Joint press conference with Prime Minister the Hon. Tony Abbott MP

Parliament House, Canberra

Subjects: Strengthening trade ties to boost economic growth; visit to North Asia; Qantas; the Government's commitment to repeal the carbon tax; Andrew Demetriou.

Transcript, E&OE, proof only

3 March 2014

PRIME MINISTER: Good morning. It's good to be here with the Trade Minister Andrew Robb. I acknowledge the presence of business leaders and other distinguished Australians who are enthusiastic about the fact that Australia is – under this Government – open for business. I particularly appreciate the presence of Professor Ian Young of the Australia National University, Catherine Tanna of the BG Group, I see my friend and former colleague Mark Vaile here.

What I am doing today is first of all announcing that early in April I will travel to our major markets in Asia; to Japan, to Korea and to China. I'm also announcing that Trade Minister Andrew Robb will lead to China what is almost certainly going to be the largest ever Commonwealth sponsored Australian trade delegation. I understand that already there have been some 350 registrations from businesses that want to go to China with Minister Robb. They will be participating in what's described as Australia Week in China and as I said this will be the largest ever Commonwealth sponsored trade delegation and it is a concrete manifestation of the determination of this Government to be open for business.

Obviously at the heart of our trade agenda is the negotiation of free trade agreements with these very significant trading nations, trading partners. I hope while in Korea to be able to formally sign the Australia Korea Free Trade Agreement, I hope in Japan to be able to substantially advance that agreement and we are still hopeful of finalising an Australia China Free Trade Agreement by the end of the year.

Why we are so committed to free trade; why we are so committed to doing more on the trade front is because trade means jobs – trade means jobs. If we want to ensure that Australia is as prosperous as we possibly can be in the years and decades ahead we need to build on these very important trading relationships and that is the determination of this Government. That is what you would expect from a Government which is determined that Australia will indeed be open for business.

TRADE MINISTER: Thanks Prime Minister. Ladies and gentleman, as the Prime Minister has said trade means jobs and in many ways trade investment is absolutely critical to correcting the mess that we inherited, to paying back the debt and to creating jobs. In that regard, China is perhaps the most important or one of the most important markets that we must continue to focus on. China is changing. Over 500 million people in the last 15 to 20 years have come out of poverty in China. There's an expectation of something heading towards a billion people will be in the middle class in 20 years' time. We're seeing a change in focus from exports driving their economy to domestic spending and in fact retail spending for instance last year grew by 13 per cent alone, along with major increases in consumer spending across the board.

Now this obviously presents enormous opportunities for Australia. In the last year $130 billion in two-way trade – our biggest two-way trading partner. It is an enormous opportunity, but it is changing; it is changing from the focus on exports and major development to turning into an economy which is focused on consumer spending. It might be our biggest trading partner – two-way trading partner – but that can be said, as well, for 123 other countries around the world. We're the seventh biggest trading partner of China, but there are 123 others who can claim that China is their biggest trading partner. So it's not going to fall into our laps; that's the bottom line. The nature of trade is changing. Resources will continue for many decades to come to be a very significant part of it, but we have to build trade across a lot of other areas and people don't realise it, but at the moment China is our biggest resources market – of course, that would be known – but it's our largest source of foreign students, it's our largest source of tourists, it's our largest services market, it's our largest agricultural market, it's a growing source of foreign investment and just to give you one example, red meat in 2012 we exported 80,000 tonnes; in 2013 we exported 260,000 tonnes.

These sorts of phenomena are there but there's enormous competition around the world to capture this changing nature of the Chinese market and unless we put in the hard yards, establish the linkages, the contacts, things like the Colombo Plan, these sorts of things, all about long term sustainable linkages and contacts and understanding and trust that's being built. That's why we are taking this initiative amongst others and as the Prime Minister said several hundred, already some 300 have nominated, we're looking for hundreds more to go to Australia Week in China. We've got a special week across four cities – Shanghai, Beijing, Chengdu and Guangzhou. Those four cities will have teams of people and Ministers with them and including the Prime Minister who's taking a more extensive North Asia visit at the same time.

We will be organising industry themed programmes throughout the several days in all of those cities covering things like agribusiness; mining – mining equipment and technology and services; education – vocational and higher education of course; health – medical devices, a lot of those things that sit around our great strengths in medical research; tourism; food and beverage; and consumer services including luxury goods; financial services; building services; aged care services; new technologies. A whole raft of things; the things that we do best as a country – our strengths, that's what we're focusing on. Brand Australia is very strong, not only in China but in the region and we aim to capitalise and build on that in the years ahead.

QUESTION: Prime Minister, the first assistant secretary for DFAT for North Asia Peter Rowe said that last week that the treatment of Julie Bishop late last year by the Chinese Foreign Minister was the rudest thing he'd seen in 30 years of being in the diplomatic core. Do you accept that you've got a bit of smoothing over to do when it comes to the Beijing relationship?

PRIME MINISTER: I met with the Chinese Ambassador a week or so back and he assured me that the Chinese Government at the very highest of levels was looking forward to my trip, was looking forward to Australia Week in China. From time to time there are always going to be issues, but there is a fundamental strength in this relationship and I want to build on those strengths.

QUESTION: Prime Minister, just after you were elected you set an ambition to seal the FTA with China within 12 months. You said in your opening remarks you're hopeful. How confident are you that you can still meet those ambitions?

PRIME MINISTER: I'll ask Andrew to add to this answer, but I'd like to achieve it obviously. We'll do everything we reasonably can to make it happen, but in the end there are two sides to a negotiation. We're keen to conclude the negotiation. We want to get the best possible deal that we can. We do want a deal. Now, in the end, it does depend upon our Chinese partners, but we are confident that it is do-able.

TRADE MINISTER: We had another round of negotiations last week, both with China and separately with Japan. I've had contact with my counterparts in both countries now in January and in February, I met personally with the Japanese Trade Minister, I look forward to getting to China in this trip and hoping to catch up. We are making good progress on both fronts in fact. So, I'm not going to put a date on it, but I think things are progressing in a very satisfactory manner and the relationships in terms of the negotiations are not dissimilar to that which we experienced during the South Korea one.

QUESTION: You've put reforms to the Qantas Sale Act on the agenda. One long-term outcome is surely an alliance between Qantas and possibly a Chinese airline, possibly an investment. Would you welcome that or would you have concerns about that?

PRIME MINISTER: We're open for business and that means we're open for investment. Obviously investment has to pass the Foreign Investment Review Board tests, but nevertheless we are open for business and we are welcoming of investment. If we are able to change the Sale Act in the ways we hope, obviously, it will then be up to Qantas and potential partners to talk about what might happen. We certainly look forward to an unshackled Qantas – a Qantas which can continue to be one of the world's great airlines.

QUESTION: [inaudible]

PRIME MINISTER: If we repeal the Qantas Sale Act there will still be a number of tests and conditions that would have to be passed. First of all, all foreign ownership, or all substantial foreign ownership, has to go through the Foreign Investment Review Board process. There's a separate requirement for international airlines based in Australia. So, both of those tests would have to be passed and it is, as I understand it, impossible for an Australian-based overseas airline to be more than 49 per cent overseas-owned.

QUESTION: There are reports coming out of China saying that the Chinese have actually put the FTA on the backburner. Do you at least concede there are issues that have to be resolved diplomatically on other areas? Such as the, we've had military issues that have raised their head in recent weeks. Do you concede they have to be resolved before the FTA has any chance?

TRADE MINISTER: I saw those reports in the Australian press and followed it through. In fact I got the transcript, the exact transcript, of the question that was asked of not the minister as it was reported, but of the spokesman for the Ministry for Commerce. If you look at the transcript it's quite clear that the journalist asked about three specific free trade agreements that China is currently participating with and he responded to those three. It's quite clear from the transcript that he was talking about the local area, because the question was about Japan and Korea and the RCEP, the regional agreement and he answered quite specifically those three. I think it was, in my view, a misrepresentation of the question and the answer, Australia wasn't mentioned and wasn't invited to be talked about in that question and answer. So, I'd just say to you, again, we're in constant contact with the Ministry of Commerce, with their team. We had negotiations again last week. They went extremely well and I think we're on track to finish the Chinese and the Japanese in a satisfactory timeframe.

PRIME MINISTER: If I could just add to that Andrew, look, to use the old phrase it is possible to 'walk and chew gum at the same time'. It is possible to have a respectful disagreement with the Chinese on one issue and at the same time be strengthening the overall relationship including trade relationships.

QUESTION: China's been critical of our treatment of asylum seekers recently, making reflections about our human rights record. Is this an opportunity for you to have that discussion with China, or is this just about trade?

PRIME MINISTER: This is a trade delegation, but obviously in a strong and robust relationship it's possible for people to raise all sorts of subjects. My understanding is that the Chinese observations about our policies on border protection took place as part of the human rights dialogue which we regularly have with China and we have some observations from time to time about things in their country, they from time to time have observations about things in our country and that's fair enough. That's exactly why this human rights dialogue was established. But I think all of us want to strengthen the overall relationship. I think that the overall relationship is in very good shape. I think it is good and getting better and it's in both country's overwhelming interest to further strengthen the trade and investment and economic relationship and that's what this is all about.

QUESTION: Are you and Joe Hockey at odds over what to do about Qantas given his previous support for the debt guarantee?

PRIME MINISTER: Absolutely not. Absolutely not. We both accept that airlines are an essential service and obviously in the event that there is any challenge to essential services, government has an important role. But any suggestion that we are anywhere close to that is just completely wrong. What we want to do is ensure that Qantas continues to be one of the world's great airlines. We want to ensure that Australia has a vigorous and competitive airline market which is going to be good for passengers, good for workers and ultimately good for shareholders as well.

QUESTION: Prime Minister, on deregulation, are you concerned that your Parliamentary Secretary Josh Frydenberg has been distracted from portfolio responsibilities by his involvement in rolling Denis Napthine in Victorian pre-selections?

PRIME MINISTER: Well, I just don't accept the premise of that question. I don't accept the premise of that question at all. I think he's doing an extremely good job – a very good job indeed.

QUESTION: Back on Qantas, just to clarify, is it your intention, when you talk about levelling the playing field, to remove the 49 per cent cap altogether and allow the cards to fall as they may, or are you arguing to keep that 49 per cent cap and ensure that Qantas remains an Australian carrier?

PRIME MINISTER: There are two separate acts here. There's the Sale Act and the Government has indicated an intention to remove the restrictions on Qantas under the Sale Act, but there is also the restrictions on carriers under the other Act and we're not proposing to change them.

QUESTION: Prime Minister, is a debt guarantee off the table entirely, you're not issuing a debt guarantee [inaudible] or at any point?

PRIME MINISTER: Well Kieran, the point I make is that if you do something for one, in fairness you've got to do it for all and this is a Government which is not in the business of favouring one company over another; we're in the business of trying to ensure that all Australian companies – all Australian enterprises – are given the best possible chance to flourish.

This is why I'm so determined to get rid of the carbon tax, because the carbon tax – as I hope all of you know – was a $106 million hit on Qantas' bottom line in the last financial year and as John Borghetti said on Friday – strangely underreported statement of John Borghetti's – the best thing you can do for the airline industry, right now, is get rid of the carbon tax. I hope that that clip of John Borghetti might get replayed tonight, because he does know what he's talking about. He's running Virgin, he was very senior in Qantas; he knows as much about the airline industry as anyone, and his clear statement – no ifs no buts – the best thing you can do for the airline industry, right now, is get rid of the carbon tax.

QUESTION: Minister Robb, can I just clarify with the free trade agreements with Korea and Japan and China, but particularly Korea – in the Parliament the other day the debate highlighted that some of our agribusiness, some of our dairy products for example, were put on a very long finger and following our free trade agreement with the United States, [inaudible] our beef exporters for example – pay a higher price than other sectors of Australia to pull off these deals, which in the end are free-er trade rather than free trade?

TRADE MINISTER: Well, if you look at the South Korean, I think in nearly every case - we didn't succeed with rice but there might be a long tail on some things because of the particular sensitivities in Korea - but they go to zero, they go to trade liberalisation. The thing is that the EU and the US completed free trade agreements two years ago. We should have finished it four years ago. This thing started some time ago – some years ago – and as a consequence, even though there's a tail to some of these protections coming off, the US and the EU have got a two year jump on our industries. If it had gone another year, the gap would have been, seriously detrimental to our trading relationship.

So, we are now back in a position on lots of products like wine - 15 per cent goes off the day this thing's introduced, potatoes – 300 per cent goes off the day this is introduced, manufacturing over the next twenty years until 2030 will increase by an estimated 56 per cent, agriculture trade by 73 per cent by 2030. This is demonstrably good, even though for some products, or some parts – some of dairy comes off immediately, other parts come off over several years, sheep meat comes off over 10 years, beef comes off over 15 years, but we're on the same track now as the Americans so their advantage over us will be neutralised. And of course already we get $500 million worth of trade in beef; it's going to be a real fillip to so many of our agricultural industries; for most of horticulture, they go to zero immediately.

So, I think it is the highest quality deal that we've ever been engaged in, notwithstanding the outstanding efforts of my former trade minister and colleague over there, Mark Vaile. But it is the best quality deal that we've ever done and it will not only help agriculture enormously – and it should – and it is going to be the century of food and water security, but it's also for services, which has not received a lot of attention but our capacity to position services of all sorts, whether it's aged care, health, education, engineering and of course legal and all the rest, they can go in in their own right under this agreement, establish themselves and it will really open up enormous opportunities for services.

QUESTION: Prime Minister, just to go back to Qantas, I understand that you're trying to apply some political pressure on the other Parties to wave through the changes to the Sale Act, but you can read the numbers like everyone else can and at this stage that doesn't look all that likely. Will the Government consider other things to assist Qantas in the meantime in your discussions this afternoon?

PRIME MINISTER: Well yes Mark, we will consider getting rid of the carbon tax as quickly as we humanly can, because, as I say, it was a $106 million hit on their bottom line and this is a very significant burden that Qantas is carrying that it shouldn't carry. It's also a burden that the other airlines are carrying; I think Virgin's carbon tax bill was something like $46 million.

So, this is an unnecessary burden and the job of government is not to play favourites amongst different businesses, the job of government is not to pick winners; the job of government is to get the fundamentals right, because if we get the fundamentals right, all businesses are best able to compete, they're best able to employ, they're best able to deliver the best possible service.

I want to say this really is one of the key differences between this Government and its predecessor: we do not play favourites between different businesses. We do not think that we are better at running businesses than business people are, but we understand that if you want to get regulation down, if you want to get taxes down, only government can do that and that is our job.

Now, we will do our job as well as we humanly can and we will allow business people to do their job as well as they humanly can and that is the best way to keep our economy strong, to maximise jobs and to maximise prosperity.

QUESTION: Prime Minister, just on another matter, do you have any response at the resignation today of AFL chief, Andrew Demetriou and on a sort of related matter, do you think there needs to be a faster resolution for the football players' sordid cloud hanging over them in relation to the ASADA matter?

PRIME MINISTER: I think it is unfortunate that the reputation of Australian sport has been blackened as a result of that rather overdramatic announcement here in Canberra about a year ago. I think that whole business could have been handled a whole lot better. Now obviously, sport has to be clean and it has to be fair. I think Australian sport, by and large, is clean and fair and as I said, I think it is unfortunate that the reputation of Australian sportspeople generally was impacted by that somewhat melodramatic day here in Canberra.

Look, as for Andrew, I've got to know him reasonably well over the last few years. He's certainly been a very big figure in the AFL. I think there's been a lot of change and development, a lot of improvements in the code under Andrew and I congratulate him for the good things he's done. I wish him well in his retirement, but you know, I'm no AFL expert and I'm sure when it comes to summing up the career of Andrew Demetriou, there are many people whose plaudits are far more valuable than mine.

Thank you.

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