The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Chris Pearce

Parliamentary Secretary to the Treasurer

26 October 2004 - 3 December 2007

Speech of 26/04/2007


Crown Promenade Hotel, Melbourne

Thursday, 26 April 2007

Key Points

APEC: The importance of APEC and Australia's role as host in 2007

Economic management: The significance of economic reform as a general principle

Investment and APEC: The importance of ‘reform partnerships’ to drive investment climate reform within APEC

I’d like to extend a very warm, Melbourne welcome to everyone here today. Can I thank you all for the opportunity to provide some opening remarks to this very important APEC level Policy Dialogue.

The Asia-Pacific region is vital to Australia’s economic future.  The Australian Government therefore places great value on APEC. It is the pre-eminent regional organisation, and Australia of course, is very proud to be its host this year. 

The Australian Government acknowledges that APEC operates on a voluntary basis.  Open discussion based on  mutual respect, informs debates among APEC’s member economies.  We believe that the views and opinions of all APEC member economies, large and small, are equally important in forging decisions based on consensus.

The key objective of this Policy Dialogue is to examine the Policy Framework for Investment - or the ‘PFI’.  The PFI is a highly flexible diagnostic tool developed by a Task Force of the OECD, which itself involved 15 APEC member economies. 

The Policy Dialogue will discuss how APEC’s developing member economies may use the PFI tool as an organising principle for investment climate reform.  In practice, member economies may use this PFI to benchmark their strategies for undertaking investment reform against broadly accepted best international practices.

APEC’s Leaders — through the Busan Business Agenda of 2005 and the Hanoi Action Plan of 2006 — have recognised that improving investment climates is a major challenge for APEC’s developing member economies.  This is because investment climates must improve if living standards are to rise, working conditions are to get better, and more jobs are to be created.

The current Policy Dialogue offers a way forward to meet this challenge.  The challenge embraces improving the climate for both domestic and foreign investment — the former makes up about 88 per cent of total investment in APEC developing member economies. 

However, I think it is important to say that the PFI is not a panacea.  Rather, it offers to all of us, a framework to take on the challenge of improving our investment climates.  Importantly, the PFI does offer a comprehensive and coherent approach to the task of investment policy when comparing it to other diagnostic tools.  And at the same time, the PFI can complement existing approaches based on other organising principles we will hear about today.

I wish to commend APEC for bringing together high-level policymakers and business people today.  The Policy Dialogue has successfully brought together such interests for over a decade now.  The Dialogue will promote understanding of the practical benefits of PFI assessments.  And I think it will also demonstrate how PFI assessments may be conducted.

I would like to encourage all of you here today to take up the opportunity that is offered by this very constructive forum.  APEC’s developing member economies have a key role in the Dialogue.  They will present their reform experiences and their current policy settings and prospects.  They will also consider how they may use the PFI to refine those settings and perhaps most significantly, improve outcomes.

Business, too, has a particular role in this Dialogue.  Business can highlight the impact of non-transparent investment climates on their commercial decision-making.  Business can also make a case for improving economic growth — and thus, living standards — by optimising the use of capital flows.

International development institutions and related bodies also have a special role.  They can point out the pitfalls of their experience.  Inevitably, this will lead to discussion of the need for clear policy priorities.  These priorities, I think, should take account of the broad investment policy environment and potential, or if you like, unintended, knock-on effects.

Broadly speaking, the Dialogue over the next two days will demonstrate that APEC can make sound use of the experience of all of its participants.  That is, APEC developing member economies, businesses, international policy institutions and international development organisations can all, together, contribute to investment climate reform.

I would now like to turn to the significance of economic reform as a general and guiding principle for all good policy.

Commentators have noted that Australia’s economic record over the last decade has been outstanding.  It therefore behoves our country, where possible and where appropriate, to share the ‘secrets’ of our success, and I hope we can do that through our significant involvement in APEC’s Economic Committee and the Finance Ministers’ Process.

I know that the Economic Committee has embarked on a new, 5-year structural reform programme.  It is now in the process of finalising ongoing work programs in the areas of competition policy; regulation; governance; and economic and legal infrastructure. 

And Finance Ministers have finalised their medium-term work agenda that focuses on macroeconomic, fiscal and financial issues.

Finally, I would note the importance of ‘reform partnerships’ to drive investment climate reform within APEC.  I need go no further than point to a key deliverable for this Dialogue — a PFI scoping study on Vietnam.  Japan, Australia, Vietnam and the OECD have all joined in such a ‘reform partnership’ to put this study together.  The OECD and Vietnam will present their findings at this meeting.

I feel certain that this Policy Dialogue will play a significant role in driving investment climate reform within APEC.

I urge you all to share your ideas on the best uses for the PFI.  I wish you all every success in this endeavour.

Thank you.