Response to Ministerial Statement on Investment

Dr CHALMERS (Rankin) (12:24): Labor supports foreign investment. We see foreign investment as one way to create the jobs and to create the opportunities that might not otherwise be created or be made available in our economy. Our engagement with the world has made Australia a more competitive, a more productive and a more prosperous nation. As others have said, including the Minister for Trade and Investment today, we are a capital-hungry country and there is a lot of capital looking for a home around the world. We do not have in Australia sufficient capital to maintain the sort of employment opportunities and living standards that Australians have a right to expect and that Australians deserve.

The benefits of an open market have flowed to everyday Australians through lower consumer prices and increased employment opportunities. Labor knows that we will not improve living standards and opportunities for working people by pulling down the shutters on the world, so we do support foreign investment. Subject to the right arrangements and subject to the right protections, we do want a more open Australian economy. We are the ones who believe very deeply that it is possible to combine economic expansion and Asian integration and opportunities for a greater number of Australians here at home. This is effectively the Keating model that so many of us on this side of the House see as an article of faith. Some of us joined the Labor Party to advance the cause of, for example, Asian integration and a more open economy and to do so in a way that gives our people more opportunities to prosper.

Labor does have a really proud record when it comes to investment. Contrary to a lot of the commentary that you hear from the government's cheerleaders, there was an investment boom under the Labor government despite a global financial crisis. In the minister's own statement, he refers to a really stunning statistic—and I do congratulate him for informing the House of this statistic, because it is important. Between 2008 and 2013—so for the period of the former Labor government—there was an investment boom. Foreign direct investment was up 40 per cent over that period, which is an extraordinary amount of growth and something that we are very proud of on this side of the House. I think the whole nation should be proud of the way that Australia has attracted that level of foreign investment. Unfortunately, for the government and for the minister, it undermines the rest of his argument that Labor was in some way an impediment to this kind of investment. There was an investment boom under Labor. His own speech refers to 40 per cent growth in foreign direct investment under Rudd and Gillard. It is extraordinary that he would then go on to make his partisan points about Labor, having already quoted the key statistic.

I am proud in my own personal sense to have been involved in some of these foreign investment decisions in a former role working with the member for Lilley, the member for McMahon and the member for Maribyrnong—the Treasurer and various Assistant Treasurers over that period. I was proud that we took such a pro-investment stance when it came to many of the applications that came before us as a government. So I do thank the minister for mentioning that crucial stat about the growth in foreign direct investment under the former Labor government.

Of course I do not have time to go through it in detail here, but the Asian century white paper was also geared towards how we would become a more attractive destination for investment here in Australia, in the most dynamic region in the global economy, which is, of course, Asia. How do we attract investment from these countries that are becoming not just big exporters of capital but also big consumers so that we have this virtuous cycle of investment and trade in our region.

It was also good of the minister to mention 23 years of consecutive economic growth in Australia. That is almost a quarter-century of economic growth and continuous expansion in the Australian economy—every Australian should be proud of that fact—with half of it under us and half of it under our opponents across the table here. It is worth mentioning that whenever we think of that quarter-century of continuous economic expansion in our economy, we should pay tribute again to the reforms put in place by the Keating and Hawke governments and also by the efforts that all Australians put in, including the government, in saving Australia from the global recession.

Without the Keating reforms, without the stimulus and all the other factors that helped us over that difficult period in the global economy, those 23 years—entering 24 now—would not have been possible. So I think that, with our credentials as attractors of foreign investment and our economic record, we do come to this conversation with some credibility.

We also take a national interest approach to these questions. It is the only way to go. It is no use conducting these debates in an overly partisan way. It is of course our responsibility to highlight the flaws in each other's arguments. But this is after all about Australian prosperity, and we should always take a national interest approach to these sorts of questions. I think it is wonderful to hear from the minister for trade, for example, about the success that he might have in some of these forums. We support him touting Australia's wares around the world; that is the job of a trade and investment minister. As patriots first and partisans second we do want Australia to succeed in the global economy. We do want to have that success. We do want to have that prosperity. We do want to create jobs. So, where we can, we support the government. So we do not disagree with everything the minister said; we disagree with parts of what the minister said.

One of things we do disagree on is that we believe being 'open for business' should be more than just hanging a sign on a lectern. We need to be serious about it. You are not serious about it if you are hopelessly split as a party on decisions like the GrainCorp decision, which was a shocking decision for Australia. There was not a single mention of it in the minister's statement. When I was flicking through the minister's statement, I thought that a page had dropped out because there was nothing in there about GrainCorp, which was the most significant and detrimental decision that the government has taken when it comes to foreign investment, and I want to go through that in detail in a moment.

You are not serious about foreign investment if you have members like the member for Higgins denigrating the Foreign Investment Review Board, in the Treasurer's portfolio. I thought that they were disgraceful multiple interventions from the member for Higgins when she was running down Brian Wilson, who is a top servant of Australia, who runs the Foreign Investment Review Board, in the Treasurer's portfolio—not a peep from the Treasurer to defend his own Foreign Investment Review Board. You are not serious about foreign investment if you attack the confidence that overseas investors might have in that body. You can say what you want about their resourcing, you can even say what you want about their decisions, but for the member for Higgins to get into Brian Wilson about a lack of leadership, I think, sends the wrong message to the rest of the world. It would not surprise me entirely of some members opposite agreed with me. I would hope that the Treasurer would agree with me, given that the FIRB is in his own portfolio.

You are not serious about foreign direct investment if you have two views on agriculture, and we know that those opposite have very different views in terms of the threshold for—

Mr McCormack: You've got no views on agriculture—

Dr CHALMERS: I will run through them in a minute if you like. We have outlined our position on agriculture. They have outlined two positions on agriculture.

You are not serious about foreign investment if you play around with the renewable energy target like those opposite are. You are not serious about the billions of dollars that should flow into our renewable energy sector if you have ministers saying one thing, including here, and other ministers saying another. You need to be sending a signal to those who want to invest in renewable energy that we are fair dinkum about renewable energy.

With regard to what we heard from the Minister for Trade and Investment today, as I said before, there were some things we agree with and some things that we disagree with. We think that the most important thing that you need to contemplate when you are talking about being 'open for business' is not just the rhetoric, as important as that can be in some of these international fora, but also the decisions made, and I do want to spend some time on the inconsistency of those opposite when it comes to foreign investment.

The Abbott government failed its first test on foreign investment when it blocked the proposed takeover of GrainCorp by Archer Daniels Midland. Not only did the government block the takeover but it has been completely inconsistent in its reasons for doing so, showing that it is making up investment policy on the run. It is noteworthy that the minister mentioned the First Fleet in his statement but not the Treasury decision on that foreign investment proposal.

In April this year, the Treasurer claimed that he had blocked ADM's proposed takeover of GrainCorp because the American company was of 'not particularly good character'. The Treasurer's extraordinary claim was made public five months after blocking the ADM investment and raises serious questions about the transparency and fairness of the government's approach to foreign investment. This sorry saga of confusion and contradiction on ADM's proposed $3.4 billion investment gives the lie to the government's claim that Australia is open for business. The Treasurer and the Minister for Trade and Investment have made a series of inconsistent statements about ADM's proposed acquisition of GrainCorp. When the Treasurer announced he was blocking the deal last November, he cited national interest grounds and the impact on competition and made no mention whatsoever of the character grounds that he has since talked about. Then, in March this year, the Minister for Trade and Investment told an investor conference the decision to block the takeover was just a signal that the deal's timing was wrong and that 'there may be an opportunity at some stage' for ADM to renew its bid for GrainCorp. A month later, the Treasurer made a new claim when he said that one of the reasons it was knocked back was concern about the company's character. Given this claim was made so long after the decision to knock it back, we do wonder whether ADM was given the opportunity to respond.

If the Abbott government wants to show some leadership and find some consistency on foreign investment, it could start by providing a coherent explanation for that particular shambles. As the BCA's chief executive, Jennifer Westacott, said at the time of the ADM decision, certainty about Australia's foreign investment policy and transparency in communicating the reasons for decisions are important for global confidence in Australia. Inconsistent and incoherent behaviour by the government on major investment proposals will erode Australia's reputation as an investment destination, which will be bad news for jobs and growth.

In addition to the Treasurer's retrograde decision against ADM, we also have the tail wagging the dog inside the coalition party room, with the imposition of new and arbitrary limits on investments in agricultural land. The minister talks big when he is on the phone to financial journalists, but he cannot stare down the Nats in his own joint party room.

In a speech to the Economic and Social Outlook Conference in Melbourne in July, Labor's shadow minister for trade and investment, Senator Penny Wong, outlined Labor's ambitious approach to lifting the thresholds on foreign investment. Australia has always built its economy with investment funded by a mixture of domestic and overseas capital. We agree, as I said before, with the minister that our economy is capital hungry and it does rely on foreign investment to create jobs and business opportunities and to boost growth. As part of a comprehensive agreement delivering real market access gains and dealing responsibly with the labour movement, Labor is inclined to support China enjoying the same investment thresholds as the United States.

That means a threshold of just over a billion dollars for Foreign Investment Review Board screening of proposed investments in non-sensitive sectors. Lower thresholds should continue to apply for investments in sensitive sectors or by state owned enterprises where issues of national interest can arise. The proposed treatment of state owned enterprises must be outlined by the minister before any agreement is signed.

Labor does not agree with the Abbott government's policy of imposing more restrictive rules on foreign investment in agriculture. As Penny Wong has said:

If we are serious about significantly expanding our food exports to Asia, we must front up to the reality and necessity of foreign investment in our agricultural sector.

It is inconceivable that we will be able to scale up production to fully tap into the growing consumer markets of Asia without foreign investment.

Placing hurdles in the way of foreign investment in our primary production industries will only jeopardise their growth.

That is why Chinese investment in agriculture should be treated in the same way as investment in other non-sensitive sectors.

Looking further ahead, once Australia has a $1 billion-plus threshold for FIRB screening for investors from the United States, Korea, China and New Zealand, it is hard to see why we should discriminate against other major trading partners.

Minister Robb has also cited the increased threshold for these countries in his statement, but Labor believes that Australia should consider unilaterally extending the FIRB screening rules offered to these FTA partners to all countries. Just like domestic investments, foreign investment proposals would still need approval from competition and corporate regulators to maintain competitive markets and protect shareholder interests, and for proposals worth more than $1 billion, the government would retain its powers to scrutinise investments on national interest grounds. But for a country that thrives on investment, it makes no sense to impose unnecessary red tape or barriers to investors looking to build businesses and create jobs legitimately in Australia.

Labor has a proud record when it comes to foreign investment. We in Labor understand that foreign investment means growth and jobs when it comes to broader measures to open up our economy. Over the years, Labor trade ministers from John Dawkins and Peter Cook to Simon Crean and my own predecessor Craig Emerson have played important roles in dismantling protectionist barriers. Labor wants to see more opening up of our economy on a wider range of fronts, with deeper integration into our region and into the world, because this will deliver growth for Australia and will improve living standards for working people. If Australian policy makers handle this shift intelligently they will deliver great economic benefits for future Australian generations.

The Gillard government's Asian century white paper set the goal of ensuring that Australia's economy becomes more integrated with Asia, with goods and services, capital, ideas and people flowing more readily between Australia and the economies of our region. If this can be achieved there will be tremendous opportunities for Australian businesses and investors in countries like China and India. But it will not just happen by itself. It will require getting a raft of policies right, not just in trade but also in industry and innovation, education and science, investment and infrastructure. Unfortunately, in so many of these areas billions of dollars have been cut from investment right across the board. To be serious about boosting Australia's trade performance, it is necessary to be serious about boosting productivity and competitiveness. Declaring that Australia is open for business requires more than signage on a lectern. We need continuing economic reform.

Labor wants an innovative, competitive, dynamic and outward-looking Australian economy. We want to think more broadly about the kind of country that other companies around the world would want to invest in. The minister outlined some of those factors that companies around the world take into account. We think that that shopping list of policy measures was characteristically narrow and exclusive and an excuse to pursue some pet ideologies. To give a speech about investment and not to mention superannuation, to be the minister for investment and not talk up super in our economy, is bizarre in the extreme. Anyone who knows anything about this sort of stuff knows that that combination of foreign and domestic investment—that capital—comes not only from overseas but also from our own super funds and other sources. I think if we are going to have a minister for investment he should understand and should value and should treasure the role of superannuation in our economy, including the role of superannuation in helping Australia get through the global financial crisis.

The other thing we want to hear from the government is that a lot of companies around the world want to invest in a country where the people are smart and well trained and where there has been substantial, proper investment in the human capital of a nation. To be attracted to Australia, people want to know that they are investing in a country full of dynamic, adaptive and resilient people. That goes to some of the unfortunate, disappointing and devastating reforms to the higher education system proposed by the Minister for Education which will price some people out of the market. Those opposite do not have a great understanding of people who are vulnerable in our community. Some people will finish high school and they will think about higher education, but they will decide against it on the basis that they do not want to owe Chris Pyne $100,000, they do not want to take all their life to pay back that money and they do not want to choose between a higher education—a degree—and buying a house or starting a family. The massive majority of the Australian people are with Labor on that issue.

Mr Tudge interjecting—

Dr CHALMERS: No, they did not. When we talk about team Australia, its membership should be broad. What I mean is that when we are talking about foreign investment we need to make people understand that foreign investment is a big opportunity for Australia and that its benefits need to be more broadly felt. We need more people to be able to grasp the benefits of prosperity in our country. That means we need to do a better job—all sides of politics, anyone involved in the public conversation—of explaining to the Australian people the benefits of foreign investment and the benefits of opening up our economy so that those who adopt a reflexively defensive position do not dominate the debate. I think probably we could agree, and I am sure the minister would agree, that it needs constant effort on both sides of politics and all parts of the country to consistently sell the benefits of that effort if you do believe in foreign investment and in opening up the economy.

The minister mentioned before the global value chains that are dominating the trade structure of the global economy right now, particularly in our own region. When we talk about foreign investment and trade we want to make sure that we are training our people for the best parts of those global value chains. We want to be at the good end; we want to be at the high-wage, high-skill end of those global value chains. I think that is a worthy aspiration for a First World, first-rate country like ours. We cannot compete with other countries on wages. We cannot win a race to the bottom. So it is important that we are training our people up for the best parts of those global value chains.

In finishing up my response to the Minister for Trade and Investment, I will say that we do agree with the government on the tremendous opportunities available to Australia out of foreign investment and trade. We welcome the opportunity to engage on these issues, and we thank the minister for the opportunity to respond.

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