Interview with Laura Jayes, Sky News AM Agenda

Laura Jayes: Let's go to the Trade and Tourism Minister, Don Farrell now. Don, thanks so much for your time. We just heard from Ed there about, you know, we've been worried about Australia being caught in the middle of Donald Trump's trade war, but we might be short term beneficiaries of it. So, are you seeing this as perhaps a short-term win, or should we be careful about that kind of thinking?

Minister for Trade: Look, I think we should be very careful about that kind of thinking, Laura. Australia is an island trading nation. We rely on trade, free and fair trade to produce our prosperity. We've done very well in recent years with that trade and increasing our prosperity. We think that the best way for the world to go forward is to maintain that open and free trading system. And when I get the opportunity, as I hope to do very soon, to talk to my American counterpart, that's very much the message I will be giving the Americans.

Laura Jayes: What is the message to the Americans? And why haven't you been able to speak to your counterpart so far? I mean, we had to remind Donald Trump in the last administration that we actually run a trade deficit with the United States. Do you expect that will be the one thing that will keep us out of his sights?

Minister for Trade: Look, I think there's a number of arguments that we can present to the Americans. Just to answer your first question, under the American system, it's required that the incoming cabinet secretary, in this case the Secretary of Commerce, Howard Lutnick, has to be approved by the American Senate before he can engage with foreign governments. We've spoken to his potential Chief of Staff. We've indicated that we would like to talk to him as soon as he has been approved. And the message that has come back is that he's very keen and willing to do that. So, I think we'll be amongst the first countries to speak directly with, with Mr. Lutnick. And the message I'll be giving him is a simple one. You've mentioned one aspect of it, and that is that the Americans have a trade surplus with Australia. Just to put that in perspective, Laura, the two-way trade between Australia and the United states is roughly $100 million, $70 million of that is product that we buy from the United States, $30 billion of that is product we sell to the United States. Interestingly, quite a bit of that is gold that you were just talking about a moment ago. It makes no sense when you've got a trade surplus with a country to be imposing tariffs. And you might have seen the arguments that President Trump has been using against Canada, against Mexico, against China. Is that the reason he's doing it is because there's a trade deficit with the United States. So, that's the first argument. Secondly, we are very strong strategic partners to the United States. And of course we've got the, the AUKUS project where, you know, we are spending billions of dollars buying American submarines. So, that'll be an important part of the discussions. And the final point I'd make to the Americans is this: since Donald Trump was first elected, trade from America to Australia has doubled. So, without tariffs, without tariffs, the Americans have done really, really well in terms of their trading relationship with Australia.

Laura Jayes: Could we be collateral though, if this trade war between China and America does drag on for longer than, you know, 30 day pause we've seen with Mexico and Canada. What are the effects that that will have on the Australian economy?

Minister for Trade: Look, it does, you're right, Laura, it does potentially affect the Australian economy. And that's why the message that I'll be giving to the American Commerce Secretary, Howard Lutnick, is not just about Australia, but that we believe that the world benefits, prosperity is increased when there is free trade. You, you'll have seen over the last three years. When we came to government almost three years ago, Laura, we had $20 billion worth of trade barriers and trade tariffs imposed on us by China. Bit by bit, we have managed to remove all of those. The last of those was crayfish just before Christmas. And since the lifting of those impediments, we've now sold a thousand tonne of crayfish into China.

Laura Jayes: Yeah, that was the last one and that was super important. But I wonder, Don Farrell, what your, what your feelings are about in the last couple of days when we've seen Donald Trump impose these tariffs on Canada, Mexico, China, all three countries have come out and said it's a violation of world trading rules. This is not in the spirit or the letter of them, but I mean, when China imposed all these tariffs and trade barriers on all those goods for the last couple of years that we were exporting to China, I mean, there was none of that criticism against China. It's a bit rich, isn't it, for China to point that out?

Minister for Trade: Well, in fact, Laura, we did take action in the World Trade Organisation and one of the reasons, I think, that we were able to negotiate an outcome, a satisfactory outcome, particularly as it relates to wine and barley, was that we were prepared to withdraw our World Trade Organisation disputes in return for a fast review of those of those tariffs. So, I think the World Trade Organisation will be important in this, in this process. The other thing I think we've done over the last couple of years is to diversify our trading relationship. So, in that three-year period, we've got a new trade agreement with the United Kingdom. Our trade with the United Kingdom has doubled. In the case of meat and beef and sheep meat to the United Kingdom, it's gone up. We've got a new agreement with India already. Our extra trade with India, particularly in agriculture, is up 60 per cent in respect to manufactured goods, up 70 per cent.

Laura Jayes: I mean, you probably got a bit of advice from the Trade Minister from the U.S. when you speak to him about how to deal with China. I might suspect. I mean, probably raising an eyebrow or two at China's complaints about the rules when they were happy to flout them when it came to us.

Minister for Trade: Look, I'm not sure the Americans will be necessarily taking advice on China from me, but if they would like my input into that, I'm very happy to provide it to them. But it's. Look, it's. What do the Chinese say? We live in interesting times. Well, I don't think in terms of trade, I don't think there's been more interesting times than the time we are going through at the moment.

Laura Jayes: Indeed, we're about- we're standing by for this media conference between Benjamin Netanyahu and Donald Trump that's due to start any moment now. It was due to happen just after 9 o'clock. But while I've got you, if I could ask you about a domestic policy issue. It feels like we haven't spoken about policy in Canberra for quite some time. But I want to talk about the Treasurer's, well, the intention for Labor to legislate a tax on unrealised gains for super accounts over $3 million. You'd be on a defined benefit scheme, wouldn't you, Minister? Would that mean that same tax would apply to those schemes as well?

Minister for Trade: I wish I was on a defined benefit scheme. I had come into Parliament after the pension was abolished. So, I'm like everybody else. I'm on an ordinary superannuation fund, I'm sad to say.

Laura Jayes: Ok, so the Prime Minister is on a defined benefit scheme. So, would you also expect that the public expectation would mean that he's also, too, taxed by this legislation?

Minister for Trade: Look, these laws will apply to everyone, as I understand it, and if the application is to everyone, then everybody who's on one of those schemes would be caught up in this, in this change to the legislation.

Laura Jayes: Alright. So, this change would apply to defined benefit schemes such as the one the Prime Minister's on as you understand it.

Minister for Trade: I'd have to get some advice from the Treasurer on exactly how this scheme would operate. Of course, my area of expertise is trade in the finance sector and the Treasury -that's all Jim Chalmers. And might I say, he's doing a terrific job in that portfolio.

Laura Jayes: Yeah. So, in the interest of fairness, you think it should apply though.

Minister for Trade: Look, the law, as it will apply, will apply to everybody who's covered by that law. But you'd have to ask the Treasurer, in particular in individual cases, how it might operate.

Laura Jayes: If I could ask you one final question, Minister, because we haven't had you on the show for quite some time. I've been talking to a lot of your Ministers about the energy policy and how this helps Australia be competitive and attract that investment we talk so much about when we don't have cheap or reliable energy at the moment. You'd have to say this transition to new renewables isn't going as well as planned. Would you agree with that?

Minister for Trade: Look, to be honest with you, Laura, I wouldn't. I was with the South Australian Premier in Moomba at Santos last Friday and we witnessed the first turning on of a carbon capture and storage project that Santos and Beach Energy run in South Australia. That project collects the CO2 that might come from the production of gas and puts it back into the ground where it originally came from. I see a lot of positives in the progress towards renewable energy. So, no, I remain optimistic. One of the things we did while we were in Whyalla on that same trip was to have a look at some of the projects with hydrogen. Now, I know there's been a couple of projects that have not proceeded at this stage, but in my discussions with overseas companies, they continue to be very interested in the hydrogen project. So, no, I'm optimistic, to be honest with you, Laura. I think there's plenty of potential there. Not everything's going to succeed. Just to give you one example, the Foreign Minister and the Defence Minister and myself were in Singapore just before Christmas. The Singaporeans are still very interested in the Sun Cable project. This is a project where we produce solar energy just south of Darwin and we transport it in a cable 4200 kilometres to Singapore. So, there's still plenty of interest in renewable projects. And to be honest with you, I'm quite confident about the future in terms of renewables.

Laura Jayes: It must be the South Australian air that makes you so confident. Then just finally, before I let you go, you are the Tourism Minister as well. Don't you think the fringe benefit tax exemption on small businesses that Peter Dutton has announced over the summer is good for the industries that you represent? Isn't that a little injection that they need? It's not tax reform. But wouldn't you support that?

Minister for Trade: Look, the best thing I think we can do for small business in this country, Laura, is to keep downward pressure on interest rates. It's interest rates, the rise of interest rates that has had such a dramatic effect on the cost.

Laura Jayes: Well, there's been 13, under this government. 13 rises. There might be one reduction.

Minister for Trade: Yes, well, or more, depending on when the election is called. I'm not here to second guess the Reserve Bank of Australia, but we've produced two consecutive surplus for the first time in 20 years. Jim Chalmers in his leadership in the Treasury has produced two consecutive surpluses. Part of my job in trying to assist with that surplus, of course, is creating more trade. And one of the reasons we've been able to put that surplus in place is because trade is booming. And part of it, of course, is bringing tourists back into Australia. So, a combination of what we're selling and what we're doing in terms of bringing tourists back into Australia is helping with that downward pressure.

Laura Jayes: And do you really begrudge these small tourism businesses being able to take their workers out to lunch and not pay fringe benefit tax?

Minister for Trade: Look, there was a good reason that Paul Keating removed this, this entitlement all those years ago. I don't think we should be going back.

Laura Jayes: What was it?

Minister for Trade: Well, I think it's far more productive for small businesses and businesses to be working to generate prosperity in this country than to be going out to lunch. I think we've moved beyond that phase in our economic history. I think the best thing that this government can do is do everything that we can to reduce the cost of living, put downward pressure on interest rates and that's exactly what Treasurer Chalmers is doing. And I think we should continue to do that.

Laura Jayes: So, when's the election? Has the Prime Minister asked for your advice? That usually happens, doesn't it?

Minister for Trade: No, he doesn't. He doesn't need my advice. He said all the way along the line it's going to go full term. And we're now very close to the end of the term.

Laura Jayes: So, you're thinking May, Don Farrell.

Minister for Trade: I'm thinking that the Prime Minister will make a decision in the next few weeks as to when we will go to the polls. And I'm very much looking forward to the return of an Anthony Albanese Labor government.

Laura Jayes: And you'd stick around full term?

Minister for Trade: Well, of course, yes. I love this job. This is the best job that I've ever had in my life. I think the government has been successful in its trade agenda. Sure. We've got plenty of potential problems at the moment and I think this government is the best government to deal with these issues. You've seen what we've done in stabilising the relationship with China, rebuilding $20 billion. Think about this, Laura. $20 billion worth of trade with China. I think we are the best placed government with Anthony Albanese, Penny Wong and myself to be the group that deals with these very difficult sets of circumstances that we face at the moment. If you were a winemaker or a grain grower or a beef producer, you'd be very worried right now about the return of a Dutton government.

Laura Jayes: Ok, Don Farrell, we'll have to leave it there. Thanks so much for your time. Good to see you.

Minister for Trade: Thanks, Laura.