2020 Annual Investment Statement
11 December 2020
Acknowledgements
Well thank you very much Frances for those kind words of introduction.
I may have driven the Department and the Agencies during my time in this portfolio – hopefully not driven you too crazy in that time.
Can I thank you for all that you and all the DFAT team have done.
To Tim, thank you for hosting today’s event, for chairing today’s event and for your leadership during this extraordinary year where we have asked of DFAT, of Austrade, of Export Finance Australia and of Tourism Australia in particular, very different things, changes in tempo, changes in what we’ve expected of delivery.
Whether it is, for DFAT, the relentless ongoing task of consular assistance for Australians throughout the world or for Austrade the very hands on practical task of facilitating air freight movement in and out of the country.
These are activities that the agencies are there for, but never anticipated doing to the scale and the degree of intervention that has been necessitated this year.
And, on behalf of all Members of the Government, we are extraordinarily grateful for all that you have done in that regard.
Can I welcome the many Heads of Mission who are here today, thank you very much to the members of the diplomatic corps for joining us and for your support for all aspects, particularly in our trade and investment relationship’s, in which we always emphasise the two way nature and the important part there of us working in such a complimentary way
To our international business chambers, the other leaders of business and industry, the many distinguished guest’s of course, and some of our award recipients who we will turn to shortly.
Thank you all for joining us, thank you for anybody who has tuned in to the streaming as well.
We are all part of the great endeavour of keeping business and markets open – so I very much appreciate you coming today, and all that everyone does in that regard, especially in this extraordinary year.
As has been reflected upon, perhaps a little too much already this may be one of my last official engagements as the Minister for Trade, Tourism and Investment. But let me give you all the assurance, that Minister’s may change portfolio’s, but they accumulate interests.
And I can assure you, that as the Finance Minister my interest of course spreads across almost the entirety of the Government, but there will be a particular interest that I maintain in the trade, tourism and investment space. I look forward to continuing to work with all in that regard.
The sharp change in economic circumstances
A little over a year ago, I spoke to an international investor dinner in Sydney, I think some of our European friends who are here today attended that event.
It was an event with a theme not too dissimilar to this one in terms of the focus on the opportunities of investment.
I boldly began my remarks with a question: “how long can a good run last?”
I was of course speaking, at a rather unprecedented time in Australian economic history.
At that point, September last year, we were enjoying a rather unbelievable 28 years of consecutive economic growth.
It was a record for any major developed economy.
Nearly three decades without an Australian recession, even through the Global Financial Crisis, the Asian Financial Crisis, and many other disruptions.
I boasted that it was a record that any sporting team in the world, from Manchester United to the Boston Celtics to the All Blacks to Australia’s Hockeyroos, or certainly my struggling Adelaide Crows … any of them would have envied.
28 years.
Well we got the answer to that question, a little sooner and much more spectacularly than I would have hoped.
From September last year, it was, of course, only three months before the first reports began surfacing about a novel coronavirus.
And we all know what happened after that.
As the virus spread, governments around the world did what they had to do to try and shut it down.
And the toll on national economies and the global economy and world trade came hot on the heels of the virus – unprecedented and devastating economic impacts like nothing the world had seen since the 1930s.
Like many economies around the world, our national performance has been dragged down by the twin elements of this crisis – the health and the economic disruptions.
But Australia has weathered the crisis both in a health and economic sense better than just about all developed nations.
In a health sense the mere fact that we are here, gathered, in this room, COVID safe, but also COVID free, able to do so in such close proximity so freely in the daily moving about of our lives is a testament very much to the successful management here in Australia.
Economically we entered the crisis with a balanced budget, strong employment and a trade surplus.
From this base and with an effective response we experienced a smaller fall in GDP than every other advanced economy over the first half of 2020.
And that means we are positioned to come out of the crisis and go into a steady recovery over a sustained period of time.
What Australia has done to make our economy and society resilient
Today I am here to speak about investment, and the first question we need to address, any investor needs to address is “Why Australia”.
I want to make the point that while the pandemic has affected us, like it has affected all nations, our fundamental economic health remains robust.
To continue with the sporting analogy a little, it’s still worth backing team Australia because our run of success wasn’t broken by any another player or newly successful team, but rather by an external shock that has affected the growth of every economy on Earth.
Our economic success over the proceeding three decades wasn’t just luck.
Despite all of the politicking the media may focus on from time to time, from a long term perspective Australia is, simply, very well-governed across our Federation.
A smart place that develops and implements good policy, across different governments, on the widest range of issues.
Australia has shown that we can succeed when the conditions get tough, get very tough, as well as when things are going well.
If you look at the measures that matter to people’s lives at this point in time, there’s something about Australia’s performance that should still commands global attention.
I say this without any disrespect to what other societies have gone through, because we know these have been terribly challenging times all around the world.
But as a senior member of our Government, frankly as an Australian citizen, all Australians should be proud of how successful Australia has been in tackling and responding to this pandemic.
There is more to our success this year than just our physical geographic location or a controlled coastline.
Our measures have been innovative, and unprecedented
With hundreds of thousands of people losing their jobs or at risk of doing so we made the hard and right decisions early.
That includes the health and economic side, encompassing all of the various measures the Government has had to take to protect Australians and to make our economy more resilient in the face of this shock.
Yes on the health side, Prime Minster Morrison closed our borders.
But the Government also took the tough decisions to spend very heavily to support Australian business and Australians at large through this crisis.
But we did so against clearly defined principles from the outset – that such interventions would be temporary, be targeted and would be proportionate to the circumstances.
In doing so our focus was on saving the jobs of Australians, but also critically maintaining the business and economic productivity of the nation.
We knew from the outset that we could no more afford to see massive job losses than we could see massive business failures and that in fact, the structural impacts of massive business failures would have a far longer-lasting impact upon jobs and employment than anything else, we were see that to occur.
Our economic team, led by the Treasurer and my predecessor, as Finance Minister, Mathias Cormann – now a candidate for OECD Secretary-General – together with the rest of the team in Government and of course the Prime Minister, designed and brought in the economic support package that would keep businesses and families afloat.
Importantly, we had the fiscal firepower that allowed us to introduce JobKeeper and JobSeeker supplement… as expensive as they were. And to provide support to businesses and to respond further to the recovery in this year’s Budget by incentivising investment.
The challenges of course have been immense, but our sound policy structures played a key role in seeing us through.
We have the right national settings to support growth and stability on a whole range of fronts.
We have a strong, and healthy democracy, with a vibrant media, where people who peddle untruths or unsound policies are quickly discredited.
We have leaders who listen to science and evidence.
We have strong national institutions, often with genuine independence from government, which stand up for their statutory duties and core missions and do so with integrity.
We are an open economy that has long thrived on competition, innovation and being prepared to ‘give it a go’.
But at the same time as being open and a free-wheeling market economy, we have robust regulatory mechanisms and institutions – financial cops who police government and market alike.
We have leaders across our Federation from different political parties and persuasions willing to unite, to talk, to compromise, and to work to deliver a nationally united position on key aspects of our pandemic response … we called this ‘National Cabinet’. I’ve been very optimistic about National Cabinet’s unity and compromise and ability today because of course they are meeting just up the road.
We stood this up in real time, a new approach to our Federation and cooperation – knowing it would be a tough, contested space where policy arguments would occur, but recognising that we needed all arms of executive government across the Federation working together. By and large they have.
We boosted a range of other health and mental health supports for Australians, too, under our world-class public health system.
Now, in December, we are seeing the benefits of our sustained effort, with a recent Reserve Bank of Australia report confirming that Jobkeeper alone saved at least 700,000 jobs.
This support still has a long way to run and our endeavours to restore employment and opportunity remain, as we pivot in accordance with those initial principles of support being temporary, targeted and proportionate which means the nature of that support obviously changes over time. But already, as the ABS confirmed last week, that Australia has come out of our first recession in nearly 30 years.
Even though there’s no longer in our 28 year streak of growth and that that has come to an end, you can see Australia is still in a position of strength, primed for the journey of economic recovery and with most of our domestic economy back at work.
Trade policy supports Australia’s economic proposition
Another key plank of or economic resilience is trade, and here the Government is continuing to forge closer economic relations with other countries through an active agenda on free trade agreements.
Agreements with Hong Kong, Peru and Indonesia all entered into force just this year.
PACER Plus, the regional agreement between Australia, New Zealand and several Pacific Island economies, will enter into force this Sunday 13 December – an opportunity indeed to make sure we continue our crucial role of supporting the recovery of our Pacific islands family and friends.
The Government is also busy negotiating new free trade agreements, building on those that entered into force this year and the many others we have delivered in recent years, with the UK, with the European Union, with the Latin American countries of the Pacific Alliance.
Following signature of the Regional Comprehensive Economic Partnership on 15 November, we are now working toward ratification, while also exploring a Comprehensive Economic Cooperation Agreement with our friends in India.
High-quality free trade agreements like these help attract investment, because they provide more open trade and investment arrangements, as well as certainty and transparency, for businesses.
They, like many global institutions are not always perfect but they do provide clear steps forwards and new opportunities. They also support, in terms of the range of our agreements I mentioned, our market diversification strategy and will be a key part of our economic recovery from COVID.
You can see why I, all of us, should be bullish about Australia’s future.
Foreign Investment Matters
At the heart of why we are here today and indeed as we go into 2021 we send the message that Australia will continue to welcome foreign investment as we reshape Australia’s economy in the rebound from COVID.
Foreign investment is critical to the success of any economy, it brings capital, innovation, technology, skills and know-how.
Such investment has always given our economy depth and resilience, it has stimulated growth, and it has added to our prosperity enabling jobs, services and opportunities for Australians – and it will do so 2021 and beyond too.
Capital from overseas has helped Australia, with our relatively small population, to capture tremendous opportunities across our large continent and to enjoy a share of global economic activity disproportionate to our population.
It is our economic performance as a country that makes us the 13th largest economy in the world, that gives Australia a seat at the G20 and that helps to makes us, an influential global middle power.
Australia is better placed to compete in an integrated global economy because foreign investment provides for much needed infrastructure and enhances Australia’s skills base.
Some of Australia’s most important industries are underpinned by foreign investment, led by our traditional investment partners like the United States and Europe.
For years now, the United States has been the strongest direct investor in Australia’s economy – total US FDI stock in Australia in 2019 was $205 billion.[1]
The United Kingdom, too, unsurprisingly has historically been a major investor, in 2019 was our second largest investor with $127 billion in FDI stock.
Japan continues to be our largest investor from Asia and is our third largest source of direct investment, providing $116 billion of FDI as at December 2019.
The countries of the European Union, too, are major investors in Australia – taken together, the EU – without the UK – is our 4th largest source of foreign direct investment in terms of stock – at $111 billion in 2019.
FDI from these countries has been fundamental to the growth of our mining, manufacturing and financial sectors, along with many others on which our economy relies.
Companies are voting with their feet
Companies have long recognised Australia’s educated and creative workforce, our proximity to Asia, our focus on innovation and R&D, and our robust economy.
Despite the crisis, companies are continuing to vote with their feet.
Of the 2,419 foreign investment applications that the Foreign Investment Review Board received to October this year, 1,450 would have been received even without the temporary $0 threshold that was put in place in response to COVID – this is more than the 1,280 applications received in the equivalent period last year.
Despite the pandemic, investors showed that they are attracted by the opportunity and stability Australia offers – in a whole range of business areas.
French utility Neoen is pressing ahead with bold investments here, especially in the renewable energies space, working with Austrade since 2013 on a strategy to enter the Australian market.
In April, Neoen confirmed plans to build the world’s largest battery near Geelong in Victoria.
Likewise, United Arab Emirates resources company Masdar, also known as Abu Dhabi Future Energy Company, is building a $511 million greenfield resource recovery facility in Western Australia, expected to be operational by the end of 2022.
Over the last decade as well as this year we have seen strong investment from China in areas as diverse as minerals, LNG and agriculture through to food processing, major infrastructure and tourism.
We are keen to see and welcome more of this.
Japan’s Marubeni and Hong Kong’s MTR Corporation have invested millions of dollars in the Sydney Metro City & Southwest PPP project – Australia’s largest public transport project.
Vancouver-based Asterion is developing the world’s largest medicinal cannabis facility on the outskirts of Toowoomba – an investment that could lead to an annual $2 billion export business.
In January 2020, Novartis announced a commercial agreement with Cell Therapies to manufacture Novartis’ cancer treatment Kymriah.
And in April, Hong Kong’s CVX Semiconductor launched its engineering and research capability in Adelaide.
Wipro, one of India’s leading technology companies, opened a new Cyber Research Development Centre in Melbourne in December of 2019.
There are many more such examples and importantly I could give similar examples of outbound FDI of Australian companies making investments in many other countries around the world.
Our national reforms to strengthen foreign investment
Australians support foreign direct investment because they know it is good for Australia.
In all, foreign direct investment supports approximately 1.2 million, or 1 in 10 jobs in Australia.
These companies contribute one quarter of total Australian business output, they paid wages and salaries to workers in Australia valued at some $82 billion, and they contribute 14 per cent of Australia’s total tax revenue from business.
Equally, Australians expect investment in Australia to be on our terms, on our rules and in our interests.
That has always been the strong position of our Government, as it is of governments right across the world.
Australia welcomes foreign investment for the significant benefits it provides but also ensures that investments are not contrary to the national interest. To do otherwise would be to undermine the social licence that welcomes, allows and facilitates foreign investment.
To remain competitive, we’ve been strengthening our foreign investment regime to protect national security while also making it easier for business to invest here through a new package of measures and reforms.
A more timely, consistent, reliable and predictable investor experience must ensure that we continue to realise the benefits of foreign investment in Australia while maintaining community support and confidence.
I am pleased to speak here today following the passage in the Parliament this week of our full suite of foreign investment reforms which will come into effect on 1 January, and I trust provide those positive outcomes and experiences for potential investors.
Australia has a disciplined policy
As well, Australia has a disciplined policy framework for investment.
This year I set eight national priority areas to guide our investment attraction and focus, from resources and energy to advanced manufacturing, digital technologies, agrifood, health, infrastructure – including in tourism – and the circular economy.
Austrade has a dedicated investment focus, and a network of 111 offices worldwide, working hand-in-hand, elbow-to-elbow or otherwise with our DFAT team to help turn aspiration in those crucial sectors into reality.
Austrade continues to engage with investors around Australia’s long-term positive fundamentals – our high per capita income, our sustainable economic growth, our open policy settings, our strong institutions and of course our highly-skilled educated workforce and peoples.
Despite COVID and the disruption it has caused globally, in the 2020 financial year Austrade managed to facilitate, in addition to the many trade responsibilities they carry, 117 inward investment projects, facilitated with Austrade’s cooperation with an investment value of $4.7 billion that creates or retain more than 8,000 jobs.
In September, the Prime Minister announced a new Global Business and Talent Attraction Taskforce, to work along Austrade with a Taskforce whose goal is to identify and attract exceptional talent and high-value businesses to Australia.
This will be a key part of our national recovery, and support the Government’s own programs for job creation.
The Prime Minister has charged Special Envoy Peter Verwer AO with running the taskforce across government and Peter thank you for being here today. Thank you very much.
The Taskforce will target apex enterprises and exceptionally talented professionals from business, culture and science – people with entrepreneurial energy and drive to innovate and succeed.
It’s establishment is a very practical demonstration of our ongoing support and desire for the best possible talent and our willingness to use our visa, migration and other settings to help make sure that we attract it.
Conclusion
Friends and colleagues, this pandemic has changed much in the global economy, and its broader impacts across our societies will take years to unfold.
But one thing has not changed.
As we look to come out of this global downturn, every economy around the world – developed economy and developing economies alike – is going to need major investment.
Australia has shown our strengths through this crisis.
We are a cohesive, co-operative, well-run country.
We are a resilient, skilled and adaptable nation.
We are open and ready to welcome productive foreign direct investment.
Our business fundamentals are as strong as any economy in the world and we’re ready for 2021.
We are already on the comeback of economic recovery, we look forward to the years ahead and we look forward to the partnerships with all of you to ensure they are successful for all of our different stakeholders across all of our different nations.
Thank you, very much once again for your support in being here today.
[1] Based on ABS catalogue 5352.0 (‘International Investment Position, Australia: Supplementary Statistics’)