Bloomberg Surveillance
TOM KEENE: I would suggest there's a big difference in growing up in Northern Queensland versus growing up in Sydney. What does that tell you about the need for international trade in the Pacific?
STEVEN CIOBO: Well Tom, certainly Queensland like Western Australia, are two states that are very heavily focused on resources and resource exports. In terms of Australia's overall story, we're a very trade exposed nation, we're always forging to have better market access into key export markets like China, like South Korea, like Japan and I guess you get that reinforced in a state like Queensland.
TOM KEENE: We talk about the Washington consensus, let's talk about the Canberra consensus right now. After what you've observed over this US presidential campaign and the crash and burn of TPP do you suggest the Canberra consensus moves toward Beijing?
STEVEN CIOBO: No, I wouldn't say that it moves towards Beijing. Australia has always had a strong relationship with Beijing, with China. It's our single largest exporting country, $155 billion worth of trade with China, so we've always had a strong focus on China but also on Japan and on Korea. Those are our three key markets alongside the United States.
TOM KEENE: Francine, I want you to jump in here, I've already had a Surveillance correction and then I butchered the capital of Australia which shows you, I've got read more Neval Shute there's no question about that.
FRANCINE LACQUA: Right, were taking the show to Australia, there you go. Minister, you have a strong relationship with China, you have a pretty strong relationship with the US, but what happens if there is a trade war between the US and China? You will almost automatically suffer.
STEVEN CIOBO: Well, we certainly don't want that to be the case the fact is we need global trade growth to continue. Global trade growth will underpin global prosperity. The very worst outcome would be of course if we had that kind of scenario arise. Australia is very focused on what we can do to continue to grow export opportunities for Australian businesses.
FRANCINE LACQUA: Minister, what does the Donald Trump presidency mean for Australia? I'm talking about for example a stronger dollar and that has an impact on commodities, but also if there is a trade war, then China could suffer quite a lot and therefore ask for a lot less of your commodities.
STEVEN CIOBO: Well, if there is a trade war everyone suffers. It's not as if it's a binary thing. The fact is that if there is a trade war, and I don't think that is going to happen, but everyone does worse as a consequence. In terms of Australia's lot we are continuing to focus on creating trade opportunities, we've put in place free trade agreements with China, with South Korea, with Japan. I'm currently in conversations with Indonesia. With a view to concluding a trade agreement with Indonesia this year. I'm focused on what I can do with the UK post-Brexit, focused on commencing negotiations on FTA with India and with the European Union this year as well.
FRANCINE LACQUA: Ok but Minister, how long does it take to actually do a trade deal? So we are hearing about a possible special relationship between the UK and the US even if there was full commitment on both sides it could take up to four or five years.
STEVEN CIOBO: Well, it's sort of like, how long is a piece of string, it does vary. The UK positions as I understand and as I have been informed, is that the UK's not in a position to commence formal negotiations on any FTAs whether it's with the US or Australia until such time as they actually exit the EU. So we're just going to have to wait and see, but we're applying our best efforts, we've had a number of scoping discussions already so we like it to happen and conclude as soon as we can.
TOM KEENE: Uh huh. Minister, we need to give you a briefing right now Bruce Kasman from JPMorgan is going to do that. Is a commodity boom restarted, rekindled? Where are we when you look at global commodity pricing right now? It's always been a deflationary trend.
BRUCE KASMAN: Well, we've had a long deflationary episode and I wouldn't argue that we are about to enter a boom, but what we are doing is we are shaking off the drags of the last couple of years on the supply side in some key commodities and on the demand side, particularly on the EM side, I think what that does is it gives us some lift here. We're looking for broadly commodity prices to be up about ten per cent over the course of the next year.
TOM KEENE: Minister, I want to give great credit to Australia for BHP Billiton and Rio Tinto and others – you've cleared the market. I'm sure it's been ugly at times. What do you need from commodity Australia right now in terms of your pressure employing and marginally employing more Australians but also in just bringing in revenue or turnover? What do you need from mining Australia?
STEVEN CIOBO: Well, the story with Australia right now it's that it's actually a significant rebalancing. We've just had a massive pipeline of projects, we've seen big investment led expansion into the mining industry. We're now seeing supply side response and that actually means employment numbers have declined in that sector as we shift from the actual investment in new capacity to the extraction. Commodities are doing well, we've seen at this point in time I think a more sustained rally in prices than we anticipated and that's a big positive for us but we're also very focused on what we can do on the services side of the Australian economy and the fact is that the Australian economy being as mature as it is, is quite well balanced and that's part of the reason why we have not had a recession for 26 years.