Since the ‘First Fleet’ Australia has been a country unashamedly reliant on foreign investment.
It has helped build our infrastructure, grow our businesses and provide the quality of life and enviable standards of living Australians enjoy.
As a big and sparsely populated continent with a thin domestic capital market, but great investment opportunities in front of us, our reliance continues today.
It is integral to the development of our capital intensive resources and energy projects.
It will help us realise the enormous unfulfilled potential in agriculture in this the century of food and water security.
It will help us develop Northern Australia which has so much to offer in support of our continued economic growth.
As a new government in Australia, we have a clear message to global investors – we unambiguously welcome investment from abroad. We are open for business.
Our objective is to create the most stable and conducive environment possible for investment.
As an economy our fundamentals remain strong.
We have seen 22 consecutive years of economic growth and have been one of the strongest performers in the OECD over the past decade.
But in recent years we have faced our own fair share of challenges.
As I have travelled in my role, I have sensed a growing disillusionment with the interventionist, big government policy responses to the Global Financial Crisis.
The debt fuelled spending adopted by governments globally – including in my country – has not delivered sustainable economic growth or staved off rising unemployment.
There is a new appetite in many countries to pursue trade and investment as the drivers of growth and job creation.
In Australia our central objective is to displace big government from the centre of economic policy and replace it with robust growth driven by the private sector.
We are focussed on reducing the costs of doing business in Australia and providing certainty and stability – to restore Australia’s reputation as the gold standard when it comes to sovereign risk and to be a great place to invest for the long-term with confidence.
We have embraced four key principles to guide our approach.
- We will live within our means.
- Pursue serious deregulation.
- Restore a culture of personal responsibility – both for individuals and corporates.
- And we will back our strengths, the things we do as a country as well as any and better than most.
We are restoring the government budget back to health after a record build-up of debt and deficit under our predecessors.
For the first time in two decades there is a Commission of Audit to examine the size of government and quality of spending.
We are cutting red and green tape; last week we identified around 10,000 laws and regulations for repeal.
We are streamlining project approval processes.
Since taking office we have granted environmental approval to 125 projects worth $400 billion, some which had been delayed for six years.
We are removing unnecessary and anti-competitive taxes, such as the carbon tax and the mining tax.
We are restoring the Australian Building and Construction Commission (ABCC) to boost productivity in the construction industry by tackling rogue union behaviour.
We have also taken a series of difficult decisions to end government hand-outs to struggling enterprises, because it is not the role of government to indefinitely prop up uncompetitive business practices and delay inevitable adjustments.
Rather, as a government, we are committed to playing to our strengths. And there, the stars are aligning for Australia.
A significant report was recently released by Deloitte – Positioning for prosperity – Catching the next wave.
The key insight in this report is that Australia’s major strengths – our areas of comparative advantage – align with the major areas of projected global demand and growth in the years ahead, including:
- international education, and
- wealth management.
Resources and energy
Resources and energy is our most celebrated strength.
The mining boom Australia has enjoyed over the past decade has underpinned our economic growth.
China’s industrialisation and urbanisation has driven seemingly insatiable demand for our minerals and energy.
While it is true the Australian mining boom is abating, don’t buy the mythology that it is over.
Demand will remain strong in the years ahead, not only from China, but from the likes of India, Japan, Korea, Vietnam and other emerging Asian economies.
Consider this: in the next five years, Australian energy and resources exports are projected rise by 48 per cent.
That’s around $90 billion in today’s money – 120 countries have a smaller GDP than that.
To pick one example – LNG – we’re already the third biggest exporter worldwide.
Yet by next year, all three major Gladstone LNG projects in Queensland will be in production.
When combined with the developments in offshore LNG in Western Australia, these projects mean that by 2017-18, Australia could overtake Qatar as the world’s largest LNG exporter.
But there is a lot more still to play for in global LNG, driven by growth in Asia’s energy hungry middle class.
Global demand for LNG is estimated to grow 15 million tonnes per year between 2016 and 2025 – the equivalent of one Gorgon project per year, every year.
The Gorgon project is one I know well – I spent two years working for Chevron on one of their early investment teams for Gorgon.
That is why I know how important it is that, as a government, we ensure we provide a highly competitive and stable investment environment; to restore Australia’s reputation as the gold standard when it comes to sovereign risk.
Over the next three to five years, decisions will be made in regard to $250 billion worth of energy investments globally.
This involves a number of companies with a strong presence in Australia
This investment is up for grabs and Australia can secure more than its fair share.
There is in fact a whole raft of mineral and energy resource projects that can continue to help drive the Australian economy in the years and decades ahead.
This includes gas, along with the staples of thermal coal, coking coal, iron ore, copper, gold and also uranium.
In Northern Queensland’s Galilee Basin we are on the cusp of seeing the first new mineral province opened in 40 years, with thermal coal the focus.
Over the next four years China is expected to import more thermal coal than it has in the rest of its history.
So Australia’s resources and energy sectors will continue to present strong prospects for investors.
Beyond resources and energy there are many other opportunities for Australia to leverage our strengths to support economic transformation across the Asia Pacific.
China’s economy for instance is changing.
The focus on export and investment has shifted to the domestic consumption of an exploding middle class.
In recent decades China has lifted some 500 million people out of poverty.
This is something unprecedented in human history.
The Chinese middle class is hurtling towards one billion within 20 years.
This growth will drive extraordinary consumer demand and open up new opportunities for Australia.
This will be the century of food and water security and Australian agriculture has enormous prospects.
We have a world class agriculture sector and an enviable reputation for ‘clean and green’ produce.
Currently we help feed 60 million people per year and our exports of agricultural technology and services help feed a further 400 million.
We should be striving to double those numbers.
In 2012, we exported 90,000 tonnes of red meat to China.
In 2013 we exported 265,000 tonnes.
Consider the emerging demand for Western milk powder to feed the 18 million plus babies born in China alone.
Let alone the broader middle class Asian demand.
You may know that our neighbour’s in New Zealand secured a free trade agreement with China in 2007.
Since then their dairy exports to China have grown by $2.2 billion. Meanwhile, Australia’s, in the absence of a China FTA, have grown by less than $70 million.
But now, an FTA with China seems within our grasp and anticipating this we are already seeing substantial Asian investment into the Australian dairy sector.
Hong Kong businessman William Hui recently bought United Dairy Power in rural Victoria for $70 million.
And Tasmanian Dairy officially opened a world-class $75 million milk powder factory last year, in a joint venture with Mitsubishi.
Or consider the Mildura Fruit Company.
In 2012, they exported 100 containers of citrus to China. Last year, it was 500 containers.
There is enormous scope for new investment in Australian agriculture, including joint-ventures.
We are seeing significant new Chinese investment to expand the iconic Ord River irrigation project in Australia’s North.
There is an estimated 152,000 GL in total surface water run-off in the North.
Currently we only capture around 2 per cent.
If we could capture and use even 6 per cent, we could feed millions more as a food bowl for Asia.
Health services and products is another Australian strength.
Our state of Tasmania for instance grows the poppies that are transformed into about half of the world’s supply of opiate-based pain relief.
Other Australian services which have developed around our core strengths have a big role to play.
Services like engineering, finance and wealth management, architecture, legal and construction.
Tourism and events management are other strengths.
Tourism is Australia’s biggest service export, worth $26 billion in export income.
China is already our biggest tourism market with 676,000 visitors last year and it is growing by 18 per cent per annum, creating great new investment opportunities for hotel and resort operators.
Education and training is our second largest services export – Australia is already the 3rd largest destination for tertiary students from Asia.
And we now have the opportunity to complement that with education services delivery in-market in places like China and India.
So both of these areas offer excellent growth prospects.
As a country we are determined to compete at the quality end in what we do.
Whether it is six star tourism experiences or premium quality produce.
As a government we are pursuing a very ambitious trade and investment agenda because that opens up new markets and makes us even more competitive in existing ones.
We’ve already concluded a Free Trade Agreement with Korea, we are very close with Japan, and as mentioned earlier, we are hopeful of also concluding an agreement with China this year.
These represent our three biggest export markets, making up 51 per cent of our total exports.
We are also working to conclude the Trans Pacific Partnership agreement.
This involves 12 countries which represent 40 per cent of global GDP.
Currently, I am also in the process of appointing a group of very senior investment specialists; people who have been working at the investment coalface.
They will be tasked with helping to drive and facilitate inward investment by the private sector into Australia across areas of priority
The key message I’d like to leave you with today is Australia is very much open for business.
We have a range of strengths and investment opportunities that mesh well with the exploding demand of the Asia Pacific.
We are working hard to open new markets to trade through Free Trade Agreements.
And as a government we are committed to providing the best environment possible to invest.
The early steps we have taken strongly signal the direction we are headed.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555