Address to Australia Solomon Islands Business Forum

Brisbane

Speech, check against delivery

22 October 2010

Prime Minister Philip, distinguished guests, on behalf of the Australian Government, I welcome you to the second Australia Solomon Islands Business Forum.

My colleagues Craig Emerson, the Minister for Trade, and Richard Marles, the Parliamentary Secretary for Pacific Island Affairs, send their warm regards and best wishes for a successful Forum.

Last year's inaugural Australia Solomon Islands Business Forum was a valuable meeting of business minds from around the region. We anticipate the same quality of exchange today about a broad range of export and investment opportunities.

This type of forum provides an important opportunity to discuss how we can work together to bring about stronger trade and investment ties in the Pacific. This dialogue over the economic future of the region is important in helping to drive job creation and innovation.

Your attendance today confirms my belief that businesses from both Australia and the Solomon Islands recognise the potential of stronger trade relations and greater economic integration in the Pacific.

Australia and Solomon Islands are linked historically, culturally, politically and economically. The Gillard Government considers the Solomon Islands to be an important partner for Australia.

Australia is firmly committed to efforts to build a more prosperous and secure economy in the Solomon Islands, including through the expansion of our trade and investment relationship.

We believe strongly that economic development will help to drive stability and growth.

Unlocking the gains from trade is a source of new growth, job creation and a higher standard of living.

Trade between the Solomon Islands and Australia is small but growing. Last year two-way trade totalled A$85 million, representing about A$80 million in exports from Australia and A$5million in imports from the Solomon Islands.

Australian companies are commercially active in areas such as banking, insurance and mining. Other companies, such as Virgin Blue and ABC International, have also established networks there.

Importantly, mining and mining services are showing great promise as areas where Australia can make a major contribution to the Solomon Islands' economy.

For example, Allied Gold is set to reopen the old Gold Ridge Mine next year, which has been closed since 2000. Allied Gold is being assisted by a Perth-based company, GR Engineering Services, one of several Australian firms helping with the project. Moreover, other Australian mining companies are actively exploring prospects for gold and nickel mining in the Solomons.

As economies begin to emerge from the deepest global downturn since the Great Depression it is important that we lock in the benefits of trade because trade is the best way to lock in economic recovery.

In recent weeks, my colleague Richard Marles, the Parliamentary Secretary for Pacific Island Affairs, travelled to the Solomon Islands. His visit was not only an opportunity for discussions on bilateral and regional priorities, it also provided an opportunity for the newly re-elected Gillard Government to reaffirm its commitment to a strong relationship with the Solomon Islands with the opening of the new Tamboko Health Clinic destroyed during last year's floods.

Health is a major priority under the Partnership for Development between our two nations. The Partnership is assisting the Solomon Islands to take advantage of new growth opportunities by improving service delivery, infrastructure, and the management of fiscal challenges. In fact, the Partnership is a good example of the capacity-building aid in which Australia is investing in the region to support sustained development.

These measures support the drivers of sustainable growth because development assistance alone is no substitute for the long-term growth that can be generated through trade and investment.

Australia's contribution to the Regional Assistance Mission to the Solomon Islands (RAMSI) is indicative of the importance we place on building the institutions to support not only a peaceful and prosperous Solomon Islands, but one with the right conditions for economic growth.

The mission has provided an enabling environment for renewed investment, and continues to work with the Solomon Islands Government to improve commercial opportunities and modernise business regulations.

RAMSI is now firmly focused on capacity building as the mission begins to prepare for its eventual departure. This will be taken forward under the Partnership Framework agreed between the Solomon Islands and RAMSI in 2009.

While there is no 'exit date', RAMSI was never intended to be a permanent mission, and it will draw down in the coming years as the Solomon Islands' capacity grows.

We recognise that RAMSI's presence is an important factor in business confidence however, in the long-term, only Solomon Islands itself can provide a stable and secure foundation for broad-based economic growth.

The Australian Government believes that the more Pacific Island nations are integrated into the global trading system and the freer the flow of goods, services and investments around the region, the better the opportunity for genuine long-term economic growth.

Australia has had a long-term commitment to promoting greater trade and economic integration in the Pacific region, dating back almost thirty years to the South Pacific Regional Trade and Economic Cooperation Agreement, or SPARTECA.

SPARTECA allows Pacific Island nations to export their goods to Australia and New Zealand duty free and quota free.

It opened up markets but also provided an important lesson – in itself; easier market access does not mean greater trade capacity.

Trade and investment do not just occur in a vacuum, which is why social and economic capacity-building is important for the success of liberalisation and why, in the last financial year, Australia provided approximately A$150M in aid for trade in the Pacific.

Nations need help in building their capacity to export, a point recognised in August last year, at the 40th meeting of the Pacific Island Forum leaders in Cairns. At that meeting, the decision was made to begin negotiations for a new regional trade and economic agreement –better known to all of us as PACER Plus.

We understand that the Pacific Islands are at different stages of economic development and that each country has its own priorities and its own challenges. In this regard, PACER Plus will be designed to take these differences into account and to reflect the individual circumstances of each country.

Since the Cairns meeting, Trade Ministers from the participating countries have met twice to advance the negotiations. Agreement has been reached on priority issues to be negotiated such as rules of origin, trade facilitation, development assistance, infrastructure and regional labour mobility.

Australia's primary objective in backing PACER Plus is to promote the economic development of Forum Island Countries. We view PACER Plus as an excellent longterm chance to help countries become more competitive and productive. The 'Plus' in PACER Plus indicates a strong commitment to work on practical capacity-building measures which make this a 'trade-plus' agreement. This means the elimination of regional trade barriers, improved efficiencies, and a significant increase in volumes of trade.

To back our commitment to PACER Plus Australia has committed more than A$5.8M to support the participation of Forum Island Countries in their on-going negotiations.

This will support specialist training for Forum Island officials, independent research on trade priorities and the creation of a new Office of the Chief Trade Adviser.

The success of the agreement will also depend on the input of the business community. Trade negotiators need to be aware of your concerns and your knowledge of the region's business environment, and I encourage you to make contact with the appropriate officials.

Australia looks forward to continuing to work with the Solomon Islands, in its key role as one of the lead countries in negotiations, to secure an agreement that provides real, long-lasting benefits for the region.

While the Solomon Islands has weathered the global recession and is expected to post an increase in growth this year, it continues to be a challenging place in which to do business; it faces high unemployment, and declines are forecast for the logging sector.

But the Solomon Islands Government, in partnership with RAMSI and other donors, is working to address these challenges and to create a more business friendly environment.

There have been some recent wins. The introduction of competition in the Solomon Islands' telecommunications sector, including the recent launch of a second network, has lowered costs and improved services for businesses.

The new Companies Act has simplified reporting requirements, and the time needed to complete business registration has been cut from around four months to a matter of days. The reforms to state-owned enterprises, and in the transport sector, are improving infrastructure which is so essential for commerce.

The Australian Government looks forward to continuing to work with the Solomon Islands Government to build a strong foundation for economic growth and sustainable development in the Pacific.

Through innovative trade agreements like PACER Plus, and through our bilateral aid program and RAMSI, we strongly believe that Pacific Island nations like the Solomon Islands can create a more efficient way of trading and investing - one that will deliver more jobs, wealth and the benefits of social and political stability.

The PACER Plus negotiations offer future generations of the Solomon Islanders a great opportunity to build a wealthier and more stable Pacific trading and investment community.

I welcome the Australia Pacific Islands Business Council's ongoing support for PACER Plus.

The commitment of the Solomon Islands Government to promoting economic growth through the expansion of trade and investment is demonstrated by Prime Minister Philip's attendance at today's Forum. In this light, I'd like to recognise the important role of the Australian Solomon Islands Business Forum in promoting stronger trade and investment ties between our two nations and the broader Pacific region.

I congratulate the Council for organising today's forum and I wish each of you every success in your future business endeavours.

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