Address to Austrade/Australia-Pacific Islands Business Council

  • Speech, check against delivery
18 February 2020

Good morning Craig, and thank you for that warm introduction. And I should say from the outset, I absolutely agree with you. I think the opportunities at forums like this and seminars that we put on and that you attend is in the relationships, and relationships are very important to us in the Government. And that's why the Solomon Islands Deputy Prime Minister and I led by example this morning. We've already had our first meeting on the side of this conference — hopefully that's the first one — leading the way to make sure that, really, you have this great opportunity here with the investors and the people in this room, the people who've done business over many years, the people who are here to look at what they can do in the Pacific to form those relationships, develop them and work ahead. And we've already had a great start and some great infrastructure projects and things that are important to both the Solomon Islands and Australia.

So I just want to say a few words this morning about the Government's agenda in the Pacific, and certainly recommend to you the things that we're doing as Australians, as a government to ensure that investment and the investment climate in the Pacific, in infrastructure in particular, is very strong.

I'd start by acknowledging of course the traditional custodians and their elders, past present and emerging, and of course, particularly welcome Deputy Prime Minister Manasseh from the Solomons. It's a real privilege to have you here. The relationship between Solomons and Australia is so strong and deep over so many years now. We always value the time that you spend with us and of course the interest that you show. But nothing more, I think, could reflect the depth of that relationship than every Australian in this room understanding that through the very difficult time that we've just had over January and December, where we've had fires, of course, devastating millions of hectares of our country, a billion animals killed, many, many people died, many properties lost. The Solomon Islands, led by Prime Minister Sogavare and the Deputy Prime Minister, of course, raised hundreds of thousands of dollars, Australian dollars, to donate to us and to our people when we've had our hour of need. And I just wanted to extend to you, Deputy Prime Minister, our deep appreciation for that fundraising effort, for the work that you've done. We're there to help each other in times of crisis, but you have been there for us in one of our most difficult hours and we deeply thank the Solomons and the people and the Government for the work that you've done for us. So thank you for everything that you've contributed to the bushfire relief effort, and we deeply appreciate it.

I think it underscores the familial relationship that we have in the Pacific between so many of our countries. We didn't ask for help, but so many Pacific Island countries saw the need that Australians had, and you've seen military contributions from many countries that have them here in Australia — we've got engineers from different Fijian regiments and Papua New Guinean regiments deployed into some of the most difficult parts of Australia right now helping us.

You've seen people with wheelbarrows walking down the streets of their villages taking up collections to help people who've lost everything here in Australia. And of course the governments across the Pacific have helped with their support and their aid in our time of need. And our Pacific family, really, we owe them a great thanks for the effort they've put in for us. And I know that it's being felt on the ground. They're perhaps the most popular people out there in these battle-scarred sort of environments that we have over our country at the moment. To hear Pacific Islander regiments singing, you know, bringing their love, bringing their faith, bringing their hope to communities. I know that they've been so well received and so well regarded, and they're doing a lot of hard work. So we thank all of them for us. A very challenging summer for Australia, but I think, again, underscoring the depth of the relationship between us and the Pacific is the bond that we have in times of strife.

And of course, we're there for the Pacific when they need it as well, and we've been lucky not to have a very difficult cyclone this year so far. Of course, the season continues, but we keep an eye on it constantly.

One of the few things I think that we all know being here today is the vital role that infrastructure will play in the Pacific's development and in the ongoing progress that we want to see from our partners in the Pacific. And I think when you look at what happened in the fires and the disasters that we've had over the break, infrastructure again goes from being something that people in Australia tend to ignore or overlook to being their primary concern, and perhaps the most difficult challenges that the Government is wrestling with in dealing with this is communications infrastructure that went down, basic road and transport infrastructure that was not functional. Other vital infrastructure, even if it's logistics and supply infrastructure for fuel which went under, I think then people here get a real sense of what the challenges might be when we're facing developing countries that need, of course, better and more infrastructure. And I think we've seen that very directly.

But of course, here with so many people who do business and have worked so long in the Pacific understand the investment climates and understand the realities of doing business and understand the need and understand how to, of course, invest and succeed — I think it's important to use all that experience and that effort that we have over many, many years to understand what we can now do given that we have a climate, a world climate, where all of our partner countries — major partner countries whether they be in the Pacific or surrounding the Pacific — are looking to invest more, they're speaking to us about more investments on a larger scale, especially in the infrastructure space. And we find that even in the last few weeks we've had significant meetings in Canberra, 5 plus 2, with major countries, those partner countries speak to us more often about large scale investments into more infrastructure into the Pacific.

And Australia has a vital role, of course, to help facilitate the flow of that investment whether it be government money, whether it be from banks or other institutions, multilateral banks or indeed as we've mentioned this morning, quite rightly, institutional money, which of course is looking for greater impact in their investment, greater investment into developing countries and certainly into climate related activities, which the Pacific has a lot of opportunity for.

So we consider, of course, climate change contributing to the difficulties that we see in the Pacific, more extreme weather events. More challenge enables, of course, opportunities for more climate resilient infrastructure. And that's what we mean when we talk about climate resilience and climate adaptation. How do we get more money investing in significant infrastructure projects that will assist our partner countries in the Pacific be more sustainable, be prepared, be more able to recover from climate exposed disasters. And we have seen this over many, many years in the track record that we have. Whether you think about the destruction of roads in Vanuatu following Cyclone Pam in 2015. Australia, obviously, was there to help as a major priority in rebuilding. 2018, of course, the electricity supply being restored to Tonga following cyclone Gita was another key component. So when you think about the money that we invest following disasters, and certainly in the Foreign Affairs budget, we have a huge reserve of money in the humanitarian budget ready to assist. It's only natural for Government and government partners to be thinking ahead of what infrastructure can we build ahead of time to ensure that we spend money more wisely, spend it upfront to ensure that infrastructure is more resilient and more adaptable and able to resist those disasters more. And if we're going to spend the money afterwards, which we have to to recover, I think we're in the situation now where more often more investors, more boardrooms, more people are looking at what investment can we make up front that will help in terms of better infrastructure that will help withstand many of those disasters I've mentioned.

I think when it comes to economic growth as well, and the Deputy Prime Minister made this point to me this morning, it's also the case that transformative infrastructure is probably the phrase that we hear more often, those things that will enable transformation of those economies and unlock the potential that we all know is there. Electricity supply, absolutely, is one of those things that we think of as transformative infrastructure. But so are the roads and the other critical mass of infrastructure within countries that we hear from our partners more and more often. And I think you know, we have responded in a real sense to that consistent call from Pacific countries with our infrastructure financing facility, the AIFFP, it's certainly a big bold new initiative that we have well underway that we think will make a difference in terms of scale and make a difference in terms of regularity of projects. But it does rely, in my opinion, on more private sector investment, co-investment, private-public partnerships, getting our partners involved. Our $2 billion that we put in place obviously isn't anything to near what we will need in terms of the infrastructure shortfall that we know exists across the Pacific. So this seminar and then your attendance at it, and seminars like it I think focused on those co-investment models and what we can do together in partnership where Government can de-risk and underwrite and offer concessional finance to projects which are of high quality, which do meet the standards that would require. Really, this is something that the Government will continue to be very interested in.

I think you know that the Infrastructure Financing Facility we have established since 2018 already has a pipeline of projects, a large pipeline of projects that they're considering. We've also put a climate window within it to not just talk about climate adaptation resilience projects, but to actually put an incentive in there to say: well, we do want to see those climate projects come through within our Investment Finance Facility. Often, the commentary will focus on the fact that it's geostrategic competition or that we want to just build the infrastructure to compete; that's not the case. We also want to make sure we're taking account of vital shortfalls in infrastructure that appear from our partner countries in projects, in energy, water, transport, telecommunications but also other priority infrastructure projects; climate adaptation needs. And I think we know in this room that the Australian businesses have that expertise, they have that depth of relationship over many, many years in delivering infrastructure projects. And I'm struck by when I meet with businesses regularly in Canberra who are looking to invest in Pacific infrastructure in partnership with the Government often, sometimes to start their first projects in the Pacific at this time. The real depth of experience that they bring in the infrastructure space and the problem solving experience that they bring, which I think stands them in good stead with many of the challenges that the Pacific faces.

So it is a pretty exciting time in this space, and I think our facility with a wide variety of projects and financing partnerships, will be as flexible as possible in its approach. And in my other hat in Foreign Affairs, I'm also assisting the Foreign Minister with the review of our development budget, which is of course our $4 billion annual budget, and now $1.4 billion of that goes into the Pacific. And the flexibility that we're seeing there, in the roundtables and consultations that we're having, again, strikes me that the environment is there for co-investment models in the Pacific. We had a roundtable the other day, I don't mind telling you with obviously the financial sector looking at institutional money that might want to get involved in investing in our development programs, looking at expanding and obviously delivering more social impact investing which is obviously a mature market in the United Kingdom but is new to Australia, but also would be valuable to look at how we can align large amounts of institutional money with the projects inside the Pacific with the outcomes and remembering that primarily, the concept of impact investing is about outcomes, how to align good projects with outcomes with the pools of money that are looking to get involved into it.

So there's a lot of work being done from the Government's perspective, there's a lot of interest. And I think that will continue to be the case. From our perspective, of course we want to back projects that meet the highest standards, and we know that Australian businesses are expert at high standards that will stand the test of time. I think of course we need to make sure that these are fairly constructed projects, that obviously there needs to be the right metrics around them, but they need to obviously deliver those outcomes and those impacts that we have put into place.

And I note Craig's point there about Export Finance Australia. I think it's also important to remember that from the Government's perspective, we are heavily delivering in terms of expanding export finance Australia's remit. There's an extra $1 billion in callable capital and new powers, as Craig mentioned, to finance overseas infrastructure projects, including in the Pacific, not just exclusive to the Pacific but obviously the Pacific is a prime focus of the Government.

So you can see the kinds of things we're doing with our new Infrastructure Financing Facility, more portable capital for export finance. We're relaxing the rules and looking at more flexible models of co-investment. And of course, the Government's continuing to directly invest in critical infrastructure. You will have all heard about our coral sea cable of course, which is completed, and of course now Honiara to Moresby. This is a 5500 kilometre undersea cable which the Government has invested in. That's a very significant investment. We'd like to see the economic potential of that. I know the Solomons Government and the PNG Government want the economic potential of that investment realised with further projects. And of course, we're looking forward to seeing those projects coming on. I think we all understand the transformative power for young countries in the Pacific with large youth populations of enhanced and better developed access to the Internet. And the business opportunities that can flow, the infrastructure opportunities that can flow from that model.

I think it would be remiss of me not to mention, being here with the Deputy Prime Minister, the partnership with the World Bank, of course, with the financing packaging of over $200 million for the Tina River Hydropower Project. Again, a high quality project Solomons put forward, in a well understood model of hydropower. And we were able then to develop, in consultation with the World Bank, a landmark public-private partnership. These are the kinds of projects, of course, we'd love to see more of and more development of, and the Government's appetite and the appetite of significant partners around the Pacific is high for these sorts of projects.

And I should take a moment to acknowledge, of course, the work at the Pacific Islands Investment Forum. I have a problem, Craig, with calling it PIIF. I know we get acronym'd down at these things, but — the Pacific Islands Forum, which is a premier regional forum. And you know, I often have a go at the Department of Foreign Affairs — we've got Ewen McDonald here, the Head of the Office of the Pacific — that come up with the worst and hardest to pronounce acronyms, like PII — you know, the Pacific Islands — the Pacific Investment …

Yeah, highlighting the challenge. Pacific Islands Investment Forum, the PIIF, and of course our Infrastructure Financing Facility of the Pacific. It's wonderful when you put these into speeches, all these acronyms but I hope people do understand. So we won't call it the PIIF, but I do want to acknowledge the Islands Investment Forum, for the work they've done in collaborating between provident and super funds.

As I mentioned, I'm pretty excited this morning. I've been meeting with some of those funds here. And yes, I think we also have to look at that issue of those funds within the Pacific, making a contribution to the Pacific, but also the funds that we know — with so much global money, not just Australia, but also around the world. There are so many funds that are looking to investing in impact investing. But that's pretty exciting to understand the collaboration between funds within the Pacific, and the super provident funds. And I think there are real opportunities there to bring that on.

Look, our focus on infrastructure through our Pacific Step-up is about making the region stronger, but it's also about unlocking private sector investment and opportunities. And this is a government that does understand — absolutely, in our DNA — in our approach to government that the most significant thing we can do is unlock and provide the investment environment for our businesses and our investment sectors to get involved in Pacific countries, and better engage with business in the Pacific. And that's, to us, a fundamental outcome of everything that we do, because we recognise the Government's got a limited budget. The Government's got constraints, and so do our partner governments. But the power of our markets, the power of our businesses, the power of the investment, the power of the volumes of money that we see in super and provident funds, and obviously in institutional funds around the world is there to be unlocked.

So you'll continue to see policies from the Government that do that. We have our private sector mobilisation fund; $150 million, a small fund, but a start on mobilising more businesses to get involved, and more capital-owned businesses to get involved in the Pacific, which I think you'd agree with me is a pretty important objective for a government to have, recognising the Government simply will not be able to meet the challenges that the Asian Development Bank, the World Bank tell us a number in the tens of billions in terms of challenges.

So to do that, of course, to generate that economic growth, we need to get the fundamentals right. We need to open the trade and investment settings, which we have as a higher priority through all of our partnership elevations. We've got our partnerships being lifted to comprehensive strategic partnerships in many countries, including PNG. And all of those discussions revolve around increased and enhanced trade and investment settings, better regulation, and modern infrastructure, and important topics that we see as vital in the Pacific — especially increased opportunities for women. It would be remiss of me not to say that is a high focus of our government's investment agenda, and we want to see women's economic empowerment continue, and the progress there, obviously, it unlocks even more economic opportunity throughout the region.

And of course, the flourishing private sector at both ends. That is, of course, in forums like these — related, connected and doing business together. So economic integration, I would say, is probably one of the top pillars of the Pacific Step-up. Certainly from our government's perspective it will continue to be. I think we'll continue to develop more policy to see that economic growth from a strong base of cooperation continue. And we know it's not just about the two big economies in the region; we have so many thousands of businesses doing business in PNG and in Fiji, and we welcome that, and we want to see a lot more of it.

But we recognise Solomons, we recognise Vanuatu, we recognise all of the different countries that make up this region also need those economic opportunities and that access to our market. And you might have seen, perhaps, some of the other side. Having been in government now for six years, having been in Parliament 12 years — a bit like Craig, having done a lot of time in politics, having worked in the Howard government, and been an advisor at a lot of levels and a lot of portfolios, three or four, there's not a lot of government projects that I'd point to as the most successful. But I have to say, the Pacific workers' programs that we've put in place as a government — whether it's the Seasonal Workers Programme or the Pacific Labour Scheme — to me are achieving profound and real change and success, as pillars of our economic policy. And this underscored an important development. It's not just the numbers, where you have thousands upon thousands in countries like Vanuatu who are returning remittances from Australia at Australian rate wages, not just to one place but to the entire country; it's spread across the entire country into regions, very hard in government policy terms to get money into regions. But it's also certain countries, I'd pick Tonga as an example, where the totality of the remittances from our worker schemes is now a greater amount than our development assistance to those countries. And that to me is the success of the policies we're putting in place. At the organic flow from the supply and demand problems we're having in Australia — so we have demand for labour, Pacific has a supply of labour. The standards are being met, the employment standards in Australia are being met, and the supply is being delivered to our farmers and our agricultural sectors and other important processing and manufacturing sectors. But importantly, the volumes of money returning to the Pacific organically in the hands of people, in the hands of villagers, in the hands of consumers, in the hands of those economies, is now getting to critical points where we're seeing wonderful outcomes in terms of increasing prosperity, and generating stronger economies in countries and in regions.

Now, the Government isn't going to rest on the numbers that we've already achieved. We want to see more. There is more demand for labour inside Australia and we'll certainly be taking measures to increase our opportunities through labour schemes and training and development. And you can imagine a high focus of the Government will be on capacity building, returning people with high quality skills, making sure they're able to work in their own fields back in their own countries. But with that goes generating the job opportunities. So we can give them the skills here, but obviously people will continue to keep coming here while there are those opportunities. So we need to make sure we're working on generating the relevant opportunities at the other end.

I would say under our new Pacific labour scheme as well that 800 Pacific workers are employed now in different sectors. And for a pretty new program, that's great success. So keep your eye on that space. I think you've seen great success in government policy. It's not common. I didn't want to say that about government but you know, government does a lot of things well and does a lot of things very badly. But this is an area of great success and we're very proud of this. On top of things like our new Colombo Plan with our 5500 scholarships in the Pacific, that really makes a big difference. The investment in training, the investment in skills — this is another area to keep in the back of your mind, in the background that we are continuing to make those investments to ensure that the skills and the employees are there for the business opportunities. And when you think about the Australia Pacific Training Coalition, and the 1200 Pacific students each year who go through that, that is a huge investment from the Australian Government and these are high standard facilities, high standard skills, that are delivered to people. And of course, they will need those jobs and other economic opportunities to back up the investment we're making in skills.

And so finally, I'd say before I conclude today, that obviously you and the private sector and the work that you're doing is obviously of critical significance to us as a government. We think we are putting in place the right settings and the right policies that can help you in what you're doing in your discussions here today. But obviously, we're open to hearing your ideas and hearing more about where we can make those critical decisions, those critical investments, to unlock your potential and the potential of your businesses and the businesses you represent. We think the infrastructure financing facility will be one of those things that does unlock critical infrastructure projects. I think you'll see that this year, as projects begin to be announced. And I'd remind you all — I guess, you already all know — but the tender process is open from the infrastructure financing facility. So, the projects are welcome. And there have been — people tell me about great projects they have been submitting. I think I'd encourage everyone here to continue to do that, and we're hoping that will be very successful so we can build on that success. I don't think that will be the end of the infrastructure financing facility. We're very aware about the capital needs and the shortfall that will probably come in a very short space of time in that facility. So, I'd encourage early engagement with the tender process that we've got.

Thank you to the Business Council and all of the long term people. I really want to thank you. The advice I've received as a minister from the day I started in this role and the ongoing relationship you have between governments and countries is so important to us. And I know the Deputy Prime Minister and myself, we do rely on you as business councils and chambers telling us what are the things we can do better to help with the business environment. So, we listen very carefully. But we thank you all for your engagement, especially your engagement here today in this critical forum, when you think about the critical role infrastructure will play.

So today, that's really a small snapshot. I mean, I could really talk about the Pacific Step-up all day every day. When Ewen and I get going, we always run over in our meetings. We always get into lots of trouble. My chief of staff is here, Nick McCaffrey.

But the meetings we have — there are so many policies the Australian Government is putting into place to promote this region, the engagement in this region. Really, what I'm trying to say is our focus, the focus of the Australian Government, on this region, on our region, on our Pacific family, is here to stay. It'll be in cementing government policy and it won't just be this government. We have a bipartisan commitment to this. We have a deep and abiding commitment in the Parliament the long-term engagement with this region.

So you'll see more and better policy. You'll see that on a bipartisan basis. You'll see more money in the Pacific on a bipartisan basis. In this year, $1.4 billion is the most any Australian government has ever spent into the Pacific. There'll be more. And over time, I think this Step-up, the evolution of this Step-up and its emphasis on infrastructure, but critical infrastructure is everything. It isn't just roads, it isn't just transport, it isn't just wharves. It's health infrastructure, it's education infrastructure, it's climate infrastructure. It covers all facets of Pacific and Australian life. I think that commitment that you'll see from the Australian Government will realise the development of this region. And it's what we all want to achieve. It's what we all want to see. It's what we're all invested in. And I know that these kinds of seminars, the investments you'll make, are vital to that. And I think the Government realises that as well.

So please tell us, it's a good time to be telling us things. I can tell you now there is a lot of interest in the Pacific. When you have the two preeminent powers of our age, the United States and China, fully focused on this region. We have their attention. We have their interests. We have their investment into our region. We have other great partners like Japan, New Zealand, Canada, France — and we'll welcome President Macron soon to the region. This is a great time to be talking to the Australian Government, to be talking to our officials, to be talking to your agencies, to do more thinking about those partnerships, those collaborations, on investment. We are hearing a lot about it from our partners. We're hearing a lot about it from you. And I think we must capture the spirit of this time and the opportunity that exists.

So thank you for the opportunity today. I commend the Pacific Step-up to you and I really wish you all the best with your discussions for this seminar.

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