“It was the best of times, it was the worst of times….”
Simon Birmingham, Australia’s roving Minister for Trade and Investment,
could be forgiven for citing Dickens’ epic Tale of Two Cities when
reflecting on the current global trading environment. While the Minister
can justifiably gloat over recent bilateral trade deals – with Indonesia,
Hong Kong and Peru – that will come into effect in 2020, he concedes the
ongoing stoush between China and the United States is having a dampening
effect on global economic conditions.
In a wide-ranging interview for the Australian Investment Council, Senator
Birmingham talks up the potential for private capital to tap into recent
trade gains, including the recently signed RCEP (Regional Comprehensive
But he also concedes that Australia, along with many other countries, is
paying a high price for the disruption caused by Sino/American trade
tensions, along with the Brexit saga. All of which makes his role, of
managing the Trade portfolio and selling Australia to the world, one of the
most challenging and demanding in the Morrison Government.
Global trade tension has impacted Australia
“Global trade headwinds, in terms of disputes between US and China,
disruption of World Trade Organisation processes, events like Brexit, even
events like the dispute between Japan and Korea, have all had a negative
impact on growth in the global trade flows,” the Minister says.
“And that has flowed through to hit global economic growth and certainly
Australia has felt that; not so much in terms of our own trade flows, which
remain at record, or near record, levels in terms of the value of
Australian trade... but certainly it has had a dampening economic effect
here, and more profoundly in other countries who are facing negative
While calling for a “degree of stability” to return to the global trading
environment, the Minister is unsure whether the superpowers’ stoush will
get worse before it improves. “Only those two countries can sort that out
between them,” he concedes.
While admitting that Australia has little leverage when it comes to
soothing trade tensions between Beijing and Washington, he says it has
actually had the perverse effect of bringing Australia and other trading
nations closer together, in defence of the World Trade Organisation and a
free market rules-based trading system.
“There is a recognition when we sit down with our regional partners in
RCEP, that takes in 15 or 16 regional countries, or when you sit down with
the European Union, that as well as the tangible benefits of pursuing trade
agreements between each other, there is a real symbolic benefit in
demonstrating that we are getting on with the path of opening up our trade
flows and demonstrating the role it has played in wealth generation over
recent years,” he says.
On a recent visit to China, accompanied by 200 Australian companies,
Senator Birmingham was forced to confront the inconvenient truth: that the
deteriorating political relationship between our two nations is raising
question marks over future trading conditions. China, of course, is
Australia’s largest trading partner, and the Minister must deftly manage
the fallout from the increasingly strident criticism of China and its
alleged interference in Australia’s political system by senior political,
media and intelligence figures.
Asked directly whether he worries this bellicose denunciation of the
Communist superpower will harm two-way trade, the Minister replies: “There
shouldn’t be negative effects in that we both – Australia and China –
recognise that we have different systems. In Australia, matters will be
spoken of freely as is true to the values of our country, but that
shouldn’t impede us from getting on with the positive aspects of the
relationship, of which trade is one of them.”
Indeed, while Australia’s economy is limping along, with annual growth of
1.7 per cent, we are experiencing record levels of exports to China. And
the Minister confidently predicts Australia will continue to “grow that
market” notwithstanding the obvious signs of geo-political tensions.
Private capital is important for bilateral trade flows
Likewise, Senator Birmingham is bullish about the potential for private
capital to play an increased role in helping Australia’s economy grow,
fuelled by the recent trade deals that he hopes will open up offshore
“Australia has something like the 6th largest funds under
management plan in the world. That is a huge resource for our country,” he
“It is also increasingly a maturing sector looking for the opportunities
beyond our shores, and that is something that in building the success of
Australian companies, as well as the returns on their investment and
savings, it is important that we do encourage those funds under management
and capital to look at the opportunities, not just in Australia but
overseas and to broaden their spectrum.”
The Minister is keen to ensure that private capital investment “sits high
up the ladder” when it comes to opening up bilateral trade flows in
Indonesia and India and other priority markets.
FinTech and RegTech important for new Australian industries
He is cautious though when asked about further reforms to stimulate private
capital investment in Australia. For instance, while Britain has recently
introduced measures to unlock 20 billion pounds in ‘patient’ capital, the
Minister is unwilling to discuss specific measures.
Instead, he says the Government will continue to “analyse and tweak where
required some of the reforms that are delivering benefits around venture
capital investment and the like, in terms of encouraging that investment in
highly innovative parts of the economy”.
Pressed on this point, he describes the reform process as a “never finished
project… in terms of looking at mechanisms to make sure that we are getting
policy settings right to attract the optimum level of investment in venture
capital and like projects”.
He adds: “From Australia’s perspective, we have seen gains there. We want
to see more. The Government is particularly eager in areas of FinTech and
RegTech to encourage further business development and opportunities there
that can create new industries in Australia.”
And he sees strong opportunities for Australian firms to tap into regional
markets such as Singapore to capitalise on growing demand for innovative
digital products and services.
“Our region is one of the most dynamic in the world and still offers really
strong growth prospects,” the Minister says. “What we are desperate to see
is that over coming years, the business literacy of Australian investors
and companies in doing business across the region lifts so that the
opportunities to really secure two-way investment flow, business growth and
trade growth, with those relationships, is realised.”
Scope to enhance Strategic Investor and Talent Visas
He is also open to further changes to the strategic visa program to
encourage foreign investment to Australia. This includes the global talent
scheme which aims to attract highly skilled individuals to our shores.
Likewise, the Minister flags potential changes to the Significant Investor
Visa (SIV) program which offers a four-year pathway to permanent residency
for entrepreneurial and high net worth individuals. The SIV requires the
individual to make a $5 million investment, a proportion of which has to go
into venture capital.
The majority of participants so far have come from China and the Minister
“We want to make sure that is the right mix, in terms of the quantum, in
terms of the split, to attract the type of investors and entrepreneurs who
want to come to Australia but also to guarantee that in return for that
access to Australia, we are getting the type of investment that can help
While the high proportion of Chinese investors has fuelled some questions
in Canberra, the Minister plays down the need for radical change.
“I understand that there are some changes in the application flows already
that are expanding the base. But these are people who are making business
investments, who are seeking to gain residency rights in Australia,” he
“The commitment that we are looking for in return is that those investments
create jobs and opportunities for other Australians and, of course, these
investments are therefore governed by Australian rules and expected to
operate to Australian standards and values.”
Steve Lewis is a senior adviser with Newgate Australia. He worked for
more than two decades for Australia’s leading newspapers and was a
leading figure in the Canberra Press Gallery.