18 February 2014
Speech - #2014003, 2014

Announcement of ASX and Bank of China Renminbi agreement

Check against delivery

Thanks very much Elmer, fantastic to be here today. This is the second event I’ve been to in two days involving the greater internationalisation, if you like, of Australian financial services and the deepening of our engagement with China.

I begin by saying that on behalf of the Australian Government I’d like to congratulate Mr Yue and yourself Elmer, on leading this landmark joint initiative between the ASX and the Bank of China.

What I like about this initiative is, in part, because it builds on the world class financial market infrastructure that we’ve got in this country.

I think it’s very important to recognise that, when we’re looking at the attributes which make this potentially a great springboard for exporting financial services into the region, we have to understand that we have this world class infrastructure. And it’s a product I think of a process of going through 30 years of financial deregulation, building a sound financial system that has diversified and now includes of course a very strong superannuation component. But we’ve created a very strong financial system, backed up by very sound regulatory settings, very important to us as we made our way through the global financial crisis.

For us the future lies very much in having, a diversified industrial and services base and financial services will be at the forefront of that.

So initiatives like today, where we are taking a lead role in helping the further internationalisation of the renminbi are very important for the bilateral relationship, but they’re also very important for Australia’s own economic development.

The point I want to make about the relationship between Australia and China is that we are on a journey. You’re going on a journey of diversifying your economy. You’ve been on a path of export-led growth for a long time - that is now changing to more being powered by domestic consumption. There are some great transitions occurring as a result of that.

That is opening up new opportunities for Australia but we are going our transition ourselves; we’ve just been through a remarkable period of growth based on resources investment, the biggest phase of resource investment in our history, the biggest increase in the terms of trade in our history.

Now we’re going through a transition which won’t be seamless and it won’t be smooth, but it is a great opportunity to diversify our economy, and therein lies the opportunity for both countries working together. For us whenever there’s talk in the press and elsewhere about volatility in terms of the ebbs and flows of macro policy as we look at these through the short term lens of the newspapers or whatever, the fact is, as a government, as governments together, we keep our eye on the longer term prospects and opportunities of the relationship.

We welcome the opportunities that the greater internationalisation of the renminbi will provide for us in terms of trade and investment opportunities. We want more Chinese investment in Australia. We welcome foreign investment and yes we do have a foreign investment regime which means that we apply scrutiny to foreign investment proposals. But that is actually a way of providing assurance to the Australian public that what we do when it comes to foreign investment is in the national interest - is not contrary to the national interest.

That’s very important in helping to build public support for foreign investment in Australia, but that foreign investment is very important, and for us, now increasingly, not only do we welcome that inward investment, we are also very strong supporters of Australian outward investment. We don’t take the view that if money flows offshore, somehow that’s an opportunity lost to the Australian economy. We see that as an opportunity to build our international engagement, to deepen our trade and investment links, and that’s very important to the future of the Australian economy.

I know that a lot of you will be focussed on the fact that this week we have the G20 happening here, the Finance Ministers and Central Bank Governors meeting.  It’s a very important opportunity for Australia to provide, frankly, global economic leadership, and there’ll be many issues that come up there. And some of those issues which fall within my remit, include continuing and concluding those major financial regulations and reforms that were put in train after the global financial crisis.

I was interested to read in the press, I think it was yesterday, that people are now saying that we do need to take stock about the extent to which, we have increased regulation and make sure always that it’s in the interest of strengthening the economy and particularly that we take into account that we have very strong capital controls here in Australia and making sure that whatever we do in the future doesn’t overly burden the economy with excessive compliance costs. It’s very important for us to be able to take that sort of balanced view.

So for us the G20 is an opportunity to provide global economic leadership. As part of that we continue to welcome the greater engagement of China in the world.

There’s a lot of silly talk around about how sometimes Australia has to choose between America or China or whatever. It’s not a matter of choice. For us we embrace the developments that this century is bringing, we embrace where China is going and we are part of that journey.

That greater global engagement which gives each of us a stake in the continued progress of the world economy, according to very transparent international rules, is very important to creating prosperity, not just for ourselves but for the world as a whole.

For us today is a day to celebrate what the stock exchange is doing with the Bank of China. It’s a day to celebrate another milestone in the relationship between Australia and China and it is also a day to celebrate the importance of continuing the process of globalisation.

On that note Elmer and Mr Yue, thank you for the opportunity to be with you today.

Whatever the Australian Government can do in a positive way to continue to promote the relationship, I can assure you we will do and I look forward to the day when we can say that the Australian financial services sector is really punching above our weight internationally.

Thanks very much.