I’m grateful to the Australian British Chamber of Commerce for organising this lunch – and to Ashurst for your generosity in hosting and sponsoring today’s event. My thanks to you all for coming.
I am delighted to be in Melbourne – and congratulate you on again being voted the world’s most liveable – and friendliest city. This is my first visit but the city holds a special place in my family history. In 1855 my ancestor, John Swire set up a business in Flinders Lane which traded everything from fencing wire and cement to olive oil and Guinness beer. It was not long before he also recognised the massive opportunities of trading with China and other countries in the region – and the rest is history. For the record, my ties to the Swire Group today are genetic but, sadly, not financial.
After arriving in Melbourne this morning my first stop was in Williamstown where BAE Systems are helping to build cutting-edge new amphibious ships for the Royal Australian Navy. It is a major project and it brought home to me the scale and diversity of our trade and investment ties, many of them built up with the support of this Chamber of Commerce. I pay tribute to you for your contribution to this crucial element of the 21st Century partnership between the UK and Australia.
UK exports to Australia already exceed AUD18 billion, making this a more important export market for us than either Japan, Canada or India. And notwithstanding your rapidly growing trade with Asia, we remain your sixth biggest trading partner, buying nearly AUD10 billion in imports from Australia every year.
Britain is also the second largest foreign investor in Australia with AUD500 billion in total investment stock here, second to the US but both by some distance ahead of all the rest. At the same time, we are your second largest destination for Australian outward investment.
Like you, the UK Government has a real interest in the emerging economies and we have set out to boost our ties. But we have not forgotten our traditional allies and partners, especially Australia which has bucked the trend among developed economies and kept growing throughout the global recession.
I am happy to say that thanks to our government’s ambitious economic plan, and the hard work and ingenuity of the British people, our economy has also surged ahead. With economic growth above 3 per cent we are on course to be the fastest growing of the G7 nations, outpacing even the US this year. We are by some measure the leading inward investment destination in Europe, not least because by 2015 Britain will have a corporate tax rate of 20 per cent – the lowest of any major economy in the world.
We want Britain to be a dynamic and open for business. So we have cut red tape with a new “one in, two out” rule for business regulation. We have supported high growth and high-tech industries. And we have undertaken massive investments in road and rail.
But we know that to secure our economic future, we need to expand our trade and investment relationships overseas. So our Chancellor in 2012 set the target of doubling our exports and inward investment by 2020.
One third of the staff in our diplomatic network across Australia’s cities are engaged in commercial and economic work in support of this ambitious goal.
It is a similar picture right across Asia and beyond – and in many countries Chambers of Commerce like this one play a vital role. I know that you have worked closely with our High Commission and UK Trade and Investment staff, for example on our GREAT Campaign promoting British business and I am thankful for your valuable efforts.
I am sure that if we continue to think creatively and ambitiously, we will find even more ways to work together both to expand the trade and investment links between our countries, and to tap the enormous growth potential in the emerging economies to your North.
One new initiative I am supporting at an event later this afternoon is the British Business Network. It aims to make the most of the large British diaspora in Australia by creating a virtual network of business people committed to sharing their knowledge and experience to help increase trade and investment between our countries.
Where else do I see the opportunities for partnership?
First, working even more closely together on the international stage to create the conditions for sustainable growth. Our Trade Ministers have been among the most vocal supporters of trade liberalisation in the G20, which we know to be key to growth. And our cooperation has already helped secure the historic deal at the Bali round of trade negotiations.
Australia’s G20 presidency gives us the opportunity to build on this valuable work. The UK welcomes your government’s approach – the emphasis on growth, but also on infrastructure, tax and trade. These were priorities for us when we hosted the G8 last year and we are looking forward to the G20 Summit in Brisbane in November as an opportunity to make more advances.
I’m also confident our Prime Minister won’t begrudge the chance to leave late autumnal London for a taste of early summer in Queensland.
Second, the UK and Australia can work together more closely by leveraging our joint membership of the Commonwealth. This is a sometimes forgotten element of the UK’s and Australia’s competitive edge.
As members of the Commonwealth, we have a ready-made network that boosts trade and business – the engines that drive our growth. And it connects us to some of the powerhouses of the global economy. Last year, the Commonwealth’s nominal GDP was £6 trillion, according to the IMF. It is forecast to grow to £8.4 trillion by 2019.
We share with other Commonwealth countries the principles of democracy, rule of law, good governance and similar legal systems. These are solid foundations for doing business and a platform for trade, investment, development and in turn prosperity. Some studies have put this ‘Commonwealth effect’ as between 20 to 50 percent in trade advantage.
At the Commonwealth Games in Glasgow last month it was good to see England ahead of Australia for the first time since 1986. But I was also struck by the drive and ambition of Commonwealth businesses at the accompanying Business Conference. The Prime Minister rightly emphasised that the Commonwealth has a great history of trade and is “not just united by history, culture and values but by trade and prosperity”. We must use the connections it gives us, such as the newly established Commonwealth Enterprise and Investment Council, to the fullest advantage.
A third priority for our partnership should be increasing the flow of bilateral investment and exports, in both directions. There have already been some striking examples of new business ties in recent years. As a father to two teenage daughters, I am all too aware of Westfield’s success establishing two of the largest shopping centres in Europe in London. We also count Australian Super funds as significant players in the UK’s transport infrastructure and utilities.
And these are just the tip of the iceberg: last year UKTI assisted more than 60 Australian companies to expand their businesses into the UK, attracted by the most competitive tax system in the G20, our highly skilled and flexible workforce, strong research and development base and London’s position as international financial capital.
But business flows in the other direction too, with UK companies making massive investments here in Australia. From energy giants like BG Group with its $2.55 billion coal-seam gas project in Queensland, to Spec Savers, which has taken a 35 percent market share in just five years, British firms see a bright future down under. We are stepping up our support for innovative smaller and medium sized UK businesses to seize new export opportunities; companies like Outpost whose software drives a new range of virtual reality products that are set to revolutionise the in-flight entertainment market.
Fourth, the UK and Australia can work together building the infrastructure that will underpin future economic success. In the UK we have embarked on the biggest road enhancement programme since the 1970s and the largest programme of investment in our railways since the Victorian era. Here in Australia you also have some major transport projects underway – not least the planned East/West Link, Melbourne Rail Link and Westconnex in Sydney.
UK companies have the experience, expertise and drive for innovation to help realise these ambitious plans. They are world leaders in low carbon and sustainable building, globally recognised for city planning and urban regeneration, and pioneers of cutting edge technology like digital Building Information Modelling.
A number of leading UK companies such as Arup, Mott MacDonald and Laing O’Rourke are already active in the market and I know many more are keen to explore the opportunities. So I hope we can expand our cooperation in this area.
Lastly, I hope more Australian and British companies can join forces and target Asian markets together – particularly given our shared strengths providing the services that Asia’s growing middle classes will be increasingly demanding.
And of course, these are underpinned by a strong political relationship. Our Prime Minister was the first leader to congratulate Tony Abbott after he won the election last year and they have had regular conversations since; we were delighted that Prime Minster Abbott could make a visit, albeit short, to London last month. And the annual Australia-UK Ministerial talks (AUKMIN) have developed into the lynch pin of the foreign and security policy relationship. Each year our respective foreign and defence ministers agree an ambitious set of outcomes that advance our mutual interests, and I know that our Foreign and Defence Secretaries are looking forward to next year’s Aukmin, which Australia will host.
So, I look forward to taking your questions in a moment but to conclude I hope I leave you with no doubt about the energy, commitment and activity being devoted to Australia both by the British Government and British business – for our mutual benefit. This is a flourishing relationship with even greater potential for the future and we must continue to strengthen it. Thank you.