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Foreign Affairs, Defence and Trade References Committee
Australia and the countries of the Indian Ocean rim

CLARK, Mr Bryan, Director, Trade and International Affairs, Australian Chamber of Commerce and Industry

Evidence was taken via teleconference

CHAIR: I welcome Mr Bryan Clark, from the Australian Chamber of Commerce and Industry, who is appearing via teleconference. The committee has received your submission as submission No. 26. Do you wish to make any amendments or alterations to your submission?

Mr Clark : No. It stands as it was lodged.

CHAIR: Would you like to make an opening statement before we go to questions?

Mr Clark : Firstly, I hope you can hear me all right. We are quite privileged for the committee to use this type of technology for us. I think that, given the difficulty with the technology, I will give an overview of our summary in that it covers a number of areas where we think there are opportunities for Australia in the Indian Ocean. It is an area that has perhaps been neglected, and we would like to see a stronger policy focus, particularly for trade policy, into the Indian Ocean Rim. Thank you.

CHAIR: Thank you; that is very helpful. We will go to questions now. I would like to ask you some general questions. What is the main interaction of members of ACCI with the Indian Ocean Rim countries?

Mr Clark : There would be certainly be quite a number involved in international trade with many of the countries going around, individually or bilaterally, the Indian Ocean Rim. But, from the ACCI perspective, we have been involved with the Department Foreign Affairs and Trade as a body trying to assist with a business voice inside the Indian Ocean Rim Association for Regional Cooperation for perhaps more than a decade. Over that time, we have been disappointed that not all that much has been achieved. We were represented at the last two meetings in India by some representatives who have been in that region—they are domiciled in India through the New South Wales Business Chamber and the Victorian Employers' Chamber of Commerce and Industry, who have representatives there—and by Harish Rao representatives as well at the most recent meeting.

We have proposed a number of things, including a free trade agreement with the Indian Ocean Rim countries, which we would like to see advanced. Recognising that that may take some time, we have also suggested that a simple step forward might be the introduction of a card similar to the APEC travel card to assist businesses just to do the simple border crossing process a little more easily in that region and facilitate more business interaction.

CHAIR: I think an APEC travel card idea sounds very interesting. Free trade agreements tend to be with individual countries, so that is a little more complex and would probably have to come in a staged process. People have talked about a free trade agreement with South Africa; how would you respond to that?

Mr Clark : We would be supportive. We are a little concerned at the moment with the government's focus on the Asia-Pacific, if you like, and the eastern and northern aspects of Australia's trade rather than the western and northern aspects of Australia's trade. Yes, a lot of free trade agreements are bilateral, but there is also an increasing propensity for regional agreements. In fact, I am in Auckland today for some of the discussions around the Trans-Pacific Partnership Agreement, where multiple countries are involved. We have suggested to the government that maybe its model in the ASEAN-Australia-New Zealand Free Trade Area, AANZFTA, might be a useful one to consider and also the Trans-Pacific Partnership, which started with only four countries but, as more countries have seen that that may be beneficial to them, it has gathered pace and more countries are now involved.

We think that it should be possible to have that sort of discussion, notwithstanding that Australia is already attempting to have free trade agreements with India and the Gulf Cooperation Council and is in discussions at the moment—and we have assisted the government on this—with Indonesia on the comprehensive economic partnership, and we already have agreements with Thailand and Malaysia. So there are a number of countries where we already have existing arrangements which could be built upon but with a focus on the Indian Ocean rather than, necessarily, the Asia-Pacific.

CHAIR: That certainly sounds very encouraging. Is there a role for private companies to assist in providing advice on regulatory matters to companies in other countries in the region? Professor Peter Drysdale noted the huge spread of economic interests in Africa through the mining industry and referred to Australian investments there which are growing in scale and importance. He also cited the significant amount of services activity in Africa with the mining engineering sector playing a prominent role in the huge number of projects that are being put into place right across Africa. Would you like to specifically comment on the scale of Australian investment in mining in Africa and the potential for Australia to build links through this activity with countries in Africa?

Mr Clark : I do not have any specific details at my fingertips, but I understand that there are about 400 companies who are already active in the mining sector in Africa. I would think that there are strong opportunities for it. It is an area where Australia has good competitive advantages. It is not limited to mining. There are many other services as well. You are talking about a region which, in general, also has very strong population growth, and it has interests in food security and how it will provide food for the growing population, as well as broader services which come as countries develop. I would think that Australia is well-positioned if we were to extend a friendly hand to those countries in the Indian Ocean Rim, particularly the ones that at an early stage are most willing to work with us—to say that we have services, skills and expertise that can be transferred to their own economies, and have some of the profits of that repatriated to Australia.

CHAIR: In this inquiry, only a few businesses responded to the committee's call for submissions. From your point of view in the ACCI, what would your explanation be for this lack of interest in a parliamentary inquiry seeking to understand the situation and make recommendations to the Australian government on ways in which Australia could build on the potential for increased trade within the Indian Ocean region?

Mr Clark : I cannot comment on why individual companies have not responded directly to you, but, talking with our members, there is very strong interest in it. Part of the problem is that the government has not necessarily promoted it as a region. 'The Asia-Pacific' is a commonly spoken of term. We have APEC, the East Asia Summit and a lot of institutional arrangements which give a media profile to our general relationships in Asia, but the same sort of dialogue does not go on with the Indian Ocean. The Australian government is going to come into the chair of the Indian Ocean Rim Association for Regional Cooperation. I think that chairman's role starts in November 2013. We have been trying to encourage the government to make sure that there is strong momentum into its chairing of that. Following Australia, we understand, is Indonesia. Clearly, we have very strong linkages with Indonesia at the moment. There are discussions going on. Maybe we have not had sufficient general discussion in the common business frameworks and, more broadly, with the Australian economy, and within the government's own discussions. There is the discussion on Asia through the Asian white century paper, for example. That still has a heavy emphasis around China and India as single countries rather than, perhaps, the Indian Ocean as a region that might be focused on.

CHAIR: That is a very interesting answer because, of course, it is not a natural region and, as you say, we are only just beginning to be interested in trade and business exchanges with Africa, the Gulf states and so on. So I suppose we are beginning a process. The explanation lies in the comments you have made, in the content of them—that this is just the beginning. Do you agree that the Indian Ocean focus will grow and we will see strong bilateral business relationships develop? Would you agree with that?

Mr Clark : Absolutely. I think your own inquiry is giving a little bit of focus to that and, hopefully, there will be some positive media come from the discussions as well.

CHAIR: The submission of the Department of Foreign Affairs and Trade notes that Australia contributes quite significantly to international counterpiracy efforts through defence support aid and through the Australian Federal Police support to the UNF Office on Drugs and Crime Counterpiracy Program. Have your members whose businesses involve ocean transport ever raised concerns about the effect that piracy in the Indian Ocean has had on their businesses and their use of sea lanes and the ability to export minerals and other kinds of goods?

Mr Clark : We have not had anybody raise that particular issue with us, but we know that it is an issue, particularly out of Somalia and other places. Certainly, the department of foreign affairs has indicated issues with the region, including forcing a fishing fleet from the Seychelles—not to put to sea for fear of piracy activities, which was then leading to food security issues in their economy. I also note that the Australian Navy, in its purchase of a ship, chose to take it a different route rather than through some of the Gulf waters because of the threat of piracy. But we are not hearing anything from our members around what the commercial aspects of that are placing on business.

CHAIR: I read that. Apparently, rerouting the ship cost an extra $2 million.

Mr Clark : It is extraordinary.

CHAIR: Interestingly, the federal government felt that that was a necessary step for them to take to avoid the threat of piracy. I might just hand you over to Senator Stephens now.

Senator STEPHENS: Thank you very much for your submission, which raises some very interesting questions. I am now looking at section 8 of your submission, which goes to the issue of Australian competitiveness within the Indian Rim. You make some very interesting observations here. Would you like to make any comment about the paragraphs on page 10 of your submission, which go to the issue of scaling up Australian businesses so that they remain competitive and thrive in a global business environment? That is a different kind of argument that has been put in many other submissions, so it would be helpful to explore that in the sense that we do not have many Australian globally competitive companies.

Mr Clark : Certainly, outside of the minerals sector and the banking sector there are quite a number of Australian companies which are active globally but a lot of the time we are seeing international companies coming to Australia and taking over Australian firms rather than the other way around. So we are quite keen on understanding how might we push our own companies offshore, particularly in the current financial circumstances where the currency might be working in their favour. But the critical thing in this is the investment characteristics of each market. What we would like to see is Australian companies enjoying the opportunities for investment offshore in the same way that foreign companies can in Australia.

We saw a circumstance in Australia—and there are examples of it which we note through the automotive industry, for example—where the decision making of the companies does not reside in Australia any longer although it does to a certain extent. But their fundamental capacity to stay within a country is then forcing the Australian government to go offshore to talk with the decision makers in some other market. We do not necessarily see that that is happening for Australian companies other than a handful of very large companies where they might have a fairly dominant position in the marketplace. So we would like to see the local policy settings such that Australian companies are encouraged to go offshore, to develop their businesses offshore and perhaps service a global market from multiple locations, including Australia, while taking advantage of other opportunities within our region as well.

Senator STEPHENS: Has ACCI done any work on investigating the sectors that might be best placed to do that kind of thing?

Mr Clark : I think—and we have not specifically stated it—clearly mining and mining services is one of the areas where we do have an extraordinary base to build on at the moment. We think that food security—and that is not necessarily supplying global commodity markets from Australian shores alone—is too. We are interested a little bit in how the Australian agricultural sector and the broader food sector will use their expertise to become globally dominant in food supply. Clearly, in the services sector—around environmental services, accounting and legal services, design services and engineering, and taking many of those sorts of areas—Australia has an educated workforce and should be able to be taking advantage of the competitive advantage that we have at the moment. That is not going to last all that long in the services sector. At the moment we have an early mover advantage because Australia does have an educated workforce, but at the moment there are many hundreds of millions of students studying in India, China and many other countries and they will be as equally qualified as Australian professionals and they will be looking for jobs and perhaps they will do them cheaper than Australia. So we need to be making sure that Australian firms are the ones who are able to grasp the opportunities earliest and set themselves up in the marketplace and be, as we would like to think anyway, ultimately the dominant players and the beneficiaries of development in the countries of our region.

Senator STEPHENS: Thanks for that. I noticed in today's media that India has become the highest source of migrants to Australia this year as it has just tipped the scale. In the sense that India has a growing middle class and a very strong business focus on expanding into Australia, have you any comments to make about where you are seeing Indian investment into Australian industry and which sectors you are seeing Indian investment or Indian Australians investing their money into businesses that can be scaled up and perhaps moved up?

Mr Clark : We cannot make any specific comment about Indian investment specifically. We can note though that in a broad sense Australia is a very easy country to invest in. Unfortunately, that is not reciprocated in India and we would definitely support the Australian government's actions in trying to liberalise trade and investment opportunities in India.

Senator STEPHENS: You make two points, one about temporary migration and labour migration programs, and you have raised, on page 12 of your submission, the issue of the Pacific seasonal workers scheme and the enterprise migration agreements. Can you give us any feedback about how your members are considering enterprise migration agreements to help resolve their labour shortages?

Mr Clark : There are very few enterprise migration agreements in place at the moment and they have been subject to some controversy limited to the mining sector. Perhaps of slightly greater interest are the regional migration agreements and getting those in place. We have seen some difficulties in getting them in place after the controversial nature of EMAs.

The Pacific seasonal worker scheme appears to be working but could be expanded. In a broad sense, we are also interested in how you might structure a hybrid product. We have flagged this within our recent work in Indonesia assisting the Australian government—with a business partnership group and our Indonesian business counterparts—to inform the government in advance of their negotiations in the comprehensive economic partnership.

We have also flagged the opportunities for bringing people into Australia on a different visa arrangement from 457. We do not necessarily specify what that would be, other than it probably has some characteristics that could be drawn from existing migration visa arrangements. Instead of just the straight students at a professional level who have been going to universities and then going home, you might bring them to Australia in a way that they can be involved in the Australian economy, generating skills inclusive of English language—so they need not necessarily have English language as a high skill when they come into Australia but have it as something they may learn while they are here—to do something that is also a value in the Australian economy. Then they go home as more valuable citizens with increased skills, be they vocational or professional, some sort of accreditation of that and stronger English language skills. This makes them more valuable citizens in their own countries or perhaps in third countries.

We are interested in how Australia might play a part in assisting the development of our region through those types of schemes, where Australia may do some sort of partnering or skills development and development in both countries. The people then return home as more valuable citizens and can assist with the development of their own countries.

Senator STEPHENS: You said you made submissions about that from the Indonesian end. Would you be able to make some of that material available to the committee?—that is, the proposition for the hybrid type workers migration scheme.

Mr Clark : Yes. Broadly what we are thinking about is this. At the present time, most people on a professional level are coming to Australia on a 457 visa, which requires them to already have a high skill level in the English language as well as their professional skill. We are also experiencing, with our partner countries, that Australian professionals cannot necessarily stay in their country for terribly long doing work. Their student bodies are moving to Australia to do something, but increasingly their own institutions will develop, and we encourage Australian institutions to go in market into these other places too. But it is somewhat difficult, and so we are looking for a way that we can utilise and expand the Australian services sector in particular—but not limited to that—through being able to work in country in the other countries. In return for that, we would be able to bring locals from that particular target country into Australia, have them work, say on construction or mining or health or tourism—wherever their skill and interest happens to be—so they provide some sort of economic benefit to Australia as they do it, we skill them up, and they go home to their home country. Australia would also benefit from that because we have an ageing population. We will at some point hit a crisis of oversupply of the required work opportunities without having necessarily the right labour force to fulfil that. There is a dominance in Australia of a skilled workforce and everyone is becoming educated, but some of the jobs in the Australian economy do not require the skills that the Australians have. But we could bring in people, train them up, take advantage of that skill development and have them here on a rotating basis, and they would go home as a more valuable citizens.

Senator STEPHENS: Are you familiar with the Indian Ocean Rim Association for Regional Cooperation?

Mr Clark : Yes.

Senator STEPHENS: Several submitters have suggested that business would support and sponsor the IOR-ARC but only if the organisation and its work are given greater promotion.

Have you been involved with that organisation and is it your intention for ACCI to be involved once Australia becomes the chair, from 2013 to 2015?

Mr Clark : Most definitely. We have been involved for more than a decade with that organisation, assisting with business views to the Department of Foreign Affairs and Trade. We had hoped that it might have been more than it is, but on reflection it has not been run by some of the major economies. We consider there is an opportunity in front of us now, with India as the chair and Australia as vice-chair, of Australia rotating into the chair at the end of next year, followed by Indonesia, we believe. So we think that the larger economies, now having the dominant position in the organisation, may be able to assist the organisation to have some more impetus and a stronger agenda and we are concerned that that has not necessarily happened, that the Australian government is not entirely focused on the Indian Ocean Rim and the opportunities which might come from it.

That said, we have worked well with the department of foreign affairs to date on this. We had hoped that the most recent meeting in India where we were represented, as I said in my earlier remarks, would have been a greater opportunity than it was, but in the end also the Indian side did not necessarily place the emphasis on it we would have hoped for. We would like to see as Australia takes the reins on it or prior to that over the next 12 months that there is a ramp-up of activity—we would encourage that—and that we use our opportunity as the chair for two years to host increased dialogue, inbound trade missions from the region into Australia, to have broader ambition for it and by the time Australia has handed it over that maybe there will also be some stronger institutional bonds.

Senator STEPHENS: Thank you very much.

Senator FAWCETT: Mr Clark, in your submission you talk about coordinated promotion.

Mr Clark : Yes.

Senator FAWCETT: We have had comments from some others about the number of industry-based, state-based Austrade and other groups who can end up knocking on the same door in other nations. Do you have any proposals for how we can balance the benefits of coordination with not stifling the innovation and resourcefulness of particular industries or states that may want to push ahead for an opportunity they see opening up?

Mr Clark : It is something which we are seeing and are quite concerned about. We have had a lot of discussion with Austrade about it. They have also reformed their own operations. We have felt that some of the reforms of Austrade would in fact create gaps and that some states would try to act so that we do not get a coordinated response. I think we do need to keep coming back to team Australia in Australian promotion, be it tourism, trade or other industry specific activities. Perhaps the most useful thing that can be done at the moment is simple timetabling, if everyone was talking—as I know they do through senior officials groups—to make sure that there is some coordination going on. It may require some flexibility among the states and federal agencies as well, if people have some aspiration.

The other thing which occurs to us is that when state premiers want to do things—premiers and ministers from time to time lead trade missions from their particular state—from our perspective they should be encouraged to pursue the strategic opportunity and take all of Australia with them. We certainly support the sharing of the workload and there being a good, strong and prominent face.

Increasingly, the reality is that the scale of markets in many countries outside Australia is vast and cannot be supplied necessarily by any one state, so it will be a joint activity from Australian companies who are servicing a market from multiple states or, in fact, multiple places from around the world. So if we could encourage coordination amongst the states and the federal government in their activities that would be good.

Part of the reason the last Indian Ocean rim association meeting was not as successful as we would have liked was, as I said, not least because the Indians did not necessarily give it the focus that we had hoped they might. But we were also going to structure a trade mission to go in association with that, as we saw it as a business opportunity to have a business dialogue and to take others, and then we learnt that the New South Wales and Queensland governments were taking trade missions independently of us and anyone else, and two weeks apart, behind the Indian Ocean Rim meeting. As well, our Prime Minister had only been there several weeks in advance of that meeting. So there just appeared to be a general lack of coordination going on. That comment about people knocking on the same doors at a high frequency is often heard in our markets. What would be good is if each time the knock was on the door it was building upon the last one rather than competing against it.

Senator FAWCETT: Sure. You talk about services in your submission and you highlight that it accounts for about 75 per cent of Australia's output. You make the point that there should be a greater emphasis on services in trade liberalisation initiatives. Could you speak a little more about ACCI's view of trade liberalisation and whether or not you find DFAT reactive enough so that if there is a particular opportunity one of your members sees opening up they can engage with the respective country on a bilateral basis, or whether you find your input just gets rolled into the sort of negotiations held every five or 10 years with a bilateral partner?

Mr Clark : I think we work well with the department of foreign affairs. They are receptive to ideas from business, and when we put some ideas to them they take those up. I guess it is fair to say, though, that they operate within the broader trade frameworks, from the WTO down. We support those activities and the efforts of the government in, firstly, trying to break open the Doha Round and, secondly, putting emphasis on bilateral trade agreements at the moment. What does concern us is that some of these could be overlapping and that there is a lot of time and effort spent on trying to get relatively marginal benefits rather than opening up new areas. Hence, our concern at the moment that, in the Pacific, Australia already has the AANZFDT Agreement, quite a number of bilateral agreements, the Trans-Pacific Partnership negotiations that are going on and now the new RCEP ones. Of course we should be party to those, but what occurs to us out of that is that there is a dominance of activity in the Pacific and an absence in the Indian Ocean, rather than there being a balance to it.

That said, our point about the services industry, which is the growth centre for Australia into the future as we have this opportunity with our educated workforce, is to get that offshore and to make sure Australian firms are the dominant ones and that it is Australian firms who are taking over others, unlike some examples which are going on at the moment. I can point to the legal industry as an example. What we are observing is that quite a number of international law firms are coming in and, while they are not necessarily taking over, they are becoming the dominant name on the letterhead. The Australian firm is perhaps not being as dominant as it might be, or it is disappearing entirely into a global organisation rather than the Australian one being dominant.

We are keen to see the Australian government ensure that it is Australian services industries as well that are getting on and that it is not just traditional goods activity in a free trade agreement. I think this focus is coming, but there is still work to be done on it, and of course we are dealing with a negotiation with another government or numbers of governments who often enough in our region are also developing countries. It may take them some time to come to liberalised market circumstances, but we think we should do it.

A lot of the services trade at the moment is inbound education, rather than Australian institutions necessarily going out. I know they are all trying very hard, but sometimes the rules for investment in foreign countries prevent companies from necessarily being able to take up or even start up a business; they may well need a local partner, or there may be rules around what level of investment they can make or whether or not they can even own a majority of a company in that foreign country. These are things which need to be addressed. It is quite difficult to do outside of the framework of the free trade agreements.

Senator FAWCETT: Your submission also touched on food and the increasing food task globally. I have two questions. You made the following comment:

Australia’s capacity to produce food to contribute to satisfying world demand is limited.

You referred to recent drought conditions as a part of that, saying 'Australia is not always a reliable supplier.' You then go on to say:

Australia should support Australian farmers and agribusiness to become investors and service providers into foreign countries …

With regard to the second part, are there any specific areas beyond, for example, the CSIRO research that is being done, where you see that the Australian government needs to support the private sector? As for the first part, about the ability of Australia to produce food, are any of your members actively exploring options to develop the north of Australia, where we have a reliable water source, for climate- and environment-appropriate crops?

Mr Clark : No doubt they are, but I am not privy to their own activities. What we are really thinking about here is that Australia has a very strong research base in developing farming and food production systems under a whole range of climatic conditions, be they tropical, alpine, arid or temperate. We have very good researchers who are extending their knowledge across the globe for this and some of the technology associated with it.

We are also now considering that Australia traditionally produces the commodities but does not in general do an awful lot of processing, for a range of reasons, before selling those commodities offshore. Increasingly, Australia has difficulty in doing that so that it can supply the global requirement. As the globe goes to a population upwards of seven billion people, supplying from Australia means one of two things are going to happen: either the supply will expand, and that is not generally thought to be possible, globally, or the price will go up, and price inflation in food often causes instability in political circles around the world.

That said, we are more than happy for Australian farmers to be paid better than they are at the moment or to receive a better return for what they are doing. At the moment we are contemplating agriculture as a services industry rather than as a commodities industry. Australia has strong expertise in how to carry out really good agriculture and food production, with high-quality products and high-yielding production coming out of it, be it livestock or crops. How do we take that expertise offshore and not just try to sell the direct commodity from Australian shores all the time? How would we take agriculture to be a services industry and take our farmers and the support services that they have offshore so that they can do what they do best in other countries?

I have a regular visitation program of ambassadors from foreign countries coming into my office. Almost to a person they come with an investment agenda and a food security agenda, wondering what they can do to feed their own population. They are not necessarily looking at how to supply the world; it is a simple question of how to feed their own population. Australia can assist in doing that. We need to start reflecting on the things we have strengths in—and agriculture is one of them—and how we turn them into a global force inclusive of the service aspects rather than just trying to sell the commodities alone from our own shores.

Senator FAWCETT: You are talking a lot about exporting our services and our expertise in agriculture, which I support—it has been a strong part of Australia's contribution in the region. Are you seeing much investment from Australia in the commercial sphere—to whatever extent, whether it is 49 per cent holding or otherwise—in regional countries in the food production space? Or are most countries closed to that?

Mr Clark : We are not seeing it, and quite a number of countries are closed to it at the moment. It is something we would hope that the government focuses on in their FTA discussions—that is, how to ensure Australian investment inclusive of land can be done by Australians offshore. So it is quite interesting that we are having the local debate about the importance of and the implications for foreign investment in Australia, but often enough that is not reciprocated—we cannot invest in foreign countries in the same way that they might invest here. That said, there are ways around that. There are a number of countries, some of them in the Indian Ocean rim but certainly around the globe, who are welcoming of investment and investment models which may or may not involve ownership. But if you are dealing with a services industry, perhaps you do not need to own the land in order to receive the receipts from the activity.

Senator FAWCETT: Are you hearing any push back from the people that you say are essentially queueing up to come in through the door, looking at investment opportunities around food security? Are you hearing any concerns raised by them in the light of the discussion that is occurring here in Australia about the foreign investment review process?

Mr Clark : We are not hearing that directly from any of the players here in at all, but you do hear it sometimes at government level—that if Australia is a difficult place to invest in—and it is seen as a welcoming place, but if that is tightened—then firstly, there are other markets where that capital can go. We need to recognise that capital is mobile and if it is not coming to Australia it will be going somewhere else. The second aspect is whether or not you then see any detrimental impact on other aspects of the economic relationship going on: whether there are limitations, or whether or not Australia is preferenced in their buying. You can see from time to time that some of those activities go on. We are seeing it in Indonesia at the moment, where the practical approach which was taken to the live cattle trade there has had other ramifications for our economic dealings and that is now taking some time to rebuild.

Senator FAWCETT: Your submission also talks about the Australian economy suffering from an extended period of much diminished productivity growth and eroding competitiveness, which goes to that issue of the mobility of capital and where it may go. Do you wish to expand at all on your comments about drivers of that reduction in productivity?

Mr Clark : We have a project looking at that at the moment. We have not got that to its conclusion but productivity appears to be in decline in Australia. There are a number of commentators across different sectors who are making that comment. We have a strong and informed workforce but we do not appear to be getting the best out of it, and there appear to be limitations not only in our industrial relations system but also I think in our investment horizon. It is recognising that we are operating in a global workforce—and a global economy as well—and that capital is mobile goods, and that mobile traders will go looking around the world for the lowest cost product that they can get inclusive of services. As the financial crisis continues apparently unabated, in the Northern Hemisphere anyway, then obviously there are strong drivers to reduce cost. It is difficult to maintain a high-cost economy and still supply the world with what it needs.

Senator FAWCETT: My last question relates to your comments on energy. You talk about our extractive coal, natural gas and uranium industries, and you make some comments about nuclear energy. Where do you see the future for Australia in terms of nuclear energy, either domestically or for export?

Mr Clark : Domestically it is going to be a challenge, but for export—as we have seen in the agreement with India to supply them with uranium—it will, I think, unlock a number of doors in our relationship with India. It also clearly assists them with a low-carbon technology. From the Australian Chamber of Commerce and Industry's perspective we think that the government's approach, and to some extent the global approach, is flawed around climate change. What Australia has is that it is a global supplier of energy in various forms and services. If we can combine those things as our strengths, then we can also be assisting the global effort on reduced carbon emissions through our own technology—black coal, clean coal technology, gas, uranium and food for that matter—as energy sources, combine that with our own strong skills in engineering and design. And also look for opportunities where it is the Australian economy as the one benefiting from the interest the globe has in how to reduce carbon emissions rather than what is a taxing position at the moment. Energy is one of the clear competitive advantages that Australia has in all of its forms and we need to be maximising our opportunities in that field.

CHAIR: I would like to ask you a question about the business group of the IOR-ARC. Professor Rumley referred to the structure of the IOR-ARC when it was set up as having three groups—the academic group, the tourism group and the business group. In his assessment the only group that has really taken off a little bit has been the business group. He said:

The main reason for that is that it is driven very hard out of India. The Indian business community has a very strong view of India's role in the Indian Ocean.

Would you like to comment on those sorts of views and whether you feel ACCI can join India in a cooperative way in driving the development of the Indian Ocean business group?

Mr Clark : I think we could. I am not as familiar with the other two groups to be able to make any particular comment on them other than that they do appear to operate disparately rather than coming together. Our observation is that, because the secretariat of the organisation is in Mauritius, perhaps not well funded and has not been held up as an organisation of high regard by a number of the members, then perhaps it has languished and its potential has not been realised. Certainly, we would like to see Australia taking a leading role now in reinvigorating the organisation broadly. I think it did aspire at some point to be the APEC of the Indian Ocean or that sort of organisation. I am sure they do not like the comparison. It is, at the moment anyway, the only institutional framework for that region, so we need to work with it rather than see something else develop over the top of it. Some focus at all would be good.

That said, I think, the business community is the engine house of where these relationships will come from. We have just had a tremendously good experience in Indonesia, which I said before, where the business organisations, ACCI and KADIN, the Indonesian chamber of commerce, and then the two bilateral Indonesia-Australia and Australia-Indonesia business councils formed what was called the 'business partnership group'. We received some funding from AusAID via DFAT to support that work to assist with the development of a common business view to then inform the negotiators in the comprehensive economic partnership negotiations. We think that we achieved an enormous amount in that, and I am happy to furnish you with a copy of the report if you would like. It is certainly available on our website and DFAT already has one.

It was given to the two trade ministers, so Minister Emerson also has a copy of it already. We were able to develop a very strong position on free trade, free investment and free movement of people in the lead-up. It is a mutual position of business from our two countries.

Now, we think that that is something that could be built upon for the Indian Ocean Rim. Again, our suggestion is to perhaps not go for all of the countries all at once but pick out a few—maybe building on the work we have done with Indonesia. India would also be very good, I think. An African partner might also be useful and, of course, the Middle East. These things might then unlock the broader discussions on improving the general trade and investment relationship across that region. It will take time and it will take resources, but I think business is willing to be a partner in that process.

CHAIR: That is very good and very interesting. We would like a copy of that report. I actually belong to the Indonesia Australia Business Council, so I might get a copy of it anyway. But if you could forward a copy to the secretariat that would be appreciated.

Mr Clark : We will.

CHAIR: Thank you. You said that the IOR-ARC secretariat is in Mauritius. Will that be there permanently or will it shift with the change in chairmanship?

Mr Clark : I think it is permanently located there. I do not think there is a rotating secretariat that goes with the country of the chair. I would have to check that.

CHAIR: Do you think it would be desirable to move it to a more metropolitan centre, if you like, Mauritius being somewhat small and out of the way?

Mr Clark : I do not know the history of how it came there. I guess there is some merit in it being in a developing country that is perhaps a neutral venue in the region, but it is certainly not an area which is as easy to get to as some other places. Similarly, a rotating secretariat means that it waxes and wanes and you have to have handovers, and it is dependent on the nature of the country. I think the more important thing is to ensure that it has strong resources and strong technical capability. I do not see any reason why you could not have, for example, centres of expertise in other countries who give assistance on particular sectors to a centralised secretariat. I would not want to say that Mauritius is doing a bad job of it, but I think Mauritius perhaps has limitations to its capacity to serve as such a secretariat without strong input from other countries.

CHAIR: Yes. Thank you for those remarks. I read that you might have felt that way from the comments you made. So your organisation is obviously very committed to the concept of developing a stronger trade relationship between the countries of the Indian Ocean Rim. Do you work closely with Austrade in seeking to promote those objectives?

Mr Clark : We certainly try to do that. Whenever we have dialogue discussions with them, we always raise the Indian Ocean Rim is an area of interest to us. They are not necessarily operating within that parameter either through their own reforms, as they are operating in a number of what they regard as frontier markets—they have withdrawn certain levels of service, anyway, from what they regard as mature markets. So parts of Africa, parts of the Middle East, parts of India and parts of Asia are certainly the focus of their activities, but it tends to be more of a bilateral approach on key markets, rather than necessarily being a regional approach to the Indian Ocean Rim countries—which I think is just characteristic of the way Australia is broadly approaching the Indian Ocean. I think there just has not been a broad focus on it, unlike the Asia-Pacific region.

CHAIR: Yes, I think that is a fair comment. What government department, then, would you see as being the most appropriate for you to work with to promote the regional concept?

Mr Clark : The Department of Foreign Affairs and Trade is the natural grouping, but I think its focus has been more on the foreign affairs part than the trade part in the past. Clearly, there are relationships, there is military history, there is risk in the region, there are some problems with states in the region, there are a lot of developing countries across that region—so there is some aid activity going on there as well. So, broadly, it would be the Department of Foreign Affairs and Trade. We would certainly like to see a ramp-up of the trade component of interest in the region, and we think that the foreign affairs component should be a strategic approach to befriending the region as much as possible, and encouraging and influencing it in a way which is desirable to Australia. I am sure that is going on now, but it needs to continue and it needs the addition of a trade agenda.

CHAIR: Yes, because the trade agenda becomes, if you like, the significant benefit from the development of this regional concept in terms of the economic benefit both to other countries and to Australia. Are there any other remarks you would like to make, as we are drawing to the end of your time with us? Would you like to make any concluding remarks?

Mr Clark : No. I have enjoyed it. I appreciate your tolerance of the use of technology, as I am in Auckland. We would be more than happy to assist you again if there are any points of clarification you need—or, if, through your own deliberations, you have some ideas, we would be more than happy to consider what they might be through your recommendation process.

CHAIR: Thank you. We thank you for appearing. I am at least very pleased to hear how enthusiastic you are about the development of closer ties around the Indian Ocean Rim. Your evidence has been very useful, so thank you very much.

Mr Clark : Good. Thank you very much, senators.

CHAIR: I declare this hearing closed.

Committee adjourned at 14:31