BERNIE LO: Steven Ciobo, the Minister of Trade and Investment joins us now first here on CNBC. Minister, welcome to Hong Kong.
STEVEN CIOBO: Thanks Bernie, pleasure to be here.
BERNIE LO: Great week to be here, huh? Got the Investors Conference going on, a little bit of football here and there and then on route to China to sign and seal some deals.
STEVEN CIOBO: We Aussies, we always manage to blend some sport with business, but I mean, it is a great week. We've got the Credit Suisse's Conference that's on the Investors Conference, so in my capacity, I'm Minister for Trade and Investment, part of my sales pitch, so to speak, on behalf of Australia is to talk about the opportunities for investment into Australia. Then next week the focus is upon what we can do to capitalise on the free trade agreement that Australia has with China. You know great in terms of comparative advantage over other competitor nations, great access into China, 1000 delegates that are coming out because frankly, there's a huge appetite to do business with Australia.
BERNIE LO: To be honest with you, I've never heard of a trade delegation with 1000 people and I don't think Obama has ever led a trade delegation with 1000 people. That is a lot of people. That's a lot of Australian business interests. That has got to span every possible nook and cranny in Australia from the universities to biotech to biomed to whatever. I mean, it's got to be just about everything and probably some mining in there. I mean it's not like mining's gone away, right?
STEVEN CIOBO: There is. Yeah, I mean look, the resources energy story of Australia everyone’s familiar with. Everyone knows that's a core natural strength for Australia, but with the drop off in commodity prices, we've seen a Capex (capital expenditure) been reduced over the last couple of years. That's understandable, I mean, the volumes are actually increasing, but of course the price is down. What the Government's focused on now and what I and other ministers are really concentrating on is how we continue the transition of the economy. 75 per cent or thereabouts of our economy is services based. We want to make sure that we continue to expand on services exports. We want to continue to expand in a range of different areas and that's part of the reason why we've got 1000 delegates that are going across to China. We know that there's a whole range of areas where Australia has a real competitive advantage. I mean, agri-tech and agri-business more generally at the moment is really running hot. We produce three times the amount of food that we can consume in Australia. We can be a very good exporter in terms of agricultural products, in terms of beef, all these types of things, dairy products, so there's a lot of interest and appetite for that because we have a very clean and green reputation as well. People know that Australian food and food product is good quality.
BERNIE LO: Yeah, and with all due respect, China is very, very behind in terms of their agri-tech needs. I mean, their efficiencies, I mean the yield per hectare is far behind that of Australia or America so there's certainly technology you can teach them. There's certainly fertilisation, irrigation techniques, all kinds of things, all kinds of knowhow that you can teach them. You know, many people are of the mind right now that, you know how a lot of people are kind of moaning and groaning about how China's slowed down from the frothy heady day, days of yesteryear, 11, 12 per cent growth. Others take the positive stance and say this is good because at 11, 12 per cent growth, you're so concerned about growing the economy you're polluting your rivers, you're polluting the environment, now that things are slowing down, you've got a little breathing room to actually deal with the environment damage that you caused along the way. That's not necessarily a bad thing. Certainly you can take the slowdown in China and make that work for Australian companies and their knowhow. You've got to take a situation like this and actually make it work in your favour.
STEVEN CIOBO: Absolutely, I mean, I think I probably best sum that up as being that key word of sustainability. I mean, yes there's environmental sustainability which of course, everyone has an interest in and is invested in but there's also sustainability in terms of economic growth. The great success story of Australia, I believe, has been that we've had 25 years of continuous economic growth. A lot of people thought at the end of the last resources super cycle that Australia would go into recession, but we didn't. Canada has, other countries have, but Australia hasn't, and the reason being because we are actively promoting policy from a federal government perspective which is about diversifying the economy and making sure we play to our strengths in the non-mining sectors now. That's what we're doing. If you look at tourism exports for example, yield out of, I should say spending out of China was up 18 per cent year on year. If you look at the number of visitor nights, tourism out of China was up 11 per cent year on year. We do have areas that we can, as the economy transitions, put increased emphasis upon. Frankly, China growing at 6 per cent is still a great story. It's a sustainable story, whether it's 6 or 7 per cent, it's a sustainable story and one that Australians can definitely take advantage of.
BERNIE LO: Yeah, but plenty of countries around the world are going to be get up to where China's going to be falling to in terms of –
STEVEN CIOBO: Yeah, but we've got the free trade agreement. We've put in place the building blocks, which I know that we'll be able to capitalise on.
BERNIE LO: Now, the one thing that becomes very apparent in this process, you are taking you and 1000 other of your countrymen, country men and women, are going to be going to China, trying to drum up business, but an FTA works both ways, it's a two way street. It's not a one way street. There is a narrative out there or there is maybe a conception from time to time that Australia is not entirely an open country. It's not entirely open to the idea of foreign investment in the nation. You know, there have been high profile cases that were spotted all over the media of the Foreign Investment Review Board saying no to certain deals, this is an issue of national security. No, you can't invest in this, no, you can't invest in this. There is a concern right now about water rights in Australia going to foreigners, because water, it's the driest continent in the world, Australia. There are concerns about foreign interests actually controlling in perpetuity water rights. Very, very important to irrigation, agriculture and of course, the people. How open is Australia after signing these FTAs, have you changed your mindset?
STEVEN CIOBO: Well Australia's very open. I mean, the phrase we use is ‘we're open for business’ and that continues to be not only my focus, but the Government's focus in terms of dealing with foreign investors. I think we've got to maintain perspective on this. Since 2001, there have only been three occasions when the Foreign Investment Review Board or a member of the executive has said no to a foreign investor, only three.
BERNIE LO: Only three?
STEVEN CIOBO: Only three since 2001. On average we get around about 1000 applications a year. Now obviously not every single one of those applications translates into an investment. That notwithstanding, around 1000 applications a year. When you consider there's been three no's verses probably something like 15 - 16,000 yes's, I think it puts a better perspective around it. Now I'm not going to deny that there aren't some concerns that people raise, but that happens in any democracy. People have different points of view, but the actual framework for investment, it's governed by what we call the ‘national interest test’, which simply says that it's got to be in Australia's national interest for this investment to happen. The vast bulk are, 99.9 per cent are in Australia's national interest and we see it as being a big positive so we are very welcoming to foreign investment.
BERNIE LO: Minister, let me find my mate, Matt. He's somewhere in the old Burns Philp Building. It's an old 150 year old building, so maybe he's lost in the stairway. Oh there you are, Matt, there you are. I was wondering where you are. Minister is here, say hi.
MATTHEW TAYLOR: Hi Steve. I've got a question for you just about the news that we're following this morning on Arrium. I know it's not your portfolio essentially, but what's the Government going to do on this front, because there stands to be about 7000 workers affected. We know the town of Whyalla in South Australia dependent on the steel works there, and news that Arrium this morning into voluntary administration.
STEVEN CIOBO: Look, there's obviously, there's a lot of jobs at stake and this is an important economic driver so we'll be having a close look at how events unfold over coming days and I know there seems to be some divergence in terms of the way forward between some of the creditors and the plan that's been put forward by others. I think it's still very early days, but the Government of course will monitor this closely.
BERNIE LO: Tell me about, what are you expecting to come away from, where are your travels going to take you, by the way? You're not just going to Beijing, Shanghai, I mean, Australia has a lot to offer other places, other than the usual suspects and China. There are many tier two, many tier three cities and many places that mess up the infrastructure by over investing, misallocating capital, they need to do a reversal and they need to clean up and they need to rethink how they are managing the grid, that sort of thing. Where are your travels going to take you? I'm interested, how this trade mission may differ from previous ones?
STEVEN CIOBO: Well there's a lot of focus in this trade mission upon the opportunities that exist. We're doing something like 150 events across 10 cities over the next week. That will mean that, if you look at all the different investment streams, we have a number of streams that are operating. We've got premium food and beverage, we've got resource and energy, travel, there's a variety of areas of focus. People are moving around in those different streams to different cities. Myself personally, I'll be doing Beijing and Shanghai and won’t have opportunity on this trip to get further afield than that, but we have got a large number of officials from Austrade, which is our primary vehicle for doing trade with the world - it's our engagement vehicle on behalf of the Government and as I said, we'll be moving around about 10 cities.
BERNIE LO: Okay. Minister, pleasure having you in town. Thank you, welcome to town. Have a good rest of your visit here and best of luck in China.
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