As Invest Australia’s Senior Investment Commissioner in the United States, Bob Hunt is responsible for selling Australian investment opportunities to Americans. This influential insider recently visited Australia and, with the recent Free Trade Agreement (FTA) between the two countries, Anthill sought his opinion on the new playing field and what American investors view as the strengths and weaknesses of our market sectors.
ON HOW AMERICANS VIEW THE FTA WITH AUSTRALIA…
Outside Washington DC, the financial community and affected industries, there is not a lot of awareness. Americans are not as acutely tuned to international trade as Australians. American Congressmen were concerned that Australia might not have had the right kind of labour laws or working conditions or environmental laws. Americans are very concerned with – the sense that other countries have advantages because they’re not as conscientious about working conditions. But then they took a look at Australia they realised that workers are at least as well off here than they are in America.
ON AUSTRALIAN MEDIA COVERAGE OF THE FTA…
I would say that the FDA negotiations were reported fairly myopically in Australia. By and large the media took the kind of alarmist stance that we see too often in this country. That said, I think the media have come around. The biggest single misconception in Australia is that the FTA is somehow a reward for Australia being allies with the US. That is absolutely not true, I have spoken to several of the Australian negotiators and they said that if we were being rewarded we sure didn’t feel like it because it was a really tough negotiation.
ON AUSTRALIA’S MOST ATTRACTIVE SECTORS…
The most attractive sectors are probably biotech and pharmaceuticals, where we have had successes already and we’re expecting a lot more. There is a desire in the US to source promising technologies no matter where in the world they come from.
We’ve had quite a few wins in the financial services sector. Banks, investment banks, brokers, insurance companies, back office financial services, and so on. Those are all very hot areas. We believe that food processing and agribusiness are going to become more important. The people who negotiated the FTA for Australia believe that it will make it more attractive for American food processing companies to partner with Australian companies and to produce foods in Australia for the Asian market, which is rapidly developing Australian and US style taste. So I think all those are important.
The information technology sector is a high priority for us. Australia has a huge amount of talent in the area of entertainment, electronic entertainment, post production technology, the sort of thing that Blue Tongue in Melbourne or Animal Logic in Sydney do. Australia has a world wide reputation for that sort of thing. But, to some degree, these are industries that are so well known that they don’t need any help from us.
ON OUR WEAKNESSES…
Although we have many advantages as an investment destination, every one of these can be challenged. They can be challenged by a market with lower cost structures. They can be challenged by a market that graduates a huge volume of people in the areas of science and engineering, like India or China. We can be potentially challenged by markets that are bigger and faster than Australia.
People say, “Why go to Australia, let’s go straight to China”. There are reasons why you wouldn’t want to go straight to China. We’re a good market. Australian’s have a lot of money; we like to buy new technology. But we’re still only about two or three precent of the market in any given product area. Research and development follows big markets, so people put R&D facilities where they think the customers are going to be.
Australia was a rather cheap country to do high quality technical programming and R&D work about fi ve years ago, back when the Australian dollar was around 60 US cents. Now that the dollar is hovering just under 80 US cents, we’re less competitive on price. We have many things going on for us an in any given industry we also have lots of technical achievements and headline companies that we can point to. But at the same time we can never relax because the investment environment is continually changing.
ON WHAT THE FTA MEANS…
From a broad perspective, the most important thing about the FTA is that it’s the climax of 20 years of economic reform in Australia. It began under Labour back in 1983 and that philosophy has continued under the Coalition Government. It’s a point that I make to Americans. It’s not sudden. It’s the natural evolution of the profound change that the Australian economy has undergone.
It recognises that, even though the US economy is a lot bigger (about 22 times bigger), in terms of the way both economies work – their reliance on the rule of law, on very rigorous accounting and judiciary standards, respect for intellectual property, business conditions and infrastructure, and all the other things that matter doing business – they’re very, very similar. The difference is in quantity not quality.
The FTA is not a short term agreement. It’s designed to last for many decades and I think its full implications aren’t going to be realised until we look back ten years from now and see the change in trade. The extra fi ve or six billion dollars a year that is forecast to occur is great, but the really profound impact is in the investment area, with the financial sectors being bought closely together.
ON INVEST’S AUSTRALIAS ROLE…
Our role is both promotional and facilitational. In terms of promotional, we sell Australia. We get other people who don’t know anything about Australia – they might not even be very clear about where it is – and we tell them why their industry is actually very important in Australia. They have potential customers there. They might want to open an office there. They might want to consider managing their Asian operations from Australia, because it’s in the right time zone and has all the comforts and safety of an office in, say, California. And then we facilitate investment. We do that when companies pretty much know what they want to do but they need help or they’re looking for incentives from the State Governments. But also we proactively market sectors to American companies.
