15 March 2009
Interview: Doorstop, Canberra
Subjects: China FTA, Foreign Investment
SIMON CREAN: I've essentially thanked them for the input that they've been making to us, particularly in relation to the FTA that we're still seeking to negotiate with China. I've talked to them about the engagement we've had with China at the multilateral level, the significance of the ASEAN free trade agreement in terms of the emerging regional architecture and obviously the way in which we are still actively pursuing the FTA with China. The FTA with China has got bogged down, as you know, but we're keen to develop a new framework, a new economic partnership with China and we've made it clear on a number of occasions that that FTA also needs to sensibly create a new framework for investment flows between the two countries, not just product flows and not just service flows. We want all of those flows, because that's what the modern economic relationship is. And the final point I made to them was that we do need to understand that there is a huge interdependence between ours and the Chinese economy and that what we want is a modern up-to-date expression of that relationship and a framework to advance it going forward.
QUESTION: With the investment comments, were you particular on any type of investment, resource investment?
SIMON CREAN: No. No, I mean, the question of - what we've got to do is to create the framework that's encouraging of investment that builds the interdependence but I have made the point that the reason we need a framework is because investment is a two-way street. It's not just a question of us considering on a case-by-case basis proposals that come to us from time to time. It's also trying to understand the importance in a modern trading relationship of investment flows. And if that's the case, we need a framework and a statement that better understands and better tries to position ourselves for it. Now, that can only happen if we're prepared to talk about such a framework and the best way to do that is within the framework of the FTA.
QUESTION: Is the Chinalco decision dependent on the reciprocal access by the Chinese?
SIMON CREAN: Not at all. The Chinalco decision is a matter for advice from the FIRB to the Treasurer and decision by him, it is not conditional on this at all.
QUESTION: What do you say to the concerns about the Australian Foundation Investment Company about the investment and the concerns of having the Chinese Government involved in a company like this?
SIMON CREAN: Well, I mean, I've seen those concerns and, of course, they're - but that's what the national interest test is about and they're concerns that obviously the Treasurer will take into account when he makes the decision. That's in a different - different realm. It's a different track. What I'm talking about is people do need to understand the importance of investment to economic development, the importance of investment with interdependence and strong interdependence within economies and the approach that we're pursuing with China is no different than we're pursuing with every other country that we're trying to strengthen and build our economic relationship with.
QUESTION: Are there any concerns that you have, or any concerns put to you that with the Chinalco-Rio and some of the other mining deals that that could upset the negotiations for the free trade agreement?
SIMON CREAN: Not at all. It hasn't come into it and I think it is really important to understand, we've made no connection between the two. Neither have the Chinese.
QUESTION: Given that a lot of governments are now becoming involved in companies in terms of bailouts and assistance, the sovereign wealth issue has changed the way foreign…
SIMON CREAN: Sure.
QUESTION: …investment happens. Is it time that Australia looked at, through the Parliament, its framework of foreign investment, given those changes?
SIMON CREAN: Well, the Australian government has a pretty open and has always had a very open policy in terms of foreign investment. That hasn't changed. We've been built on foreign investment because until Labor came to power and built a domestic savings pool, we didn't have any savings. So we've always been dependent upon foreign investment and we will continue to be dependent on foreign investment. I think what has changed though, over recent years, is Australian companies growing are dependent not just on producing goods and shipping them but also of investing into other countries. Australian direct investment out of the country now equals direct investment into the country. That hasn't happened before. Now, what that says to me is that we've got to understand the changing nature of this dynamic in terms of trade flows, why people do that. They can't just produce here and think that they can sell large amounts into overseas markets. They have to, at times, go and invest in those markets or to position themselves for a global supply chain they need to invest somewhere else. But it's still job opportunity - overseas job opportunity, yes - it's repatriation of profit, it's important to the economic development of this country. That's why we need frameworks and some relationships that reflect that.
QUESTION: How do you respond to concerns that the FIRB process isn't transparent enough?
SIMON CREAN: The FIRB process, well, I reject that. I think it is transparent and it's a process that has served the country well in the past. I don't' have a problem with the FIRB process. What I'm saying is that in terms of modernising the relationship with China, and even if you don't want to approach it from that perspective the interdependence between our two economies. What has to come from that is a greater realisation that investment will play an important part. But it's investment on a two-way basis.
QUESTION: Could you briefly outline what Australia's national interest is in terms of resources industry.
SIMON CREAN: We think Australia's national interest in terms of the resources industry is to a) ensure that we are self sufficient in terms of our own energy needs and secondly that we are developing the resources that not only address that, but maximise our comparative advantage. We can produce, extract, ship, process more productively, more competitively than most other countries. And so our national interest is ensuring we take that resource base and not just sell the commodities to the rest of the world, but to trade our services and our technology, our know-how, our smarts, to the rest of the world and be part of the resource development globally. That's, if you like, treating the resources industry not just as a commodity, but as a value added industry, that's our national interest.
QUESTION: Does that change according to the economic circumstances, how big a part will jobs play in terms of the decision that's made.
SIMON CREAN: Well, it's an important part of our economic development but if you look at it, I mean I visited the Philippines in the last year, I visited the Middle East, quite apart from China. There is huge undeveloped resource. What I'm keen to do is to make sure that our resource companies can have a better crack at that development. Now in many cases they won't do it unless that can invest in those countries. We need a framework for investment, not just to accommodate better in a framework sense the interest China has here, but our interest in China, our interest in the rest of the world, our interest in ensuring those globally competitive companies can get better access, not just for commodities, but for their comparative advantage.
QUESTION: But if that benchwork, that national interest benchwork changing all the time to meet the current economic circumstances. Obviously the unemployment rate is sort of heading towards 7%, jobs are an important issue.
SIMON CREAN: Our national interest is to go for growth, because through growth you create the job opportunities. Why do you think we've got a stimulus package? It's about stimulating economic growth. Why do you think we're still pushing for Doha? It's because trade is a multiplier of that domestic stimulus package. Why do you think we're trying to get markets open? Because Australia, with 22 million people, simply isn't big enough to produce here and create enough jobs selling to itself. We have to sell to the rest of the world, that's why what we've got to engage in is trade and trade isn't just about exports.
QUESTION: What do you think about about Barnaby Joyce's campaign saying you are selling lumps of Australia to the Chinese?
SIMON CREAN: I have not heard of Barnaby Joyce's latest campaign and I am not particularly interested at the moment. Okay, thank you.
[ENDS]
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