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Your Excellency Professor Marie Bashir, Premier O’Farrell, distinguished guests, ladies and gentlemen.
It’s a pleasure to be in Sydney, the heart of Australia’s vibrant Chinese community where almost half of our nation’s Chinese-Australians call home.
This city has an important sister city relationship with Guangzhou, as equally New South Wales has with its sister state Guandong Province.
These relationships represent just two of the many important cultural and economic links between China and Australia, established during our forty years of diplomatic ties.
Ties that continue to generate significant prosperity for both countries.
There is no doubting the significance of China to Australia's economy, particularly in the growing resource and energy sector.
In 2009, China surpassed Japan to become Australia's largest export market.
The strength of our relationship continues to increase our combined economic wealth, complement our energy security and foster new employment opportunities and improve our technological innovation.
And new opportunities are emerging beyond the resources and energy sector, in areas such as tourism, financial services, education and agriculture.
If Australia is to capitalise on these opportunities – as we have done in the energy and resources sector – we must be open to foreign investment.
Over the past decade investment in the mining sector has lead to a tripling of direct jobs over the previous decade to a quarter of a million in 2011-12 and has contributed to real income growth in Australia of around 40 per cent.
Australia would not have captured the full extent of these benefits if it had not welcomed foreign investment, with 80 per cent of the Australia's resources sector funded from overseas.
The simple reality is Australia's capital markets are not large enough to fund these up-front capital-intensive investments on their own.
With our relatively small population and commensurate capital pool, Australia requires significant foreign investment to develop our vast energy resources.
Resources that not only meet our own needs, but that of growing global demand, to improve the lives of the world’s people.
It is this complementarily between the Chinese and Australian economies that defines our trade.
Australia's knowledge and skills in the sector and access to resources matched with China's increasing outbound investment.
And this ongoing partnership – with all the wealth and jobs it brings – should be encouraged.
This of course needs to be balanced against other national interests.
Seeking the right balance between foreign investment and other national interests is something with which both China and Australia are familiar.
In Australia the Foreign Investment Review Board advises government on these issues and to date has welcomed all investment by Chinese investors in the resources and energy sector.
It is clear that through closer ties, both Australia and China are learning how to do business together.
This is supported by the findings of KPMG and the University of Sydney in their report that is a focus of this forum, "Demystifying Chinese Investment" which finds that:
"Chinese State Owned Enterprises have shown strong commercial motivations, similar to those of multinational corporations... and increasingly are recognising the importance of having strong local Australian partners, employees and stakeholder relationships."
This partnership is good for both countries, providing local knowledge to projects and job opportunities for Australians.
However, attracting foreign investment does come with its challenges.
We need to maintain Australia as an attractive destination for foreign investment.
Capital is footloose and will go to the country that can offer a stable investment environment that is low risk, provides competitive production costs and stability of supply.
Simply having the resources is not enough.
Governments, industry and unions alike must recognise that the days of record high commodity prices are behind us.
The moderation of economic growth in China and concerns over the Euro zone debt crises have put downward pressure on commodity prices.
The price of iron ore and coal, are, roughly speaking, all about half what they were a year ago.
This has meant Australia’s terms of trade peaked in 2011.
If we are to make up this shortfall and maintain the income growth we have enjoyed over the past decade, improvements in our productivity must be made.
And there is room for improvement.
According to the Reserve Bank of Australia, Australia's productivity growth declined noticeably in the 2000s compared with the period of strong growth in the 1990s.
This is a big wake up call to all of us that nobody owes Australia a living and it is now time to roll up our sleeves and increase productivity, streamline our regulatory processes and lower production costs.
I say this in the context of – not so much the $270 billion pipeline of advanced projects – but the second tranche of $230 billion in less advanced projects that are not yet committed.
If these projects are to proceed, we need to make improvements to the way we do business.
Turning now to energy security.
We face a shared challenge to continue to satisfy our societies’ and the region's increasing energy demand.
This is especially true in China, with increasing urbanisation, industrialisation and population growth.
China’s economic growth has been remarkable, allowing its economy to double every decade.
This has seen China's urbanisation rate increase from 20 per cent of the population in the early 1980s to over 50 per cent in 2012.
This change in demographics is creating new opportunities for Australia, which I will discuss later.
This growth has lead to a massive increase in demand out of China for our minerals and energy exports, spurring a ten-fold increase in the mineral and energy exports from Australia to China over the last decade from $5 billion to around $50 billion in 2010–11.
The continued social and economic well-being of our citizens depends on reliable, safe and affordable energy supply.
Without sufficient energy, the kind of unprecedented growth that China is experiencing is unsustainable.
Open trade and investment through well-integrated markets provides the best chance of creating lasting energy security here and abroad.
That is the basis for the Energy White Paper, which in its draft, proposed four priority areas in which we can enhance national energy potential and security:
- Strengthening the resilience of our policy framework;
- Reinvigorating the market reform agenda;
- Developing critical resources, particularly gas; and
- Accelerating clean energy outcomes.
What the Energy White Paper seeks to do isprovide investors, consumers and planners with a clear direction and instil confidence in Australia’s energy future.
Investor confidence is essential, as the draft White Paper identified that Australia may need as much as $240 billion worth of new electricity and gas generation and network capacity by 2030.
However, the extent to which this investment is required will largely depend on demand for electricity – which has trended down since this forecast was made.
This comes on top of additional infrastructure needed to meet our liquid fuel requirements, with our growing mining sector increasing Australia's demand for liquid fuels.
The final Energy White Paper is due for release in October and will outline a strategic policy framework to meet these challenges through market-based solutions to ensure a secure, reliable, clean and competitively priced supply of energy to consumers, while building national wealth through the safe and sustainable exploitation of our energy resources.
Of course, in terms of policy development and discourse, the White Paper will not be the end of the road.
Input from stakeholders such as you will continue to be critical to the development of Australia's energy sector.
Policy development after all is not a 'set and forget' exercise, it requires a process of continuous improvement.
I trust that what you come up with during this forum will contribute to an ongoing dialogue about how Australia, and our major resources and energy partner, China, can continue to develop our complementary energy future.
While fossil fuels and uranium dominate out two-way trade in energy, Australia and China are increasingly collaborating on development of new cleaner sources of energy.
Investment from China will again play a key role in developing and driving down the prices of new technologies seeking to utilise these resources and create new renewable solutions.
Chinese firms have already had significant success in supporting Australia’s booming small scale-power solar photovoltaic market.
And we have seen a massive uptake, with Australia’s installed rooftop solar PV capacity increasing from just 23 megawatts in 2008 to over 1,500 megawatts in 2012.
There are also an increasing number of large-scale commercial collaborations with Chinese companies occurring in Australia’s wind energy market.
The $200 million Southern Cross Renewable Energy Fund will facilitate further investment in Australian renewables during the coming years.
This fund is an example of the joint commitment of the Australian Government and Chinese investors, Softbank China Venture Capital, working together to drive the development of emerging renewable technologies.
Australia also has strong and effective policies for clean energy development, backed by new institutions such as the Australian Renewable Energy Agency and Clean Energy Finance Corporation, and world-leading leading researchers and entrepreneurs.
I’m happy to report that China and Australia are also collaborating on ways of reducing emissions from established fossil fuel technologies.
We have for example established a $20 million Joint Coordination Group on Clean Coal Technology, which is creating a firmer commercial footing for low-emissions coal development.
Technological developments to reduce emissions associated with the burning of coal are vital to both countries, which rely heavily on its energy to power our economies reliably at a competitive cost.
For these reasons it is important the cooperation between our two countries in technology development continues.
While I have focused on energy and resources here today, I would also like to highlight the important contributions Chinese trade and investment make to Australia’s tourism industry.
China is currently our fastest growing and most lucrative overseas tourism market.
This is largely because of the changing demographics of a growing middle class in China I alluded to earlier.
Visitor numbers from the country increased 16.5 per cent in the 12 months to July, while the market’s value reached $3.5 billion for the twelve months ending March 2012 making it our biggest spending market.
The Australian Government wants to maximise the contributions China makes to our economy and is working with the states and territories and industry to ensure this.
Efforts that will contribute to this goal include the new $48.5 million Asian Marketing Fund, which supports promotion of Australia in growing Asian markets.
The fund is currently focused on accelerating Tourism Australia’s existing China 2020 Geographic Strategy, to target the country’s secondary cities, including the emerging centres of Qingdao, Chengdu and Chongqing.
The latest There’s Nothing Like Australia marketing campaign also launched in Shanghai in June this year and is performing well throughout China.
We are on target to have around 1 million Chinese visitors to Australia every year by 2020, including the large number of Chinese students developing cultural links between our nations.
This is an increasing opportunity for Australia, with China last year also becoming Australia's largest services export market due predominantly to our growing education-related travel services.
This has contributed to two-way trade between China and Australia of nearly $114 billion and two-way investment of about $36 billion in 2011.
And plenty more opportunities exist for Australia.
For example, Australian architectural, engineering and consulting firms now have a major presence in China.
And Australia’s agriculture industries also have huge potential to supply food and wine to the growing middle class of China.
The extent of this trade is why China is our number one trading partner.
With growing opportunities for both countries I am confident this trading partnership will continue for decades to come.
I would like to close by stressing the importance of fostering increased cooperation and collaboration in Australia and China’s future relationship.
Whether it is securing new trade and investment or simply sharing ideas, a close partnership will be critical to achieving goals such as energy security, developing clean energy technologies and new tourism opportunities.
This year we are celebrating 40 years of productively pursuing these aims.
I believe China and Australia’s increasing closeness will see even greater success achieved during the next 40.