Angus Taylor (Hume, Liberal Party) Share this | Hansard source

I have often spoken in this place about the huge market opportunities to our north. There is no doubt that Asia is where the action is for Australian exporters. Our introduction of the Asian Infrastructure Investment Bank Bill 2015 into the House a week ago is another sign of the commitment of this government to make sure that those markets open up as quickly as possible, as effectively as possible and as profitably as possible for our exporters and for our country.

As the Treasurer outlined in his speech when he introduced the bill, Asia faces a massive infrastructure financing gap. It is estimated to be over US$8 trillion over the next decade. This bank is designed to help address that infrastructure financing gap. Australia will be a founding member, and this will help to fund those major new infrastructure projects. I will come back and talk more about the detail of those benefits to Australia in moment.

The decision to join the bank followed extensive consultations with key partners inside the Asian region and outside as well. Australia has negotiated our participation in the design of the bank with more than 50 other prospective founding member countries. These negotiations have resulted in a commitment that the bank will be based on world's best practice. It is critical that the governance of the Asian Infrastructure Investment Bank be best practice, transparent and effective. All members will be involved in the direction and decision making of the bank. As one of the largest regional shareholders of the bank, Australia will be able to influence the decisions and strategic direction of the bank, and that will be extremely important to not only the effectiveness of the bank itself but to ensuring that benefits flow to Australian exporters and Australia more broadly. Australia will lead a constituency on the bank's board of directors. This is very important because we want that board to be best practice in the way it is put together and the way it works. Negotiations on the composition of this constituency with established partners in the region are well advanced.

Our shareholding with be just under US$4 billion—US$3.7 billion—and our contribution will have zero direct impact on underlying cash balance, fiscal balance and net debt as we are purchasing a shareholding in the bank which has value in itself. This is an extremely important and very positive investment for us which, as I say, will not result in an increase in our net debt position.

The economics of the Asian Infrastructure Investment Bank are worth dwelling on for a moment. The starting point here is to understand what drives growth in developing countries. In the stage of development we are seeing in Asia, particularly southern Asia—China, India and Indonesia—what drives growth in these countries? There is no shortage of research. There are well-established principles from economic research about what drives growth. Ultimately, it comes down to three things.

The first is infrastructure investment. There is no question that, in the absence of infrastructure investment, you do not see the productivity gains that are necessary to take a country from poverty to lower middle-class to middle-class to the sort of wealth and incomes that we have in Australia today. Infrastructure is absolutely essential.

The second is institutional development. We know that is absolutely critical. This means the development of institutions that are not corrupt, that are transparent, that are accountable and that, therefore, deliver to customers and citizens in a way that may not be the case when a country has very immature institutions. That institutional development is central. We know that, without it, we do not see the sort of growth that we have seen in Australia and throughout the Western world over the last several hundred years.

The third is innovation. That is the area where the Asian Infrastructure Investment Bank can do the least. But it must be remembered that innovation in developing countries these days is largely about taking proven ideas from the West and rolling them out in developing countries. That innovation can be aided significantly by well-targeted infrastructure investment.

We know that the economic growth story based on infrastructure, institutions and innovation will have huge benefits for Australia. We have already seen the evidence of that over the last 15 years. When a country goes from an income of about $2,000 per capita up to $10,000 it is in an early stage of growth where much of that growth is driven by physical infrastructure development. That is: engineering construction in bridges, roads, railways and airports; residential construction in housing—in Asia that has largely been apartment based housing; and commercial construction, which is office buildings, shops and so on.

All three of those sorts of developments require large amounts of iron ore and metallurgical coal. They have been extremely profitable exports for Australia, and they will continue to be for many years to come if we continue to see the growth in the early stage of development that we have seen in China reflected not just in the western provinces of China, where it is still continuing today at a rapid rate—about 15 million to 20 million people are being urbanised each year—but also in countries such as Indonesia and India, where we know the infrastructure deficit is absolutely enormous.

The other export that benefits hugely from that shift from $2,000 per capita to $10,000 is copper. We are a significant producer of copper here in Australia. Copper goes into homes and appliances, and there is heavy use of it in that early stage of development. As we move up from $10,000 per capita to $20,000 per capita or higher we see a shift in demand.

There are two areas in particular where we stand to benefit enormously if we can support growth. The first is food. While someone on an income of a couple of thousand dollars per year will tend to eat carbohydrates, as they move up to $10,000 or $20,000 a year in income, they will shift their diet towards proteins, oils, sugar and fruit and vegetables. We stand to gain enormously as China moves into that zone in the next couple of years. It is happening now. We also stand to gain enormously as other countries throughout the region—such as Indonesia and India—start moving up towards that level where their consumption of food shifts from staple carbohydrates. We gain benefits from the staple carbohydrates, but we will shift to much greater benefits as they move to protein, sugar, oils and fruit and vegetables.

Each country throughout Asia is at a different stage in their development. Of course, Korea and Japan are furthest advanced. That is why they provide such great opportunities for us in food exports. China is well back, but even further back is India. With a population of well over a billion people, India offers us enormous prospects, as does Indonesia.

Given that story, it is critical, from our point of view, that we see the Asian Infrastructure Investment Bank focus on investment in the infrastructure and institutional development that is going to allow that rapid growth of income per person in the coming years throughout the countries of Asia.

Within that context, the free trade agreements that we have negotiated with Japan, Korea and—of course, the big one—China are enormously important. In the mining boom clearly much of the benefit came without additional free trade agreements. The most important free trade agreement we had was on iron ore with the Japanese in opening up the Pilbara in the 1960s. We did not need new free trade agreements for massive growth in our exports of iron ore, coal and copper over recent years, but we do for food. We absolutely need these free trade agreements to tap into that food opportunity that we see coming at us at a rapid rate.

Those opposite—and I know it is not all of them—who blockade and get in the way of these free trade agreements needs to eyeball every one of those farmers who are increasing their income through feeding Asia. This is, quite seriously, the worst piece of economic vandalism I have seen. Australia has not gone down this path of looking inwards for a long, long time. In fact, Hawke and Keating, to their credit, were extraordinary leaders in this country in opening up the country to exports, and what we are seeing from those opposite is a turnaround, a change, as they become subservient to a union movement that does not care about the interest of the average Australian and certainly does not care about the farmers of Australia. I will not stand for it. I will work closely with the farmers of Australia to make sure the CFMEU's scare campaign based on absolute lies is revealed for what it really is, which is an attempt by those opposite to get into power at the expense of Australia's long-term interest, short-term interest and medium-term interest, and the interest of every Australian who works hard every day to export products into Asian countries that desperately need our food.

Closer to home, I was extremely privileged to welcome the Prime Minister, the trade minister and the agriculture minister to a property at Yass in my electorate yesterday. Bellevale is owned by Brendan and Rowena Abbey. They are local cattle producers and they are enjoying great success producing beef cattle for live export to China. The Abbeys have been exporting Angus heifers to China for four years, many grown on their Yass property. They stand, as so many farmers do, to benefit greatly from the China free trade agreement. And so they should, because this is an opportunity for Australian farmers the likes of which I have not seen in my lifetime—and I will not stand for the CFMEU getting between us and that opportunity. In the words of trade minister, Andrew Robb:

The kind of investment the Abbeys are putting in to their business is a great sign of the return of confidence in the rural sector—their cattle have gone up in value every month for the past seven or eight months. The Free Trade Agreement with China will be fundamental to their success and the success of thousands of farmers—

tens of thousands of farmers—

in all sorts of areas of agriculture.

Australia is poised on the edge of an opportunity that we have not seen since the 19th century. Those opposite are in the way. It is time for us to stand up for Australia's long-term prosperity, its medium-term prosperity and the short-term benefit of every Australian citizen by saying, 'We will not accept what they are attempting to do.' The Asian Infrastructure Investment Bank is an important part of encouraging growth and wealth creation in Asia that will benefit all of us. I strongly commend this bill to the House.

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