:00:00. > :00:00.split on the decision. Those are the headlines, we will
:00:00. > :00:00.have more at the top of the hour. Now, Talking Business.
:00:07. > :00:09.It has always been at the heart of Australia's economy.
:00:10. > :00:12.Ever since this country was founded more than 200 years ago,
:00:13. > :00:13.Australians have been getting rich from it.
:00:14. > :00:15.Either through farming, or by digging out what lies
:00:16. > :00:19.But now, as demand for some of what Australia produces slows
:00:20. > :00:45.down, what does this country do next?
:00:46. > :00:48.Welcome to Talking Business, I am Karishma Vaswani,
:00:49. > :00:53.This is a massive country - the world's sixth largest,
:00:54. > :00:57.in fact - and I will be travelling through some parts of it to find out
:00:58. > :01:01.how Australians are faring in the face of a global economic
:01:02. > :01:07.First stop, mining country, where my colleague, Jon Donnison,
:01:08. > :01:10.has been finding out for himself what happens to a community
:01:11. > :01:26.Ground Zero for Australia's coal industry.
:01:27. > :01:30.The state has some of the world's largest coal reserves,
:01:31. > :01:35.and was at the heart of the country's mining boom.
:01:36. > :01:37.It is a boom which maybe yet hasn't gone bust,
:01:38. > :01:40.but which these days is certainly providing a lot less bang
:01:41. > :01:50.Coal continues to be pulled out of the ground here in Queensland
:01:51. > :01:57.But such has been the fall in the price of the product,
:01:58. > :02:01.that many of the big mines are struggling to turn a profit.
:02:02. > :02:03.And that hit mining communities like Moranbah hard.
:02:04. > :02:10.Nearly everyone here is connected to the coal industry.
:02:11. > :02:13.But wages have been cut, and jobs have been lost.
:02:14. > :02:17.I am not quite sure where boom and bust originated from,
:02:18. > :02:30.but it certainly cemented into the mining industry,
:02:31. > :02:33.We do need to work towards sustainability
:02:34. > :02:36.And Moranbah has definitely not seen that.
:02:37. > :02:41.These houses don't look too flash, but during the boom,
:02:42. > :02:44.when miners were flush with cash, this small non-descript town
:02:45. > :02:46.remarkably had some of the most expensive real estate
:02:47. > :02:49.But in the last few years, many people have left,
:02:50. > :02:54.and property prices have dropped by as much as 70%.
:02:55. > :02:58.The town is starting to struggle now because of that impact on the bottom
:02:59. > :03:01.line, so you don't have the general money to spend around the town.
:03:02. > :03:04.I am always concerned about my family and the community's
:03:05. > :03:07.future, hoping it will come back, you will see a flattening
:03:08. > :03:14.and a potential increase in demand, but there is all that worry.
:03:15. > :03:20.Australia's coal reserves are not going to run out any time soon.
:03:21. > :03:32.As you have seen, the resources sector is really taking a beating
:03:33. > :03:36.from the end of the mining boom here, but agriculture has always
:03:37. > :03:39.been an important part of Australia's economy.
:03:40. > :03:42.I am at the third largest meat processing plant in the country,
:03:43. > :03:46.and people here are betting on the growing fortunes
:03:47. > :03:56.This isn't just any old job, it is a lifeline for Scott.
:03:57. > :04:01.He spent 14 years of his life here, before leaving this job
:04:02. > :04:06.When oil prices were high, his salary doubled.
:04:07. > :04:12.But just before Christmas he lost that job, because oil prices
:04:13. > :04:21.In the oil and gas industry I was promised a chance of moving up
:04:22. > :04:24.and progressing in the company further, and then that went bust,
:04:25. > :04:29.The way the company is going here now, I can see it is going to be
:04:30. > :04:32.going very well in the future, so I am happy to have a job.
:04:33. > :04:36.As Asia's middle classes get richer, more of them want what Australia
:04:37. > :04:45.Australian beef exports to China hit a record of $655 million last year,
:04:46. > :04:52.There is more than 50,000 head of cattle in this feed lot alone,
:04:53. > :04:56.and almost half of the meat produced here ends up on plates across Asia.
:04:57. > :04:58.These cows, for example, are destined for supermarkets
:04:59. > :05:02.But it is China, farmers here tell me, where they have seen
:05:03. > :05:05.the biggest demand in increase of orders and inquiries over
:05:06. > :05:12.But it is not all blue skies and sunny days just yet.
:05:13. > :05:15.Australia's beef sales are only worth about a third of the value
:05:16. > :05:19.of what coal and iron ore bring to the economy.
:05:20. > :05:26.The Government says betting on beef is a long-term strategy.
:05:27. > :05:29.Some three billion people in the coming decade will be
:05:30. > :05:34.You have got rapid rates of urbanisation and continued
:05:35. > :05:42.That will lead to a greater demand for services like education
:05:43. > :05:43.services, tourism services, health services.
:05:44. > :05:46.It will lead to a greater demand for high quality agricultural
:05:47. > :05:48.products, which Australia is very well-known for,
:05:49. > :05:54.as well as higher calorie agricultural products, like beef.
:05:55. > :05:56.Supplying Asia's middle classes with high quality agricultural
:05:57. > :05:59.products is how Anne Storey sees her business going,
:06:00. > :06:08.Australia, and businesses like ourselves particularly,
:06:09. > :06:13.need to target carefully what part of the Asian market segment
:06:14. > :06:17.we are trying to serve, because our cost base is high,
:06:18. > :06:20.but we are prepared to put that effort and that work in delivering
:06:21. > :06:23.a consistently high quality product to the customer every time
:06:24. > :06:26.Australia is hitching its fortunes to Asia yet again.
:06:27. > :06:28.First, coal and iron, now lettuce and beef.
:06:29. > :06:33.But Asia is slowing down, and that could hurt farms
:06:34. > :06:44.I am standing in front of Parliament House,
:06:45. > :06:48.where the men and women who run this country sit down to tackle some
:06:49. > :06:49.of the challenges facing its economy.
:06:50. > :06:51.But first, a lighter look at some of those challenges,
:06:52. > :07:01.with the BBC's Colm O'Regan, who has been taking some lessons
:07:02. > :07:04.On this week's Talking Point, if Australia wants to concentrate
:07:05. > :07:07.more on farming, then they have come to the right man.
:07:08. > :07:10.I grew up on a farm - the land is in my bones,
:07:11. > :07:13.I look forward to coming back to my natural habitat.
:07:14. > :07:15.Now, unfortunately there wasn't really time for me to go back
:07:16. > :07:19.all the way to my natural habitat, so instead I have come to a city
:07:20. > :07:21.farm here at Airfield in Dundrum, in Dublin.
:07:22. > :07:26.It exists to give lungs to the landscape and to teach
:07:27. > :07:30.children that milk does not necessarily come from cartons.
:07:31. > :07:34.What better metaphor for an economy trying to rebalance towards a more
:07:35. > :07:36.agricultural means of earning money than a farm in the middle
:07:37. > :07:48.We have been down this agricultural road already ourselves,
:07:49. > :07:51.here in Ireland, there has been huge expansion in our farming industry.
:07:52. > :07:54.Huge targets for growth in output for our farms.
:07:55. > :07:57.There is a huge investment going on in agriculture businesses
:07:58. > :07:59.around the country, where we have seen upwards of about one billion
:08:00. > :08:01.euros being invested at industry level.
:08:02. > :08:04.One of the big drivers for that was the end
:08:05. > :08:11.You see, we can produce as much milk as we want.
:08:12. > :08:13.We decided we would grow our milk output by 50%.
:08:14. > :08:16.And I suppose we are beginning to see the fruits of that labour
:08:17. > :08:20.now, with the lifting of quotas in April last year.
:08:21. > :08:24.We are going to see about 300,000 extra cows being milked every year
:08:25. > :08:29.in Ireland over the next 10-15 years, which is is a massive
:08:30. > :08:32.in Ireland over the next 10-15 years, which is a massive
:08:33. > :08:38.increase on the output we are doing at the moment.
:08:39. > :08:40.Let us go and meet some milk producers.
:08:41. > :08:43.You see, in Ireland now we are in the middle of a milk boom.
:08:44. > :08:45.These Jersey cows behind me are in calf.
:08:46. > :08:49.We don't need Silicon Valley, we have Milking Valley.
:08:50. > :08:55.Ever since the recession back in 2008/9, agriculture,
:08:56. > :08:58.I suppose, has been the driver of the Irish economy since that
:08:59. > :09:01.Agriculture has been identified to have a great potential to drive
:09:02. > :09:09.As it stands, it counts for about 12% of our merchandise export.
:09:10. > :09:13.We export about 10 billion euros worth around the world,
:09:14. > :09:15.and that has grown significantly over the last six years,
:09:16. > :09:19.and there is a target there to grow that to about 19 billion euros
:09:20. > :09:26.So, what can we say about the future about Australia's rebalancing
:09:27. > :09:31.of its economy towards more friendly fellows like this?
:09:32. > :09:34.I think for agro-business today you cannot ignore China -
:09:35. > :09:36.after all, China has about 25% of the world's population,
:09:37. > :09:39.and they are consuming more and more of the products we produce,
:09:40. > :09:46.which are high quality premium end products.
:09:47. > :09:48.Of course cows, like any industry, need inputs.
:09:49. > :09:52.All I can say is I certainly would rather be here,
:09:53. > :09:58.Some Irish takeaways there for Australia from the BBC's
:09:59. > :10:03.If you want to catch more of his material,
:10:04. > :10:14.What is it going to have to do to keep diversifying its growth
:10:15. > :10:22.Joining me to answer some of those questions is Andrew Robb.
:10:23. > :10:24.Tell me, what is Australia's strategy going forward,
:10:25. > :10:26.now the mining boom is almost officially over?
:10:27. > :10:30.We have been blessed for the last 12 years with a very long mining boom.
:10:31. > :10:34.A lot of that has meant we have projects all over Australia
:10:35. > :10:43.I mean, literally $400 billion worth of infrastructure in the oil and gas
:10:44. > :10:48.That will deliver us returns for decades and decades to come.
:10:49. > :10:51.We are selling a lot of those products now.
:10:52. > :10:55.Sure, the price is down on them, but we are selling a hell of a lot
:10:56. > :10:57.more than we had five years ago in the market place,
:10:58. > :10:59.agricultural prices, the dollar is now 30% lower.
:11:00. > :11:05.A whole swag of free trade agreements that we have negotiated.
:11:06. > :11:08.Some which give us access that no-one else has got to places
:11:09. > :11:14.like China, and these things, as well as tourism and education,
:11:15. > :11:19.Services is the next horizon for Australia,
:11:20. > :11:33.We are in a region which is exploding and needing our service.
:11:34. > :11:36.We are in a region which is exploding and needing our services.
:11:37. > :11:39.We are a first world country in a region of emerging countries.
:11:40. > :11:41.We just happen to be there at the right time.
:11:42. > :11:44.For the first time, really, in the right place, as well.
:11:45. > :11:47.There is an ambition to become the food bowlof Asia,
:11:48. > :11:49.There is an ambition to become the food bowl of Asia,
:11:50. > :11:52.but Australia, my understanding is, only produces enough food to feed
:11:53. > :11:55.That is not enough to feed neighbouring Indonesia,
:11:56. > :12:00.If we pitch at the top 1 or 2%, and that is about all we could
:12:01. > :12:03.supply, the top 1 or 2% of all of these emerging markets,
:12:04. > :12:05.and even then we couldn't meet all that demand,
:12:06. > :12:09.but if we get to that premium end we get a premium price which allows
:12:10. > :12:12.us to invest heavily in innovation and remain competitive,
:12:13. > :12:16.keep the quality up, so if we are looking to position
:12:17. > :12:19.ourself, not just with agricultural products, but with our tourism
:12:20. > :12:24.products, education products, with health products,
:12:25. > :12:27.with many other services, if we pitch them at the very high
:12:28. > :12:34.end, which is a big demand for that, we have got great markets.
:12:35. > :12:38.As long as we aim for the top end, we will be in very good shape.
:12:39. > :12:42.It is not an easy sell, frankly, to go from an economy that has been
:12:43. > :12:45.so dependent on land and resources to one that is more focussed
:12:46. > :12:47.on innovation and technology, but it is all part of
:12:48. > :12:49.Prime Minister Malcolm Turnbull's new plan.
:12:50. > :12:55.I am in Sydney now, behind me the financial pulse of this country.
:12:56. > :12:59.I am about to meet some key people in the pillars of this economy,
:13:00. > :13:20.Joining me to answer some of these questions, and have a discussion
:13:21. > :13:23.held the post of CEO at the New South Wales Minerals
:13:24. > :13:26.Council and the Australian Coal Association, and she was recently
:13:27. > :13:28.voted in the top five most influential women in
:13:29. > :13:31.Bill Ferris, recently appointed as the chairman of Innovation
:13:32. > :13:34.He is a 45-year-veteran of private equity in the region,
:13:35. > :13:37.and co-founded Australia's first ever venture capital firm in 1970.
:13:38. > :13:39.Last, but not least, Fiona Simpson, vice president
:13:40. > :13:43.of the National Farmers' Federation, and the past president
:13:44. > :13:46.of New South Wales's Farmers' Association and a farmer herself.
:13:47. > :13:51.There is a lot of talk about how the old Australian economy,
:13:52. > :13:53.the mining boom, that's dead, and that Australia needs to find
:13:54. > :13:56.a way to innovate and move forward in future, to stay
:13:57. > :14:02.Of course any economy and any sector within an economy needs to innovate,
:14:03. > :14:08.The mining sector is obviously in the doldrums at the moment.
:14:09. > :14:13.We have just come off an incredible supercycle,
:14:14. > :14:17.and that supercycle we have effectively seen happen around
:14:18. > :14:23.about every ten years, for as long as I can remember.
:14:24. > :14:29.In other words, where we are today is entirely predictable.
:14:30. > :14:32.A 60% slump in the price of commodities, that is entirely
:14:33. > :14:35.When you are coming off the highs we came off,
:14:36. > :14:38.but I think the main thing for people to focus on is that
:14:39. > :14:41.when you have a crisis in a particular sector,
:14:42. > :14:43.one of two things happens - you either have extinction
:14:44. > :14:47.or you have reinvention, and you know, our industry has been
:14:48. > :14:53.reinventing itself for many, many decades.
:14:54. > :14:56.It is why we are the most technologically advanced mining
:14:57. > :15:01.You are in charge of spearheading this innovation agenda in Australia.
:15:02. > :15:08.How much will that play into the old economy?
:15:09. > :15:10.How much does that have to contribute to that?
:15:11. > :15:15.I think the big issue for us, the excitement for Australia
:15:16. > :15:18.is that we are in a grand position to capitalise on the new technology,
:15:19. > :15:25.the new innovations going forward and commercialise a great deal more
:15:26. > :15:29.I don't think a lot of your viewers would really appreciate the fact
:15:30. > :15:32.that whether it is from penicillin or xerography, which led to Xerox,
:15:33. > :15:35.or the black box flight recorder or vaccines of all sorts,
:15:36. > :15:38.or more recently Wi-Fi, I could go on, all of these things
:15:39. > :15:49.We are an inventive people, what we haven't done too well
:15:50. > :15:51.at is commercialising our fair share of that.
:15:52. > :15:57.Fiona, I think this is an opportune time to bring you in.
:15:58. > :16:00.Would you say that the farming and agricultural sector has been
:16:01. > :16:03.neglected as a result, some of this focus we have had
:16:04. > :16:10.When you think about cycles, there are farmers who would say that.
:16:11. > :16:13.Whether it is just a natural cycle, whether it is not,
:16:14. > :16:15.that the Government, you know, and the community has been focussing
:16:16. > :16:18.on what has been an amazing boom for mining, so I think definitely,
:16:19. > :16:22.where we are at the moment is at a point where we are ready
:16:23. > :16:24.to grow, and we see amazing potential in front of us.
:16:25. > :16:27.We see opportunities and challenges that we haven't seen for many,
:16:28. > :16:32.many years in many generations in agriculture, but certainly
:16:33. > :16:34.we need now some policy settings in place, and we,
:16:35. > :16:38.as a industry, need to do some things to make sure that we actually
:16:39. > :16:40.get some of those gains out of the opportunities that
:16:41. > :16:45.There is a lot of talk about how can Australia become the food bowl,
:16:46. > :16:48.Isn't the reality Australia only produces food enough
:16:49. > :16:52.That is not enough to feed neighbouring Indonesia,
:16:53. > :17:00.Politicians in Australia have been talking about whether it's
:17:01. > :17:01.supermarket or whether it's delicatessen.
:17:02. > :17:04.When you consider we export 60% of what we produce in Australia,
:17:05. > :17:07.it offers some amazing opportunities for who we can actually feed,
:17:08. > :17:14.considering the growing populations in Asia,
:17:15. > :17:19.in China, in India, in Indonesia, and the change in demographics
:17:20. > :17:24.in those countries, so the exploding middle classes in Asia are wanting
:17:25. > :17:29.But does Australia risk making the same mistakes and focus on one
:17:30. > :17:32.country, one market to become the sort of saving grace
:17:33. > :17:34.for the economy, in the same way it did in mining?
:17:35. > :17:42.It is important to understand we are already 75-80%
:17:43. > :17:44.a services-based economy, and some of the new exciting,
:17:45. > :17:47.very high growth, very high growth opportunities for Australian
:17:48. > :17:57.innovation, in worldwide markets where we have been operating
:17:58. > :18:00.for yonks, over and apart and separate from the commodities
:18:01. > :18:02.trade, our rating worldwide in health and medical research
:18:03. > :18:06.We are nowhere in terms of the commercialisation
:18:07. > :18:09.of our own drug discoveries or work, because when you get
:18:10. > :18:11.to the clinical trials phase, you need about $10-20 million
:18:12. > :18:14.of venture capital per project to get into a phase one
:18:15. > :18:22.It gets licensed off too early or goes to people offshore,
:18:23. > :18:27.We are now going to do more of that ourselves.
:18:28. > :18:31.I think it is really important, the flexibility in capital
:18:32. > :18:36.investment in regional Australia at the moment.
:18:37. > :18:39.Our infrastructure is - a lot of it is sadly decayed
:18:40. > :18:43.and lacking, and that means we are not competitive when it comes
:18:44. > :18:45.to other countries we might be competing with.
:18:46. > :18:48.We haven't got, and Government at the moment hasn't got the money
:18:49. > :18:49.to inject into that rail infrastructure,
:18:50. > :18:54.We need to make sure that we have a system in place
:18:55. > :19:06.How can we make sure it goes to where it is needed?
:19:07. > :19:11.If I look at the mineral sector, during the boom, the iron ore supply
:19:12. > :19:13.chain, which was primarily on the west coast,
:19:14. > :19:15.was entirely privately owned - but that doesn't mean
:19:16. > :19:17.anything in particular, except that the whole process
:19:18. > :19:20.was orientated to how you maximise exports on the east coast.
:19:21. > :19:23.On the other hand, you had multiple players owning the railway cars,
:19:24. > :19:39.the tracks, the roads, the tunnels, the boats, the port,
:19:40. > :19:42.The supply chain was completely fragmented, and that meant that
:19:43. > :19:45.while we were able to take advantage of high prices,
:19:46. > :19:47.we lost market share to competitive countries like Indonesia,
:19:48. > :19:48.in certain of our commodities, that infrastructure,
:19:49. > :19:50.the hard infrastructure, and the notion that the infrastructure
:19:51. > :19:57.must be co-ordinated as a supply chain, and the soft infrastructure -
:19:58. > :20:01.the schools, you know, the hospitals, and all the other
:20:02. > :20:04.services, those things have to be put in place.
:20:05. > :20:08.This is where government vision is so critically important.
:20:09. > :20:10.It is not the Government's going to pay for that,
:20:11. > :20:16.but it is going to make it possible by incentives and other things
:20:17. > :20:18.for private industry to build it and deliver it.
:20:19. > :20:23.Finally, how much of an impact do you feel that the ongoing global
:20:24. > :20:25.financial environment will have on Australia's fortune?
:20:26. > :20:38.The resources from the mining boom is what helped us financially,
:20:39. > :20:41.to get through the global financial crisis and other ebbs
:20:42. > :20:43.and flows in the economy, but I think as we digitalise
:20:44. > :20:45.more of our business, whether that is -
:20:46. > :20:48.even if that is attached to a real, a real business, making something
:20:49. > :20:51.or extracting something, that will allow greater flexibility
:20:52. > :20:54.and ability to adapt to, you know, what is pretty
:20:55. > :21:07.We have come through lots of crises and as an economy, surprised
:21:08. > :21:09.the world about now 25, 26 years of unbroken growth.
:21:10. > :21:15.Jury is still out somewhat, but I am convinced that one of the,
:21:16. > :21:18.one of the great virtues will be this sense of what is possible,
:21:19. > :21:20.a sense of innovation, a sense of can do
:21:21. > :21:26.It's the first time ever we have had a cabinet committee of innovation
:21:27. > :21:27.and science under the Prime Minister.
:21:28. > :21:30.That is a big signal, a big message to every sector.
:21:31. > :21:41.Always it is going to have some effect, but for agriculture
:21:42. > :21:44.at the moment, we were wanting trade agreements, we have a whole raft
:21:45. > :21:47.of good trade agreements now, providing a level playing field
:21:48. > :21:52.At the moment, that is what we have got.
:21:53. > :21:58.Everything is right at the moment for agriculture
:21:59. > :22:05.So despite the global economy, I think we are ready to show
:22:06. > :22:07.who we are and to really grow in Australia.
:22:08. > :22:09.We are looking forward to that growth.
:22:10. > :22:11.Thank you very much, ladies and gentleman,
:22:12. > :22:16.It has been a real pleasure speaking to you about some of the issues.
:22:17. > :22:19.That is it for this edition of Talking Business here in Sydney,
:22:20. > :22:22.I am Karishma Vaswani, join us for the next
:22:23. > :22:29.Lic is fairly evenly split on the decision.
:22:30. > :22:46.Those are the it a weekend of huge variety, most
:22:47. > :22:51.of us seeing rain at some stage, otherwise really mixed fortune, it
:22:52. > :22:54.hinges on a weather front. Let me show you, this great big snake of
:22:55. > :22:55.cloud extending out of the