Speech to the Delhi Economic Conclave

20 December 2011

Please read my speech to the Delhi Economic Conclave in India, December 16, 2011

Good afternoon. It is a pleasure to be here today. I would like to congratulate the Confederation for organising this gathering. I would like to acknowledge my
colleagues from Trinidad and Tobago, Azerbaijan and Vietnam in particular as visitors.

I want to talk to you about ‘resources for all’ through the lens of Australia and India. Because I think if we’re capable of working on that relationship and
providing resources, it provides a model for the more global needs for energy security.

I should open my remarks by first of all indicating that within Australia, there is a great enthusiasm for all things Indian. And I don’t just mean in terms of
the fact that over 300,000 Australians have Indian descent. I don’t just mean because India now provides the ninth largest source of visitors to Australia, I don’t mean just because trade between Australia and India in the last five years alone has increased from AU$10 billion to AU$21 billion, which is roughly
at parity with the US.

But of course, and I should say before I get to resources of the mineral and energy variety, that we have a special relationship because of cricket. I’m not sure if his speech has had coverage recently, but Rahul Dravid gave what is called the ‘Sir Donald Bradman Address’ in Australia and he said that ‘cricket and the special relationship of cricket between our nations is a metaphor for other relationships’. He reminded Australians that on the day in June of 1930 when Jawarhalal Nehru was arrested by the British, Sir Donald Bradman destroyed the English bowling attack and scored 254 runs. So, a form of at least levelling the score.

But more seriously than that, he did make this point – and this is where perhaps we’ll move onto the topic that I know keeps economists up at night, it’s a question of energy security and resources – he said words to the effect that ‘when young Indian men go out to play cricket against Australia and the young men of Australia play cricket in the test this Christmas, they are the temporary trustees of the relationship’. They are the trustees of cricket and they are the trustees representing their nation, at least in one context. In terms of resources, we have opportunities between our nations, our resource-rich nations
and nations which are growing, to also in our period of time be the trustees of the present and set the ground for the future.

Australians are very alive to the growth story of India. We’re very alive to the growth story, in fact, of all Asian economies. I was recently in Hanoi and saw the
remarkable things that are happening in Vietnam. We watch what happens in America and Europe with great interest and some concern. But for Australia and
our economic trade at this point in time, we do more business with India and China, and the Asian economies than we do with the whole of Europe and North America. So we have a very clear focus, not only on East Asia, but South Asia.

When you look at the fact that India, in 2010 represent 5 per cent of the world’s GDP, by 2030 at least 10 per cent, and indeed by 2050 an even larger part of the total economic activity of our planet. When we look at the remarkable growth numbers in the workforce of India, when we look at the pace of urbanisation in India, when we look at the next five-year plan to create trillions of dollars of infrastructure in India, we understand in Australia that we have an opportunity to be part of the energy security of Indian future growth.

This is where we get into this question of ‘resources for all’. In 2010, we were exporting AU$6.8 billion worth of coal to India. And that’s up from AU$2.6
billion as recently as 2006. In Australia in the last three years, we have approved AU$513 billion of inward foreign investment into our nation. When I’ve been speaking with representatives of the Indian Government and state authorities and the private sector, people say, well, how easy is it to invest in Australian resources? Let me please advise you that our government and our private sector has an appetite for investment in our resources.

Our foreign investment laws are not particularly complex, but they do certainly measure national security and they do also take into effect that the deal should be commercial. A fact which is important when we look at ‘resources for all’ and the availability of Australia to share its mineral resources, there’s some pretty exciting numbers for people to contemplate. There have been only two foreign investment proposals in the last ten years that were rejected by the Australian Government – Shell and an Australian oil company, and the Singapore Stock Exchange and the Australian Stock Exchange merger. So, Australians do not have any difficulty with foreign investment in our coal, in our iron ore, in our gold, in our LNG.

Most recently in the last two weeks, the governing party of the nation, of which I am a member, debated changing the policy on the sale of uranium to India.
Traditionally this had been a problem because of the Non-Proliferation Treaty and the fact that Australia traditionally exported uranium purely to Non-Proliferation Treaty members. But we understand India’s need for the safe development of its uranium industry and energy. So, the Government changed its policy within the last two weeks to open-up separate negotiations so we can approach a treaty-level arrangement so we can export to India.

Compared to the growth numbers of India our numbers are modest. We’re forecast to grow in our GDP by just above 3 per cent, but still compared to some of the European nations that’s a pretty good number. Our unemployment is at 5.3 per cent, which compared to some of our European and North American colleagues is a good number. We have low net public sector debt – it is something like 9 per cent of our GDP as our federal government debt, and when you add on other levels of government it’s around 11 per cent. We have AU$430 billion of projected expenditure and infrastructure in our minerals and energy, our hydrocarbons, our oil, our coal and our iron ore infrastructure. We believe it is possible to support the legitimate Indian aspiration, as well as the legitimate Chinese aspiration, and those of other emerging strong growth economies to supply them with the resources they require.

Perhaps I might just conclude on this observation. In terms of working through access to resources in Australia, it’s only been in the last12 months that we’ve approved the GVK Group to be able to acquire a controlling interest in prospecting coal mine projects in our Galilee Basin in central Queensland in northern Australia. These projects are expected to produce up to 60 million tons of thermal coal per year.

The final example I’d put before you of Australia’s openness to foreign investment, and certainly foreign investment from India, is that in August of last year,
the Adani Group bought a coal tenement in the Galilee Basin with resources of almost 8 billion tons of thermal coal. And this year, we’ve granted Adani, which as you would appreciate is the largest private sector importer of coal, a 99 year lease of our coal terminal, providing Adani with its own coal export terminal. We believe that, in terms of providing ‘resources for all’, that Australia is more than up to the task of welcoming Indian investment. But I would also say that energy security, so people can improve their economic circumstances, is fundamental to Indian growth.

We also have aspirations that along with the direct provision of materials from Australia, we see opportunity for expansion in financial services, expansion in infrastructure, expansion in education services, and logistics. But please rest assured there is a huge appetite and interest in Australia for all things Indian, and your growth. But perhaps we’d like to win at least one of the test matches this summer. Thank you.