Mr Speaker, I’m very pleased to be here today to present the second annual Investment Statement to the Parliament.
This Government instituted the Investment Statement because we understand the critical link between investment and the health of our national economy.
We also understand that investment and trade are two sides of the same coin.
Like trade, investment has helped secure greater prosperity for Australia throughout our modern history.
To be clear, investment equals jobs and growth.
Without investment, we would not have been able to create the strong national industries that underpin our economy – and each of those industries is a creator of Australian jobs.
Investment means innovation, it means skills development and it means entrepreneurship – all important drivers of job creation.
The link between investment, jobs and growth is real.
The evidence is here and it is strong.
Compelling new research from the Economist Intelligence Unit, which I have the pleasure to announce today, confirms Foreign Direct Investment has a positive, causal impact on employment in Australia.
In fact, modelling based on data since 2000 shows that a $1 billion increase in FDI would result in around 1,000 Australian jobs created.
Investment has created and retained jobs for Australians by expanding industries, developing our rich resources and contributing to our international exports.
A great example is one of our long-term and successful investors - Mitsui & Co.
In 1963, Mitsui partnered with Thiess Brothers to develop and invest in the Moura coal mine in Queensland’s Bowen Basin.
That came just six years after the signing of the Commerce Agreement with Japan.
The project operates today under the name of Dawson, and five decades on, Mitsui is still involved, priding itself on being a loyal founding partner and a patient long-term investor.
After Moura, Mitsui replicated its investment model in other sectors and now has a range of diversified interests across Australia including iron ore, LNG, infrastructure, grain, chemicals, steel and financial services.
Mitsui has grown with Australia.
The company invested over $14 billion in the last 10 years alone.
It is now the fourth-largest exporter from Australia, a trade that is worth more than $8 billion annually.
It has paid over $8 billion in federal corporate tax, state royalties and resources taxes.
But the relationship cannot be measured in dollar figures alone.
The company is a strong contributor to regional communities and education scholarships, with over 40 years of sponsoring Australian students to Japan and, more recently, participation in the New Colombo Plan.
And crucially, the Australian joint ventures in which Mitsui participates employ over 20,000 people.
Mr Speaker, history teaches us several important things about foreign investment.
It shows that Australia has always needed Foreign Direct Investment to supplement its own thin capital markets and savings.
It also reveals that better trade relationships lead to increased investment flows, and increased investment from our trading partners follows implementation of our trade agreements.
A year of achievements
Mr Speaker, this year, the Government has made significant achievements in bringing in new investment – investments that will pay dividends in job delivery and growth in the years ahead.
First and foremost, we now have trade agreements with Japan, Korea and China.
Two of these are already delivering substantive benefit to our economy.
The third, with China, is set to deliver billions of dollars in additional revenue for industries throughout Australia and a quantum leap in our investment flows.
These agreements will have a transformative impact on our economy and thereby job creation.
They will allow increased access to overseas markets for our goods and services.
They will also, as I said, result in increased foreign investment.
The investment frameworks established by these agreements – and those currently under negotiation – will support a more attractive and predictable investment environment and help drive further economic integration in the region.
This investment will help expand production to meet increasing demand and support research to develop technologies of the future.
As a result of these agreements, we will also see a once-in-a-generation shift towards investment in services.
This is important as we move beyond the boom cycle of resource investments.
It is also important because as we know, services employ nine out of 10 Australians.
Services that will be increasingly in demand among Asia’s three billion-strong emerging middle class over the coming decades.
The opportunities are spectacular - in health, in tourism, in hospitality, in education and training and in financial services to name a few.
Industries that will create the jobs of the future.
The $6.5 billion acquisition of Australia’s logistics company Toll by Japan Post is a massive endorsement of Australian services, skills and expertise.
This investment will enable Toll to spearhead Japan Post’s global expansion ambitions in logistics, headquartered in Melbourne, in time creating many new jobs in Australia and exciting career opportunities for talented Australians in an expanding global business.
Mr Speaker, in a year where global investment flows contracted, 2014, Australia attracted $ 140.1 billion in new foreign direct investment.
This was up $21.2 billion, or 17.8 per cent on the $119.0 billion invested into Australia in 2013.
The total stock of FDI in Australia as at year end 2014 amounted to $688 billion or 2.2 per cent of total global FDI.
Details of this investment are outlined in the Department of Foreign Affairs and Trade’s second annual International Investment Report, which I will release today.
Austrade’s investment outcomes, in terms of the number of projects supported, were up 28 per cent in fiscal year 2014/15 reaching almost $7.75 billion.
But success hasn’t just fallen in our lap.
It has required us to focus. To revitalise our efforts and to make sure we understand our priorities.
Last year we boosted Austrade through the appointment of Senior Investment Specialists, who provide expert insight and knowledge, helping get major projects across the line.
I personally have conducted 67 investment roundtables in 27 different countries and as a result, I know investors understand the great strengths we have.
These are: sound macroeconomic management, a highly skilled workforce, a commitment to reform to ensure Australia is an attractive place to do business, significant infrastructure needs, and a great pipeline of potential projects.
But we need to keep making sure we are speaking to the right people – I’ve made this a particular focus of my work as Trade and Investment Minister.
Our efforts are having an impact.
Last year we saw an increase of 40 per cent in FDI stock out of Canada
This was driven in part by significant infrastructure and other investments from that country’s major pension funds.
CPPIB, OMERS (Borealis), Ontario Teachers’ Pension Plan and OPTrust are all groups that I have made sure to meet over the past 12 months, to spread the word about Australia as a stable and secure investment destination.
These Funds, with total net assets in excess of $500 billion, praise Australia for its economic stability and the quality of its investment opportunities.
We’ve continued the hard work of taking Australian business delegations to the world – 14 at Ministerial level in the past financial year.
Last year, I spoke about Chinese property group Wanda’s commitment of $900 million coming out of the highly successful Australia Business Week in China event, hosted by the Prime Minister and myself in April 2014.
Since then, Wanda has announced plans to invest almost $1.2 billion in a major mixed-used development at Circular Quay in Sydney.
This Government places a priority on investment in the tourism sector.
Why? Because tourism contributes roughly $43.5 billion to GDP and provides jobs for almost a million people.
Tourism is our largest services export at $33 billion.
Tourism can be our fastest-growing sector this decade, but we need to position ourselves well and we need investment.
Along with Wanda, this year has seen some significant investment successes.
- Chinese property developer Greenland will include a 200 room high-end hotel in its Sydney CBD development.
- Hong Kong’s Far East Consortium plans to bring back the prestigious Ritz Carlton brand to Australia (in Melbourne and Perth)
- A consortium made up of Echo Entertainment, Far East Consortium and Chow Tai Fook Enterprises will undertake a multi-billion dollar redevelopment of Queen’s Wharf in Brisbane.
For the Queen’s Wharf development alone it has been reported that 2,000 jobs will be created in the construction phase and 8,000 following completion.
In January this year, I led a delegation of 450 business representatives to India for Australia’s largest-ever business promotion in that country.
This complex undertaking covered 14 industry sectors across 125 events in eight cities.
It was welcomed by the Indian government and again shows that we are serious in our intent to deliver increased investment and business for Australian firms.
Negotiations for a Comprehensive Economic Partnership Agreement with India are well advanced, promising significant new trade and investment opportunities between our two countries.
Efforts are well underway for Australian Business Week in Indonesia, planned for November this year, and Australian Business Week in the US which will take place in February 2016.
Follow-up missions to China and India are planned for next year.
Through our trade agreements and other activities we have opened new markets and improved competitiveness for Australian exporters.
This is a message that resonates with foreign investors seeking a safe and secure platform for expansion throughout Asia.
Investors are responding.
China’s largest private company, New Hope Group, has established a $500 million fund to invest in Australian agriculture.
The fund was announced as part of a Memorandum of Understanding between New Hope Group and Australia’s Freedom Foods.
It was signed in November 2014 alongside official ceremonies for the signing of the China-Australia Free Trade Agreement.
Brazil’s JBS is another example with its recent $1.45 billion acquisition of Primo, which will position JBS to utilise Australia’s FTAs for the export high-value branded products to Asia, capitalising on the company’s global distribution reach.
JBS is focussed on domestic and international brand development of its beef, lamb and food products.
This strategy not only underpins jobs and exports but has delivered higher farm gate returns to its livestock producers.
What a change from the laments of the past that we were simply a commodity exporter failing to make the most of our broader strengths.
It’s happening here, and happening now, because of investment to capitalise on the tremendous growth of middle-class markets on our doorstep in Asia.
Since first arriving in Australia in 2007, JBS has invested around $2 billion in strategic acquisitions.
It has also expended $700 million in capital and advanced technologies to improve the quality, performance and international competitiveness of its Australian business.
It employs some 12,500 Australians full time, of which 8,000 are in regional and rural Australia.
Another great example of the linkages between trade and investment is the recently signed MOU between CP Group – Thailand’s largest private company – and South Australia’s Thomas Foods.
The partnership will build an advanced food processing centre to produce ready-made beef and lamb meals for export across Asia and the world.
Pressing the advantage
Our challenge now is to press the advantage we have earned through all this hard work that went into securing the opening up of new markets through the free trade agreements.
Despite the successes we have had – and despite the world being awash with cheap money – we will have to work even harder in future.
Since the Global Financial Crisis, business investment has fallen around the developed world.
Australia was largely insulated from this because of the investment in our resources sector.
Our economy was blessed for 15 years with a mining boom.
The peak of the mining investment boom has now passed, as evidenced by recent EIU forecasts indicating that over the next five years Australia’s investment inflows will fall. So we need to shift our focus to other traditional strengths, other things we are good at.
Things like our agribusiness sector, tourism and hospitality, our health and medical sector and all the services that support them.
Over the long run, notwithstanding the ebbing of the mining investment boom, Australia can return to FDI growth, particularly if we overcome challenges associated with increasing competition from developing countries and the United States.
This year, the Government has further strengthened trade and investment promotion activities, with an additional $53.2 million commitment.
That includes $30 million to increase promotion of foreign direct investment in priority areas, with increased staff and resources for Austrade’s global investment teams.
Another $18 million will go towards expanding Austrade’s Australia Week events in China, India, United States and ASEAN.
We have also overseen major reform of the Significant Investor Visa and Premium Investor Visa programs to foster innovation and commercialisation, within Australia, of our world-leading research and technologies.
Ten per cent of the SIV funds will be channelled to venture capital and 30 per cent to funds specialising in emerging companies.
This will direct capital to where it has the most impact, and the sort of investment funds flow in prospect could be a game-changer for the funding environment to aid commercialisation of good ideas in our most dynamic, innovative industries.
This Government has set out big bold ideas for our economic future, like our plans to open up Northern Australia to major private sector investment, holding out the prospect of thousands of new Australian jobs and a revitalised national economy.
Many people have talked about the development of Northern Australia.
But this Government is serious about making it a reality.
Our Northern Australia Investment Forum to be held in Darwin in November will attract some of the world’s key investors and fund managers and shine a spotlight on the immense potential of the North.
We will showcase investment opportunities and projects across agriculture, resources and energy, tropical health and medical research, tourism and infrastructure.
This is a once-in-a generation opportunity and we need to act now.
There are real opportunities which need capital.
For example, the $1.5 Billion Sea Dragon Project involving tiger prawn production in the Northern Territory and Western Australia would make Australia a global leader in aquaculture.
Mr Speaker, this Government is serious when it talks about the importance of attracting investment.
What we need to ask ourselves is: who will be the Mitsui or JBS of the future?
The answer will help determine how we write the next chapter in our economic history, how we adapt to shifting global patterns of wealth and demand.
How we transform our economy to be competitive, as it can be.
And, how we ensure that Australia is the easiest and safest place to do business in the world.
We know that investment equals Australian jobs, and stronger economic growth for our country.
Mr Speaker, we are deeply committed to taking the steps needed to attract it here, the steps that will set Australia up for a prosperous future.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555