Mr Tim Pallas MP – travel report – China, France, the United Kingdom and the United States of America, 4 to 21 November 2023

*The above costs are not final and complete

Purpose of travel

The Treasurer travelled to China, France, the UK and the US to:

• support a large trade delegation at China’s flagship trade event, the China International Import Expo (CIIE)
• support an international education delegation in Shanghai
• meet with the Vice-Governor of Jiangsu Province
• officially open the Victorian Government Trade and Investment (VGTI) office in Paris
• undertake a range of significant trade and investment related meetings, including with Lockheed Martin, Boeing and Microsoft in the US
• gain insight into the changing global economic climate, capital markets and investment markets
• support effective and efficient delivery of the state’s funding requirements.

The mission promoted Victoria as a stable, well governed jurisdiction to key international stakeholders, including existing and prospective international investors, the World Bank, International Monetary Fund, the Organisation for Economic Cooperation and Development and ratings agencies.

Benefits of travel to the State of Victoria

China

The visit to Shanghai and Jiangsu Province reinforced the importance of the longstanding and collaborative relationship Victoria shares with China. China is Victoria’s number one overseas buyer of Victorian goods with sales topping $6 billion last financial year. Leading exports include wool, wheat and dairy products. Chinese students also contribute significantly to the Victorian economy – last year more than 52,000 Chinese students studied in Victoria.

Shanghai

• Attended a reception of Australian businesses in honour of a visit by the Australian Prime Minister – the mission coincided with Prime Minister Anthony Albanese’s and Trade Minister Don Farrell’s visit to China.
• Attended the CIIE – the first Victorian Minister to do so – and led a delegation of 49 Victorian food and beverage brands who exhibited at the Victorian booth designed to facilitate export opportunities.
• Participated in several activities associated with CIIE, which provided opportunities to promote job-creating Victorian exports to the state’s biggest trading partner, including:
  • Speaking at the China Chamber of Commerce of Import and Export of Foodstuffs (CFNA) Dairy Forum to reinforce Victoria’s role as a supplier of premium dairy products to China.
  • Meeting with key Victorian exhibitors including Coles Export Australia, Bulla Dairy and Remedy Drinks, as well as visiting the 49 Victorian food and fibre companies and brands in the Victorian Pavilion.
  • Delivering the keynote address at the Friends of Victoria CIIE event to promote Victoria in China and enhance commercial ties through engagement with alumni and key stakeholders in the business, education, and government spheres.
  • Witnessing eight Memoranda of Understandings (MoU) signings by Victorian food and beverage and consumer goods companies valued at A$133.7 million at the Friends of Victoria CIIE event.
• Immediate trade outcomes from CIIE are valued at A$58.4 million by Victorian exhibitors.
• Welcomed a Victorian education delegation led by the Hon John Brumby AO (Chair of Victoria’s International Education Advisory Council and Chancellor, La Trobe University) to the Study Melbourne Hub in Shanghai. This provided an opportunity to showcase the Hub, which connects, retains and attracts Victoria’s offshore students. Austrade Shanghai also participated in the event and shared insightful market updates with the delegation.
• Delivered the opening remarks at the Victoria-China Education Forum. The Forum brought together Victorian education institutions and their partners in China to celebrate achievements in collaboration and to explore future opportunities. At this event, the Treasurer witnessed the signing of three institutional MoUs relating to articulation programs, education partnerships and a jointly run institute collaboration.
• Attended a Victorian Spirits Showcase at Vic House in Shanghai, and delivered the opening remarks to an audience of brand owners and trade buyers to further promote Victorian distillers to the Chinese market.
• Met with the CEO and Founder of Hema Fresh to promote Victorian food and fibre companies and toured a Hema Fresh Supermarket. Hema Fresh is one of China’s largest retail grocery chains with over 750 stores and it currently stocks around 30 Victorian brands in its stores.

Jiangsu Province

• Met with Vice Governor Fang Wei of Jiangsu Province to reinforce the Victorian Government’s commitment to its oldest standing sister-state relationship and discuss the upcoming 45^th anniversary of the relationship and areas of potential collaboration in trade and investment.
• Visited Wuxi Tianfeng (a subsidiary of Heilongjiang Pengcheng Biochemical), an enterprise that manufactures glucose syrup, to further explore investment opportunities in Victoria’s agribusiness and food sectors.

France

France is a significant and strategic partner within Victoria’s Europe trade and investment activity. Between FY2018-19 and FY2022-23, France ranked as the second largest foreign investor in the state, as measured by CAPEX at more than $5 billion, only behind the US.

Paris

• Opened the Paris VGTI office at an event attended by over 50 industry, government, and academia stakeholders, including senior representatives from France, Belgium, Spain, Luxemburg, and Germany and the French Government and the Ile de France region (which encompasses the Paris region). Since March 2023, the new office has actively supported more than 70 unique exporters through trade missions and one-on-one trade support. The Paris location will further enhance Victoria’s engagement with Europe and access to the region for Victorian businesses, particularly in the key sectors of technology, sport, life sciences, renewable energy, professional services and advanced manufacturing.
• Attended and delivered the opening remarks at a networking event to bring together key existing investors and potential partners in Paris, with both Australian and French commercial interests, including members from the Australian France Business Association (AFBA). This supported the potential for increased trade and investment between French companies and Victoria.
• Held meetings to promote and reinforce investment in Victoria including:
  • RATP Dev, the world’s third-largest urban transportation operator – building on RATP Dev’s recent decision to establish a Victorian office in Melbourne and lead the company’s participation in Victoria’s Big Build.
  • Alstom, the leading manufacturer and supplier of rolling stock for Victoria’s trams and trains – to discuss its future activities and plans in Victoria.
  • Airbus, one of the world’s largest aerospace and defence companies – to discuss Airbus' commitment to supporting the development and operation of Advanced Air Mobility (AAM) and Victoria’s capabilities and ambition for economic growth through efficient zero emission transport and supply chain networks.
  • Neoen, one of the world’s leading and fastest growing independent renewable energy companies headquartered in Paris – to discuss projects under development in Victoria. Neoen established a Victorian State Office in 2022.
  • The Organisation for Economic Co-operation and Development (OECD), which is headquartered in Paris – to discuss insights on global economic resilience best practices and to identify recommendations for Victoria.

United Kingdom

Victoria values its long-standing, multifaceted relationship with the UK, covering trade and investment, research collaboration as well as strong cultural ties. By value, the UK is Victoria’s 15^th largest two-way merchandise trading partner (worth $2.6 billion) and 18^th largest merchandise export market. In the past five years, the UK has ranked as Victoria’s second largest foreign investor as measured by jobs and number of projects.

London

• Attended an investor networking event to meet key existing and potential UK investors, including Appian Capital, Legal & General, Arup, SSE, Mott MacDonald, OCO Technology and Octopus Energy. This included delivering the opening remarks on the Victorian economy and the state’s investment strategy, followed by a discussion on the investment environment and emerging opportunities in Victoria.
• Held investment attraction meetings with:
  • BAE Systems, a British multinational arms, security and aerospace company which will be a key delivery partner for the AUKUS agreement.
  • Zenobe, a leading owner and operator of battery storage in the UK supporting the National Grid with the uptake of renewable power – to discuss the company’s strong interest in participating in Victoria's net zero program.
  • Oxford Quantum Circuits, a leading UK developer of quantum computing technology designed to assist in solving challenges like climate change and new drug discoveries.

United States

Victoria has a long history of engagement with the US and the expansion of Victoria’s trade and investment team in the US demonstrates the importance Victoria places on the market. The US is Victoria's second largest trading partner with total two-way merchandise trade in FY2022-23 valued at $17.3 billion ($4.7 billion exports, $12.7 billion imports). The US is the largest global market for foreign direct investment (FDI). In FY2022-23, this market was valued at $1.2 billion. The US is also the largest bond market in the world, with approximately 40 per cent of the estimated $128.9 trillion in global debt securities outstanding at the end of 2022 issued in US dollars.

New York

Held meetings with:

• BlackRock – to obtain its views on the global macroeconomic outlook and discuss geopolitics, demographics and inflation. Victorian Funds Management Corporation (VFMC) has had a long relationship with BlackRock since becoming its first ever fixed income client in Australia.
• The Federal Reserve Bank of New York (NY Fed) – to discuss the economic outlook, including the US inflation environment, interest rates and financial stability, as well as the US federal government budget and debt management strategy. Given the NY Fed’s influence on US and, indirectly, global interest rates, its views on economic and market conditions are pertinent for Treasury Corporation of Victoria’s (TCV) funding strategy.
• Representatives from eight large fixed-income asset managers and life insurance companies, including Brandywine Asset Management, Blackstone, ManuLife, Guardian Life Insurance, Barings and Lazard Asset Management – to provide a presentation on Victoria’s economic performance, fiscal outlook and sustainability strategy in support of TCV’s efforts to diversify its investor base.
• Credit rating agencies Moody’s, Standard and Poor’s, and Fitch – to discuss Victoria’s economic performance and outlook, fiscal strategy and infrastructure investment program and Victoria’s credit ratings. Ongoing constructive and transparent dialogue with the rating agencies supports Victoria’s credit ratings, which enable TCV’s access to debt markets to meet its funding task.
• The Canadian Pension Plan Investment Board (CPPIB), one of the 10 largest pension funds in the world and a major investor in infrastructure in Australia – to discuss sustainable and transition financing, parallels and contrasts between the Canadian pension and the Australian superannuation systems and Canadian provinces and Australian states, and approaches to global debt issuance.
• Sixth Street, a key investment partner which has had a long-standing relationship with VFMC since 2011 – to meet with Dr Jennifer Doudna, the Nobel Laureate who pioneered CRISP-R gene editing technology, and discuss potential applications of the technology including to cure genetic disease and create drought resistant crops.
• Global Citizen, a charity and international advocacy organisation established in Melbourne and now headquartered in New York – to discuss an upcoming partnership with the Victorian Government to deliver an international youth leadership summit and associated music event in Melbourne in 2024.

Washington DC

Held meetings with:

• The World Bank – to hear its views on the global economic outlook, transition financing and strategies to catalyse private financing to support the global transition to a net zero economy. As one of the largest issuers of green, social and sustainable bonds in the world, the World Bank also shared views on the value of and outlook for sustainable financing, as well as its approach to its global funding task and managing relationships with its investors. The World Bank also provided an overview of its liquid asset investment activities, including its potential interest in purchasing bonds issued by TCV.
• The International Monetary Fund (IMF) – to discuss the global economic outlook, international inflation dynamics and key risks to the global economy, as well as the IMF’s 2023 Article IV Mission Staff Concluding Statement on Australia.
• Lockheed Martin, a leading aerospace, defence, information security and technology corporation – to discuss Lockheed’s Gridflow Battery technology and other topics of potential benefit.

Seattle

Held meetings with:

• Boeing Commercial Airplanes (BCA), one of the world’s leading aerospace manufactures – to discuss its continued investment in Victoria through Boeing Aerostructures Australia (BAA) and partnerships between Boeing and Victorian industry.
• Slalom – to discuss reinvestment and partnership opportunities for an AI Hub in Victoria.
• Microsoft – to discuss how Victoria can position itself to support Microsoft’s $5 billion investment into Australia and take advantage of Copilot, Microsoft’s recently-released AI platform that enhances employee productivity.
• Amazon Web Services (AWS) – to explore opportunities to bring AWS quantum technologies, machine learning and high-performance computing capabilities to Victoria.
• Businesses at an AI-focussed networking event, hosted in partnership with the Washington Technology Industry Association – to build awareness of Victoria in this tech hub and to learn how tech is thriving in the ecosystem, and understand what’s being done to boost AI talent in the state.
• Silver Creek Capital Management (Silver Creek) – to obtain views on private credit and real assets markets and broader issues such as portfolio diversification. VFMC has had significant funds invested with Silver Creek in a funds arrangement since 2006 and it is a key partner for VFMC in North America.

Next Steps / Follow Up

China

• The Global Victoria Trade and VGTI China teams will continue to work with the 49 Victorian CIIE exhibitors to facilitate and maximise commercial trade outcomes.
• The Global Victoria International Education team will work with the three Victorian education providers on implementing the signed MoUs to facilitate commercial outcomes from the partnerships as well as advancing business leads generated from the Victoria- China Education Forum.
• Deepen the sister-state relationship with Jiangsu Province in its 45^th anniversary in 2024 through activities that will contribute towards mutual economic benefits and people-to- people ties.

France

• Continue to work closely with all investors including RATP Dev, Alstom, NEOEN and Airbus to support their existing presence and encourage new activity in Victoria.
• Continue to engage with Ile de France region and explore further opportunities to deepen the relationship at a sub national level.
• Continue to leverage and partner with relevant industry associations and chambers such as AFBA to grow and strengthen Victoria’s presence in the region.
• The VGTI to continue to encourage Victorian companies to explore export opportunities across Europe and deliver a strong program of trade missions to assist companies to enter the market.

United Kingdom

• Following discussion on emerging opportunities related to AUKUS, engage with UK defence companies on skills requirements and opportunities for investment in training solutions.
• Support the facilitation of investment by Zenobe and continue to work with BAE Systems on their expansion in Victoria.

United States

• The visit created the opportunity to deepen relationships with key existing international investors and to develop relationships with potential new investment partners. It also provided the opportunity to explore a range of sub-sovereign investment and issuance strategies.
• As a result of the visit, opportunities have been created for TCV to pursue more detailed follow-on discussions with CPPIB and the World Bank in relation to sustainable financing, global debt issuance and debt investor relations strategies.
• The Global Victoria International Education team to continue working closely with Global Citizen to progress planning for the 2024 Melbourne event.
• Continue ongoing discussions with Boeing on reinvestment opportunities in the state, particularly around the Advanced Manufacturing and Tech Hub that was previously proposed.
• Continue ongoing discussions with Slalom on reinvestment opportunities for the state, particularly around an AI hub.
• Explore partnership opportunities and undertake follow up discussions with Microsoft to help inform decision-making associated with the company's announced $5 billion investment in Australia.
• Following the focus on AI in Seattle, explore further opportunities in AI and quantum computing for both government and the broader economy.