DAVID SPEERS: Minister thanks for your time. I wanted to start by asking you about Iraq in particular the situation there has seen the oil price climbing over recent days. Are there trade implications as well as Defence implications in what’s going on there do you think?

ANDREW ROBB: Well, I think just any instability and clearly it’s a very concerning situation in the country, but any instability has a ripple effect. It’s not a huge issue for us country-to-country, we haven’t got a huge trade into Iraq, but as I say the instability that could emerge depending on what happens there, is a great concern I think.

DAVID SPEERS: Speaking of instability, we’ve also seen a number of Arab states raising concern about Australia’s position on a very sensitive issue, East Jerusalem can you clear this up for me, what is the Australian government’s position? Is it occupied, is it disputed, what is East Jerusalem regarded as by the Australian government?

ANDREW ROBB: Well, there are lots of different settlements, but the ones particularly in East Jerusalem, they have been a matter of clear dispute for a long, long time and so that is the description that seems most fitting for those and I think we have written to all of our respective counterparts in those countries to try and just clarify it. I think there was a misunderstanding or an overreaction in lots of ways about what was being said. Our position on Israel has not changed one iota.

DAVID SPEERS: But has the position changed on how you describe East Jerusalem?

ANDREW ROBB: It has been that particular part of the city has always been a question of dispute and the whole point of in any sort of two-state solution that was one area which there would need to be a dispute resolution.

DAVID SPEERS: Sure, but it was previously described as occupied.

ANDREW ROBB: Well a lot of the other settlements were described as occupied many people often would describe East Jerusalem differently as disputed territory, so it has been either or in many cases from my experience having visited and talked about it.

DAVID SPEERS: But did you need to go here, did George Brandis need to go there and say we have now decided we are going to refer to it only as disputed East Jerusalem and no longer occupied that’s a loaded phrase. Was that really necessary?

ANDREW ROBB: Well, I haven’t had a chat to George about it, it’s …

DAVID SPEERS: So you weren’t consulted about this?

ANDREW ROBB: I wasn’t aware of it, no, but I think George was just looking to clarify the situation he must have found himself and others in the course of government business using different terms to describe that part of Jerusalem and George sought to get some clarity on it.

DAVID SPEERS: But it has upset the Palestinians, Iranians, Pakistanis, Indonesians, as well, these are important trading partners aren’t they?

ANDREW ROBB: As I say, I think there was a misinterpretation, they seem to assume that there had been some change in our attitude to Palestine and the Jewish state and the two-state solution and I think once it is clarified that our position on Israel has not changed one iota, then hopefully this issue will pass.

DAVID SPEERS: Did George Brandis overstep this?

ANDREW ROBB: No, as I say I think he because he sought to clarify it ended up being interpreted, reported, I don’t know really how it then all happened that they thought that there was some change in terms of our policy, there is no change in our policy.

DAVID SPEERS: Let’s turn to why we are here in Houston what do you think has been achieved by this visit by yourself and by the prime minister?

ANDREW ROBB: Clearly, I think we have had an outstanding week. It’s been a sort of sell-out week in a way. Everywhere we have gone there’s been enormous interest particularly because of firstly, the infrastructure initiatives being taken in Australia. In Toronto and in New York I had a roundtable with the seven biggest funds in New York representing around $1 trillion under management.

In Toronto I had a roundtable with the major pension funds and a couple of other funds, representing nearly half a trillion dollars there under management. The enthusiasm was palpable and the big thing that has caught their attention in a profound way is the asset recycling initiative where the Commonwealth will provide a 15 per cent bonus to the states who privatise assets and put the money back into other infrastructure.

DAVID SPEERS: So they’ve told you they’re going to start putting more money in?

ANDREW ROBB: Well, they said they are now considering setting up offices and they said they will be examining all of the options that came up. Since we had the budget brought down there’s been something in excess of $50 billion worth of projects that the states have identified. You could see they had very little opportunity – almost no privatisation in the United States with very little or difficult examples in Canada.

So to see this happening in a stable country that they know they’ve had successful investments in before, there was a lot of excitement about the brown fields projects coming up and the green field projects that will also be coming up because of the money being reinvested. So from both the pension funds, who are looking at brown fields and long-term assets to match their liabilities, and the PPP construction companies looking at green fields projects. A lot of the world is saying that there is a lot of money around, but there are no projects.

We’ve given them projects and it generated enormous interest including in New York where we have had success but less success in the past. I had the seven biggest funds in New York, who have got options all over the world and again a lot of enthusiasm for what was happening in Australia.

DAVID SPEERS: I want to talk about the energy boom that is underway here in Texas, here in Houston around Houston in particular. The shale, oil and gas revolution that’s changing the American economy and has much broader implications as well put that together with the widening of the Panama Canal that’s happening over the coming years. They are going to be able export LNG into the Asian market. Is that going to create competition for Australia there do you think?

ANDREW ROBB: It will create competition but it will seriously deepen the market in Asia. I think the gas and the petroleum will logically go into Asia from the United States.

DAVID SPEERS: Will that push down the price for Australians as well?

ANDREW ROBB: Well the thing is, what was confirmed here is just the extraordinary opportunity and demand that is emerging in the next 10 to 15 years for energy, about 15 million tonnes of gas a year, a new project has to come on-stream that delivers that amount per year. That’s the same as the Gorgan gas project, that’s our biggest and one of the biggest in the world, that’s got to come on-stream every year for 10 years.

DAVID SPEERS: So even though it is booming here, it’s not going to make future projects in Australia unviable?

ANDREW ROBB: No it’s not, no, no, I think the competition will be particularly healthy because it will bring in another competitor who is also efficient and at the top of the market and it will put pressure on other smaller players in other countries. I think it will create opportunities for us because it will put pressure on other higher cost countries for LNG and for whatever so that we can emerge in a market that’s galloping in terms of demand.

DAVID SPEERS: When you look though, particularly the shale, oil and gas industry here do you get frustrated at all about the restrictions the states in Australia are putting on coal seam gas development?

ANDREW ROBB: Well some states are putting on. Look, at the moment Queensland has got 40,000 new jobs because of the coal seam work, those Gladstone projects start delivering next year and the year after …

DAVID SPEERS: But in NSW it’s virtually frozen isn’t it?

ANDREW ROBB: Well, you know I think it is a frustration from the point of view of domestic gas, it is starting to be squeezed we do need more gas. We are drowning in gas reserves all around the country both in conventional and unconventional, coal seam and shale gas. We’ve got the seventh biggest reserves of shale gas in the world and we haven’t started to tap into that.

DAVID SPEERS: One of the differences do you think, here in the US the farmers or landholders get a royalty it can be up to I think 20 per cent. In Australia they get next to nothing because the mineral deposit or the gas reserves are considered a public asset rather than something they own.

ANDREW ROBB: Well that was the case and that certainly stymied a lot of the early development of the coal seam even in Queensland but the market has settled in the US at about 12 per cent of revenue for the farmer and that certainly ignited what happened in the US, no doubt about that. But what has happened in Australia, and I got confirmation here in the last few days, is that you add the royalties, state royalties, together with what the farmers are getting and it is getting to close to or it is around what it is costing US companies for royalties plus what they are giving to farmers.

DAVID SPEERS: But of course it is not going in the farmer’s pocket back home.

ANDREW ROBB: Yes it is, no that’s my point there is a royalty paid in Australia to the states, but over and above that there’s an amount not dissimilar to what is happening here in the US but you would expect that over time, I mean the market, the farmers in Australia are no different, ok they might own the land here so put them in a stronger position immediately but now to get the cooperation of farmers and to make it worth their while for the disruption and all of the rest they’ve had to slowly but surely gravitate to what they are paying the U.S farmer for their gas.

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