Beijing
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Introduction
Thank you for the invitation to address the China-Australia Chamber of Commerce, and thank you for the important work you do in promoting trade between our two countries.
My three portfolios – resources, energy and tourism – account for a large slice of Australia’s trade with China.
Australia’s resources and tourism exports collectively earn Australia $198 billion a year.
Together, Australia’s mining and tourism industries make up 14 per cent of our GDP.
Mining and tourism directly employ 700,000 Australians and 100,000’s more indirectly.
Australia is the world's largest exporter of iron ore and coal, and in years ahead will rank as the second-largest exporter of LNG.
These are fine achievements for a nation with a smaller population than Shanghai.
Tourism
Let me begin with the opportunities for tourism.
More and more Chinese people are enjoying the Australian tourism experience for themselves.
Australia was one of the first western countries approved under the Approved Destination Status scheme, and close-to half a million Chinese visitors came to Australia last year – up by 25 per cent on the year before.
China has surpassed the UK as Australia’s most valuable tourism market.
This market is worth more than $3 billion a year and we expect that figure to double by the end of the decade.
China Southern recently doubled its daily direct flights to Melbourne, with more to Perth and Brisbane too.
We estimate seat capacity between China and Australia will rise four-fold by 2020, to more than 2.4 million seats.
This growth, of course, should be setting the scene for new investment in Australia.
I welcome Chinese investment in Australian tourism infrastructure – especially new hotels and in regional areas.
Historically in Australia, investment growth in tourism has lagged investment growth in the rest of the economy.
As a result, occupancy rates at Australian hotels are very high by international standards.
With so many more Chinese visitors on the horizon – including business travellers – there is a strong case for Chinese investment in the Australian tourism industry.
Resources and energy
The backbone of the trading relationship between Australia and China is resources and energy.
And China’s growth in consumption is behind much of the huge growth we are seeing in Australia’s resources sector.
Australia’s total resources and energy export earnings are forecast to reach a record $215 billion next year.
That’s a 21 per cent increase on this year, and reflects strong increases for most commodities including coal, iron ore, oil and gas, base metals and gold.
At the last count, we had 94 projects at an advanced stage of development.
Between them, they had a record capital expenditure of $173 billion.
And that was a 31 per cent increase in just six months.
Foreign investment
Australia welcomes foreign investment.
It’s no exaggeration to say our economic prosperity was historically, and continues to be, built on foreign investment, especially in resources.
Open and transparent frameworks guide our decisions.
And, like every nation, so does the national-interest test.
There has been some misleading reporting in the Australian media suggesting that a shift is under way in Australia’s process and criteria in assessing foreign-investment proposals.
There has been no such shift.
And given the positive impact on jobs – especially in regional areas – Australia has no incentive, and no intention – to close the door on more potential investors.
The Australian Government continues to review proposals on a case-by-case basis – regardless of origin – to ensure they are consistent with Australia’s national interest.
Our foreign investment numbers are impressive – approved investment from China reached $16 billion in 2010.
Three-quarters of that was in the mineral resources sector, making China our third-largest investor.
Between 2007 and last year, we approved more than 3,500 Chinese investment proposals worth $50 billion.
Six involved conditions; none were rejected.
Tax changes
Let me take this opportunity to clearly explain the Government's Minerals Resource Rent Tax.
The MRRT legislation was introduced into our Parliament last week, and the tax will take effect from 1 July 2012.
The development of this tax involved extensive engagement and consultation with industry and followed the Government's announcement in July last year of the broad detail of the tax.
We have seen 42 positive investment announcements since the Government announced the broad principles of the MRRT.
Clearly this shows industry remains prepared to invest in Australia.
Of those projects, nearly half will be subject to a resources rent tax.
Revenue from the MRRT will allow billions of dollars to be invested back into the mining industry in the form of new infrastructure.
The Regional Infrastructure Fund includes $5.6 billion to support important investment.
This investment will expand our export capacity, with better railways, roads and ports.
Likewise, the Government is also currently legislating the introduction of a carbon price through the Parliament.
This will take effect from 1 July 2012.
In terms of emissions intensive trade exposed sectors such as LNG, the Government has provided assistance to help maintain Australia's international competitiveness.
The Government has also provided $1.26 billion to assist fugitive emissions associated with Australia's gaseous coal mines.
I recognise that investors have a keen interest in these developments.
Since the release of the detailed carbon pricing package on 10 July 2011 we have seen continued investment in our resources and energy sector.
Since this announcement, I note that Peabody have spent $4.9 billion acquiring Macarthur Coal and there is significant interest in developing the Galilee Basin.
I was also pleased to attend the Final Investment Decision announcement of Chevron's $29 billion Wheatstone LNG project in Perth six weeks ago.
Precompetitive data
One of Australia’s major strengths is our success in exploration.
Despite all the activity we are seeing, Australia remains underexplored.
And so, through Geoscience Australia, we provide an enormous amount of precompetitive geoscientific data at minimal cost to resource and energy companies.
It’s fair to say we lead the world in this field.
GA data can help companies by lowering technical risk, assisting commercial returns, or both.
Mining technology services
Australia’s world-leading expertise also extends to mining services.
They are an important part of the equation that makes the Australian resources sector as efficient as it is.
However China remains a relatively small market for Australian mining technology services.
In fact, both India and Indonesia account for larger shares of Australia’s export market in this area than China.
In the most recent figures available, fewer than one-in-ten Australian mining technology services companies had offices in China.
So China is a market with significant potential for Australian mining services companies.
By entering China, Australian companies can make a positive contribution to the development of mining projects here in China.
Safety, efficiency and environmental management in Chinese mines can all benefit from our expertise.
Conclusion
In closing, the stage is set for an even stronger trading relationship between Australia and China.
Whether in resources, energy or tourism, opportunities to invest are opening up on a scale that’s unprecedented.
We should all endeavour to grab these opportunities for our mutual benefit.
Thank you