TREASURER: (Opening audio inaudible)

With a number of very detailed discussions about a range of issues going to the heart of the economic relationship between China and Australia and also involving a number of issues relating to the G20 which Australia is the Chair of at the moment.

Chairman Xu opened by recognising in his words, that the investment environment in Australia has improved a lot since the election of the Coalition Government. He also praised the Government for its decisions to repeal the Carbon Tax and the Mining Tax. He recognised that Australia has undertaken significant reform in its economy over a long period of time and there is much information we can share between Australia and China in order to help to facilitate major new opportunities for economic growth. In particular, we discussed the free trade negotiations between Australia and China–which Minister Robb might care to add to–we discussed the target for growth and the G20, and we discussed closer financial relations, including Australia's desire to have a clearing bank for Renminbi in Australia and also the opportunity to create a market maker for Renminbi trading in association with that clearing bank in Australia.

Out of our discussions today, there was mutual recognition that there is tremendous opportunity to deepen the relationship at a number of levels including in particular, expanding services, exports from Australia to China and also improving investment opportunities. As a result of that, we have agreed to create an Investment Co-operation Framework, at the suggestion of Chairman Xu who has asked us to work with him to create a much deeper framework for the improvement in investment in the relationship between China and Australia. The suggestion by Chairman Xu to go down this path illustrates a tremendous goodwill that the leadership of China has towards Australia, and in turn our strong support for deepening the investment relationship from China to Australia is recognised as contributing to an overall significant improvement in the overarching economic relationship. So, it was a very productive few hours and later today, the Minister and I will be meeting with Vice Premier Zhang and we will seek to further build on a number of initiatives that were framed at our Strategic Economic Dialogue.

MINISTER ROBB: Well, just particularly on the free trade agreement discussions, which we had for a considerable amount of time, going through that, I think the conclusion was –the conclusion was, it is doable this year; it could be completed and that both governments are determined to bring it to completion this year. Chairman Xu did suggest at the end, NDRC will be active in helping to conclude that Free Trade Agreement and I would say that the initiative that Chairman Xu put forward on the working group, to develop an Investment Co-operation Framework–the intent there is to have that concluded by the time President Xi visits the G20 and it will give us a significant road map going forward on even specific investment issues–is the intent but it is aimed at two-way investment. Of course, most attention is on the very significant and most welcome investment from China to Australia over the last ten to fourteen years in particular, but of course Australia has $20 billion of investment in China and so much of our potential investment interest is in the services area and we discussed this at length. And this Investment Co-operation Framework will really put some substance and some real form around investment opportunities both ways and I think again will add further to the acceleration of the economic relationship between our two countries.

TREASURER: Questions, over to you. Yes, sir?

REPORTER: I have two questions to the both of you. (Inaudible) I am concerned that the finance and trade ministers will be housed (inaudible).

TREASURER: Okay, well, I can answer the second part first and then you can talk about the G20. I am meeting with Finance Minister, Lou Jiwei tomorrow and we have already on a number of occasions discussed PPPs, and you are right, Australia is regarded as one of the world's leaders in relation to PPPs and despite some domestic political challenges, we are determined to roll out further PPPs to build the infrastructure for the 21st century that Australia needs and we will utilise the trillions of dollars that are going to be in superannuation, but also the huge amount of investable money out of China, to build the infrastructure that is productive and generates income.

REPORTER: (Inaudible)

TREASURER: Now, this is something that is one of the core areas of focus of G20; how do we get more private sector investment into productive infrastructure? And there are some golden rules in that regard. You need consistent access regimes, you need regulatory investment environment that is stable and supportive, you need to have a proper assessment of traffic flows, you need to have a speedy environmental approval–not something that has been a particular impediment in China, but it is hugely important that when you make all the decisions to go ahead with projects, you actually do go ahead with the projects rather than being bogged down in red tape and dis-organised government. So, having said that, we are prepared to work closely with our friends in the Finance Ministry in China to develop PPP–the infrastructure around PPP that helps to bring along speedy investment in infrastructure. You might talk about G20?

MINISTER ROBB: Okay, there is as you indicated a T20 meeting on July 19th in Sydney and it will be joined by all of the Trade Ministers, more or less, from all of the G20 countries. It is an input into the G20 meeting later in the year of leaders and what the G20 meeting later in the year is looking for, is each member of the G20 to present a range of domestic initiatives that they will take unilaterally reforms that they will take in their own country to contribute to two per cent growth–an increase in two per cent growth. Now, we are looking at the T20–at the trade component of those measures. So, once we come up with those measures, they will go onto the G20 as a contribution towards each country's G20 offering and I would hope that we see some very ambitious offerings at the T20. One commitment is certainly to continue the earlier G20 decision to freeze any increases in protection and a subsequent agreement to begin to roll back any protectionary measures that were introduced after the Global Financial Crisis where we saw an increase in protection . Those two things and secondly, the Trade Facilitation Agreement that was agreed at the WTO Bali meeting earlier this year, which has the potential to create some 21 million jobs and add a trillion dollars to world economic growth, to have that fast tracked and for the whole G20 to fast track that. So, they are the key things that we will be waiting to see.

REPORTER: Minister, can you give us an indication what is–some more details around, what exactly is in this (inaudible) and you know what sort of areas will be canvassed? Is it outside the Free Trade Agreement? Is it consistent with that? And secondly, Treasurer do you get the sense that more Australians take the (inaudible). Do you get the sense that China will require a more independent foreign policy to Australia?

TREASURER: In relation to the second issue, no and in relation to the first issue, the Investment Co-operation Framework goes beyond the Free Trade Agreement. It is based out of the Strategic Economic Dialogue, which will be held each year and I invited Chairman Xu to come to Australia for that meeting. The focus is to deepen the everyday engagement between China and Australia with some identifiable projects. Now for example, we talked at length–as the Trade Minister was able to speak with a great deal of knowledge, we talked at length about the Government's Northern White Paper and the massive demand for new investment to develop Northern Australia and certainly that was something that created a lot of interest with Chairman Xu. So, out of our Investment Co-operation Framework, we want some identifiable areas as well, where there are going to be new investment opportunities and it as much about investment in Australia, as it is about Australia investing in China.

REPORTER:  So, with the actual projects is that right? Could that include high-speed rails…

MINISTER ROBB: Well, it could go to–the Free-Trade Agreement is about rules. So, we will hopefully conclude a set of rules that will free up trade between Australia and China on a whole host of issues. Hang on, that's the first part of it. This sits beside it. It takes that expression of goodwill and trust to a further level, where we start to identify individual–potentially individual projects or individual areas, where we will give one another particular consideration; so, for investment into China and investment from China into Australia. And it did follow a recognition by Chairman Xu that a series of very significant investments into Australia have been quickly and properly considered by and approved by the Treasurer over recent months, which showed our bona fides in dealing with things that are of material interest to Australia, but also meant it benefits investors from China.

TREASURER:  Let me name the individual investment decisions. So, that's quite interesting and has a detailed discussion. Well, like State Grid and Yancoal, the decision I made in relation to Yancoal and also a recent decision I made (inaudible)

REPORTER: So, with that, in terms of the investment framework that you say is going to be rolled out. Will there be a change in attitude from Australia towards state-owned enterprises?

TREASURER: Well, we have changed our attitude; we came with a new Government. Obviously, where it is contrary to our national interest, we will say no but there have been a range of applications that have come before the Foreign Investment Review Board, and come to me as Treasurer, that have been approved. So, we are open for business. And the fact is, when the Prime Minister said on election night, ‘Australia is open for business', we have been able to add real meaning to those words and that was recognised by Chairman Xu in his opening statement to us, he recognised, and I say it again, ‘the investment environment in Australia has improved a lot, since the election of new government'; his words. 

REPORTER: And, in terms of the, you mention that (inaudible) doable this year in terms of the Free Trade Agreement. Was there any discussion around or what might hold it up?

MINISTER ROBB: Well I did–which they already knew I think–but I did go through, in broad detail where I had got to with Minister Gao just on June the 7th, we met in Canberra. But, we still have a lot of negotiation to do, including around the investment rules, which were just referred to. The rules will be set in the Free Trade Agreement. The Investment Co-operation Framework, we will take that and seek to apply with goodwill, an approach to specific areas of investment.

TREASURER: Question from someone else?

REPORTER: (Inaudible)

TREASURER:  Well, yesterday I met with Governor Zhou from the Central Bank and he is the person primarily responsible for the approval of clearing banks and we had a detailed discussion and I must say, he is a hugely impressive individual. In fact, together with Chairman Xu and everyone we have met–hugely impressive individuals, very good and very confident. Highly intellectual leadership in China and Governor Zhou was very interested in setting up a clearing bank in Australia, he sought out our view about the matter and we gave him our views on it. It would obviously be a Chinese bank operating in Australia; it doesn't mean you can't have a market maker that is an Australian bank that forms a partnership as a starting point but there were a few other issues that we talked about, all of which I must say, there was very considerable engagement and support for and certainly, when the President makes his state visit to Australia later in the year, we are hopeful that there will be a number of very positive announcements.

MINISTER ROBB:  In regards to the energy and resources sector, we did explain our intent to try and broaden our economic activity in Australia and the investment, when were talking about investment prospects, that we identified other areas like agriculture and agribusiness, significant services areas; health and medical research, tourism, ageing. All these sorts of areas, because we are concerned (inaudible) infrastructure program spearhead our economic programs for some years to come but that was to take the weight off, or the onus off resources and energy to do all of the heavy lifting in the economy because the construction phase of many of the mining projects in particular, is coming to an end. Of course, the trade will go on for decades but the actual construction phase– investment phase, is coming to an end in some areas.

But, we did also talk about the energy side of resources and energy and how you know there is many, if not more opportunities over the next decade or so that we've seen in recent years. There is something in order of 15 million tonnes of gas a year–new gas, new projects, each year for the next ten years according to the major resources and energy companies, and these will come on stream. So, we have said that there are still many very significant opportunities and of course, China needs energy and it needs gas. It is looking to replace some coal with significant amounts of gas. So, on all of that front, that was a very detailed discussion we had and of course, Chairman Xu knows the energy sector very well and was alert to those opportunities.

REPORTER:  Agriculture is the (inaudible)

MINISTER ROBB:  Well, as I said earlier, I think we (inaudible) around the 12 months is the expectation that we are both still on track. I mean, it is a negotiation so anything can happen but we are both confident and we went through in some detail, what had to be, what ground had to be covered, including agriculture. Today was not a meeting for negotiation; it was to canvas new ideas. It was a very forward-looking meeting, that's why the Investment Co-operation Framework is starting to lay out a pathway beyond the Free Trade Agreement. So, it was very forward looking to compliment what we are doing in the FTA but the negotiations themselves will be conducted between myself and Minister Gao.

REPORTER: What kind of (inaudible)?

MINISTER ROBB:  Well, in agriculture there is the usual –there is always difficulties with things such as rice and grains and a whole lot, but we are looking for a New Zealand-plus agreement. So, China signed four years ago or completed four years ago an agreement with New Zealand and it did focus heavily on agriculture because that is a large part of their economy and we are anticipating a New Zealand-plus agreement.

REPORTER: Minister Robb, I am with the Financial Times. With regards to the agricultural issues you have just mentioned. Is the issue specifically tariffs or quotas? What are the stumbling blocks? And could you also just say something quickly about the TPP and your expectations for reaching a conclusion to that negotiation by November, as President Obama has suggested?

MINISTER ROBB: Just on the detail, I don't want to get into the details–I am sorry, because I don't want to put my cards on the table when I don't have the other cards that I am looking at, at the same time. So, I think you can understand our position in that regard. But on TPP, I feel we are 80 per cent of the way there with TPP but, because as one of my Chinese friends said in regard to another issue a few weeks ago, ‘it is a 100 mile journey and we are over 90 miles, so we are nearly half way there' and that seems to capture the nature of, or the difficulty in, that last 10 or 20 per cent. We are in to that stage where we are talking market access between the 12 countries and I think there has been somewhat of a breakthrough between Japan and the United States in that regard and that has meant that now all of the countries are negotiating with Japan and the US and so I think we can see how a final agreement would take shape and we haven't all agreed to it yet but I think we can see, pretty much the nature of a final agreement. I don't see anything happening, in my assessment of US politics, or the assessment that many of them have given me of their own politics, is that one will pass this year, no matter what happens so I think the window, the best window and the best opportunity will be in the first half of next year.

REPORTER: Mr Hockey, just sticking on infrastructure. China is trying to set up an Asian infrastructure investment bank which is something of a rival to the (inaudible). Given the Government's interest in rolling out infrastructure across Australia, is that something Australia would look to sign up for?

TREASURER: We are prepared to engage in discussions about it. Obviously, we and a number of other countries are looking forward to receiving more detail in relation to the proposal. It is–it could have a very significant role in the Asian region and that is something we are quite prepared to consider. Yes, up the back?

REPORTER: (inaudible)

MINISTER ROBB: Well, there is a lot of e-commerce trade already taking place between–more in whitegoods and clothing and electronics. But from our point of view, this is a matter for the markets to sort out. No it is, it is. I mean, this is not something we would be looking to direct from government. We would try and create the framework and make sure the facilities are there for e-commerce to take place but I think, no matter what area of trade you are talking about, the future is going to have a very large component of e-commerce associated with it.

TREASURER: And I have just decided to give each of my cows a Facebook page.

REPORTER: Treasurer, there is a parliamentary committee looking at foreign investment rules, particularly on residential property in Australia. Given that the range of investment from China buyers has been so high and has (inaudible). Does that mean the (inaudible) should be tougher?

TREASURER: No, because they're in compliance with the existing rules by foreign investors.

REPORTER: (Inaudible) exisiting houses.

TREASURER: They are entitled to, under certain circumstances, purchase existing properties but the rules are very strict. There has been no evidence that I have seen of widespread abuse of the rules. In relation to Chinese investment in Australian real estate; it is overwhelmingly limited to newly constructed premises. Well, I am in charge of foreign investment so I get a pretty good picture.

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