It’s always a pleasure to address an AustCham audience and I’d like to begin today by acknowledging the important role our expatriate communities play in places like Hong Kong and throughout Asia.
Next month I’ll be leading our biggest ever trade mission to China, an event that in many ways symbolises the new economic philosophy of the Australian Government, especially the idea of backing our strengths.
I’ll talk a bit more about that in a moment but first let me express my appreciation for the work of organisations such as AustCham in creating a receptive environment for Australian trade missions in the first place.
I particularly want to thank AustCham for your work supporting the Australian Government in launching the New Colombo Plan pilot program here in Hong Kong. It is a high priority for the government, and we are grateful for your assistance.
Expatriates form a kind of advance guard, forging the contacts and networks that make trade possible and helping maintain Australia’s international reputation or brand.
I fully appreciate the sacrifices the expatriate life can involve in terms of time away from home and long hours of travel.
For a while, I ran the Australian arm of a major global company headquartered in the eastern United States and I know how quickly you tire of regular 24-hour journeys and constant conference calls in the middle of the night.
As an aside, I also ran a company focused on the Asian region and can attest that flights to and fro, and telephone and electronic contact in roughly the same time zone bring enormous benefits and efficiencies, not least of which is quality of life and impact on families.
The advantage Australia enjoys in sharing a time zone with Asia is seldom recognised, but it can’t be emphasised enough.
It enables businesses to easily collaborate on projects and allows Australian expats to “play the long game” in Asia because they can easily balance working there with staying in touch with friends and family in Australia.
This is important because Australia needs to be a long-term player in Asia, both at a business and government level. Our future prosperity will depend on how well we marry structural change in our economy to the opportunities and economic changes in our biggest markets in Asia, especially China.
One of the other things about the expatriate lifestyle is that it’s often harder to stay across the full nuance of news and debate back home.
Today, then, I’d like to take the opportunity to provide you with some detail about how the Abbott Government sees Australia’s current economic challenge.
Our economic philosophy is based on a few simple principles:
- living within our means,
- reducing red tape,
- accepting personal responsibility; and
- backing our strengths.
It is tailored to the post-GFC world and reflects some of the lessons we have learnt going back to our earliest days in opposition. What are they?
Perhaps the most important relates to the role of government.
If the GFC’s aftermath has taught us anything, it is that debt-fuelled government spending and other intervention is not the best way to deliver sustainable economic growth and job creation. The Crisis was the gravest economic challenge the world has faced since the 1930s, it was not a crisis of markets but one of Governance.
Governments are at their best when they focus on creating the right conditions – the right atmosphere – for business to thrive, rather than trying to drive growth themselves.
This has implications not only for the implementation of responsible fiscal policy – living within our means – but also for government regulation.
Earlier this month, we introduced into Parliament the first of our regulation repeal bills. Together they aim for the bulk repeal of more than 8,000 pieces of redundant legislation, part of a broader program designed to cut red tape and reduce compliance costs by $1 billion.
We are also seeking to reduce the restrictions on business at an international level, in part through our role this year as chair of the G20, which presents a rare opportunity to influence global economic policy.
In this forum and others, we are spreading the word that Australia is open for business and I can tell you that message is finding a receptive audience, for example at the recent G20 Finance and Central Bank Governors meeting in Sydney and the Australian Prime Minister’s speech at Davos
The spirit of openness informs our approach to free trade negotiations, which aim to free up restrictions our businesses face in foreign markets.
The Government has already secured a Free Trade Agreement with Korea, eliminating high tariffs on a wide range of Australian exports over time including beef, wheat, sugar, dairy, wine, horticulture and seafood.
The agreement creates new market openings for services and substantially improves investment protections.
The Government is committed to securing an FTA with China and an Economic Partnership Agreement with Japan and here, too, we are making good progress. Negotiations for a series of other agreements, including the Trans Pacific Partnership, are also continuing.
All these things will help create a better environment for Australian businesses to succeed by stoking the demand side of the equation.
Ultimately, however, the question of whether they do or not is up to individual businesses, on the supply side. It will be decided on their own merits, rather than through anything government can do.
Australia’s economy is changing. New sources of growth beyond direct investment in mining are required to sustain prosperity. The mining boom is cooling but the economy is also undergoing separate structural change. The auto sector is an example of this.
As you are probably aware, the Abbott Government has, on several occasions, declined to divert scarce tax payer funds towards indefinitely propping up uncompetitive industries and enterprises. We are not going to kick the can down the road.
These decisions have not been taken lightly and, in some cases, they have led to hard outcomes. In others, however, they have served to show just how resilient businesses can be when they assume responsibility for their own fortunes.
SPC Ardmona is a case in point. When the Government refused to provide the $25 million it requested to help modernise its canning operation earlier this year, there were dire warnings about the prospects for the company, the fruit growers who depended on it and the firm’s employees.
In the event, however, SPC Ardmona has enjoyed a remarkable turnaround, securing a $70 million deal with Woolworths that will allow it to modernise its operations. SPCs Peter Kelly said ‘it was probably the best $25 million we never got.’
While companies such as SPC restructure, along with our economy generally, Asia is continuing its upward trajectory of wealth creation and undergoing its own dynamic reforms.
China’s old export-led growth model, for instance, is being replaced by one focused more on consumer spending and imports. Its middle class is growing rapidly and is expected to reach almost 1 billion in the next two decades. Across the region, the middle class is expected to top three billion by 2030 – a once in a millennium change. This offers Australia great opportunities, but arrives at a time when the role of government is limited because of fiscal constraints.
It means we must rely more on the private sector as a source of growth, especially new investment in sectors of the future, such as tourism, agribusiness, services, and wealth management. This means looking to a range of new opportunities emerging in Asia as sources of growth and investment.
That’s where April’s trade mission to China fits into the picture of our economic policy.
The mission will visit China during Australia Week in China, and will provide networking opportunities for businesspeople in a range of sectors, including some I just mentioned but also:
- resources and energy and its spin-offs in mining equipment
- technology and services
- food, beverage and consumer services, including luxury goods and fashion
- urban planning and architectural services.
All of these show great promise in China and they are sectors in which Australia has inherent strengths to expand its trade with China.
The facts here speak for themselves. China is already:
- ·our largest resources customer
- ·our largest source of foreign students
- Our largest source of tourists
- Our largest services market
- Our largest agricultural market
Education, to take one example, is something Australia clearly does well in the Chinese market and elsewhere, competing effectively with the major providers in Europe and North America.
The industry has grown over the past decade to become one of our most important exports; for Victoria it is the largest export, valued at $4.3 billion in 2012-2013, three times the value of the state’s automotive exports.
There are good prospects for further strong growth in this sector, particularly when it comes to education programs delivered offshore.
Employers in Asia are demanding more in-country training services to address skill shortages in their local workforce.
Australia is well-placed to deliver them, but doing so will require greater engagement with industry partners in the region, something Australia Week in China is designed in part to promote.
Other service industries also show great promise in China, including tourism and agribusiness, to name a couple. During a previous visit to Hong Kong, no fewer than 32 services were raised with me that are in demand in China, and which Australian providers are capable of delivering to the highest standard. The list included banking and financial services, architecture, logistics, healthcare, education and vocational training through to project and events management.
These will also be important areas of focus.
A key aspect of backing our strengths is securing the foreign direct investment our industries need to reach their full potential.
Promoting greater flows of FDI is another goal of Australia’s period as chair of the G20 and it is also key aim of Australia Week in China, which includes a roundtable with CEOs from major Chinese and Australian companies, plus a VIP-level roundtable focussed on investment in tourism infrastructure.
As well as the trade mission, the program also includes a series of events promoting trade, investment and tourism in Shanghai, Beijing, Chengdu and Guangzhou.
Taken together all of these represent an important commitment of effort and resources.
It’s a measure of how optimistic the Government is about the prospects for increased two-way trade and investment and how committed we are to helping Australian business realise its potential in Asia.
Our success in doing so depends in no small measure on people like you. If Hong Kong is the gateway to China then, as far as Australian business is concerned, you are the gatekeepers. I thank you for your role in keeping the way open.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555