Trade development, investment, policy coordination and tourism

Programs 1.1 and 1.14

Not Met Partially Met Met

Deliverables	2013–14	2014–15
Australia’s foreign, trade and economic, development and international security policy interests and international standing are advanced through:
contribution to enhanced regional architecture through the Asia-Pacific Economic Cooperation (APEC) forum and MIKTA (Mexico, Indonesia, the Republic of Korea, Turkey and Australia)¹
promotion of high-quality public diplomacy and international media which improve understanding of Australian Government trade policies.
Australia’s trade and economic opportunities are maximised, including through:
leadership of the G20 processes.
Australia’s international and portfolio responsibilities are met through:
effective coordination and sound advice to ministers, members of parliament, government agencies, state and territory governments, business, non-governmental organisations, media and members of the public
administration of the Export Finance and Insurance Corporation National Interest Account.
Administration of the T-QUAL grants program which provides competitive grants for innovative projects to stimulate sustainable economic growth in the Australian tourism industry. This program terminates in 2014–15 and there will be no further grant rounds. All existing projects are due to be completed by June 2015.²	*
Administration of the Tourism Industry Regional Development Fund (TIRF) program which provides competitive grants for innovative projects to improve the quality of accommodation and attractions in regional areas. This program terminates in 2014–15 and there will be no further grant rounds. All existing projects are due to be completed by June 2015.²	*
Development and administration of the Demand Driver Infrastructure program. In line with the Government’s policy priorities for tourism, uncommitted funds allocated to the TIRF Program will be refocused to a new program that will deliver demand-driver infrastructure for the tourism industry. Funding will be disbursed to the states and territories, which will be responsible for implementing the projects that support tourism infrastructure needs.	*

Key Performance Indicators	2013–14	2014–15
The department’s advocacy, negotiation and liaison on Australia’s foreign, trade and economic, development and international security interests contributes positively to bilateral, regional and multilateral outcomes that help ensure the security and prosperity of Australia and Australians.
For the T-QUAL Grants program at its conclusion:	*
proportion of grant recipients that report an increase or maintenance of the level of business turnover and employment³
the completion rate for T-QUAL Grants projects in accordance with executed funding agreements between the recipient and the Commonwealth will be at least 90 per cent
the level of additional investment will be at least 110 per cent of the amount of T-QUAL Grants awarded.
For the TIRF Grants program at its conclusion:	*
proportion of grant recipients that report an increase or maintenance of the level of business turnover and employment levels in tourism businesses⁴
the completion rate for TIRF Grant projects in accordance with executed funding agreements between the recipient and the Commonwealth will be at least 90 per cent
the level of additional investment will be at least 110 per cent of the amount of TIRF Grants awarded
TIRF Grants recipients eligible for T-QUAL accreditation to be T-QUAL accredited by completion of their funded project.⁵
Demand Driver Infrastructure (DDI) program	*
budgeted DDI funding distributed to states and territories⁶
DDI expenditure by states and territories is consistent with principles agreed by tourism ministers’ meeting.

¹ MIKTA was not included in the deliverable for 2013–14.

² Final and financial reports may be submitted after 30 June 2015.

³ This KPI was introduced after the commencement of the program and was elective for grant recipients. Only minimal data was collected when this program ceased.

⁴ The TIRF grants program terminated after the first round permitting only minimal data collection.

⁵ The T-QUAL Accreditation Program ceased on 30 June 2014 and was no longer a requirement for TIRF grant recipients.

⁶ Based on revised budget following approved movement of 2014–15 funds into future program years.

* The Australian Trade Commission reported against Program 1.14 deliverables and KPIs in 2013–14.

Overview

The department played a key role in supporting Australia’s successful presidency of the G20 in 2014, including by supporting the Trade and Investment Minister’s hosting of the Trade Ministers’ Meeting in July 2014 and providing policy advice across the G20 agenda on trade, development and energy issues. We supported the development of the Brisbane Action Plan for growth that outlines individual and collective actions for the G20 in pursuit of strong, sustainable and balanced growth.

We led the implementation of the Government’s economic diplomacy agenda, working to open markets to Australian exports and two-way investment, shape economic and institutional reform abroad, and build support for the benefits of trade in the Australian community. Over the past year, the department has led work in the G20, OECD and APEC that advances this agenda.

Infographic depicting Australia’s total two-way trade by region, 2014 — **Figure 18:** Australia’s total two-way trade, 2014

Economic diplomacy

The Government’s economic diplomacy (ED) agenda was launched by the portfolio ministers in August 2014. The ED agenda reflects the Government’s goal of enhancing the portfolio’s work on trade, growth, investment and business. The department leads on the agenda and works closely with portfolio partners—Austrade, Australian Centre for International Agricultural Research, Tourism Australia, Export Finance and Insurance Corporation (EFIC)—and key economic agencies in our overseas posts.

The department’s ED agenda is based on four pillars:

1. Trade—opens new markets for Australian exporters, sustains a rules-based global trading system and helps developing countries engage with the global economy through our aid for trade programs.

2. Growth—encourages economic growth through economic reform, our aid program and the work of international organisations.

3. Investment—promotes inward and outward foreign direct investment, and assists developing countries improve investment conditions.

4. Business—supports Australian businesses, promotes Australian tourism, and assists developing countries to grow their business sectors.

2014 ED case study highlights

Trade—lupin market access in India

Following intensive advocacy by our high commission in New Delhi, India granted access for Australian split lupins for human consumption in February 2014. The access is a positive outcome for the Australian industry, especially in Western Australia, the largest lupin producing state. Australia’s pulse industry assesses lupin exports to India have the potential to grow to $450 million over the next 10 years.

Growth—Nauru’s first tax system

The department helped Nauru establish its first tax system through the aid program. The creation of a tax code and system of administration should provide a stable revenue base for the Nauru Government and enhance macroeconomic stability. Creating a legal framework provides greater certainty for foreign investors, including Australian businesses, brings Nauru into line with global practice and better links it to the global economy.

Investment—‘Moonlight Investor Briefings’

In Singapore, there is an investment event almost every night, which can make it difficult to attract attendees. Our high commission, by utilising the unique venue of the residence and inviting a selection of investment-ready companies, has been able to attract a strong audience of investors to its ‘Moonlight Investor Briefings’. Briefings have covered agriculture, infrastructure, aviation and start-ups. Bringing investors and opportunities together has helped link unlisted offshore investment to potential deals for Singapore-based investors.

Business—supporting BHP Billiton in Mexico

The department supported BHP Billiton’s market entry to Mexico by providing advice on the economic environment, including energy sector reforms and facilitating access to key decision-makers. BHP Billiton has established an in-country presence and is considering substantial investments in Mexico’s oil and gas sector.

Chart showing Australia’s total two-way trade by region and selected countries, 2014 — **Figure 19:** Australia’s total two-way trade by region and selected countries

Investment

The department supported the Trade and Investment Minister in promoting foreign investment into Australia and in assisting Australian businesses to invest overseas. We also supported him in overseeing investment policy as it relates to general investment attraction and bilateral, regional and multilateral agreements. We provided policy contributions to the Energy, Agriculture and Northern Australia white papers, the Murray Financial System Inquiry, the Harper Competition Policy Review and the process to modernise Australia’s Foreign Investment Framework. We worked closely with Treasury to support the work of the Foreign Investment Review Board. In Canberra and overseas, the department worked with Austrade to secure inward investment and to promote Australian investment into the region and abroad. In the Indo–Pacific region, our development activities help countries attract international investment.

OECD

The Organisation for Economic Cooperation and Development (OECD)’s work in 2015 focused on boosting global investment and implementing structural reform to support global growth. We were central to OECD efforts to have members improve their investment environments, avoid protectionism and foster open markets. We also led OECD engagement with Southeast Asia, including through our co-chairing (with Cambodia) of the Southeast Asia Regional Policy Network on Investment.

We used the G20 presidency to deepen the role of the OECD in promoting global structural reform. The department supported the Parliamentary Secretary’s participation in the OECD Ministerial Council Meeting in June 2015, at which he signed the OECD Multilateral Competent Authority Agreement Common Reporting Standard. The Common Standard provides for the automatic exchange of financial account information in tax matters and is another pillar of the OECD/G20 moves to combat base erosion and profit shifting.

G20

In 2014, the department provided strong support to Australia’s presidency of the G20. In 2015, we continue to provide policy advice and recommendations on trade, development and energy across the G20 agenda.

At the Brisbane Leaders’ Summit (15–16 November 2014), leaders agreed to substantial actions to lift global growth and job opportunities and to make the global economy more resilient. The centrepiece of Australia’s host year was the delivery of a Brisbane Action Plan for growth. Each G20 member presented individual, country-specific growth strategies, including actions to promote trade and investment, which collectively are estimated to create economic growth of 2.1 per cent over the next five years, equating to more than US$2 trillion of additional output and millions of new jobs.

We supported Mr Robb’s hosting of the G20 Trade Ministers’ meeting on 19 July 2014 in Sydney. This meeting contributed to the strong trade outcomes achieved in 2014, including laying the groundwork to resolve the WTO impasse on the Agreement on Trade Facilitation. Leaders committed to strong domestic actions to boost trade, reaffirmed their commitment to resist protectionism and agreed to discuss how to make the global trading system work better.

The department continues to lead Australia’s G20 development agenda by working to ensure developing countries can participate in, and benefit from, the G20’s employment and economic growth agenda. As a member of the G20 troika (immediate past, present and future presidents), Australia co-chaired the G20 Development Working group in 2014–15 which endorsed five priority areas for ongoing work. These are outlined in the Brisbane Development Update: infrastructure investment, financial inclusion and remittances, domestic resource mobilisation, food security, and human resource development. G20 leaders recommitted to reduce the global average cost of transferring remittances to 5 per cent and to enhance financial inclusion as a priority.

Deputy Secretary, Jan Adams PSM (left), with Minister for Trade and Investment, Andrew Robb AO (centre), US Trade Representative, Michael Froman (second right), and UK Minister of State for Trade and Investment, Lord Livingston, G20 Trade Ministers’ meeting, Sydney, 19 July 2014. [G20 Australia]

Trade finance

The department manages the Government’s relationship with Efic, a statutory corporation that provides financial support to Australian exporters in circumstances where they have been unable to source finance from the private sector. In 2015, revisions were made to the Efic Act and the Minister’s Statement of Expectations to enhance Efic’s focus on support for small and medium-sized exporters.

The department was an active participant in meetings of the OECD Export Credit Group and the International Working Group on Export Credits where we are leading efforts to negotiate new trade finance guidelines that will extend to non-OECD countries.

Preparing for Australia’s chairmanship of MIKTA at an innovationXchange-facilitated ideas session, — Departmental officers preparing for Australia’s chairmanship of MIKTA at an innovationXchange-facilitated ideas session, June 2015. (L. to R.): Lisa Davidson, Maris Tebecis (iXc facilitator), Geoff Matthews (back to camera), Kate Taylor, Luke Hughes, Georgina Harley-Cavanough, Jillian Rees, Melanie Calvert, Sarah McFarlane. *[DFAT/Ben Lavis]*

MIKTA (Mexico–Indonesia–Republic of Korea–Turkey–Australia)

Australia was instrumental in establishing MIKTA, an innovative grouping of countries of similar economic size but coming from diverse regions and backgrounds. MIKTA foreign ministers first met in September 2013. In 2014–15, the forum continued to reinforce bilateral ties between members and provide a new perspective in multilateral discussions. The department played a key role in developing MIKTA’s joint statements on flight MH17, Ebola and gender equality. MIKTA ministers wrote a joint op-ed on the role of cross-regional networks in global governance.

MIKTA foreign ministers met three times in 2014–15. The department supported participation by the Foreign Minister and senior officials in meetings in New York, Brisbane and Seoul. Australia will chair MIKTA from September 2015.

APEC

APEC is the primary forum for deepening Australia’s economic integration with the Asia–Pacific region. APEC’s 21 member economies account for over 70 per cent of Australia’s total trade.

The department supported the participation of the Prime Minister, the Trade and Investment Minister and the Foreign Minister in the APEC Leaders’ Meeting and the APEC Ministers’ Meeting (November 2014), as well as the APEC Ministers Responsible for Trade Meeting (May 2015).

We helped shape a number of key APEC outcomes in 2014, including actions to advance the Free Trade Area of Asia–Pacific (FTAAP), deepen cooperation on Global Value Chains (GVCs), and enhance connectivity in the region. APEC Leaders agreed in November, in Beijing, to intensify APEC’s work towards the long-term goal of an FTAAP. Australia led work on a Free Trade Agreement (FTA) information sharing mechanism to encourage WTO-plus outcomes in APEC economy FTAs with a view to achieving a high quality, comprehensive FTAAP.

We promoted unilateral reform and open markets for services trade and investment in the region through seminars on good practice regulation for facilitating trade and investment in the transport and logistics, telecommunications and ICT, and mining and energy services sectors. We expanded the Australian-led online APEC STAR database outlining the requirements APEC services exporters must meet, making it easier for Australian services suppliers, especially small to medium enterprises (SMEs), to export to the region.

Australia continued to lead APEC’s structural reform agenda. We assisted developing economies implement structural reform priorities, particularly to promote more open, well-functioning, competitive and transparent markets, and led discussions on a post-2015 structural reform strategy for APEC, ahead of the APEC Structural Reform Ministers’ Meeting in September. We supported the Productivity Commission’s (PC) ‘twinning program’ under the Government Partnerships for Development scheme, aimed at building the capacity of developing economies to implement structural reform. This involved staff exchanges between the PC and counterpart organisations from Mexico, Laos and Cambodia over the last year.

Assistant Secretary APEC Branch and Chair of APEC’s Committee on Trade and Investment, John Larkin (left), confers with Australian APEC Official, Leslie Williams, APEC First Senior Officials’ Meeting, the Philippines, 6 February 2015. *[APEC Secretariat]*

We continued to play a leading role in promoting cross-border education cooperation in the region, initiating a report on education provider mobility, including actions to overcome policy and regulatory impediments. This work stream complements Australia’s international education strategy.

At the 2014 APEC Leaders’ Summit, the Prime Minister announced an Australian contribution of $1.2 million, funded by the department, for projects that improve APEC cooperation on mining.

We led a workshop for APEC economies in April 2015, supported by the Australian Federation of Automobile Parts Manufacturers, aimed at identifying and addressing impediments to greater participation of auto parts SMEs in GVCs. We also continued our leading role in supporting women-owned SME access to export markets through capacity building for trade promotion authorities in APEC.

Integrating SMEs in Global Value Chains

International production, trade and investment are increasingly organised within GVCs where the different stages of the production process are located across different countries, underlining the mutual benefits of modern trade and investment.

Australia is working in the G20 and APEC to help countries take full advantage of GVCs, including through better SME integration into GVCs and encouraging countries to move up the value chain. We are advocating reforms to facilitate trade by lowering costs, improving access to finance, streamlining customs procedures, reducing regulatory burdens and strengthening trade-enabling services.

We worked with the OECD during Australia’s G20 presidency to provide analytical evidence of the interconnectedness of economies through GVCs. In 2014, at the G20 Trade Ministers’ Meeting, Mr Robb launched the OECD, WTO and World Bank Report Global Value Chains: Challenges, Opportunities and Implications for Policy, which recommended that countries implement the Trade Facilitation Agreement.

The Foreign Minister released an Australian-led guidebook at the APEC Ministers’ Meeting to promote the use of business continuity plans among SMEs. On financial market integration, we collaborated with Treasury to advance the Asia Region Funds Passport initiative, an innovative scheme that will facilitate greater cross-border trading of financial products among participating economies.

We established an APEC Economic Diplomacy Fund to support the department and other agencies to implement APEC initiatives that support trade, growth, investment and business engagement in the region. This includes, for example, work to reduce post-harvest food losses in regional supply chains. At the 2015 APEC Ministers Responsible for Trade Meeting, we worked on a statement by ministers supporting concrete outcomes at the 10th WTO Ministerial Conference (MC10). Ministers also supported the goal of the entry into force of the Agreement on Trade Facilitation by MC10, noting that it would make a significant contribution to global trade.

The department continued to work closely with Papua New Guinea to support its preparations to host APEC in 2018, including supporting the secondment of PNG officers to the APEC Secretariat.

Working with business

The department launched the Charter on Economic Diplomacy and Australian Business in August 2014. The charter outlines the high-quality services that the portfolio provides to business, setting out 12 priorities that will be pursued to advance Australian business and prosperity.

We supported Mr Robb’s consultations with Australian business, including the 20-member Trade and Investment Policy Advisory Council. The council met twice during the year, in Melbourne and Cairns, and discussed a range of trade, investment and red tape issues, FTA priorities, and opportunities to attract foreign investment.

International tourism policy and engagement

The department continued to strengthen bilateral relationships with major tourism markets, notably through the signing of an Australia–India MOU in the field of tourism. We adjusted Australia’s support for multilateral tourism forums by starting the treaty process to withdraw Australia from the UN World Tourism Organization (UNWTO). The National Interest Analysis recommending Australia’s withdrawal from the UNWTO was tabled in Parliament and supported by the Joint Standing Committee on Treaties. Our withdrawal follows a comprehensive review in consultation with key tourism industry stakeholders. Throughout 2014–15, we were active in the OECD Tourism Committee and the APEC Tourism Working Group. Our engagement in these forums aligned with our priorities under Tourism 2020, Australia’s national strategy to enhance growth and competitiveness in the tourism industry. Under Tourism 2020, governments and industry have committed to a target of doubling overnight visitor expenditure to between $115 and $140 billion by 2020.

Tourism grants

During 2014–15, the Australian Trade Commission assisted the department in the administration of the following tourism grants.

T-QUAL grants program

The T-QUAL grants program provided competitive grants for innovative projects to stimulate sustainable economic growth in the Australian tourism industry. This program ended on 30 June 2015 and there will be no further grant rounds. The round completion rate for T-QUAL grants projects met the minimum 90 per cent target and were as follows:

2011—91 per cent
2012—89 per cent
2013—90 per cent.

The level of additional investment exceeded the minimum target of 110 per cent of the amount of the T-QUAL Grants awarded. Additional investment (measured at the time of offer) for each funding round was as follows:

2011 Round—for the 117 projects initially offered funding of $8.4 million, matching funds were $9.8 million
2012 Round—for the 77 project initially offered funding of $6.68 million, matching funds were $18.3 million
2013 Round—for the 89 projects initially offered funding of $8.5 million, matching funds were $18.4 million.

Tourism Industry Regional Development Fund

The Tourism Industry Regional Development Fund (TIRF) program provided competitive grants for innovative projects to improve the quality of accommodation and attractions in regional areas. This program ended on 30 June 2015. The completion rate for TIRF Grants projects was 91 per cent. For the 85 projects initially offered funding of $17.4 million, matching funds were $158 million.

Because the T-QUAL Accreditation Program ceased on 30 June 2014, TIRF Grant recipients could not receive accreditation under that program.

Tourism Demand Driver Infrastructure (DDI) program

In line with the Government’s policy priorities for tourism, uncommitted funds allocated to the TIRF program were reallocated to the DDI program that delivers infrastructure for the tourism industry to help drive demand. The states and territories are responsible for implementing the projects that support tourism infrastructure needs.

New South Wales and Victoria sought movement of 2014–15 DDI funding allocation into future program years, while Queensland and Western Australia sought partial movement of 2014–15 funding into future program years. Movement of funds of $6.3 million was approved. All funding requested by the states and territories in 2014–15 ($4.7 million) was provided.

State and territory governments documented that all projects funded through DDI were consistent with DDI principles agreed by the Tourism Ministers’ Meeting on 11 July 2014.

Resources and energy economic diplomacy

The department supported the Government’s economic diplomacy agenda in the resources and energy sector through using its diplomatic assets to promote Australian investment in both established and emerging markets. We also worked to promote Australia’s resources and energy sector to foreign investors. The department facilitated Australia’s engagement with international energy organisations, including the International Energy Agency. We enhanced Australia’s reputation as a leader in sustainable development in the energy and resources sector through initiatives that improve governance.

Outlook

The department will continue to pursue economic diplomacy in support of Australia’s trade and investment interests against a background of more difficult economic conditions.

Despite some global weaknesses in growth expectations, the outlook for the Australian economy remains positive. In 2015–16, Australia’s economic growth is expected to be solid, underpinned by a lower exchange rate, lower oil and electricity prices and accommodative macroeconomic policy settings.

The department will strengthen its focus on addressing structural, market and regulatory behind-the-border impediments to Australian outward trade and investment in major Indo–Pacific countries. This work will complement Australia’s FTAs and support developing partners to pursue economic reforms that drive mutual prosperity.

As a member of the G20 troika, the department will work closely with current host, Turkey, and China, the 2016 host, and will continue to lead the G20 trade agenda for Australia. In APEC, we will support steps towards the realisation of an FTAAP, including by supporting information sharing and capacity building on FTAs, and the development of a collective study (due in 2016) on FTAAP issues. In MIKTA, we will support Australia’s chairmanship from September 2015.

The department will also play a key role in implementing policies in the White Paper on Developing Northern Australia, including activities to attract foreign investment, enhance business connectivity with the region, support partnerships on tropical health research, and promote infrastructure investment linkages with the APEC and ASEAN connectivity agendas.