personal favourite, this speech from 2008 titled 'Australia-Indonesia Relations: A New Partnership for a New Era' by then Foreign Minister Stephen Smith, which characterised this approach under three headings: security cooperation, regional disaster response and Indonesia's development challenges. And that was delivered to an Indonesian audience.

It is no wonder such a patronising, short-term approach has failed to deliver for our national interest. Unfortunately, as a Policy Brief I wrote back in 2010 set out, business and people-to-people ties do not provide a more positive counterweight and, if anything, are much worse.

This new poll challenges many core assumptions about Indonesia. For a start, Indonesians actually like Australia. Of nine foreign countries, we were the second-most trusted to act responsibly in the world. Australia was also the fourth-most warmly regarded country (of 21 included in the survey), moving from a lukewarm 51° in 2006 to a warm 62°.

Indonesians support a much broader relationship than the current one based around threats. Big majorities are in favour of a focus on education (95%), health (92%) and trade (87%). Indonesians are also natural democrats. Nearly two-thirds (62%) say democracy is preferable to any other kind of government and there is near universal support for core democratic values like the right to a fair trial (97%), free expression (96%) and the right to vote (95%).

Like Australians, Indonesians worry about China. A majority (56%) say it will likely become a military threat in the next 20 years (44% of Australians said this when asked the same question last year).

The news is not all good. While 88% of Indonesian adults say the suicide bombing attacks that have occurred in Indonesia were never justified, in one hypothetical question, 12% were in favour of the Indonesian Government encouraging militant groups to attack Australia. This minority of extreme anti-Australian sentiment will be a major concern to Indonesian and Australian policy-makers, but it is hugely counterproductive to construct the entire relationship around it.

Australia has a critical national interest in seeing Indonesia emerge as a stable, democratic, and economically thriving neighbour. But the opportunity presented by the pro-Australian presidency of Susilo Bambang Yudhoyono has almost been lost. This poll should act as a reminder that Indonesia is ready for a mature, contemporary relationship and that, across almost every facet of the relationship, Australia-Indonesia ties are badly underdone.

The full poll can be downloaded from the Lowy Institute website.