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Northern Territory Chamber of Commerce

Doubletree by Hilton Darwin Northern Territory

9 October 2015

Introductory remarks and acknowledgements

I would like to respectfully acknowledge the traditional owners and custodians of the land on which we meet today, the Larrakia people, and pay my respects to their elders, past and present.

Good morning everyone. It is wonderful to be in Darwin, my first trip to Northern Australia since coming into my new role.

Thanks to Greg Bicknell, your CEO, for the introduction and to your president Greg Ireland for inviting me to speak to the Chamber this morning.

I would also like to specially thank my colleague, Natasha Griggs, the Federal Member for Solomon, and her staff for their generosity and hard work in organising this visit.

She has advocated strongly for the $150 million Palmerston Regional Hospital, the $100 million Tiger Brennan Drive duplication and the $16 million, 15-court Marrara tennis centre.

Natasha, together with my colleague and Territory Senator Nigel Scullion are strong advocates for the north, and I look forward to working with them in this portfolio.

I also want to acknowledge and thank your Chief Minister, Adam Giles, who is here this morning, and with whom I had a very productive meeting earlier in the week and with whom I look forward to partaking in the Territory’s development.

Over the past few days it has been fantastic to hear first-hand from those who live and work in the Territory.

The people I have met so far have been full of optimism, enterprise and vision for the future of the Territory.

From Bob and Dan Richards at Humpty Doo Barramundi, which started producing just 300 kg of saltwater barra per year 22 years ago, and is now producing 33,000 kilograms per week.

To Nick Hanigan, yet another generation in the Paspaley family who have also demonstrated enormous commitment to northern Australia, to the people at TFS, which is growing the world’s largest Indian sandalwood plantations here in Northern Australia.

Not to mention all the dedicated people working at INPEX Ichthys and ConocoPhillips Darwin LNG plant, two of Darwin’s most significant major projects, which are testament to the confidence our global investment partners have in the future of the Territory.

This morning I want to talk about the Government’s priorities for Northern Australia, and the role that Darwin will play in this.  In particular I will focus on:

1. The Government’s plan for development in the north, and how Government and business can best work together to unlock the north’s potential.

2. The Government’s infrastructure priorities.

3. The important and ongoing role that energy and resources will play in driving growth.

The Government’s plan for Northern Australia

When the Prime Minister spoke about his new Cabinet he said Northern Australia needed a powerful advocate.

The Prime Minister recognises the enormous economic potential of the North and I’m delighted to be the first Cabinet Minister charged with formal responsibility for the development of Northern Australia.

The White Paper on Developing Northern Australia released in June opens with a very succinct description: “The north has untapped promise, abundant resources and talented people.”

The White Paper makes the case for the north, saying “a strong north means a strong nation”, and puts forward an ambitious vision for the north by 2035.

Including 40% of Australia’s landmass, and over 1.3 million people, the north is certainly endowed with many natural advantages.

It has proximity—it takes less time to fly from Darwin to Singapore, than it takes from Darwin to Sydney.

It has position—it’s a gateway to the Asia-Pacific region, which by 2050 will account for almost half of the world’s economic output and more than half of the world’s population.

In addition to trade and investment, this presents significant opportunities for international education, and also for tourism – with some 200 million Chinese and 50 million Indians travelling overseas every year by 2020.

But operating in the north is not without its challenges, as you well know.

For a range of reasons, northern Australia is a higher-cost area, relative to other parts of Australia.

Other challenges include a lack of infrastructure, knowledge gaps about essential water and soil resources, and complex land and water rights.

Despite these issues, Darwin is a thriving city. It has won the confidence of some of the biggest companies in the world, like INPEX and ConocoPhillips.

And it has strong expertise in the energy and minerals, tourism, agriculture and aquaculture, defence and education sectors.

Later today I will be visiting Charles Darwin University to talk about how CDU, through education and research, is strengthening the development of northern Australia and the Asia-Pacific.

The White Paper is about building on this strong foundation, in Darwin and our other northern centres, and ensuring we get the regulatory settings right to unlock their vast potential.

Darwin’s role

Darwin has a critical role to play in realising the Government’s vision for northern Australia.

The Territory’s Gross State Product has been forecast to grow 4.1 per cent for 2015-2016, well above the expected national growth rate of 2.6 per cent.

Approximately fifty-five per cent of Australia’s exports are shipped from northern ports, and Darwin Port plays a key role in this.

Over the past ten years, we have seen a 13 fold growth in export volumes shipped through Darwin Port, driven by Darwin’s proximity to Asia-Pacific markets, and the opening of the Adelaide to Darwin railway in 2004.

The success story isn’t limited to large projects, with the August Sensis Business Index finding that small and medium enterprise confidence in the Territory is the highest of all the states and territories in Australia.

As you would appreciate, implementing the White Paper is a huge task, involving the coordination of over $1.2 billion in investments, spread across 50 policy measures and 15 Commonwealth agencies.

Success will require all governments –Territory, Queensland, Western Australia, and the Commonwealth – to work together, as well as genuine and ongoing engagement with stakeholders.

The Office of Northern Australia (ONA) will drive the Government’s Northern Australia agenda, and provide me with crucial assistance in connecting directly with stakeholders.

Given the critical role Darwin plays in the north, both as a gateway and also as an economic and cultural hub, I am pleased to confirm here today that the ONA will be relocated from Canberra to Darwin.

I will also be speaking with my Queensland and Western Australian counterparts to ensure that they are represented in the new ONA headquarters, and am determined to work hard to facilitate the strongest levels of cooperation, so that the White Paper can deliver on its promise.

The role of governments and businesses

The White Paper cautions us to always be aware that businesses and governments should each do what each does best.

The White Paper correctly envisages that growth will be government-facilitated, not government-led.

For this reason, as announced in the White Paper, my department is in the process of implementing the ‘single point of entry’ to assist investors to navigate regulatory hurdles in the north.

This new single entry point will expand on the Major Projects Approval Agency which has been successfully operating in Tasmania since July 2014.

We will open a new office, the Major Projects Approval Agency – Northern Territory, in Darwin in January 2016.

The Darwin office will work, in collaboration with officials at all levels of government, with major project proponents who are investing or wish to invest in the Northern Territory.

Another significant area where the Government can help business to succeed, by facilitating growth, is in opening new offshore markets.

The Government has concluded landmark Free Trade Agreements (FTAs) with Korea, Japan and China.

With over three quarters of merchandise exported from the Northern Territory, Queensland and Western Australia going to those three countries, these three FTAs are great news for the north.

On Tuesday, the Minister for Trade announced the conclusion of negotiations on the historic Trans-Pacific Partnership Agreement (TPP), between 12 countries which together represent around 40 per cent of global GDP.

It is the biggest global trade deal in 20 years and includes two of the Northern Territory’s top five export partners – Japan and Vietnam – as well as investment partners like the United States, Singapore, New Zealand, Canada and Malaysia.

The TPP will eliminate 98 per cent of tariffs among the 12 countries across everything from beef, dairy, wine, sugar, rice, horticulture and seafood, through to manufactured goods, resources and energy.

It will create unprecedented opportunities in the Asia Pacific region that will particularly benefit northern Australia.

For example, tariffs will be eliminated on seafood exports to Canada, Peru and Vietnam as soon as the agreement takes effect.

Significantly, Japan’s beef tariffs will reduce to 9 per cent within 15 years of entry into force of the TPP, adding to the competitive advantage for beef and beef products already created by our FTA with Japan.

Japan is already the Northern Territory’s biggest partner in trade, and beef is Australia’s largest global agricultural goods export, worth $8.4 billion in 2014.

Approximately one third of the cattle exported from Australia are through the Port of Darwin, making Darwin the busiest livestock port in the world.

I also acknowledge the work that my colleague Barnaby Joyce has been doing in Jakarta over the past three days, in ensuring Australian cattle farmers have greater surety of access to Indonesian markets.

Government’s infrastructure priorities

Infrastructure development is central to the Government’s vision for northern Australia.

The White Paper included record levels of investment by the Commonwealth to secure the future infrastructure for Northern Australia.

Over the forward estimates we’ll be investing $1.2 billion, including:

  • $600 million for a Northern Australia Roads Package;
  • $200 million for the northern component of a new National Water Infrastructure Development Fund; and
  • $75 million for a new Cooperative Research Centre on Developing Northern Australia, located in the north, with an initial focus on agriculture, food and tropical health.

This is in addition to a $15.3 million Tropical Health Strategy, a $100 million northern Australia beef roads package and the Northern Australia Insurance Premiums Taskforce, as well as the $5 billion Northern Australia Infrastructure Facility (NAIF) announced in the Budget.

Northern Australia Infrastructure Facility

Let me say a few words about the NAIF.

The NAIF will begin operating in 2016, and will provide loans on concessional terms to support the development of economic infrastructure that will open up Northern Australia for business.

We’ve already started consulting on eligibility criteria, with state and territory governments and private sector institutions.

We will soon move to the public phase of consultation, and I encourage all of you here with an interest in the NAIF to engage with that process.

I’d expect that the facility would be applied to infrastructure projects in the resources and energy, agriculture, transport and tourism sectors, among others.

The aim is not to compete with private capital, but to fill financing gaps to support ‘backbone’ economic infrastructure projects.

In addition to concessional rates, the NAIF will be able to provide more patient capital that allows time for a project to reach maturity before it’s repaid.

We are also looking at ways in which the NAIF can partner with state and territory governments and the private sector.

As I said earlier, the NAIF will play a complementary role with the private sector, rather than crowd it out.

Resources and energy priorities

The development of Northern Australia also closely aligns with my other portfolio responsibilities of Resources and Energy.

As you know, the mining and energy industries together account for around 20 per cent of the Territory’s Gross State Product, with mining contributing $3.25 billion in 2013-14 and employing some 7,700 people directly, and many more through contract work and FIFO arrangements, and in related industries.

Energy production contributed $1.7 billion to Gross State Product in 2014, $200 million of this coming from the processing of gas into LNG.

I am keenly aware of the development of LNG gas in so many parts of Australia, but particularly in the north and north-west.

Australia will become the world’s largest LNG exporter by 2020 as the sector moves into the production phase of its life-cycle.

Projects like the Ichthys LNG project are important to the Territory, and the nation.

Apart from being the Territory’s largest infrastructure project in progress at present at around A$54 billion in current terms, it will add depth to the Territory economy as it and other projects transition from investment led growth to growth that is underpinned by production and exports.

As I said, it will make Australia the world’s the largest LNG exporter and will ideally place us ideally to meet a global supply shortfall in 2020-2021.

Remarkably, Ichthys is projected to produce around 8.9 million tonnes annually—that’s around 10 per cent of Japan’s total demand for LNG.

Ichthys has a projected production life approaching 40 years.

So I was extremely interested in my visits to INPEX’s Ichthys project site at Bladin Point yesterday morning and then to ConocoPhillips at Wickham Point.

These projects, together with other pioneering LNG projects off our north-west coast, these are examples of world’s best practice in risk management.

And there are further opportunities for the sector, including backfilling the Darwin LNG facility and the potential new demand created by from the North East Gas Interconnector – this will creating the possibility of even greater gas development in the north.

I earlier said that governments have an important role to play in unlocking business potential and facilitating private investment.

In this respect I want to congratulate the Territory Government for its success in generating strong private sector interest in the proposed North East Gas Interconnector transmission pipeline.

A commercially-viable pipeline will be a win-win project bringing multiple benefits, including infrastructure that facilitates further development of the Territory’s gas resources.

We will work with state and territory government agencies and stakeholders to ensure required approval processes are completed promptly and within legislated timeframes.

Conclusion

In conclusion, the White Paper is a blueprint for the long-term development of northern Australia.

This will be good news for all Territorians and all Australians – for developing the North is a national priority and a national endeavour.

The White Paper will see the right policies and mechanisms put in place for sustained increases in the scale and breadth of economic activity in the north and a platform for a productive relationship between the Territory and Commonwealth governments.

Thank you.

Ends