Ministerial Statement – Annual International Investment statement

Mr PITT (Hinkler—Assistant Minister for Trade, Tourism and Investment) (11:21): Can I say that the third annual statement on international investment in Australia, which was presented to the House yesterday by my colleague the Minister for Trade, Tourism and Investment, Steve Ciobo, gives a snapshot of the latest trends in Australia’s international investment position. The total value of foreign investment in Australia stood at $3 trillion at the end of 2015, an increase of 7.9 per cent from 2014. The five largest sources for stock of foreign investment in 2015 were the United States, with a value of $860 billion; the United Kingdom, with a value of $500 billion; Belgium, valued at $238 billion; Japan, valued at $199 billion; and Singapore, valued at $98.6 billion. Investment from China was valued at $74.9 billion, while investment from India was valued at $11.6 billion. The mining industry accounted for the largest share of the stock of direct foreign investment in Australia, valued at $295 billion or 40.1 per cent. It was followed by the manufacturing industry, valued at $86 billion, and the real estate industry, valued at $64 billion or 8.7 per cent.

Australia is a very large country, as I am sure you know, Mr Deputy Speaker. We are the sixth largest landmass in the world and our economy is the 13th largest, but we have a small population, which means that we need to tap into other countries’ savings. Australia has relied on foreign investment for over two centuries to meet the shortfall of domestic savings against domestic investment needs. Foreign investment helps Australia reach its economic potential by providing capital to finance new industries, enhance existing industries and boost infrastructure, productivity and employment opportunities in the process.

There is no more important issue in my region—and I am sure yours, Mr Deputy Speaker—than employment. The high growth supported by foreign investment pays dividends for all Australians by increasing tax revenues to federal and state governments and increasing the funds available to spend on hospitals, schools, roads and other essential services. Foreign investment has other benefits beyond injecting new capital. By bringing in new business with new connections in different markets, it opens up additional export opportunities, boosting our overall export performance. It also encourages competition and increased innovation by bringing in new technologies and services to the Australian market.

But why do they want to come here? Why do they want to invest in Australia? There are a number of reasons. Firstly, Australia has experienced 25 years of uninterrupted annual growth since 1990-91. That did not happen by accident. We have a highly skilled workforce and our location has strong geographic, trade and cultural links with the growing Indo-Pacific region. We have strategically located ports with well planned rail and road transport networks and efficient logistics chains. It is these qualities that have attracted foreign countries to invest in Australia for many years.

In my own electorate of Hinkler, the German company Knauf is building a plasterboard manufacturing factory at the Bundaberg Port. Civil works began on 1 February on a plant worth more than $70 million that is expected to create around 200 jobs during construction and around 70 permanent positions once completed. The Bundaberg facility, which is expected to be operational by the beginning of 2017, will be the company’s third in Australia, with manufacturing plants in Sydney and Melbourne, but it certainly is the first in regional Australia. Knauf is a major supplier of plasterboard and associated products to the lightweight construction industry. The company began in 1932 and has grown, with more than 220 facilities, 70 quarrying operations and 23,000 employees in over 60 countries. The project at the Bundaberg Port will also include gypsum handling and processing facilities to support plasterboard production and for the sale of gypsum into the agricultural sector. For those who know the Bundaberg region or the Hinkler electorate, it is one of the largest horticultural producing areas in this country. We are the largest producers of heavy vegetables, and to have a company that can import lime directly and make it into a pelletised product at a much-reduced cost will be a large benefit for local farmers and our agricultural producers. It is this type of investment that we need to encourage, particularly into regional Australia.

Whilst we recognise the benefits of foreign investments in Australia, I also acknowledge community concerns about foreign ownership of Australian assets. I want to reassure people that there are appropriate checks and measures in place to ensure foreign investment proposals are consistent with Australia’s national interest. The government reviews major foreign investment proposals on a case-by-case basis through the Foreign Investment Review Board. The board examines significant foreign investment applications that fall within the scope of Australia’s foreign investment policy and the Foreign Acquisitions and Takeovers Act 1975, and makes recommendations to government on those proposals. The review system allows the government to consider these community concerns around foreign ownership of certain assets when assessing Australia’s national interest. The national interest test also recognises the importance of Australia’s market-based system, where companies are responsive to shareholders and where investment and sales decisions are driven by market forces rather than external, strategic or noncommercial considerations. It is also important to remember that any foreign companies that invest in Australia have to follow our rules regarding employment, employment law and taxation, just as a few examples. Around 51 per cent of foreign direct investment over the past five years has been reinvested in Australia.

Australia needs to ensure that we remain competitive with other countries now vying for their share of that investment. There are talks of the United States and the United Kingdom cutting their company tax rate to lure foreign investments to their shores. We need to continue to be seen as an attractive investment opportunity for foreign investment, but we must also keep true to our values. That means ensuring that we always act in the national interest, which we will.

Can I just add, in terms of investment into our nation, there are people who have invested here for many years. In fact, they have held those holdings in terms of farms and agricultural producers for some generations. It is important that we as a government continue to focus on what is important to them and ensure that their investment continues to provide a return and to employ Australians. In that case, there is nothing more urgent in the Australian Senate than the backpacker tax right now. Mr Deputy Speaker, I am sure you know, as I know from my agricultural producers, those producers who are out there earning a dollar and employing Australians simply do not care about the political process in this country. They want a result, they need stability, they need certainty and it needs to be provided as soon as humanly possible. With that, Mr Deputy Speaker, I will conclude my remarks. Thank you for the opportunity.