2.1
This chapter provides an overview of Australia’s trade and investment relationship with the United Kingdom and how the UK’s robust economy and growing population is driving demand for Australian food, education, and services. It outlines the exports and imports of merchandise goods, and also the growing trade in services and tourism, the interest in Australia’s education and scientific research sector, and the areas of interest for investment funds.
Trade policy and trade agreements
2.2
The Australian Government is committed according to the Department of Industry, Innovation and Science to trade liberalisation through multilateral, regional and bilateral trade agreements where they are high quality and provide business with commercially meaningful outcomes. Multilateral agreements offer the largest benefits and the Australian Government is committed to furthering Australia’s trade interests through negotiations in the World Trade Organization (WTO). The Government pursues regional and bilateral trade agreements which are genuinely liberalising and substantially reduce barriers to trade.
2.3
The UK Secretary of State for International Trade the Rt Hon Liam Fox MP submitted that the UK Government wants the UK to be a champion of free trade and share Australia's commitment to global trade liberalisation and champion the benefits of open markets.
We will build a truly global Britain, one that is a great, global, trading nation, and one of the firmest advocates for free trade in the world.
Inside the EU, the UK is one of the Union's strongest advocates for free trade, unwavering in our support for the EU's trade agreements. Outside the EU, we will continue to champion this cause. As the UK leaves the EU, every effort will be made to minimise disruption to our trading relationships, ensuring that our free and open commercial relationships continue to generate prosperity.
2.4
The British High Commissioner, HE Menna Rawlings CMG praised the strong people-to-people links between the UK and Australia as the ballast to a very close relationship.
There's a huge geographical distance. It's 10,545 miles from Canberra to London, but when we arrive in each other's countries, we feel as if we're at home, and I think that's quite a unique experience. Australia hosts the largest British expat population in the world—1.2 million people. Incidentally, that's higher than the total number of Brits living in the other 27 EU member states. Living and working in the UK remains a rite of passage for many Australians. We see incredible tourism flows between our two countries. There are around a million visits by Australians to the UK each year. Aussie tourists spend about a billion pounds in the UK each year.
Australia-European Union FTA
2.5
The Prime Minister of Australia Hon Malcolm Turnbull MP together with the President of the European Council and the President of the European Commission agreed in a joint statement on 15 November 2015 to start the process towards a comprehensive and high-quality FTA with the European Union.
2.6
In April 2017, Australia and the EU concluded a scoping study in preparation for entering into FTA negotiations. The Australian Government has identified the following key objectives for the agreement:
negotiate a comprehensive, high-quality Australia-EU FTA that helps to ensure our trade and investment relationship reaches its full potential;
the removal of barriers to trade in goods;
the expansion of services linkages and investment ties; and,
the facilitation of enhanced regulatory cooperation in specific sectors of interest to business.
2.7
The UK will be a party to the negotiations until its exit process from the EU is complete.
2.8
Professor Philomena Murray and Dr Margherita Matera from the University of Melbourne and Dr Laura Allison-Reumann from the Nanyang Technological University have jointly submitted that the UK’s decision to leave the European Union has resulted in questions about the Australian relationship with the UK, and the “extent to which Australia might ensure that relations with the EU remain strong and that those with the UK are strengthened”.
Australia’s Trade Minister has made it clear that the government’s priority is the EU Free Trade Agreement (FTA), and a recent study has shown that Australia should indeed follow this policy.
The extent that the UK’s exit from the EU will impact these negotiations remains an unknown factor.
2.9
Professor Murray, Dr Matera and Dr Allison-Reumann noted that Australia and the EU have a longstanding relationship of over 50 years.
In recent years this engagement has reached a level of unprecedented cooperation that is characterised by a multi-policy Australian all-of-government approach and an all-of- EU approach that have become increasingly beneficial for both interlocutors.
The EU and Australia currently enjoy a relationship that is regarded as both constructive and substantial. It is characterised by an alignment of material interests, ideas and common values. The relationship has evolved from earlier decades of mutual misunderstanding and distance, where the engagement has been challenged by difficult relations at times.
2.10
A post-Brexit EU will, it is assumed by the Trade and Investment Queensland, be committed to continue operating as a cohesive economic union and will remain one of Australia’s most significant partners and currently third largest.
Australia’s trade relationship with the EU outweighs trade with the UK by a ratio of approximately 3 to 1 so focus must be on the EU as well as separate opportunities with the UK.
2.11
Professor Murray, Dr Matera and Dr Allison-Reumann stated the UK represents a small overall percentage of Australia’s trade in comparison to DFAT’s trade data for 2017 for the four leading trade partners (China at 22.7 per cent, the US at 10.5 per cent, Japan at 9.1 per cent and the Republic of Korea at 5.1 per cent).
Thus, while the UK makes up a significant percentage of trade with Australia compared with the EU27, total trade with the EU27 outweighs trade with the UK by almost 3 to 1.
Australia-UK FTA
2.12
The UK is Australia’s largest export market within the EU. A UK-Australia FTA would be an opportunity to tailor outcomes to the interests of both parties and facilitate ongoing trade.
2.13
In September 2016, the UK Secretary of State for International Trade the Rt Hon Liam Fox MP and the Australian Minister for Trade, Tourism and Investment the Hon Mr Steven Ciobo MP announced the establishment of a bilateral Trade Working group that will focus on scoping the parameters of a future FTA, with the intent of expediting a high quality outcome once the UK’s withdrawal from the EU is finalised. The Department of Industry, Innovation and Science is supportive of this approach.
EU-Australia Mutual Recognition Agreement
2.14
Australia currently has a Mutual Recognition Agreement with the EU, the European Community-Australia Mutual Recognition Agreement (EC MRA), which helps to reduce barriers to trade by providing mutual recognition of conformity assessment according to the Department of Industry, Innovation and Science. Australia also has a Mutual Recognition Agreement with the European Free Trade Area (EFTA MRA), which extends the EC MRA to all countries which form the European Economic Area.
Trade
2.15
The United Kingdom is Australia’s fifth largest two-way trading partner, worth $27 billion in 2015-16. According to the Australian Government’s submission from the Department of Foreign Affairs and Trade (DFAT), the UK is Australia’s second largest trading partner in services. Australian exports to the UK are worth $4.9 billion and imports $7.3 billion. The trade in services is dominated by tourism, professional, technical and other business services.
2.16
Economist Associate Professor Mark Melatos wanted to qualify the importance of the UK as a trading partner.
The UK’s current importance as Australia’s 5th largest trade partner is artificially inflated by its membership of the EU. The value of the UK as a trade partner to Australian firms is mostly as a gateway to accessing the EU common market. Post‐ Brexit, the UK’s value to Australian firms (and as a trade agreement partner) is likely to be greatly diminished.
2.17
Overall exports of goods and services ranks the UK as Australia’s seventh largest export market for 2015-16, worth $12.1 billion, and representing 45 per cent of Australia’s total exports to the EU. No other EU country featured in Australia’s top 15 export markets in 2015-16.
2.18
The UK is a high priority export market for Australian firms, and Australia’s top export market in Europe. Australian goods and services exports to the UK have a broad base, covering a wide range of sectors. This base includes activity by some of Australia’s largest companies, such as in financial services, with Australian banks having a longstanding presence in the market, through to small and medium enterprises.
2.19
Melbourne academic with expertise on the single market effects and the impact of free trade agreements on corporations, Professor Gabriele Suder, submitted that some Australian firms, especially in the services industry, may reconsider favouring the UK as a European base due to its “institutional, historic and cultural proximity” to Australia because they “mainly use UK operations as a gateway into the Single Market”.
The scale and nature of the UK market is insufficient for Australian firms (versus trade and investment options in Asia) to remain attractive without this gateway function.
2.20
Australia’s International Business Survey 2016 (ABIS 2016) saw the UK ranked fourth by Australian exporters for ‘top current market’ and for ‘top future target market’, behind the US, China and India, and just ahead of Indonesia. Familiarity of culture and language and the opportunity for growth and profits were the most frequent reasons listed by exporters for targeting the UK. Of those that identified the UK as their most important overseas market, almost three quarters (73 per cent) listed the ease of doing business as the same, or better, than in Australia.
2.21
The UK is also a valued merchandise goods partner, with Australian exports to the UK worth $7.2 billion and imports $7.6 billion. Australia’s main exports to the UK are gold, lead, alcoholic beverages, which is mostly wine, pearls and gems. Australian wine has been a market leader in the UK over the past decade. One in five imported bottles of wine consumed in the UK is from Australia. The UK is currently Australia’s third most valuable wine export destination. Some other areas of recent export growth include beef, diamonds and telecommunications equipment.
2.22
Of Australia’s total exports to the UK in 2015, exports of industrial goods accounted for $3 billion or 81 per cent, with exports of agricultural goods making up the remaining $700 million or 19 per cent.
2.23
Since 2008, the value of industrial goods exported to the UK has declined year on year from a peak of $8.3 billion in 2008, or 88.5 per cent of Australia’s total exports to the UK. This decline has been driven by a decrease in Australian gold, lead and coal exports to the UK, caused by a reduction in UK domestic demand.
Two-way trade between the State of Victoria and the UK
2.24
The Government of Victoria highlighted the importance of the UK stating the UK is Victoria’s 18th largest merchandise export market, taking around 1.5 per cent of all Victorian exports. It is Victoria’s largest merchandise export market in Europe, with the state’s merchandise exports increasing from $273 million in 2014-15 to $358 million in 2015-16. Leading exports from Victoria to the UK in 2015-16 included medicaments ($47 million), alcoholic beverages ($43 million) and plastic plates, sheets & film ($41 million).
2.25
In 2015-16, Victoria’s merchandise imports from the UK amounted to just over $2 billion (2.9 per cent of all imports to Victoria). Leading import items were passenger motor vehicles ($513 million), pharmaceutical products ($172 million) medicaments ($71 million) and printed matter ($66 million). Overall, UK exports to Victoria have enjoyed 5-year trend growth of nearly 7 per cent.
Two-way trade between the State of Queensland and the UK
2.26
Trade and Investment Queensland submitted that Australia and Queensland enjoy a robust trade and investment relationship with the UK, the 6th largest global economy. The UK is Queensland’s ninth largest merchandise export market valued at $809.8 million in 2015-16.
Two-way trade between the State of NSW and the UK
2.27
The UK is NSW's 12th largest merchandise export destination, with $673.7 million in merchandise exports in 2015-16, a year-on-year increase of 5.3 per cent. NSW’s top merchandise exports were miscellaneous manufactures, meat and meat preparations, and beverages.
2.28
Merchandise imports from the UK far outweigh NSW’s exports. In 2015-16 merchandise imports were valued at $3.36 billion.
Agricultural exports to the UK
2.29
Australia's agriculture trade relationship with the UK is long-standing, but has changed significantly. In the early 1950s almost 40 per cent of Australia's merchandise exports were to the UK; of which nearly 80 per cent were agricultural products (mainly beef and wool).
2.30
However, from the mid-1950's Australia's exporters' focus has increasingly moved away from the UK (and Europe more broadly) towards Pacific rim markets such as the United States and Asia. By the early 1990's the UK's share of Australian merchandise exports had fallen to 3.6 per cent of total, of which 21 per cent were agricultural exports. A major factor behind the shift was the loss of preferential access by Australian farmers to the UK when it joined the European Economic Community in 1973.
2.31
By 2015 Australian agricultural exports to the UK were valued at $727m, making it Australia's 15th largest agricultural export market (1.4 per cent of Australia’s total agricultural export value).
Despite its small share of overall value, the UK is a high value market, in particular for meat. It is also Australia's third largest export market in the world for wine by value and largest by volume.
2.32
The UK is Australia's largest agricultural export market within the EU-28 markets, making up almost a quarter of our total agricultural exports to the EU by value(see Table 2.1). It is the largest export market within the EU for Australian beef ( 40 per cent of total value to the EU), sheepmeat (72 per cent) and wine (64 per cent).
2.33
These three commodities (beef, wine and sheepmeat) together make up 83 per cent of Australia's total agricultural exports (by value) to the UK in 2015.
2.34
When considered as a bloc though, Agribusiness Australia considered the EU as clearly one of Australia's main trading partners. In 2014, the EU was Australia's second-largest trading partner, although it fell to third place after China and Japan in 2015.
2.35
The UK was Australia's eighth-largest export market for 2014, representing 37.4 per cent of Australia's total exports to the EU. No other EU country featured in Australia's top 15 export markets.
2.36
Principal Australian exports to the EU include canola, wine, fruit and nuts, wool, and beef. Total Australian food and agriculture exports to the EU (excluding the UK) were valued at approximately $2.3 billion in 2015 and have been relatively static over recent years.
Table 2.1: Key Australian agricultural, fisheries and forest exports to the UK by value - 2015
|
|
|
|
|
|
|
|
Wine
|
384.4
|
64 per cent
|
597.0
|
18 per cent
|
2,168.0
|
|
Beef and veal
|
120.5
|
40 per cent
|
302.5
|
1 per cent
|
9,296.4
|
|
Sheepmeat
|
100.8
|
72 per cent
|
140.3
|
4 per cent
|
2,525.3
|
|
Almonds
|
16.4
|
5 per cent
|
302.0
|
2 per cent
|
745.3
|
|
Wool a
|
12.8
|
4 per cent
|
303.6
|
<1 per cent
|
2,906.5
|
|
Plant extract b
|
11.7
|
26 per cent
|
45.8
|
5 per cent
|
234.4
|
|
Chickpeas
|
11.6
|
94 per cent
|
12.3
|
1 per cent
|
1,004.3
|
|
Offal c
|
4.4
|
79 per cent
|
5.6
|
1 per cent
|
773.3
|
|
Apples
|
2.5
|
100per cent
|
2.5
|
23 per cent
|
10.7
|
|
Other
|
62.1
|
5 per cent
|
1,368.7
|
<1 per cent
|
31,075.5
|
|
Total
|
727.2
|
24 per cent
|
3,080.3
|
1 per cent
|
50,739.7
|
a Greasy and semi-processed. b Contains essential plant oils and elaborately transformed tobacco and related products. c From red meat animals. Source: Submission 21 Department of Agriculture & Water Resources- ABS Cat 5465.0
Wine
2.37
The UK is the second largest importer of wine in the world with 99 percent of all wine and sparkling wine consumed coming from outside the UK. Approximately half of the wine is produced in the EU according to the Winemakers’ Federation of Australia (WFA), while the remainder comes mostly from Australia, USA, Chile, Argentina, South Africa and New Zealand. Australia is the second largest source of wine for the UK behind Italy, by volume.
2.38
In 2016 a third of all Australian wine exports were sold to the United Kingdom, making the UK market Australia’s number one export destination by volume, with 236 million litres of Australian wine exported. The value of this wine from Australia was $355 million, split roughly equally between packaged and bulk wine shipments. Notably, bulk wine shipments account for 80 per cent of the volume of wine exported and wine shipped in bulk has a lower value per litre, making the UK wine market Australia’s third-largest export market by value.
2.39
The UK is a significant contributor to global wine trade and according to the Australian Grape and Wine Authority, the UK is an important trading centre that also acts as a hub for Australian wine exports to Europe.
It is the second largest import market by value globally and Australia is the UK’s second largest source of wine, behind Italy, by volume.
2.40
Treasury Wine Estates, which as one of the world’s largest wine companies and headquartered in Melbourne, maintained that the UK wine market is a very tough one, with significant retail competition resulting in low margins and fierce competition between global wine producers.
Therefore the high level of tariffs are making an already hard job for Australian wine producers even harder.
2.41
Treasury Wine Estates pointed to the growth in premium Australian wine sales to the UK in a AGWA media release on 27 January 2017 stating “The market did see strong rates of growth in exports of our higher priced wines. Exports priced at $5 or more per litre grew by a healthy 23 per cent to $68 million. The growth was even stronger for exports at $10 or more per litre, which grew by 25 per cent to $28 million, double the 20-year low in 2013.”
Red meat
2.42
The UK has historically been an important customer for Australian red meat. However a disproportionately low European Union (EU) tariff rate quota (TRQ) import regime involving high above quota tariffs has constrained the ability for Australian exporters to respond to ongoing consumer demand for high quality red meat in the UK and compete equitably with other suppliers.
2.43
Prior to joining the EU, the UK was one of Australia’s largest export destinations for red meat. In 1955 for example, Australia exported 47,000 tonnes of sheepmeat to UK (93 per cent of Australia’s sheepmeat exports at the time). Additionally, beef exports to the UK reached a peak in 1959 of approximately 149,000 tonnes (65 per cent of Australia’s beef exports at that time), which was a similar size to today’s Korean market for Australian beef.
Incorporation of the UK into the highly restrictive EU import regime in 1973, however, severely curtailed Australia’s red meat trade volumes via restrictive arrangements, (which still operate today).
2.44
The UK imported 243,250 tonnes of beef and 87,337 tonnes of sheepmeat in 2016 to feed its growing population of 64 million. However, Australia’s market share represents just 5 per cent (or 15,897 tonnes in 2016) of the UK’s total red meat imports, including EU and non-EU.
2.45
For Australian beef; 7,699 tonnes was exported to the UK out of Australia’s total exports of 20,841 tonnes to the EU in 2016 (consisting of 15,980 tonnes of high quality grainfed beef and 4,862 tonnes of high quality grassfed beef). Over the past decade Australian beef has represented on average, only 2 per cent of all UK’s beef imports with approximately 67 per cent of the UK’s beef imports from Ireland.
2.46
For Australian sheepmeat; 12,378 tonnes was exported to the UK out of Australia’s total exports of 16,471 tonnes to the EU in 2016 (consisting of 11,512 tonnes of lamb and 4,959 tonnes of mutton). Over the past decade, Australian sheepmeat has represented, on average, only 13 per cent of the UK’s sheepmeat imports (approximately 73 per cent of imports are from New Zealand).
There were no shipments of Australian goatmeat to the UK in 2016.
2.47
Despite low volumes into the EU overall, the UK remains Australia’s single largest market for beef and sheepmeat exports within the EU, importing 46 per cent of beef and 75 per cent of all Australian sheepmeat exports to the region. Additionally, the EU (currently including the UK) is Australia’s highest value beef export market on a per tonne basis - reaching $13,430/tonne in 2016, almost double the global average.
Rice
2.48
With the boom in Japanese cuisine in the UK, Australian rice producers are well placed according to the National Farmers’ Federation to supply the UK market with speciality rice.
Between 2010 and 2016, the total volume of Australian milled Japonica rice exports to UK increased 626 per cent due to the increasing demand for Japanese cuisine and sushi specifically.
2.49
Milled Australian-grown Japonica rice – medium and short grain varieties – exported to the UK presently represents the vast bulk of leading Australian rice producer SunRice’s trade in rice to the EU.
2.50
Since 2011, the UK market has averaged almost 80 per cent of SunRice’s total volume of trade to the EU. The market for Australian Japonica rice in the UK is growing strongly due to the phenomenal increase in the popularity of Japanese cuisine.
2.51
However SunRice, which is one of the world’s largest rice food companies and one of Australia’s largest branded, processed-food exporters, with revenues exceeding $1.25 billion, outlined that Australian milled rice exports to the UK are restricted because of the broader EU’s application of tariff rate quotas (TRQ) and the prohibitively high tariffs on imported volumes above the TRQ level of 1,000 milled tonnes.
2.52
Between 2011 and 2015, the UK importation of milled rice, which includes medium grain and short grain varieties, increased by 11 per cent to 269,000 tonnes. The major sources of UK rice imports are Italy, Spain, the US, India and Thailand.
Australian Japonica rice exports to the UK
2.53
The total volume of Australian milled Japonica rice exports to the UK increased by 626 per cent between 2010 and 2016 to 1,161 tonnes. Even in isolation when excluding sales volumes to SunRice’s other EU markets such as Sweden, Australian rice exports to the UK exceeded the broader EU’s TRQ level of 1,019 milled tonnes in 2014 and 2016 (refer figure 2.2).
2.54
Despite increasing demand for Australian Japonica rice, the EU tariff imposed on imports above Australia’s TRQ is set at €175/tonne, representing a significant additional cost of between 15-20 per cent to the average sales price. This is a prohibitive cost, according to SunRice for potential customers of Australian Japonica rice to produce sushi and ricecakes.
2.55
Without any trade restrictions, SunRice considers that Australian rice export volumes to the UK could match annual levels achieved by major competitors, such as the US.
An annual export target of 40,000 tonnes of milled rice (a 40 fold increased on current levels) would not be an unrealistic expectation and would generate revenues approaching $60 million.
Dairy
2.56
Currently, 98 per cent of the UK’s dairy imports are sourced from the EU, according to the National Farmers’ Federation.
Prior to the UK joining the EU, the UK was the largest market for butter and a major destination for cheese exports for Australia. The UK is a milk deficit nation although through the evolution of regional and global supply chains, it is also a modest sized exporter of dairy to other EU states. Worldwide, the UK is the second largest importer of dairy product behind China; nonetheless, Australian dairy exports into the UK are negligible. The EU currently enjoys a monopoly on the supply of dairy into the UK.
2.57
The Australian Dairy Industry Council highlighted that during the six‐year period 1967‐68 to 1972‐73 the average volume of bulk butter and cheddar exports were 46,270 tonnes and 8,778 tonnes respectively.
2.58
ADIC stated it was worth noting that although Australia lost its largest market for butter in 1973, “New Zealand was able to keep its access to the UK market to a greater degree than Australia”.
2.59
The Australia dairy industry is the fourth largest exporter in the world behind New Zealand, the EU and the United States, with an approximate 6 per cent share of global trade, on a milk equivalent basis in 2015‐16. The total value of Australian dairy exports in 2015‐16 was just under $3 billion.
2.60
While the major regional export destinations are ASEAN, East and North Asia and the Middle East, Australian origin dairy product exports to the UK are negligible, according to the Australian Dairy Industry Council; totalling 15 tonnes in 2015, including one tonne of cheese.
In the ten‐year period 2006 to 2015 UK imports of Australian origin dairy products peaked at 3,281 tonnes in 2007 before sliding. Imports of cheese accounted for 90 per cent of the total over the ten‐year period; averaging 1,211 tonnes per annum.
2.61
This trade is occurring in the context of the UK’s position as the second largest dairy importing nation after China. For example, in the period 2006 to 2015, if intra‐EU trade is included, the UK ‘imported’, on average, 339,660 tonnes of cheese per year. Of this total the other EU member states supplied 92 per cent.
On a value basis, the dairy trade relationship with the EU is even more pronounced: 98 per cent of the UK’ dairy imports are sourced from the EU, mainly cheese and butter from Ireland and France, while 72 per cent of British dairy exports are destined for the EU.
At the same time, the dairy trade relationship between Australia and Britain is becoming increasingly asymmetrical with UK origin exports to Australia increasing from 1,028 tonnes in 2006 to 2,075 tonnes in 2015. Cheese constitutes the largest product group.
Sugar
2.62
The Australian Sugar Industry Alliance (ASA) would welcome the restoration of Australian raw sugar exports to the UK and EU markets as Europe used to import about one third of all Australian sugar exports prior to the UK joining the European Economic Community in 1973. Australian sugar exporters now have a small annual WTO tariff rate quota (TRQ) access to the EU, including the UK, of just 9,925 tonnes annually. As a result of the EU using quota and tariff restrictions to limit imports in cane sugar in favour of European-grown sugar beet, Australia’s raw sugar exports to the UK in the last three marketing years were:
Key Australian industrial exports to the UK
2.63
In 2015, major Australian industrial exports to the UK were precious metals, stones and jewellery ($867.7 million); lead ($469.4 million); medical instruments and equipment ($289.7 million); coal ($212 million); and machinery ($170.3 million) (see figure 3).
2.64
While the UK is not a major export destination for most Australian minerals and resources commodities, London is nonetheless highly important to Australia’s mineral and resources exporters because of its role as a global trading hub for gold and metals.
2.65
The London bullion market facilitates wholesale over-the-counter trading of gold and silver among members of the London Bullion Market Association (LBMA). LBMA members include most gold-holding central banks, private sector investors, mining companies, producers, refiners and fabricators.
2.66
The UK is also home to the London Metal Exchange (LME), one of the world’s major centres for trading in industrial metals. LME provides trading platforms for both physical commodities and financial products such as options and futures contracts on base and other metals. Through its trading activities the LME plays an important role in price discovery.
LME prices are typically used as reference prices for key metals commodities. Its metal futures are important vehicles for risk management and hedging by users, traders and producers. LME provides futures and options contracts for aluminium, copper, lead, nickel, tin, zinc, gold and silver, cobalt and molybdenum.
2.67
Market access barriers for minerals and energy products into the UK are relatively low under the EU’s existing common external tariff according to the Minerals Council. The EU applies zero tariffs on imports of many of the major minerals commodities which Australia produces. The EU’s Most Favoured Nation (MFN) applied tariffs on iron ores and concentrates, coal, gold, liquefied natural gas, aluminium ores and concentrates, crude petroleum, copper ores and concentrates, and pearls, for example, are zero. However, there are a number of minerals products where the EU does impose tariffs ranging from around 2 to around 10 per cent.
Tariffs at the higher end of this range are imposed on basic metals manufactures such as aluminium, ferro-alloys and a number of base metals such as titanium, zirconium and antimony.
Precious metals, stones and jewellery
2.68
In 2015, Australia exported $16.8 billion worth of precious metals, stones and jewellery to the world, representing 6.7 per cent of total exports. This was Australia’s fourth highest exported commodity behind iron and steel ($49.1 billion), coal ($37.0 billion) and liquefied gases ($17.1 billion).
2.69
Exports of precious metals, stones and jewellery to the UK accounted for $867.7 million, or 5.2 per cent of Australia’s total precious metals, stones and jewellery exports. In 2015, the UK ranked as Australia’s fourth largest export market for precious metals, stones and jewellery, behind China, Singapore and India (see figure 2.4.).
2.70
The major types of precious metals, stones and jewellery exported to the UK in 2015 were gold ($424.4 million), diamonds ($358.3 million), and silver ($51.4 million).
Lead
2.71
Australia is the world’s largest exporter of lead and is at the forefront of technological development in lead mining and processing. In 2015, Australia exported $1.1 billion of lead to the world, representing 0.43 per cent of Australia’s total exports. Lead was Australia’s 20th highest exported commodity.
2.72
In 2015, exports of lead to the UK accounted for $467.2 million, or 43.6 per cent of Australia’s total lead exports. The UK has consistently ranked as Australia’s largest export market for lead (see figure 2.5).
2.73
According to the Department of Industry, Innovation and Science the 99.85 per cent of lead that is exported from Australia to the UK is of an “unwrought, unrefined form that is not containing by weight antimony as the principal other element”. This specific form of lead comes from the Glencore Mount Isa Mines.
The lead is smelted into a concentrate and then purified further to produce 99.6 per cent pure lead bullion, which is cast into 4.1 tonne blocks. The lead bullion is then transported via train to the Port of Townsville, where it is shipped to Glencore’s Britannia Refined Metals refinery in the UK.
2.74
This UK refinery uses a trademarked smelting process, ISASMELT, which is an energy efficient smelting process that was jointly developed in the 1970s by Mount Isa Mines Limited and the CSIRO, to produce lead ingots that meet the London Metal Exchange’s purity specifications of a minimum of 99.97 per cent.
Table 2.2: Australia's exports of unwrought, unrefined lead to the UK
|
|
|
|
|
|
|
|
|
|
Value
($ million)
|
$404.8
|
$328.4
|
$486.6
|
$404.2
|
$301.5
|
$466.6
|
$532.3
|
|
Tonnes
|
144,615
|
99,450
|
158,380
|
138,803
|
108,634
|
164,928
|
152,816
|
Source: Department of Industry, Innovation & Science, Answers to Questions on Notice
2.75
Currently, lead ranks after aluminium, copper and zinc in terms of usage with the largest application being in batteries for transport vehicles and communications. Other uses include cable sheathing, solder, casting alloys, chemical compounds, ammunition, in ceramics and in glass for TV and computer screens for radiation protection. New uses for lead could be in large storage batteries used for load-levelling of electrical power and in electric vehicles.
2.76
Source: Submission 24 Department of Industry, Innovation & Science - ABS Cat 5368.0
Pharmaceutical industry
2.77
Medicines Australia, which represents the research-based pharmaceutical industry in Australia, stated many of its members and the pharmaceutical industry more broadly, have strong business ties to the UK, including imports from and exports to the UK as well as other key partnerships.
With the UK set to leave the European Union (EU), there is an opportunity to address existing barriers to increasing the level of trade for the pharmaceutical sector in a future trade agreement between Australia and the UK.
2.78
The trade and investment relationship between Australia and the UK is important for the pharmaceutical industry, according to Medicines Australia, for a number of reasons. A significant proportion of Medicines Australia’s more than 50 member companies have either headquarters located in the UK, or have investments in manufacturing and associated supply chain components.
2.79
As a global company headquartered in the UK with a strong heritage in Australia dating back to the early 1900s, GSK, formerly known as GlaxoSmithKline, stated it was supportive and committed to contributing to a strong trade relationship between the UK and Australia. GSK Australia has more than 1,200 employees working at two manufacturing plants on a range of innovative medicines, vaccines and healthcare products.
In 2015, we invested over $40 million in Australian research and development, and we manufactured over $461 million in exports at our two manufacturing facilities (representing over 18 per cent of Australia's pharmaceutical exports in 2015).
2.80
AstraZeneca is another global pharmaceutical company with strong links to the UK where it employs 6,500 people, but also has had a manufacturing presence in Sydney, Australia, extending back 60 years to 1957.
2.81
With nearly 1,000 staff in Australia, AstraZeneca manufactures 86 product lines and exports to 20 markets globally. In excess of 50 per cent of its products are for the Australian market; but its export growth is anticipated by AstraZeneca to exceed domestic sales as early as 2018.
2.82
The investment by AstraZeneca in clinical trials, extends to every state and territory in Australia. It exceeds 52 separate trials and involves in excess of 1,500 patients. AstraZeneca has invested more than $250 million in R&D over the last 10 years. The investment by AstraZeneca into its operations in Australia since 2011 has exceeded $130 million.
Australian mining companies presence in the UK
2.83
Australia’s two largest mining companies Rio Tinto and BHP Billiton Limited have direct presences in the UK.
2.84
Rio Tinto has joint head offices in London and Melbourne. It is listed on the London Stock Exchange and the Australian Securities Exchange. Rio Tinto plc’s London head office includes staff responsible for a range of functions and operations, including corporate, investor and media relations, procurement, marketing, technology and innovation, marine operations and for the Rio group’s copper business. In addition Rio has a procurement office in Paris and aluminium interests in northern France.
2.85
BHP Billiton Limited is registered in Australia and has a primary listing on the Australian Securities Exchange, while BHP Billiton plc is registered in the UK and has a primary listing on the London Stock Exchange. BHP Billiton has a corporate office in London in addition to its global headquarters in Melbourne. BHP Billiton also has financial interests in North Sea oil and gas production operations in the UK. Its global petroleum assets include a 16 per cent non-operating interest in the Bruce oil and gas field and a 31.83 per cent non-operating interest in the Keith oil and gas field.
2.86
Glencore, one of the world’s largest mining companies, which has significant operations in Australia has a corporate office in London and refined lead and silver production operations in the UK. Glencore’s head office is in Baar in Switzerland and it also has numerous offices and operational facilities in EU countries including Spain, France, Germany, Italy and Poland.
Key Australian industrial imports from the UK
Passenger motor vehicles
2.87
In 2015, Australia imported $20.4 billion worth of passenger motor vehicles from the world. Imports from the EU accounted for $6.3 billion, or 31 per cent, and imports from the UK accounted for $1.3 billion, or 6.5 per cent.
2.88
In 2015 according to the Department of Industry, Innovation and Science, the total duty collected on passenger motor vehicle imports from the world was $422.4 million, of which $315.2 million, or 74.6 per cent came from imports from the EU. The duty collected on passenger motor vehicle imports from the UK was $65.5 million or 15.5 per cent of the total duty collected.
2.89
Compared to the rest of the world, in 2015, the UK ranked as Australia’s sixth largest source of imported passenger motor vehicles in the world, and second largest source of imported passenger motor vehicles in Europe, behind Germany ($3.1 billion)
2.90
The Australian automotive industry sources new motor vehicles from around the world. The Federal Chamber of Automotive Industries (FCAI) submitted almost 1.2 million new passenger motor vehicles were sold in Australia in 2016, of which less than 8 per cent were domestically manufactured. Australia will cease all domestic motor vehicle manufacturing by the end of 2017.
From 2018 all new motor vehicles for sale in Australia will be imported. The Australian passenger car market is now one of the most open and progressive automotive markets in the world in relation to tariff levels and overall protection. Australian automotive tariffs reduced on 1 January 2010 from 10 per cent to 5 per cent, resulting in an average tariff rate well below 5 per cent today, as cars imported from countries with which Australia has FTAs are landed without being subject to any tariff…there are 67 brands in the Australian new car market selling more than 400 different models and thousands of variants, including many from the United Kingdom.
2.91
The FCAI stated that currently, around 76 per cent of Australia’s total new car imports originate from trading partners with which Australia has a free trade agreement.
2.92
In contrast according to the FCAI, 19 per cent of new passenger motor vehicle imports (204,000 units) were sourced from EU countries. This includes the UK, which made up 17 per cent of all EU imports.
2.93
In 2015-16, automotive vehicle imports from the UK into Australia were valued at more than $1.5 billion. In 2016, more than 40 different makes and models were imported from the UK. Manufacturers importing motor vehicles from the UK include Jaguar-LandRover, Mini, Nissan, Honda, Rolls Royce, Bentley, Aston Martin, Lotus, Morgan, Caterham and Infiniti.
Table 2.3: UK sourced motor vehicle imports into Australia
|
|
|
|
2006
|
9,825
|
|
2007
|
9,222
|
|
2008
|
9,554
|
|
2009
|
9,633
|
|
2010
|
15,026
|
|
2011
|
20,165
|
|
2012
|
27,698
|
|
2013
|
35,106
|
|
2014
|
32,881
|
|
2015
|
32,084
|
|
2016
|
35,581
|
Source: Federal Chamber of Automotive Industries, Submission 41, p. 3.
Machinery
2.94
In 2015, Australia imported $42.3 billion worth of machinery from the world. Imports from the EU accounted for $8.2 billion, or 19.4 per cent, and imports from the UK accounted for $1.2 billion, or 2.7 per cent.
2.95
The Department of Industry, Innovation and Science submitted that in 2015 the total duty collected on machinery imports from the world was $267.6 million, of which $103 million, or 38.5 per cent came from imports from the EU. The duty collected on machinery imports from the UK was $12.9 million or 4.8 per cent of the total machinery duty collected.
2.96
Compared to the rest of the world, in 2015, the UK ranked as Australia’s 10th largest source of imported machinery, behind Germany and Italy.
Scotch Whisky
2.97
The Scotch Whisky Association, which represents 66 companies including distillers, blenders, bottlers, brokers and exporters or more than 95 per cent of Scotch Whisky production in Scotland, highlighted that Australia has long been an important market for the industry. Currently when compared with other direct export markets for Scotch Whisky, Australia ranks 9th in value terms and 11th in volume. The export value of direct exports to Australia was over £100 million in 2016.
2.98
Annual consumption of Scotch Whisky in Australia by best estimates is 18 million bottles out of a total spirits market of 88 million bottles or 20 per cent approximately.
Australia’s agricultural imports from the UK and the EU
2.99
The UK is also an important supplier of agricultural (mainly further processed) products to Australia (see Table 2.4). In 2015 Australian agricultural imports from the UK were valued at $644 million, making it our 10th largest source globally and third largest supplier from within the EU-28 (12 per cent of total imports from the EU by value in 2015).
The agricultural trade relationship between the two countries is relatively balanced, with Australia having a modest agricultural trade surplus.
2.100
According to Meat & Livestock Australia, the scale of the balance of trade in agricultural goods is tipped well in the EU’s favour. In 2016 the EU exported more than double the amount of pork (81,500 tonnes) to Australia than Australia’s exports of beef (20,841 tonnes) and sheepmeat (16,471 tonnes) to the EU combined. In fact, the EU exported nearly $1.4 billion more in agricultural goods to Australia than Australia exported to the EU in return.
2.101
Australia’s agriculture and food imports from the EU were valued at approximately $3.8 billion in 2015 according to Agribusiness Australia, and consisted predominantly of wine and processed foods, as well as canned vegetables such as tomatoes from Italy, and pig meat sourced from Denmark and the Netherlands.
Table 2.4: Key Australian agricultural imports from the UK by value - 2015
|
|
|
|
|
|
|
|
Plant extracts a
|
46.3
|
28%
|
163.8
|
4%
|
1,139.3
|
|
Beer
|
18.9
|
16%
|
119.3
|
4%
|
433.4
|
|
Printing and writings (Paper)
|
16.4
|
5%
|
307.4
|
2%
|
819.1
|
|
Coffee
|
12.2
|
5%
|
258.9
|
2%
|
811.7
|
|
Cheese
|
10.1
|
5%
|
215.5
|
2%
|
586.4
|
|
Animal feed
|
8.6
|
11%
|
81.9
|
2%
|
428.2
|
|
Packaging and industrial (Paper)
|
7.8
|
5%
|
169.1
|
1%
|
583.9
|
|
Wine
|
5.4
|
1%
|
409.4
|
1%
|
793.9
|
|
Household and sanitary (Paper)
|
3.0
|
10%
|
29.5
|
1%
|
463.4
|
|
Edible oils
|
2.2
|
8%
|
26.9
|
<1%
|
473.4
|
|
Other
|
513.1
|
15%
|
3,508.6
|
3%
|
17,490.2
|
|
Total
|
644.0
|
12%
|
5,290.3
|
3%
|
24,022.9
|
a Contains essential plant oils and elaborately transformed tobacco and related products. Source: Submission 21 Department of Agriculture & Water Resources - ABS Cat 5465.0
Investment
2.102
The UK is Australia’s second largest investment partner, with total two-way investment valued at $853 billion in 2015. The stock of total UK investment in Australia at 31 December 2015 was $499.9 billion. This included foreign direct investment (FDI) of $76 billion, making the UK Australia’s third most significant source of FDI behind the United States and Japan, and one of Australia’s most significant source of foreign investment since federation.
2.103
According to DFAT, there is a strong pipeline of UK direct investment into Australia, with the investment monitoring service FDI Markets reporting a total of 43 UK FDI projects in Australia in 2016. As in previous years, the leading sectors by project numbers included business services and ICT, with these sectors representing two-thirds of all projects.
2.104
British businesses have traditionally viewed Australia as an attractive base for regional operations and according to DFAT have invested in a wide range of industries, including infrastructure, pharmaceuticals, energy, and travel industries. Approximately a third of all regional headquarters operations in Australia are European, and of these, almost half are British. Major UK investors in Australia include BP, BAE Systems, BT, Vodafone, Associated British Foods (George Weston), PZ Cussons, Tavistock (AACo), HSBC, Diageo, Unipart and Serco.
2.105
UK investors include small and medium size businesses opening new operations in Australia through to large superannuation funds investing in major Australian infrastructure assets. The UK, as a global financial centre, is also the investment decision centre for organisations from other countries in relation to their Australian investments, including, for example, foreign sovereign wealth funds such as the Kuwait Investment Authority.
2.106
According to DFAT, there has also seen strong growth in the UK’s share of overall EU direct investment into Australia, from 40 per cent of the EU total in 2010 to 48 per cent by 2015. The growth in FDI from the UK accounts for around 94 per cent of the entire net growth for the EU ($23.8 billion) since 2010. The UK is the largest foreign owner of Australian agricultural land.
The relationship is also supported by strong, long-standing agricultural investment. The UK is the largest foreign owner of Australian agricultural land, with assets comprising 27.5 million hectares, or over 52 per cent of total foreign owned land.
2.107
The stock of total Australian foreign investment in the UK was $353.2 billion at 31 December 2015, with foreign direct investment of $81.3 billion.
Australian investments in the UK were worth $353.2 billion in 2015, representing 17 per cent of total Australian investment abroad. Australia’s mining industry has significant interests in mining overseas. In 2015, 15.2 per cent of Australian direct investment abroad was in mining.
2.108
Bunnings as Australia's leading retailer of home improvement and outdoor living products and a major supplier to building trade sector has invested in a British home improvement retail chain.
In February 2016 we expanded our operations further with the acquisition of Homebase, the second largest home improvement and garden business in the United Kingdom and Ireland.
2.109
As at 31 December 2016, Bunnings had 354 trading locations across Australia and New Zealand (BANZ), and 255 trading locations in the United Kingdom and Ireland (BUKI). The first Bunnings Warehouse in the United Kingdom and Ireland commenced trading in St Albans, Hertfordshire, in February 2016.
Bunnings currently has plans to invest a further £500 million in the United Kingdom (subject to the successful rollout of the pilot programme).
2.110
The British Consul General and Director-General for UK Trade and Investment Australia and New Zealand, Mr Michael Ward, that their ambition is to successfully attract a very wide range of Australian investors to see UK as part of their international expansion across many sectors.
We also work a great deal with capital investors in Australia who are interested in investing in real assets and urban renewal and infrastructure in the UK, where there are several billion Australian dollars invested—a notable example is Australian Super's investment in Kings Cross, a major mixed development in London—and also with many of the other large banks and fund managers.
2.111
DFAT estimates about 1,500 Australian companies maintain a presence in the UK, with a large number using the UK as a base for continental Europe. Key Australian investors in the UK include Macquarie Bank, Westfield, AMCOR, Lend Lease, Westpac, the Commonwealth Bank, ANZ Bank, National Australia Bank, Cochlear, ResMed, CSL, Boral, and dual-listed companies GKN Brambles, Rio Tinto, and BHP Billiton.
2.112
MCA stated while international economic relationships have traditionally been assessed through the prism of trade, investment flows are now increasingly also recognised as an important facet of these relationships.
2.113
Recent analysis by the DFAT according to the Minerals Council showed that 743 of Australia’s top 2000 companies were majority foreign owned in 2013-14.
These foreign owned companies had sales of $629.3 billion and employed 696,700 Australians. On the other side of the ledger, 653 of Australia’s top 2000 companies had direct investments abroad in 7,632 foreign companies in 2015.
2.114
The UK was amongst the top five locations for these Australian direct investments abroad, along with New Zealand, the United States, Singapore and Hong Kong.
2.115
Further analysis by DFAT based on partner countries’ foreign affiliates trade statistics found that there were 474 majority Australian-owned businesses in the UK with sales totalling $21.3 billion and 44,300 employees. In Australia, there were 1,232 majority UK-owned businesses with sales totalling $91.8 billion and 152,100 employees.
This data suggests that for both Australia and the UK, sales by foreign affiliates in each other’s country were worth considerably more than bilateral exports of goods and services.
Macquarie Group’s presence and investment in the UK
2.116
Macquarie Group, which was established in Sydney as the Australian arm of British merchant bank Hill Samuel in 1969, is now a global financial services provider with expertise across advisory and capital markets, trading and hedging, funds management, asset finance, financing, research and retail financial services. The diversity of operations, combined with a strong capital position and robust risk management framework, has contributed to Macquarie Group’s “47-year record of unbroken profitability”.
2.117
Macquarie has since grown from three employees in 1969 into a diverse global business and as at 31 December 2016, employing more than 13,600 people in 27 countries.
More than 1,400 of these employees work in the Group’s European, Middle Eastern and African (EMEA) operations, the vast majority of whom are based in the UK.
2.118
Macquarie, and its managed funds, is one of the largest investors in the UK, and consequently it is a significant global investment destination for Macquarie. The Group opened its London office in 1989 and it is the headquarters for Macquarie’s EMEA operations. Four out Macquarie’s five operating groups have substantial presences in the UK, with infrastructure, energy including renewable energy, and commodities as sectors of particular focus. The Group’s global infrastructure funds management division (Macquarie Infrastructure and Real Assets) and the renewable energy activities of its corporate advisory division (Macquarie Capital) are both led from London.
2.119
Macquarie’s diverse UK businesses serve a primarily corporate and institutional client base and the Group holds market-leading positions in each of its core businesses, for example:
The top-ranked UK infrastructure and project finance advisory firm
UK’s largest independent owner of gas and electricity assets
UK’s largest independent provider of smart meters
The world’s leading commodities research team is based in London
One of the largest financial institutions in the European wholesale gas markets
Number one in agricultural & softs commodities trading markets
Macquarie’s infrastructure investment in the UK
2.120
Since 1999, Macquarie and its managed funds have invested in infrastructure businesses and projects that provide services to people living in the UK. Current investments include airports, energy, utilities, roads and transportation services. Macquarie and its managed funds are direct investors in infrastructure and facilitators of investment in infrastructure.
…this investment is primarily by UK-domiciled and international institutions such as private and public sector pension funds.
2.121
Since 2005 Macquarie Group and Macquarie-managed funds have led over £35 billion of investments into businesses and projects located in the UK.
Like Macquarie, infrastructure investors generally have a long-term investment horizon and this is reflected through Macquarie funds typically having an investment life of 10 to 15 years. In the UK these managed funds are called Macquarie European Infrastructure Funds, of which there are five, with pan-European investment mandates.
Investment relationship between the State of Victoria and the UK
2.122
The Government of Victoria identified the UK as an important source market for investment in Victoria. For the period July 2011 to June 2016, online database fDi Markets recorded 75 UK FDI projects in Victoria, representing a total capital Investment of nearly $2.8 billion. Important UK investors in Victoria included GSK or GlaxoSmithKline (pharmaceuticals), BAE Systems (Defence), Unilever (consumer products, co- headquartered in UK/Netherlands), Shell (resources, headquartered in the Netherlands and incorporated in the United Kingdom) and Tyrrells (snackfoods).
2.123
Victorian-based companies with a presence in the UK include the NAB, (financial services), ANZ (financial services), Telstra (tech/ICT), and Typo (Cotton On Group – retail).
Investment relationship between the State of NSW and the UK
2.124
The UK has traditionally been one of NSW's largest investors. It remains Australia's third largest investor, having been overtaken by Japan for second place as recently as 2015. State-based ABS figures for inward investment stock are not available, according to the NSW Government, but NSW is a recipient of a significant proportion of this investment, particularly in the financial services sector. In 2016, greenfields foreign direct investment (FDI) from the UK into NSW was valued at $700 million - 8.1 per cent more than in 2015.
Investment relationship between the State of Queensland and UK
2.125
Of the total $1 trillion EU foreign direct investment (FDI) stocks in Australia, approximately 50 per cent has been invested from the UK. Key sectors for UK investment in Australia include infrastructure, energy and agriculture, with UK-based investors accounting for over 50 per cent of all foreign owned farmland or 27.5 million hectares in Australia (of which Trade and Investment Queensland claimed a large part would be in Queensland, given the size of the state and the relative importance of the agricultural sector)
2.126
In terms of significant recent trade and investment flows, Trade and Investment Queensland noted two major projects with British investment:
The very significant UK investment (over $20 billion) in energy projects including the Coal Seam Gas to LNG projects in south west and Central Queensland (initially by British Gas, recently merged with Shell); and
Increasing renewable energy infrastructure investment (such as the recent $33M investment by Foresight Group in Barcaldine Solar Farm).
2.127
Trade and Investment Queensland submitted that there are also significant Queensland investments in the UK, due mostly to London’s importance as a global financial hub.
The City of London remains a global hub for financial and other service industries (banking, investment, legal and advisory services), operating across multiple industry verticals including agriculture, energy and mining). For example, most global mining giants operating in Queensland and throughout Australia are registered on the London Exchange as well as the ASX. All our major banks are strongly represented in the market and our superannuation funds and wholesale investors have growing utility and property assets in London and throughout the UK.
UK and EU investment in major mining projects in Australia
2.128
The Minerals Council of Australia (MCA) stated foreign investment is important for the Australian minerals sector which is capital intensive due to the large scale and technologically advanced nature of mining and resources development projects. Access to funds, technology, know-how and market links through foreign investment, in particular foreign direct investment (FDI), has enabled Australia to tap its vast minerals resources potential and establish arguably the world’s most efficient mining sector.
In 2015, 16.4 per cent of the total stock of foreign investment in Australia, and 40 per cent of the total stock of FDI, was in the mining industry.
2.129
The MCA noted that Australia’s openness to foreign investment, together with the quest of East Asian economies for resources security to underwrite their development, has seen Asia, especially Japan, emerge as a major source of FDI alongside traditional sources such as the United States, the UK and other European economies.
2.130
Analysis by the Department of Foreign Affairs and Trade has shown that there were 3,226 European Union (EU) majority-owned enterprises in Australia in 2013 with 1,232 of these being UK majority-owned.
EU majority-owned Australian enterprises in the mining industry had turnover valued at $42.7 billion and employed 39,200 people in 2013.
2.131
The Department of Industry, Innovation and Science also highlighted the particular importance of mining projects to the Australian economy. There are 26 major projects worth $2 billion or above that are either currently underway or in the design and engineering stages. Many of these major mining projects are joint ventures involving both Australian and foreign investors.
2.132
The Foreign Investment Review Board has reported that the UK has provided the highest level of foreign investment in Australia’s major projects, with UK incorporated companies being responsible for 27 per cent of major project investment costs.
Trade in services
2.133
Services are becoming increasingly important in trade and investment globally. In 2015-16, services continued to be the largest part of the Australian economy, according to the Department of Industry, Innovation and Science, representing just over 60 per cent of GDP with output of $1,015 billion. Services sectors were also the largest employers, averaging 9.4 million employees in 2015-16.
2.134
The UK was Australia’s second largest two-way services partner in 2015, accounting for $12.3 billion or 8.6 per cent of total services trade. In 2015, services exports to the UK were valued at $5 billion – up 8.8 per cent from 2014, while services imports from the UK was valued at $7.3 billion – up 10.5 per cent from 2014. Tourism is Australia’s key services export to the UK at $1.9 billion, and is also Australia’s main services import from the UK at $2.9 billion.
2.135
HSBC Bank Australia submitted that the services sector is a major part of both the Australian and British economies, contributing 70 per cent and nearly 80 per cent to each country’s GDP, respectively.
Services also play an increasingly important role in both countries’ exports, both in their own right and also through value-add within traded goods (for example, shipping and logistical services, legal services and financial services). Services trade is an important component of economic growth, as it has proven less sensitive than manufacturing to the economic cycle.
2.136
The NSW Government stated that the UK is particularly important for NSW as a market for its services exports. The leading services exports were travel (education and tourism), other business services, and financial services.
At a national level, the UK is Australia's primary overseas market for financial services exports. Australia exports more financial services to the UK than it imports (not counting insurance and pensions).
Legal services
2.137
The Law Council of Australia submitted that the UK is Australia's equal-second largest export destination for legal services of around 13.5 per cent in Financial Year 2010-11. Continental Europe accounted for a further 13.5 per cent of Australian legal services exports.
Trade and investment cannot take place in a legal vacuum. Legal services are an essential enabler of international trade and investment because of the role that lawyers play in identifying and mitigating risk.
2.138
There are currently no significant barriers to trade in legal services between Australia and the UK, according to the Law Council.
Underpinning this high quality market access in both countries are clear regulatory frameworks that facilitate the availability of foreign legal services combined with the flexibility for local and foreign lawyers to work together to jointly provide multi-jurisdictional legal services to clients.
Australian and UK lawyers enjoy comprehensive access into each other's markets to provide foreign law legal services; to enter into commercial association; and to work with local and other foreign lawyers to provide advice covering the laws of multiple jurisdictions.
Healthcare services
2.139
A number of Australian healthcare service providers have expanded into the UK such as successful Australian companies as Cochlear and ResMed Holdings described by DFAT as “investors in the UK”, with offices and distribution points across the UK.
2.140
Cochlear opened its UK office in 1992and grew with more than 100 employees now working out of Surrey as part of a network of offices in Belguim, Finland, France, Germany, Italy, Sweden and Switzerland.
2.141
Australia’s largest private hospital provider Ramsey Health Care has acquired hospitals in the UK where revenue was $728 million in the 2017 financial year.
2.142
Another Australian company looking for new markets was GenesisCare. As Australia’s largest provider of cancer and cardiac services, GenesisCare has expanded into Europe to become the largest provider of private cancer services in Spain and the United Kingdom. GenesisCare acquired the UK’s leading provider of private cancer services, Cancer Partners UK, in 2015 with the intention of expanding its network of eight cancer treatment centres to 11 providing radiotherapy treatment.
2.143
Aspen Medical is another Australian-owned global provider of customised healthcare services that has been operating in the UK since 2004. Founded in 2003, Aspen stated it has become a world leader in delivering cost-effective healthcare services in any setting, particularly those that are remote, challenging or under-resourced regions such as those in Africa or war zones.
2.144
Aspen won a contract from the UK Government’s Department for International Development (DFID) to run Ebola treatment units in Sierra Leone between May 2015 and January 2016. Following Aspen Medical’s success in managing Ebola treatment units on behalf of the Australian and US Governments, Aspen was contracted by the British Government to run two Ebola treatment units in Kerry Town, Sierra Leone. This included delivery of full clinical operations, supporting the Public Health England-run laboratory and decommissioning of the site at closure.
2.145
In 2012 Aspen Healthcare Solutions UK LTD (AHS) was awarded the contract for the provision of medical services and the supply of civilian clinical staff to support the military, to Operation Herrick (Afghanistan). This contract, delivered under the auspices of Contractors on Deployable Operations (CONDO) included recruitment, credentialing, identity checking, security clearance and training of personnel for three month deployments where military personnel were unavailable in a particular speciality. During the life of the contract AHS supported 10 deployments and deployed 33 civilian staff.
2.146
In 2012 the UK-based Aspen Healthcare Solutions was contracted to supply the United Arab Emirates Army Medical Services with a range of mobile medical facilities. These enabled the UAE Army Medical Battalions to deploy in remote and austere environments in support of the main fighting force, providing the ability to establish a medical treatment facility in less than 20 minutes from arriving in location. The equipment supplied provided a suitable environment for patients to be treated prior to evacuation to a base hospital.
2.147
In November 2011, Aspen Healthcare Solutions was awarded the contract to provide mobile medical Incinerators and a comprehensive support package to the UK Ministry of Defence in Afghanistan.
2.148
In 2006 Aspen Medical was also contracted by the Craigavon Area Health Authority in Northern Ireland to provide the complete surgical team, including ward rounds and post-operative care, for a large number of urology cases to be conducted in the first quarter of 2006. Aspen Medical removed over 500 people from the urology waiting list, including some who had been on the waiting list for over eight years and reduced the waiting list to 30 days.
2.149
In 2005 and 2006 Aspen Medical, won a Northern England Surgery Waiting List Reduction contract to deliver surgery into the UK to reduce waiting lists whilst providing a high standard of clinical care. Aspen Medical through Nuffield Hospitals conducted over 5,000 surgical cases and 5,000 outpatient appointments as part of the provision of surgical services in England.
2.150
In 2005 Aspen Medical was contracted by the Hospital Trust in Northern Ireland due to an urgent requirement to meet cataract waiting time requirements before the end of the calendar year. Aspen Medical utilised existing facilities to ensure best use of current resources, and provided the whole team, including pre-and post-operative nursing and clinical staff, the complete surgical team, including recovery. Aspen Medical removed 200 people from the waiting list, many who had been waiting many months for surgery, some for over two years. The ophthalmic project was completed on schedule.
2.151
In 2004 and 2005 Aspen Medical was contracted to provide an Orthopaedic Network to the UK NHS, utilising a solution incorporating mobile surgical facilities, and the complete provision of all medical staffing requirements. Aspen provided both orthopaedic and general surgery along with Anaesthetic services, treating patients that had been on the public service health system waiting list. Through their treatment, Aspen Medical successfully reduced waiting lists in the UK.
Tourism and permanent migration
2.152
Tourism recently became Australia’s biggest export sector as a result of the concurrent strong growth of inbound tourism and the slowing of resources activity, according to the Tourism & Transport Forum (TTF) which represents more than a 100 members from across the sector. Domestic and international visitors spent in excess of $100 billion in Australia in 2016 with domestic travellers spending $61 billion, and international visitors $39 billion.
2.153
The TTF submitted that the UK is Australia's third-largest source market for visitors after New Zealand and China, based largely on the visiting friends and relatives sector (VFR) and leisure travel.
2.154
In 2016, the TTF stated visits to Australia by UK nationals totalled 716,700, an increase of 3.7 per cent over the previous year. Expenditure by UK visitors was $3.7 billion, or 9.5 per cent of overseas visitor spending, equal to the US and second only to China, which this year will become Australia’s largest market by visitor numbers.
2.155
According to the Department of Immigration and Border Protection, temporary visas granted to UK citizens had increased from 545,378 for tourist visitors in 2012-13 to 586,174 from an overall total of 4,799,173 for all tourists in 2015-16. On top of this, there were also 42,175 working holiday makers from the UK who came to Australia on subclass 417 visas in 2015-16, a decrease from 46,131 from the UK in 2012-13. This was also a reduction of 5.7 per cent compared to 2014-15.
2.156
The Restaurant & Catering Association, representing the interests of 35,000 restaurants, cafe and catering businesses across Australia, submitted that the value of tourism to Australia’s trading position is significant and highlighting Austrade estimates of tourism exports to be worth more than $41 billion. It stated restaurant, café and catering businesses were the largest employers in the tourism sector, employing half a million Australians.
2.157
The Restaurant & Catering Association believed the importance of tourism is shown by the visitor economy representing almost two thirds (65 per cent) of all services exports and 13 per cent of total Australian exports.
2.158
The Restaurant & Catering Association welcomed the 3.7 per cent increase in the number of travellers from the UK coming to Australia in 2016.
While this growth rate is much lower than that currently being experienced by Asian source markets such as China and Korea, the UK is one of Australia’s longest-standing mature travel markets that has provided consistently strong visitation over the years. Travellers from the UK are high-yielding visitors, injecting $3.7 billion into the Australian economy annually.
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According to the OECD, the travel industry contributes to over half of Australia’s services exports to the UK and 30 per cent of the UK’s services exports to Australia. For the year ending September 2016, UK visitors spent $3.75 billion, at an average of around $5,600 per visitor, which was an increase of 6 per cent.
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The Department of Immigration and Border Protection stated there were also 4,088 students, who arrived from the UK in 2015-16 out of a total of 310,845 international students. The Department stated that 12,821 UK passport holders arrived on skilled temporary resident visas in 2015-16 from an overall total of 85,611, as well as 9,649 UK citizens arriving on other temporary resident visas in 2015-16 from an overall total of 130,807.
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The UK is Australia’s fourth largest short-term destination. In the year ended 30 September 2016, there were 591,600 departures from Australia to the UK, an increase of 2.7 per cent on the previous year. In 2015-16, the UK Office for National Statistics reported more than 600,000 Australians visited the UK.
Sports-related tourism
Cricket
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The national governing body of cricket in Australia, Cricket Australia, highlighted cricket as the “bedrock of Australia’s sporting and cultural relationship with England”, the UK’s largest nation.
The Ashes is of course the most iconic feature of Australia’s relationship with England through cricket. The Test series is considered international cricket’s most celebrated rivalry with an origin dating back to 1882, and the first ever Test match between Australia and England taking place in 1877. It is a tradition that pre-dates Australia’s Federation and is intertwined through the history of Australia’s relationship with England, including some of its defining moments.
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Cricket Australia stated how in recent years, tourism and travel to and from Australia and the UK in pursuit of cricket has become an important form of trade that strengthens Australia’s relationship with the UK.
While the Ashes is the pinnacle of cricket between Australia and England we recognise that in recent years the tradition has also delivered significant economic outcomes and driven considerable international visitation.
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Cricket Australia outlined the economic benefit of an Ashes series in Australia from a decade ago. A URS Australia study commissioned by Cricket Australia, in conjunction with Tourism Australia and the then Department of Industry, Tourism and Resources, of the economic impact of the 2006-07 Ashes and One Day International series against England found that the tour:
generated $317 million in direct expenditure within the Australian economy, including $265 million attributable to the Ashes series alone;
contributed an additional $54 million in Gross Domestic Product (GDP);
produced an increased incremental regional direct expenditure of $48 million and a regional GDP impact of $8 million;
created an additional 793 annual average time jobs in Australia during 2006/07; and
attracted 37,000 international visitors as spectators, with the majority of those international spectators coming from the United Kingdom and an estimated 64 per cent of these international visitors coming to Australia primarily for the Ashes.
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The URS Australia study found on average, these incremental international visitors stayed for 29.5 days and spent $10,425 for the duration of their stay in Australia during the 2006-07 series, nearly double the average spend for a typical UK visitor to Australia.
The series therefore marked a high point in public interest in the Ashes in recent years. An equivalent economic impact assessment was not conducted for the 2010-11 and 2013-14 Ashes but the series maintains a high level of public interest and continues to drive economic activity and international visitation.
Netball
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Netball Australia submitted netball is the highest participation sport for women and girls in Australia and new competitions are attracting attention, and more supporters.
Our traditional rivalries with the UK remain strong. Tests are played each year with England. England, Wales, Northern Ireland and Scotland compete in many other levels of competition, for example the World Cup and the Commonwealth Games.
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In 2017, Australia hosted two international tournaments - the Fast Five World Series (top six countries in the world) in Melbourne and the Quad Series.
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The 2015 Netball World Cup was hosted in Sydney and showcased the best female athletes from all over the world, reinforcing Australia’s track record in creating and hosting successful, premier sporting events to a global audience. Countries participating in the World Cup included Australia, New Zealand, England, Jamaica, Malawi, South Africa, Wales, Scotland, Fiji, Samoa, Trinidad and Tobago, Barbados, Singapore, Sri Lanka, Uganda and Zambia.
International Netball Federation in its history. It highlighted that netball fans are willing to travel to see the best in the world and provides a useful example for what could be possible for the Commonwealth Games.
Travel packages were offered at the Netball World Cup 2015 (NWC2015) with 8,662 fan packages selling over the event period.
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A partnership between Mummu Sport and NWC2015 – the NWC2015 Travel Office – was established in September 2013 to support the strategic development and operational delivery of the NWC2015 Official Travel Agent and team/delegate travel logistics programs. Similar arrangements with travel offices have been arranged for Fast Five World Series held in Melbourne from 2016-2018.
Qantas Group
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The Qantas Group has strong and historic links to the UK, having first operated the ‘Kangaroo Route’ between Australia and London 70 years ago in 1947.
This route was one of the first aerial services to connect Australians and Britons, and has played a large part in facilitating the bilateral trade relationship which has continued to grow throughout the 20th and 21st centuries.
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In 2017 Qantas operates double daily A380 services between Australia and the UK, with flights from Melbourne and Sydney to London Heathrow.
Through the Group's strategic partnerships and alliances, Australians travelling to the UK on Qantas have access to an expansive network of destinations across England and Scotland. With Emirates, Australians have access to Birmingham, Glasgow, London Gatwick, Manchester and Newcastle. Australians travelling to the UK on Qantas are also able to codeshare on British Airways services to Aberdeen, Edinburgh and Leeds.
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Qantas described the UK-Australia market as a mature one that has “experienced intensified competition in recent years -with approximately 60 currently operating services (metal and code) between UK/Europe and Australia over a number of hubs in Asia and the Middle East”.
The highly competitive nature of services between Australia and the UK/Europe is confirmed by the magnitude of traffic flows on the ‘Kangaroo Route’. It has become a highly attractive market for any mid-point carrier in the Middle East and Asia to target -and recent technological advances which allow the operation of more efficient, high capacity and longer range aircraft have facilitated greater competition.
There has never been better access for tourism between Australia and the whole of Europe market, as well as the emerging Middle Eastern and African markets.
Emirates
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The Emirates Airline Group estimated one quarter of the 700,000 visitors who travelled to Australia from the UK in 2016 were carried on Emirates. For cultural and commercial reasons, Australia is a significant destination for Emirates’ customers in the UK and the UK is the top source market for Emirates’ Australian flights, representing 30 per cent of traffic on our services between Dubai and Australia. Emirates carried around 514,000 passengers between the UK and Australia in 2016 – an increase of 7 per cent from 2015.
Emirates’ Dubai hub is geographically and strategically positioned to effectively link Australia and the UK. Emirates’ connections from five points in Australia to six points in the UK (London Heathrow, London Gatwick, Birmingham, Manchester, Glasgow and Newcastle) provide a scale of connectivity that plays a substantial role in enabling tourism, international business relationships, Foreign Direct Investment, and the international trade of goods and services.
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Emirates commenced operations to Melbourne in 1996, followed by Sydney in 2000, Perth in 2002, Brisbane in 2003, and Adelaide in 2012. Emirates currently operates 77 services a week to Australia – 21 to Melbourne and Sydney, 14 to Brisbane and Perth, and seven to Adelaide. Emirates also operates 35 weekly flights between Australia and New Zealand.
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In 2016, Emirates carried 3.3 million passengers to and from Australia with an average seat factor of 78 per cent. Emirates has carried 27.6 million passengers to and from Australia since 1996, supporting the nation’s annual $30 billion (US$21.5 billion) export earnings from tourism.
Emirates employs over 7,400 Australians globally (around 1,520 in Dubai), and an estimated 23,000 Australians live and work in the UAE.
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Out of the 83 countries that Emirates operates to, the UK and Australia rank second and fifth respectively in terms of number of weekly frequencies. Emirates’ 18 daily flights between the UK and Dubai connect with 11 daily services between Dubai and Australia.
Emirates has the largest UK network for any international airline operating between Australia and the UK. London (Heathrow and Gatwick combined) is the largest single destination for passengers on these flights. The combined six UK destinations are our second biggest “destination region” for passengers on our Australia flights after mainland Europe. For context, at any one point in time we generally have around 50,000 passengers holding forward bookings to the six UK destinations ex-Australia, compared with 150,000 booked to 35 mainland Europe destinations.
International Airlines Group
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The International Airlines Group (IAG), which is the parent company of British Airways, Aer Lingus, Iberia and Vueling, currently operates a daily British Airways flight to Sydney. IAG described Sydney as the fifth largest market between London and Australasia and the third after Hong Kong and Singapore for ‘premium’ traffic, that is passengers travelling in all but BA’s World Traveller (economy) cabin.
The strength reflects the nature of the market and the importance of connections between the UK and Australia for business travel. However, the UK-Australia market is also one of the most competitive in the world. The distance means that non-stop flights have not generally been possible so there are a myriad of routes and competitor airlines available to consumers. A traveller searching for flights on the internet today will quickly find more than 20 viable options for connecting flights to Australia from the UK with a choice of stops in the Middle-East, Asia, and in North America.
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IAG recognises the vital importance of the two-way trade and tourism between the UK and Australia but also the role that air transport plays in contributing to economic development. IAG highlight the need for “continued liberal arrangements between the UK and Australia for international air services”.
Airlines provide a contribution to the economies at both “ends of the route” through direct employment in airlines and their supporting industries (including airports).
Qatar Airways
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Qatar Airways currently operates 26 weekly frequencies for passenger services to/from Australia as follows: Melbourne (7), Perth (7), Sydney (7), and Adelaide (5). Qatar Airways has also announced plans to commence daily flights to Canberra from Doha via Sydney and from Canberra to Doha via Sydney in February 2018. Qatar Airways submitted that it already contributes to the bilateral trade of goods and tourism between Australia and the UK through one-stop connections in its Doha hub.
This contribution could increase substantially should Qatar Airways be allowed further market access in Australia in a possible context of free trade with the United Kingdom.
Tourism from the UK to the State of Victoria
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The UK is an important tourism market for Victoria according to the Government of Victoria. In the year ending September 2016, there were 225,600 overnight UK visitors to Victoria representing growth of 5.4 per cent over the previous 12 months. This recent solid growth contrasts to a low 1.5 per cent per annum growth over the five years, year ending September 2011 to year ending September 2016,and visitor volumes have now returned to similar levels experienced in 2006 following a poor post Global Financial Crisis performance.
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Regarding tourism expenditure, the UK is Victoria’s third largest international market after China and New Zealand, valued at $407 million, which represents six per cent of international tourism expenditure to the state. Expenditure has grown by 4.8 per cent in the past year and on average 5.7 per cent per annum for the five years September 2011-September 2016.
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For the year ending September 2016, over 25,000 or 11 per cent of visitors from the UK to Victoria came on a working holiday visa, which was 18 per cent of all Working Holiday Maker visitors to Victoria, making an important contribution to Victoria’s economy.
Tourism from the UK to the State of NSW
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In 2015 there were approximately 348,000 UK tourists in NSW, spending approximately $739 million. As a group, they ranked the fourth largest cohort of international visitors.
Skilled migration to and from the UK
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In 2015-16, 14,170 UK citizens arrived in Australia as part of the skilled permanent migration programme according to the Department of Immigration and Border Protection. This was a decrease from 19,463 in 2011-12.
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Sydney legal firm Immigration Solutions Lawyers noted one of the primary intentions of the UK in opting to leave the EU was to take control of their immigration policy, which may see further substantial immigration reforms that may impact on Australians.
Already in the last decade, there has been a substantial decrease in the volume of Australians migrating to the United Kingdom as a result of stricter migration regulation. The number of Australians migrating to the UK has decreased significantly in the past decade from over 40,000 in 1999 to only 26,000 in 2011.
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Immigration Solutions Lawyers highlighted how for many years, the UK was the primary source of skilled and permanent migration to Australia but this was in decline.
However in the last decade, the rates of UK to Australia migration rates have fallen significantly. UK visa holders are now the third biggest contributor to Australians migration program behind China and India. In the 2015-16 year, 17.2 per cent of 457 visas were granted to UK citizens, which is down 11.3 per cent from the previous 2014-15 year.
It will be important to ensure that any uncertainty regarding the recent reforms to skilled working visas be offset to ensure that Australia can continue to benefit from the positive effects of a healthy migration system.
Air freight between Australia and the UK
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Emirates SkyCargo operates three weekly dedicated cargo services between Sydney and Dubai. SkyCargo is currently the third largest cargo carrier in Australia, with a 13 per cent market share. Emirates also operates dedicated freighter services between Dubai and London twice a week, in addition to the belly-hold capacity on the UK passenger flights.
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According to the Bureau of Infrastructure, Transport and Regional Economics’ report International Airline Activity 2016, Emirates carried 116,000 tonnes of high value cargo to and from Australia in 2016.
Goods transported from Australia to the UK include dairy, boots and clothing from Adelaide; large quantities of fresh meat from Sydney; car parts from Melbourne; lamb, fruit and vegetables from Perth; and perishable products from Brisbane.
Our breadth of connectivity and fast, well-timed connections support Australian exporters in getting fresh produce to market as quickly as possible.
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Despite tough competition in the Australian cargo market, Emirates claims SkyCargo remains a market leader by providing consistent high service levels, global connections across a diverse route network, a modern all wide-bodied fleet of aircraft and technologies that assist in the delivery of products quickly and safely.
Education and research services
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The Department of Education and Training (DET) highlighted that education is an important component of Australia’s overarching trade and investment relationship with the UK.
Australia and the UK have a mature and long-standing education relationship signified by student mobility, multilateral engagement, institutional linkages, research collaboration and government agency engagement.
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Along with Australia, the UK is also a major destination for international students worldwide.
It is the third largest destination country for Australian tertiary-level students after the USA and New Zealand and is Australia’s second largest source of international students from Europe (after Italy).
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As at November 2016, there were 7,278 UK student enrolments at Australian institutions, an increase of almost 9.8 per cent on year-to-date November 2015, according to the Department of Education and Training.
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The Department of Education and Training commented on Australia supporting students from the UK to undertake study, research and professional development in Australia and for Australians to do the same in the UK.
For example, since 2007, 77 students and professionals from the UK have accepted an Endeavour Scholarship or Fellowship to undertake study, research or professional development in Australia. Over this same period, 109 Australians have accepted an Endeavour Scholarship or Fellowship to go to the UK to undertake study, research or professional development. Since 2008, Endeavour Mobility Grants have supported over 655 Australian students to undertake a study experience in the UK and over 255 students from the UK to study in Australia.
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In 2015 according to the NSW Government, there were 2,400 international students from the UK studying in NSW, making the UK the 20th largest source of international students in the state.
University linkages and research collaboration
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According to Universities Australia, Australian universities have mature and valuable relationships with their UK counterparts, which are based on a long history of policy sharing, encouraged by similarities in higher education and research systems.
These similarities extend to the nature of the peak bodies representing the university sector, with Universities Australia and Universities UK sharing a regular and much valued policy dialogue.
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Universities Australia highlighted that Australian universities also have extensive collaborative agreements in place with UK universities, with a 2016 survey identifying more than 500 formal agreements in place between Australian and UK universities (up 11 per cent on 2014).
These linkages are some of the oldest, deepest and most complex managed by Australian universities. Indeed, opportunities for postgraduate courses, PhD and postdoctoral programs and research collaboration with UK institutions and research facilities are important milestones in the careers of many Australian academics and have been instrumental in the success of the Australian university research and innovation enterprise. Moreover, these relationships have also provided important facilitation of access for Australian researchers to European partners, European Union (EU) funding, and large scale research infrastructure located in Europe.
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The Department of Education and Training highlighted that the UK is the fifth highest source country for international institutional agreements (surpassed by China, USA, Japan and Germany). Universities Australia 2016 data lists 502 formal agreements between Australian and UK universities that support student and staff exchange, academic and research collaboration and study abroad.
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Research collaboration between the UK and Australia is strong, according to the Department of Education and Training drawing upon Thomson Reuters’ INCITES Essential Science Indicators and Journal Citation Reports 2015 data.
The UK was Australia’s second largest scientific publication partner during the period 2011-2015. Over the same period, Australian and UK authors collaborated in over 10 per cent (31,000 publications) of all publications to which Australians contributed.
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The Australian Research Council (ARC), through its National Competitive Grants Program, funds research projects involving collaborations between Australia and the UK that benefit Australia the Department stated.
For example, researchers at The University of Western Australia (supported by several ARC-funded projects), are collaborating with researchers at Oxford University, as well as other international industry partners, to improve modelling of ocean-pipeline-seabed interactions. Their collaborative research has led to more accurate, reliable and cost effective design of pipelines, resulting in safer and more reliable energy supply in Australia (and worldwide).
Curtin University, Western Australia
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One of Western Australia’s largest universities, Curtin University, submitted that it works in partnership with a number of UK universities to offer student mobility and collaborative research opportunities. As example of the university linkages between Australia and the UK these partnerships include active student exchange agreements between Curtin University and Middlesex University, The University of Reading, The University of Liverpool, The University of Birmingham, The City University London, Loughborough University, University of Hertfordshire, Heriot-Watt University, University of Essex, University of Leeds, Robert Gordon University, Oxford Brookes University and the University of East Anglia, in addition to a Fieldwork Agreement with The Queen Elizabeth Hospital in Birmingham, United Kingdom.
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Aside from these partnerships, in 2017, Curtin University formed a strategic alliance with the University of Aberdeen in Scotland, UK.
In 2015, Curtin University first signed a Memorandum of Understanding with the University of Aberdeen. This is a relationship that has strengthened into the creation of the strategic Aberdeen-Curtin Alliance with an Agreement to this effect signed in February 2017.
The University of Melbourne, Victoria
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The University of Melbourne submitted that its international standing is in part built upon the significant contribution made by its large community of international scholars, staff, students and visitors. The University of Melbourne has agreements with a majority of the world’s 50 top-ranked universities and also has widespread international collaborations, maintaining over 250 agreements for academic cooperation and exchange with universities around the world, concentrated in the United States, United Kingdom, Japan, China, Italy and India.
At the University of Melbourne, the United Kingdom is the fifth highest source of commencing international students, with 52 students with UK citizenship commencing at the University in 2016. In 2016, 198 students whose last place of education was in the United Kingdom commenced at the University. With regards to student mobility, the United Kingdom is the third most popular source for inbound exchange students. In 2016, 130 students from United Kingdom institutions participated in an exchange program to the University of Melbourne.
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The University of Melbourne has an established and extensive relationship with the UK through research collaborations, bilateral and multilateral agreements, institutional partnerships and student mobility programs.
Research collaborations
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The University of Melbourne submitted it has developed academic links with the UK covering 283 institutions across a wide range of disciplines. As of 2015, the University’s Melbourne Research Windows database listed 10,006 collaborative publications between the University of Melbourne and academics in the UK and 607 academic staff with research expertise in the UK.
Since 2010, University of Melbourne publications involving one or more United Kingdom collaborator have more than doubled. Collaborative publications with the United Kingdom were strongest in the areas of population and global health, ophthalmology and physics.
Bilateral and multilateral agreements
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The University of Melbourne has formal bilateral agreements with 12 leading institutions in the United Kingdom including:
Queen Mary, University of London
University College London
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The University of Melbourne has 13 bilateral agreements between faculties across institutions in the United Kingdom including:
Edinburgh College of Art (Architecture, Building and Planning)
Glasgow School of Art (Victorian College of the Arts -Melbourne Conservatorium of Music)
Goldsmiths College, University of London (Victorian College of the Arts - Melbourne Conservatorium of Music)
Heriot-Watt University (Business and Economics)
London Business School (Business and Economics)
Manchester Business School (Business and Economics)
Queen’s University Belfast (Medicine, Dentistry and Health Sciences)
Royal Conservatoire of Scotland (Victorian College of the Arts - Melbourne Conservatorium of Music)
Royal Holloway, University of London (Arts & Victorian College of the Arts - Melbourne Conservatorium of Music)
Royal Northern College of Music (Victorian College of the Arts - Melbourne Conservatorium of Music)
University College London, Bartlett School of Planning (Architecture, Building and Planning)
University College London, Faculty of Engineering Sciences (Engineering)
University of East Anglia (Arts)
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The University of Melbourne has signed key partnerships in various fields with the University of Birmingham, the University of Manchester, Oxford University and Kings College, London.
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The Department of Education and Training pointed to an example of Australia’s close multilateral engagement with the UK such as when Australia co-chairing the Integrity of International Education Roundtable with the British Council.
The roundtable provides a senior-official level forum for discussions on a range of important issues including quality assurance, student visa arrangements and cross-border education. The other roundtable members are Ireland, Canada, New Zealand and the USA. The department’s involvement in this initiative reflects its close and ongoing relationship with the British Council and shared concern for international students.
Chapter summary
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Australia and the UK enjoy a close relationship based on shared history, culture and values.
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Australia and the UK are enthusiastic about possible opportunities that may follow the UK’s exit from the EU for this relationship to become even closer through deeper trade ties.
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Independent of any trade negotiations between Australia and the UK, Australia and the EU agreed in September 2015 to work toward an Australia-EU Free Trade Agreement, with a scoping study concluded in April 2017 and formal negotiations soon to commence.
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Under the terms of Article 50 of the Lisbon Treaty, the UK is prohibited from negotiating trade deals until its departure from the EU takes effect. In the meantime, the UK will be party to any free trade agreement negotiations between Australia and the EU.
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Whilst the UK is currently Australia’s fifth largest individual trading partner, trade between Australia and the remaining 27 EU nations outweighs trade between Australia and the UK by a 3 to 1 ratio.
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Two-way trade with the UK was $27 billion in 2015-16.
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Submissions and evidence to the Committee suggested that the UK’s standing as a trading partner may be inflated on account of businesses using the UK as a “gateway” to access the larger continental EU market.
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Whilst the UK remains Australia’s largest agricultural export market within the EU, this has declined since the UK entered the EEC in 1973 to just 1.4 per cent of all agricultural exports in 2015-16, valued at $727 million. By contrast, total Australian food and agriculture exports to the continental EU in 2015 were $2.3 billion.
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Exports of Australian wine, beef, sugar, rice and dairy goods to the EU (and thus to the UK) are severely curtailed by strictly enforced EU quotas and tariffs giving preference to European suppliers.
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Australia nevertheless enjoys a robust trading relationship with the UK, with key goods and service exports including precious metals, stones and jewellery, and pharmaceuticals.