Sep 7, 2015

Asian Infrastructure Investment Bank Bill 2015 – Second Reading

Mr ALBANESE (Grayndler) (12:53): Machiavelli once noted the importance of making the right decisions at the right times. He said: ‘Tardiness often robs us of opportunity and the dispatch of our forces’. The Italian philosopher was of course talking about military affairs. But being in the right place at the right time is just as important when it comes to making big economic decisions. That is why I was concerned that, when the Chinese government first proposed the creation of the Asian Infrastructure Investment Bank late in 2013, the government dithered; it obfuscated. Mired as it is in internal division, the government mucked about for months before committing itself to what should have been seen as a policy no-brainer.

Australia is a part of Asia. We trade with Asia. It is absolutely in Australia’s interests that the nations of our region have efficient infrastructure, are able to grow and have higher living standards. If these nations have efficient ports and distribution systems, it is all the better for our exporters, not to mention Australian companies that are involved in the Australian infrastructure market. We must do everything we can to remove infrastructure bottlenecks, particularly in fast developing nations like China and India. That is because fewer bottlenecks means easier movement of Australian goods into these markets.

It is also fundamentally because of this that we should support the lifting up out of poverty of everyone, regardless of where they, through an accident of birth, live. And infrastructure is a key to economic growth and development. Australia has a responsibility to play a role in our region, as well as throughout the world. If we play that positive role, in the end it is good for them; but it is also good for our national interest. It is clear that our trading relationship with the nations of our region is expanding. That provides massive opportunities. But, if the opportunities are not able to be realised, then of course our economic growth will be smaller than it would have been otherwise. So that is why we are very supportive of the government’s decision—belated though it was—to sign up to the Asian Infrastructure Investment Bank.

I must say, it is consistent with the approach that Labor has had from the beginning when we supported this initiative. Indeed, in government we laid groundwork for cooperation between Australia and the Chinese government when it comes to infrastructure. In December 2011, I visited China and had discussions with my counterparts about how we could improve the cooperation on infrastructure between our two great nations. That led to the signing of a memorandum of understanding, here in Canberra on 10 April 2012. The MOU on enhancing cooperation in infrastructure construction was signed by me, as the Minister for Infrastructure, and by the Chinese Minister of Commerce, Mr Chen Deming, at a function here in Parliament House.

This MOU means closer cooperation on planning of projects, exchanging information on investment opportunities and technical expertise, training and education, joint conferences as well as joint infrastructure projects in the future. In the end, it is about creating more jobs, tapping more economic opportunities and delivering better infrastructure in both Australia and China. As a result of that a working group was established, with membership from government departments and agencies, industry organisations and financial and business partners to help implement the commitments outlined in the MOU, which were of course a prelude to the celebrations of the 40th anniversary of diplomatic relations between Australia and the People’s Republic of China.

This was a particularly important initiative which grew out of Gough Whitlam’s historic mission to China as the leader of the Australian Labor Party. The coming to office of the Whitlam government meant that that was put into practice with that recognition. At the time, the two-way trade between Australia and China was $113 million. Today it is well over the $100 billion mark. That is an example of the benefit that can be got from Australia having an enhanced relationship in our region.

As a minister I was very pleased to make four visits to Indonesia to promote the Indonesian Transport Safety Assistance package between Australia and Indonesia. This was a Howard government initiative commenced towards the end of its term in office. We continued and, indeed, extended it. It was very important—we had an MOU on transport cooperation between Australia and Indonesia that I signed on 15 December 2010—and has led to a great deal of cooperation between Australia and Indonesia in road infrastructure, in the operation of their airports and in the maritime sector, particularly with regard to maritime safety. It has been a major benefit.

Last month I attended meetings in Hong Kong. One was with the Australian Chamber of Commerce in Hong Kong. This is the largest chamber of commerce outside of Australia. It plays an absolutely critical role in promoting Australian business interests not just in Hong Kong but also into mainland China and, indeed, the entire region. There were more than 30 Australian business interests at the meeting, and afterwards I was taken by Boyd Merrett and Paul Freeman of Leighton Contractors to have a look at the work they were doing, providing leadership as Australian businesspeople, in extending the rail line, the metro network, to the south of Hong Kong Island. I had a practical look at the engineering challenges that are there. The work they are doing is of great benefit of course to the people of Hong Kong. The fact that we have that Australian presence there is also of great benefit here in Australia.

The Asian Infrastructure Investment Bank provides opportunities not just in terms of the finance sector but also for Australia to increase our engagement in the infrastructure sector in the region in an absolutely vital way. Australia’s total shareholding in the Asian Infrastructure Investment Bank will be US$3.7 billion, comprising US$738 million in paid-up capital. It will be paid in five equal annual payments, starting from when Australia ratifies the articles. There will be zero direct impact on the underlying cash balance, fiscal balance and net debt, as using cash to purchase shares represents a change in the composition of the Australian government’s assets. It is an investment rather than an expenditure. The creation of the bank is expected to boost infrastructure investment in our region by more than $100 billion. That provides an opportunity through the growth of that infrastructure market for Australian firms to benefit directly.

We hope the government will engage constructively on priorities for the bank and will work to ensure that robust transparency and accountability arrangements are put in place. Not only will this institution assist growth in our neighbourhood in terms of Asian nations; it will also open up opportunities for our infrastructure providers like construction companies, engineers and accountants. Many Australian companies are already active in this area. I have pointed out the change that was made in China with the MOU on cooperation, but wherever you go in the region—whether it be China, India, Vietnam, Indonesia, the Philippines, Japan or anywhere else—there is a very strong Australian business presence. The presence of Australian businesses is particularly important.

Another opportunity we have is that, because of our strong legal framework and support for the rule of law and proper business practice, Australia can provide international companies with a base for their operations in the region. Certainly, that is what a number of companies based in Europe have done. For example, growth has occurred in the presence of companies here. I have visited the headquarters of Bouygues, a French-based company, outside of Paris and discussed with their senior executives about them establishing a presence in Australia. Ghella, an Italian company, participated in the Italian infrastructure delegation that visited the parliament here in November 2012, which was led by the Italian Secretary of State, Mr Staffan de Mistura. That was the largest ever delegation from Italy to visit our shores. This extremely successful delegation resulted from my invitation when I visited Italy and met with Confidustria, the industry body that provides such an important leadership role in Italy. Major companies such as Ansaldo, Ghella and MERMEC are already playing a key role, and those companies played a key role here in construction of the South Road Superway and the Legacy Way tunnel in Brisbane. Importantly, by having a presence here and using that as a base into the Asian region, we can benefit in a big way in terms of infrastructure development and boosting our economy.

So I commend the government for getting there in the end and supporting this initiative. I say to the government that they should do a little bit more building and a little bit less talking about infrastructure, and it is a pity that the budget in 2015 had $2 billion in cuts this year and next when it comes to infrastructure. Two years on from the government being elected with a commitment that within one year there would be cranes in the sky of Melbourne, Sydney, Brisbane and other capital cities on new projects, in fact none of them have begun. Indeed, the government have been good at reopening projects or claiming projects that were initiated by the former government. What they have not been good at is initiating new projects and getting them going, which is why infrastructure investment has actually fallen under this government.