Makati Business Club

Speech, check against delivery

Philippines

21 February 2014

Introduction

Thanks for having me here today.

Let me start with an observation.

In the past five months I have travelled broadly in my role.

I have met with public policy-makers in many parts of the world.

Most recently I was in Davos for the World Economic Forum.

What I have observed is an emerging disillusionment with interventionist approaches that public policy in the aftermath of the Global Financial Crisis.

There is a lack of faith in continued government spending; debt fuelled spending and other intervention, to deliver sustainable economic growth and job creation.

Instead, countries are looking for alternative approaches to drive growth and to bring down unemployment in a sustainable way.

They are looking to trade and investment as the major components of an alternative way.

The aim is to replace big government with robust growth in the private sector.

The key role of government is to create the conditions, the atmosphere, for business to invest and grow.

The countries that perform best in the 21st Century will be those with strong and confident private sectors.

That means an environment where business is at the engine room of growth and government largely gets out of the way.

In Australia, with the strong support of Prime Minister Abbott, we have set a very ambitious trade and investment agenda.

We are also doing what we can to significantly reduce the size of government, to reduce government debt, to remove unnecessary taxes and regulation, and streamline approval processes.

Our approach as a government is guided by four key principles:

  • living within our means
  • reversing the reach of government
  • restoring a culture of personal responsibility
  • backing our strengths as a country.

From a position of strength, Australia will be best equipped to take advantage of the unprecedented growth we are seeing across the Asia- Pacific.

Both Australia and the Philippines have great unfulfilled potential.

Australia and the Philippines already have a steady trade and investment relationship.

Notwithstanding our potential there will be enormous competition.

As a relatively new Australian Government we are promoting the message that 'Australia is indeed open for business'.

We are keen to deepen our economic ties across the region.

For example, we recently concluded negotiations on a Free Trade Agreement with Korea.

We are also aggressively pursuing FTAs with China and Japan and we are playing a constructive role in Trans Pacific Partnership negotiations.

Australia and the Philippines – close partners

Australia and the Philippines have been close partners for decades.

We cooperate closely in defence, counter-terrorism, law enforcement and development, border control, port and aviation security – in a whole range of ways.

We are democracies, we share values and have similar assets, especially human capital and natural resources.

Australia has a quarter of a million people of Filipino background.

Filipino people are well characterised as hard working.

Determined.

Practical.

And – as I've seen on this visit, in the wake of the awful Typhoon Yolanda – very resilient.

The economy of the Philippines is growing, and growing more quickly than expected – at 6.5 per cent in the last quarter of 2013, well above the predicted 4.1 percent following Yolanda.

But critically, the Philippines has the potential to grow exponentially over the next few years if the parameters are set correctly now.

We have some strong figures around our trade and investment relationship – two-way trade ties between Australia and the Philippines is valued at around $3 billion.

But, in real terms, this is quite modest.

With smart thinking, and pushing for the right conditions - this can turn into something else entirely.

Tools for Growth

The thing that supports sustainable growth is a strong rules-based system to operate within.

Good governance.

A well-resourced law and justice system.

A well-developed and responsible regulatory structure.

Transparency, a clear playing field.

For both our countries, we need less regulation, and more growth.

We need good strong infrastructure.

Investing in infrastructure creates jobs and drives growth.

Backing our strengths

And we have to back our strengths.

We've come to the Philippines on this visit with a significant business delegation – something that will be a regular feature of our government.

Members of our delegation represent some of our nation's biggest strengths in agriculture, mining and resources, services and education.

In what will be the century of food and water security, Australian agriculture can have a very bright future.

We currently feed 60 million people directly and 400 million indirectly through our technology and innovation.

With the right support and investment we are aiming to double those numbers.

Australian wheat and beef exports to Philippines are quite strong.

The ASEAN-Australia-New Zealand Free Trade Agreement has been a contributing factor to growth, as tariffs have been reduced to zero in key categories including wheat and beef.

I've got Mauro Balzarini here – and Fred Troncone – Managing Director and CEO of Wellard Rural Exports – largest livestock exporter –breeding stock in Manila, 10,000 head feedlot in Pampanga.

Richard Price - Australian Export Grains Innovation Centre – looking at the Philippines as a growth area for milling and feed wheat.

Simon Camilleri – Managing Director of Baiada Poultry – negotiating big contracts to supply chicken products across the Philippines.

They are here because they want to do business with the Philippines.

They know agriculture and see this country as a strong partner.

They want to leverage Australia's reputation as a 'clean and green' food producer.

Resources is also an area of huge potential here.

With the right conditions, resources can underpin a genuine transformation in this country.

The A$5.9 billion copper and gold project – Tampakan – a joint venture of Glencore Xstrata and Melbourne-based Indophil, would be the largest in Philippines history, contributing 1 per cent to GDP.

We have great people here representing Australia's resources sector - Mick Wilkes, CEO of OceanaGold.

OceanaGold has the only Australian gold mine in the Philippines that is successfully operating and Mick is a senior representative of our delegation.

Steve Norregaard from Red 5 Limited, Phil Bynre – Nido Petroleum, Rick Crabb, Otto Energy are also with us.

These gentlemen and others are looking very seriously at increasing their commitment here.

Co-investing with Filipino businesses.

Potentially bringing a whole lot of resources-led growth to this country.

Services are also an area of great future prospect.

Australian services exports in 2012-13 were $521 million, while imports of Philippines services were $652 million.

On this visit, we have Robert Nason from Telstra.

The Philippines hosts customer service operations for Telstra – with a lot of growth potential.

And in education, the Philippines is a fast growing source of students with an average growth rate of 20 per cent over the last 3 years.

In 2012, a total of 6,938 Filipinos students enrolled to study in Australia, primarily in the VET (57 per cent) and higher education (33 per cent) sectors.

Now, like the Australian Government, the Aquino administration recognises there is a need for liberalisation to support reform.

Your government is working to address a range of challenges to create a more open business environment.

You have made progress, with three investment grade credit ratings in 2013 and the second highest growth rate in Asia.

I am interested in hearing what the Australian government could do, to best assist our business and education communities, help take our relationship to the next level.

Thank you.

Media enquiries

  • Trade Minister's Office: (02) 6277 7420
  • DFAT Media Liaison: (02) 6261 1555