Last Friday our Prime Minister announced a range of new incentives to encourage more investment in screen production in Australia, to get more film attractions, more series developed and produced here in Australia. We hope and trust that much of that may come through partnership with the United States.
I do want to assure you today as I speak to you on screen, in a rather static format, that the entertainment value we hope to produce through those screen incentives is going to be far more dynamic than what I can offer you in my presentation today.
I apologise that I can’t be there in person and that unfortunately the ongoing state travel restrictions have put in place impediments that make it a little too difficult. But I am thrilled to able to join you all virtually to mark the continuing importance of this long-standing Australia-US relationship.
I start by thanking Ambassador Culvahouse. AB, I know how much the launch of this report means to you today. I well remember our first public engagement together, in regional Western Australia, the sod turning on Albemarle’s facility to process lithium within that state. At that event, in our personal conversations and in your public remarks you highlighted that the one thing you wanted to elevate public understanding of, in regards to the Australia-US relationship, was the investment ties – the importance, the strength and the criticality of those investment ties.
I know today means a lot to you and is timed importantly just as you leave to join our annual AUSMIN discussions, bringing together our foreign and defence ministry establishments to enhance the strategic cooperation between Australia and the United States. But in holding this event today you underline the richness and the depth of that relationship that extends so far beyond the government-to-government ties that are often at the forefront of AUSMIN discussions and publicity but of course the commercial ties, the business to business and ultimately the people-to-people ties that comes from the richness of our engagement, particularly our investment flows.
I also recognise AmCham Chairman Dr Brendan Nelson AO, my former colleague, for his work now leading an organisation, together with April, that does so much to recognise and promote the special economic relationship that Australia has with the United States.
We are at a key juncture in global affairs, as we work together through a period of profound transition and this terrible pandemic.
Today I’m pleased to offer a ray of sunshine amongst much of the gloom, as we launch this important Deloitte report on the US-Australia relationship, a report that does a great job of putting the significance of our economic relationship into its proper context, and recognising just how important it is at this very crucial time.
It is right that we do this now, not just in the midst of a pandemic and great strategic challenges, but also that we do it recognising the 15th anniversary and the many beneficial impacts that have flowed from the signing of the Australia-US Free Trade Agreement just 15 years’ ago.
[Bilateral economic relationship]
The United States remains at the heart of the global economy, even – indeed especially – during the COVID downturn.
As we have long been, Australia is not only an important economic partner for the US – we’re a force for progress in the global economy in our own right – a positive, can-do, self-reliant nation, well-versed in making our own luck.
This report usefully highlights our respective and complementary strengths.
Deloitte’s analysis concludes American economic activity here in Australia is worth at least $131 billion – or as this report puts it, the equivalent of about 7 per cent of Australia’s GDP.
And that is on top of the enormous value Australian consumers and businesses clearly derive from many US products and technologies, services here in Australia every single day.
Now, as we celebrate fifteen years of our bilateral free trade agreement, it’s worth reiterating how this economic architecture has underpinned the growth in our relationship and helps underpin an Australian way of life that is very much the envy of the world, especially at this time of global health and economic challenge.
Since 2005, two-way trade has increased by 98 per cent to $81 billion in 2019.
There is, as we all know, much discussion about investment – particularly investment from certain quarters, but the United States stands clear as Australia’s #1 source of foreign investment. Indeed, over that 15 year relationship two-way investment has grown by more than 180 per cent.
Unfortunately, the significance of the US contribution to Australia’s economic success is often lost on many commentators.
Our links are so intrinsic, so part of the furniture, if you like, that it’s easy to sometimes forget their importance:
- More than 320,000 Australians employed by majority-owned US companies here, but also that Australian companies employ an estimated 180,000 people in the United States;
- Highlights the $1.2 billion in US R&D expenditure spent here, and the role of the US as our largest research collaborator;
- Ordinarily over 1.3 million Australian tourists visit the United States each year, with around 800,000 Americans returning the favour. This is a number that when conditions allow and flights resume, I’m determined to make sure that we grow to match, if not outnumber, the number of Australians heading to the US.
As the report notes, trade is simply easier to track, and quantify, particularly when it comes to goods – an area in which we have excelled for so many years.
But trade in services has grown too. In 2019, for example, the US was our largest services trading partner, with our exports increasing at an average 8.4 per cent per year over the last five years.
This includes diverse, high-value activity like business and IT services, finance and intellectual property.
While we intuitively understand the dynamism that US business nous, skills, and access to new and trusted technologies brings to Australia’s economy, quantifying those benefits of investment is harder.
The report takes an innovative approach to try to square that circle.
At nearly $1 trillion, the United States overtook the United Kingdom a decade ago as our largest source of inwards investment and includes such iconic companies as Boeing, Chevron, Apple, JPMorgan and Amazon to name but a few.
This is no small matter for Australia – we are a country with a strong and highly resilient economy, but one based on a relatively small domestic market.
We’ve long needed more investment than our domestic savings could support – that’s why US investment has been so critical and remains so.
That said, the attraction between our two economies is not one-sided.
US companies see the benefits of investing here, which is why they invest 40 per cent more in Australia than they do in China’s much larger economy – and more than they do in other major Indo-Pacific economies, too.
Investment is a different kind of commercial relationship to trade. It’s more than just a series of transactions – it’s an enduring vote of confidence.
It’s a long-term commitment to partner for mutual gain by sharing business nous, technology, and talent.
Australians return the favour with the US the #1 destination for Australian companies’ overseas investment. At the end of 2019 Australian investment in the US was $837 billion including such iconic names as CSL, Sonic, James Hardie, Computershare, Bluescope, Visy, Macquarie Bank and many others.
The persistently high levels of two-way investment in this relationship speak volumes about how closely our people and businesses work together – and the mutual trust we share.
Such strong ties are a valuable bedrock for new areas of cooperation.
Prime Minister Morrison and President Trump have agreed, for example, to hold a senior high-level dialogue on US-Australia collaboration in frontier technologies such as artificial intelligence, biotech, and energy.
During his visit to the US last year, the Prime Minister announced a $150 million program for Australian researchers and businesses to directly support NASA’s Artemis program, which aims to return people to the Moon by 2024.
Having established Australia’s Space Agency, right here in my home city of Adelaide, we’re dedicated to scaling it up, proposing to triple the size of our local industry by 2030, and so creating up to 20,000 new jobs.
As the pandemic has highlighted, our economic future is increasingly reliant on digital connections, just as we are doing right now. There is an important role for Governments in strengthening these economic linkages.
There’s also great opportunities for us to cooperate further on shared economic and security interests when it comes to shoring-up crucial supply chains.
On critical minerals, for instance, both sides are committed to strengthening supply chains for these key enabling resources – essential for the global industries of the future.
[Resilience in the time of COVID-19]
The exceptionally broad and deep economic relationship we share has also been a great asset in these unusually trying times … a ballast, a source of stability and strength.
Australian property giant Lendlease, for example, was very active in the early phase of the pandemic in New York, carrying out emergency works on seven New York hospitals, dramatically expanding intensive care capacity.
Likewise, ResMed, a joint listed US-Australian company, has been a strong supporter in producing life-saving ventilators for the US, Australia and other nations – its access to critical inputs secured in part by the US Defense Production Act.
Australian and American companies have stepped-up when we’ve most needed them – forging new ties to adapt supply chains to meet demands on our respective health systems.
South Australia’s Detmold, for example, has worked with American company Berry Global as it manufactures over 145 million facemasks in Australia.
Similarly, US company Stryker has partnered with four Australian businesses to produce hospital beds designed for patients with respiratory illnesses.
All these instances point to a commercial relationship that’s not just good for innovation, but a crucial national asset for both our countries.
Whether it’s the Battle of the Coral Sea, the Apollo missions, or fires raging across our great landmasses, Australians and Americans have shared many of each other’s greatest triumphs and been the first to lend a hand in our darkest hours.
Now, we must stare down the greatest health and economic challenge the world has faced in the last century.
The world needs America to play a leading role in power our economic recovery. The dynamism and capacity for innovation of the U.S. economy is enduring, as is Australia’s ongoing ability to make a contribution more befitting the scale of our land mass than the size of our population.
As an independently minded but reliable partner and ally, we proudly punch well above our weight contributing to the Indo-Pacific’s security and prosperity and making an impact wherever we can across the globe.
Our two countries’ contemporary relationship encompasses many shared fields of endeavour; defence and security cooperation, extensive trade and investment links creating jobs for Australians and Americans, cultural exchanges, sporting rivalry, education participation, research and development, and tourism.
We may be marking 15 years of our Free Trade Agreement and we may have recently celebrated 100 years of mateship but this is a relationship that should still have its best days ahead – here’s to the next 15 years, 100 years and many more beyond.