PETER VAN ONSELEN: Can I start by asking you, I guess it relates to Arthur Sinodinos stepping aside but it's about the Expenditure Review Committee. Presumably he also stepped aside from that. You're the former shadow finance spokesperson before taking on the role that you're in; in fact in the last government the Trade Minister, Craig Emerson, was part of the ERC - there's a vacancy there now, are you going to be stepping into that?

ANDREW ROBB: No, I'm not. The responsibilities of Arthur, as the Prime Minister has announced, are taken by Mathias Cormann. Of course Mathias was the Assistant Treasurer, Shadow Assistant Treasurer so he's all over the issues that are Arthur's responsibilities. I think as far as myself - as far as I'm concerned, I'm travelling so much overseas because that's really where the trade investment job is, that I don't think I'd be able to make a contribution to the ERC that is necessary.

PAUL KELLY: Minister, you've had a long commercial association with a number of different companies and a number of different sectors. How surprised are you at the findings last week about Arthur Sinodinos?

ANDREW ROBB: Well, firstly, Paul, there's been absolutely no allegation made against Arthur and it's - he's a man that anyone who knows him, no-one would believe that he would do anything corrupt. At the moment he – Arthur- is just a witness, he's just giving evidence or he's just giving responses to the ICAC investigation and with anyone involved in business, it's always difficult to see all of the strands of contact that you've had and the way in which that may be used or abused against you in the future. It's always a difficult one, it's why when anyone comes from business, there's a very torrid investigation now by the pre-selection panels to try and ensure that we do understand the connections and what needs to be done to make sure that all of those things have been severed.

PETER VAN ONSELEN: Well, there's a report in today's Sunday Telegraph that Bill Heffernan, Senator Bill Heffernan, asked about some of these issues on the pre-selection panel for Arthur Sinodinos; have you heard that?

ANDREW ROBB: I read something about that. And I thought it was quite a proper thing to do. They would have gone through with Arthur, as I've just intimated, as they do with anyone as particularly if you've had major and significant business involvement, the pre-selection panels these days, the State Directors, the Presidents of the party - they really put you through the third degree and I think Bill Heffernan was on that committee in New South Wales and would've been his and others' responsibility to forensically identify all of Arthur's connections including this one. And I'm sure they did and as I understand and as Arthur has attested, he saw nothing at the time that was an issue.

SIMON BENSON: Minister, notwithstanding the fact that no allegation has been made against Arthur, would you agree though that perhaps he may have exercised poor judgement in getting involved with a company that he admittedly - he admits himself knew at the time- was also associated with the Obeid family?

ANDREW ROBB: Well, I don't know what Arthur did know at the time and I'm not in the position to make judgements about Arthur's judgement at the time so it would be very gratuitous of me I think to start to form conclusions. As I said, there's been no allegations. There have been, within the ICAC itself, all sorts of points are being made by various people about the nature of the business that was being operated, but again, that's a body that is not encumbered by the processes of evidence and I'd just warn everybody to be a bit careful about making premature judgements about anyone and in particular someone who I believe is honourable and as competent as Arthur Sinodinos.

PETER VAN ONSELEN: Can I ask you about that idea about the nature of ICAC? I wrote about this in The Weekend Australian yesterday, it strikes me that it's a star chamber; it's a body, it's a permanent body, something that the Fitzgerald Inquiry recommended against for Queensland because it's too much power to be vested in one permanent body because as you say, Mr Robb, it is able to operate outside of the standard legal requirements of fair and due process for witnesses and others. As a public figure yourself, do you have concerns about the proliferation of these sort of star chambers and what they can do to people's reputations, particularly people that ultimately end up not having any findings against them but are dragged through the media process of these organisations?

ANDREW ROBB: Well, as a public figure, I'm always reluctant to start making strong statements or rash statements about bodies that have been set up to keep public figures accountable, so I'm careful in that regard. I must say though that the absence of evidence and processes as part of - that are part currently and have been for centuries of the criminal and civil systems in our community, I think that's something that needs to be assessed when we are assessing or the states are assessing the roles of these bodies such as ICAC - that have been put in place in various states.

PAUL KELLY: Minister, just switching to your portfolio, are you confident that we will have an FTA with China before the end of this year as Tony Abbott promised?

ANDREW ROBB: I see no reason why that can't be achieved. One of the preconditions I think for a successful free trade agreement is to have the political will on both sides to really make some difficult political decisions and my sense is that the Chinese Government is certainly of that mind. We heard Premier Li just two or three weeks ago indicate that over the next year one of their priorities is to accelerate the conclusion of a free trade agreement with Australia. Certainly the Prime Minister, Tony Abbott, has made our position clear from the first week of taking office. He has really led our emphasis on trade and investment and I do think that we've got some hard decisions yet to resolve but [interrupted].

PETER VAN ONSELEN: What sort of things, Mr Robb? What are those sort of hard decisions if you like that are going to have to be looked at?

ANDREW ROBB: Well, the particular interest of the Chinese is a matter of public record is their potential for investment in Australia. Of course they have invested something like $93 billion over the last few years, largely in resources but of course in many other sectors but also labour mobility, these sorts of issues - they're not easy issues for - but I think there is a sensible way through these issues and for our part we need to see greater access, particularly for the things that we do well which is so many of the agricultural products and of course services. I think China and many other parts of Asia are at a stage where they desperately need the access to the sorts of knowledge-based services we've got just about in any area of commerce and education and health and all the rest, so I think yeah, if we can see some substantial - substantially greater access to services in an unfettered way, financial services and others, that I think we could end up with a very high quality free trade agreement with China and it could be done; I can't see any reason why it can't be completed by the end of this year.

PAUL KELLY: Well, just on that point, Minister, does this mean that we will see a significant increase in Chinese investment into this country? Is the Abbott Government committed to that idea and is that idea saleable in political terms?

ANDREW ROBB: Well, if you look at history, wherever there's been a strong trading relationship there inevitably ends up a strong investment relationship because the trading relationship - it builds relationships, it builds trust, it builds understanding and then you get informed investment into a country. Now, a lot of the early Chinese investment I don't think was informed. They - there's some bad commercial decisions taken and I think the Chinese have learnt from that as you would expect, but as I say when you build a strong trading relationship and bear in mind that China is not only our biggest customer for our resources but it's our biggest customer already for agricultural products, our biggest customer for education, our biggest customer for tourism, our biggest customer for services. Now, in that regard we have to - it is our responsibility- and we have to take account of the fact that this will build a relationship that does require investment opportunities so that we can go to the next level. We've always relied on foreign investment since the First Fleet, we've relied on foreign investment, its' true again today. There's so many opportunities for us in this country but we haven't got the capital to take many of those services, a lot of the logistical arrangements, a lot of the innovation and research and development.

SIMON BENSON: Sorry, look, I'll just interrupt for a second, just back to Paul's question. I'm assuming that the Chinese will want a similar deal to that we gave to the US which was a billion dollar threshold for foreign investment. Now that's going to cause you problems with your National Party colleagues if that's something you're prepared to consider, particularly considering a lot of that investment would come from state-owned enterprises in China, how do you overcome that problem? And will you be willing to consider that sort of same deal for China that we gave to the US?

ANDREW ROBB: Well, with state-owned enterprises in the United States, or from the United States and there are many at a state and federal level, the threshold for the FIRB is zero. We are not discriminating in any way on SOEs across the globe.

PETER VAN ONSELEN: You'd acknowledge that there's more concern though particularly in National Party ranks about state-owned enterprises, particularly Chinese ones but of any variety?

ANDREW ROBB: Well, as I say if there are state-owned enterprises from the United States, they currently face the same conditions as those from China. There are a lot more, I concede, of state-owned enterprises in China though that is changing but there is still a lot, lot more but the other factor is that we've just completed, in fact we'll sign in the next three weeks, we'll sign the free trade agreement with South Korea. Now, they got the billion dollar threshold that we have provided to the United States and to New Zealand but at the same time there was a $15 million threshold included in that agreement on agricultural land. And that was seen to be quite acceptable to the South Koreans. Now, all I'm saying without pre-empting where we end up with the Chinese Government, there's many ways to sort of skin a cat.

PAUL KELLY: Well, there might be many ways to skin a cat but I mean surely when it comes to the billion dollar threshold we can't offer the Chinese less than what we've offered South Koreans?

ANDREW ROBB: Well, the South Koreans again, there's the SOE threshold is zero and the private enterprise threshold is a billion. Now, I don't want to pre-empt where we finish up in our negotiations with the Chinese. Every country is a different case. And - but there are precedents as you've suggesting, which will certainly influence our - the sorts of propositions that we might consider with the Chinese but let's see where it falls out at the end.

PAUL KELLY: Well, just on this related issue, Minister, is it your view that the United States is our single most important economic partner?

ANDREW ROBB: Look, I don't like to start ranking - the United States - they've invested at the moment they're by far our biggest investor. I don't see any reason why over the next - in the next few years the next 10 years, possibly that that will change; $600 billion of investment, the UK's about 530, Japan's about 120. China at the moment is at 20 billion, 20 billion of foreign direct investment or the stock of investment. Now, it's a long way to go, there is so much focus on investment from certain countries, you'd think they were dominating but in fact the Americans continue to dominate investment into Australia. So I don't see that changing.

They are a very important, mature market for us in so many areas such as tourism and others. We have to maintain and foster that long-standing, important, critically important relationship but at the same time build these new emerging markets in a way that opens up more and more opportunity for Australia.

So its not a zero sum game, this. If you like China more and more each day, you don't like the US less and less each day.

PETER VAN ONSELEN: Can I ask you a slightly philosophical question about all of these potential distinctions Paul Kelly was asking about whether there can be differences between the deal with South Korea versus the deal with China and we've been talking a bit about the United States as well. Does the level of democratisation in a nation come into at all when we talk about capitalist exchange with them because it strikes me, certainly amongst the voting public that there's perhaps greater concern about China because it is an authoritarian state, whereas when you look at the United States, when you look at South Korea, we're talking about democracies, does that in any way, shape or form come into trade and investment considerations?

ANDREW ROBB: Well, only to the extent that it influences the way in which business is conducted. If you look at the Trans-Pacific Partnership negotiations, this is the 12 countries including the US and Japan and Vietnam and Malaysia, ourselves, New Zealand, Chile, Mexico and a number of other countries, in that negotiation it's seen as a 21st century negotiation which is looking at a set of rules which will sit around state-owned enterprises so that there can be the assurance and the comfort that they are not getting some commercial advantage which puts them in an unfair position compared with private enterprise. Now that is the issue that sits behind the nature of government in some of those countries where there's a single party government. Now, in that situation hopefully will come up in this Trans-Pacific Partnership, with a set of rules which as I say ensure that there's a level playing field in regard to tendering and pitching for business between the countries that have got a large number of SOEs, state-owned enterprises, and countries that are predominantly private enterprise structures.

PETER VAN ONSELEN: Alright. Stay with us here on Australian Agenda. We're talking to Andrew Robb, the Trade and Investment Minister. When we come back from the break, we've been discussing China but there's also discussions around free trade agreement with Japan and we're counting down to the May budget where obviously trade and investment decisions will be crucial.

PETER VAN ONSELEN: Mr Robb, before the break, we were discussing China and you made mention of the fact in answer to one of Paul Kelly's questions, that you expect if you like the agreement with China to be able to be struck by the end of this year or you see no reason not to. Have you got a strategy in place for what that will inevitably mean which means obviously far greater Chinese investment in Australia? Have you got a strategy in place for dealing with presumably looming National Party concern about some of that?

ANDREW ROBB: Well, we dealt with this issue in that sense before the last election. It's not just National Party, there's wide community concern to make sure that especially with agricultural land, that like the case is in most of the Asian countries that we're dealing with, there is a particular concern about the nature of ownership and the opportunities and to make sure that if there is investment in our land, it's done in a way which is in the national interest. And that's why we put a $15 million threshold on the purchase of agricultural land and in the agreement, as I mentioned before the break, in the agreement that we've struck with South Korea, that's exactly what was imposed. There was a carve-out for agricultural land; it doesn't stop investment in agricultural and, it just means that anything above 15 million, it is considered by the Foreign Investment Review Board in the context of; does it help the national interest?

PAUL KELLY: Well, can I just ask you directly, Minister, is it your judgement that the Australian public is ready, is politically ready to accept a very significant increase in Chinese investment to this country?

ANDREW ROBB: Well, I think if it is coming into Australia and targeted and constructive and assisting with the research and the development and the improvement of a lot of infrastructure in the country to increase productivity, I think the electorate is ready. I think we've all got a job as politicians to explain it and to give people the comfort that this is in our mutual interest and the fact of the matter is that half of our trade is currently with China, Korea and Japan. If you look at the ASEAN countries, then they've got nearly the same level of trade, you put all those countries together, as we have with China, so eight of the 10 top exporting countries for Australia in our region.

SIMON BENSON: Minister, can I just bring you back to China…

ANDREW ROBB: We have to get that story across.

SIMON BENSON: I'll just bring you back to Chinese investment. One of the - you talk about agricultural land, investment in agricultural land but obvious… there's a lot of investment at the moment coming from China into domestic real estate and housing. The last 10 years has seen one of the highest housing approvals figures and a lot of that is being driven by demand from China; what are you going to do about the impact that that's going to have on housing prices for Australians?

ANDREW ROBB: Well, I've seen this argument several times before; unfortunately I'm old enough to have gone through different stages of investment increases. The Japanese in the '80s and a lot of the same fears and concerns were being expressed. If you go back to when the FIRB was first introduced, the Foreign Investment Review Board, you look at the newspapers - all the same arguments, the same sort of hysteria and it was the United States - they were concerned about, that was two years after they'd just saved us in the war. So there's nothing new about what's going on.

The fact of the matter is, when you get foreign investment, even in domestic housing, like the Japanese in the '80s et cetera, it does lead to a massive increase in the stock of housing and that we've seen this year - we've seen the biggest increase in the housing approvals for new houses that we've seen I think in something like 15 years. So there is a real benefit in the sense that it's going to increase the stock of new housing which is available for Australians.

PETER VAN ONSELEN: Andrew Robb, how important is the whole idea of the development of the North been in a sense viewed in unison with Chinese investment? Obviously the development of the North is something that you had carried for in Opposition and continue obviously in your current portfolio to have significant input into, it strikes me that an upsurge in Chinese investment into Australia that a free trade agreement would be able to assist with is all important to the sort of infrastructure development of the north that the Government is talking about, is that right?

ANDREW ROBB: There's no doubt of that. There's enormous opportunity - 60 per cent of all the water that falls in Australia falls in the North, we capture two per cent of it. If you captured five per cent of it, you could irrigate so much of the 17 million hectares of arable soil that currently is only allowed to have cloven footed animals on it, cattle.

So there are enormous opportunities now that there is an emerging market of high value middle-class from 600 million to three billion people in the region around us over the next 20 or 30 years. The opportunities are phenomenal.

We have to do this in a considered and measured way. That's why there's a White Paper being prepared now in concert with Queensland and Northern Territory and Western Australia but with my investment hat on, I am not just going to places like China - America will be one of the biggest investors as I mentioned earlier, Singapore have got major investment funds where they're looking to these sorts of opportunities.

The Middle East are looking for more opportunities. So it is really quite exciting and we just have to get the climate right here, get rid of the carbon tax, the mining tax, get the building and construction union back in non-criminal activities, non-rogue activities, these sorts of steps which we're trying to bring into place if we only got Bill Shorten to start to cooperate and remove the sovereign risk that Labor introduced for the first time in our history, into investment, we have got enormous opportunities and many of those are in the North.

PETER VAN ONSELEN: We're talking to Andrew Robb, the Trade and Investment Minister. Paul Kelly, I know you have a question to (breaking news of MH379)

PAUL KELLY: Minister, we know Tony Abbot is about to go to China with a delegation. We know that you've got an upcoming visit to China. What do you anticipate will come out of the Prime Minister's visit?

ANDREW ROBB: Well, it will add I believe the momentum that we are trying to build and the linkages; we're taking some close to 600 business people to China across four cities over a period of several days and there's meetings and opportunities being programmed for those 600 companies, but I think the presence of 600 business people with the Prime Minister will make a huge statement.

It's not just the media benefits, which I think will be very significant, but the fact that that level of interest associated with the Prime Minister of the country, with him going to Shanghai and Beijing, engaging with the leaders of China, will add even more impetus to the political will that I was talking about earlier that both countries have got to conclude this relationship for the free trade agreement.

PAUL KELLY: Well, can I just ask the extent to which you're concerned that strategic issues will cut across trade. I mean, we know we've had a number of difficulties with China in relation to strategic issues. We've had some very sharp words exchanged by senior Chinese figures towards the Abbott Government, so are you concerned at all that these economic proposals might be undermined on the strategic front?

ANDREW ROBB: No, I'm not Paul. Look, firstly I do think that, in many cases, a lot of ultimate trade decisions are driven by domestic necessity and if China is to significantly move towards a domestic-based economic and away from an export-dependent one, the sorts of services that countries like Australia can provide are fundamental to that movement, so imperative in their own domestic situation to see a greater opening up of their economy. So, that's an imperative. We've got to significantly increase trade and investment if we are to get sustainable economic growth and sustainable jobs in Australia. So, we've got mutual benefits at a domestic level. Now, I've found that the issues that might have occurred over the last six months, of a political nature, some hard words have been said on both sides, but through all of that, I've found I've been able to maintain a focus with the people with those responsibilities on trade to progress the negotiations while all of those things were happening.

SIMON BENSON: Minister, just on your other portfolio hat- Investment. Investment is going to be critical to this budget, in particular Joe Hockey's plans for an infrastructure boost, if you like, to the budget. What are the barriers that you're still finding overseas to investment coming into Australia? I mean, we had in the aftermath of the GFC, a lot of re-regulation by government. It actually put barriers up to investment. Are we now emerging, are we seeing the world emerge into a new environment where those barriers are coming down?

ANDREW ROBB: Well, a lot of this depends on the Senate, of course. What I have found, I've now done 12 round tables, investment round tables, across six countries and invariably the eight to ten people in each of those round tables represent hundreds of billions of dollars of potential investment.

Now the one message that has concerned me from those round tables across six countries has been that, for the first time in our history, sovereign risk and Australia are mentioned in the same sentence.

And it's the endless rule changes they talk about of the last few years. The firestorm of regulation. The unexpected and new taxes. The carbon tax and the mining tax. These things have materially damaged our reputation and when I say to them we've introduced as our first piece of legislation: get rid of the carbon tax, second piece: get rid of the mining tax, third piece: reinstate the Building and Construction Commission. When I talk about the approval process, which is in some cases for big projects blown out for over two years, over two years longer than when in 2007. We've got to make all of these changes. We've got all of that in train, some of it is being blocked in the Senate.

You know, Bill Shorten, I think he's gun shy. He is afraid to take any move which is anything different to what they've done for the last six years. That was a recipe for killing investment into Australia. We've got to turn that around and Bill Shorten has got big responsibilities in this. He's starting to look like the Bob Brown of the new Parliament, walking sovereign risk.

PETER VAN ONSELEN: We've been talking a lot about China, Mr Robb, but Australia is obviously close to finalising a free trade agreement with Japan, as well. We've been in negotiation about this since I think about April 2007. The Prime Minister is committed to getting this done by September this year, I believe. What barriers continue to exist, if any I suppose? I did note that just a few days ago that the National Farmers' Federation, that of course you've had close ties with in the past, have expressed some concerns about Australia giving ground in the agriculture space. Is that something that's still up for negotiation?

ANDREW ROBB: Well, that's you know, that's the hard part we're at. There are five areas that Japan has refused in the past to make any concessions to any country: on rice, on grains, on dairy, on sugar and on beef. Now, unless we get some movement…

PETER VAN ONSELEN: What's left?

ANDREW ROBB: What's left? Well there's a lot of horticulture left and again, they've got quite a lot of protection on that, but we've been negotiating across all of those fronts.

You know, we don't do a deal without movement in those five areas and significant movement. But we will be, if we do pull this off, we will be the first major agricultural export country that Japan has struck any agreement with, any major agreement with, and it will be a ground-breaking initiative. They are our second biggest trading partner; they're our third biggest investor. There are enormous linkages and, you know, contacts and friendships and business relationships. We can grow that significantly, but we do need to break through in these areas and we are close, I think.

SIMON BENSON: Look, Minister, I just wanted to take you back to the start of our conversation. We started with talking about Arthur Sinodinos. There are of course a number of other Liberals from New South Wales that may be called before this ICAC inquiry and the more we hear about it, the more we find out that Eddie Obeid has links into your own New South Wales branch, which is Tony Abbott's branch of course. I'd ask you to take yourself back a little bit further than we were talking about it before and put your hat on as the former Federal Director of the Liberal Party. Can you tell me, as a Victorian, what is wrong with New South Wales?

I mean, this was something you characterised as the New South Wales disease for Labor and now it looks like it's becoming a disease for the New South Wales Liberal Party. What's going on?

ANDREW ROBB: Well, you know, I think you're jumping - to start to equate anything in the Liberal Party to the Labor Party, you know, performance in New South Wales, you're talking about Thomson and Michael Williamson and Obeid and Macdonald and the AWU slush fund. I mean all of these…

SIMON BENSON: I'm talking about the names of some of your colleagues that have started to appear in the daily tribulations of ICAC.

ANDREW ROBB: Well, there might be speculation about some people but it doesn't bear comparison. I mean with the sort of institutionalised corruption and mismanagement and croneyism and all of the rest that is characterised New South Wales Labor Party for so long, so I don't for a second accept the claim that Liberals in New South Wales - that there is any institutionalised activity that mirrors the Labor Party's performance over the last couple of decades.

PETER VAN ONSELEN: Alright, Andrew Robb. You've been generous with your time to us here on Australian Agenda.

ENDS

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