Foreign investment
1.1
Foreign investment in Australia is critical for economic growth. The provision of foreign capital for support and development of industry, finances new and existing industries, increases competition, productivity and innovation, and creates employment opportunities. It is also essential that Australian businesses and research institutions establish international connections to further support future economic development and innovation, and be assisted to do so.
1.2
As Australia is a geographically large country with a small population, there is high demand for capital with not enough domestic supply to fund projects and initiatives. Foreign investment fills the gap between what we can invest domestically and that demanded. The Department of Foreign Affairs and Trade (DFAT) noted that over recent decades the investment gap has averaged approximately 4 per cent of Gross Domestic Product (GDP).
1.3
At the end of 2017, investments totalling $433 billion comprised of $390 billion in domestic investment and $43 billion in foreign investment.
1.4
Economic growth, supported by these levels of foreign investment, further benefits all Australians by increasing tax revenue, which in turn increases capital available to spend on public services such as ‘hospitals, schools, roads and other essential services’.
Austrade
1.5
The Australian Trade and Investment Commission (hereafter Austrade), plays a vital role in promoting Australia as an attractive investment opportunity and destination to foreign investors. One of its core roles is in facilitating relationships between those prospective investors and home‑grown industries and businesses.
1.6
To do this, Austrade assists Australian industries and businesses to connect with export opportunities, and attract foreign investment by ‘generating market information and insights’. Austrade also collaborates with partner organisations, including Commonwealth, state and territory government agencies, and industry stakeholder associations.
1.7
The effective delivery of these services from Austrade underpins the Commonwealth Government’s strategic policy directions to expand Australia’s economy and deliver better outcomes for the Australian public and market alike.
1.8
The international economy and markets in which Austrade undertake these activities is in constant change, and the pressures of the last decade and a half have made renewal, critical analysis and targeted services more essential. For this reason, it is timely that an inquiry into these functions of Austrade be undertaken.
About this inquiry
1.9
This inquiry was initiated when, on 17 October 2018, the Minister for Trade, Tourism and Investment, Senator the Hon Simon Birmingham, asked the Committee to inquire into and report on:
What role Austrade has in attracting investment in Australian businesses;
What the benefits have been from investment in Australian businesses; and
How Austrade might better help Australian businesses to attract investment.
1.10
In inquiring into this topic, the Committee will have particular regard to the areas that play to Australia's strengths, as identified by the Australian Government in consultation with the states and territories including: Agribusiness and Food; Major Infrastructure; Tourism Infrastructure; Resources and Energy; and Advanced Manufacturing, Services and Technology.
1.11
The Committee received 21 submissions and held two public hearings. Details of these are included at appendix A (submissions) and B (public hearings).
1.12
This report consists of three chapters:
Chapter 2— will describe Austrade, its work, and the benefits derived from its investment promotion, as well as the current business improvement agenda being undertaken by the agency.
Chapter 3—will discuss ways for Austrade to progress improving investment promotion and facilitation, as well as prioritisation of targeted corporate improvements.