The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Joe Hockey

Joe Hockey

The Minister for Financial Services and Regulation

21 October 1998 - 26 November 2001

Transcript of 23/10/2000

No. 010

Interview with BBC World Service

23 October, 2000

QUESTION: You are here in London promoting Australia as a financial centre. You know, the rest of the world thinks of Australia as a resource country. That's where people grow sheep and mine metals and things like that. Why should they come to Australia to invest?

MINISTER: Well, Australia is a new and vibrant economy. It is an economy which has 80 per cent of its GDP based in services and the internet and M-commerce provides the export of services with opportunities that no-one could have foreseen a few years ago.

QUESTION: 80 per cent. That's a much higher figure than I think that most people realise because, I mean, to go back to the point I just laboured slightly, people think of Australia as a resource based economy. You're saying its much more than that. What are the services?

MINISTER: Well, that's right: education is about 10 per cent of the economy, financial services alone is larger than agriculture and mining combined which represent only about 7 per cent of the Australian economy. So we are an exporter of education: we have 15,000 Hong Kong students studying in Australia at the moment, about the same number of Singaporeans. We're probably the biggest exporter of education into Asia, and of course tourism's a vibrant part of our economy. But the internet provides us with opportunities to access a market of 3 billion people on our doorstep that, you know, never existed previously.

QUESTION: The 3 billion I think you're referring to must be the rest of East Asia, and that scenario which is not short of financial acumen and you have three very, very powerful and very senior financial centres close by. I'm thinking of the obvious ones: Hong Kong, Tokyo, in descending order probably, Tokyo, Hong Kong and Singapore. Are you going to compete with them?

MINISTER: Well, we do in one sense compete with them. We need to understand the Australian economy is larger than Hong Kong, Singapore and Malaysia combined. However, opportunities come once. We believe that we can access a market stretching from the Philippines to India and all the way north to Korea; seven of our top-ten trading partners are in Asia, and we have the language skills to be able to access the region, almost like no other country. I mean its very hard to be based in Japan and to access the Bahasa language in Indonesia or Hindi or some other languages. For example, Australia has the largest number of Spanish speakers in all Asia, including the Philippines. We have of a population of 19 million people, one million speak a Chinese language. So we have those sort of skills and the educational base to launch quite aggressively into Asia.

QUESTION: You paint an intriguing picture of Australia – I think one that is not commonly known.Why's this? How much was your job helped by having the Olympics in Australia?

MINISTER: Well, the Olympics has provided Australia with an opportunity to showcase not just its nation but most importantly its people. And human capital is what is really going to drive future development right around the world. It is the education base supported by IT infrastructure. Now, the Olympics was the largest peace-time event in the history of humanity. There were 17,000 sports journalists in Sydney, but perhaps just as equally important, there were 3,000 non-sports journalists that came down and were able to provide a snapshot of what Australia really looks like and what Australians really look like as well.

QUESTION: Of course, you do have problems. Life isn't unendingly glorious. You're suffering at the moment from an uncommonly weak Australian dollar and while that has benefits on one side, it has huge disadvantages on another. Importing goods is very, very difficult, and it can have a strain on some sectors of your economy. The problem really is that Australians are finding it more attractive to invest abroad than they are in Australia. How can you persuade others to invest in Australia when Australians are sending their money abroad as fast as they can?

MINISTER: I don't know that it's Australians sending their money abroad as fast as they can. In fact, there is substantial reinvestment in Australia, particularly arising out of the development of the New Economy in Australia which is extensive. In fact the OECD put out a report recently stating that Australia was one of only six economies in the world that could be described as a New Economy, primarily because we mainstreamed new technologies, so the old economy is using new technology and, in fact, has become the New Economy. The level of the Australian dollar is no different to the way that the Euro and various other currencies around the world have been affected by the absolute infatuation with all things American at the moment, and, as the sixth or seventh largest trader of currency in the world, we have been affected by that infatuation – a huge movement of capital into the United States. At the same time, we are trying to tell the true story about Australia – what it really looks like, rather than rely on the perceptions that you talked about a little earlier that we're just a great big mineshaft with a few kangaroos and sheep grazing at the entrance.

QUESTION: That's [inaudible] description, of course, because among those sectors that are hurting very badly are some of the Australian gold miners, specifically gold miners who told the world how to hedge in future production – very successfully nearly twenty years ago – 15 years ago – some of those are hurting very badly now because they hedged at a time when the dollar was much stronger – the Australian dollar. They're hurting very badly. Banks are going to foreclose on them. I can think of names but I won't give you them now, but, er, things are very tough for that sector at the moment, aren't they? And this is entirely a result of the strong US dollar and weak Canadian, er weak Australian dollar.

MINISTER: Well, in fact, information is a little bit different on that. It indicates that, in fact, Australian gold producers – there was a report in some of the Australian media – that many of the Australian gold producers have not, in fact, hedged their risk and, therefore, are reaping substantial benefits from not only the increase in the price of gold recently, but obviously, the lower Australian dollar, but, look, there's no doubt that when your currency's lower its good for exports and Australia is not precluded from the affect of that economic theory.

QUESTION: Thank you.