Compere: Now returning to PK in Canberra, who is joined by the Trade Minister Simon Birmingham.

Patricia Karvelas: Yes, I am. Simon Birmingham was actually in a division in the Senate, but he is the Trade Minister and he's right here with me now. Simon Birmingham, welcome.

Simon Birmingham: Great to be with you.

Patricia Karvelas: The downgrade in Australian growth is bigger than some other advanced economies. Is this purely international factors or is there domestic factors at play here?

Simon Birmingham: Well, clearly the drought circumstances impact in a domestic sense, so there are a range of different factors that are there. Now, all of them were, to one degree or another, known prior to the election and prior to the budget being formulated this year, which was why we brought down a budget that delivered such strong tax cuts, such strong investment in infrastructure, because we were responding to those international doubts and tensions, because we were responding to the drought as well. Now, in both those cases, there have been some further developments since that that have reinforced the wisdom of those decisions to make sure that we run a budget and Government policy that is helping across the economy but also, whilst we continue to have strong employment outcomes in Australia, that we also make sure we deliver upon the surplus and maintain our budget strength to be in a position to be able to respond to whatever happens next.

Patricia Karvelas: You mentioned the drought and there was lots of drought theatrics in the lower house. I know you're a senator, but this is a key question. The Treasurer Josh Frydenberg talked about the drought being the number one item in the budget. But it's not, is it?

Simon Birmingham: Well in terms of the type of policy actions that have been undertaken and- since, you know, Prime Minister Morrison became Prime Minister, there's been a continuity of measures and actions to support farmers, to support communities, to build resilience and a lot of different investment …

Patricia Karvelas: Sure, but it's not number one budget item, is it? Welfare, pensions, of course ...

Simon Birmingham: Well, I think- I think- well, if you're going by- if you're going by totality of spending, then that's a different equation. If you're looking at the number of different policy measures and responses that have been accumulated in a short period of time, I think I the number of different responses to the drought would be right up there.

Patricia Karvelas: Okay, but shouldn't the Government be clear about that? It's not the- it's not it's number one item at all?

Simon Birmingham: Well, I wasn't there to hear the exact words the Treasurer used ...

Patricia Karvelas: Okay.

Simon Birmingham: ... but if you're looking at priorities the Government's set and number of policies delivered, drought response is right up there because we've been focused, not just on how you help farmers but also how you help communities and how you build resilience.

Patricia Karvelas: You say you don't want to change your strategy, despite this IMF report. Does that mean you're prepared to accept growth below 2 per cent?

Simon Birmingham: Well, we're going to do everything we can to make sure we deliver upon the growth forecasts that are in the budget. They will be impacted as always, as every budget is, by external factors as well as by Government policy. We're pleased at the fact the Australian economy is growing, while economies in places like Germany, the UK, Singapore, have actually been shrinking. So again, we can see that our policies continue to keep Australia on the right direction, but we want to ensure that we can continue to grow. And in my portfolio, which is one of the pillars of our economic plan – not just delivering tax cuts and infrastructure but creating more opportunities for Australian businesses to sell overseas – that's why realising our agreement with Indonesia as well as with Peru and Hong Kong is so critical to further those opportunities.

Patricia Karvelas: If there is another downgrade, will you accept the need for more stimulus?

Simon Birmingham: Patricia, we're not going to get ahead of ourselves and we're certainly not going to talk the economy down by entertaining hypotheticals that we …

Patricia Karvelas You have to be realistic about the economy, too, though don't you?

Simon Birmingham: And in government, you plan for all sorts of contingencies. As every responsible government …

Patricia Karvelas: So are you planning for that contingency?

Simon Birmingham: … as all sorts of responsible government should do in thinking about when things get better, if things get worse, deal with all of those different scenarios privately. But at present, things are – as we saw them at the time we did the budget – international tensions, drought difficulties. That's why we handed down the Budget we did, of tax cuts, of record investment in infrastructure ...

Patricia Karvelas: Let me pin you down on this. If there is a further downgrading, you have a contingency for more stimulus?

Simon Birmingham: Patricia, no, we don't have you know contingency for stimulus we take out of the drawer and drop on the table. We think endlessly about the circumstances that are there and we make sure that in every budget you're responding to the circumstances that are before you at the time. That's what we did this year. We knew about the difficulties that were on the horizon and were evident to us at the time. That's why we built the budget that we built: $20 billion plus of extra money has gone back to Australians as a result of our tax cuts in the last two and a half months. That's extra money in the pockets of Australians, for them to spend at present. Some might ...

Patricia Karvelas: But if they're not spending it ...

Simon Birmingham: Some may call that stimulus.

Patricia Karvelas: But if they're not- if they don't spend it, Minister, that's a big issue in terms of stimulating the economy. That's your problem.

Simon Birmingham: And let's see what happens there. You know, we've delivered those tax cuts and we're delivering in terms of the infrastructure. We've seen a record trade surplus which means that Australian businesses are getting more dollars in their pockets in terms of their export sales, all of those things bode well.

Patricia Karvelas: Former Treasurer Peter Costello says low interest rates have been good for sophisticated – or rich – people who borrow to buy assets, but bad for poor people who can't. Have low interest rates worsened inequality?

Simon Birmingham: Look, I think interest rates always create(*) issues there which is why made we adjustments recently in terms of the deeming rates that apply in relation to self-funded retirees and people who have part-pensions and that's important. You need to adjust those types of policy settings when necessary ...

Patricia Karvelas: But do you- but in terms of what Peter Costello says, it's good for the rich and it's clearly hurting the poor, do you agree with that thesis?

Simon Birmingham: Well Patricia, I think acknowledging that people who are on part-pensions and fixed incomes coming off of savings of limited value, that's why you make changes to policy settings like we did in terms of deeming rates. But we want to see not just sophisticated individuals but more importantly businesses take advantage of the low interest rate environment to be able to invest, to grow. That is certainly the urging that we have there for businesses and, indeed, for the banks to make sure that they are open for business when Australian companies come along wanting to invest in the future, because that's the way we can continue to grow those exports and generate more wealth for the country.

Patricia Karvelas: On another issue, Peter Dutton has tabled a statement on his decision to exercise his medevac discretion to refuse a transfer. But the Government, including Peter Dutton and Scott Morrison, said that they wouldn't have the power to do that, to stop someone coming. So they gave misleading information, didn't they?

Simon Birmingham: Patricia, I think we have dealt there with the legislation handed to us that we didn't want and …

Patricia Karvelas: Okay, I've got to pin you down on this. This is- they said that this scenario couldn't happen under the legislation, but today it has. So they were wrong?

Simon Birmingham: No, Patricia, I think what was argued at the time was that the powers in terms of being able to reject were clearly not strong enough. That was the argument at the time.

Patricia Karvelas: No, that was not the argument.

Simon Birmingham: Well, you can go away and have a look if you like ...

Patricia Karvelas: I remember very well what was said.

Simon Birmingham: I'm telling you that I'm confident …

Patricia Karvelas: Murderers, pedophiles would be able to come to Australia. Peter Dutton has been able to stop somebody ...

Simon Birmingham:  I'm confident the argument was about the extent of the powers and of course, about the lack of necessity for this reform or this piece of legislation overall. You know there are 132 people who have come to Australia under this legislation who aren't in hospital. They aren't in a hospital, they're not here with acute medical conditions that necessitated coming into an Australian hospital circumstance. We had provisions already for providing health care and health treatment for individuals who needed it, and this legislation was demonstrably unnecessary, and the consequence of it is that it has created a pathway.

Patricia Karvelas:  But the Minister has the ability to refuse, as he has today, this Iranian father, he's refused his entry to Australia. So he has this power, doesn't he?

Simon Birmingham: In limited circumstances. Obviously others who've come here have come under this power and under this provision where the [indistinct] necessity [indistinct].

Patricia Karvelas: But there's no evidence that they're murderers or they're pedophiles, is there?

Simon Birmingham: Let's understand, the overall argument ...

Patricia Karvelas: You're shifting this conversation to the medical priority. I'm talking about their status.

Simon Birmingham: No. Patricia, well you are focusing on one of the arguments made against this.

Patricia Karvelas: That's the one I'm asking you about it.

Simon Birmingham: The core argument against it at the time was that it would open a channel to Australia that would undermine our border protection regime and it has opened the channel to Australia and 132 …

Patricia Karvelas: But wasn't the Government misleading about this legislation, given the evidence today?

Simon Birmingham: No, no. We were not. That was one argument at the time and the argument at the time which still stands is that the power to say no is limited. The bigger argument at the time was it was putting another chink, another hole in the border protection regime that we had built. And it was unnecessary to do so because you can get health services and we did provide and have the power, where necessary, to bring people to Australia already. And the way that this has been used to date has to set up a circumstance where you do have more than 130 people who have come, who aren't in a hospital, but they were brought here as a result of this medevac law.

Patricia Karvelas: Just on another issue, but actually the same person - the Home Affairs Minister - he accused the Communist Party of China of hostile conduct in Australia. He says he can't stand by
as computer networks of government and non-government bodies are hacked. Were those comments undiplomatic?

Simon Birmingham: I think the Prime Minister's addressed those comments. The Prime Minister …

Patricia Karvelas: I want you to address those. Do you think they're undiplomatic?

Simon Birmingham: The Prime Minister has addressed those comments and addressed them highlighting the very obvious fact that a Communist Party regime is very different in terms of its values and
its approaches from a liberal democracy like Australia. And those differences, which Peter spoke of, are simply obvious to all.

Patricia Karvelas: If they're obvious, why is he telling us?

Simon Birmingham: Because he was asked a question by a journalist.

Patricia Karvelas: Why- I mean, he's sort of given us a list of the things that the Communist Party is doing - hacking computers - is there evidence of that?

Simon Birmingham: Well, we did make, along with a number of other nations, statements of attribution last year and I'm sure that's what Mr Dutton was referring to.

Patricia Karvelas: Is it helpful for your work? You're trying to rebuild the relationship, is it helpful?

Simon Birmingham: Look, I urge, as I have before, everyone to make sure that their engagements with China are focused where possible on the positives, but we have to deal also in the reality of the global situation we face and the changing power structures that are there and we do that in terms of our policy settings and our approaches to protect all area of Australia's interests. And that's what we'll continue to do.

Patricia Karvelas: The Deputy Prime Minister has declared he wants to expand Australia's free trade agreement with China. Given the state of the relationship, do you think that's feasible?

Simon Birmingham: Look, I would welcome the opportunity, when it appears, for us to negotiate with China around the next stage of the China-Australia Free Trade Agreement. It's been good for both countries and in that sense, it's created opportunities for economic development for China, as well as here in Australia. And that's why we seek to open up new markets in Indonesia and elsewhere to enable not only Australian companies to continue to advance and do well, but those in Indonesia to win as well. And we want to keep
doing that because it has underpinned growth in exports to record levels for Australia, record trade surpluses for Australia and that means it's good for businesses, it's good for jobs and good for all Australians.

Patricia Karvelas: Parliament looks like enabling passing legislation for a free trade agreement with Hong Kong. Will that make it harder to speak out on anti-government protests?

Simon Birmingham: No, it won't. And in fact, what it does is underpin our recognition of the two separate systems that exists between Hong Kong, China and the mainland People's Republic of China. We already have, as we just referenced, the China-Australia Free Trade Agreement, and this is a Hong Kong-Australia Free Trade Agreement. And so it is a recognition we are dealing with different systems. And importantly, passage of that and bringing it into force at present would provide a very strong statement of support for the
separate system that is Hong Kong, which, in particular, the legal systems there and the transparency there, are valued by Australian businesses and we want to see that continue into the future.

Patricia Karvelas: So you think it actually strengthens Australia's support for democracy in Hong Kong? And for that movement in some ways, you know, the elements of the movement - not the violent elements - the elements that the Australian Government has said it's happy to see?

Simon Birmingham: It is a demonstration of the fact that we engage with Hong Kong, China as a different system to how we engage with the People's Republic of China. And particularly that for businesses doing work there, they do value those legal systems and safeguards, the transparency that comes with the legal system. That also provides though, then a base from which many businesses operate into China, especially southern cities in China. And we hope to see a return to peace there, but importantly, one that respects the two systems and those fundamental aspects such as the rule of law.

Patricia Karvelas: The Government is hoping to conclude a 15-nation regional free trade deal in November but India is reportedly worried about opening their market to China. Will that happen on schedule or is that just too significant a roadblock?

Simon Birmingham: The 16-nation Regional Comprehensive Economic Partnership Agreement which is comprising of close to half the world's population, a third of the world's GDP ...

Patricia Karvelas: It's huge.

Simon Birmingham: ... so it's the biggest agreement in terms of the scale of the geography, populous and economy that's ever been sought to be negotiated around the world. And so it is huge, which means it's also challenging. We are still sticking by our ambition of trying to conclude that agreement by early November. That's going to require a lot of heavy lifting between now and then. The last round of negotiations occurred in Bangkok on the weekend just gone. And I hope and trust we can get manage to get all 16 nations to include-

Patricia Karvelas: Can the deal be done without India then?

Simon Birmingham: Look, those hypotheticals are things we don't really want to entertain or consider at present because we want to get it across the line with all 16 nations. We want to see India as part of this because not only will it provide the first-ever trade agreement access between Australia and India, but also the regional benefits of establishing more common rules of origin across our Asian region, the opportunity for businesses to integrate into value chains across our region, and the symbolic statement that our region, which has benefited so much from opening up of trade and commerce over the last couple of decades, stands against those global headwinds of protectionism and is continuing on that trajectory is a very powerful one.

Patricia Karvelas: Just before I let you go, the reason our interview sort of started only a couple of minutes was you were forced to vote in the Senate, on a motion congratulating New South Wales for decriminalising abortion and it was a conscience vote. And how did you vote?

Simon Birmingham: Look, I voted for the motion. It was a motion noting the reforms that had happened in New South Wales and thanking and acknowledging those who had worked to bring them to bear. It was a
conscience vote on what is a very personal and sensitive subject for anybody and I respect very much the personal decision that each senator would have made. They're unusual and I'd say it's- I don't think it's the ideal way to consider those topics because these types of Senate motions are voted without debate. And so, many senators chose to abstain because you don't get to put the nuanced position in a speech that you might otherwise on those issues. But this was a relatively limited one and I do acknowledge the work of those who delivered reform in New South Wales.

Patricia Karvelas: Minister, thanks for coming in.

Simon Birmingham: Thank you Patricia.

Patricia Karvelas: And that's the Trade Minister Simon Birmingham.

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