PETER VAN ONSELEN: Certainly the politics of the week was focused on the Senate but the public policy achievement of the week was in the wake of Mr Abe's visit, the Prime Minister for Japan. It was the sealing of the free trade arrangement between Australia and Japan. To discuss free trade we are joined now by the Trade Minister Andrew Robb. Welcome to the program.

ANDREW ROBB: Thanks very much, Peter.

PETER VAN ONSELEN: The last time that we spoke to you, you were confident about soon signing the deal with Japan and hopefully you were hoping that we would be able to also get the deal done on free trade with China by the end of the year. The first one has been achieved. How are we looking in the second part of that?

ANDREW ROBB: Well, we have still got quite a lot of negotiation to go but I do think we’ve settled on a framework that means we can achieve it in the time frame. I spent an hour and a half yesterday on the phone to my counterpart in Beijing progressing some of the issues. So we are on the case and I do think we are still on track to conclude something significant by the end of the year.

PAUL KELLY: Just on this point, Minister, the Chinese were clearly concerned about some of the decisions which emerged between Australia and Japan in this most recent week. Is there any risk at all that in terms of its relations with Australia China might seek to retaliate in terms of the proposed FTA with China? Might it draw a link between the two or are you confident that that won't happen?

ANDREW ROBB: As I said, I have just spent an hour and a half yesterday with my counterpart. I saw absolutely no inference that the last week has had any impact on our relationship. We had a very frank and cordial and I would say from the Minister's point of view it was a very dignified exchange. It was tough. They are very tough negotiators, I have got to say, but I saw no sense of concern about the last week. And I think the fact of the matter is, Paul that Australia's economy is so tied in now to not only Japan and Korea but also to China.

And it means that our prospects in the future depend critically on us having strong security arrangements with all three. Of course, it is not that long ago we had the joint naval exercises with China and there is intent to continue to have a strong strategic relationship with China as well, as with the other two countries, Japan and Korea. So we are, if you like, inextricably linked and peace is critical for all countries if we are to realise the opportunities and the potential that exists for the decades ahead.

PAUL KELLY: Let's just focus on our Chinese investment into Australia. Clearly, this will be one of the key provisions of the proposed FTA. How significantly do you think the Abbott government is prepared to modify and liberalise foreign investment policy from China, particularly in relation to Chinese state-owned enterprises?

ANDREW ROBB: We have already flagged publicly that we are looking at where we can recognise the contribution that's already been made. Of course, there are a number of very major state-owned enterprises that have been in Australia now for a quite considerable number of years who have made a major contribution, who have been good corporate citizens, who have paid taxes, who have employed thousands of people and our thinking is being shaped around performance in many respects. So I don't really want to get into the detail of what we might end up putting on the table. But certainly I think it is significant that if companies have been here for a long time and are looking to engage in another project, that we can and should start to recognise that contribution.

PETER VAN ONSELEN: We have got the G20 Trade Ministers’ meeting coming up. You will be hosting that. What's top of the agenda?

ANDREW ROBB: What’s driving the agenda, I think, is some numbers that were just out a couple of weeks ago. We have seen the growth in world trade, for the third year in a row, being no greater or less than the growth of economic growth generally across the world. Now, this has not happened for decades and what we are seeing – and I'm seeing it as I move around the world with my trade and investment responsibilities – we are seeing that asset prices, so shares and house prices have gone up because of the debt fuel spending after the GFC. And it was intended. That was an intention of the policy response. But it is not giving any confidence to investors to invest.

And so you are seeing, not just in Australia, but you are seeing it especially around the developed world and it is now seeping into some of the emerging economies where investors have lost confidence because the asset price increase, it's been driven by all of this massive spending by especially developed countries over the last few years.

It is not underpinned by real reforms, sustainable reforms. And that's why unemployment around the world, especially in Europe, is not coming off. So the G20 and the Trade Ministers and the B20, the business groups, all of us have set an agenda which has focused very heavily on growth and growth driven, in part by trade and investment, and there has been an amazing response in many respects from all of the G20 countries.

Everyone is looking for a different public policy formula to that that's been applied in most countries for the last few years. They want to get away from government driving things, from spending and debt fuel spending and replace it with private sector activities, private sector growth with business investment and it means reforms within each country have to be taken, unilateral reforms to give business the confidence to invest to show that growth is sustainable, not just driven by borrowed money.

PAUL KELLY: Yes, but just on that point, Minister, you have outlined the problem well. I mean, global growth is slow, it is weak, but do you think the will exists among G20 countries to take hard decisions because essentially a lot of these economies are in difficulty anyway? I mean, what are the actual prospects apart from getting fine statements and words being expressed of actually getting some concrete action? Are we going to see more trade liberalization? What is going to be the outcome?

ANDREW ROBB: I think there is the potential for will to exist. I was in Spain last week talking to investors in Australia, existing investors to try and increase their level of investment and Spain is now coming strongly out of the problems that they incurred. They are one of the basket cases, remember. They are now, along with Germany, the only two countries in Europe that are growing and it is because they have undertaken a raft of unilateral reforms.

They have taken initiatives within their own country to cut spending, to encourage investment, to cut back the onerous taxes which were discouraging investment and a whole raft of other initiatives that they have taken. A big focus on the trade; a big focus on investment. We have now got six of the biggest construction companies in the world out of Spain participating very strongly for a lot of our big infrastructure problems.

PETER VAN ONSELEN: Sorry to interrupt, Mr Robb. Can I ask you, out of that, where does that leave Australia and your government, I suppose, going into the next election? I know you are one of the more reformist members of the cabinet. When you speak about the need for more reform within nations, are we likely to see a pretty substantial package from an Abbott government for a second term?

ANDREW ROBB: Yes, but we have already got a substantial package for a first term. We will get an even more substantial package. We have got a finance inquiry going, we have got a workplace relations inquiry going, we have got the federation inquiry going, got a welfare one with Patrick McClure and a tax reform program. All of these will provide a second term agenda. But this term we have got the carbon tax, which you have talked about in the introduction. We have got the mining tax. We have got the streamlining of approval processes. We have got the massive deregulation task that we have set ourselves. We have got free trade agreements, two so far, we are looking for another one. We are looking at a trade investment agenda. So we have got a big raft of programs.

The thing is you talked a lot about Clive Palmer. Their focus is on the crossbenchers but in many respects the focus need not be, should not be, on the crossbenchers. The guilty party is the Labor Party. The Labor Party went to the last election promising to scrap the carbon tax, remove $550 worth of tax on families across Australia, get the electricity prices down 9%. They have welshed on that promise.

Twenty five senators last week from the Labor Party voted to not scrap the carbon tax, to block the scrapping of the carbon tax. If Bill Shorten was true to their word at the last election, they would be coming alongside the Coalition, not just on the carbon tax, but on a raft of other savings that are fundamental. The fiscal program we have got this term is fundamental to giving business that confidence to get back in, invest, employ and take us forward, get us into a position to capture the enormous opportunities that are emerging on our door step.

PETER VAN ONSELEN: All right. We will see what happens when parliament resumes next week, whether you can get the carbon tax repeal through. That's all we have time for on this particular episode unfortunately. Andrew Robb, Trade Minister, appreciate your company. Thanks very much.

ANDREW ROBB: Thanks very much, Peter, Paul.

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