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Tuesday, 15 September 2015
Page: 6790


Senator RUSTON (South AustraliaDeputy Government Whip in the Senate) (13:26): I too rise to speak on the Asian Infrastructure Investment Bank Bill 2015. It is with great pleasure that I am able to make a contribution to the debate on this particular bill. It is also even more delightful to know that we have reasonably universal support for the benefits that such a bank is going to bring to our country.

The Asian Infrastructure Investment Bank Bill 2015 basically sets out the authority and the appropriation for the payment of Australia's capital contribution to the bank. This will facilitate Australia's membership of the bank. Following completion of all the necessary ratification processes and the like, Australia will lodge its instrument of ratification with the bank's depository in China, and Australia's membership of the bank will become effective on either the date of the lodgement or the day on which the bank is actually established. On becoming a member of the bank, Australia will be obligated to pay for Australia's shareholding. I understand Australia's total shareholding will be US$3.7 billion, which probably adds up to about A$4.5 billion on current exchange rates. So it is obviously a very substantial contribution on Australia's behalf. We have to realise that that contribution is going to have amazing and ongoing impacts for Australia.

We only have to look at what is happening in the Asian region as we speak. The Asian region is projected to account for half of the global population growth that we are going to see over the next 35 years. It is already the world's most populous continent, but it is projected that another billion people will be resident in the Asian continent by 2050. It is not just the increase in the number of people in Asia that is of significance to Australia as one of the residents of this particular region; the changing affluence in Asia means that we have a shift towards greater expenditure and a more western diet—particularly with increases in protein, which they are looking to gain through things like meat and dairy rather than plants. So the opportunity for Australia in the Asian area over the next 35 years is massive, and our involvement in the Asian bank obviously gives us a greater level of access to take advantage of these opportunities that are presented on our doorstep.

The key benefit of Australia becoming a member of the Asian Infrastructure Investment Bank is improved infrastructure throughout the Asian region, which will provide great opportunities for all of our trade and businesses in Australia. Australia's prosperity and economic growth are closely tied to the region. Not only does greater infrastructure investment mean greater demand for Australia's commodities, such as metals, but it also means greater investment in ports and rail in emerging markets will create new opportunities that currently do not exist for Australian companies. The AIIB also provides an opportunity to deepen our relationship with our latest trading partners in the region and the largest economies, along with the other 55 member countries of the bank. It is interesting that this particular opportunity has come to our doorstep so soon after the trade agreements that we have entered into since coming into government with our near and very important economic neighbours of China, Korea and Japan.

Obviously there has been a lot of talk in recent times about the ChAFTA, but the overwhelming majority of Australians believe that the opportunities that ChAFTA provides for Australia are going to be of great benefit to this country. Let us remember that China is already Australia's largest trading partner. It buys almost one-third of all Australian exports, so one-third of Australian exports go into one country, which is a massive amount—it was valued at nearly $98 billion in 2014. It is also good to remember that it is our top overseas market for agriculture, research and services exports, and Chinese investment in Australia has been growing strongly in recent years. It is believed to have reached in excess of $65 billion in 2014. ChAFTA builds on Australia's largest successful commercial relationship with China, and by securing markets and providing Australians with even better access to China across a range of our key business interests, including goods and services and investment. The trade and investment opportunities with China will be a central key to the prosperity of Australia because, as I have probably said ad nauseam in this place, Australia is an exporting nation and we are not going to get rich selling to ourselves, so the importance of the kinds of agreements that we have put in place since coming into government in 2013 are absolutely essential because the prosperity of Australia is going to be driven by the prosperity of our export market opportunities.

It is not just China; we have other agreements, particularly the two that I have already referred to—the Japan and Korea agreements. Once again, the economic partnership that we have established with Japan—Japan has been a very sophisticated market for Australian exports for a very long time, and in some areas it is our biggest market. We have had a long-standing and very complementary relationship and economic partnership with Japan. It is also our second largest trading partner and the fourth largest source of foreign investment into Australia, so the economic partnership agreement that we entered into earlier this year is of major importance to Australia, particularly some of our export markets, which come from—and I know that certainly for my home in the Riverland in South Australia the Japanese market is a massive market for our citrus and it has been not just a very large market but also a very profitable market for Australian citrus growers over a very long time. It is also a big market for our beef, as you would know, Mr Acting Deputy President Back; wine, which is another huge export commodity from South Australia; dairy; and seafood. This particular market, the Chinese market and, indeed, the Korean market are very important for our farmers and our agricultural producers across Australia. Given that Australia has a reputation as being one of the cleanest, greenest and finest producers of good quality, safe, clean food these particular agreements are very important. The fact that we have these agreements is very important, and overlaying that is this very important piece of legislation that will facilitate Australia's membership and involvement in the Asian Infrastructure Investment Bank. I think it is very timely that they should coincide.

It is also really important to understand the opportunities that will be provided for Australian companies to bid for the projects that will be invested in by this particular bank. One of the things that is very exciting is the opportunity for an open procurement model, meaning that companies from any country, not just member countries, will have the opportunity to participate in bidding for contracts. But, as a member of the AIIB, Australia will benefit from having a working, up-to-date knowledge of what is going on, the projects that are afoot and the opportunities that we are able to make available to Australian companies. Australian companies have won contracts from other multilateral banks, such as the Asian Development Bank, so I think Australia is well positioned to take advantage of the opportunities that are provided by this new Asian Infrastructure Investment Bank.

While the AIIB is not precluded by its articles of agreement from investing in Australian projects, it is my understanding that initially the focus of the bank's investment in infrastructure will be in developing countries, particularly in the Asian region, where it will be able to play an important role in encouraging private sector funding and financing of infrastructure so that the opportunities that are able to be capitalised on in these particular areas can be realised.

Australia's contribution to the bank, as I said, will initially be that Australia will put in approximately $932 million paid in contribution to the bank, but we will also be responsible for about $3.7 billion in capital, which will only be drawn on if the bank cannot meet its liabilities within existing resources. I suppose the question is: why is Australia making a decision to commit $932 million—cold, hard dollars—to the AIIB instead of funding other priorities, because there has been much debate in this place about the limited resources that are available to the Australian government for investment or for expenditure on any government project, no matter what it might be. The decision by the government to make the Asian Infrastructure Investment Bank a priority for the allocation of resources is something that has obviously been very, very carefully and strategically considered.

We believe that Australia's economy will benefit from improved infrastructure in the Asian region. Joining the AIIB with them will promote stronger linkages between Australia and our neighbours. It will drive economic growth and it will generate benefits for Australians in the area of trade and business. And, as I said, being an exporting nation, if we continue to concentrate on the activities that happen only within our shores then our opportunities for the growth and expansion of our economy will be extremely limited. So, I think the forward thinking of the current government in seeing the opportunities that this particular infrastructure bank is able to provide for Australia—Australia's businesses, Australia's economy and Australia's future—represents a very strategic decision and one that has been very wisely made.

Also, there is no doubt that the AIIB will work closely with the private sector to deliver these infrastructure projects. Given that Australian businesses are considered to be world leaders in many of the areas of infrastructure delivery, the opportunity is there for Australian businesses on the ground, not just the benefits of the infrastructure once it has been provided but there are opportunities in the build phase of the infrastructure for Australian companies. That also needs to be considered in realising the net value to Australia, the net economic benefit and the net economic opportunity, of its involvement in the Asian Infrastructure Investment Bank.

Consistent with the treatment of Australia's contributions to other international financial institutions, Australia has paid in capital. It will be treated as an investment. Therefore, it does not come at a cost to other government spending and will not directly add to the budget deficit, which is very important for Australia's books, to make sure that we keep our credit ratings where they need to be, sensibly treating capital as an investment.

But you do not just need to take my word for the benefits that this opportunity is going to provide for Australia. A number of people have come out publicly in support of the Asian Infrastructure Investment Bank. And I think it is very important that we seriously take into account some of the comments that have been made by important heads of Australian industry and industry groups. They are the ones who represent the very people who will be the beneficiaries of this particular project. But we must also reinstate, reinforce every time, that if we have businesses that are going well in this country, these businesses employ people, and the most important bottom line is to ensure that the majority of Australians—that every Australian we can possibly can get into the workforce—has an ongoing job. That is probably the most important thing that any government can achieve.

But we as a government believe that the best way of facilitating people getting jobs is making sure that the jobs exist in the first place. You cannot create jobs out of thin air; hence we believe that investment in these long-term productive activities is much more important. It comes back to the old saying that if you want to feed a man for a day you give him a fish but if you want to feed him for life you give him a fishing rod. I think that is very important with these sorts of projects, these sorts of strategic investments by government. What we are seeking to do is provide the fishing rod to Australian industry so that we are actually able as a country to feed our people in the longer term and make sure they have jobs, have a standard of living to which I think all Australians aspire. And we certainly do not want to see our standard of living slipping backwards the way it has done over the past few years. It is these sorts of investments into the future and the future prosperity and economic opportunity that will make sure that Australia retains or regains its position as an economic powerhouse that is able to deliver for all citizens of Australia.

But, as I said, do not just take my word for it. There are a number of industry leaders who have been very public on the record about their support for this opportunity. As an example, the chair of Industry Super Australia, Peter Collins, said:

This move will be a huge fillip for Australian expertise in funds management, engineering, construction, architecture and legal services which could be widely applied to projects financed by the AIIB.

He also said:

The activities of the AIIB will not only provide new opportunities to deploy capital but also export super funds' know how in connecting pension savings to bankable projects.

And:

The resources of the AIIB will increase scope for pension and sovereign wealth funds to invest in long term, productive assets in the region.

So, obviously the head of one of Australia's large industry super funds has seen the opportunity for his particular funds and resources that he has available for investment in these sorts of projects and that they really give him the opportunity to generate the economic growth that he needs to in order to provide the outputs that need to occur at the end of the investment in a superannuation scheme.

The Business Council of Australia chief executive, Jennifer Westacott, equally made some very positive remarks about the opportunities that the infrastructure bank provides for Australia:

The Business Council of Australia (BCA) welcomes the government’s decision to join the Asian Infrastructure Investment Bank (AIIB) as a founding member.

As a founding member, Australia can play a key role in setting the direction of this body and the decisions it will make to finance projects that address Asia’s infrastructure gaps.

Australian companies will benefit from opportunities to participate in developing and building new AIIB financed infrastructure, as well as having access to improved infrastructure which facilitates trade in the region.

Ms Westacott obviously has taken the view that the opportunities are not just in the development or the build component of the opportunities that this bank provides but also in the increased trade and investment opportunities for Australia in the region.

Australian Industry Group chief executive Innes Willox was equally full of praise for the bank:

Ai Group welcomes Australia's participation in the Asian Infrastructure Investment Bank. We have argued for some time that the AIIB's objective of financing infrastructure development in the Asia-Pacific region will foster greater trade and economic development in the region of Australia's closest and most important economic partners.

Given our national ambitions to be more thoroughly engaged in the Asian region, it makes clear sense for Australia to become a founding member of the AIIB and to work to ensure its success.

Mr Willox makes a very good point in terms of the strategic overall policy of this government in acknowledging and recognising the opportunity that Asia provides for Australia. So often we hear the rhetoric whereby governments say that they are going to do things—'We are going to be the food bowl of Asia'; 'We are going to feed the world'; 'Agriculture is going to be one of the mainstays of our economy.' So often we hear the rhetoric, but often the policies that sit behind that rhetoric do not deliver the outcomes of the policy.

If you have look at a broad range of the activities that have occurred under the government that I am a member of—this current coalition government—many of the things that we have sought to put in place since coming into government have been the policy implementation and real actions behind the rhetoric that we have heard for such a very long time. The free trade arrangements that we have put in place with Korea and Japan—and hopefully we will see the nonsense in relation to the ChAFTA arrangements resolved very shortly when the opposition realises that focusing on one particular component of that agreement is completely silly in comparison with the massive economic benefits that we can deliver to our country from signing it. When you look at the agricultural white paper that we have seen in recent times and, on top of that, this particular bill today—the Asian Infrastructure Investment Bank Bill 2015—that seeks to provide the opportunity, the authority and the appropriations for Australia's involvement in what I think is a very important initiative and a fantastic opportunity—the Asian Infrastructure Investment Bank—which will enable many Australian businesses, over a very long period of time, to realise the series of opportunities that would not otherwise be available to them in the largest and most quickly growing economy in the world. (Time expired)