CEDA event Q&A - Melbourne

QUESTION: You mentioned it's 100days now to CIIE, and wanted to understand because there are some otherbusinesses here, and Australia Post, who are very active in CIIE, the PresidentXi's trade show to open up to the world. Minister, what do you expect and wantfrom brands showcasing their services and products and offerings at that time?

PENNY BURRT: Thanks Jeremy. If wecould take another 2 questions.

STEVEN CIOBO: I like your faith in myability to remember all these questions, Penny.

PENNY BURRT: What questions?

QUESTION: Good afternoon, myname's Gavin Smith, I'm the Country Head for Bosch in Australia and NewZealand. Steve, you talk about the strategic partnership with the US aroundrare-earth minerals. Also, a big topic for us, China controls 90 per cent ofthe resources, 90 per cent of rare-earth magnet production, but Australia hasgot a wealth of rare earths in the ground ready to be extracted. In practicalterms, what can the government do to actually help accelerate the process ofgetting them up, processed, and into market?

STEVEN CIOBO: So to address the CIIEquestion, look, I'm very pleased to be leading a very significant delegation toChina for CIIE. You know, President Xi's now spoken on at least three or fouroccasions, Boao, The People's Congress, and at Davos, as well as previously atthe Belt and Road Forum about his stated desire to continue to open andliberalise China's economy. That represents terrific opportunity for Australianbusiness. It's our most significant bilateral trade relationship, worth $173billion. Now, traditionally, that's predominately been in relation to resourcesin the main, and in particular iron ore and coal. But what we want to do ismake sure that we now expand that out, and CIIE will provide an opportunity tolook at the way in which we can embrace some of that opportunity. I had thechance to go recently to Shanghai and to see, for lack of a better term, theconvention centre, and the scale, I mean, most Australians don't appreciate thescale of what we're talking about. This convention centre where CIIE will beheld will take around 300,000 people a day, and it is really significant. Partof what I want to make sure that we do as a nation, and what I'm calling onbusinesses like Australia Post and others to do, is to partner with us, throughAustrade, who's of course, driving that responsibility on behalf of theAustralian Government, in relation to the branding and positioning ofAustralia, with respect to China and those opportunities. Having a strong teamapproach, for lack of a better term, Team Australia approach, will be critical.In what's going to be a very congested marketplace, with more than a hundredcountries possibly being present, require some consistency in relation to whatwe can achieve together, so that's going to be a core part of the focus. One ofthe initiatives that we put in place, which, unfortunately, won't be concludedby the time of CIIE though, is the development and establishment of a nationbrand for Australia. I've asked Andrew Forrest to chair a committee thatincludes eminent Australians, including for example, Alan Joyce and Jayne Hrdlicka and others, a nation brand for our country. And I want itto be driven by industry, not by politicians, I want to be driven by industry,to effectively embrace and embody within it, the core brands that our countryis both known for, but also which we can help to shape, and to help shapeperceptions about Australia going forward. An example many people often makereference to is, New Zealand's '100% Pure' campaign. In time, with futureCIIE's, for example, if we successfully get a strong nation brand, we'll haveAustralian business getting behind it, and we know that'll help to establish astrong point of presence, in terms of Australia's presence, at these kinds ofimport and export conferences that happen in the future. In relation torare-earths, watch this space, is the main point I'd make, at this stage. I'veraised it today, and I intend to do a lot more and take the opportunity todrive some specific policy settings from the Australian Government in relationto this. In my speech I outlined some of the opportunity in relation torare-earths and I think there is an extraordinary amount that we can do. Youknow, in terms of lithium, we've got the largest concentration of hardrock-source lithium globally, and I want to ensure that, not only in relationto lithium but also in relation to other rare-earths, that we can develop amuch stronger presence of processing and refining here in Australia. And it'snot about the Australian Government picking winners per se, it's about recognisingthat this is gonna be a multi-trillion dollar market. At the moment, as Iunderstand, we get lithium to about 4-6 per cent purity before it's exportedfor further processing. In other words, we export 96 per cent waste, it'scrazy. And by making sure that we can continue to drive further investment intoAustralia, through accommodation of Federal Government incentives and well asState Government incentives, and by incentives, I don't necessarily meanfinancial, I mean incentives in terms of facilitation and making it easier forbusinesses to process here, which requires a combination of Federal and StateGovernments working together. I'm very confident that over the years ahead wecould develop a strong presence here in Australia of refining and processing ofthese minerals here in Australia, rather than exporting them. And that hasclearly, logically got to be a tremendous opportunity for Australia. Both withrespect, as I said, to traditional, strong trading partners like China, butalso with respect to traditional, strong trading partners like Japan and theUnited States. And so, that's going to be ultimately the direction in which wepush, but I'll say a lot more about this over the months ahead.

PENNY BURRT: Thank you very muchMinister, really interesting initiative to be focused on. Can we check if thereare other questions in the back? In the middle? Thank you.

QUESTION: Thank you Minister,David Olson, King & Wood Mallesons. China's been pushing a very strong opentrade agenda as well, through its Belt and Road strategy, and you've obviouslybeen to the Forum and participated in other events. Globally, though, we seemto be at loggerheads with China, in terms of its economic development model andhow that Belt and Road strategy fits into the trade agenda. Do you seeopportunities for Australian companies to participate more proactively to workwith China, to alleviate some of the perceptions, the negative perceptions ofthe Belt and Road strategy, transparency, governance and financing and things likethat, where we've got real strengths. At the moment, I sense we're not talkingproperly to each other.

STEVEN CIOBO: Well, I'll pull you upon, perhaps you didn't mean it directly, but the assertion about us being atloggerheads, I certainly don't think that we're at loggerheads. Australia andChina's trade and investment relationship is very, very strong. It's our mostsignificant trading relationship at $173 billion. To go to, I think, what wasthe main part of your question, about how do we address issues liketransparency and the work that we can do together there - look, I think thereis opportunity. There is no doubt that China and Australia have very differentsystems of governance, very different systems of governance. Australia tries toembrace as much as we possibly can, the benefits that flow from transparency,and the benefits that flow from an openness in respect of government functions.We think that it's in China's interest to do that, as well. Where we haveopportunity to be able to work constructively on these principles together, weabsolutely should take them. One of the outcomes of my attendance of the Beltand Road Initiative Forum in May, trying to think if it was last year or theyear before, was to focus on the work that we could do together in thirdcountries. As a nation, we've got a really strong track record, with respect toproject finance, design, construction, et cetera. Let's work together for theprovision of infrastructure throughout the region, in a way that ticks those boxesin relation to transparency and the like. And we have done some of this before.If you cast your mind back to the establishment of the AIIB, the InfrastructureInvestment Bank that was put in place and the work that Australia's donethrough ADB, the Asian Development Bank, you can see a strong track record, ofan approach that sees effective governance, transparency, and openness. Thathas always been Australia's approach. So, we will continue to be an advocatefor that approach, but recognise that there are differences in terms of theapproach that China and Australia has, with respect to some of these projectsand I respect that there are differences. We'll be advocates for our approach.China will adopt an approach that suits China and there will always beopportunities where there's strong overlap for us to work constructivelytogether. So, that's precisely what we're doing with respect to the Belt andRoad Initiative. It's a great initiative that China's pursuing. Australia hasour own initiatives that we're pursuing including for example, the NorthernAustralia initiative, and the work that we're doing to drive investment intoNorthern Australia, recognising the incredible potential that will flow fromNorthern Australian investment over the years and decades ahead. So, they'reexamples of where we will find, from time to time, that we can workconstructively together in third countries. That's why we signed the MOU, and Iremain committed to doing so.

PENNY BURRT: Thank you Minister. Ohanother one? Alan Oxley there.

QUESTION: Minister, you mentioned single desk in your introductions. Sometimeago, I asked a friend of mine who had been a Customs official for a very longtime, who runs his own business now, what he estimated to be the cost ofadministration in Customs in Australia because he said, in his opinion, that ithadn't really been tackled for 15 to 20 years and thought it was really justtoo much for the officials to go. He estimated that the cost to trade was about15 per cent on products to meet the administrative arrangements or the way itworks, so could you give us a picture of where this is all heading?

STEVEN CIOBO: In relation to singledesk?

QUESTION: Yeah.

STEVEN CIOBO: No. I'm gonna leavethat to Minister Littleproud because that's his baby, and that's his area, notmine. But you would recall, Alan, why I appreciate you're a terrificcontributor to this discussion over a long period of time. My point in raisingit was to talk about some of the hard decisions Australia's adopted over thedecades, which I think is, although often politically fraught by variousGovernments. Politically fraught, in terms of their implementation, have placedAustralia in a strong position vis-à-vis our ability to trade with the world.But I'm gonna absolutely leave that to the appropriate Minister, which is notme, and is in fact the Agriculture Minister to make those comments.

PENNY BURRT: Thank you Minister. I'mactually gonna presume on the chair here and ask you a question about India.You set out a really interesting view today, in terms of our future opportunityand agenda quite clearly. The new India Economic Strategy and the Government'sresponse is a great moment to be discussing what we can do. When we think aboutregional trade architecture at this point, India is not yet a member of APEC,it hasn't been part of the TPP, and you've obviously flagged we are workingtowards bilateral economic partnership. What's your view on how we might bringIndia into some of these regional trade initiatives and what are the prospectsin the immediate future?

STEVEN CIOBO: Probably the largestopportunity right at this point in time is in relation to RCEP, the RegionalComprehensive Economic Partnership, as it's called. RCEP represents ASEAN plussix countries, including Australia, New Zealand, India, China, Japan, andKorea, and really does present tremendous opportunity for us if we can concludea deal. If and, I'm hopeful that we will, but we've just gotta continue to workthrough it, if we can conclude a deal, it will be a terrific outcome, because Idon't think it will be on the same level of comprehensiveness and ambition asthe TPP, but it will importantly be a deal that will see ASEAN plus six beingable to sit down and say 'okay, we've agreed on some rules of the road so tospeak, we've agreed on tariff reductions, market access, movement of naturalpersons, those types of things. A successful conclusion of RCEP will, in theshort term, mean that India is at the table, and that's great. But India's gotto go through a reform process, and it is. Prime Minister Modi has outlined onnumerous occasions now, part of his very fierce pursuit of investment intoIndia, the 'Make in India' campaign which, of course, many of you would befamiliar with. What I've sought to do and the Prime Minister's approach incommissioning this study by Peter Varghese, was to develop, as I said, a moreholistic approach for engagement with India. Recognising for all the reasons Ioutlined in my speech, just the scope of opportunity. The ten sectors, tenstates approach that Peter has outlined in his Economic Strategy, I thinkprovides a lot of ballast for Australian businesses to think about and to helpinform and guide them on their engagement with India. I think it's fair to saythat, not all, but many businesses make the mistake perhaps of thinking, we'veachieved success with respect to, for example China, we adopted a strategy of Xin relation to China, we'll adopt that same strategy of X with respect to Indiabecause that's a big market too. And that's a mistake, because it's a verydifferent market, and it requires a different approach and a differentstrategy. So what we want to do is make sure we can equip Australian businessesto tackle their strategy for engaging India and expanding into India, in a waythat's consistent with the Indian Government's desired outcomes, and in a waythat's consistent with what will be the approach that's been outlined by PeterVarghese, which the Government will respond to in due course.

PENNY BURRT: Great. [inaudible] isactually looking forward to working very closely actually, with the Governmentand others in helping implement some of the outcomes of this Strategy. Our lastquestion, that's so great, there is a big red sign in the back.

QUESTION: Hi, thank you Minister.My name is Trent Smyth, I'm the Secretary of the Consular Corps in Melbourne.To David's point and also perhaps to Alan's as well, India and China have gotcompeting interests. So do you see an increasing role for sports diplomacy andsay soft diplomatic tools, in terms of bringing them together, vis-à-vis theAFL game in Shanghai recently and also the major events, particularly sincewe're here in Victoria, Grand Prix, tennis, and so on. I'll be interested inyour comments on that.

STEVEN CIOBO: Cricket, you left outcricket. That's probably the biggest one, with respect to India. Look, ofcourse, ultimately I believe, and certainly anecdotally has been the case, andI'm sure there's research around, people like Alan are probably more familiarwith it than I. Ultimately, the strength of these relationships is driven bythe people-to-people links, and the more that we can facilitate cultural linksand people-to-people links, the more we can draw on our diasporas, as I said inmy speech, whether it's the Indian diaspora, now the Chinese diaspora, we havenow in Australia, I think, Chinese or Mandarin is the second most commonlyspoken language, after English, in the country. You know, thosepeople-to-people links, those cultural links, are absolutely what will underpinbeing able to do work, to drive trade, to drive investment between ourcountries. So, that will absolutely include opportunities around, to use yourphrase, soft diplomacy, around sports. We have some really strong linkages withIndia in relation to cricket, in particular, not exclusively, but that clearlyis what tends to dominate. I think it's tremendous that the AFL is forwardleaning enough to look at the expansion of the game into China. It's probablygonna take a little while, but they know that. You know, it's a deliberatestrategy the same, they're not expecting 400 million Chinese to tune into theAFL Grand Final, but it's about putting down some roots now, which they canbuild on over time. And so I think there are a lot of opportunities in relationto that, and I think that's a terrific outcome.

PENNY BURRT: Thank you. Well,Minister, thank you very much for a fantastic session, for sharing yourthoughts and your vision for the future.