Speech
Address to European Ambassadors
23 November 2009, Canberra
Introduction
It was a great pleasure to be asked to address the diplomatic representatives of the European Union here today.
I’d like to acknowledge the head of the EU delegation in Australia, David Daly, and indeed welcome to all Your Excellencies.
As all of us know only too well, it has been a tumultuous year and a half for the world economy.
The Global Financial Crisis has given the world economy its biggest shock since the Great Depression.
But it was a shock which brought forth unprecedented levels of positive international cooperation.
Through bodies such as the G20, the world successfully coordinated its fiscal stimulus packages and monetary policies to help steer the global economy back on course.
We are now seeing the early signs of a recovery in Asia and Europe.
So I believe it is an appropriate time to focus on the future of the commercial ties between Australia and Europe.
Australia and Europe
It is often commented that Australia gives the impression of being preoccupied with its own backyard, the Asia Pacific and the big economies to our north, economies such as China, Japan and India.
Nothing could be further from the truth.
Since the early days of colonial settlement, European investment in Australia has contributed greatly to our national prosperity.
And today, the European Union remains Australia’s biggest trade and investment partner, with two-way merchandise trade of A$69.4 billion in 2008-09 and total trade of A$91.2 billion.
Australia’s global trade and investment agenda continues to strengthen our existing historical, cultural and commercial links with Europe.
The Australian Government wishes to highlight the vital role that European trade and investment has played, and is playing, in the Australian economy.
It is not widely known, for example, that the European Union is the largest foreign direct investor in Australia, indeed Australia’s largest overall source of foreign investment.
At the end of 2008, for example, European nations had invested 34 per cent of Australia’s total FDI, or about A$133.2 billion.
Total European investment stood even higher, at A$567 billion, or about 33 per cent of total investment.
Much of this investment was in manufacturing, financial services, mining and resources.
Together these investments employed about 500,000 people directly and about 1.4 million indirectly, or 12 per cent of the workforce.
In 2008, as well, five of Australia’s top ten investors were European, namely, the UK, Switzerland, Germany, France and the Netherlands.
So there can be little doubt about the contribution of European investment to our national prosperity.
Likewise, Australia has also invested heavily in Europe, putting an estimated A$43 billion into the EU zone by 2008, much of it in the United Kingdom.
The 27 countries of the European Union provide an enormous opportunity for Australia representing a market of almost 500 million people. With the EU economy being worth $23 trillion annually, this makes it eighteen times as large as Australia’s economy and bigger than the US economy.
We welcome the two-way investment and we applaud the positive political and economic cooperation which exists between Australia and the EU member states.
Investing in Australia
Most importantly, we would like to see two-way trade and investment between Australia and Europe strengthened, especially in clean energy technology and financial services.
In this regard, I welcome the EU-Australia Partnership Framework as a new mechanism for greater commercial cooperation.
Just last week, at the address I provided at the Australia-EU Investment Conference at the Australian National University, I highlighted how the Partnership has already delivered two new agreements, one on trade in wine and the other on product testing procedures, which will help facilitate trade by limiting red tape.
If I might add, on the topic of agriculture, the Australian Government strongly welcomes the recent decision by the European Union (EU) to end dairy export subsidies.
More broadly, we believe that Australia’s stable, well-regulated economy, and our proximity to Asian markets, will continue to be a drawcard for European investors.
Australia has performed better than most other advanced economies during the GFC and is forecast to be one of just two advanced economies to grow in 2009.
The Government’s well-timed fiscal stimulus packages, historically low interest rates and targeted bank guarantees put a floor under the Australian economy.
Despite the downturn in global export markets, Australia continued to emphasise its faith in an open global trade and investment system.
Australia urged world bodies like the G20 to finalise the Doha Round of the WTO and in February signed an important new Free Trade Agreement for South East Asia that will give our exporters greater access and new investment platforms.
The AANZFTA, as it is known, joins together the economies of Australia, New Zealand and the 10 nations of ASEAN into one free trade zone with 600 million consumers and a combined GDP of A$3.2 trillion.
Our network of FTAs throughout Asia and the Pacific will continue to offer terrific opportunities for investors using Australia as a base.
The Government has also committed itself to facing the challenge of climate change.
One of our top priorities is the development of clean energy technologies, such as carbon capture and storage, or solar power, and we welcome investment in those sectors.
In December, we set a 20 per cent renewable energy target for Australia by 2020.
The Government also has before Parliament a Carbon Pollution Reduction Scheme which is designed to reduce greenhouse gas emissions.
The CPRS, as it is known, is a cap-and-trade emissions scheme that will cover about 75 per cent of Australian emissions.
Together, the renewable energy target and the CPRS will provide extra incentives for the development of renewable energy industries in Australia.
At the same time, these policies will offer opportunities for foreign investors interested in doing business here with some of the world’s most advanced companies in solar, wind and thermal energy.
Earlier this year, the inaugural Australia – Spain Business Forum in Sydney highlighted the scope for the EU, which is the world’s largest source of investment in the clean technology sector, to play a key role in clean and renewable energy projects in Australia.
Apart from my having had the pleasure of meeting the visiting King of Spain, HM King Juan Carlos, I also highlighted in my address to the Forum the substantial Spanish investments in wind farms in Australia by Union Fenosa and Acciona Energy, and in the landmark Western Australian desalination project, undertaken by Technicas Reuunidas.
Projects such as these symbolize the strengthening investment relationship between Australia and the EU.
Another priority for the Government is foreign investment in financial services.
Australia is now one of Asia’s financial hubs, with one of the largest pools of managed funds in the world, estimated at about A$1.3 trillion.
The size of this pool and the skills which have developed to manage it offer excellent opportunities for foreign financial service firms, which can also take advantage of Australia’s location to export into Asia.
Conclusion
Australia’s solid economic performance, its soundly regulated economy and growing economic integration with Asia make it a great and safe investment destination for European investment.
Austrade, as the Government’s trade and investment development agency, is there to help with market advice about the Australian economy and I urge investors to make contact.
In the 21st century, Australia and Europe’s longstanding historical, cultural and commercial ties are set to grow even stronger, especially as the global economy begins its slow rebound from the GFC.
Thank you.
ENDS