Investment - Working in the national interest
Mr Speaker, I have the honour to present the Coalition's third Investment Statement to the Parliament.
This annual statement is to update the Parliament – and the Australian people – on our work promoting Australia as a place for productiveforeign investment.
Mr Speaker, there are many strong views on the sort of investment Australia should accept. This is an important and welcome discussion and we need to engage with the range of views expressed by the Australian community.
Like most important things, there are sensitivities, risks and opportunities. However, it is only by examining them and considering our options that we can best respond and make sure we are doing the right thing.
At a time when there are questions around globalisation and rising protectionist sentiment I don't resile from liberalisation and this investment statement is an opportunity to explain why.
I've just come from the APEC Ministers' Meeting in Peru, where I saw first-hand how Australian leadership is continuing to shape the development and implementation of pro-growth trade and investment rules and standards in our region. Liberalised trade and openness to foreign investment builds productive economies – this is how we prosper and grow.
Australia is the world's 6th largest landmass, with the world's 13th biggest economy, but ranks only 52nd by population. So it's only natural that our tremendous natural endowments generate greater investment opportunities than we can fund from our own savings. We've been tapping savings from abroad – foreign investment – for almost every decade for at least 150 years.
By supplementing our savings with the savings of others from overseas, we drive more investment here at home, generating higher growth, more jobs with higher wages, and raise more tax revenue to fund for example our schools and hospitals, than if we only invested what we saved ourselves and shunned foreign investment.
That's why the Coalition Government expanded the traditional role of Trade Minister to be the Minister for Investment as well. My job as Minister for Investment, and the work of my agencies, is to promote and attract productive foreign investment and to ensure Australia remains an attractive destination for that investment.
This means investment that:
- builds on our strengths
- helps us retain and create new jobs
- build competitive industries here at home; and
- helps us deliver our expertise to the world.
The areas this Government has made a priority – in partnership with Australia's States and Territories – are the areas which back our strengths:
- major infrastructure
- tourism infrastructure
- food and agribusiness
- resources and energy; and
- advanced manufacturing, services and technologies
To support these priorities, since 2013 the Coalition has:
- Delivered Australia a unique "FTA investment advantage". The North Asian FTAs deliver unmatched preferential access, providing a powerful incentive for investors to expand businesses here and hire more workers to capitalise on our newly-won trade advantage in these key markets.
- Held around 100 investment roundtables with companies investing, or interested to invest, in Australia. I have hosted 28 of these since February this year as well as many bilateral investment meetings that have encouraged new investment, helped maintain our relationships with existing investors, and helped resolve issues and facilitate investment that otherwise may not have happened.
- Because we know that most new foreign direct investment is additional; re-investment by those who already see the value of investing here.
- Austrade, our investment attraction agency, has recorded 271 new investment outcomes, with a reported value of almost A$17 billion, creating or safeguarding at least 30,000 jobs.
Over this term, I will continue to promote Australia as a destination for global investment dollars, to drive jobs and growth.
In 2015 the stock of foreign investment in Australia was made up of portfolio and other investment ($2.3 trillion) and foreign direct investment ($735 billion) for a total of $3.0 trillion.
The major sources of this investment were the United States ($860 billion), the United Kingdom ($500 billion), the remainder of the EU ($491 billion) and Japan ($200 billion). Chinese investment is growing rapidly from a low base and at the end of 2015 was A$75 billion. The emergence of China is the latest in successive waves of foreign investment in our history which started with the United Kingdom, then the United States and then Japan.
Mr Speaker, the quantum of new foreign direct investment into Australia in 2015 was valued at $117.9 billion. This was down $38.7 billion – or 24.7 per cent – on the amount invested into Australia in 2014.
These trends are outlined in the Department of Foreign Affairs and Trade's third annual International Investment Report which I will release today.
Although annual investment data tends to be lumpy, with large investments in one year – such as through the recent peak of the LNG investment boom - causing spikes, these figures show we can't be complacent about our attractiveness as a destination for foreign investment.
Amidst subdued global growth, there is fierce competition for global investment. So Australia must redouble its efforts if we are to remain internationally competitive, attract new investment, retain and expand existing investment, and thereby safeguard Australian jobs.
This means ensuring Australia keeps up with the pack in terms of a globally and regional competitive corporate tax rate – this is why the Coalition plans to lower company tax to 25% over the medium term.
This means providing an attractive environment for start-ups and entrepreneurs – as was introduced last year through the Coalition's Innovation and Science Agenda.
This means deepening our trade and investment relationships with key markets including Indonesia, the European Union and the United Kingdom; and progressing transformational regional agreements such as the Regional Comprehensive Economic Partnership, to link us into regional value chains.
As for the TPP, the government has been clear on the very substantial new opportunities for our exporters and investors that would flow from the agreement, in particular the creation of a more seamless trade and investment environment across the region. My recent meetings in Lima revealed a widespread view among all TPP parties on the value of the deal. We have since seen public comments by President-elect Trump which appear to signal an intention to withdraw from the TPP. We will need to wait for more detail from the US Administration after it has come to office, but in the meantime the Australian Government remains committed to pushing to realise the high ambition, comprehensive outcomes that embedded in the TPP.
Australia has long had export awards, but we are introducing something new this year. A national investment award.
Tomorrow night, I will announce the winner of our inaugural Investment Award.
This award will highlight some of the enduring, substantial, creative and new investments in this country that we should recognise and celebrate.
If we look at the nominees for the inaugural Investment Award, put forward by States and Territories and Austrade, those seven companies and their joint venture partners have invested more than A$138 billion in Australia and created or retained over 53,000 jobs.
We will be talking more about those seven in the coming days.
More generally, if you look at the 37 per cent of Australia's top 2000 companies that are foreign-owned, these companies firms account for A$1.1 trillion of assets in Australia, generate revenue of A$629.3 billion and employed nearly 700,000 people in 2014-15.
It is important we celebrate the jobs that new investment drives. Not everyone sees the value of investment openness. As with liberalised trade, some see it as a threat to their standard of living, rather than an opportunity to improve it.
When it comes to investment, we often hear about the bad but not the good. The nature of news means the factory closing gets more coverage than the one opening.
You have heard about the Ford plant closing, but not the $1 billion Boeing has invested in Australia that is creating opportunities for engineering and machining companies to diversify and win new markets in the international aerospace market.
This is the case for Lovitt Technologies, a supplier to Boeing, one of the finalists for the investment awards.
Mr Speaker, Australia has had an enviable 25 years of economic growth, but this does not mean people have been unaffected by the challenges posed by disruptive technologies and global competition.
I know people are concerned about whether we can overcome these challenges.
Whether working hard will be sufficient to hold on to their jobs and standards of living.
Whether our children will have the same opportunities to build good lives.
Whether our economic success story can continue.
Productive foreign investment, the investment this government promotes, is one of our best ways of confidently meeting those challenges.
Mr Speaker, investment from outside of Australia has been critical to the development of our world-leading export industries.
Our mining boom would not have happened without foreign investment to develop the infrastructure, expertise and supply chains around the world we needed to make us the global resources powerhouse we are today.
For example, companies like Mitsui, whose long term investments and joint ventures in Australia employ an estimated 20,000 Australians, were instrumental in the development of the Pilbara's iron ore and the Bowen Basin's coal.
Mr Speaker, with Australia's transition to a new economy, opportunities in renewable energy are driving significant investments, particularly in hydro, wind and solar.
Companies like Neoen (France), RATCH (Thailand), and Goldwind (China) are helping Australia reach its clean energy targets.
Investment award nominee Neoen out of France has close to A$1 billion investment planned to date, including projects in South Australia,Western Australia and New South Wales. Neoen sees ongoing opportunities in Australia across all states and is ready to commit another A$1 billion in renewable energy projects by 2020.
And, Australia is poised to become the world's largest exporter of LNG, when major projects come online. Projects like US company Chevron's Gorgon and Wheatstone developments in WA, and Japanese company Inpex's Ichthys project in Darwin.
These investments support the growth of small and medium size businesses like Total Marine Technology in Bibra Lake, Western Australia, whose CEO Paul Colley says:
"We weren't sure our credentials were established enough to supply… to a project as large as Gorgon. Chevron listened to us and TMT was awarded one of the most significant contracts in our history. In addition to doubling our number of employees, we've grown internationally with offices in Brazil and Malaysia."
We understand that in today's global world it is important for small Australian businesses, the engine room of our economy, to be part of the global economy.
Global value chains – where many countries are involved in producing a final good or service – now support 75 per cent of the world's trade and investment activity.
Boeing's investment in Australia is a great example of foreign investment creating jobs, driving innovation and supporting access to global value chains at the same time.
In Melbourne alone, Boeing has created jobs for around 1,200 Australians who make control surfaces and flaps for Boeing aircraft at Fisherman's Bend.
Working with the CSIRO – and ten local universities, Boeing's R&D investment in Australia has also helped us to become world leaders in developing new aviation products.
And Boeing's global supply chain has supported Australian companies win global supply contracts. In 2015 alone, more than 1,000 Australian companies were suppliers in Boeing's global supply chain. That year, Boeing spent approximately $400 million on its Australian suppliers. Companies like Lovitt Technologies that have worked with Boeing for over 20 years.
Bruce Ramsay, Lovitt's Manufacturing Director says:
"Working with Boeing has given Lovitt the opportunity to grow from an automotive tooling supplier into a globally competitive aerospace component manufacturer."
Let me be perfectly clear Mr Speaker, this is investment that enables Australian businesses to connect with multinational companies.
It is investment that brings enduring jobs in Australia.
Let's not forget Mr Speaker - Australia does not just receive investment from overseas, we have significant investment abroad.
Mr Speaker, we want an open and transparent global playing field for trade and investment. And Australia is helping to drive those objectives regionally and globally - in the G20 (developing guiding principles for investment policymakers) and in the FTAs we negotiate (including provisions to support Australian firms' ability to deliver goods and services overseas).
Promoting global openness matters for Australian companies. More than two thirds of the goods and services supplied by Australia to the European Union, New Zealand and the United States are by Australian firms on the ground in these countries, using Australian skills and expertise.
For example, when I was in London recently I rode the iconic red London buses, operated by Australia's very own Transit Systems which runs part of the bus network in London and also in Singapore.
Mr Speaker, the Foreign Investment Review Board (FIRB) monitors foreign investment to ensure it is not against our national interest.
It is important to note that just because we accept foreign investment we don't lose the ability to set the rules that all companies (domestic and foreign-owned) must comply with. All companies are subject to our legislation and regulations, be it our taxation laws, our environmental and safety standards and our labour market requirements. We are not losing control of these things by accepting foreign investment.
In terms of critical infrastructure, we know risks must be managed carefully, and we will have more to say on this shortly. In those rare cases where substantial problems are identified, the Government won't hesitate to take appropriate action to safeguard our national interests. This is why the Treasurer rejected the proposed acquisition of Ausgrid.
But outright rejections are rare; we continue to welcome foreign investment in critical infrastructure. For example, I was pleased to see a consortium comprising Australian and international investors participate in the Port of Melbourne lease.
Investment in agricultural land is also a touchstone issue in Australia.
This is why we have tightened the FIRB screening thresholds for agricultural land and agribusiness and established an agricultural land ownership register to help provide some facts around levels of foreign ownership.
It turns out that foreign investors held only 13.6 per cent of Australian agricultural land (as at 30 June 2016), and the biggest investors in agricultural land are the United Kingdom and the United States. China comes in fifth, holding only 0.4 per cent of Australia's agricultural land.
But we need investment to build on the great potential of our agricultural and food sector and to maximise its capacity to take advantage of the growth opportunities in our region.
ANZ has estimated we need additional investment of A$1 trillion if we are to double our agricultural exports by 2050.
We can look to examples of where there has been controversy and reflect on the results.
At 96,000 hectares, about the size of Iceland, Cubbie Station is one of Queensland's most significant agricultural land holdings.
Less than five years ago, Chinese textile firm Shandong Ruyi lifted Cubbie out of five years of voluntary administration with an investment of A$240 million.
Today, it's hard to find a bad word about Cubbie or its foreign owner in Dirranbandi.
Despite all the initial concerns, Cubbie's operations have stayed local. It is the lifeblood of farmers and local businesses. It is reported that more locals than ever are working on the crops, which will be worth more than $85 million when they ripen next April.
It's not just those on the farm that benefit. Local businesses that might otherwise have suffered are benefiting from what is now a viable business at Cubbie.
In the words of John Travers, Manager of the local agricultural machinery and truck dealership, Vanderfield:
"Any concerns around the acquisition were quickly allayed because changes in the operations were unnoticeable. They remained loyal to their contractors and suppliers and recognised that we are part of the supply chain."
Mr Speaker, foreign investment delivers not just jobs for those directly employed, but also practical, tangible benefits for many other Australians through the goods & services produced. The benefits of foreign investment can come in all sorts of ways.
For instance, the entry of German discount supermarket Aldi has not only increased competition in Australia's supermarket sector. With plans to sell groceries and wine online to China in the first half of 2017, to be followed by establishing stores there, its regional expansion is building Australian jobs and exports.
State and Territory governments are also harnessing foreign investment. With assistance from foreign money and capability, they are creating tens of thousands of jobs across the country, while building the infrastructure we need to cut travel times and get us to and from home faster.
Projects like the Sydney Metro Northwest will cut travel time from 90 to 35 minutes and reduce car trips by 14 million a year. It will be delivered with investment from Hong Kong company MTR.
It means new jobs now and broader benefits for decades to come.
And let's not forget our tourism sector, which directly accounts for one in every 20 Australian jobs. It is of particular importance to the regions, where 45 cents in every tourism dollar is spent.
In my constituency alone, tourism directly employed 30,400 people, with another 20,000 indirect jobs, and contributed A$4.9 billion to the Gold Coast economy in 2013-14.
But major investment in tourism is needed if we are to sustain this and fully benefit from the higher demand predicted to flow from the growth of Asia's middle class, from 600 million to three billion by 2030.
Our hotels, resorts and tourist attractions need upgrading with new investment. Resorts like the Sheraton Mirage Port Douglas Resort which was relaunced in August this year following an extensive $43million refurbishment of the resort's 294 guest rooms and public spaces by Chinese company Fullshare Industrial Holding Group.
Here again, foreign investment is helping to make Australia globally competitive, continuing a pattern of successive waves of foreign investment.
We saw significant Japanese investment in Queensland hotels and resorts in the 1980s. Many of these assets eventually ended up in local hands. Sources of capital may change but the resulting infrastructure endures.
Today we welcome investment in tourism from new sources. TFE hotels, established in 2013, is a joint venture between Australia's Toga Group, and Singapore's Far East Hospitality Holdings.
Operating 70 hotels nationally, with brands like Medina, Travelodge and Vibe, its presence sprawls across Australia opening doors to tourism in northern cities such as Darwin and Rockhampton.
Mr Speaker, we are a proud and capable country. We have world leading ideas, technology, and skills. We are embracing the challenges the global economy presents.
Investment is a crucial element in our strategy to retain and create new jobs and economic opportunities.
To safeguard what we have now and what we want for the future, and to project our capability into the world.
Mr Speaker, the right investment will support substantial and enduring jobs, sustain our businesses and local communities, build on our strengths and potential.
That is why as Minister for Trade, Tourism and Investment I will continue to welcome foreign investment here at home, and be at the forefront of efforts to maintain openness abroad.