Rafael Epstein: Andrew Robb, good afternoon.

Andrew Robb: Good afternoon Raf.

Rafael Epstein: Firstly what do people in Hong Kong and China say to you about the China Free Trade Agreement?  I’m just assuming they think it’s great and they can’t wait to come and invest here?

Andrew Robb: Well they do follow what’s happening here or the senior people do; many have got some investments already, some billions of dollars worth.  They do keep well in touch with Australia; there’s a great sense of anticipation about the agreement and the opportunities it’s going to open up.  In fact, a lot of things in a business sense are already starting to be put in place between Australian companies and Chinese companies.  But basically, they’re confused.  They thought, and they felt, that Australians were very receptive to what is I suspect, the biggest deal we’ve ever done, and yet now with the union campaign and the nature of it, it is the xenophobia which confuses them; do we really want them to be involved in investing in our country and buying our products?  It just has soured the whole run-up to entry into this huge deal.

Rafael Epstein: I’m sure there’s been some extravagant claims on both sides…

Andrew Robb: No, people keep saying this, I keep reading this; that the unions are making extravagant claims and we are – there’s nothing extravagant about our claims.

Rafael Epstein: I meant racism…

Andrew Robb: It is clearly racist, I can have that argument for 20 minutes with you; it’s clearly racist.

Rafael Epstein: Okay, but can I ask you about the Free Trade Agreement, I’m sure you’ve been asked this, but let me just clarify something; the memorandum says there is no requirement for labour market testing, so is it the case that effectively, bureaucrats will decide if there needs to be a check to see if there are Australian…does the memorandum not say there will be no requirement for labour market testing?

Andrew Robb: This is how those opposed to it – particularly the CFMEU, who I noticed were splashed all over the papers today about facing criminal charges – they have in a very disingenuous way, taken one part of that MoU and made out that it refers to the whole agreement.  But in simple terms, what we did was create a vehicle whereby if someone comes in and says I’m going to spend a billion dollars, or $500 million with a project, invariably it takes a year or two to get approvals for some of these greenfields projects. 

So they sign at the start, when they’ve just put the money on the table – there is nothing happening apart from getting approvals, they don’t know what the market is for labour but they sign at the start – and that’s where it says at that stage they don’t have to do any market testing because there’s nothing to test.  In two years time or three years whenever the project is ready to go, what the agreement basically says is that once you get to construction, if you find there’s 60 specialist welders that you can’t find in Australia, we will – the Immigration Department in Australia – will fast-track the access of welders from China for a period of time…

Rafael Epstein: That’s not what the Immigration Department have said though…

Andrew Robb: I’m sorry Raf, I did the deal…

Rafael Epstein: I understand that Andrew Robb.

Andrew Robb: You didn’t let me finish what I was saying: once you get to bring them in, they have to do market testing.  They have to be established, like we always do with any 457s – the 125,000 457s that were here under Labor, went through the same process…

Rafael Epstein: There’s fewer with you now.

Andrew Robb: There is fewer with us.

Rafael Epstein: Can I ask you then why the Immigration Department told ABC Fact Check there is a possibility there might be unique and exceptional circumstances were labour market testing may be waived?  Why is the Immigration Department saying that to the ABC?

Andrew Robb: Well that’s another clause altogether.  We’ve had the investment provisions which I’ve just sought to explain, there is another section which says in regard to business executives and senior managers and independent executives associated with major investors, they don’t have to have labour market testing.

So someone comes in and is going to build a $2 billion roadway, their senior executives come with them, there might be five or six or whatever senior executives, their major engineer or whatever; now that provision is in the China deal, because it’s in every other deal – the deals we’ve done, the deals Labor has done, because it makes sense.  If Lend Lease, as they do, go to New York and build 14 high-rise buildings in New York, they take their senior executives because that’s the team.  They use locals to do the work, but the executives are part of the company and that is the provision.   And again, it’s being used and abused – the unions know it and so do the opposition, they know workplace relations back the front; they would have known this in an instant that that clause is in every other Free Trade Agreement, but they’re using it out there to confuse the public, to run a scare campaign, which is totally inappropriate and to brand it Chinese, Chinese, Chinese, Chinese.  They didn’t say it with the Japanese agreement, they didn’t say it with the Korean agreement, they didn’t say it with the Chilean agreement that Labor put in place, so it is a racist campaign and they’re playing off the fears of people.

Rafael Epstein: Well quite a few experts, including ABC Fact Check say that the memorandum…

Andrew Robb: Well that Fact Check was…

Rafael Epstein: Can I just ask something?

Andrew Robb: Yes, go on; you’re just quoting all the time people who are clearly biased and associated with the anti-campaign, but go on.

Rafael Epstein: Well lets go to again I’m sure a letter that you have been asked about quite a few times, there’s a letter from you, dated the 17th of June that says Australia will remove the requirement for mandatory skills assessments for jobs like cabinet makers, carpenters, joiners.  Why is that not evidence of what your critics say is true?

Andrew Robb: All it means is we don’t send a person to those countries to physically check all their arrangements.  They have to demonstrate to our Department of Immigration, they have to show their qualifications which are verified with organisations that our own trade skills organisations acknowledge.  They have to show their experience, they have to show their references.  All we’ve done with China is put them in line with 150 other countries that we’ve had this provision for.  It still means they have to establish and they’ve still got to get a state or territory licence, which involves another set of requirements, that prove that they’ve got the skills, as it should be, so there is again nothing new in this and it applies to every other country, why can’t it apply to China?

Rafael Epstein: So there’s no difference for a Chinese investment of $150 million, there’s no difference in 457 visas on those projects, compared to any other project from any other country.

Andrew Robb: No.  The thing is that all they’re getting is the insurance that when they sign, and make the commitment of money, sometime later, maybe two or three years later when the construction starts, that they’re not going to find themselves without the resources, without the skills, if they’re not available in Australia at the time because those Australian workers are doing other things.

Rafael Epstein: Andrew Robb if I can just ask you a broader question to do with the Coalition and policy; are tax cuts more important than balancing the Budget?

Andrew Robb: Well you can’t separate one from the other; they are both important.  What I will say about tax, is that I think it is, and it’s clearly established around the world for so long, that taxation is the most powerful instrument that a government has got and if it’s too high, if the rates get too high, it’s a huge disincentive.  People are driven by incentives and disincentives in this life, and taxation from a government point of view is one of the most powerful things, if they’ve got the tax too high, it discourages people from working, investing…

Rafael Epstein: But that’s a philosophical argument Andrew Robb.

Andrew Robb: It’s a fact actually; when you reduce tax burdens on people they respond.

Rafael Epstein: But even if it is a fact, it doesn’t talk to the fact that the deficit has doubled and your tax take as a proportion of the economy is growing and not shrinking so I just don’t understand how you offer a tax cut if those things are happening.

Andrew Robb: There are two sides to the balance sheet; there’s the cost side and the revenue side.  Now you can get revenue through more taxation and that seems to me to be the total preoccupation of debate in Australia.  I’m sitting up in Hong Kong, there’s a fellow about to come in the door shortly who has got billions of dollars he’d like to invest in Australia and help us to grow – jobs and income, and you get taxation from that growth.  So if taxation is so high that people are discouraged from investing, and spending – they haven’t got the money to spend…

Rafael Epstein: Are you saying it’s as simple as cut the taxes and you’ll get such a growth in investment you’ll replace the tax cut?

Andrew Robb:  No, I’m saying there’s two sides to the issue and you’ve got to get the balance right.  You’ve got to make sure there’s sufficient taxation coming in, but one of the answers to that, which I don’t think we’ve focused long enough and hard enough on, is how do we grow the economy?  How do you grow the pie, because if you grow the pie, you get a lot more taxation simply because of all the new ventures that have taken place, and the people with the jobs and the taxation that’s coming from that, so we’ve got to look at both sides. 

At the moment, with bracket creep, it’s getting to the point where people on relatively modest incomes, with a couple of kids, there’s too much tax taken out, they don’t have the money to go and take a holiday or go to the movies or to buy furniture that they’d ideally like, and if millions of people take that decision, all of a sudden, across the economy, there’s a whole lot less activity taking place; less jobs, less taxation, so you can’t ignore the other side.

Rafael Epstein: So how do you balance the Budget and give people a tax cut?  You’ve got to get more money from somewhere or you’ve got to cut spending.

Andrew Robb: No, that’s my point, it’s not a zero-sum game.  If some of your tax cuts encourage people to spend money like I was saying, either the consumer or the small business to put another person on and grow their business, or the big businesses to start another venture altogether and seek to sell via the Free Trade Agreements and other things overseas, all of this brings more income into our economy and therefore more tax.  So you’ve got to make sure the tax system is not getting to a point where people are discouraged or unable to make spending decisions or investment decisions, so we’ve got to keep a very keen eye on that and not just keep responding to the demand for more and more taxation to solve all the problems because it won’t.

Rafael Epstein: Have a good time in Hong Kong.

Andrew Robb: Thanks very much Raf; thanks for the opportunity.

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