Andrew Robb (Goldstein, Liberal Party, Minister for Trade and Investment) Share this | Link to this | Hansard source

by leave—Mr Speaker, I am 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 being 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 coalmine 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. The company is a very strong friend of Australia and, crucially, the Australian joint ventures in which Mitsui participates employ over 20,000 people.

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

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 therefore job creation. They will also increase access to overseas markets for our goods and services. 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 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 just a few. These industries 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, our skills and our 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.

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 has not 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 countries and, as a result, I know investors understand the great strengths that we have as a country. 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 have made this a particular focus of my work as trade and investment minister.

And I believe 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, at a time when investors around the world have great nervousness. 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-use 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 multibillion-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 spread. JBS is focused 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 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-ready 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.

Conclusion

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. We are deeply committed to taking the steps needed to attract it here, the steps that will set Australia up for a prosperous future. Thank you.

Tanya Plibersek (Sydney, Australian Labor Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

The Minister for Trade and Investment has delivered a very important statement today about the importance of trade and investment. Of course, there is a great deal on which Labor agrees with the minister when it comes to trade and investment. Labor has supported trade liberalisation for decades. We know that it boosts growth, creates jobs, forges more competitive industries and gives consumers greater choice and lower prices. Labor governments have opened up our economy and our society to the world by bringing down postwar tariff barriers; by floating the Australian dollar; by deregulating our banking sector; by pursuing multilateral trade liberalisation; by initiating the Asia-Pacific Economic Cooperation forum, APEC; by working to bring together G20 leaders to respond to the global financial crisis and by working with that same group on issues like base erosion and profit-shifting and inclusive growth to underpin sustainable economic growth in all of our major economies; and by identifying and embracing the opportunities for Australia in our region by placing the Australia in the Asian Century white paper at the centre of our national debate and opposing protectionist responses to the global financial crisis at home and abroad.

We have done all of that because we support trade and investment. One of the things that is curious about the recent discussion we have had is the mixed messages that the government have sent out in this area. Competitive global trade has contributed to significant, real price reductions for Australian families. We are happy when Australian families need to spend less on their cost of living. Our policies, including trade liberalisation and the opening up of Australia's capital and investment markets, under the Hawke, Keating, Rudd and Gillard governments, have contributed to over two decades of continuous economic growth. So there is much on which we agree with the minister. We know that investment is the lifeblood of any economy. A growing economy needs to attract and generate investment in new businesses and in the expansion of existing businesses. It needs investment in new factories, new buildings, new equipment and new technologies. It needs investment in new products and new production processes, innovation in the kinds of goods and services we produce and innovation in how we produce them. A growing economy needs both private and public investment, because we know that investment today creates the jobs of the future—private investment in entrepreneurial new ideas and business ventures, and public investment in the critical infrastructure that underpins productivity, healthy workers, educated workers, strong and modern transport and communications networks, and high-quality education and health care for our people. That is why we support policies which promote and encourage investment in our people and in our economy, investment in sound macroeconomic management to ensure a stable and growing economy and to encourage business and investor confidence; policies designed to ensure our economy is characterised by competitive, efficient and well-functioning markets, the central role of financial markets in ensuring capital and savings are efficiently channelled into new investment opportunities, and the importance of Australia being an open economy so that we can tap into and take advantage of trade and investment opportunities in the global economy.

We agree with the minister's observations that trade and investment are two sides of the same coin and with his reminder that Australia has historically relied on foreign capital to meet our domestic investment needs and to build growth into our economy. The fact is that Australia's pool of domestic savings is not large enough to adequately fund all of the investment that we need to build and expand our economy. It is one of the very important reasons that Labor developed Australia's superannuation system. It was to increase the pool of domestic savings available for domestic investment and, incidentally, for investment overseas. Superannuation savings helped bring Australia through the Asian financial crisis and through the global financial crisis, because we were less reliant on sources of overseas capital. If Labor's low-income superannuation contribution and our proposed increase in the superannuation rate to 12 per cent had not been abandoned by this government, Australia's national pool of savings in superannuation would be $500 billion higher by 2037 than it will be under the current settings. So we need to supplement our local savings with foreign investment to create the jobs of the future.

We must always ensure that we remain an attractive destination for foreign investment and that we do not impose unnecessary barriers on that inward investment. Foreign investment has always been essential to Australia's economic development, and it is essential to our future prosperity. The National Farmers' Federation has stated, for example, that for Australian agriculture to meet rising demand, investment of between $1.2 trillion and $1.5 trillion is needed over the next 35 years.

This government has imposed new barriers to foreign investment in Australian agriculture and agribusiness. A complex regime of differential and discriminatory thresholds for Foreign Investment Review Board screening of proposed investments has been adopted, with no explanation and no foreign policy or economic policy rationale. The investment screening threshold for investors from China, Korea and Japan has been reduced to $15 million. For investors from Singapore and Thailand that threshold is $50 million. For investors from the United States, New Zealand and Chile the threshold is $1,094 million. These new barriers even apply where existing investors seek to make improvements to their property. So the new rules are not just a deterrent to potential new investors but also a disincentive for existing investors to improve their operations.

The government is also proposing to reduce the screening threshold for investments in agribusiness to $55 million—and agribusiness has been so broadly defined that it would include around half of Australia's food manufacturing industry. Again, discriminatory rules will apply, with investors treated differently depending on their country of origin. Investors from China, Korea and Japan will be subject to the new $55 million screening threshold, while investors from the US, New Zealand and Chile will again be subject to a much higher threshold.

In this year's budget the government also announced $735 million in new application fees for foreign investors. That makes Australia one of the very few countries in the world which effectively imposes a tax on inward investment. This government is making Australia a less attractive investment destination. Their changes to foreign investment will make it harder for the agriculture and agribusiness sector to raise capital and will put downward pressure on the value of farm assets. So it is no surprise that these new barriers to and this new red tape on foreign investment have been criticised by    the Business Council of Australia, the National Farmers' Federation, the Australian Food and Grocery Council, the Queensland Farmers Federation and the Western Australian Chamber of Commerce and Industry.

But it is not just about agriculture and agribusiness. This government has a very mixed record on investment. They rejected ADM's bid for GrainCorp. They have cut funding to leading drivers of tech investment like the CSIRO and NICTA. According to a mining 'best places to invest' index, Australia has slipped from first in the world to second for the first time in about seven years. Australia has also gone from fourth to 10th in the Renewable Energy Country Attractiveness Index and from No. 4 to No. 37 in the Global Green Economy Index.

Labor supports trade and investment and consequently supports the China-Australia Free Trade Agreement, because it will drive growth, create jobs and improve living standards. We have been the party of trade liberalisation for decades. We have been the party of Asian engagement for decades. Economic engagement with China has been critical for our growth and will be critical for our future. Unquestionably China has become the dominant economy in our region. That means that there are enormous opportunities for Australia from boosting trade with China. We understand the potential benefits of the China free trade agreement and we have worked hard to bring this agreement into being. So it should be clear to the Australian public where Labor stands on this. We support the best possible free trade agreement with China but we want safeguards for Australian jobs. We want a high-quality free trade agreement that creates high-skill, fair-wage jobs for Australians. For the benefit of those opposite, I repeat what Labor wants to see in the enabling legislation: firstly, mandatory labour market testing for projects over $150 million, ensuring that Australian workers actually get the first opportunity before overseas workers are brought in on these projects; secondly, an assurance that Australian workplace skills and safety standards will be maintained; and, thirdly, an assurance that Australian wages will not be undercut.

The minister himself has quite rightly said, 'It is not difficult.' It is true: it is not difficult. We want to ensure that the enabling legislation is finetuned so that these elements are delivered on. But the government will do anything rather than sit down at the table and discuss our sensible proposals. We saw last week that they have embarked on a rebranding exercise. We have seen a doubling of the market research budget. 'What is it that people want from their free trade agreements?' you can hear them asking in the groups sitting down around the market research table. They have an extraordinary advertising budget—which I believe, sadly, the minister has been berated for not spending quickly enough before the Canning by-election. And last week we saw the result of this market research and rebranding exercise. The China-Australia Free Trade Agreement has been rebranded an 'export agreement'. It is really interesting, because I think this agreement covers both exports and imports and I do not think Australians are silly enough to fall for a simple name change when it comes to their concerns to ensure that the number of high-quality Australian jobs increases under this agreement. This government would rather have a fight than have a conversation about getting the details right. Once again I say: let us give up on the rhetoric and on the sorts of stunts that we saw last week and let us get these safeguards in place for Australian jobs. Let us talk about upholding Australian safety standards, upholding Australian pay and conditions and supporting Australian jobs. That is what is important. Let us get on with it.