A negative attitude towards foreign investment could “compromise” Australia’s ability to attract billions of dollars in new capital from China, the chairman of the Australia China Business Council, John Brumby, has warned in a report out today.
A former premier of Victoria, and current director of Chinese telco Huawei in Australia, Mr Brumby said China’s investment in Australia was about $75 billion — or less than 3 per cent of total foreign investment into Australia.
But he said Chinese investment into Australia could be expected to step up as the country’s middle class grows, with demand increasing in areas where Australia had a competitive advantage, including agribusiness, health products, services, tourism, and education.
“As Chinese investment flows in, unrealised value in Australian businesses can be unlocked,” Mr Brumby said.
The extra capital investment into Australia would allow for productivity increases which could create more growth and jobs here, he added. “But we must not take this for granted.”
He said many countries were competing for Chinese investment. “While Australia has a number of competitive advantages, unfavourable policy settings driven by a negative, anti-foreign investment attitude will compromise our ability to attract the investment we need to make the next quarter century as prosperous as the last.”
He said Australia needed foreign investment to continue its long period of growth. And China was the greatest potential source of foreign direct investment into Australia.
Mr Brumby said it had always been possible to “raise suspicions of Australians through talk of foreigners ‘buying up the farm’.” “What is not often talked about is the benefits that come with foreign investment,” he said.
Mr Brumby’s comments were echoed in a foreword to the report by ANZ chief executive Shayne Elliott, who warned that Australia-China relationship was “not without its sceptics in the broader community.” Mr Elliott said Australia’s focus on the implications of the “Asian century” had “waned somewhat from the heady days of the resources boom.”
But Mr Elliott said the report would remind Australians their country was in an “enviable position” with its geography and its highly skilled workforce, which could help it seize on China’s move to a services-led economy with a growing middle class. An open two-way investment would “continue to be the key to the economic prosperity of both countries.”
Mr Brumby and Mr Elliott were commenting on the report today by Deloitte Access Economics, on the benefits of Chinese investment into Australia.
The report said the Australian economy was “well placed” to benefit from increasing demand from China. While Chinese demand had been a driver of the resources boom, rising incomes and a growing middle class in China were now supporting a “new wave of growth” in Australia.
“Increasing affluence among Chinese consumers has boosted discretionary spending on many items, including quality food and health products, attractive holiday destinations and internationally esteemed educational institutions,” the report said.
It said Australia must spend about 20 per cent of its GDP a year to just to replace depreciation and maintain its capital stock at current levels.
And the majority of foreign investment in Australia continued to be held by the US, which was responsible for 27 per cent of total foreign investment or $861 billion. By comparison, Britain had 16 per cent, or $516bn, in investment in Australia.
By GLENDA KORPORAAL