By Louise Hand
Australian High Commissioner
The Australia-Canada relationship is very close and works exceptionally well across a wide range of issues. We co-operate closely in international affairs, advocating human rights, democracy and freedom around the world, including through the United Nations and the Commonwealth. Almost daily, our political and business leaders use one another to benchmark policies and the outcomes that they are achieving on everything from the military to development assistance, health, science, investment, immigration and indigenous issues. (Find further commentary on Australia and Canada’s relationship at www.youtube.com/dfat under “Our Ambassadors”.)
Australia’s and Canada’s economies weathered the global financial crisis well with positive growth rates (Australia 3.1 per cent in 2012) and low unemployment (Australia 5.1 per cent). This reflects our strong regulatory systems, particularly in the banking sector, our natural resource endowments and well-educated populations supporting a range of high-tech industries. We are fortunate to be so prosperous, and our social indicators such as life expectancy, education and employment are among the highest in the world.
The fact that Canada sits next to the world’s largest economy, while Australia is part of the rapidly growing Asia-Pacific region, explains why neither country features in each other’s top 10 trading partners for goods and services. In 2011-12, Australian goods exports to Canada amounted to $1.6 billion and Canadian goods exports to Australia were $2.1 billion. Australian services exports to Canada equalled $829 million and Canadian services exports to Australia were approximately $874 million over the same period. There are relatively few remaining barriers to doing business between our two mature, open and broadly similar economies. However, business groups, including the Canadian Council of Chief Executives and the Australian Industry Group, have identified a series of measures that governments could take to enhance trade and investment flows between the two countries. These efforts include eliminating remaining tariffs on goods and improving labour mobility through better recognition of each other’s qualifications.
Australia’s top exports to Canada last year included: nickel ores and concentrates ($315 million), wine ($237 million), waste and scrap of precious metals ($152 million), lead ores and concentrates ($133 million) and aluminium oxides ($64 million). On the other hand, Canada’s top goods exports to Australia included civil engineering equipment and parts ($118 million), waste and scrap of precious metals ($108 million), pork ($96 million), sulphur ($96 million) and aircraft ($75 million).
But these trade figures are dwarfed by the bilateral investment relationship. Canada is now Australia’s ninth largest source of foreign investment, with approximately $17.9 billion of direct investment and a further $8 billion of portfolio investment (shares, bonds, etc.) Similarly, Australian companies and superannuation funds have $24.1 billion in direct investment in Canada and a further $20 billion of portfolio investment. It is the similarities — mature, stable economies, with similar regulatory and legal systems and strong growth prospects — that have led to such strong investment flows between the two countries. Canadian companies and pension funds have been particularly keen to invest in Australia’s forestry and mining industries, as well as long-term infrastructure assets. These provide well-regulated, long-term, stable income-producing investments. They also provide Canadian investors with exposure to Asia’s high growth rates.
With a small population, the Australian economy has always relied on outside sources of investment to develop our natural assets and improve our standard of living at a pace that would not be possible on our own. Our resources sector alone currently has 87 major committed projects and 277 projects in the planning stages, requiring $277.8 billion in funding. Austrade, the Australian government’s trade and investment promotion agency, is working closely with Canadian investors to help them meet this need for investment capital.
Australia and Canada are also parties in the negotiations for a Trans-Pacific Partnership free trade agreement. This agreement could be truly transformative for trade in the Asia-Pacific region in the future. At the APEC meeting in Honolulu in 2011, the leaders of the TPP countries set the goal of removing all tariffs between their economies. This could unlock as much as US$520 million in gains annually. It could also increase trade in services by as much as 50 per cent between Australia and Canada (according to Australian Industry Group and Canadian Council of Chief Executives modelling). My colleagues and I at the Australian high commission will continue to work closely with the Canadian government and industry to highlight the benefits of a strong, comprehensive agreement.
Louise Hand has been Australia’s high commissioner in Ottawa since January 2012. Follow her on Twitter @AusHCCanada or connect with the Australian high commission at (613) 236-0841 or www.canada.highcommission.gov.au.