AUSTRALIAYour Competitive Edge

Garry Draffin

International General Manager, Invest Australia

Nexia International – Sydney Tax Conference

June 1 2007

2

Strategically located in the world’s fastest growing region

3

Other Asia, 11%

Japan, 7% Japan, 6%

India, 6% India, 8%

China, 15%China, 20%

West Europe, 21%

West Europe, 17%

USA, 22% USA, 20%

Rest of w orld, 19% Rest of w orld, 18%

Other Asia, 10%

2005 2015

Asia's share of world GDP in 2005 38%

Asia's share of world GDP in 2015 45%

Source: Consensus Economics, IMF, ‘economics@ANZ’ *Purchasing Power Parity

By 2015 it is forecasted that Asia's economies will account for 45% of world GDP (PPP*), more than the US and Europe combined

4

Australia’s Major Trading Partners

Australia's top 10 two way trading partners, 2006(Goods and services)

12.0

12.5

12.6

19.7

21.3

22.2

22.8

47.5

50.4

55.0

0.0 10.0 20.0 30.0 40.0 50.0 60.0

India

Thailand

GermanyNew Zealand

Korea

Singapore

UKUSA

China

Japan

A$ billionSource: ABS Cat. 5368.0 Jan 2007, ABS Featured article (Preliminary Feb 2007)

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Australia’s Free Trade Agreements

• Australia already has Free Trade Agreements (FTAs) with the United States, Singapore, Thailand and New Zealand.

• Australia is currently negotiating a number of other FTA’s with ASEAN/NZ, China, Japan, Malaysia, the Gulf Cooperation Council and Chile; and examining feasibility of FTAs with Mexico and Korea.

• These agreements will help the unimpeded flow of talent capital and ideas between Australia and other countries.

6

Most Resilient Economy in World

Source: IMD World Competitiveness Yearbook, various years

7

Strong Economic Growth

1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

New Zealand

Japan

Belgium

Germany

France

Euro area

Austria

Finland

USA

Norway

OECD

UK

Sweden

Netherlands

Spain

Canada

Australia

Ireland

Per Cent

2008

2007

Source: OECD Economic Outlook 80, November 2006

Australia

GDP Growth Forecast for Selected OECD Economies

8

Australia is a Services-based Economy

Source: ABS, National Accounts, Catalogue 5206.0, June quarter 2006

Services77%

Manufacturing14%

Agriculture , forestry and

fishing3%

Mining 6%

Share of Major Sectors to Economy, 2005-06

9

Industrial Disputes in Australia: Declining

Working days lost per 1000 employees - All industries

251

191

278

203

178

239

183

159

82 85

114

9082

56

105

45 4230

67

2922

0

50

100

150

200

250

3001985-8

6

1986-8

7

1987-8

8

1988-8

9

1989-9

0

1990-9

1

1991-9

2

1992-9

3

1993-9

4

1994-9

5

1995-9

6

1996-9

7

1997-9

8

1998-9

9

1999-0

0

2000-0

1

2001-0

2

2002-0

3

2003-0

4

2004-0

5

2005-0

6

Nu

mb

er

of

da

ys

Annual series

Trendline

Source: ABS, Cat. 6321.0, June quarter 2006

10

Falling UnemploymentThe unemployment rate is at 30 year low, 4.5% in January 2007

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Jan-

79

Jan-

81

Jan-

83

Jan-

85

Jan-

87

Jan-

89

Jan-

91

Jan-

93

Jan-

95

Jan-

97

Jan-

99

Jan-

01

Jan-

03

Jan-

05

Jan-

07

Per

cen

t

Source: ABS, Cat. No. 6202.0 February 2007

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Australia is most politically stable country in the worldRisk of Political Instability

8.8 9.1 9.3 9.6 9.8

Germany

USA

Chile

Singapore

Switzerland

Sweden

Norway

Iceland

Ireland

Austria

Luxembourg

Finland

Denmark

Australia

Score: 10= Risk absent, 0= otherwise

Source: World Competitiveness Yearbook 2006

Australia

12

Friendly Regulatory Framework

Of the 30 OECD countries, Australia has theFewest restrictions on product markets

Least public ownership of business

Least restrictive impact of regulation on economic behaviour

Australia’s World Rank (World Competitiveness Yearbook 2006)

Category Rank

Supervision of Companies by Corporate Boards 1st Efficiently Managing Shareholder Value 1st Transparency in Financial Sector 2nd Consistency of Government Policy 5th

Source: OECD 2006 and WCY 2006

13

Ease of Doing Business, Australia's Rank 2006

Source: World Bank Doing Business 2007

Rank among 175 countries

8th9th

1st1st1st

Minimumcapital

required

Number ofprocedures

Number ofdays to starta business

Cost - % ofper capita

income

Ranking -ease of doing

business

14

Strong Patent ProtectionEnforcement of Intellectual Property Rights

Source: World Competitiveness Yearbook 2006

5.4

5.5

6.1

6.2

6.2

6.5

6.6

7.1

7.6

7.7

7.9

7.9

8.0

8.0

8.1

8.1

8.2

8.3

8.4

5.2

5 6 7 8

India

Italy

China

Spain

Taiwan

Malaysia

Hong Kong

UK

France

New Zealand

Canada

Germany

Netherlands

USA

Australia

Finland

Denmark

Singapore

Austria

Switzerland

Score: (10 = Adequately enforced, 0 = Otherwise)

Australia

15

Australia ranked first in Asia Pacific for generating productivity in industry

Source: World Competitiveness Yearbook 2006

50,452

56,746

72,357

76,968

22,989

11,706

10,000 30,000 50,000 70,000

India

China

Hong Kong

Singapore

Japan

Australia

GDP (PPP*) per person employed in industry, US$, pa * PPP - purchasing pow er parity

Australia

16

World Class Education System

• Australia has been ranked equally the first in the world for general literacy of its people, and in the top seven in the world for economic literacy (WCY).

• Australia’s education system ranked the second best in the Asia Pacific and in the top seven in the world for meeting the needs of a competitive economy (WCY).

• Australian students ranked fourth in OECD for reading and science literacy.

• Six Australian universities ranked in the top 50 universities in the world (The Times).

• Proportion of workforce with tertiary degrees is 31%, compared to OECD average of 23%.

Source: World Competitiveness Yearbook (WCY 2006)

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Higher Education Enrolment Among World’s BestGross tertiary enrolment rate (2003 or more recent)

Source: Global Competitiveness Report 2005-2006

51

52

56

58

58

61

64

72

74

74

81

83

83

88

46

51

40.0 50.0 60.0 70.0 80.0 90.0

Singapore

Japan

Germany

Ireland

France

Canada

Netherlands

Belgium

UK

Taiwan

New Zealand

Australia

Norway

USA

Sweden

Finland

Per cent

Australia

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Multilingual Workforce

Source: Australian Bureau of Statistics Census 2001

Major Asian/Arabic Languages Spoken in Australian Homes, Number of Persons

Chinese dialect, 401,357

Lebanese, Arabic, 209,400

Indonesian, 38,722

Korean, 39,528

Hindi & Tamil, 71,891

Tagalog (Filipino), 78,878

Japanese, 28,285

Turkish, 51,423

Khmer, 21,982

Vietnamese, 174,235

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Multilingual Workforce

Source: Australian Bureau of Statistics Census 2001

Major European Languages Spoken in Australian Homes, Number of Persons

Italian, 353,605

Greek, 263,717

German, 76,443

Macedonian, 71,994

Serbian, 49,203

Polish, 59,056

French, 39,643

Russian, 34,790

Eastern European, 113,944

Maltese, 41,393

Croatian, 69,851

Dutch, 40,188

Spanish, 93,593

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Competitive Telecommunication CostsCost of a 3 minute international call, 2005 ($US)

Source: World Competitiveness Yearbook 2006

0.23

0.33

0.41

0.45

0.48

0.52

0.55

0.59

0.64

0.65

0.70

0.73

0.88

1.10

1.15

1.63

2.93

0.15

0.1 0.6 1.1 1.6 2.1 2.6

Germany Netherlands

France India USA

Canada Austria Taiwan

Spain Australia

UKSingapore Denmark

Italy New Zealand

Hong Kong JapanChina

US$ per 3 minutes in peak hours to USA (for USA to Europe)

Australia

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Competitive Electricity Prices

Industrial Electricity Prices

Source: WCY 2006

0.050

0.054

0.055

0.055

0.056

0.060

0.061

0.067

0.073

0.077

0.096

0.111

0.127

0.161

0.049

0.045 0.055 0.065 0.075 0.085 0.095 0.105 0.115 0.125 0.135 0.145 0.155 0.165

Canada

France

Spain

Taiwan

USA

Malaysia

New Zealand

Australia

UK

Singapore

Germany

Denmark

Hong Kong

Japan

Italy

US$ per kwh

Australia

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Tax Revenue As a Share of GDP

Australia Eighth Lowest in OECD

19.8

25.6

26.4

26.8

29.4

30.0

30.5

31.2

32.3

33.5

34.4

34.5

34.7

35.0

35.8

35.9

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0

Mexico

Korea

Japan

USA

Slovak R

Switzerland

Iceland

Australia

Turkey

Canada

Poland

Portugal

Germany

Greece

Spain

OECD average

Per centSource: OECD, 2006

Australia

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Low Cost of Living

75.0

77.8

78.6

78.9

79.5

82.1

85.3

86.5

87.2

87.6

88.0

90.6

91.8

93.3

97.8

97.9

70 80 90 100

Canada

USA

New Zealand

Indonesia

Australia

China

Germany

Spain

Belgium

Israel

Singapore

Taiwan

France

Netherlands

Austria

UK

Cost of Living Index, New York = 100, 2005

Source: World Competitiveness Yearbook 2006

Australia

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Innovative Culture Culture Open to Foreign Ideas: Australia Ranks 5th in the World

6.1

6.4

6.7

6.8

6.9

7.4

7.7

8.0

8.1

8.2

8.4

8.7

8.8

9.2

6.1

6 6.5 7 7.5 8 8.5 9 9.5

Spain

Germany

Italy

UK

USA

China

Denmark

New Zealand

Singapore

Netherlands

Australia

Canada

Ireland

Hong Kong

Iceland

Score (10 = Open to foreign ideas, 0 = Otherwise)

Source: World Competitiveness Yearbook 2006

Australia

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Australia's IT Infrastructure is the most advanced in Asia Pacific

EIU E-Readiness Index 2006

3.1

3.4

4.0

4.0

4.3

4.5

4.6

5.6

7.5

7.6

7.8

7.9

8.2

8.2

8.4

8.5

3 4 5 6 7 8 9

Vietnam

Indonesia

China

Philippines

India

Venezuela

Thailand

Malaysia

Taiwan

Israel

Japan

South Korea

New Zealand

Singapore

Hong Kong

Australia

Score: 0 low, 10 high

Australia

Source: Economist Intelligence Unit 2006

26

Internet savvyInternet Users Per 1,000 People

Australia Ranks in the Top Four Countries in the World

84

392

474

475

496

562

580

591

619

641

660

662

666

668

677

704

728

730

732

47

25 125 225 325 425 525 625 725

India China Spain

Malaysia France

Italy Germany

Taiwan UK

Singapore Netherlands

New Zealand Hong Kong

Canada USA

JapanAustralia Denmark Sweden Iceland

Number of internet users per 1000 peopleSource: World Competitiveness Yearbook 2006

Australia

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Financial Services sector

• Financial services are one of the fastest growing sectors of the Australian economy, with an average annual growth (real) rate of 4.9% since the mid 1980s

• First major financial centre to open in Asian time zone.• Fourth largest investment funds asset pool in the world at US$867

billion.• Seventh biggest foreign exchange market in the world.• US/Australia dollar is fourth-most traded currency pair in the world. • Australian dollar is sixth most traded currency in world.• Eighth largest stock market exchange in the world.• The Australian international and domestic securities market is the third

largest in the region (ex-Japan), after China and Korea.

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The Global Significance of Australia's Investment Funds Asset Pool

29

Excellent Quality of Life

7.5

8.2

8.3

8.3

8.4

8.7

8.7

9.2

9.2

9.3

9.4

9.4

9.6

7.5

7 7.5 8 8.5 9 9.5 10

Spain

Hong Kong

France

USA

Singapore

Netherlands

New Zealand

Germany

Canada

Australia

Norway

Denmark

Switzerland

Austria

Score: (10 = High, 0 = Otherwise)

Quality of Life Is High in Australia

Source: World Competitiveness Yearbook 2006

Australia

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Most Liveable Cities in the World

Australia’s Five Major Capital Cities Rank in Top Eleven

Source: Economist Intelligence Unit – EIU 2005

Rank City Country1 Vancouver Canada2 Melbourne Australia 2 Vienna Austria2 Geneva Switzerland5 Perth Australia 5 Adelaide Australia 5 Sydney Australia 5 Zurich Switzerland5 Toronto Canada5 Calgary Canada11 Brisbane Australia

31

Invest Australia

32

Invest Australia Programs

• Major Project Facilitation

High-level information, advice and support to assist projects of major strategic significance to Australia through necessary government approval processes

• Supported Skills Program

Fast track immigration for senior management and specialist employees of companies seeking to invest in Australia.

• Strategic Investment Coordination

Designed to attract to Australia, on a case-by-case basis, projects with significant economic benefit that are viable in the long term and would otherwise have located elsewhere

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AustraliaCanberraSydney

North AmericaNew York (3 staff)San Francisco (6 Staff)

EuropeFrankfurt (5)London (2)Paris (2)

North East AsiaTokyo (5)Seoul (1)

Greater ChinaShanghai (4)Beijing (2)Guangzhou (1)

South AsiaPacificSingapore (2)Mumbai (1)New Delhi (0.5)Dubai (1)

Invest Australia Network 2006-07

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Solutions for your business

Invest Australia provides free, comprehensive and confidential assistance for your business. We provides a range of services including:

• Connecting you with the right industry and government contacts.• Comprehensive information on business opportunities in Australia, the

business environment, investment regulations and government programs.• Tailor-made information on business costs, skills availability, taxation and

research and development opportunities.• Expert advice from our industry specialists on Australia’s industry capabilities

and strengths.• Site visits to identify the most suitable locations in Australia.• Business matching to link you with potential joint venture partners.• Streamlining project approvals processes.• Facilitating major projects.

Thankyou

www.InvestAustralia.gov.au

Garry.Draffin@InvestAustralia.gov.au