Peter Van Onselen: We are joined by the Trade Minister Andrew Robb; appreciate your time.

Andrew Robb: My pleasure; thank you Peter.

Peter Van Onselen: We'll get to the (TPP) policy, because that is what we've got you here for, but just a quick one on yesterday's Liberal Council meeting in New South Wales, where we've seen the reports that Malcolm Turnbull spoke and apparently was booed by sections of the audience. Was that to be expected I guess, given the difficult, heavy few weeks we've seen?

Andrew Robb: Look, I think the comments might have stirred the passions of one or two in the audience, but the rest of it I think was largely good humoured carry-on, and that's as I've been told by people who were there, so I wouldn't read too much into it.

Peter Van Onselen: Well, when you say the comments, you mean him referring to the fact that we don't have factions in the Liberal Party; obviously, New South Wales – you'd well know this as a formal federal director – New South Wales is probably the most factionalised state of the Liberal Party.

Andrew Robb: I don't think he said, well I didn't hear the speech, but I heard parts of it and I thought he said we're not controlled by factions in the Liberal Party, that's a big difference.

Peter Van Onselen: True.

Andrew Robb: Factions are a part of everyday life, even in families, but certainly in corporations and organisations. And we've got factions, always have in the Liberal Party, but they don't control us, and that's a big difference.

Paul Kelly: Do you think, as a senior minister, something needs to be done in terms of the relationship between Malcolm Turnbull and Tony Abbott? I mean this is getting more publicity, will continue to get publicity. Tony Abbott will continue to talk; does there need to be some effort made to settle this issue down, as far as the Government's concerned?

Andrew Robb: You could expect Tony to be fairly bruised after recent events; the change of leadership. I don't know that Tony has said things that are deeply disloyal or are an attempt to destabilise.  He's certainly made comments about his time and you can expect that; there were a lot of achievements during Tony's time as Prime Minister and he should be very proud of them. I haven't seen anything beyond that and I think that's not unacceptable, so I wouldn't think at this stage that we've got a problem. They've been great friends actually for a long time; Tony deposed Malcolm and yet they worked together quite constructively in a cabinet sense for a long time.

Peter Van Onselen: But I think Paul's point though is also about the need, going forward, to make sure that it doesn't get beyond where it is now. I think you're right Andrew Robb about what Tony Abbott has said so far being a defence of his legacy, I suppose, rather than any sniping necessarily. But the risk – and you'd know this as a professional operative with decades of experience – the risk for the Liberal Party is that if something isn't done in that relationship, that it does start to brew into something resembling that Rudd-Gillard relationship.

Andrew Robb: Tony made a very clear and intentional statement after he lost the leadership that he would not be a source of destabilisation in the run down to the election, and knowing Tony as I do, I think he will stick with that.

Paul Kelly: Well, what's his future; does he just sit permanently on the back bench from now on?

Andrew Robb: Well, it's too early Paul; he's said he's staying and I think he just needs time to let the reality of it soak in and to think through clearly what his options are.  He's got lots of options; he's an experienced man and he would still have a contribution in the parliamentary party if that's what he chooses, but I think it's too early to start finding what he should do, and it's his call obviously.

Paul Kelly: Well we might switch now to the big trade deal, the Trans Pacific Partnership. What are the main tangible benefits for Australia in this new deal?

Andrew Robb: Firstly in a very broad sense, you put TPP together with the trifecta of Asian trade agreements – the bilateral trade agreements that we've got – and we have started to put some real architecture in place, which will help us steer our way from the dominant last 15 years of a resource based economy, and help use diversify in a very material way, particularly with services.

All of these deals have been good for agriculture, and that's a great thing because agriculture will play a big part, as it always has, but with the services – 75 per cent of our GDP is services, but is only 17 per cent of our exports – there's so much scope in the region, given that the region around us is growing in a way it never has; they are going to need to move to service based economies, that's where the jobs are.

Nine out of ten jobs in Australia are in services, so these Asian agreements in a very broad sense – and the TTP adds to this – really means that we've got much of the region covered in terms of the future and where the growth areas will be. Also the linkages that these agreements will develop; the relationships; the trust, which not only goes to commercial benefits, but it goes to contribution towards stability and peace.

Paul Kelly: Now that this is all wrapped up, I'd like to ask you, how close it got to falling over. We know that you were very involved in this critical issue about medicines, about the push by the United States pharmaceutical companies for patent protection, that the American administration wanted a longer protection period. How close did this deal get to actually falling over?

Andrew Robb: I'm not sure, but I must say there were two or three times in this last week – during the negotiations – particularly over the biologics, that I thought where do we go from here; we've got nowhere to go and we seem to have reached a total stalemate, and the objectives of the United States and many other countries, including Australia, were fundamentally at odds.

But we did finally work through it, but I'd say two or three times we got that close. And if we had not settled at this meeting in Atlanta, the chances are, with elections and all the rest that are really upon us as a group of countries, I expect this would have been punted-off for a year or two.  I've been involved in enough deals, commercially and politically, to know that if you miss the opportunity, sometimes it never comes back.

Paul Kelly: And just explain to us how the solution was devised and your role in that.

Andrew Robb: The US had a proposition on biologics and we said we've got a system that works, there's no reason to change, and everyone thought – including all the participants – that in the end, we have to meet somewhere in the middle, that we have to have some hybrid.

The breakthrough was to suggest we should have two streams of approach – two roadways if you like – that end up at the same outcome, but are fundamentally different. When we separated the two and looked at how each one could deliver an outcome that was satisfactory to all sectors, that's when we started to make progress.

I was there putting that proposition, but there's a lot of work that went on after that; another day of negotiations before we found a position, but it meant we were able to say that our current system, with five years of biologics, but with a strong patent system and other things, when you put our system together, it provides currently sufficient incentive for the pharmaceutical companies to come and invest. We've got a very strong and growing biologics sector in Australia, at the same time we are holding down prices as best we can.

Paul Kelly: I just want to clarify, so presumably you're working on the assumption that we can't tolerate any increase in the price of medicines; that that would be unacceptable to the Turnbull Cabinet and clearly never get through the senate. Was that the fundamental political equation?

Andrew Robb: That was the ultimate driving force, but our assessment all along, and I've been saying for two years – since I got into the negotiations – to my American colleagues that we've got a system that works.  They have got problems; their patent system is under attack from litigation and all sorts of things, so they need a different approach; it's quite rational what they want, and they need it, but we don't. We don't need that system; we've got a system that has evolved and is working and is satisfactory to all, including on the prices side, so that's where we finished up.

Peter Van Onselen: So in terms of the details, obviously we haven't seen all the details yet, there's nothing unusual in that, that's the way these things are done, but when we do see those details, the Labor Party has raised the spectre of concern, you could say, about this side of the deal. Is it your anticipation that what was struck, when we see the fine print, should satisfy them?

Andrew Robb: It is my expectation.  The week after this deal ultimately enters into force, the Australian health system will be no different to the week before it enters into force; nothing, absolutely nothing will change in the way in which we run our health and pharmaceutics sector.

Peter Van Onselen: And what about the ability to get this agreement through the various domestic parliaments? I started in the introduction by making this point; we've heard during the week that Hillary Clinton has changed her position on this. She's obviously in the middle of an election contest domestically, but is there a real risk here that this doesn't get through the Congress? And if so, then surely it's dead buried and cremated.

Andrew Robb: Well we have to see it through the Congress, but there's also eleven other countries, including our own; we all had an eye all through the negotiations on what we could sell back home.  This has got to be acceptable to your own community otherwise it's not much point going through it all. Every one of us, we settled last Monday because we'd all, including the US, made a judgement that we could ultimately get it through our local parliaments.

Peter Van Onselen: But did you anticipate Hillary Clinton coming out as strong in a change of position? It's been interesting, during the week I spoke to Alan Oxley, a trade expert as you know; he says that he thinks it will get through the Congress. Tom Switzer from the US Studies Centre said no he doesn't think it will get through the Congress because of the intervention of Hillary. What do you think?

Andrew Robb: I looked at Hillary's comments, they were qualified – ‘from what I know, but I haven't read all the deal, I'd be against it’ – and she is desperately trying to differentiate herself from some of the other candidates. Her nomination is not certain; while it has been for three years, it's now not certain and she's got to get through the nomination process.  I know how the system works and there's a long way to play yet; there will be lots of ups and downs and reassessments, but I think in the end this deal is so significant – not only from a commercial but from a strategic point of view to the United States – that in the end, no matter who's in government, who's president, I think this thing will go through.

Paul Kelly: What about the situation in Australia? We've seen Labor campaigning around the provisions of the Australia-China FTA. This has become a frontline political issue. To what extent is the TPP deal different to that? How confident are you that this will get through the Australian parliament?

Andrew Robb: The TPP of course involves twelve countries and is setting a lot of the rules for the 21st century. It is the biggest deal in 20 years, since the Uruguay round in the global sense, and it is looking at state-owned enterprises, setting rules for them and the requirement for transparency. It is setting rules for e-commerce and the movement of data, how paperless payment systems operate, all of the things that are making the commercial world – especially small and medium sized businesses – now able to compete in their own right in lots of markets around the world.

And it's setting one set of rules for 40 per cent of the world's GDP. That will mean less paper, less frustration when moving things between borders; a lot of boring stuff, but it is very important from a commercial point of view, so we've got a lot of those 21st century rules. There’s still the 19th century on agriculture, but largely it will set the scene and the rules for so much of the world in terms of the 21st century.

China was very much a market access deal, not only with agriculture – which is a stunning result – but particularly – and it hasn't been properly recognised in Australia yet – with the services side. We've got the best deal China's ever done; we've got concessions that no one else has got in health services, in education services, in aged care services, in financial services, in engineering services, you name it. Dozens of different services are now open to Australian service companies in China, and it's immediate access; in a sense the China deal has got immediate and profound opportunities, the TPP has got some immediate opportunities, but it does set a lot of the rules and the context for the decades ahead.

Paul Kelly: Okay, well let's look at the big picture when it comes to the TPP. The fundamental question here, and the issue which divides the critics and supporters is whether or not this will lead to a region wide Asia Pacific free trade arrangement. Now the critics say you're dividing the region; China is not in this, China is outside. You say the real test at the end of the day will be getting to this stage of a region-wide free trade zone. How confident are you about this, and how will China be brought into this arrangement?

Andrew Robb: That's a very important point; my observation is that all the major countries, in fact all the countries in the region, have got a very clearly stated ambition to ultimately have one free trade zone; a freer trade zone for the region.

The best way of getting China in there – and India by the way – is through this secondary set of negotiations called the Regional Comprehensive Economic Partnership (RCEP), which involves China, involves India, involves us again and New Zealand, Japan, Korea, all the ASEAN countries; every country in the region's basically in either TPP or RCEP or in both –Vietnam's in both, Malaysia's in both.  This other agreement, which is expected to be concluded at the end of next year, I don't think it will be as ambitious as TPP, but from what I can see, it is going to be a very good deal.  China's now showing a lead in that and once that is concluded, I think by 2025, there's every prospect that those two can be brought together, and then you'll have one agreement with the US and China.

Paul Kelly: Isn't there a risk, Andrew Robb, that the United States see the TPP deal in strategic terms? That is, they see it in terms of rivalry with China. What's your assessment of that? Is that an accurate view of the United States' perception and if so, what are the consequences?

Andrew Robb: There's an element of that, no doubt. They do see that if they are to have their pivot to Asia, it has to have a significant commercial component and the TPP provides that. But it's a good thing that the US wants to maintain its significance, and I think that's good for the stability in the world. China and India are inexorably returning to share the centre of economic gravity in the world, as they did for eighteen of the last twenty centuries – we know what's happened for the last 200 years – that is happening. For a lot of the rest of the group in the TPP, their focus is more on how to accommodate that inevitability whilst having the benefit of an involvement with the United States.

Paul Kelly: Okay, now just taking that answer. Presumably what that answer means is that, different countries involved have different views about the meaning of this agreement and presumably, we also have different views to the United States. I would assume we don't see it as an element of rivalry with China?

Andrew Robb: We did a major bilateral with China, so obviously we don’t.  It is contributing to the balance of powers and we want to maintain our relationship and our strategic involvement with the United States. That's a very important part of our overall program, but we have to accommodate the emergence of this ultimate superpower in our region, the Chinese and ultimately India. I’m involved heavily there now and India are twenty years behind China, but they are coming and there's 1.2 billion people and they'll have to be accommodated as well, so it's quite complicated, but certainly our view is one of accommodation, of the reality; you don't have to lose friends to make new ones.

Peter Van Onselen: I wanted to talk to you more broadly about the service industries that you mentioned earlier, in the wider context of all of these deals, if I could. You know, we've reflected a lot in the last decade on the mining boom being so powerful to Australia's prosperity, but tourism is something that's perhaps under-cooked. The university sector is something that can become an even bigger player in the mix of our economy. How much opportunity is there and what needs to change in some of these service sectors for us to get maximum benefit from these deals?

Andrew Robb: A lot of the change is state of mind. We are so well-placed but Australians don't realise the view that the region has about our high quality services; they see us as gold standard in just about any service area you can talk about, health and education, all the things you've just mentioned and many, many more. The opportunities are immense because all of these countries, as I said earlier, ultimately have to develop a strong service sector because that's where the jobs are and they've still got literally hundreds of millions pouring out of the regional areas into the cities.

They know this, they know what they need, they’ve just got to manage that transition. We're a big part of the transition because we don't frighten anybody, we're not big enough, so they can get access to our world class service offerings to train the trainers, if you like, in many areas without having us swamping part of their economy and creating unintentional political consequences. But our service sector is not realising that yet.

You know tourism is a great, great sector with so much to offer. I still feel there's a sense of complacency, yet the opportunities that are emerging in our region – for the first time since settlement here in Australia – they are enormous; the next thirty, forty years can be spectacular for Australia. We have to realise what's happening on our doorstep and go and take advantage and these trade agreements are about facilitating that movement.

Peter Van Onselen: Can I marry almost, two policy areas as an example of a concern I have about taking full advantage of these various agreements. You look at something like university sector reform, where the domestic political argy-bargy kills off fee deregulation, even though the vice chancellors, almost as one, wanted it.

That's a political reality in that policy space, but it strikes me as such an important example of where we need to change, if we are to then take advantage of all of the opportunities that the trade deals afford, in an area like higher education.

Andrew Robb: Well yes, we saw twenty years ago, emerge from very little, an international education service Australia provides which is now our third biggest export. And a lot of that sector was regulated heavily at home, and had a lot more flexibility internationally; they acted responsibly and provided a great product. Now that's true of so many different areas; we could be teaching 10 million students in ten years' time, international students, not 650,000 as we currently do. Not here, a lot of that will be with all sorts of different models, business models, but the opportunity, the thirst for our talent is there.

It's just so frustrating to see so much opportunity, so much high regard for Australia; they like Australia, they've got a high regard for our brand, our clean green healthy product in Asia, this is an opportunity.  And now with the digital age, small and medium business can just as easily extend their business from Melbourne to Guangzhou or Tokyo or Seoul or Delhi as they can from Melbourne to Sydney.

Paul Kelly: You seem to have genuine doubts, genuine worries that we won't seize this great opportunity.

Andrew Robb: I have, I've got to say. We're blessed with such a wonderful lifestyle in Australia, in so many ways; it can breed a complacency and yet, at the moment, we've been given first mover advantage in so many parts of the region. We're geographically in the middle of it; for the first time in our history we're in the middle of things and that's a huge advantage to be in the same time zone.  I can tell you, having run businesses – both into another region and time zone and one into Asia – it's chalk and cheese.

There is an opportunity – without affecting the lifestyle of individual business people and their families – to grab, and yet I don't see the awareness that there should be, amongst the business community in particular, about what is there to grab. With the services sector, many of them have never been used to exporting, and that's where the huge growth is going to be because we are world class in those services.

Paul Kelly: Okay, well let's talk about another opportunity of the Australia-China FTA. This is coming down to the wire now. Will the government, will you as the minister, make concessions to Labor on the migration-labour market testing side in order to get this up?

Andrew Robb: We've said all along, I've said all along, that we're happy to talk about anything that might assist this process, but we're not going to discriminate against China and we're not going to change the fundamentals in any way; we're not going to change the package. Now they've got around to say they accept the package can't be altered, the MoUs and the side letters can't be touched, that is a fundamental requirement, but they've also talked, usually in sound bites, about something they want done with the Migration Act to give comfort, not just for China, but for all of the 457s.

If they show us something of substance and we think it doesn't in any way compromise what we've agreed to, we'll look at it; we've said that. There have been some private discussions, some of it earlier on was ridiculous, just a huge wish list to use this opportunity with the free trade agreement to fundamentally change the Migration Act across a whole lot of things, that if they wanted to change, they could have done so when they were in office. But if they've got something sensible which gives them comfort and we can do it, we'll talk to them about it, but we haven't seen that yet.

Paul Kelly: Okay, well on the Migration Act because that's where the problem is, are you prepared to make significant concessions to Labor or is your fundamental position that there's not much validity in the proposition they're putting?

Andrew Robb: Well you only have to look at it; firstly, despite the mining boom and China having access to 457s like every other country, and despite the big demand for imported labour to help us do what we did in the mining boom, the Chinese component of that is 0.7 per cent of 457s. Secondly during Labor's time, only 20 per cent of occupations, out of 130,000 457 entrants, only 20 per cent required labour market testing. So, you start to wonder what is going on here; is it more politics than it is substance?

Paul Kelly: Well, what do you think is going on?

Andrew Robb: It's politics. In fact the national secretary of the CFMEU belled the cat, when he said in an interview to the Canberra Times, quite explicitly, he said this whole exercise is about removing this government at the next election, because if we get back in, they think they'll be deregistered because of all of the massive corruption and fraud and bullying and all the rest that the Royal Commission has identified.  And it goes on to, more and more has been pouring out, but they think they'll be a target for deregistration and he quite explicitly said this is all about getting rid of the government. It's not about what's in the China deal.

Paul Kelly: Well if that's true, if that's what you think, if that's what the government thinks, surely the government then is not going to make many policy concessions, migration policy concessions to Labor if this is really about Labor's ties with the CFMEU?

Andrew Robb: We're not looking at change. They say they want comfort; if we can clarify things and give them some comfort, but we're not making changes. The system that's there they set up for goodness sake, and they've only been out of office two years, so it's not like it was a generation ago that they had control of this whole area. They brought all this in, they restricted it to 20 per cent of all 457s be actually labour market tested.

So it just does point to the absurdity of some of the claims and the nonsense that's gone on. We have matched to the letter what Labor had done, and we changed nothing for the good reason that I thought if we did make any change, if we ran fast and loose, we'd have this sort of problem we've got. We didn't change anything within the system – the worker protections – and Penny Wong's press release yesterday was just a total joke. In fact, it talked about things within the document which she and others have said they've got no intention of…

Paul Kelly: Well let's talk about that press release. The implication of her press release yesterday is that it gives unrestricted access to this country from Chinese workers. That's the implication.

Andrew Robb: That's right and it's just a total and absolute nonsense; Penny knows it, they all know it, for goodness sake. They all know that they're just playing politics with this thing. Now they've got themselves totally isolated, the Labor Party, because of the commitment they gave the CFMEU at the Labor conference in order to get the policy of turning the boats around in place. Now that commitment, that internal politics of the Labor Party, that factional politics of the Labor Party is now controlling Labor's lack of flexibility to deal with this issue in the way it should be done; they know it and we'll see how it will unfold, but we are not going to make fundamental changes off the back of the nonsense that's gone on for several weeks.

Peter Van Onselen: I wanted to ask you about taxpayer advertising of the China free trade agreement. I've heard it on the radio; it refers to it as an export agreement. This was the sort of argy-bargy in that sitting period under the previous prime ministership of Tony Abbott. Isn't that a little bit too clever by half to call it an export agreement, when it is obviously a free trade agreement and that's just one half of it?

Andrew Robb: No, a lot of people don't know what a free trade agreement is – even though we've been familiar with it for decades – they don't know what it is and when we say, well it's a free trade export agreement, they think, ‘Oh, right; it's about goods coming and going, right’. So it wasn't trickery.  I got that money set aside in a budget – and it was a tight budget this year – long before the CFMEU campaign.  We didn't anticipate the nonsense that's gone on with this China agreement and with the unions and Labor Party.  I thought, we've got three big agreements, and going back to our earlier conversation, I felt that neither side of politics in the past has done a good job of explaining what the opportunities are for businesses to take advantage of.

So we put this money aside as a very deliberate attempt to communicate the opportunities. We've been running two and a half hour seminars, we've got 200 we're going to do around the country with SMEs and they started long before the CFMEU went ape. And we've got a whole raft of different measures; portals, you name it, and it all came out of that money, but the advertising's very important. If you look at what we've advertised so far, it is all about what's in it for businesses; there's no politics in it.

Peter Van Onselen: Was it frustrating for you, how long the process was to get it going? I understand there were reports that the previous Prime Minister Tony Abbott was frustrated and expressed that to you, about how long this was taking to respond to the union campaign.

Andrew Robb: Tell me about it, because having run campaigns in the '90's for the party, and having total control over the whole development process, you can turn things around in twenty-four hours if you've got the system in place. But because of the criticism over many years, from both sides of politics, about the misuse of government advertising, the procedures that are now set up beggars belief. You've got to go through months of procedure to get any program on air. And yes, when we're getting attacked with $12 million worth of robo-calls and totally disingenuous and disruptive ads, in all of our marginal seats, it was a frustration to have those layers of procedure to go through.

Peter Van Onselen: And just finally, before we let you go Andrew Robb, you're a former federal director of the Liberal Party yourself. The current federal director, who has presided over four elections at the federal level, Brian Loughnane, has announced that he is retiring from the role. Pretty good record, won two elections and almost won a third.

Andrew Robb: He's had a great record. I've known him for twenty-five years and he’s the ultimate professional, he’s totally discreet, he’s a lovely fellow; a good human being and I think his great strength is his strategic skills, his ability to see where we've got to be positioned and then get people to work out how to arrive at that position and provide all the policies and things that will support that strategic positioning. It's a great strength he's had and he should be extraordinarily proud of his contribution, and to go to four campaigns, I take my hat off to him. I did two and that was enough for me.

Peter Van Onselen: And if you had to put your money on it, Tony Nutt?

Andrew Robb: I don't know to be honest, but I would very strongly support Tony Nutt if he gets up. I tell you, he's a great guy.

Peter Van Onselen: Trade Minister Andrew Robb, we appreciate you joining us. Thanks for your company.

Andrew Robb: Thank you.

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