Trading Day, Sky News Business - Interview with Carson Scott

Subject: Investment.

Transcript, E&OE, proof only

8 November 2013

CARSON SCOTT: Welcome back into the show. Well, Andrew Robb wears a couple of hats, not least of all when it comes to portfolio responsibilities under the Abbott Government's leadership: Trade and Investment. He's joining us today to cast his eye across growth, what he sees off-shore on his sojourns there and plenty more besides.

With Andrew who's joining us today we've got Simon Segal from Dealreporter with me in the studio, but it's Andrew you're seeing on screen. So, Minister, welcome into the show.

Just reflecting as you come on to speak today, the release of Reserve Bank minutes where the Central Bank has flagged this uncomfortably high Australian dollar, I'm just wondering from what you're seeing off-shore whether that very issue is vexing international investors. How do they judge the high Aussie dollar?

ANDREW ROBB: Well, from my observation, they are looking at a range of factors. The high dollar, of course, has some influence but many of the investors are looking for longer-term investments. So I think they're factoring in, you know, movements up and down in the dollar over time.

The fact of the matter is that the world is awash with cash because of the quantitative easing by many countries and a lot of that cash is looking for a reliable and safe home, not necessarily with massive returns because there aren't a lot of easy investments with major returns.

They're looking for stable economies, economies where there's little sovereign risk, economies where it's easy to do business and they've been the major reactions that I've received as I've moved around, in the last few weeks, around many of the major investment markets.

CARSON SCOTT: Andrew, do you worry, based on that, that money is going to prove too hot to handle and then it won't stick around. We're inside this economy that'll be yanked off-shore quick smart when the Fed tapers and we'll be all the poorer. Could you, in other words, think the unthinkable about taxing outflows?

ANDREW ROBB: No, no. That's certainly not on our mind. The fact of the matter is, I think, what I am seeing as major retirement funds around the world, major sovereign wealth funds around the world, major investors, private equity investors, many of those are particularly looking for major infrastructure opportunities, not, you know, not opportunities where they can get in and out but, rather, opportunities that are going to give them a strong stable return over decades for that matter.

So it's quality investment that I think is looking for a home and it's quality investment that we're looking for to give it a home.

CARSON SCOTT: Are you, just to that end, are you looking to really ratchet up the pipeline of government-led infrastructure to bring in those investors and sweeten it with your AAA credentials?

ANDREW ROBB: Well, certainly one of our objectives is to, as a government, live within our means. But at the same time we need to crank up in a very significant way major investment here in Australia as, inevitably, the mining boom and resources boom tapers off in the years ahead. We need to replace it with significant infrastructure investment.

CARSON SCOTT: You'll have to hurry, Andrew, because the RBA says it's going to happen as soon as next year, that mining investment should fall faster than previously thought. Are you therefore bringing forward your infrastructure investment plan to investors?

ANDREW ROBB: Well, one, we are accelerating it very quickly but, secondly, you know, in our assessment there is another $150, $200 billion of investment particularly in the energy sector, particularly with gas that's still there. If we can remove the carbon tax, remove the mining tax, if we can streamline environmental approvals, if we can very significantly restore the competitive position of our economy we are really well placed to get at least another $150 billion of energy investment and at the same…

CARSON SCOTT: That sounds, that sounds like a Kipling poem. You had so many ifs in that sentence, Andrew, that it seems Herculean. I know that Simon Segal wants to come in on this one. Simon?

SIMON SEGAL: I'm just curious, you know, taking up the Reserve Bank's statement earlier, where the slack on the mining and energy sector, where you particularly can see that slack being taken up and if there is reason to be as optimistic as the Reserve Bank seems to be, or cautiously optimistic I should say.

ANDREW ROBB: I think there's every reason to be cautiously optimistic. The fact of the matter is that we have got, both state and federal, we have got extensive infrastructure opportunities. We are of a mind to assist with the risk but we are trying to unlock a lot of private sector money.

There is literally trillions of dollars in world money markets looking for a home. The thing is, if we restore Australia's reputation for low sovereign risk, if we restore our competitive position as we are moving very quickly with that, if we restore the ease of doing business in Australia, so much of that money will find a home here and it'll be not just in mining and energy resources, it'll be in infrastructure and other major projects.

So I think we have got reason to be quietly optimistic about the investment prospects.

SIMON SEGAL: How confident are you, now that you're newly in government, that that list you've just given can actually be addressed and the bureaucracy actually managed or is it more complicated than you initially imagined?

ANDREW ROBB: No. Well, we just came to government with a very strong win six weeks ago which gave us, in my view, a strong mandate to remove the carbon tax, which has been a really major dead weight on investment and business certainty, to remove the mining tax which again has been a great deterrent to investment in Australia. And more importantly, to remove up to a billion dollars a year in the cost of regulation in Australia.

We've moved very quickly to remove many, many regulations. We've got much more to do in that regard. We can materially make Australian business far more cost competitive and in that sense I think the investment world is starting to look very closely again at Australia's prospects.

CARSON SCOTT: It seems, whilst all that's laudable, Andrew, that the Reserve Bank is not persuaded. They have said categorically today and this is the first chance since the election that they have had to cast judgment on your plans, non-mining investment is expected to remain subdued in the near term.

Clearly your accelerated plan isn't convincing our top bank. Now, what do you say to that?

ANDREW ROBB: Well, I just say to you that the investment in infrastructure, the projects that we are looking to encourage, both at state and federal level, are very well positioned to fill any of the, sort of, gap that's occurring.

We have to move quickly. We are moving quickly. I think you saw today in Queensland great interest in many of the infrastructure projects, the road projects, the tollways in Queensland, $5 billion.

There are opportunities galore, really, for us to roll out infrastructure. We have to move quickly. We are moving quickly and I think once the Reserve Bank sees, you know, the interest that I expect to be generated from around the world then they will revise their position.

SIMON SEGAL: On this slot we - Carson and I and James - have regularly discussed this issue about GrainCorp and the impact that it's having on broader sentiment. From your recent travels, certainly in Asia, do you perceive that this is being eagerly watched and eagerly anticipated and is this a potential problem?

ANDREW ROBB: Well, it's like any major investment decision. It's a $3 billion-plus decision. So it's of significance, great significance and there is a lot of interest that I'm picking up around the world. And that process will be worked through over the next month or six weeks, 17 December, I think, is the deadline for a decision on that and the Treasurer, Joe Hockey, of course will be making that decision.

CARSON SCOTT: What's your own philosophy in the rounds on this issue?

ANDREW ROBB: Well, I have been, and the Government is, since the First Fleet I think Australians have been supportive of foreign investment. But at the same time we have got procedures for very significant foreign investments to make sure that they're in the national interest. And I'm very happy with that process to work its way through, and I'm certain that Joe Hockey will make the right decision because I've given him, like many others, my own advice. But it's not appropriate for me to put that in the public arena. He needs to be able to make a decision receiving advice but not having some sort of public episode leading up to it.

CARSON SCOTT: Well, can you confirm, at the very least, consistent with your just-stated philosophy that you flagged the principles of the First Fleet to Joe Hockey?

ANDREW ROBB: Well, I'm not going to get into what I have said to Joe Hockey…

CARSON SCOTT: Why is the…

ANDREW ROBB: Like any others, I've given - like any others I've given him advice.

CARSON SCOTT: Why is your own philosophy such a closely guarded secret though? Surely that's your credo.

ANDREW ROBB: Well, I said what my philosophy was. So I'll make my judgements consistent with that, but as I've said I think Australians in general have been supportive of foreign investment. We always have needed foreign investment. We've got thin capital markets.

We always will need foreign investment but if you have got very major ones it is very appropriate to consider the national interest to see whether, in fact, that's going to advance our national interest or not and that process is well in train. This thing will be decided in a lot of detail. It is being decided with a lot of consideration and I've got no doubt that Joe Hockey will make the right decision.

SIMON SEGAL: I think in this context, Carson, the potential risk is that the bankers and legal community have been making it clear to us for months and months that this is an eagerly watched decision and the Chinese and Asians in particular do not relish being taken before the Senate, like ADM was. You know, Americans are more used to that cut and thrust and I think this could - I mean we've argued that this could potentially be a problem down the line.

You know, it doesn't have to be. It depends how it's managed but there is certainly concern in the community, in the legal and investment banking community about, you know, which way this could go.

CARSON SCOTT: Well, Andrew Robb is cognisant of that. As you've said, Dealreporter has flagged that. Thank you, Simon, for your contribution and not least of all to you, Andrew Robb, Trade and Investment Minister. Appreciate your insights.

ANDREW ROBB: My pleasure, thanks guys.

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