LEIGH SALES: We heard a bit of that heated Alan Jones interview in Sabra Lane's story just now. Does this pass the pub test? Do you think Australians are on board with the idea of opening up the country further to China?

ANDREW ROBB: Look, I think throughout history, people have always had reservations about any new wave of investment. I can remember in the '80s with the Japanese, and in fact, the Foreign Investment Review Board was set up because of the same sort of feelings about the United States just two years after they saved us in the war. So, I don't think anything's new and I do think that as the relationship builds and the free trade agreement we've signed today is part of that building the trust between the two countries and people will start to feel and see the benefits, the jobs that come out of it and the opportunities and not have the fear that often is pushed around the country.

LEIGH SALES: Let's talk about a few specific industries. You mentioned jobs there. Under this deal, China can bring skilled labourers to Australia to work on major projects. Why should Australian labourers accept that?

ANDREW ROBB: Well, it means that if there are no Australian labourers - and it won't be labourers, it'll be skilled workers. If there are no skilled workers available for a particular project, they will be able to apply to get an investment facilitation agreement. And this is consistent with legislation that is already in place. There's nothing new in this. All we've done is take the existing framework for these sort of one-off cases and put it into the free trade agreement with all of the safeguards, all of the protections, all of the obligations that currently exist if there is 457s or the skill visas are applied or if there's a special case with an enterprise. This has existed in other free trade agreements, including those brought down by the Labor Party. 

LEIGH SALES: Let's turn to dairy. Dairy Australia says that there's only capacity to increase milk production by about two to three per cent a year. Doesn't that mean that if Chinese demand is more than that, then demand is going to outstrip supply and drive up prices, that Australians could potentially have to pay more for milk?

ANDREW ROBB: Look, there is an amazing capacity for supply response, not just in Australia, but around the world. And if the growth of the middle class in Asia continues with the speed it is now, there'll be demands not just for dairy, but for all sorts of products. It will see our dairy farmers far more profitable ...

LEIGH SALES: But my point is that ...

ANDREW ROBB: Hang on - no, no, the point is ...

LEIGH SALES: Sorry, could I just - no, no, but I just want to come back to the point, which is that they've said today that they've only got the capacity to increase production by about two to three per cent a year.

ANDREW ROBB: Well, if you introduce innovation and you will see costs come down and you'll see capacity and production go up and therefore you can supply a bigger market and actually reduce the price of milk. This is the essence of increasing trade massively, increasing investment. You do get - we've got to be at the cusp of innovation, and if we are, we will reduce costs - that will increase profits - and we'll increase production and that'll also increase profits.

LEIGH SALES: Sugar and rice are excluded from the deal currently. Is there the capacity to change that at some point, because obviously the Chinese market would be very, very lucrative for both of those sectors?

ANDREW ROBB: It - there is no increase in their opportunities at the present time, but in three years' time we've got a clause in there where the four areas or five areas which we saw no progress, they will go back under negotiation in three years' time and the whole agreement will be - we'll look at enhancing the whole agreement at that same time.

LEIGH SALES: When you have a look at China, it's already our largest trading partner. This deal increases the interdependency. Yet China has plenty of preconditions for future instability. It's not a democracy, it has a history of territorial aggression and domestic repression. Is Australia reaching a position where the health of our economy is becoming too dependent on China?

ANDREW ROBB: Well, if we were only looking to enhance trade with China, there might be some argument. But, of course, this is part of the trifecta. We got the Japanese one concluded in May and we got the Korean one concluded before that. The three countries themselves in North Asia represent 52 per cent of our current exports. So, we have got a big spread. We are now starting to talk to India about a free trade agreement over the next 12 months. That's another 1.2 billion people. And we've got a big effort going on in Indonesia and the Gulf states, so there is a lot of other activity happening and I think you'll find that, you know, we will be providing, as we do now, so many parts of the world for decades and decades to come.

LEIGH SALES: One final question. You've held a number of senior economic portfolios both in opposition and in government. Do you agree with conservative world leaders like Angela Merkel and David Cameron when they say that climate change poses a potential future impediment to economic growth?

ANDREW ROBB: Well, it's - the warming that is predicted, if that comes about, there's no doubt that the science shows that it does have a warming effect. It is the extent of it which is unproven, the extent that that will affect climate. But, in any event, there will be economic implications some time in the future and that's why we've got our Direct Action policy. And I just say to you, most of the world is talking about targets and Australia's actually taking real action on this issue, not waiting for the world, not waiting to find out how they're going to achieve these targets and I - you know, you start to wonder sometimes; most of the countries that are lecturing us did not meet the Kyoto targets and we did.

LEIGH SALES: Andrew Robb, thank you very much for your time tonight.

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