10 November 2015
Northern Australia Investment Forum, Trans-Pacific Partnership Agreement (TPP)
Janine Perrett: I spoke earlier with our very busy Trade Minister Andrew Robb in Darwin.
Andrew Robb: It’s been a remarkable three days; we’ve had 250 people from 20 countries, plus 100 investors from Australia, and it’s been a really fast and furious program with enormous connections made and a big buzz in the room for the whole three days.
Janine Perrett: Apart from a marketing exercise for Northern Australia to say it’s open for business, what tangible benefits do you think you got out of it?
Andrew Robb: We’ve introduced some very big investors from around the region, people who are looking for projects worth hundreds of millions of dollars or billions of dollars. Some of them already have significant investments in other parts of Australia, but were unaware of the prospects in Northern Australia and the scale in many respects, so we’ve introduced some very excited people to the scale and the range of projects; from resources and energy, to agriculture and agribusiness, tropical medicine, tourism, infrastructure and international education.
They saw all of these sorts of projects; we had a marketplace where we had well over 100 investment-ready projects that were being considered, and we had many presentations during the weekend.
Janine Perrett: Are you saying you’d expect to see some quite big deals to come out of this?
Andrew Robb: I have no doubt that in the months and years ahead, the forum will be responsible for deals worth tens of billions of dollars.
Janine Perrett: Where can we see those deals? We know already you mentioned tourism, agriculture and resources; they’re the traditional areas, and there’s already a lot of investment being planned, that wouldn’t be a surprise. Where are these new deals – ones worth billions – that you perhaps wouldn’t have seen until this event?
Andrew Robb: We had investment-ready projects for them to see. So for instance, there’s the Tiger Prawn project up near Stage 3 of the Ord River project; that’s 10,000 hectares of ponds and it will be the biggest prawn operation in the world, but it will barely touch the sides in terms of demand that we see around the world for prawns. So that’s a $1.5 billion project; now investors have seen it and they understand the scale and they can see there are literally dozens of other similar types of opportunities.
We’ve seen agricultural projects, where they’re taking what has been straight cattle country, with one beast to the 10 acres, and they’re going to add water and now irrigate literally thousands of hectares.
These sorts of projects are multi-billion dollar projects, and they involve taking what has been large cattle stations, adding water – taking water from river diversions or other means like aquifers – and turning that country into highly productive agricultural land, possibly with beef feedlots and horticulture, all of the things that are now in high demand in the north, at a premium price.
Janine Perrett: There’s been some criticism again this week about a number of large properties up for sale, or ones that are going to go presumably to Chinese interests in that neck of the woods. What’s different about this investment program that will just not be Chinese buying up our agricultural land?
Andrew Robb: We’ve had big investors from 20 countries; the Chinese get a lot of bad press in a sense. Last year, the Indonesians came in and bought the Underwood’s property – two of the best stations in the Territory – and it’s a good thing, because they’re in the live cattle business and it introduces the people at the other end of the supply chain in Indonesia, to the cattle production issues. That’s true of the Japanese and all sorts of other interests; JBS from Brazil for example, they’re here in a big way.
The point is, it’s not just turning over properties; it’s taking the opportunity that’s presented by the explosion in the middle class in the region around us, who now have the wherewithal to pay a premium price for protein, and we will see a lot of that cattle country turned into agricultural projects, which require large scale irrigation and major development.
Janine Perrett: You talk about agriculture, as I said agriculture and tourism we know traditionally, but this forum was also billed as talking about tech and innovation as well, and we know that is the new hot topic. What about from that point of view; is there much scope in Northern Australia on the innovation and tech side?
Andrew Robb: Again, if you turn the 17 million hectares of arable soil which is currently just running cattle – one to the 10 or 20 acres – if you turn a lot of that country, which is about the size of Cambodia, into agriculture and you do horticulture and you do 100,000 hectares of sugar or specialist crops or 200,000 hectares of other horticultural products, there will be one: a lot of innovation to deliver those sorts of projects, and secondly: we had a major session on tropical medicine.
Because the top half of Australia is in the Tropics, we are well placed to deal with a lot of those diseases; Malaria, Dengue Fever, TB – a lot of those that are a real problem in the Tropics, and we had people from around the world and several deals were struck over the weekend.
Janine Perrett: Yes and I see you did an announcement a couple of days ago about the government putting money in to help on Malaria research, so on that side, what are these investors looking at from the government point of view; are they looking for tax breaks? What’s the quid pro quo to get this investment because as you know, we’ve been hearing for many years – decades – that Northern Australia is the next boom area, but it just never seems to take off.
Andrew Robb: It’s never taken off for a very good reason and that is that the region around us has never had the income and the demand for high premium, high priced, high value agricultural produce. This country in the north is costly to develop, and so you need to be able to do big scale; and you need to be able to spend billions of dollars; and if you’re going to produce the quantity and the scale, it needs to almost be like a mini mine where the only difference is you’re producing a renewable resource and exporting it, you’re not exporting a finite resource.
Janine Perrett: What were they looking for from the government? What is the government offering as incentive to attract this investment?
Andrew Robb: We’ve announced previously and Josh Frydenberg – the new Minister for Northern Australia – announced the guidelines that will help us make decisions about the allocation of a $5 billion concessional loan facility, which will help put in place infrastructure; in many cases it will be joint funding, and the infrastructure might be water, or roads or bridges. There’s another $600 million for roads, there’s several hundred million for other water projects. Now we’re going to direct that at infrastructure that’s necessary to ensure some of these projects take off.
Janine Perrett: Andrew Robb I notice the ChAFTA agreement finally went through the senate, you gave credit to Labor for helping get it through, so that’s one down. But the TPP; there’s a lot of talk coming out of the US about the uphill battle in congress. You’ve been targeted; the pharmaceutical lobby is working on congressmen and you’ve been attacked over standing firm on pharmaceuticals. I know your view was always let’s get it signed and worry about the politics, but how tough is the politics going to be?
Andrew Robb: There’s 12 countries involved so they all have to have it ratified in their own parliamentary system. The big focus is on the United States of course and the congress and the difficulty they had in getting the approval authority for the president on this, much less getting the thing though in due course.
My sense is that this is such a huge deal. It’s 12 countries covering 40 per cent of the world’s GDP – one third of world trade – such a big deal, especially for the United States. It’s also strategic for them; it’s a commercial reinforcement of their pivot to Asia, and I do think that no matter who the president is, who’s in the congress, in due course I feel this will go through because of those reasons.
Janine Perrett: Even though Hillary Clinton has announced that she’s not behind it now? Are you saying that you think she’ll have another about face?
Andrew Robb: I know she said it was the gold standard trade agreement a couple of years ago, but if you have a close look at what she’s said, she’s said that on the detail as she understands, she’s opposed to it. But at that stage we hadn’t even quite completed it and the text just came out in the last couple of days, therefore, it was a qualified statement and the politics over there is red hot.
Janine Perrett: And we saw some of the details finally emerge in the last few days; there’s been critics in Australia, some headlines saying ‘see we were vindicated’. The challenge to some of this by corporations, even though we protected the tobacco side as you said, there is still some dispute that Australia, other countries, are vulnerable to corporate multi-national court cases. What do you say to the critics, who having seen the detail that’s come out so far, say it’s not as good a deal as it sounded initially?
Andrew Robb: Some of those came out within 20 minutes of the text. Now the text is 6,000 pages, and they were on phones to media all over the country, making the same statements they’ve been making for five years without any detail, so I don’t think we’ll change their mind.
The fact of the matter is that I was able to secure safeguards in the ISDS mechanism, which are in fact stronger than the ones in the Korean deal that we did, and that went through the parliament and I didn’t hear any squeals about that issue at the time.
People can be reassured that we’ve got safeguards in respect to public health and the environment which will protect us from any litigation, and we’ve got an ISDS mechanism in a range of countries where we maybe don’t have confidence in their legal system; this is a safeguard for our own investors who are investing in other countries within the TPP.
Courtesy of the Minister for Trade and Investment