Interview on 2GB, Money News, with Ross Greenwood.

Transcript, E&OE

9 October 2019

Ross Greenwood: The Minister responsible for all of that, for Trade, Tourism, and Investment, is Simon Birmingham. He’s on the line right now. Simon, many thanks for your time.

Simon Birmingham: G’day Ross, great to be with you.

Ross Greenwood: Alright. So right now from your perspective as the Trade, Tourism, and Investment Minister, would you prefer to have the dollar lower or higher?

Simon Birmingham: Well, a low dollar as the Trade Minister is always helpful in terms of encouraging and helping our exporters. As the Tourism Minister it’s helpful in terms of encouraging Australia to be seen as a lower cost destination by those who choose to travel here. So in that sense we see positives, but of course the dollar is something that moves according to a whole range of different market factors. And what we’ve demonstrated over a period of time now is that Australian exporters can compete in a whole range of circumstances, and they’ve done so, yes, with some favourable conditions recently in terms of prices for iron ore and particular market conditions there with competitors.

But we’ve also seen thousands of additional Australian businesses start exporting over the last six years, and that’s something that shows it’s not just in a particular commodity that we have seen growth in our exports. We’ve seen it right across the board, thousands more small and medium businesses exporting, and that bodes very well for the future and is part of what’s underpinning the record trade surplus that we’ve been enjoying.

Ross Greenwood: Okay, but the truth is with those record trade surpluses, it is about iron ore and it is all about coal. The exports of those in particular to Southeast Asia, to China, to Korea, to Japan, because they are our major customers for those goods, and when the prices go up and when there is a strong demand for those commodities, of course Australia is in a much better financial position. Problem is that many Australian families are not feeling that; they’re not seeing wage rises. So while the government’s budget seems to be in pretty good order, it’s almost in contrast with the sort of order that many typical Australian families are experiencing right now.

Simon Birmingham: Well as you will know, the global situation we face is a very uncertain one, but also one where for many Western countries there’s been this very prolonged period of negligible inflation and negligible wages growth. In Australia’s case, we’ve managed to do somewhat better than most in wages growth, though not what we would wish it to be, certainly growing faster than inflation. But it’s not a challenge unique to Australia in that sense. The best we can do as a government is to keep maintaining all of the policy measures to make our economy as strong as possible. That’s about making sure that we can continue to export more, and we’ve had success there, as I say, beyond just in the commodities trade. That is certainly the icing on the cake at present in terms of having seen those high prices and market conditions that have seen a particular spike around iron ore into some of those key markets. But it’s not the only commodity, not the only good, not the only service in which we’ve seen growth in our exports. So that’s occurred right across the board.

And we’ve seen thousands of extra businesses, somewhere about 18 per cent growth in terms of the number of businesses exporting out of Australia into the rest of the world over our time in government. It’s pushed the numbers up past 50,000 Australian businesses who are exporters now, and that’s many more than of course the big names at BHP or Rio, it’s about many of those other SMEs who are really job creators and sustainers right across the economy.

We want to make sure that as we look to Indonesia, Hong Kong, Peru, other markets around the world, the EU and UK where we have FTA negotiations or aspirations for negotiations underway, that we can continue to grow those number of exporters and to help as many Australian businesses as possible get their goods out to the rest of the world and generate more jobs for Australians at the same time.

Ross Greenwood: Okay. I wanted to come to those free trade agreements and the negotiations and or potential negotiations that could come through. The Joint Standing Committee on Treaties in our parliament has called for free trade agreements with both Indonesia and Hong Kong. Indonesia – our largest, nearest neighbor – is obviously one of those that would sent- be a sensitive free trade partner, mainly because some of the cultural differences we have had there. The other one that is interesting to me is Hong Kong, given the very delicate state of politics and the relationship with China right now, it is a Chinese state of course. I find the timing of that at least curious. You as the Trade Minister, where do you stand on a free trade deal with Hong Kong?

Simon Birmingham: Well, both of these places are ones where we have concluded negotiations for a trade agreement in the course of the last year. And in concluding negotiations with Indonesia and Hong Kong, we then send it off to the Joint Standing Committee on Treaties for the parliamentary scrutiny of those agreements that as a government we’ve negotiated. And we welcome warmly the fact that the committee has endorsed the ratification of those agreements, and that we work to bring them into effect, if circumstances in Hong Kong have certainly changed since we negotiated that agreement. But on the whole, we still believe that an agreement with Hong Kong that is separate to and different from the agreement we have with China, is really giving life to the one country, two systems approach in China. And to walk away from the agreement with Hong Kong would be to really undermine the commitment to two systems. This time we want to make sure that we give strength and support to that two systems approach, and bringing into effect the trade agreement that we’ve negotiated separate with Hong Kong China from the People’s Republic of China, would be a very important and tangible way of giving that support to these separate systems that operate there.

In regards to-

Ross Greenwood: Yeah. Given the fact that you’ve got Trade, Tourism, and Investment, we’ll come back to Indonesia in a moment. I mean, quite clearly the sensitivity with Hong Kong versus China. Now we’ve seen today, for example, I mean- I don’t know whether you’re a basketball fan or not but the Houston Rockets general manager sending out a tweet in support of protesters in Hong Kong suddenly sees the whole NBA, the whole league basically taken off air in China, as they consider this to be an affront to their sensibilities.

You clearly have to step a relatively delicate path versus the merits of free speech, which we honour in this country, as compared with quite clearly trying to do trade deals and or to try and foster more trade with what is our largest export and import partner.

Simon Birmingham: Well our job is to act in Australia’s national interest according to Australia’s values. And we try to make sure both of those things are at the forefront of our thinking at all times.

Ross Greenwood: Does that mean we can speak plainly about China? I mean I’m sitting here thinking about this. I think that many of our big wineries, I think that now our biggest airlines, I think that our iron ore companies, I think that many of our tourism operators, I think our universities could not speak openly in support of those Hong Kong protesters right now for fear of retaliation or retribution from commercial partners that they would have in China. I think that is a damning indictment of the state of our country if you can see what’s taking place with something as simple as a basketball team and a basketball league in the United States and the ramifications that has.

Simon Birmingham: Well, we would urge everybody to respect the freedom of speech that we have in Australia. I mean, ultimately everybody is free in this country to exercise that as they see fit, according to our laws and our customs and our values and our culture, not those of any other country or place-

Ross Greenwood: Which is what your colleague, Tim Wilson, was doing in marching with those protesters in Hong Kong. And so, from that point of view, expressing again his freedom of speech.

Simon Birmingham: And that’s emphatically Tim’s right as it is the right of anybody. But this is also a case for Australia where we have to continue to work in our national interest of trying to engage China, as we have successfully done in many ways for recent decades. That has been good for our economy. It has also lifted hundreds of millions of people across China and across the Southeast Asian region out of poverty, which have been good things. Yes, we still have significant differences and differences in terms of our values and our approach to certain freedoms and we regularly raise concerns in our dialogue with China about human rights matters and other concerns. But what we want to see is continued progress that can continue to give people better lives, whether here or there, and we’ll continue to work as hard as we can for that. They’re not simple or easy things, Ross. None of us pretend that they are. The Prime Minister’s addressed the complexity of these issues in a number of key speeches lately. He’s acknowledged the significant development of China and how that has changed their standing in the world and how that ought to change the responsibilities they have as a country as well.

Ross Greenwood: Okay. So this week, also, you have the US Commerce Secretary, Wilbur Ross, meeting with government ministers and of course, there’s even talk- and I spoke with the Chief Executive just a little earlier of Arafura Resources. They are producing rare earths which are strategically important from a military but also a commercial application. I’ll make the observation: the Joint Strike Fighter, the F-35, has 420 kilograms of rare earths in them. The problem is that the United States has been sourcing 80 per cent of its rare earths from China, which is the major producer. They’re looking for alternative sources. Australia could potentially be that. It could bring investment into Australia. Do you reckon you’ll get a deal with Wilbur Ross this week?

Simon Birmingham: Look, we have been pointing out the obvious to many countries around the world that Australia has a richness not just of the types of resources we were talking about earlier, of iron ore and coal and natural gas, but also in many of these rarer earths that are critical to a range of different technologies – some in the defence sphere, but many of them technologies in our phones, devices and otherwise, that you and I and your listeners would use on a regular basis. But there has to be effective market and effective investment for those resources to be extracted, to be processed, and that we’re trying to really bring to the attention of the rest of the world that potential in Australia now. The US is but one, but one very significant player who might be interested in accessing some of those resources.

We make no apologies for promoting what Australia has and what an investment here can realise in terms of a more competitive market, a more reliable and stable market for those resources into the future. And I hope that our discussions with the US, which were very fruitful, when Prime Minister Morrison was there in the last couple of weeks, will equally be fruitful between Secretary Ross and myself when we have the chance to have a chat tomorrow.

Ross Greenwood: So in other words, you’re going to put it to him — that really Australia needs a billion dollars here. I guess there’d be some sort of joint investment with Australia to try and give Arafura or some other organisation the ability to put in that plan to process the rare earths to be able to compete with China and as a result, strategically from the United States’ point of view, shore up its supply of rare earths if China were to limit its exports to the United States as a result of the trade war right now.

Simon Birmingham: Well, companies looking to extract these resources in Australia and potentially process them in Australia need the same market conditions as any other business operation. They need to know that there are potential customers, that those customers are willing to purchase those resources, that they might be willing to make commitments to do so, that they might be willing to be partners or co-investors in the extraction or processing of those resources. These are all basic things that to get a project up and off the ground are necessary.

And ultimately, Australia has a market but limited domestic markets for these resources. So if they are to be fully realised, then it will take countries like the US or the EU, Japan, Korea, Singapore, others potentially, to be investment partners, to be customers and to engage with those Australian companies who’ve identified the potential we have here and are seeking to realise that potential.

And it’s just the same- we didn’t get back to Indonesia, but Indonesia is of course a huge market on our doorstep, growing rapidly, and one where our economic relationship is quite underdone relative to the exchange we have at a government to government level and engagement in a whole range of other ways. And our ambition there is to really grow the trade and investment and economic relationship between Australia and Indonesia, who are a critical part of our region sitting alongside the other nine ASEAN nations. And there are really practical benefits in the Indonesia agreement — an extra 500,000 tonnes of feed grains that could get into Indonesia with zero tariffs applied to them. And to sort of help your listeners conceptualise that, that’s about 12,000 B-double truckloads full of grains that could be going to Indonesia, giving our farmers another different market to be able to sell their goods into. And it’s so crucial if we think about what will happen when the drought ends and people get back on their feet.

Ross Greenwood: We’ve got to get that drought to end first and get the rain coming down for many of the farming families around Australia. Simon Birmingham is our Minister for Trade, Tourism and Investment. You can see some key things he’s involved in, including those meetings with the US Commerce Secretary this week, the strategic issues in regards to those rare earths for military applications but many others as well, then on top of that, Indonesia and Hong Kong, plus the relationship with China, which despite what might be said is sensitive. People have to be careful what they say including, I’m guessing, our Trade Minister as well.

Simon Birmingham, many thanks for your time.

Simon Birmingham: Thank you, Ross. My pleasure.