ANDREW ROBB: Thanks for coming and what I thought I would do is just give you some of the topics and interests and I will be very happy to take any questions you have got. As I just said during the opening, this is the biggest trade promotion campaign that we have mounted in the Gulf states and I think it sign posts the rapidly increasing priority that we are attaching to the Gulf states.
I have just sat half an hour with his Excellency and it became very clear, which has also become clear to me in recent months since I’ve had these responsibilities, that where there are strong linkages in aviation and travel, it’s great boost the relationship between the two countries in all sorts of ways. And of course trade and investment is the obvious one, the cultural links, the tourism, you name it. It opens up all sorts of unexpected opportunities. And with now very strong flight numbers coming up to 140 flights all up I think each week coming into the Gulf States - 98 into Dubai alone - it’s a great facilitator. There are other things too which I’ll come to which are really making a big difference.
And I’d just say to you too as general pointer which I finished with in the opening - there is very strong disposition among the Australian community to the people from the Gulf States. There is big tourism, there are 30,000 or 40,000 who go from here every year to the Gold Coast and other places. And I think they enjoy the experience and they keep coming back.
From an investment point of view there is never any question about investments from this part of the world - they are very welcome and I really want to capitalise on that which is why I’m the minister for trade, but for the first time ever we’ve included investment as a portfolio responsibility because where you’ve got trade, invariably you’ve got a strong investment relationship. But as well places like the Gulf States in particular have very strong sovereign wealth funds and some serious opportunities for Australia for major new projects for the next decade or so. There was a clear need for us to have a very deliberate portfolio responsibility focused on investment, but as it relates to trade.
Half my time and all the visits I have been making are around investment opportunities and that is certainly the case here for these four days. So, in a sense, the real message we are trying to get over during the next four days is that Australia is open for business and we are very serious about deepening the relationship and the engagement with countries in the Middle East and North Africa and particularly the members of GCC.
As I have said this is the largest promotional campaign we have mounted in the Gulf States. I have just come from China where we took 700 business people. And I was wondering how we could possibly create all sorts of opportunities for these 700 to get something out of the week, but the response was unbelievable. It just proved to me that our posts are really hooked in to the local areas. We just had endless – it wasn’t a week of speeches – it was some major events and senior politicians and others from China but overwhelmingly the workshops were all about developing contacts and dialogue and swapping names. So many came up to me, dozens and dozens and told me how they got endless leads out of the week. And we went to different cities in China.
Now, it’s the same principle we are trying here, same level of commitment across all the areas that we’re good at as a country; to try to open up these opportunities. The campaign here focuses on the Middle East and North Africa and it includes events in the UAE, Saudi Arabia, as well as in Oman, Kuwait and Morocco. And as I said at the opening, it’s all about one, establishing us as a reliable trading partner and reinforcing the fact that we have been and we are and we will be a reliable trading partner. That is important in itself. There are so many countries that end up purchasing goods and services, then some of the products go elsewhere or the supply line is frustrated and I think we have got a reputation as a country for looking after our customers.
Secondly, as a key investment partner and I have mentioned comments on that. Thirdly, as a provider of world class education and training. It has been 20 years since Wollongong set up a campus but there have been a lot of students from here who train in Australia. It’s not just higher education but training opportunities that we seek. Highly affordable and highly flexible in terms of meeting local needs, individual companies needs and on-site training and you name it. It is not just a bricks and mortar approach. And finally as an attractive tourist destination – and with the linkages now from the aircraft point of view which have I think expanded enormously.
So, the priority sectors that we’re looking at in these few days is food, agri-business, infrastructure, energy, major events, investment, education and tourism. Investors from the Gulf have already made some very major investments in Australia. We’ve got a very strong pipeline of economic and social infrastructure that is emerging and it’s one of the major priorities for the new government. We have got a $700 billion dollar infrastructure deficit, so, in other words, there are $700 billion dollars of projects which if we had the money, they should start tomorrow. It’s both major maintenance for major infrastructure that has been put in in the last 30 or 40 years, but it’s also a whole host of new roads, rail, and ports. We’ve got a rail line going through the centre of Australia, linking Melbourne with Brisbane. All of these things need to be funded. And the investors from the Gulf States, from the Australian point of view have been typically ideal investment partners. The Gulf countries face challenges in providing education and skills development for a growing and youthful population and we want to identify in these couple of days, it’s very important these four days, world class opportunities to study in Australia.
We are the third biggest recipient of international students, under countries like the US and UK. Australia is number three. We have got close to 500,000 students this year. And also there is a growing capacity to deliver training and education in-market, within the countries within the Gulf States. There is a lot of opportunity either way. There are 27 Australian education providers who will participate in the international exhibition conference on higher education in Riyadh this week and many of them are here to participate here as well as in Riyadh. As part of this Australia Unlimited Gulf program, the Council for Australian-Arab Relations will host the food, water and energy nexus is several places - in Abu Dhabi and Riyadh. Again the challenges faced here, many of them are not unfamiliar to Australia. We have got a lot of expertise and skills which are highly relevant and we will look to identify opportunities. And finally, there is rapid growth, as I said, in direct aviation links, with a 140 flights between the Gulf and Australia. It is further strengthening the links with the region. I think it’s not just people movements, but every aircraft has got an opportunity for cargo, so the cargo has been lifted many-fold. So, high-quality fresh fruit and the opportunity to bring in some very significant quantities of various fresh food items, as well as the tourist and business travellers and it’s all combining, I think, to create perfect opportunity and foundation for so many exciting things to happen here. So, I’ll leave that by way of overview and I am going to answer any questions.
JOURNALIST: Can you give us a sense of the type of infrastructure projects in Australia that might benefit from sovereign wealth fund investment from the Gulf? And also, perhaps a description of some of the sovereign wealth funds you spoke to or you plan to speak to while you are here such Aabar, IPIC, ADIA - which organisations are you are going to be speaking to?
ANDREW ROBB: Ok thank you. Look, there’s a host of urban rail, road works, tunnels - typical challenges that are faced by major cities with serious congestion. Australia might not be as big as the US with a population of 23 million, but we are one of the most urbanised countries in the world. Over 85 per cent of our population live in the major capital cities on the east coast. So we have ended up with a lot of congestion. In order to promote productivity, we need to free up the congestion issues in the cities. In many ways we see this as the century of water and food security and we have got an explosion of middle class in the region around us.
There are 600 million people at the moment in the middle class in the region around from India and China. It is expected by 2035 to be three billion. It’s almost inconceivable what is happening and it would put enormous pressure on the production of high-value, high-protein quality food and safe food and we won’t be able to provide anywhere near the food requirements of the region, but we can fill a very big part of the gap. A lot of the food security issues for a lot of the region, including the Gulf States, can be partially met by Australia. We can double our agricultural output if we apply the right investment – and that’s not just ‘on-farm.’ But a lot of that would be on-farm. A lot of irrigation development. And I would give you just one example: in the last 10 years there was a major project to re-vamp the irrigation in north eastern Victoria – it’s been there for, I don’t know, the last 80-100 years. Open-channel, highly productive area. In the last ten years they’ve introduced high technology, re-vamped the whole system. They are using half the amount of water they were using 10 years ago for the same production. So, the productivity gains there, as you can imagine, are enormous. Now that sort of technology and improving that technology requires investment. And it’s technology that is transferrable to here. It’s also a technology that is transferrable into parts of Australia that have never been developed, especially the north of Australia. It always looked like a magic opportunity – some people have lost tens of millions of dollars over the years. And when I say the north, it’’ above the Tropic of Capricorn, below Townsville and across to Broome, if you like that line, and everything above to the tropics. There are 17 million hectares of arable soil right across that region – from Western Australian to Queensland and the Northern Territory.
It’s a sort of mosaic of opportunities in amongst all the iconic environmental stuff that doesn’t need to be touched. But 60 per cent of all the water that falls in Australia, falls in that region, and we capture just two per cent of it. If we captured even five per cent of it, we could irrigate most of the 17 million hectares – not that you would, but we could irrigate so much of that. And with projects which are not big dams – there is a role for a big dam or two, but most of it would be done through diversion of rivers and tanks and a lot of high technology. I had this chat with HE (His Excellency) privately. There are huge green fields projects – 30,000 hectares of sugar, 20,000 hectares of horticultural products, 100,000 hectares of certain high value crops. Each of these projects would probably run their own power units from biological fuels – by-products of what they’re growing - but infrastructure is required; rail lines and this type of thing. Almost all of these projects will be of size, it’s like some of the resource projects but they’re renewable, it’s a renewable resource. And it will open up Northern Australia, not only for agriculture, but it will bring water and power to areas where there are many other resources, but it’s not economic to do it because there is no power and water. You could run this project on Diesel, but it would be un-economic. It’s only economic if you have got a separate power source and access to water, now there is plenty of water there, but it is capturing it in a way that is environmentally sensible. You only have to capture enough for a season because in the tropics the water keeps coming, unlike the rest of Australia, which is drought-prone.
So there’s all this, now for the first time, this whole area has become readily available for development because the returns, if you produce high-value agricultural products, fresh food, it’s close to emerging markets where people have got money. We never had the money before. There hasn’t been a big middle-class in the region around us, so it’s well-suited to air freighting and some very major bulk markets. Now I have said to HE (His Excellency), these are projects which we would welcome enormously – they could be projects that would contribute not only to food security here, but tie in the distribution networks, which is locally-owned and managed. The whole supply chain is also very important, just like the airlines bringing people, the supply chains bring products and services.
There are also a lot of other projects around the rest of Australia too. We want to see major investment because in these because it’s like that little example I gave you in northern Victoria. That is a very long-standing, established, and still producing serious quantities, but there is enormous capacity to come in with capital. We can double the output of Australian agriculture with the sort of investments that we are talking about. It’s quite exciting. So, it’s the full range, there’s airports to be built, there are ports to build there are railways to be built, there’s major roads, you name it, there are capital opportunities all over Australia for Australia which I’m very sympathetic to.
JOURNALIST: I’m David Flanagan from Al Arabiya. Minister, you’ve mentioned aviation a lot this morning - has there been any talks with Emirates or any other Gulf airline about possible investment in struggling flag carrier Qantas?
ANDREW ROBB: Well, at the moment, the ownership act precludes that. As a government we have said that we want to open up the opportunities for foreign investment. I don’t think we will then get involved in how that sorts itself out. But I think Qantas would very much welcome other foreign investors. And that would give them a much leveller playing field with Virgin Australia which has unfettered, or is 70-80 per cent owned by other foreign airline interests – which works very well to their advantage. We’re quite keen, we’re having problems in the Senate at the moment and to convince the rest of the parliament that that is the way to go. But I think in time, it is the only the solution to make sure that the Qantas brand and viability remains very strong.
JOURNALIST: Has it come up on the agenda during this trip or do you expect it to?
ANDREW ROBB: Well, I suspect it may well. Certainly I’m having a meeting with the head of Emirates, HH Sheikh Ahmed, and I will give him the same answer - that the new government wants to see viable airlines in Australia. So, in the case of Qantas, I think it requires a change in the ownership act and potential for other entrants into the ownership.
JOURNALIST: So you are going to specifically address that with Sheikh Ahmed?
ANDREW ROBB: Yes, I am sure he will raise it if I don’t, but I will.
JOURNALIST: And what kind of investment we are talking about?
ANDREW ROBB: Well, it’s not for me. We’re a government which is hell-bent on creating the right framework, a flexible framework, for business to do what it does best. Then it (business) has to work out what is going to be the best fit. So, we’re not really interested in coming in and imposing a view, an uninformed view, to be honest. We want to create the right environment which allows that to happen.
JOURNALIST: Just a couple of quick points – on the delegation to China, you talk about a genuine effort here in the Middle East, but just by sheer scale, the delegation to China led by the Prime Minister and five premiers there, is much larger in effort. How much of a priority is China in relation to the Middle East? And where do you see the mix or the investment percentages coming from?
ANDREW ROBB: Well, on a pro-rata basis, there are 1.2 billion people in China and we took 650 there and we have 150 here. So I think we’ve got pro-rata, we’re much greater on proportional numbers here. Secondly, China is of course our biggest trading partner. We are talking about 33 per cent of all of our exports. Actually we’re China’s seventh biggest trading partner, despite having only 23 million people. So that is clearly important to us, but we’ve got to get a balance across things. And certainly from the investment side I think the UAE has an enormous amount of attraction for Australia.
There is a pretty good knowledge of what we do and what we have got from this part of the world. There is quite a good history of investment. It has been an overwhelming a very satisfactory experience, in Australia and in this region, so from an investment point of view, I was thinking of this from day one as a priority. And secondly, we think we have got a lot to offer in terms of tourism and education, food and services in this region. Finally, my first priority in the first year, was the three big trading partners Japan, Korea and China which make up 51 per cent of our exports. My next priority was the Gulf States. Again, it sign posts the importance we attach to particularly the investment side of things. There are a lot of other countries I could have put down as my fourth priority, but the Gulf States were it.
JOURNALIST: I remember you talked about free trade agreement between GCC and Australia - have you reached any finalised agreement or signed anything?
ANDREW ROBB: No. When there was a hold put on all the negotiations, not just with ourselves, but with everyone else, I think in 2009 by the GCC, at that stage, the negotiations with Australia were quite well advanced. I have raised this already with HE and I will raise it again all the way around my trip. I have written to all the relevant ministers a few weeks ago in all the Gulf States, requesting that we re-start negotiations. As I have said to HE, it’s number four priority for me after China, Japan and South Korea. So I’m now formally asking, now that we have got the resources to deal with it, can we re-engage?
Secondly, because of the investment opportunities that have emerged in Australia since these negotiations have started and because what is going on the region that has driven the investment opportunities as I have tried to explain, I think that there is a new urgency. There is an opportunity if we completed the FTA quickly, and it is well advanced, so I think we can wrap it up quickly, I think there could be some very important sweeteners in that agreement from an investment point of view, and I think there could be some major projects that could begin sooner rather than later.
I think it’s an FTA that could lead to some very immediate outcomes, so that’s the argument that I will be putting this week and I hope that I will be having some impact.
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