Speech To Hong Kong 20: Developments & Opportunities Business Forum


Thank you for the invitation to speak today.

And thank you to ACCI and the Hong Kong Economic and Trade Office for the work you do.

It is very important.

Hong Kong and Australia are good friends.

It’s a friendship that goes back a long way.

We are great traders and great trading partners.

Hong Kong is already our sixth largest export market, and I am glad to see work has kicked off on a free trade agreement.

Hopefully it will lead to even more trade and investment between Hong Kong and Australia.

We are talking today about the road ahead in trade and investment – here in our region and right around the world.

I think we’ve got two big challenges.

The first is the unpopularity of trade and investment at the moment and the general public scepticism about it.

This is a real threat. It’s a big threat to all the things we want to achieve: more trade, more jobs, more businesses.

There are a lot of people out there who are angry and frustrated.

They feel like life is getting harder not easier.

Like the system is rigged against them.

And a lot of them blame trade.

You saw that in the US election last year.

It was a big reason why Donald Trump was elected.

You saw it with Brexit in the UK.

And you can see it here.

We are a trading nation.

1 in 5 jobs are linked to trade but when you survey people most don’t think it creates any jobs – at least not here at home.  

You can also see it in the phobia about foreign investment.

Here in Sydney most people think there should be no foreign investment in real estate at all.

They blame it for the extraordinarily high house prices we’ve got here.

That’s despite the fact foreign investors can only invest in new property which at least theoretically should provide more supply.

And it’s despite the fact that as Andrew Robb said when he was Trade Minister every billion dollars of foreign investment here in Australia creates another 1,000 jobs.

Trade and investment creates jobs – and better paid jobs.

High quality trade agreements create more.

But lecturing people with arguments like this and numbers like I have just rattled off won’t change people’s minds.

We have got to understand where a lot of this anger and scepticism is coming from.

Part of it is not everyone benefits equally from free trade.

Some benefit more than others.

In places like Australia it’s usually high skilled white collar workers.

One of the effects of open markets is it can increase the gap between rich and poor Australians.

That’s not an argument against free trade, but we do need to do something about it.

The US is a good example of what happens if we don’t.

The gap between rich and poor Americans is worse than it is here. A lot worse.

The Trump campaign responded to all this anger and resentment and fed off it.

And the result of that is that big trade deals like the TPP fall over.

That’s why this can’t be ignored.

If we don’t do something about inequality, big trade deals are going to get harder and harder to deliver.  

That’s the first challenge.

The second is how do we make the most of what’s happening in Asia?

Free trade agreements are an important part of that – but they are just the start.

After they are signed we have got to try and squeeze the maximum value out of them.

The window of opportunity is pretty limited.

As Zoe McKenzie said in an Op Ed about a year ago: “Many benefits achieved by the FTAs provide a market advantage of up to about five years” before one of our competitors comes in and gets the same deal and our comparative advantage is lost.

So time is critical.

And lots of companies that want to take advantage of these agreements struggle with market access issues.

The red meat industry is a good example.

It’s worth about $23 billion a year.

They reckon they could make about $3.4 billion more if we are able to get rid of all the different non-tariff barriers that exist in all the different countries they sell to and are trying to get into.

At the moment six Australian abattoirs have got a problem getting meat into China.

It’s a labelling issue.

12 containers of meat on ships to China had to be redirected to other markets and the problem is still not sorted out.  

That’s just one industry.

If we are going to make the most of the rise of Asia the other thing we have got to do is build up the skills and capabilities and readiness of Australian business and workers to do business in Asia.

We are very good at putting goods on ships and attracting students and tourists and foreign capital here, but we have got to get a lot better at what Bob Hawke called our “enmeshment” with Asia.

PWC put out a report a few weeks ago that revealed only 10 percent of directors and senior executives in our top 200 listed companies have a high level of Asian skills and experience.

We have got to fix this.

One in ten Australians have got Asian heritage but not many are on boards or in senior executive positions.

There are a lot of kids and adults learning languages, but not many are learning Mandarin or Japanese or Bahasa.

There are also lots of business people who have worked in Asia who tell me the skills and experiences they have acquired don’t count for much in the job market here.

In a lot of companies there is a reticence to take on all the opportunities we all know are available with so many middleclass consumers on our doorstep.

Some of that has got to do with risk

Some have been burnt before.

Some are comfortable doing what they are doing.

Some don’t have the patience that is often needed to toil away and succeed in parts of Asia.

The point is, if we don’t get in there others will.

Other companies in other countries will get in there and sell their goods and services to all those cashed up consumers.

And we could miss the boat.