Can international capital create a gateway between Melbourne’s West and our biggest trading partner?
Updated: Feb 4, 2019
Australia is a large, resource and knowledge rich country with a high demand for capital, and foreign investment has always been a cornerstone enabler of our economy. Capital from abroad helped to build our wool industry and has been essential to the growth of other key sectors such as mining and construction.
These days, foreign capital from United States, China and elsewhere is creating jobs in Australia and boosting research and innovation in new sectors such as education, hi-tech manufacturing and the burgeoning digital economy.
Ground-breaking new projects such as the $31 billion Australian Education City development are so ambitious in scope that they will require investment from a wide range of sources both local and international. But involving other nations has many other advantages too. Collaborative endeavours build global ties and partnerships that benefit all parties by harnessing their strengths
Australian Education City aims to build on Australia’s reputation as the home of Asia’s finest and most respected universities by fostering closer ties with our neighbours on education, innovation and research and development.
To be constructed in Werribee, in Melbourne’s outer west, the radical concept is designed to house 70,000 residents and attract 45,000 local and international students to a new hi-tech innovation precinct combining advanced industries, research institutions and universities from across Asia and the world in one place.
The support and participation of Chinese and other foreign investors in the massive project is essential for several reasons, says Haydn Wright, AEC Advisor.
“Firstly, the level of capital we need simply does not exist in Australia,’’ says Wright. “We are rolling out several billion dollars’ worth of infrastructure before we start building on top of that.
“It’s not typically the way Australia has developed sites and is a bit of an anathema to Australian banks. Here, in property developments we typically presell the building to a large extent before the banks will get involved and help,’’ he says. “However the Chinese get it, because they are used to building new cities.’’
Secondly, says Wright, Chinese investment helps make Chinese institutions true partners in the project.
“With Chinese financial involvement you get more interest within China, from the Chinese corporates and universities and research groups whom we hope to encourage to relocate by giving them a sense of participation in the precinct,’’ says Wright. While Australia is a centre of academic excellence, it simply can’t compete with China when it comes to research and development spending, says Wright. “The level of expansion of R&D in Chinese universities is enormous, and China’s universities are jumping up the rankings as a result. At the same time, Australia’s R&D budget is going backwards. If we are to be a leading country for innovation, we need to find a way to fund that.’’
Linking China and the West
AEC aims to create a gateway between the West and China, where academics, researchers and students from Europe and the US can engage with China. It has confirmed strong interest from education institutions in the UK and US, as well as multinational firms such as IBM, Cisco and Honeywell. “It’s the Chinese connection that will attract the rest of the world to want to come to Melbourne,’’ says Wright. Victoria alone attracts over 175,000 international students a year from more than 160 countries, and with a view to the potential for growth in this market AEC has partnered with the largest student placement group in China.
Australian Education City will build on the already strong existing ties between Chinese and Australian institutions working together on R&D. For example, UNSW’s Torch program is based around leading-edge manufacturing, Chinese companies have begun establishing incubators on the university’s Kensington campus in Sydney, and an innovation precinct is being built nearby that will provide up to 3000 Australian jobs. It will feature Chinese and Australian industries working closely with Australian researchers while also providing a home to UNSW's growing cohort of student start-ups.
In Queensland, the State Government and the Chinese Academy of Sciences jointly fund the Q-CAS Collaborative Science Fund grants scheme, which provides individual grants up to $250,000 to Queensland and Chinese researchers to undertake innovative research and development projects.
The Federal Government’s Australia-China Science and Research Fund Joint Research Centres project provides Australian research organisations with grants of up to $1 million to projects that link Australian and Chinese research institutions.
Benefits of AEC for local community
The sheer size of AEC creates many job opportunities and community opportunities in the region, that's why it has such strong support coming out of the Wyndham City Council and the region. It would involve the creation of TAFEs, schools, roads, all the things that make a community.
AEC is looking at creating an Indigenous hub, and at how to engage immigrant communities who have difficulty joining the employment market in Australia. Looking at an arts and recreation hub that would mean residents of west Melbourne would no longer need to travel to Southbank.
See PwC City Pulse Melbourne report for statistics on total job creation, contribution to Victorian economy etc. Based on discussions with IBM, and government modelling, AEC is confident it would create far more than 100,000 jobs.
One in four businesses in Australia with 200 or more employees had greater than 50 per cent foreign ownership in 2015-16. Research has found that a 10 per cent increase in foreign investment in Australia could lead to a more than one per cent increase in GDP by 2020. Canada, EU and US direct investment in Australia contributed to employing almost 700,000 Australians in 2014.