Closing Keynote Address: Boao Forum for Asia
31 July 2015
Four Seasons Hotel, Sydney
Thank you very much, Ross [Greenwood Financial Analyst and Journalist, Nine Network].
Good afternoon, everyone.
First, I want to thank His Excellency, Mr Zhou Wenzhong, the Secretary-General of the Boao Forum for Asia, for his work and closing remarks.
It has been a great pleasure to join you today at this important Forum, and I am only sorry I was not able to be here throughout the two days.
The Forum has brought together men and women with an impressive depth and breadth of experience in business, economic management and national leadership.
You heard from our Prime Minister yesterday—and two of the Forum's participants have also served as Prime Minister of their country.
So you are very well informed to tackle major issues—and showcase new ideas.
You have engaged with many of the strategic issues that nations in the Asia-Pacific region must deal with.
Issues of how we best manage risk, fund economic growth and finance infrastructure are often complex and difficult.
But they define the terrain over which nations, and international partnerships, have to navigate to advance economic growth and prosperity.
Charting a successful course depends on being open to better ideas from many quarters about promoting and managing growth.
The British scientist and writer Arthur C Clarke said that good new ideas transition through three stages:
- first, it can't be done;
- secondly, it is probably not worthwhile doing; and
- finally, ‘I knew it was a good idea all along’.
So the task is to narrow the gap between the first and last stages—and that is why international forums of this calibre are critical.
The ideas you have canvassed are directly relevant to the Australian Government's own efforts to strengthen Australian economic growth.
In a globalised world, economic development is no longer purely a national issue—in fact, it never was.
So I would like to spend a few minutes on some of the national and international dynamics that are shaping Australia's economic efforts.
Unlocking Australia's potential
Since the 1980s, Australia has generally enjoyed strong economic growth and rising living standards, and has not experienced recession since 1991.
This performance has been driven by a growing population and major economic reforms in the 1980s and 1990s.
These helped to create a more efficient and innovative economic environment.
They have also shaped Australia's economic outlook that is now much more focused on the world—as the export drive of our businesses and the trade liberalisation efforts of successive Australian Governments have shown.
Australia has great natural and human strengths—but, like any country, our continued economic growth and prosperity can never be taken for granted.
Every five years, the Australian Government's Inter-generational Reports assess the long-term sustainability of current policies.
The Reports consider how changes to Australia's population size and age profile may impact on economic growth, our workforce and public finances over the next 40 years.
The 2015 Report emphasises that the ageing of Australia's population will place a premium on Australians working smarter and more efficiently—producing more, with less.
This will involve a national effort to increase workforce participation among all demographic groups, including women, older Australians, and our young people.
It will also require continuing reforms to improve the competitiveness of Australia's businesses, and encourage entrepreneurship and innovation.
And it will require being alert to the opportunities presented by new technologies and new demands from our national and international markets.
Towards a stronger Australia
The Australian Government is focused on comprehensive responses to these challenges.
We have put in place a five-pillar plan to build on our economic strengths, and focused on agriculture, manufacturing, smart technology, education and mining.
This plan recognises the fundamental importance of an effective infrastructure base for economic growth. And this base is essential for Australia's full engagement in the Asia-Pacific region—in the economic and every other dimension.
The Australian Government has made an historic $57 billion investment in transport infrastructure including road, rail and port networks to ensure greater connectivity within Australia and with the world.
And we are advancing other infrastructure ventures beyond these commitments.
For instance, decisions about an airport for Western Sydney formed one of the intractable issues of Australian politics for over 50 years. It was a practical example of the scenario of Arthur C Clarke. Even after the site was acquired many said it couldn't be done—eventually it transitioned to we don't need it and is not worth doing.
Now, together with our partners in NSW, the Australian Government is working to make the Airport a reality, and last year we ended the indecision by locking in Badgerys Creek as the site.
Everyone now says they knew it was a good idea all along.
The Airport has the potential to generate $24.6 billion in direct expenditure by 2060, and contribute $23.9 billion in GDP to the national economy.
We expect the Airport to be operational by the mid-2020s.
It will cater for both domestic and international flights, and strengthen Sydney's international economic and tourism connections.
The Western Sydney Airport's benefits underline the need to make the right infrastructure choices.
Infrastructure projects are expensive, and their long life means they must be as ‘future-proof’ as possible.
The Australian Government appreciates this need, and the need to reform how we select and finance infrastructure.
Your panel session before lunch addressed infrastructure funding issues, with particular reference to the NSW experience with public-private models.
While views on how we should best finance infrastructure differ across the board, the emergence of the public-private model reflects a common finding—that government funding alone is not enough to meet future infrastructure needs.
Since we came to office in September 2013, the Australian Government has vigorously pursued alternative sources of funding for major infrastructure projects that encourage private sector investment, including foreign investment.
Our efforts include providing incentives to the State and Territory governments to recycle mature assets into new green-fields infrastructure—and these incentives have already been taken up by New South Wales and the Australian Capital Territory and we expect to do business with most other states.
Nowhere is the role that infrastructure plays in contributing to Australia's economic growth and productivity more obvious and more significant than in agriculture—and this sector has growing importance for Australia's international connections.
Agriculture contributes 12 per cent of Australia's GDP, or about $155 billion a year.
Australian agriculture feeds 60 million people around the world every year—and this number could be doubled.
Transport costs comprise a major share of post farm-gate costs, so it is imperative to have efficient transport infrastructure that connect Australia's farmers with their national and international markets.
For instance, our premier freight rail infrastructure project, the 1,700 km Melbourne to Brisbane Inland Rail will go a long way to servicing our future freight task, which we expect to double by 2030.
Some are still saying it can't be done or we don't need it.
The Inland Rail project will better connect regional communities with capital cities, and producers with export markets, producing lower transport costs and lower prices for consumers.
I will receive the business case and delivery plan for the Inland Rail soon, and I am determined to make it happen.
The development of Australia's north
Australian agriculture has been focused towards the world for most of its history.
And today, Australia is uniquely placed as a food supplier to Asia.
By 2050, the Asia-Pacific region will account for almost half the world's economic output and more than half of the world's population—and this opens up considerable opportunities in Australia's North.
The North is Australia's gateway to the Asia Pacific, with 55 per cent of Australian exports shipped from northern ports in 2012–13.
By 2040, northern Australia will account for nearly 42 per cent of the value of the Australian economy.
The region has successfully leveraged its natural advantages in the mining and energy industries; its farms already produce more than one tenth of Australia's farm output; and it has world renowned tourist facilities. It also has increasingly significant educational, scientific and medical institutions.
Developing northern Australia is a key priority for the Australian Government because it will benefit the whole nation through economic growth and jobs.
And this focus will benefit much of the rest of the world by supplying the products and services it wants and needs.
The release of our Northern Australia White Paper last month is a 20-year blueprint to boost northern Australia's development and investment.
The White Paper focuses on transport infrastructure, developing water resources, establishing secure and tradable land rights, attracting more investment and reducing red tape to encourage business.
I would like to make some observations about the very short-sighted campaign that some of the militant unions are leading against the China-Australia Free Trade Agreement.
The key claims being made about the threats that this remarkable agreement poses to Australian jobs and to our skills assessment processes in regard to visa applicants, are baseless. Our 457 Visa class enables skilled workers to come to Australia when there is no Australian available to do the work.
If a Chinese company applies to bring skilled workers into Australia to work on a major infrastructure project (under the Infrastructure Facilitation Arrangement that sits alongside the China FTA), they will have to demonstrate that they had been unsuccessful in their attempt to recruit skilled Australian workers first.
Visa applicants will also need to demonstrate to the Department of Immigration that they possess the requisite skills and qualifications to work safely in Australia. They will also need any required state or territory licences before commencing work.
There is an enormous amount at stake here, particularly for our agriculture and resources sectors.
Any delay to bringing the agreement into force will cost industries like beef and meat, dairy, wine and resources several hundred million dollars per year in lingering tariff payments.
MLA for example has calculated that failure to secure the China FTA in 2015 will cost the red meat industry alone $100 million in 2016.
In this respect I would call on the more sensible heads within the Opposition to put the national interest ahead of the narrow self-interest of the militant unions and provide bipartisan support to get this agreement—which Labor had an early hand in negotiating—implemented as soon as possible.
I note that respected Labor people such as Simon Crean, John Brumby and Martin Ferguson have called for the same.
I wonder what Gough Whitlam, Mick Young and Tom Burns would make of modern Labor's resistance? Gough's cable to Premier Zhou Enlai, in April 1971, requested that he accept a delegation on the basis of discussing “the terms on which your government is interested in having diplomatic and trade relations.”
Writing for the Sunday Australian immediately after the visit, Whitlam said that its success “all depends on whether Australia is mature enough, and self-confident enough, to face squarely the facts of life in our region…”
We have a proud tradition of bipartisan support in this country for freer trade and it would be a most disturbing development for there to be a breakdown over an agreement with Australia's biggest trading partner—an agreement that will add billions of dollars to the Australian economy, create thousands of jobs and enhance our living standards.
There is also a natural fit between our emphasis on developing Northern Australia and the priority we have placed on international trade liberalisation.
It is a staggering statistic, but Australia in one year has signed Free Trade Agreements with three countries—China, Japan and the Republic of Korea—that account for just over 80 per cent of Asia's GDP.
These Agreements are hugely significant to us and to all our partners, and produce very substantial benefits for importers, exporters, consumers and investors on both sides.
From Australia's side, they demonstrate in the clearest possible way our engagement in the Asia-Pacific—the fastest growing region in the world.
They complement the economic reforms that Australia has sustained since the 1980s—indeed, without these reforms, the Free Trade Agreements could not have been achieved.
The Agreements have involved some difficult adjustments for Australia, especially in manufacturing, but they are in Australia's national interest—and in the interests of our partners.
Independent economic modelling shows that the North Asia Agreements are worth $24.4 billion in additional income for Australia over the next 20 years.
The Agreements are also projected to create almost 15,000 new jobs by 2020 through increased Australian exports and cheaper imports.
And the benefits of these Free Trade Agreements are, of course, mutual.
Our partners gain access to a stable and secure market that has a very strong appetite for their products—and their investment.
We welcome foreign investment into Australia. Foreign investment has helped build our economy and continues to support our economic growth and prosperity. And we are pleased by our growing investment relationships within the region.
Naturally, we will want to be assured that investments are not contrary to our national interest and we have ensured that more land and asset purchases are scrutinized.
Our North Asia agreements increase the prospects for even greater investment flows between Australia and North Asia.
Of course, the progress we have made to date in modernising our international trading relationships does not constitute the end of the journey, not by any means.
The Australian and Indian Prime Ministers have agreed that the top bilateral priority for our two nations is to complete negotiations for a Free Trade Agreement before the end of this year.
And we are progressing economic partnership agreements with Burma, Indonesia and Malaysia. We have also achieved significant progress in the Trans-Pacific Partnership negotiations with Pacific Rim countries.
Together, these efforts demonstrate Australia's abiding interests in and commitment to Asia—and at this juncture in world history, Australians consider themselves fortunate to be a part of the region.
To sum up, Australia—and the Asia-Pacific region generally—have a strong future in store. But to fully reap the benefits of this potential requires knowledge, planning and astute decision-making.
It also requires strong international relationships and the willingness to invest in our common futures.
I think this Forum has made a worthy contribution to meeting these needs.
Australia has a deep commitment to work constructively with governments, business, industry and policy leaders, such as yourselves, to make the best choices for our common benefit.
Thank you again for the opportunity to join you today.