FRIENDS IN UNCERTAIN TIMES

ADDRESS TO THE FEDERATION OF JAPAN CHAMBERS OF COMMERCE AND INDUSTRY IN AUSTRALIA

TREASURER THE HON JIM CHALMERS MP

CANBERRA, 7 NOVEMBER 2024

Mina-sama konbanwa – good evening everyone.

Your excellency, thank you for the introduction, thanks for hosting us tonight.

It’s a real honour to be here with you all at this wonderful residence.

To gather on Ngunnawal land and acknowledge elders, customs and culture –

And to take this opportunity to talk about our friendship.

I hoped to see you in September, but a change of leadership and since then an election, meant my visit to Japan had to wait.

So, I went for the next best thing –

Meeting your new Finance Minister in Washington DC, just a few weeks ago –

And taking the opportunity to be here this evening.

Tonight, I have the same message for you that I shared with Minister Kato.

The economic relationship between Japan and Australia is strong, it’s enduring and it’s important to us.

In the face of global uncertainty, our friendship has never been more critical as a steadying force –

And Australia sees great opportunity in partnering with you to create the secure, sustainable supply chains that will be critical to the global net zero transformation.

Tonight, I want to elaborate on this in three ways.

First, by laying out why we are so grateful for your contribution to our economy.

Second, by outlining some of the specific ways we want to work with you simultaneously on traditional sources of energy and the net zero transformation. 

And third, by giving you a sense of all that we’re doing to help deepen our investment ties even further. 

CONTRIBUTION OF INVESTORS

In this room are companies with a long and active history in Australia.

Mitsui – set up its first trading office in Sydney, back in 1901. 

Mitsubishi and Nippon – helped open-up the Pilbara and the Bowen Basin to the world. 

MUFG – first established a presence here in 1915 –

Followed by the Industrial Bank of Japan, now part of Mizuho – who arrived as Australia’s financial system liberalised in the 1980s.

This speaks to how Japanese companies have played a crucial role in developing our traditional strengths.

And you’re helping us make the most of new opportunities that lie at the intersection of our meteorological, technological and industrial advantages too.

Sojitz is exploring biomethane production.

Marubeni, battery storage.

Sumitomo, hydrogen and build-to-rent properties.

I could go on.

Collectively, the companies in this room have made a big contribution to the $141.1 billion of direct investment Japan held in Australia last year.

Which just underlines the important and unique nature of our economic partnership.

When it comes to Australia’s relationship with East Asia, a lot of attention gets paid to our links with China – and rightly so.

But what sometimes gets lost in the mix, is the significant and important role of Japan in our economy – particularly when it comes to investment.

The publication of our Quarterly Reports for Foreign Investment this week, made that very clear.

Over the course of 2023-24, $186.9 billion of commercial investment was approved in our economy, up from $173.1 billion in 2022-23.

The biggest source of investment was from the United States – for the seventh year running – with some $65.7 billion worth of approvals.

But Japan was a significant source too – with $20 billion in 2023-24, up from $7.1 billion in 2021-22.

That means, over the past two years, Japan was the second largest source of investment in Australia – measured in terms of approval values.

With the US coming in first and Singapore third over that two-year period.

Together, these three countries have committed to over $158 billion of investment in Australia in that timeframe –

With Japan now also a leading source of foreign investment in Australian housing development too.

ENERGY AND NET ZERO

Of course, a big part of that investment relationship is also about energy.

Australia and Japan have a long history of working closely together in the resources sector.

You’ve been big investors in Australian LNG since the 1980s –

Helping to deepen the capital base of our economy, at the same time as we help to meet your energy needs.

Japan is Australia’s biggest market for LNG.

The value of our LNG exports to your country more than doubled between 2021 and 2023.

And we supply over one-third of your overall energy.

So let me be very clear here.

We understand the role we play in making sure you have access to the energy you require, and we will continue to be a responsible and reliable supplier – now and into the future.

That’s a message we communicated clearly through our Future Gas Strategy.

It was delivered in person by our Resources Minister Madeleine King when she visited Japan just last month –

And it’s something I’m glad to have the opportunity to reinforce tonight.

We also have a major opportunity to cooperate on the net zero transformation of our economies – especially when it comes to green hydrogen and critical minerals.

Consider the following.

Japan still produces around ten per cent of the world’s semiconductors – with ambitions to do more.

Around twenty per cent of the lithium-ion batteries used in electric vehicles.

And close to fifty per cent of the world’s industrial robots.

These industries draw on world-leading Japanese strengths in research and high-tech manufacturing.

But we want to make sure they draw on Australian strengths too.

Providing you with the critical minerals that you need and the renewable energy you require, to power these industrial processes. 

We’re already making substantial progress in opening up investment opportunities in both these areas.

There is Japanese involvement in over 40 hydrogen and ammonia projects in Australia already.

We’ve got a critical minerals partnership that will unlock more Japanese capital into our resources sector.

And an ambitious overall investment agenda too – that I’d now like to talk you through.

INVESTMENT AGENDA

One of our big priorities as a government is to make it easier for economy-shaping investments to occur.

Because it’s investment from the wealth‑generating private sector that will progress our transition to renewable power –

That will open up new industrial opportunities –

And that will help our economy become more dynamic, more productive and more competitive.

A big part of this is wrapped up in our plan for a Future Made in Australia, which will help make us an indispensable part of the global net zero economy.

As part of that agenda, we’re setting up production tax incentives for green hydrogen and processed critical minerals.

We’re investing in an Innovation Fund, to develop new industries like green metals and low carbon fuels.

We’re using financing facilities to help de-risk and unlock private investment.

And we’re creating a new single front door for investors to help accelerate and coordinate major transformational projects.

The front door will be a big part of our efforts to help investors navigate our regulatory frameworks in a way which align our interests with yours.

But it’s not the only part.

Earlier this year, I announced reforms to our Foreign Investment Framework.

To make it work better for investors, for our national interest and for our economy.

Part of this is making sure our framework can respond to the changing global and economic environment we face.

That’s why we’ve increased resourcing for the assessment of investment proposals in critical infrastructure, critical minerals, critical technology, sensitive data sets, and those which involve close proximity to defence sites.

At the same time, investors that we know, who are making investments that don’t raise any sensitivities and who have a good compliance record, are also getting decisions faster.

Treasury has set a goal for processing 50 per cent of cases within 30 days by 1 January next year.

And we’re making meaningful progress on that front.

In 2021-22, only 22 per cent of cases were approved by the 30 day mark.

In 2022-23 we managed to increase that to 33 per cent – and last year we landed on 35 per cent.

Now, thanks to our reforms, we’re making additional progress.

Tonight, I can reveal that the proportion of cases approved within 30 days has improved from 35 per cent in 2023-24 to approximately 47 per cent, for the first quarter of this year.

These numbers might jump around a bit, but the data shows our foreign investment reforms are already making a substantial difference.

Complicated cases are being scrutinised appropriately, while those which are clearly in the national interest are being approved quickly.

This is good for our country and good for investors around the world, as we continue to approach foreign investment in a stronger more streamlined way. 

CO-OPERATING THROUGH UNCERTAINTY

I know I’m the only thing standing between you and a typically delicious Japanese meal.

So, to wrap up let me share with you a couple of concluding thoughts.

In many of the conversations that Minister Kato and I were fortunate to take part in over in Washington DC, one thing was particularly striking:

There is a growing consensus that conflict and fragmentation increasingly define this world of uncertainty.

Challenges in China’s property market and conflict in the Middle East and Europe means that the world is increasingly vulnerable and volatile.

That’s been reflected in recent oil price movements.

Pricing of critical minerals.

And new risks and opportunities for the goods and services that Australian and Japanese companies sell overseas.

In this world, strong, stable friendships built on shared values are more important than ever.

As friends and partners with common interests we also have an incoming US Administration to engage with.

Our relationship with America is strong and enduring.

Built on shared values and deep engagement through forums like the Quad.

We shouldn’t be surprised if a new US Administration brings change.

But equally, we should be confident in our ability to navigate that change, as partners.

Recognising that Japan and Australia have a shared interest in the United States remaining engaged in the world and engaged in our region.

As we look forward, the special nature of the Japanese-Australia relationship isn’t just embedded in the complementarity of our economies.

Or our deep investment ties.

It’s embedded in the fact that these bilateral bonds can work to improve the world around us too – by helping to create a secure, resilient, open global economy –

Helping to grow new markets and build more diversified and secure supply chains – 

To boost resilience in a way that enhances, not diminishes, global trade and investment.

A true partnership of progress – bound by trust, as friends, in a region we shape together.

So, thanks for your investment, your friendship and for having me here tonight.