Speaker 1:
From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership, and vision in global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism, right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome, inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Desperate times call for desperate measures. It's mid-August, as I'm speaking to you, usually the time of the year that I'd load the family up in an airplane and fly off somewhere over an ocean for a summer vacation. Not this year. My wife and I looked at the map, figured out where we could go on four wheels. Loading the kids, dog, and hamster into the SUV, we vectored east from the Catskills, destination Newport Rhode Island. Now the topography was much the same as I'd left it last as a strapping young lad in 1983, Banister's Wharf, the Clarke Cooke House, the Black Pearl restaurant as anchors were right where I left it. So was One Pelham East in its perch overlooking Thames Street in America's Cup Avenue. Oh, the America's Cup! 37 years since 1983 doesn't dull the pain.
Josh King:
I'm not much of a sailor but I am a huge sailing fan and my memories of watching Dennis Connor and the United States lose the sports ultimate prize after holding it for 132 years, four races to three, after being up 3-1 to a winged keel 12-meter skippered by John Bertrand out of Australia's Royal Perth Yacht Club is still one of the best David and Goliath's stories of modern sports. Bob Hawke was the prime minister of Australia back then. When that seventh race was televised down under, just before dawn on September 27th, 1983 celebrations broke out across the country. Hawke was asked if he would declare the day a national holiday, just to let out the hangovers subside. Actually the prime minister didn't have that power, but he said it should be and said that any state premieres who disagreed with him might, as I quote Mr. Hawke, "find themselves in a spot of bother," adding that, "any boss who sacks a worker for not turning up today is a bum."
Josh King:
A bum, indeed. Americans got a full dose of the Australian ethos and psyche that summer and fall and Australia's influence on this country only grew from there. In different decades since, our screens have been lit up by Russell Crowe, Nicole Kidman, Hugh Jackman, Margo Robbie, and Chris Hemsworth. And even this year, I've been glued to the portrayals by two Australian actors, Cate Blanchett and Rose Byrne playing American icons, Phyllis Schlafly, and Gloria Steinem in Mrs. America on Hulu. So what is it about this country of 25 million people spread across 3 million square miles, best accessible from New York by a flight of almost 22 hours, that so captivates us? We'll find out in a conversation with Alastair Walton, Australia's man in New York, about the intertwined US-Australian relationship, navigating in the complexity in election year, and whether the Consul-General could indeed declare a national holiday if Jason Day or Adam Scott can win their second major. That's all right after this.
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Josh King:
Our guests today Alastair JM Walton, is the Consul-General of Australia to New York. It's a position he's held since 2017 when he moved north from Houston, serving as Consul-General and Senior Trade Commissioner there. Before taking up a government post, Alastair was an investment banker, serving as chairman of BKK Partners, co-chair and managing director of Goldman Sachs Australia, and managing director and head of investment banking for Credit Suisse in the region. He got his MBA from Columbia and was Lieutenant in the Royal Australian Army Reserve. Welcome Alastair inside the ICE House.
Alastair Walton:
Thank you so much, Josh. And it's a real honor to be interviewed by you. This is actually my last week as Consul-General, so it's a great time to reflect on the America and Australia relationship and the role that we play here.
Josh King:
Well, as it is a swan song, Alastair, let's go back to the beginning of the tune where I sort of made a bookmark. Anyway, where were you when John Bertrand and Australia, too, took the America's Cup?
Alastair Walton:
I was back in Australia and I think I had a hangover as well.
Josh King:
Talk to me about the job in a non-COVID world and how that changes amid a pandemic. Certainly fewer passengers on those 22 hour flights between New York and Sydney.
Alastair Walton:
Yeah. So I guess a Consul-General has really two distinct roles, and one's relates to consular work in which we are open and the other to public diplomacy. So in a formal sense, I'm accredited by the US Department of State to represent Australia's interests and the welfare of our citizens in my jurisdictional area. We headquartered in New York, we actually have 10 states and two territories within our jurisdiction. These represent about a quarter of the United States GDP. They're very large. And as a result, we're one of the largest issuers of Australian passports. We provide consular assistance to people in distress. We even manage sensitive issues, such as Australians in prisons and also helping families of lost ones.
Alastair Walton:
The other thing is, in any week, we probably have 150 Australians or more calling up about their passports, travel advisories, quarantine, and these are regularly changing as you know, so we are constantly having to be the source of truth to the citizens. Now I've had COVID. I should mention my fiance, Berry's had COVID. Many of our staff have had COVID, but there's been no Australians have actually died from COVID here. But you mentioned about being open. The US State Department has said that we are effectively deemed an essential service. So our consulate has been open for Australians to come in to help with passports and other services. So that's something I'm really proud of. There was two days when we thought it was too risky in terms of the operating environment, but by and large, we've remained opened. We're open today.
Alastair Walton:
That's on the consular side, but the other role where you have a lot more discretion is public diplomacy. And in a way, I'm also the Australian ambassador to Wall Street informally in the financial market so I deal with a lot of investment banks and institutional fund managers here, as well as many pension funds visiting New York. So in a sense, the public diplomacy side has been very badly impacted by COVID, in terms of meeting people, but our consular services remain open. And I think frankly, that's become more and more important to citizens, knowing there's actually somewhere they can go to get a problem resolved.
Josh King:
Now, you mentioned the consulate has both a political and government vertical. Isn't that normally the role of the Australian Embassy in Washington DC? So what do you do in this area that's different from what the embassy does a couple hundred miles south?
Alastair Walton:
Yeah. This is an interesting question. And this initiative I brought into the post, so after two and a half years, and probably way too late, I sort of recognized that our embassy in DC does really heavy lifting with the White House, the Congress state departments, federal agencies, with a major gap in terms of contact with governors and state governments. And when I was in Texas, I had a very warm relationship with Governor Greg Abbott. And when I was here, I felt that this sort of political and government interface was missing. So I wrote a brief back to the department in Canberra saying, "Look, I think we should restructure to bring this in and get rid of another position." And was approved within 24 hours, which has to be a world record for any department around the world. So thank you to DFAT, but really I should have done it in my first six months.
Alastair Walton:
I filled the position with this great guy called Luke Phillips, just at the end of February. So, of course, this was just in time for COVID and what I would say, this is a great example of good luck rather than good management, because New York became the epicenter of the pandemic. And all of a sudden we are writing reports back every day about what was going on for political and government section back to Canberra. And we started really with the medical side, impact on first responders, hospitals, etc, but gradually we incorporated the effects of the US economy as a whole, as we started to see the impact of the lockdown, and then really what was happening politically on a state-by-state basis. So leading up to the November elections, we're getting into the sharp end of this, and the US is simply too big a country with too many diverse interests, just to be analyzed out of Washington. It's very helpful to be on the ground, to speak to people. We even reach out to donors to see what they're thinking.
Josh King:
Alastair a couple of Aussies is work on our team, others work at the New York Stock Exchange. They are our colleagues. Every one of us who's lived in New York, Washington, Boston, anywhere in the United States has friends that they have loved who bring the Aussie spirit up to the United States and yet, given you read the same press that I do, Alastair, this country has a big COVID-19 problem. Wonder what you see as the future and the future ramifications of the expat community here from COVID-19, and whether the United States still seems that great place to either spend part of your life to or emigrate to?
Alastair Walton:
I think that's a really good question. And I think it's work in progress and everyone's different. So let's start with the Australians that have lived in New York for most of their working lives and to which New York is home. And a good example of this is my Columbia Business School classmate James Gorman, who's the CEO and chairman of Morgan Stanley. So James obviously remained in the city no matter what happens, but on the other end of the spectrum, there's young entrepreneurs and small business owners, maybe cafes or restaurants, who've only been here in New York a few years, they're building up their profile, and their financial situation, but they've been really economically knocked around and devastated by this pandemic. And so you have them and then also you have families with children who are not sure about long-term schooling here, particularly private versus public, etc, and whether they should return home.
Alastair Walton:
So it's really been disruptive, not only to Americans, which it has been, but also about the Australians here. And also particularly those, I think in the performing and visual arts space, they have very significant uncertainties when they can return. I mean, Broadways now closed until the end of the year. And a young person in those industries has a shorter life expectancy in terms of what they can do than somebody may in a normal corporate life. So I think the jury's out as to long-term implications of the broader Australian community here, but I'm cautiously optimistic as the state and city continues to reopen. I welcome and news on museums, for example. I think they're going to continue to make a vibrant and dynamic contribution to the economy and this will always be a magnet for talented Australians.
Josh King:
Paint a picture for me in the pre-COVID world of the types of events that you would get involved in and would host at the consulate. You've now had to pivot completely, turning to webinars and social media to engage in your stakeholders. Who are these events designed to bring together now, and what have you lost compared to what it was say a year ago?
Alastair Walton:
There's a lot of discussions going on about the future of the workplace and platforms such as this, but I'm kind of old-fashioned about this. I think you can maintain a relationship virtually, but I think you can't build one. That's my personal view and certainly as a diplomat, it's very, very difficult. So I've actually found that my interaction with business, cultural, community leaders has certainly suffered since March. There's a lot less spontaneity, I think, in the virtual workplace. And it's a less creative environment to bring people together. Now, look, we've had to adapt just as you have. We're using Zoom, WebEx, Teams, but they're nothing like as effective as face to face meetings. And we've obviously ramped up our social media to try to compensate for that. And I've done a lot of webinars, but in terms of that really personal connection that you build over a private dinner to talk about all sorts of things, about the relationship, I just don't think can do that virtually.
Josh King:
In a recent conversation Alastair that you had with Bain Capital's Jonathan Lavine, you've made some news back in Australia about how the firm would handle its recent multi-billion dollar takeover of Virgin Australia. What is the scope of US investment in Australia now with Bain Capital as one example?
Alastair Walton:
So the US is our single largest foreign direct investor and the US is also our single largest destination for FDI. And then when you add the respective trade flows, this is by far our most important economic relationship globally. Interestingly, the US Studies Center in Australia has just released a report about these very flows less than a month ago. And it said that the cumulative value of American investment in Australia in Australian dollar terms is around about a trillion dollars. So it's about a quarter of all FDI and the US contributed 130 billion to the Australian economy last year, which is 7%.
Alastair Walton:
So after the US, our next highest foreign direct investor is the UK with 700 billion or around 70%. And then surprisingly Belgium with 350 million. Now Chinese investment in Australia is only 80 billion or 8% of US investment. So I think what's happening is that you're seeing increased Asian investment, particularly from Hong Kong and China, in percentage terms, but frankly it's dwarfed by the stock of investment from our traditional allies. And also Australia is introducing a more rigorous approval framework to ensure that future investments don't compromise our national security. I guess what that means to me is that, in practical terms, investment from the United States will be even more important to Australia than ever before.
Josh King:
Help us understand, because the flow of capital goes both ways, Alastair, where most of the Australian investment in the United States is focused? We know for instance, Rupert Murdoch has an estimated fortune of 17.5 billion, much of it made from his operations in New York and LA. But where else is Australia really putting its money in the United States?
Alastair Walton:
Well, Australia invests here in two distinct ways. First of all, as you mentioned, the Australian companies. There are many large Australian companies with significant investments here, and these established either organically or by acquisition. So Lendlease, Pratt Industries, BlueScope, CSL, Atlassian, and James Hardy, but there's dozens of other examples. And Anthony Pratt has invested billions of dollars in recycling plants right across the United States. And this is biggest market by far. Then you've got research collaborations between Australian and American universities, which are really extensive, and I've come to understanding this in my role. There's commercialization spin-offs in technology, cybersecurity, space, defense, agriculture, and medicine. But the other thing is that over the last 30 years, Australia's developed a very large and sophisticated retirement savings system. So this is the fourth largest pool of retirement savings in the world in absolute terms from an economy that's smaller than the state of Texas.
Alastair Walton:
And we also have a large sovereign wealth fund called the Future Fund, which is internationally recognized for its high corporate governance, standards, and investment performance. So for your listeners, in a normal working year, Australians contribute compulsorily nine and half percent of their incomes to their retirement savings. So when you take this nine and half percent, and then you add on investment performance, it's pretty clear that the retirement pool is growing at a far faster rate than the Australian economy. And also, asset allocators want to see good international diversification. So increasingly, these funds are being managed by institutional investors in New York and more broadly in the US. And a good example outside New York is, on a webinar I recently interviewed my good Texan friend Ross Pereira Jr. He is managing over a billion dollars for Australia's Future Fund out of Texas.
Alastair Walton:
Then you've got IFM, which is an Australian infrastructure fund, which has made huge investments here by the Indiana Toll Road, Global Terminals, which manages container terminals in New York and New Jersey and Vancouver in Canada. And then you've got Buckeye, a major petroleum platform as acquired last year. So the report that I referenced earlier, Josh, about the size of the investment of United States in Australia also looked at it the other way. And in Australian dollar terms, the investment by Australia is 850 billion. So 85% of the value of American investments from Australia from a country of 25 million people, that's quite remarkable. So the next highest investment destination for Australians is the UK was 500 billion. And then lastly, if you look at Australia's investments in China, only 85 billion, so really only 10% of what Australians invest in the United States.
Josh King:
So if you are not Pratt or Rupert Murdoch, or you have the wherewithal of Ross Pereira Jr to know where to put the money, and you have armies of lawyers, accountants, and PR firms on retainer, what role does the consulate fill in finding investment opportunities for maybe the next level or two levels down of Australian investors? And is that where your banking and advisory experience most intersects with your post?
Alastair Walton:
Yeah, as you said, look, most large Australian companies will work with a number of investment banks or consulting firms to look at acquisition opportunities here. So our role with them tends to be limited, although I do get briefings from time to time on that. Really, I talked to a lot of Australian entrepreneurs who are seeking venture capital here, and we had a really great program of meeting and identifying and having VCs for dinners, understanding what they want, having one-on-one meeting so that when our entrepreneurs come here, we can then say, "I just had a great meet with that VC fund. They're kind of looking in your space." So in that area below the large corporates, we've actually had a very, very major role and our entrepreneurs and founders programs being one of our significant initiatives.
Alastair Walton:
The other thing is that you mentioned my role in Houston and that falls to an organization called Austrade. And that's the agency responsible for helping Americans look at investments in Australia. Because part of my role is also to work with Austrade. I'm not formally part of Austrade in New York, but obviously I was in Houston. And only a few months ago, I was due to travel down to Australia with a major studio investor about opportunities back in Australia. But unfortunately COVID impacted that, but it's kind of a good example the way I work with my Austrade colleagues to do that. So we look at flows both ways.
Josh King:
You mentioned your Columbia Business School buddy, Mr. Gorman, a few minutes ago. James has his eyes and ears on the ground of not only finance, but politics. There's as much discussion about who the next Treasury Secretary may be up in New York as there certainly is down in Washington. So how else do you serve as the eyes and ears of the Australian government, not only on Main Street, but on Wall Street?
Alastair Walton:
We facilitate, as you said, about 15 to 20 official Australian visits here. That's obviously pre-COVID. We've had the prime minister, the treasurer, and a wide range of cabinet ministers, and they all want to meet leading investment and corporate leaders. So in order to achieve that for them, I've had to effectively build my own extensive business networks here across a whole lot of key business sectors. And I run with a guy called Jack Pete, who also went to Harvard, who runs our business investment outreach. For example, I've hosted Josh Frydenberg, the treasurer of Australia numerous times in New York, including a memorable bell ringing with the NYSE, which made the front page of the papers back home. And in fact, I've also rang the opening and closing bell of the NYSE for Australia Day, which kind of underscores that sort of great relationship.
Alastair Walton:
But we also have a formal body called the Investment Advisory Group, which comprises 25 senior finance executives that I invite to participate. I'm the chairman of the IAG. We meet twice a year and we have a formal presentation by these participants to Australia's Treasury Department representatives and also the Reserve Bank of Australia attendees. So for example, your vice chairman, John Tuttle is a member of the IAG as are representatives of Credit Suisse, Morgan Stanley, BlackRock, Blackstone, Barclays, Rabobank, and Goldman Sachs. We cover the field there, but we also look at different aspects of the financial markets such as their components, what's happening with digital currencies, what's happening with gold, what's happening with agriculture here, industrials, technology, and the like. So there's the formal mechanism and the informal mechanism, but we are very much across what's happening on Wall Street and Main Street.
Josh King:
So Alastair, whoever finds himself in the White House next January, there are a growing number of Australian entrepreneurs in the US who may not be quite ready to have that meeting with John Tuttle to talk about listing on the New York Stock Exchange, but are look to tap into the private markets. Is the E-3 visa a critical component in fostering a global exchange of businesses and ideas?
Alastair Walton:
Absolutely. The E-3 is absolutely a critical component of the economic relationship between Australia and the United States. Now, given how few there are, I'm sure most of your listeners are saying what is an E-3?
Josh King:
That was my next question. Alastair, what is an E-3?
Alastair Walton:
Well, it was negotiated during the Free Trade Agreement between Australia United States and it's a visa which is only issued to Australians. So Australia is the only country in the world that has its own visa category here. And it's really been absolutely fundamental to the development of our business and entrepreneurial class, both in New York but right across the States. I mean, there are literally thousands of Australians who have been able to get a start who in the US, because of the E-3 visa. And I talk to them and really importantly, they employ a lot of Americans.
Alastair Walton:
So the Australian entrepreneurs here are a big employer of American talent. It's been in existence now for nearly 20 years. And I think it's been through countless White House administrations, etc. People are always worried about the status of the E-3, will it continue, etc. But sort of my view is that given the weight and importance of Australia's relationship with the United States and the big bipartisan group, friends in Australia and the Congress for their support of the E-3, I really can't imagine there'll be any change to the E-3 irrespective of who's in the White House after November.
Josh King:
Now the connection between the US and Australia goes far deeper than just modern politics and economics, the development of the E-3. Alastair really traces it back to the battlefields of World War I. What is the history of the special relationship between the USA and Australia?
Alastair Walton:
This is actually a remarkable story. In World War I, we were blessed with an extraordinary war-time leader called General Sir John Monash. And he was clearly the most innovative general in terms of the application of military strategy on the Western front, which as you know, was bogged down in trench warfare for years. And he led the charge on the town of La Hamel. And this battle was the first time in American history that your soldiers, American soldiers, ever fought under a foreign commander. And in their honor, General Monash set the battle for the 4th of July 1918, which, of course, American Independence Day. The battle only lasted 93 minutes, but it was an incredible success in terms of the application of fire power. And after this, Monash went on to win a number of really decisive battles, which rapidly brought World War I to a conclusion. He had over 200,000 men in his command, including 50,000 Americans.
Alastair Walton:
So Monash received a knighthood from King George the fifth, but also received the Distinguished Service medal from the United States for his role in the war. Now, since that time, and it's something I'm really proud of, Australia is the only country in the world to have fought alongside America in every single major conflict that you've been involved with since. This includes the battle of the Pacific from '19 to 1942, Korea, Vietnam, the Gulf war, Afghanistan, and Iraq. So without doubt, for last hundred years, Australia has been the United States' longest, strongest, and most reliable ally. And we call this special relationship Mateship. And when we rang the bell at the New York Stock Exchange, we had the Mateship banners everywhere because that's the unique relationship between Aussies and Americans.
Josh King:
And Alastair, Mateship also has economic components. I think two years ago, the first US made F-35 Lightning IIs, right off the assembly line from Lockheed Martin, which is NYSE ticker symbol LMT, were delivered to the Royal Australian Air Force, which was part of an initial order of 72 planes, maybe with another 28 on a back order, a lot of economics and politics in the largest air force acquisition in Australia's history. This is also very much a business relationship in addition to Mateship.
Alastair Walton:
Well, the two are intertwined. First of all, I've, as a Consul-General in Houston, had the pleasure to actually see the F-35s being built at the Lockheed factory there. So that was one of those sort of money-can't-buy experiences, but Australia has what is called interoperability with the United States military. So all of our military software, etc, is affectively the same software that the United States uses. And there are some examples where, for example, of the Boeing Growler, which is a highly sophisticated plane, which is designed for jamming. There's only one country in the world that America's agreed to sell it to. And that's Australia. In 2016, we had a Defense White Paper which then established the largest increase in our Naval history, with submarines being built in France but using American software.
Alastair Walton:
And just most recently, the government's announced, because of changing geopolitical issues in the Asia-Pacific, another major increase in military expenditure. Now we spend billions of dollars every year buying US equipment, but more importantly, for example, there are 500 Australian servicemen and women embedded in US bases right across the US. That's the sort of thing you see when you come to this job that you have no idea about.
Josh King:
Right.
Alastair Walton:
So that relationship isn't just a matter of history. It's living and breathing today. In fact, the relationship is getting closer and closer and closer than ever before.
Josh King:
I mean, you mark that relationship so often, or at least help us understand it. April 25th, Australians and New Zealanders celebrate Anzac Day, a national day of remembrance for soldiers lost. And it has gatherings, church services, marches really around the world. How does the consulate normally celebrate the day and how did you have to compensate this year?
Alastair Walton:
Well, again, for your listeners, Anzac Day is kind of like a combination Memorial Day and Veterans Day for Americans. If you put those things to one day, that's what you'd have. And back home, from the smallest country town to the largest cities, there's the dawn service for Anzac day. It commences at 4:30 AM and expatriate Australia, as you have said, we hold similar services all around the world at a similar time. But when I was appointed here, I also wanted to have a church service that recognized the special military relationship and bond between Australia, New Zealand, and the United States forged over the last hundred years.
Alastair Walton:
We talked about that. Now, frankly, inviting Americans to a 4:30 AM service is a tad early. So what we did was we went to Trinity Church, Wall Street and said, "We'd like to have an Anzac Day service," and bring in the American community there. And so they agreed to that, but we've had also the support of Annapolis and West Point. So we have cadets and midshipmen from both the United States Military Academy and the Naval Academy perform the honor guard. The other thing that I did was, following the service, we have a lunch and each year we raise over a million dollars for the American Australian Veteran Scholarship Fund, which funds American veterans to study in Australia and Australian veterans to study in the United States.
Josh King:
I know you had a storied career on Wall Street, Goldman Sachs, the firm you founded as well, and I'm sure that as remuneration goes, being Consul-General is not what being a partner at GS is, but seems like this is one of the best jobs in the world.
Alastair Walton:
Yes, I think it is. But I think importantly also, particularly for New York and also for Texas, which are very business-orientated, you'd need to have a good business background. A foreign policy person would work very well in DC, for example. But I think coming here with a level of business background I had, the contacts I had, my relationship with Columbia University was very, very important. It's also allowed me to make incredible new friends. I remember I was at the Navy Yards at Brooklyn and they were taking me round and I said, "What is that?" And it was Steiner Studios, right? Which you probably know has just announced a major expansion in New York, 350 million dollar investment. So I said to my staff, "I want to meet whoever owns Steiner Studios."
Alastair Walton:
I had no idea. So they organize a meeting with Doug Steiner and Doug Steiner said afterwards he was expecting a very formal, frumpy, foreign policy person. And he said he got a businessman that talked about his business, etc. So Doug took me around the studios for like three hours and we become really good friends. I and my fiance, Berry would see Doug once a week at least in Brooklyn. So that's just a good example where the perception of what you are and the reality, the business background, sort of helps enormously. I think for me, this is the pinnacle job and it's something that I've always wanted actually, to be the Consul-General in New York since '88, which I can talk to you later on about my career.
Alastair Walton:
And I sort of felt that the chance of becoming Consul-General, just by way of background, since 1987, when I was finished at the Columbia Business School to now, there's only been eight Consul-Generals. So the chance of becoming a Consul-General here is virtually infinitesimal. So I wanted to make every single hour count and every single day count, which we were doing pre-COVID. So I love the job and I love representing Australia and I love America. So it's kind of a natural fit.
Josh King:
Kind of a natural fit indeed. After the break, Alastair JM Walton, Consul-General of Australia to New York and I will discuss the career that led here and what will come next for him. That's all right after this.
Speaker 6:
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Josh King:
Welcome back. Before the break, Alastair JM Walton, the Consul-General of Australia to New York, and I were discussing the impact that COVID-19 has had on the consulate and the impact that the Consul-General has had on Australia's relationship with the United States. Alastair, your father, Tom Walton was a Senior Trade Commissioner who's posted all over the globe. How did he and his career influence your decision to enter government service?
Alastair Walton:
I think he enormously influenced my career as a whole, not just that of government service. My father was an Englishman from a poor family. Nevertheless, he got an honors degree from the London School of Economics. At the same time, he got Sporting Blues in cricket, tennis, and soccer. On top of that, he spoke several languages. And then my mother was an accomplished pianist. So whenever I look at what I've achieved in my life, it sort of pales into insignificance compared with my father. So in the sixties, dad was a foreign executive with Ford Motor Company. And he was posted to Australia for several years and was due to be sent by Ford to Ford Japan, and then head office in Dearborn, but he decided to remain in Australia and to become an Australian and applied to become an Australian Trade Commissioner.
Alastair Walton:
And in this diplomatic role, worked all over the world, including Bangkok, Los Angeles, Jakarta, Seoul, and finally Milan as Consul-General and Senior Trade Commissioner. So I guess my childhood was spent living all over the world. And as a consequence, my own career took a similar turn. I knew that one day I wanted to replicate my father's service to his country. And again, the specifics of that really changed when I was invited into the official residence of the Australian Consul-General in New York in 1988. And I said, "I want to be an Australian Consul-General." That's one of those remarkable things that I owe so much to my father, both his inspiration for the MBA, his inspiration to give service to government and the fact that I can live all over the world, I can pick up my suitcase like I'm doing now, move somewhere completely new and sort of pick up the pieces of network and meet people. That's really due to him.
Josh King:
What are some of those memories of places like Jakarta at that time? I mean, you must have been a wide-eyed kid to see all these different cultures, even before he took aside and said, "Alastair, young man, you'll become an MBA." But first you were just sort of a globe-trotting, gallivanting, young man able to see capitals and cultures that none of us really get to see, except if you're watching Mel Gibson in Year of Living Dangerously.
Alastair Walton:
Well, it actually was a bit like that living in Indonesia. So my dad's first posting was Thailand, where he was a Senior Trade Commissioner in '67 and it was during the Vietnam War. And I was, at best, an indifferent student. My mother would probably say a lot worse than indifferent student. And also there were drug problems at the American School in Bangkok during that time, not now but at that time. So all of a sudden having had this great life in Thailand, I suddenly found myself packed on a plane to go to a Melbourne boarding school. And I was a boarder for six years there. But what I would do is I'd visit my parents all over the world three to four times a year and spend a lot of time with them on university holidays.
Alastair Walton:
So I'm applying to Columbia Business School and the application form says, "Please list all your summer jobs and what you've learned from that experience." And so I sort of wrote truthfully that summer jobs for foreigners were illegal in Indonesia. Clearly for the Admissions Committee, that was fine for them. It's great living all the world, seeing different cultures and also makes you much more open-minded about things. But it also makes you recognize the strengths of your own countries, America, United States, Europe, great democracies. It's really brought that home to me.
Josh King:
You got your MBA from Columbia and joined First Boston, which is now part of Credit Suisse, just a few months before the 1987 crash. In the US, October 19th was known as Black Friday. In Australia and New Zealand, it goes by Black Tuesday, because it was already October 20th. The markets were down there by over 40% in a single day. What were your first few months in business like against that kind of backdrop?
Alastair Walton:
I still remember to this day. I mean, first of all, by way of a backdrop, not only had most Australians, not have an MBA, the Australian banks had neither. So I couldn't get what would be regarded as a student loan here. So I managed to borrow 30 years ago, $30,000 from a high purchase lender at the interest rate of 30%. And so imagine the sort of equivalent today and it's going to double every three years. So I was certainly intent on paying it back. And I got an offer in '87 from First Boston, which then was the most prestigious firm on Wall Street. And I was in the industrials group, work on a convertible bond offering from Alcan Aluminum in Montreal when the market crashed. And I can still remember the surreal nature of that day, where first of all, it didn't take long to figure out there's going to be no convertible bond offering.
Alastair Walton:
But then we just watched the second half of the day where the markets just completely melted. So it's made me actually a fairly conservative investor overall. I probably have too much cash because I with live those days and also a lot of good people lost their jobs. It was a very stressful time to be a young banker on Wall Street. But on the other hand, the leading firms are very small by today's standard. So I was kind of a Jack-of-all-trade corporate financier, did IPOs, mergers, bond offerings, convertibles, and even defeasances. So you got a very, very broad education. And then what happened was, in '89, I was called down to the FIG department to meet the partner Richard Thornburgh. And I had no idea what the meeting was about. And Dick said, "We want to go to New Zealand to pitch for the privatization of the Bank of New Zealand."
Alastair Walton:
And I said, "But I work in the industrials group and I know nothing about financial services. Why me?" He goes, "You're an Australian, it'll help with the pitch." That was how small Wall Street was then, right? So I thought it was completely crazy. So we go to New Zealand and then we win the business. And so for two years I commuted between New York and New Zealand and then become a FIG bank for the rest of my career. I was pretty petrified of Dick Thornburgh, talking about the early days. Dick was very demanding and I was terrified of him, but he became a great friend. I moved to Australia to run the FIG business in Australia. Having done the work in New Zealand, I actually did some work in Texas as well. And then I moved London to run FIG for EMEA.
Alastair Walton:
And then ultimately, I became head of Asian Investment Bank for the Credit Suisse group, but right behind every single move, promotion I made, Dick was the puppet master. So it was a relationship that in those very, very early tough days paved my way as I got more and more senior. So yeah, I worked in Tokyo, New York, Melbourne, Sydney, London, and Hong Kong for 14 years before going to work for Goldman in Australia. But it was a very, very interesting time to be a young banker then.
Josh King:
After 14 years with Dick and Credit Suisse and all these different postings, you moved back home in effect to Australia with Goldman Sachs. The early 2000s was a prosperous time for the country with significant foreign investment and interest. How did the Australian economy change as the global markets became increasingly connected?
Alastair Walton:
Well, Australia's been blessed with some remarkably good political reformers, of which Bob Hawke, Paul Keating, John Howard, and Peter Costello are the gold standard, not only domestically but, in my view, globally. And they both come from different sides of politics, but they both passionately believed in the reform process. So this quartet was responsible for flooding the Australian dollar, ensuring the independence of the Reserve Bank of Australia, establishing Australia's internationally recognized pension system, opening up the economy to foreign competition by largely eliminating tariffs, starting the Future Fund, paying down all government debt, which then laid the groundwork for almost three decades of uninterrupted growth. And that growth would've continued, but for COVID. So the work that they did has laid the foundations, not just in the 2000s, but up to 2020.
Alastair Walton:
So it was really a golden era of public policy reform. And Peter has now retired from politics, but he is now the chairman of the Australia's Future Fund, which he actually established. Now, when Peter left politics, he worked with me in my investment bank, BKK Partners with a number of other Goldman executives and believe you me, he was one of the smartest people that I we've ever worked with. So we were very fortunate to have courageous and thoughtful leaders who could sell an economic reform package, right? Selling economic reform is pretty hard, but the pace at which they did this was quite incredible. And I think the Australian people sort of got to expect the fact that good governance meant good reform. So we owe an enormous amount to those four heroes in my view.
Josh King:
Before you were involved in founding BKK Partners, Alastair, with two fellow Goldman Sachs alums, you were chairman of Central Rand Gold. Does your experience running a public company continue to pay dividends today as you advise and work closely with business leaders and entrepreneurs?
Alastair Walton:
Yeah. So look, after working for 20 years with Credit Suisse and Goldman Sachs, I actually retired in 2006 and moved to Italy with my family. I wanted to become a Renaissance man, an Italian-
Josh King:
Don't we all.
Alastair Walton:
Yeah, well, I did it. I moved there, I took the family there and I wanted to study art in the native language. I thought this would be a beautiful way of living, Dolce Vita.
Josh King:
Exactly.
Alastair Walton:
So I did four months of language training at the University of Sienna. And at the end of it, I had the worst performance review of my entire life. This lovely lady tapped me on the shoulder and said, "Better your family learn Italian, and you go back to business." So my whole dream had sort of come to this abrupt end after four months. In fact, my kids all speak Italian. And my eldest son, Angus works for the giant Australian property company, Lendlease in Milan and only speaks Italian for his job. So that part of it worked well. My part didn't work so well.
Alastair Walton:
So I decided that I had to do something a bit different and looked at this opportunity that come up from Australia. It was actually some large Australian investors in the company, pre-IPO. And so I spent two years commuting between Rome and London, work on the IPO document and we listed on the main board of the London Stock Exchange. And so despite being an investment banker and having done many, many IPOs myself, what I actually found was, that up the listing, when it's your company, it's remarkably stressful. Investment bankers, we have got five IPOs coming up and if this one doesn't work, there's the next one. But when you are the chairman of the company and it's your IPO, there's no plan B. And so that was remarkably interesting and stressful.
Alastair Walton:
The other thing is working in South Africa had really serious challenges from a corporate governance perspective. So we brought together a very strong board, most who are far more experienced in gold mining than I was, but I was kind of the financial markets expert. So it was a good complementarity there, but really to this day, it's made me very empathetic with the role that chairman and boards play around the development of strategy and corporate governance. I think it made me a better banker at BKK, sort of saying, "I've been there through that myself." It's very different being on the other end of it.
Josh King:
In 2015, you ultimately made the shift into diplomatic service, Alastair, when you were named the inaugural Consul-General of Australia in Houston. Why did the government decide a Consul-General was needed down in Texas? And what interested you about that opportunity?
Alastair Walton:
Well, we discussed earlier, Josh, about the importance of foreign capital in Australia, and we have a large energy sector. So in fact, Australia is the second largest exporter of LNG in the world after Qatar. And so Houston is the world's energy capital, companies such as Chevron, Conico, Phillips, and ExxonMobil. Now, while Chevron may be theoretically based in California and ExxonMobil based in Dallas, in effect, mostly operations are in Houston. And these companies had made tens of billions of dollars of investment in Australia. They were the largest foreign direct companies investing in Australia in our history. Also BHP at the time, its global petroleum business was also headquartered in Houston. So in 2015, prime minister, Tony Abbott, who I actually knew well, announced he was going to open up the consulate there. And so within several months, I was in discussion with the government about taking up the role.
Alastair Walton:
The other thing that really impressed me was just how big and diverse and how fast growing the Texan economy was. And the state itself has got a larger economy than Australia. So this was a great opportunity. When I look back at my life, I've had quite a number of lucky breaks, but I think going to Texas was a really turning point in my life. And to say that I love Texas and Texan is an understatement because it's such a refreshing can-do, pro-business culture. And I think the only met Texas is a real focus on personal business relationships. In some respects, in New York, you start doing business first and then could become your friends. That's kind of how it works here. In Texas, it's the other way around.
Alastair Walton:
People get to know you, if they like you, they'll do business with you, if they don't, they won't. So that was really interesting. And the day before I flew to Houston, I said goodbye to my parents. And my dad gave me his Australian Trade Commissioner tie which he wore through his career and that was a really sort of special moment. And he was very happy that I became a Trade Commissioner and a Consul-General like him. So I really thought that I was going to go to Texas four years and then go back to Australia to the private sector. But obviously that wasn't to be with my move to New York.
Josh King:
So after a couple years down there, you moved up to New York, as Nick mentioned, completed his stint as Consul-General of Australia here in New York. How did the job change for you as the landscape moved from oil wells to skyscrapers?
Alastair Walton:
Look, I think the move to New York was a really big challenge for both Berry and myself. This is a very large global city and everyone's really busy. I think it's much harder to meet corporate leaders here in New York than in Texas. Corporate leaders here are always traveling overseas and frankly had more gatekeepers. On the other hand, I think everyone in New York is a hustler. And so there was a natural fit with my sort of personality type. And there's no doubt that having a Columbia MBA and a Wall Street background with Goldman Sachs and Credit Suisse at least got me into those initial meetings, which were critical. And the other thing was, until I came to New York, I actually hadn't realized how important the Australian pension funds had become to the investment banking and investment community. And so I think if you think in sort of classic foreign policy terms, this is called soft power.
Alastair Walton:
And I don't think in Australia, the community just understands how highly regarded our pension companies are and the system is in New York. And the CEO of one of Australia's largest superannuation funds, a guy called David Elia of HOSTPLUS, has become a really good mate of mine. And he said, "You're the first person to really understand the soft power implications of this huge pull of capital we talked about later and also to use it to prosecute in our national interest." So if I ever found it difficult to get a meeting with a fund manager or CEO, a friendly call from an Australian pension fund CEO would normally do the trick. So you have to use all these sort of levers. The other thing was that we are the interlocutor for the whole Australian business community. And with this outreach, I talked about earlier with entrepreneurs, we've literally made hundreds of connections which have resulted in business opportunities.
Alastair Walton:
So there's also a huge cultural community. And outside that, there's Aussie actors, filmmakers, ballet dancers, writers, concert pianists. Even the provost of the New School is an Australian, Tim Marshall. The job here was actually a lot more complex, a lot bigger, a lot more demanding than I had in Texas. And we have a business program where I do a fire-side chat in front of 120 young Australian entrepreneurs and young leaders. I've been able to interview James Gorman at Morgan Stanley or Ajay Banga at MasterCard or Josephine Linden from Linden Global Strategies, a bit like the chat we're having now, about their growing up and their influence, etc.
Josh King:
What advice do you give to your successor, Nick Greiner as he takes on the ongoing COVID crisis and its pending economic fall-out?
Alastair Walton:
Well, look, fortunately I know Nick Greiner very well. I've known Nick and his partner, Carolyn for nearly 20 years. So what I would say is that Nick's got really four major attributes. First of all, he did his MBA at Harvard. So he's got his own strong alumni network. Secondly, he was a governor of New South Wales, Australia's largest state. So I think Nick's got a much better grasp of politics than I do. I think he's going to be able to contribute a lot in that sphere. He's been the chairman himself of a large number of public companies and really understands the business world. And then lastly, Carolyn, who I mentioned earlier, she's a devotee of the visual and performing arts. So I think they are a great package for our country and I think they're the kind of the perfect team to take on what we've done here. And given Nick and Carolyn's accomplishments, they certainly don't need any gratuitous advice from me as to how to run the post. I think they're going to be a very successful couple here.
Josh King:
Well, as we have been on this long journey together, Alastair and as you prepare to pass the reins, I think we're only left with one question for a young man like you who has accomplished so much and yet still has a lot of miles ahead. What's next for you, sir?
Alastair Walton:
Well, by now that you've figured out I'm a rolling stone. I don't like to be anywhere for more than a few years. And Berry's exactly the same. Berry was in a boarding school as well, but her father owned a cattle properties all over Australia that kept moving and he was a farmer-developer. And so we sort of figured out we've never been anywhere for more than three or four years in our entire lives without moving. So I think it's fair to say that we are very, very open to moving around what we do next. But I think it's fair to say that I'll be spending a lot of time in the US, working on my next business steps. And I want to contribute, in every way I can, to a strong relationship between Australia and United States. Don't be surprised if you see Alastair Walton back in the States in a hat and cowboy boots, in the not to distant future. So that's probably a bit of a hint as well.
Josh King:
Thank you so much. Best wishes to you and Berry. Can't wait to see you down the trail.
Alastair Walton:
Thank you so much, Josh. And again, thank you to North Stock Exchange. You've been wonderful, wonderful hosts for not only me, but many Australian government visitors and corporates. And I want to wish you all the best as well.
Josh King:
All the best. Well, that is our conversation for this week. Our guest was Alastair JM Walton, Consul-General of Australia to New York. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a question or a comment that you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @ICEHousePodcast. Our show is produced by Pete Asch, with production assistance from Steven Capriles and Ian Wolfe and Ken Abel. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitution offered to sell, a solicitation of an offered to buy any security, or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of mental clarity.
