Melbourne
*Check against delivery
Introduction
Good evening ladies and gentlemen and thank you for the invitation to address you tonight.
Let me start by saying a few words about Australia’s relationship with Japan, in the context of my own portfolio and then I will be very happy to take your questions.
I am sure that all of you here this evening agree that Australia would not enjoy the level of economic prosperity we do today were it not for our close ties to Japan.
Japan has been Australia’s closest and most consistent trading partner for decades.
For half a century now, Japanese investment in Australia has been driving our economic development across a range of sectors, not least in resources, energy and tourism but also in manufacturing and agriculture.
In fact Japan is our third largest investor, with investment growing by $15 billion last year to reach $117.6 billion.
It was Japanese investment and long-term supply contracts that helped establish Australia as a major global supplier of iron ore, coal and liquefied natural gas (LNG).
And this continues today.
In 2010 two-way trade with Japan was worth $66 billion.
Resources and energy accounted for around 88 per cent of total Australian exports to Japan in the 2009/10 financial year.
Japan is our largest energy export market and second largest mineral export market.
The golden age of gas
Looking ahead, we are entering what the International Energy Agency has termed the golden age of gas, and Australia is well-placed to benefit from this change.
In a few short years Australia will become the second largest LNG exporter in the world.
And it is Japanese investment and long-term supply contracts that are helping to propel us to into this position.
On Monday of this week I attended the Final Investment Decision on the $29 billion Wheatstone LNG project, led by Chevron.
Japan is a key customer in both this and Chevron’s other major LNG project, Gorgon – and of course this is in addition to being a foundation customer in the North West Shelf, Darwin LNG and Pluto projects.
The sanctioning of the Wheatstone project brings total committed capital in LNG projects under construction in Australia to more than $140 billion.
When you consider that this extraordinary level of expenditure has been announced since 2007, indeed over half of it in the last twelve months alone, you start to get an idea not only of the size but the pace of growth that is underway.
And of course it is Japan’s INPEX, who alongside Total, may drive this figure higher still should they decide to proceed with the Ichthys project in Darwin.
This is a project that has the potential to revolutionise the economy of the Northern Territory.
For anyone who has travelled to Darwin recently, you would know that the excitement around this project is palpable.
The opportunities it offers, especially for our Indigenous communities, are particularly exciting.
And the goodwill toward the project is testament to the excellent engagement with government, business and the community that INPEX has pursued in planning this project, to its very great credit.
Energy security together
The value we place on our relationship with Japan was again demonstrated by the visit of the Prime Minister in April this year - the first visit to Japan from a foreign leader following the March 11 earthquake and tsunami - and in the assistance we were able to provide in the wake of these terrible events.
I have had the opportunity to visit Japan twice in recent months and this has given me a keen appreciation of the scale of the task Japan faces in rebuilding.
Electricity supply is, as we know, central among these.
With 38 of Japan’s 54 nuclear reactors offline, and five coal-fired power stations damaged in the disaster, Japan is facing potential shortfalls over the short term.
Part of addressing this will be by maximising the capacity utilisation of gas, coal and oil-fired power generation and imports of these commodities are already increasing.
Australia is very sensitive to these difficulties and to Japan’s energy security needs.
As our resources and energy production capacity increases in coming years particularly in gas, coal and iron ore, Australia will be well-placed to meet increased demand from Japan.
After all Japan is already our largest export market for coal, having held this position for over 20 years.
But our collaboration and capacity for mutual assistance goes beyond this.
Over the medium to longer term Japan has to work through difficult questions about its future energy mix.
In the context of a potential return to more emissions intensive energy sources, the work Australia and Japan are undertaking in partnership on a range of clean and renewable energy technologies is particularly important.
For example, earlier this month I had the pleasure of officially opening the Global Carbon Capture and Storage Institute’s office in Tokyo.
This is the first time the Institute will have a physical presence in Asia and siting the office in Tokyo recognises Japan’s leading role in this field.
In renewables we see Mitsubishi Heavy Industries, one of the world’s most prominent solar energy organisations, partnering with the CSIRO on the Solar Research Tower Project in Newcastle.
These are but two examples of the many joint projects we are undertaking, and I hope that we will see many more to come.
The importance of tourism
There is a lot of talk at the moment about the Asian Century – about the growth in demand that is fuelling the resources boom which has been underway and indeed gathering pace in Australia for some time now.
The important - and increasing - contribution resources and energy makes to Australia’s economic prosperity is becoming well known.
It’s a story very much worth telling and one that - as I am sure you can appreciate - I am very much committed to.
But in telling this story we should never lose sight of the important contribution other sectors also make to our economy, especially tourism, and that’s why I would like to conclude tonight with some remarks on this subject.
In the context of Australia-Japan relations, tourism is vitally important, for economic reasons but also for the close cultural ties it has helped foster.
Looking back at the history of visitor arrivals from Japan into Australia we saw a period of sustained growth from the early eighties, peaking in the mid-nineties, followed by a period of steady decline.
However, last year the market started a return to growth and Japan was Australia’s fifth largest inbound market in terms of both arrivals and value.
The Government is very much focused on trying to ensure we maintain the beginnings of this upward trend.
Clearly tourism was one of the many sectors impacted by the earthquake and tsunami with declines in both inbound and outbound travellers.
Tourism Australia (TA) has since resumed its marketing activities in Japan and its strategy is two-fold.
On the one hand TA is seeking to build effective marketing partnerships and on the other to pursue aviation development aimed at increasing capacity to meet demand.
The announcement last month that Jetstar will partner with JAL to operate a new low cost airline based in Japan is a positive development on this front, in terms of helping to grow two way tourism trade, but more work remains to be done.
Conclusion
Now is a time of great opportunity, in resources, in energy and in tourism.
From the Government’s perspective we know that we can not afford to sit idly by – rather we must work to make the most of this time in partnership with business.
That’s why we are absolutely focussed on addressing pressures around labour by investing in the skilling and training Australians, by introducing enterprise migration agreements and by looking to increase the mobility of our workforce.
We are pursuing reforms that will be to the long term benefit of our nation, by reforming resource taxation and seeking to drive change in how we use and generate electricity.
Our Minerals Resource Rent Tax (MRRT) gets the balance right between capturing and spreading the benefits of the mining boom without undermining Australia’s attractiveness as an investment destination.
The continued pipeline of investment is testament to this.
And as you are very much aware, one of the most critical factors when it comes to investment is certainty.
That is what the Government is providing with the carbon price legislation currently before the parliament.
The investment required in our electricity sector is significant at around $240 billion.
Securing finance to meet this requirement is a challenge.
I note that Japanese banks are lenders in this sector in Australia and will therefore have an interest in seeing this issue of carbon pricing resolved.
And with the highest accommodation occupancy rates in the OECD the opportunities for investment very much extend to tourism product.
In conclusion, let me again restate how important and how highly valued Australia’s relationship with Japan is.
Looking ahead I believe it is clear that this relationship that will become even stronger.
Thank you.