Minister for Resources and Energy,  Minister for Tourism

Australia India Business Council Dinner   04 August 2011

Brisbane

*Check against delivery

It is my pleasure to address the Australia India Business Council.

India and Australia share many historical linkages.

As members of the Commonwealth and with a large Indian community in Australia, our nations have a  great deal to share.

As the world’s largest democracy, India has a vibrancy that few nations can match - and Australians relish  that.

We even share our national day - January 26 - not to mention our love of cricket.

I plan to travel to India again later this year, having visited twice as Minister, most recently in February  2010, and am looking forward to the trip.

My colleague, the Minister for Tertiary Education, Skills, Jobs and Workplace Relations, Senator Chris  Evans, has of course been in India this week.

The new initiatives announced throughout the course of this visit will further strengthen our bilateral ties  and serve to demonstrate the importance of the relationship - particularly in the education sector.

Across all areas of my own portfolio there is also welcome growth.

I meet Indian Government representatives and business leaders regularly to talk about investment  opportunities, not least in meeting India’s growing energy needs as a major emerging economy.

Australia offers security of supply, and is a reliable trading partner.

Long-term contracts and equity stakes in major projects offer even more potential for investment with  Australia’s fastest-growing export market over the past ten years.

These growing partnerships raise prosperity for all.

Two-way trade

Trade between Australia and India has risen on average by nearly a quarter every year in just one decade.

It’s worth around $21 billion a year.

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Australian exports grew to $14.5 billion in 2009.

India is now Australia’s fifth-largest two-way trading partner and third largest export market.

And we expect more to come.

India's economy may be worth four trillion dollars by the end of the decade, and could double again within  ten years after that.

In this context the launch of free trade negotiations between Australia and India is both welcome and  timely.

The process will be a milestone in our relationship.

Our economies, after all, are highly complementary.

Australia is a natural partner to meet India's future energy and minerals needs - the backbone of our trade  relationship.

India as a major export market

Just as India seeks reliable supplies to maintain its energy security, Australia seeks a broader customer  base.

At last count, India was the fourth-largest importer of Australian energy commodities, with imports totalling  more than $6 billion and accounting for 11 per cent of Australia’s energy exports.

India is Australia’s principal export market for gold, second-largest market for metallurgical coal and our  third-largest for non-energy minerals.

Mining technology services is a growing export.

In Australia, the sector is worth $9 billion a year, about one-third of that in exports.

In the LNG sector, huge opportunities exist at a time when global demand for LNG is increasing.

Australia will have the potential to more than triple its LNG exports by 2020.

Within five years, Australia is expected to be one of the world’s biggest exporters of LNG, second only to  Qatar.

Among its benefits, LNG produces less emissions in generating the same amount of power as traditional  coal-fired plants.

So it makes good sense for India to diversify its energy supply with LNG from Australia.

Deals like the one between India's Petronet and ExxonMobil for 1.5 million tonnes per annum of LNG from  the Gorgon project on Australia’s west coast for 20 years from 2014 are a first step to achieving this.

Coal seam gas will be a major contributor to increased LNG production in the years ahead.

Here on Australia’s east coast, the fast-growing coal seam gas to LNG industry has, in the last 12 months  alone, attracted investment worth around $45 billion across three projects - with Asia Pacific LNG  announcing a final investment decision on theirs only last week.

Investment

But the opportunities are not limited to long term supply contracts.

They also extend to investment.

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These are large, capital intensive projects well-suited to consortium development.

The Gladstone LNG project for example is a partnership between Australian company Santos, Malaysia's  PETRONAS, Korea’s KOGAS and Total of France.

As this industry continues to grow I would encourage Indian investors to consider the opportunities on  offer.

Because Australia strongly welcomes Indian investment.

In the most recent annual figures, the Foreign Review Investment Board had approved $1.6 billion worth of  investment from India across all industry sectors.

The majority of this was in mineral exploration and development.

It is evidence of India’s increasing interest in long-term contracts and equity stakes in Australian projects.

Here in Queensland, the Adani Mining Group’s Abbot Point coal terminal is worth $1.8 billion.

That’s on top of its $7 billion Carmichael rail, port and coal mine project - the single largest Indian  investment in Australia’s resources sector.

It is a truly exciting project.

When fully developed the Carmichael Coal Mine will be the largest coal mine in Australia.

India’s GVK Power and Infrastructure are also negotiating the purchase of two of Hancock’s coal assets.

These investments open up a new coal province in Australia.

The Galilee Basin is the last undeveloped coal resource within Queensland and is expected to become the  largest coal producing region in the State.

And for a State that already produces over half of Australia’s black coal that is really saying something.

This development in turn, adds enormous value to the Australian community through jobs and flow-on  economic benefits.

For India, the benefits are weighed both in terms of return on investment and contribution to energy  security.

My recent visit to Japan provided a significant insight into the challenges of energy security in a post-Fukushima climate.

Indeed, governments around the world could be tempted to re-think their energy mix.

India, of course, has its own considerations to make.

Like Australia, India relies predominantly on coal as its primary source of energy.

And like Australia, India is seeking to change its energy mix.

For India, nuclear is part of that mix.

The position of our two countries on the question of exporting Australian uranium to India is well known.

While India is not a party to the Nuclear Non-Proliferation Treaty, Australia acknowledges the need to  meet India’s growing energy needs as a major emerging economy.

And we welcome India’s willingness to work with the international community through the International  Atomic Energy Agency.

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Carbon pricing

In Australia one of the ways we are seeking to transform our electricity generation sector is by putting a  price on carbon.

This is designed to provide certainty for business, and on 10 July 2011 the Prime Minister announced  details of the Government’s carbon pricing plan.

By 2020, we expect to cut carbon emissions by 160 million tonnes a year.

The Government’s plan includes appropriate assistance to emissions intensive trade exposed firms - this  element of the package closely mirrors the November 2009 package the Government agreed with Malcolm  Turnbull.

Likewise, the Package includes assistance for Australia’s most gassy mines.

Given India’s increasing interest in Australian coal mining investments I would like to take this opportunity  to clarify how the carbon price will apply to mines.

There is an emissions threshold that applies.

Only individual mines with emissions above the 25,000 tonnes of CO2 equivalent a year threshold will be  taxed, and this will be a tax on emissions as a result of production in Australia.

Companies will not be taxed on volumes of coal they export, and there will be no tax on consumption in  India or anywhere else outside Australia.

We must not forget the importance of clean energy, and some of the revenue generated from the carbon  price will fund investment in clean technologies like solar, wind and geothermal.

In my last visit to India I addressed the 10th Sustainable Development Summit in Delhi.

My focus then, as it is now, is on proving up clean and renewable energy technologies and driving down  their costs to enable large scale deployment.

Collaboration will accelerate the timeframes for achieving this and I believe there is plenty of scope for our  two countries to share our knowledge of emerging zero-emission energy technologies.

Tourism

Of course the growth in Australia’s relationship with India is not limited to the resource and energy sectors  of my portfolio - it very much includes tourism as well.

India is among our top-12 inbound tourism markets with more than 130,000 visitor arrivals in 2010.

India is also Australia’s ninth-largest inbound market by value, worth $850 million last year.

We expect arrivals from India to grow by eight per cent a year to reach 315,000 by 2020.

The value of the market at that point may be worth $1.6 billion to the Australian economy.

We are witnessing a surge in Indian business events visitors, up 56 per cent during 2010.

This increased demand raises the potential for more Indian investment in the Australian tourism industry.

In the most recent yearly figures, Australia approved tourism investment worth $63 million from India.

And there’s plenty of room for more.

Australia has the highest accommodation occupancy rates in the OECD - a major incentive for new  development.

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We have also seen good recovery in the education visitor market.

We’ve seen a nine per cent year-on-year rise in Indian students coming to Australia following a six per  cent fall in 2010.

In the other direction, the number of Australians travelling to India reached 165,000 in 2010, making India  our twelfth-largest outbound market by departures.

Tourism Australia remains active in the Indian market.

Tourism, though, is about far more than just numbers and spending.

It brings people and cultures together, to share experiences and foster friendship and understanding, and  this builds on our strong relationship.

Conclusion

So right across my portfolios of resources, energy and tourism, the outlook for the bilateral relationship is  strong.

Your work adds to the strength of that relationship and I thank the Business Council on behalf of all  Australians who benefit from it.

Thank you for the opportunity to address you this evening.

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