26 June 2014

Keynote Address to the Australia Vanuatu Business Forum, Brisbane


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This is a transcript of MInister Ciobo's speech to the Australia Vanuatu Business Forum in Brisbane.

The Hon. Ham Lini Vanuaroroa, Vanuatu’s Deputy Prime Minister and Minister of Tourism and Commerce, our host Mr Caleb Jarvis, Vice President of the Australia-Pacific Islands Business Council and its Members, Australia’s High Commissioner to Vanuatu, His Excellency Mr Jeremy Bruer, distinguished guests, ladies and gentlemen,

It’s an honour to speak here today in Brisbane at the third Australia Vanuatu Business Forum, in the company of Deputy Prime Minister Lini and senior Vanuatu Government representatives, to talk about the bilateral relationship between our countries and the opportunities for business and economic growth.

Firstly, I would like to acknowledge the important role of the Council in promoting trade and investment between Australia and Melanesian countries, such as Vanuatu. Thanks to bodies like this, communication channels, information flow and networking between businesses and governments are improved.

Second, I would also like to acknowledge the attendance of business representatives, including some very important investors and enablers of business activity in Vanuatu. This reflects not only the need but the appetite to work together in developing better policies and better solutions to realise the potential of Vanuatu and the Pacific.

Let me start by recalling what Australia’s Foreign Minister Julie Bishop said at the State of the Pacific conference held at the Australian National University last week.

She said that the Pacific is central to Australia’s foreign policy.   But she also said that our success in realising the potential of the region will be determined significantly by the quality of our partnerships and our ability to get along with our neighbours.

The many visits of Ms Bishop and Parliamentary Secretary for Foreign Affairs Senator Brett Mason to countries in the region are a reflection of the significance we place on these relationships.  In addition, I very much look forward to travelling to Honiara next month to attend the Forum Economic Ministers Meeting.

I want to highlight that Australia has an over-riding national interest in the Pacific being stable and prosperous, as Ms Bishop has outlined multiple times in various forums.

Consistent with this, the Australian Government, through its economic diplomacy, will seek to promote economic growth and stability in the Pacific region overall, and in Vanuatu.

As the Minister has defined it, economic diplomacy means putting all of our international engagement efforts behind the idea that the best path to peace and stability is through prosperity.

And growth, investment, a thriving business sector and strong trade are the vital ingredients for alleviating poverty and achieving prosperity.

We will support economic growth, new economic opportunities and the right environment for a vibrant private sector to be able to create more jobs and income and raise living standards across the Pacific.

That’s why the Australian Government’s new approach to overseas development assistance, as announced last week by the Foreign Minister, will focus on two development outcomes:  supporting private sector development and strengthening human development. 

Under this new policy, new aid investments will consider ways to engage the private sector and promote private sector growth.

Our focus on human development reflects our commitment to driving improvements in education, health and gender equality outcomes in our partner countries. Healthier, better educated populations are critical to building skilled and competitive workforces and lifting living standards.

The policy will focus on the Indo-Pacific region, with over 90 per cent of country and regional program funding spent in our neighbourhood, the Indo-Pacific.  This is where we can make the most difference.

The new aid policy is consistent with this Government’s worldview that economic growth and development are central to prosperity and stability and that the private sector is the key driver of economic growth, contributing to gross domestic product, employment, incomes and productivity growth.

We know that the private sector in the Pacific faces some significant challenges as a result of geography, climate and relatively small markets.

These represent a challenge to economic development.

Participation is critical.

There are plenty of potential workers that the private sector could draw on, but we need to ensure they have the right skills and are able to engage and contribute to economic activity.

We want to work with Pacific Island governments like Vanuatu to look at ways to overcome the challenges of distance, of scale, and of participation to create new jobs, offer new sources of income, and increased Pacific engagement with the global economy.

The Government’s new aid program will see the introduction of a rigorous system of performance benchmarks and mutual obligations tailored to each country’s circumstances.  This will enhance accountability and ensure a stronger focus on results and value for money.

Vanuatu is not immune to these regional challenges but we can work together to build on its strengths and sustain economic growth.

Vanuatu’s economic performance has been comparatively better than its neighbours, apart from the resource-rich countries.

I would like to acknowledge Vanuatu’s hard work over the last decade to achieve sustained macroeconomic stability, key microeconomic reforms and social stability. These in turn have attracted investment and tourists over this period, driving economic growth.

And the prospects for the near future are positive.

The IMF estimates that real economic growth for this year will be around 3.5 per cent and will average 4 per cent per year until 2019.

The services sector, especially tourism services, will continue to drive economic activity in Vanuatu. Finance, insurance and ICT services will also be key economic activities over the medium term.

Construction will also contribute, driven by foreign aid and private sector investments in the services sector.

The deployment of the international submarine cable system linking Port Vila and Suva provides further incentives for continued investment in Vanuatu’s promising services sector.

The cable improves telecommunications by linking Vanuatu directly into the high capacity Southern Cross cable between Sydney and USA.

And work has commenced to link Vanuatu to other countries in the region such as PNG and Solomon Islands.

Infrastructure and technology developments of this sort could, for instance, help Vanuatu to become a strategic multi-lingual e‑business hub for the Pacific region.

Bodies such as the Australia Pacific Islands Business Council are very important in advocating for and supporting reforms that enable the private sector to flourish.

To realise Vanuatu’s potential, it is crucial that the Vanuatu government continues with economic reform to create the conditions essential for stimulating sustained growth in business activity and investment.

As close neighbours Australia and Vanuatu have strong people-to-people links and share many common interests in the Pacific region.

Australia was a strong supporter of Vanuatu independence in 1980, although our friendship and ties date back well before that.

Our relationship is one of partnership.

A partnership based on mutual respect, regular healthy dialogue, growing investment and greater friendship between our peoples.

It is a partnership for better economic and business ties.

Ms Bishop led a high-level, bipartisan delegation to Vanuatu in December last year, highlighting the significance we place on our relationship with Vanuatu.

During that visit, she launched new phases of Australian development initiatives – on roads and skills development – which are improving the lives of Ni-Vanuatu by creating the conditions for economic growth.

This third gathering of the Vanuatu-Australia Business Forum is a good opportunity for us to continue to look at opportunities to promote economic growth, and for building the Australia-Vanuatu relationship.

Tourism and services are and will continue to be key areas in our relationship.

Vanuatu is a holiday destination for approximately 250,000 Australians every year.

And the Australian cruise industry is now ranked number one in the world for market growth and penetration, with latest industry figures revealing a record 833,348 Australians took a cruise last year.

This represents a growth in passenger numbers of 20 per cent in 2013, more than double the growth rate of any other major cruise market.

It seems very plausible to conclude that the benchmark of one million annual cruise passengers will be reached by 2016, if not before.

The South Pacific continues to dominate as a cruise destination. Almost 80,000 more Australians cruised the region in 2013, taking the total number to more than 330,000 - this equates to 40 per cent of the entire Australian cruise market.

Australians are also investing heavily in Vanuatu’s services such tourism, hospitality and banking.

Australian investment in Vanuatu is estimated at AU$177 million for 2013.  This is 70 per cent higher than in 2008, despite the intervening period of world financial crisis.

Our investment provides employment for Ni-Vanuatu and contributes to the local economy.

We will hear today from some of these important investors in Vanuatu.

Other examples include resorts; such as Iririki Island Resort, one of the big three resorts, which is owned by an Australian consortium.

Other examples include the Grand Hotel, Village de Santo, Eratap Beach Resort, Tamanu on the Beach, Poppies on the Lagoon and White Grass Ocean Resort in Tanna.

We have fast and efficient air transport linkages for doing business.

Airworx Engineering provides aircraft maintenance services and charters.

In adventure tourism, visitors can choose from Nautilus Watersports, Club Hippique Adventure Park, Off Road Adventures, Ocean Blue Vanuatu Fishing Adventures and Kayaking Vanuatu, just to name a few.

ANZ Bank and Westpac are operating in Vanuatu, as are QBE and Aon insurers, providing high-quality, international-standard services.

A number of Australian lawyers and accountants also practise in Vanuatu.

Today’s forum provides an excellent opportunity to build business networks and increase two-way investment.

Together, we are working hard to ensure our substantial investment pays dividends for the people of Vanuatu and for Australians.

Vanuatu sources 10 per cent of its merchandise imports from Australia, including medicaments and chemicals for energy/fuel purposes. Australia imports fish, vegetable oils and fats and animal products from Vanuatu.

The Australian government is proud to be a reliable partner, by investing in Vanuatu’s prosperity and economic development.

And long-term development in Vanuatu depends on stable economic growth.

We are providing around AU$60 million per year in aid through Vanuatu-specific and regional initiatives to foster economic growth.

Our long-term efforts through the aid program are focused on promoting a positive business, investment and jobs environment.

Australia is helping Vanuatu to diversify its sources of income by facilitating tourism, trade and labour mobility.

On the tourism front, we have established a partnership with Carnival Australia.

Carnival accounts for 75 per cent of the Australian cruise market and 80 per cent of cruise tourism in Vanuatu.

We have partnered to identity opportunities to enhance incomes and employment opportunities for Ni-Vanuatu, particularly for women.

For example, we are working to empower women in Santo to develop culinary based tours for cruise tourists and supply produce to tourism outlets.

Another example is our work to promote Vanuatu’s handicraft products in cruise ships helping local businesses but also enriching the cruise experience for tourists.

The Australian aid funded Pacific Horticultural and Agricultural Market Access program has installed glass cabinets with local handicrafts displaying clear quarantine instructions on three P&O ships to inform passengers about the artefacts that meet Australian quarantine standards.

Carnival and DFAT are also exploring options in other areas including employment training programs to increase the proportion of Ni-Vanuatu crew on board Carnival ships, as well as a possible package of support to open up new destinations in Vanuatu.

Trade and investment are making an increasingly indispensable contribution to Vanuatu’s economic growth and development, and Australia is helping Vanuatu improve its capacity to benefit from trade in a number of ways.

The Pacific Agreement on Closer Economic Relations Plus - or PACER Plus -  negotiations offer an opportunity to help Vanuatu and other Pacific Islands Forum countries benefit from enhanced regional trade and economic integration.

Australia is supporting Vanuatu and other Pacific countries in these negotiations by providing funding for: independent research, independent support and advice; training of trade officials; and assisting with the cost of negotiations.

A new regional trade and economic agreement provides the long-term opportunity to create jobs, enhance private sector growth, raise standards of living, and boost economic growth in Vanuatu and other Pacific Island Countries.

Having benefited hugely from liberalising our economy and removing barriers to trade, the Australian government is a strong believer in opening a country up to the global economy.

Consistent with this belief, ‘Aid for trade’ investments by Australia will increase to 20 per cent of the aid budget by 2020.

‘Aid for trade’ means helping developing countries improve their capacity to trade, which drives economic growth and provides opportunities to build livelihoods and increase income.

‘Aid for trade’ initiatives will include support for infrastructure to increase productivity, connect people to markets, improve the flow of goods across borders, and equip people with the skills they need to secure employment.

Economic infrastructure is a fundamental enabler of business activity and growth.   But it can only do that if it is sustainable and affordable.

Australia is pleased to be supporting major infrastructure projects in Vanuatu which are designed to maximise economic impact, and which are sustainable.  These will pay dividends for years to come, provide jobs for Ni-Vanuatu and support business development and economic growth. 

Our investments in road infrastructure for example are already allowing for better movement of people, goods and services in island contexts like Vanuatu because they help link people to services, markets and jobs.

They also support economic activity – like agriculture, fishing and exports.

The rural road network serves three quarters of the population and our Roads for Development program is improving this infrastructure on Tanna, Malekula and Ambae and will move onto Pentecost this year.

We also recognise that Port Vila, as Vanuatu’s capital and international gateway, plays a major role in driving business activity and economic growth and therefore we have committed to invest in improving roads and sanitation there.

Once those works are completed, a core part of Port Vila’s road network, drainage and treatment of sewerage will be rehabilitated so that the city remains attractive and liveable for the people of Vanuatu and for thousands of visitors.

We are also supporting partnerships between the Government of Vanuatu and the private sector to improve key infrastructure.

Working jointly with our infrastructure program in Port Vila, technical assistance will be provided through ADB to structure a public–private partnership contract for the operation and maintenance of a new septic waste treatment facility in Port Vila.

Australia is also working to reduce the vulnerability of Vanuatu’s infrastructure and communities to natural disasters and the effects of climate change.

We have also funded NGOs Live & Learn and Oxfam Australia to work in communities to improve livelihoods and food and water security. 

The Pacific-Australia Climate Change Science and Adaptation Planning program has also been building the Vanuatu government’s capacity to incorporate future climate risks into the planning, design and construction of national road transport infrastructure. 

These investments directly complement our investments in human capital.

We are investing in improving the quality of the labour supply in Vanuatu.

This will assist businesses to recruit skilled and productive workers, especially in areas of greatest demand.

We are supporting skills development through technical and vocational education and university scholarships.

Rural populations and women are a key focus for our program.

Between 2007 and 2012, 538 Ni-Vanuatu students received scholarships. More than 40 per cent of them were women.

Through our Technical and Vocational Education and Training program, the Vanuatu Agricultural College has trained thousands of villagers on farm and animal husbandry practices which have increased productivity and reduced animal disease.

Then there’s the Australia-Pacific Technical College, which delivers internationally-recognised qualifications in targeted industry sectors. Since June 2007, the college has graduated 2,872 men and 2,047 women from Vanuatu.

A 2012 employer survey found that 89 per cent of respondents reported increased productivity as a result of training from the college.

On the labour mobility front, Vanuatu is the second-highest labour-sending country in our Seasonal Workers Program and we will continue to look at ways to expand the scheme and identify other opportunities for labour mobility in the region.

Ni-Vanuatu have gained new skills and knowledge that they will be able to take back to Vanuatu. Some of them have completed government-funded skills training in English literacy and numeracy which have greatly increased their employment prospects back home.

This contributes to creating economic opportunities, and to social stability.

Greater flexibility with financial flows will enhance these benefits.

We are currently working with Westpac and ANZ on innovative ways to facilitate the flow of remittances.

But the benefits are not only for workers in the region.

Australia’s productive sectors, specifically our horticultural industry, face labour shortages during their picking seasons, where growers have had to rely mostly on backpackers to fill short-term jobs.

Australian growers have reported that Ni-Vanuatu workers are hardworking and quick learners who have a strong work ethic and positive attitude.

Karen Xerri is a Director at E & P Xerri, which grows vegetables in north-western Sydney. Karen’s business is one of many which employ Ni-Vanuatu workers under the Seasonal Worker Program. Karen is big supporter of the program, and of ni-Vanuatu workers.  She said she’d had a hard time finding employees who would work for more than a month but having Ni-Vanuatu seasonal workers who are able to sign up for six months has helped her business a lot.

We will continue to support Vanuatu to achieve a positive business environment through prudent macroeconomic management, business regulatory reform and improved law and order capabilities.

Our Governance for Growth program is assisting key Vanuatu government institutions to implement their reform agenda and maintain sound macroeconomic management.

We are also providing support to improve the administration on and access to justice.

We know that confidence in legal systems and civil stability are crucial to development and prosperity.

Australia has provided assistance to the Vanuatu Police Force for close to ten years.  Through the Vanuatu-Australia Police Project, police facilities have been upgraded around the country and a new, skilled generation of younger police officers has been recruited.

In January this year, a police station was opened in Saratamata with the support of Australia. The people of Penama province will now receive improved policing services.

In partnership with the Asian Development Bank and New Zealand, Australia is also funding a regional technical facility for private sector development.

In Vanuatu, the facility’s advice focuses on improving access to finance by local businesses, business regulation, SOE reform and assistance to public-private partnerships.

Access to finance is a big part of the work of the facility in Vanuatu.

Thanks to Australian support through this facility, businesses in Vanuatu are able to use moveable property, instead of land, as security against a loan, allowing greater access to finance.

Also, in 2012 and 2013, we delivered 175 workshops in rural Vanuatu with 9,000 participants, 45 per cent of them women, to improve financial literacy.

As a result of these initiatives, Ni-Vanuatu are accessing financial services more than before.

Over the last couple of years, 600 new microloans totalling 160 million Vatu, approximately AUD1.8 million, were issued and 9,000 new rural based savings accounts with a value of 420 million Vatu in deposits were opened.

The resulting increase in business activity  has led to the opening of 2 new ATMs on Malekula and Tanna.

This is an important day for the business relationship of our countries.

As this forum progresses today, we will discover in more detail the challenges and opportunities for increased Australian investment and for growing businesses in Vanuatu.

We will also identify areas where we can work together for the good of both our countries.

Let me restate that we have a serious long-term commitment to Vanuatu’s development, to our relationship, and to working with partners such as the private sector and Australia Pacific Islands Business Council to promote business links and improve the business environment.

This is a win-win proposition for both our countries.

Thank you.