Asia House Brexit Series
It's always a pleasure to be here in the UK. Like many Australians, I see it as a home away from home. Only this time, there is a different energy on the streets.
Only three months ago, the British people took a decision to change the existing political landscape. It was a referendum result that captured the world's attention.
Undoubtedly, we have heard the many divided opinions about what this will mean for the UK. And there are many others who want to look backwards and unravel the decision making that led to this point.
However, here in London, what I have seen over the last two days of discussions with my counterparts is a Britain ready to embrace the new political reality with great optimism, pragmatism and enthusiasm.
Prime Minister May has taken the helm and set the course forward. I, along with my colleagues in the Australian Government, have followed the discussion closely. I note her ambition articulated at the weekend in Hangzhou that the British Government will make Britain "a great trading nation" by "forging new trade deals around the world."
While the consequences are complex and will take time to work through, Brexit is an event that reshapes the whole geopolitical landscape.
For our part, Australia will remain a committed partner to the European Union and to Britain.
Australia and the UK share a unique bond forged not only through a shared history but also through the values we hold in common.
We are confident Britain and the EU will find a new way of working together that promotes more prosperity for both, and security for all.
We want Britain and the EU to emerge from this as outward-looking partners, with a stronger collective influence on the wider world.
As is very obvious down under, the world is changing fast, and none of us can afford to take our eye off the bigger picture for long.
Today, I'll be speaking about three things that make Australia an ideal partner while Britain navigates its new economic freedom.
Firstly, Australia's 25 years of unbroken economic growth, and the transition we're making to a broader-based export-led economy.
Secondly, our goal of broadening and deepening our trade and investment relationships with both the UK and the EU.
And thirdly, I'll talk about Australia's deep connections into Asia, and the big future there for Australian and UK business.
Let me start with a quick overview of Australia's open, stable, dynamic economy.
Australia has a singular record of 25 years of unbroken economic growth, at an average of 3.2 per cent annually from 1991.
If you think that sounds good, you're right: according to the IMF, it's the best performance of any advanced economy in those recent decades.
But what's really interesting is the way our economy is transitioning to secure continuing growth for the next generation.
International trade and investment is central to this story.
We've taken the bull by the horns, signing free trade agreements in the last two years with China, Japan and Korea.
In 2015, international trade accounted for 41 per cent of Australia's GDP, but it contributed almost one half of GDP growth.
I don't need to tell this audience that Australia's abundant resources have contributed handsomely to our exports in the past.
While resources exports, and related services, remain a strength, Australia is well advanced in the transition to a more broad-based model of export-led growth.
When resources prices dropped sharply from their highs in 2011, Australia continued to grow.
The services sector is now the fastest growing part of Australia's economy, and China is our number one services destination.
But our services are valued around the world: two-way services trade between Australia and the UK totalled close to Â£6 billion [AUD 12 billion] in 2015.
A central component of our plan for growth is to keep striking win-win deals with overseas markets: increasing flows of goods, services and investment to our mutual enrichment.
Just as importantly, our free trade agreements lock in current levels of openness, and also nudge our partners to follow Australia further down the path of liberalisation, in a way that supports an open, rules-based, global system.
This is fundamental to Australia's national interests.
And why we want to do a free trade agreement with you [UK], when, of course, the time is right?
While we wait for the UK to be in a position to negotiate, Australia is working towards a comprehensive, high-quality free trade agreement with the European Union.
This was our goal before June 23 – and it remains a goal today.
Obviously since the Brexit vote, our focus is also now on Britain and preliminary discussions are taking place.
Prime Ministers Turnbull and May have already said they are committed to pursuing a free trade agreement so that when Britain leaves the EU we have very open markets between our countries.
I think you will find us optimal trade negotiating partners.
We are pragmatic, we have experience in efficiently completing comprehensive FTAs with developed economies, and our trade and investment relations with the UK are significant.
But the fact is, an Australia-UK negotiation of a FTA may be a few years off.
Your processes to disengage with the EU will take years – years of potential liberalisation we can't afford to let slip.
None of our competitors will.
So we're working on an Australia-EU FTA, which will prepare the way for our own agreement in years to come.
In negotiations with the EU, we will promote stronger trade in goods and services, and two-way investment.
An Australia-EU FTA would improve cooperation in research and innovation.
It would help us work together on improving regulation, and securing a reliable and profitable digital economy, with due attention to security and privacy concerns.
An Australia-EU FTA would build on the strong economic links already in place.
Australia is the EU's seventh largest market for services.
We are also major investment partners, reflecting our high degree of mutual trust.
Australia is a significant source of foreign investment in the EU, in areas such as infrastructure and medical technology, though this is under-reported in the official data.
It's also not well enough understood, even here in London, that Australia is in the UK's top ten sources of new foreign direct investment.
We're 8th, in fact, so Australia invests more in the UK than all but seven of your other partners.
Turning to Europe's investment in Australia: the EU, taken as a bloc, is Australia's largest source of foreign investment.
Some of this is investment by European businesses seeking to use Australia as a launching pad for linking with commercial networks and value chains in our region.
Considering nations only, the UK is the second largest investor in Australia, after the United States. China ranks 7th, but is catching up.
One of the benefits of negotiating FTAs with us is to streamline investment processes.
There's a lot to gain here, because Australia has enormous capacity to absorb productive investment.
In other words: don't miss out.
There are so many opportunities in Australia.
Take our plan for cities, for example.
We're building smarter cities that capitalise on our booming knowledge industries.
Or consider Northern Australia.
We're seizing a world-class development opportunity in Australia's north: 40 per cent of our land area, with just five per cent of the population, but already accounting for 11 per cent of Australia's GDP.
Think 'developing world' growth opportunities, but with world-class governance.
We have set aside $5 billion in concessional finance for the next wave of infrastructure projects in the north.
We have in mind airports, communications, energy, port, rail and water.
Singapore recently committed $2 billion to upgrade joint defence training facilities there.
But these Government initiatives are just a prologue.
Private-sector investment, domestic and international, is the main game.
The rise of Asia means the time has come for the development of Australia's north, and the potential is huge.
Which brings me to my final point: recognising how deeply Australia is integrating with Asia.
Another thing I think could be better understood here is just how far advanced Australia is in directing our trade and investment towards Asia.
Australia's economy benefits strongly from Asian growth – that link is, potentially, a huge asset for UK and EU interests looking to springboard into Asia.
One way of demonstrating this is to look at our trade agreement partners.
I've already mentioned our trifecta of North Asia FTAs, with China, Japan and Korea.
These agreements have locked in best-ever treatment in a range of services, as well as delivering tariff reductions that give our businesses a competitive edge in these large and dynamic markets.
We've also signed onto the Trans-Pacific Partnership, along with Japan, the United States, Malaysia, Singapore and eight other countries [Brunei, Canada, Chile, Mexico, New Zealand, Peru, Singapore and Vietnam].
We're currently at the negotiating table again with the three north Asian giants, but now also India, New Zealand and the ten countries of the Association of Southeast Asian Nations, to strike a Regional Comprehensive Economic Partnership.
This partnership will build on our existing FTAs with ASEAN and bilaterally with Singapore, Malaysia and Thailand.
Indeed, right across our economy, businesses are gearing up to contribute more to the rapidly rising living standards and expectations of hundreds of millions of consumers in Indonesia, India, China and others.
Australian agriculture and agribusiness are already the most interconnected in Asia, and the opportunities are enormous.
Asia's appetite for our clean, green produce is growing daily.
It's estimated that $1.5 trillion of investment in Australian agriculture alone is needed to 2050 to meet greater demand from Asia.
With that potential in mind, you can understand why Dutch cold storage company NewCold established its Asia-Pacific headquarters in Melbourne this year.
Australia has a particular advantage in industries where clean, green produce intersects with reliable, traceable manufacturing niches.
Health supplements are a case in point.
China in particular can't get enough of Australian vitamins and mineral supplements – an opportunity French multinational Sanofi, has seized.
Sanofi recently topped up its investment in production facilities in Brisbane, as demand continues to grow faster than production.
The potential is just as great for Australia to grow as a base for services exports.
In financial services, healthcare, water and waste, architecture: we have the expertise and the linkages that will help build the Asia of tomorrow.
All this makes Australia an ideal entry point into Asia for UK and EU business.
Ladies and gentlemen, I know you face difficult adjustments, as the UK prepares to separate from the EU.
I'm here to remind you that Australia is a rock-solid partner for both the UK and the EU.
We want both to succeed.
And Brexit provides opportunities for Britain.
Here in the UK, you may now decide on your own global trade policy.
Business should take a lead here, and you might bear us in mind.
Australia's history can provide some pointers.
Our trade success is founded on fundamental principles:
- we seek to compete with the world by opening channels for international trade and investment;
- we collaborate constantly in the WTO and elsewhere to reduce barriers to trade globally, and to support a strong rules-based multilateral trading system;
- we strive to maintain a consensus in our society that open trade makes our businesses more competitive and our country more prosperous.
These are the principles that have worked for us.
And I invite you, business and government alike, to work with us.
I think we offer avenues for your success.
We're a stable, reliable, prosperous economy – much like the UK but on the other side of the world.
We provide a platform for expansion into Asia.
Do, please, take a keen interest in the negotiation of trade agreements between Australia and the EU, and in time the UK.
Let's make them first class, and a platform for even closer ties between us.