Media doorstop in Shanghai, China

Topics: Australia-China trade relationship; Monash University - South-East University joint campus opening; education and the New Colombo Plan; Australia-China FTA; Australian resources projects; infrastructure in Australia; Huawei; China-Japan and gas exports.

Transcript, E&OE, proof only

23 October 2013

ANDREW ROBB: Good morning, nice to see some of you again, some for the first time.

Could I just make a few comments before I open it up to any questions that you might have.

It is for me quite a privilege to be the first Cabinet minister of the Abbott Government to visit China, our biggest trading partner. I’ve enjoyed doing business here, and other opportunities that I have had in China over the years, and now to have the trade and investment responsibility — I do feel that China’s going to be a significant part of fulfilling those responsibilities effectively in the years ahead.

The fact of the matter is that China is our biggest trading partner, but China is also the biggest trading partner of 123 other countries — approximately 123 — and many of those countries are direct competitors with Australia in agriculture, resources, services and investment. So it’s absolutely critical for us to take nothing for granted, and we don’t take anything for granted.

The relationship that we’ve built over the last few decades is a very valuable one for Australia, and it’s one that the new government in Australia certainly intends to build on. We do feel that the prosperity of Australia will, in significant part, be reflected by how well we continue to integrate into the region, including of course China — very importantly China.

So it’s a great privilege to be here, and it’s the reason why I’m going tomorrow, representing the Prime Minister, to open the Monash-South Eastern University at Suzhou. It is a great symbol, I think, of the wonderful education relationship we’ve got.

In many respects, education — in all its dimensions — provides the opportunity for developing great linkages between our two countries. We now have a very significant number of Chinese students, there’s quite a lot coming back from Australia to be educated here, Australian students. The New Colombo Plan that we are looking to roll out in force by 2015 — it will again provide an important vehicle by which we can, in future, have the two-way linkages developed in a very strong fashion, with Australian students being sponsored and having internships in companies in various countries in the region, including, hopefully, China. And they will be educated and have internships and, correspondingly, there will be Chinese students being sponsored to come to Australia for education and internships. Now that way, I think, we can really turbo-charge the development of so many significant, long-term, productive linkages, friendships.

In the end, all relationships are about trust. And that is about getting to understand one another — not necessarily to agree on everything, even to have different views — but to understand different perspectives of the people that you are dealing with. We have said that as a government, economic diplomacy is a very important part of our agenda. Of all of these linkages, education feeds very much into the development of long-term, successful economic connections between our countries. That’s why I feel that tomorrow’s opening is going to be a great symbol of where we can take the relationship and strengthen it in the future.

Also, yesterday, we had a Cabinet meeting where Cabinet finalised a mandate for me to engage closely with senior members of the Chinese government to, hopefully, conclude, finally, the Free Trade
Agreement. Again, if we can consolidate what will be, I think, China’s biggest Free Trade Agreement at that stage, then it augurs well for us to further grow the relationship and develop, not only trade, but investment relationships which are constructive and very productive. So that is another important element of the next few months.

I certainly will be back as soon as we can line-up diaries, now that I have a mandate. We couldn’t settle meetings on that issue until I got the mandate. We’re four weeks into government and that process has now been gone through, and the highest priority I’ve got now is to find an opportunity during November that I can get back here and meet with my counterparts.

I did meet and had a very good one-on-one with (Chinese) Commerce Minister Gao in Bali, and that was a very constructive half-hour. It was a good opportunity to canvass a whole lot of issues, including the Free Trade Agreement. Of course, Prime Minister Abbott has also, in Bali and in Brunei, met with (Chinese) President Xi and (Chinese) Premier Li. Again, these sorts of issues were canvassed, so we’ve had already, fortunately, some very good opportunities and we will progress those quickly.

As I said, life is about trust, and I’ve just come to this gathering from a meeting with Baosteel, who are Australia’s biggest purchaser of iron ore – (a) long-standing agreement, great synergy with Australian mining companies, big investors in R&D to commercialise a lot of mining innovation. So a great partnership, I think, has been built there.

I’ve just had an hour with President He (Wenbo, Baosteel) to further consolidate that relationship, and to assure him that Australia is very much open for business. He did confirm our view that the mining boom is not dead. He did say that there are many years left in iron ore alone, there are many years of strong trading in his view.

When you look beyond iron ore and steel and look at gas opportunities and all the rest, our view is that there is $150 billion worth of projects in the pipeline in Australia over the next three to five years. If we do get ourselves in a few strongly competitive position, and I did discuss this with President He from Baosteel, and said that we again, yesterday in the Cabinet meeting, we finalized legislation to remove the mining tax, we finalized legislation to remove the carbon tax, we finalized legislation to, if you like, provide responsibility for all of the federal environmental approvals to the states, so there’s a one-stop shop.
The approval time has blown out in regard to major projects by up to two years. The approval time to get an LNG project off the ground today takes two years longer than it took in 2007. If you want to get a coal project approved, it takes two years longer, and in many cases that is $30-$40 million a month. It is sort of dead money, if you like, and it does make it extremely difficult to get new projects off the ground.

We have immediately, as a high priority, moved to draft legislation and to put it through Cabinet, now it just needs to be presented to the Parliament. It will be our first legislation, these major efforts to seriously and materially reduce the cost of doing business in Australia, so that we can make investment more attractive, and we can capitalize on what is the potential for $150 billion worth of projects where the principals say to me — of these big companies — these decisions will be taken in the next three to five years, of these $150 billion worth of projects, they’d prefer to do it in Australia, because most of them have already got brownfield projects there, but they don’t have to be in Australia. They’ve got choices.

And we are seeing a supplier response coming in so many areas of resources and energy in response to the last few years of high prices. We have got competition, as I said at the outset, there’s 123 other countries who enjoy China as their major trading partner. So we’ve got competition.

I’m here today, and I’m going to be back many times, to foster the relationship, to get the Free Trade Agreement up and away, but as importantly, to just build the relationships, build the trust, build the familiarity, build the understanding of different perspectives, so that we can position Australia to take advantage of the explosion of the middle class in the region around us.

I’ll leave it at that and am happy to answer questions.

JOURNALIST: Minister, the person you met at Baosteel, did he specifically mention to you personally that he had other options besides Australia?

ANDREW ROBB: He did canvass the fact that they are looking in Africa. The thing is, all of these companies have got options, and it’s our job to get Australia as lean and as mean (as we can). I did say to him that one principal objective that we’ve got is to set ourselves a goal of not being beaten in terms of the ease of doing business in Australia. And in many cases, that is a fundamental issue.

As I said, the time to get approvals has blown out for big projects by up to two years. It is highly complex, we are going to cut through this. We aren’t going to compromise standards — we had good standards in 2007 — it’s just a question of ease of doing business, understanding their issues coming into a country. So yes, Baosteel’s got choices, so has everyone else.

JOURNALIST: And did he say anything to you about the mining tax changes and the carbon tax changes?

ANDREW ROBB: He was very pleased with those responses. These are the messages we’ve been getting from Opposition for two years and more — that the rules keep changing, new taxes keep coming in. They don’t use this language, but that the return on investment is tanking, you know, on projects that they’ve already invested in in Australia. There needs to be, in our view — and it’s a great priority of our government — is to restore some certainty and stability, stop the endless rule changes.

JOURNALIST: On both of those things he said he was pleased?

ANDREW ROBB: He was very pleased with the removal of those taxes, yes.

JOURNALIST: When Tony Abbott was up here last year, he said that China would be more prosperous if its people had the ability to elect their own government. You’ve talked about — that a relationship’s around trust. Do you believe that’s something where the new Australian government should play a role in talking to China about democracy and human rights, or do you believe it should be purely on an economic basis?

ANDREW ROBB: Well, my sense is that the economic diplomacy that we have as a government, under the leadership of Tony Abbott, made a decision to put a stronger focus on economic diplomacy, that the best way we can influence any country is to engage commercially with them. You then engage in other ways. Once you build commercial relationships, you then start to engage in a cultural sense, you have friendships, so you engage in a social sense....

JOURNALIST: But do you believe that…

ANDREW ROBB: …well, if we’ve got something to offer as a country, that is the best way for people to, in my view, to absorb that, to think about it. In the same way that we learn about the perspectives of other countries, including China.

So it’s, as I say, life is about trust, and you have to look at who you can trust, and they have to look at how they can trust us. A lot of that is just getting to know one another and understanding the perspectives of one another. We may not agree on things, into the future, they may see better ways of doing things, that is their call in the end.

The best thing we can do is to, as I say, build relationships, and the best way you can build relationships in my view is through trade and commerce. It’s a door into much wider relationships between two countries .

JOURNALIST: So do you believe it’s inappropriate then for Australia to raise things like, in your new economic diplomacy, to raise things like human rights or democracy or the rule of law in China?

ANDREW ROBB: Well, we’ve always had forums where these things…well, John Howard very successfully ensured that our views were put, but in an appropriate way, in the proper forums. We will look to do that as well, but economic diplomacy can’t be a substitute for all sorts of other positions and views that we might have. It is, in my view, a particular objective, which will help understanding in a much broader sense in time. We will do all we can to foster the very reliable and successful economic relationship with China and with other countries.

JOURNALIST: Minister, on that mandate you’ve been given by Cabinet, can you give us some more context, some more details around what that means? And secondly, doesn’t putting a deadline of 12 months of having a deal finalised reduce Australia’s bargaining position in some way?

ANDREW ROBB: Well, we’ve had conversations with the three countries that we are looking at for free trade agreements with – China, Japan and South Korea. All three have expressed a desire to complete negotiations as quickly as possible. So I do think that the comments that the Prime Minister made simply reflected the position of all four parties, ourselves and the other three countries.

It’s not the timing that’s an issue, it’s trying to meet one another half-way. The fact of the matter is that all three of those negotiations had stalled, and had been on hold. Hence, we have to find a way through the blockages.

Hopefully the mandate that I’ve been given, which I’m not in a position to reveal the components of that — you don’t put your cards on the table for those that you are negotiating with, for them to see. Hopefully that mandate will give me the opportunity to meet them half-way, and if those three countries reciprocate, we can close these things and look to build on the relationships with a strong FTA behind us.

JOURNALIST: Are we likely to have a sort of partial agreement for the things we can really agree on, and then maybe siphon off the tougher stuff until further agreement in the future?

ANDREW ROBB: Well, I don’t think that there is a lot of distance between us. There are a couple of substantial issues, don’t get me wrong, but there’s not a lot of distance. It’s not as though there’s dozens of things that we’ve got to resolve. The issues to be resolved are significant, but, to me, it’s doable.

If there’s goodwill on both sides, and there is a real attitude of meeting one another halfway, I think we can find an accommodation which is going to be to the great advantage of, in this case, both ourselves and China, but that’s true of the other two countries as well.

JOURNALIST: But do you think there could be a partial agreement, like we did with say the ASEAN Free Trade Agreement — we agreed to put things like, I think, Malaysian car tariffs were held over for a few more years?

ANDREW ROBB: There’s always, if you go back to the Australia-US Free Trade Agreement, there’s things that are carved out, there’s minor exceptions. But overwhelmingly, it saw a massive reduction of, well elimination of tariffs on almost every item. We didn’t make any progress on sugar in that agreement, okay, but we made progress on literally thousands of other items, and it’s been to the great advantage. There’s been a 38 percent increase in two-way trade between ourselves and the US. If you look back at the history of any of the free trade agreements, there’s enormous advantage, even those not involving Australia, you can see enormous advantage.

The New Zealanders in the last four years have seen a $2.2 billion increase in dairy trade with China since they struck a Free Trade Agreement, and our industry’s gone up $60 million in that time. So there’s no doubt that a Free Trade [Agreement] and it doesn’t only increase trade, you then start to see constructive investment opportunities emerge. Again, as they build trust and the relationships, all of a sudden they start talking about ‘what else can we do?’.

I talked to the New Zealanders and they’ve got investors down there looking at joint ventures and all sorts of things which are again to the advantage of both industries. So it’s very important for us to get this deal and overwhelmingly, there won’t be many exclusions, in my view.

JOURNALIST: Talking of investment, you’re going to take a fast train tomorrow to Suzhou. Australia’s thinking about building a fast train network. The Chinese have expressed some interest in helping us build that. Is that something you’d be amenable to, perhaps Chinese labour and technology helping us building a high-speed train on the east coast?

ANDREW ROBB: We’re very keen to engage, not just on high-speed trains, which clearly they’ve got enormous expertise in, but that principle, certainly about the technology is very important. It’s why a lot of the partnerships that we’ve got to form with China, take Baosteel for instance — they’re a steelmaker, and we’re miners. Our companies are miners, but they’ve combined, and they’ve got joint R&D activities, significant ones, where they are commercialising a lot of innovative activities for the mining because that helps the steel. That same principle will come out of a lot of our trading relationships.

The labour issue is another thing. We’ve got 6 percent unemployment now. Sometimes there’s expertise which we require with 457s [visas], you need particular expertise, and that’s true of Chinese companies as it is of others. But the labour issue is one that, no, we haven’t been…

JOURNALIST: What about specifically on the trains? Would you welcome Chinese investment in an Australian fast train project?

ANDREW ROBB: We would welcome Chinese investment in all sorts of infrastructure projects, but we’ve got to set priorities. There have been, and there are ongoing studies into the prospects and how we would fund a fast train project in Australia. We’ve got a lot of other priorities with road and rail and ports.

We are in the process of reconfiguring Infrastructure Australia to do studies of major projects and develop a pipeline, all of which have cost-benefit studies. Now, in due course, I am sure the fast train project will be put up by one state or another, and that will go into the mix. But at the moment, we’ve got some very major projects.

We are looking as a government, to what we can do to unlock private sector investment into public sector infrastructure. The world is awash with cash at the moment. We’ve got to find some innovative ways where we can potentially use the strength of the Australian financial position, and the government’s relative strength, to leverage private sector investment into public sector infrastructure. That’s one of our major ambitions, because we do think that we can really accelerate many, many projects which will give us a very big productivity dividend.

JOURNALIST: What about Huawei? That’s a perennial issue. Malcolm Turnbull opened the idea that perhaps there’d be a review of that. Is that something, their ability to tender on the NBN?

ANDREW ROBB: Malcolm has indicated that he will undertake a review of that situation. I know the company well and they are a very successful company in Australia. You look at their growth year on year –it’s phenomenal. They do produce some very good products, leading products, and they’ve got a big future in Australia, but in terms of the NBN, that is under review.

JOURNALIST: But would you specifically support that, that they would be allowed to tender?

ANDREW ROBB: Well, I strongly support the review. I’ve said it to Malcolm and we’ll see the outcome of that, but as I say, they are a well-respected company within Australia, and they’ve already made a big contribution to that sector, and they’ll continue to.

JOURNALIST: Just on a totally different tangent, can I steal one more question? What about the strategic competition between China and Japan for supply of Australian natural gas? That’s sort of an issue that West Australian Premier Colin Barnett has raised, that he sees growing strategic rivalry between China and Japan for our natural gas, and we’re sort of caught in the middle of it. Do you see that as an emerging situation?

ANDREW ROBB: Caught in the middle in what sense?

JOURNALIST: Well, they are both facing huge supply shortages of gas.

ANDREW ROBB: Well, we’ve got lots of gas, it is not a problem. I can assure you, one of the big parts of that $150 billion opportunity that’s out there is really the energy side of it, which is LNG and as I say, we’re awash with gas, both offshore and onshore. We’re open for business, so any investors that are looking to exploit that opportunity, we will facilitate it.

Thanks very much.

(ENDS)

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