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Thursday, 18 September 2003
Page: 20555


Mr JULL (10:24 AM) —May I thank the honourable member for Lyons for his contribution today, and for his appreciation of the situation that exists in the former Eastern bloc—now known as middle Europe—and the potential that Australia has to create trade relationships with that part of the world. Before I start speaking to some of the aspects of the report, I would just put on the record that this is an interesting report from the Joint Standing Committee on Foreign Affairs, Defence and Trade and the Trade Subcommittee, in particular as it is the second report in which we have taken specific areas that are not usually at the forefront of any particular coverage in trade talks or in newspaper articles and made a close examination of those areas to see if there is any real potential.

I hope that this second report is as successful as the first. The first of these reports applied to the countries of South America and it was very well accepted. In fact, most of the recommendations have been implemented. We have certainly seen, despite difficult times, an uplift in the amount of trade that is going on between Australia and those countries of South America. We have seen an increase in the number of students that have been there and in the number of airline services operating between the two continents. All in all, I think that speaks volumes for the recommendations that were made by this committee and, indeed, taken up by the government. I hope this report on central Europe will be equally successful.

I would like to put on the record one interesting aspect of these two reports when seen in light of criticism that is often levelled at parliamentarians. The members of this committee who undertook both the South American and the central European tours were responsible for their own costs. These were not official parliamentary visits and, despite the fact that we got some wonderful cooperation from our embassy and the Austrade people in Europe, they were done on our own initiative. I hope there is some appreciation of that. I hope that one day there will be some reformation of the way that delegations are treated in this parliament and that some of these constructive works might be included in the overall plan for the annual allocation of international delegations. I pay tribute to those fellow members of the committee who undertook this trip to central Europe for the contribution that they made.

This report on central Europe really had its foundations in an official parliamentary delegation led by Mr Speaker to the Czech Republic, Slovakia and Croatia just two or three years ago. I was a member of that particular delegation and one of the things that struck us was the fact that, even two or three years ago, Australian companies were trading there and making a contribution to these countries' economies. We had never heard of them. In fact I wondered, in some of the cases, whether government officials had ever heard of them. In Croatia our then ambassador was very keen to make sure that we took the message home that trading opportunities were opening up in that country, particularly in the light of the fact that it had suffered from the ravages of war for years and years.

There were a couple of things that really got to me in our visit to Zagreb on that official delegation. A number of Australians of Croatian origin had in fact gone back to the country at the conclusion of the war—they had decided that they at least were going to make some contribution to the reconstruction of that country and, no doubt, do reasonably well also. Those contributions were basically from small business. There was an investment in a soft drink factory, for example. But the greatest example that I saw was the establishment of the first true coffee shop in Zagreb, which was set up by a young couple from Melbourne. I think the husband was of Croatian origin and his wife had been born in Australia. The family decided that they should go back and make some contribution to the life of the new Croatia.

They had a look around and decided that there was an opportunity there for a coffee shop. So they purchased a cappuccino machine and decent coffee from Italy, and the young lady concerned made muffins. This was a most successful operation. At 10 o'clock every morning, when the coffee shop opened, there was a mile-long line of people waiting to get hold of these muffins. We went back late one night for a cup of coffee. We were speaking to this young couple and they showed us their operation. Incidentally, they sold only Foster's beer, which I thought was fairly patriotic. But in the back storage room of this particular coffee shop there were piles and piles of cartons of White Wings muffin mix, all made in Australia. The reality was that the demand for the muffins was so great that the lady could not make up this mixture, so she decided to import the muffin mix. They were making an absolute fortune. On our latest visit we saw that the coffee shop was still in business, was still doing extremely well and was obviously a highly profitable venture.

Since then others have gone in. An Australian has bought a major hotel in Split on the Dalmation Coast and is investing millions of dollars in bringing it up to date. There are a number of such contributions being made but that is not to say that major Australian companies have not been in there testing the waters, and some of them doing very well. In Poland—Poland is a really big country—one of the major employers and a major investor has been Amcor, which is the Australian packaging company. Because of the arrangements with the EU it is now making virtually all the packaging for Europe for such diverse products as cigarette cartons, biscuit and chocolate wrappings. It has plans to expand even more—possibly going into Russia within the next 12 or 18 months. When you look at the way QBE Insurance has invested and taken over a very large percentage of the insurance industry in the old Eastern bloc, it certainly gives you some hope. Once again, there was an example of how small business can also make an investment in these emerging countries.

There is a chain in Australia called the Cheesecake Shop, which is owned by a man of Polish origin, who, similarly to the person who runs the coffee shop in Zagreb, decided that he was going to make a contribution. He went back and now has a chain of 48 Cheesecake Shops, all franchised throughout Poland. The ramifications of that are quite interesting. Despite what we might hear about the EU, the dumping of sugar and the rest of it, his recipes are exactly the same as the ones he uses in Australia. But apparently beet sugar is much sweeter than cane sugar and he could not really get the taste of his cheesecakes right, so it is Australian sugar that is now being imported into Poland to make those cheesecakes.

When you look at the contribution that Australians are already making in the hospitality industry—in this report we point out that in that area there are some tremendous opportunities for Australia—you see that in some of the major hotels around those former Eastern bloc countries Australians are virtually taking over the industry. Australian chefs are certainly there. At one stage we attended an Australian food week in Prague in the Czech Republic. I think it was at the SAS Radisson Hotel. The locals were flocking to try these new experiences. That is just part of the promotion which has seen Australian red wine become a dominant force in the Czech market. We have seen exotic Australian meats moving into that market. Buffalo, crocodile and emu meats are now on supermarket shelves in the Czech Republic. As I have said, this is the start without really trying. One of the things that strike you almost wherever you go in the world is that these people like doing business with Australians. We will go in there as equal partners, we are not known as rip-off merchants—and we tend not to be rip-off merchants—and we usually make sure that we apply ourselves to all the existing rules and regulations so that we become good corporate citizens in those countries. In fact, we are welcomed.

The member for Lyons mentioned the tyranny of distance. That is particularly true and I thought that it really came through in this report regarding Croatia. Somehow we have to get over the tyranny of distance. The Croatians will go to Singapore—they do not think that Singapore is too far away—and Australia is not too much further down the track than Singapore. So we have an image problem there. But these countries, bearing in mind that most of them are on the verge of joining the EU, have gone through tremendous struggles in making sure that their banking systems are correct, in making sure that their laws are in place and that they are in compliance with the whole operation of the EU, are not the huge risks that they have been seen to be in Australia in recent years. In the countries that we visited that are not going into the EU at this stage—countries such as Croatia, Hungary and Bulgaria—there is a great deal being undertaken to ensure that they will comply so that at a later date they can accede to the European Union. That gives some confidence for Australian investors. If you want some examples of how those countries are being picked up, two great examples are the Czech Republic and Slovakia.

In terms of the motor vehicle industry it is quite interesting because Volkswagen has gone into an arrangement with Czech company Skoda. They have established a new factory, which is the cleanest and most incredible operation I have ever seen, that works seven days a week, 24 hours a day around-the-clock producing these new motor vehicles and, frankly, they cannot keep up the supply. They were telling us they hope to move into Australia pretty soon, but that supply was a difficulty and they had to get production numbers up. The French motor vehicle manufacturers have now ploughed tens of millions of dollars into Slovakia. They will be assembling and building French cars in that country within the coming months.

There is a realisation around the world that these places are providing great opportunities in terms of the work skills of their people and their cost structure and, because of the increasing wealth of those countries, that can help promote these industries. Without going through each country one by one, some are more developed than others. Slovenia was one country that brought that home to us. There is already a great deal of sophisticated trade going on between Australia and Slovenia. This is particularly true in the area of pharmaceuticals, where there is a great deal of cooperation. It is also true of the packaging industry, where the Lajovic company—a family related to the former New South Wales senator—has now taken over packaging in Slovenia. They are packaging virtually for the world in terms of toothpaste tubes, cosmetic containers and goodness knows what. That company is based in Sydney, Australia, it is being run from Australia and it has created a very good relationship.

On this particular journey, the committee split in two so that we could handle all the countries. I did not go to Romania or Bulgaria, so I will leave it to others to talk about those two countries. The other countries we went to, including Hungary, obviously have tremendous potential. I hope that, as they did in respect of the South American report, the government will look very closely at these recommendations. One of the most critical recommendations I think is about where we put our diplomatic services in the Eastern bloc. It seemed crazy to me that the Czech Republic, despite its strength and its emergence as a major force in the Eastern bloc, is still being serviced out of Warsaw. Next door, just a few kilometres over the border, is Slovakia and that country is serviced out of Vienna. I would hope that our recommendation that the Australian government look at establishing an embassy in the Czech Republic to service those two countries, at least, will come to fruition fairly soon. Obviously, because of the sophistication there, it is potentially a huge market for us.

These are exciting times in eastern Europe. There are exciting opportunities for Australian companies and there are exciting opportunities for investors in those countries. The sophistication of places such as the Czech Republic and Slovakia in providing the wherewithal, the taxation regimes and the banking systems to ensure that there are very few things to worry about in terms of these investments, should be an attractive proposition to Australians. I commend this report to the parliament and indeed to the government. I hope the acceptance by the government of the recommendations made in this report will be similar to the acceptance of the recommendations on South America. The Joint Standing Committee on Foreign Affairs, Defence and Trade made a great contribution with that report, and we are seeing the profits starting to flow between South America and Australia. I think the opportunities in central Europe are potentially even greater than those in South America.