Transcript, E&OE

Topics: WA Farmers, Barley, Australia-China Relationship, Diversifying Markets.
25 May 2020

Tim McMillan: China is flexing its muscle, it’s coming hard on trade and that is hurting WA farmers. But cool heads are needed right now; can WA survive without a good relationship with our biggest trading partner?

Let’s introduce you to our panel. Firstly, the man who has to solve this trade war, Federal Trade Minister Simon Birmingham. The WA President of the Pastoralists and Graziers Association and York farmer, Tony Seabrook joins us. Shadow Trade minister and Labor Member for the WA seat of Brand, Madeleine King, and Jeffrey Wilson, Research Director at think-tank Perth USAsia Centre. A little later in the program, the former Prime Minister and china expert Kevin Rudd will also be joining us.

So, firstly to you, Minister. You just saw Jim Mendolia there talking about his financial future hinging on a good relationship with China. I have to ask, given the position Australia was in for a couple of days, we were leading the globe in calling for this inquiry into China – was it worth it?

Simon Birmingham: Tim, thanks for the chance to be with you tonight. Australia makes no apologies and nor should we for standing by our values, being firm in our policy position, but we of course should also, as we seek to be, be respectful in our engagement with our partners. And that’s the approach our Government takes; we don’t pretend that we’ll always agree, we are happy to have points of difference where necessary, but we’ll be respectful in our engagement, and we are always open for dialogue with those partners.

Tim McMillan: Tony, you have planted barley in the past; you haven’t this year. What do you make of what you’ve just heard because, you know, their position has meant that you’ve had to make drastic changes and incur a cost, I imagine? Is it worth it for you?

Tony Seabrook: Look, bad things happen when good people don’t do anything. And I think most of the growers I represent endorse what the Prime Minister said: it was a very reasonable request; it should not have elicited the response that it did.

Tim McMillan: What’s it cost you, personally? I know you’re about to put barley in the ground.

Tony Seabrook: It could cost us somewhere around $150-200,000, if the price it used to be where it is as a result of what they’ve done. So, there’s no doubt about it; it’s going to hurt our barley growers, but there a lot of other producers all over Australia that are now in their sights, and producers of wine and cheese and sardines and a whole raft of things; they have every right to feel fearsome of what might happen.

Tim McMillan: Jeffrey, how unprecedented is this action that we’re seeing now from China? We talk about trade being weaponised now, is that your take on this?

Jeffrey Wilson: It’s pretty new for the Australia-China relationship, but it’s kind of become a bit common in the last couple of years. And unfortunately, what’s happened for Australia here, is that broader trend of using trade as a weapon; it hasn’t been a thing for us up until now, but this has become the start of that, coming home to Australia for the first time unfortunately.

Tony Seabrook: I’ve no doubt that the current Government will do everything it possibly can to re-establish the trade; I understand that. The problem is that the Chinese have stood up and said: 80 per cent tariff …

Tim McMillan: Yep.

Tony Seabrook: … Over five years. They’re not that big on backing down; backflips are not a Chinese custom. So, I think we need to look for a very difficult period going forward. What we need to hope for is that we can find other markets for our barley, and that they don’t drag other industry into this, because a tit for tat war; nobody’s a winner. This is a trade that can be mutually benefit- benefit all of us, both parties, enormously. And to me, when you see the way the world came in behind our Government in the request that it made; we weren’t off the money, we were there. And this reaction, it’s almost as if something else was stewing before because it wasn’t a big thing we did, and the retaliation was way, way disproportionate to the request that was made.

Tim McMillan: On a personal level, though, how do you feel about being the collateral damage in all of this?

Tony Seabrook: We’ve been the collateral damage on so many occasions; when Russia invaded Afghanistan they banned our wheat sales there, we lost money with grain into Iraq. Again and again and again the Aussie farmer cops it in the chin every time something goes belly up somewhere. And it’s hard, you know, I- it’s going to cost a lot of us a lot of money. But if you don’t stand up for what you believe in, and if you’re too frightened to say anything, if [indistinct] threatens us with retaliation at this level over this sort of remark, what else in the future might they? We need to have a respectful relationship; we’ll respect them; they have to respect the views that we hold as well.

Tim McMillan: Madeleine, I suppose at the top of the program, I asked the question: is there a future for WA and for Australia without China? Is there?

Madeleine King: In Western Australia, you know, we have this vast Indian Ocean in front of us, we’re proud of that Indian Ocean, it connects us forever to our neighbours in Indonesia and also across the Indian Ocean rim to India. What we know is, you know, in 30 or so years’ time, these two vibrant democracies are going to be two of the four greatest economies in the world. So, we need to diversify into those markets. And attempts have been made, but it’s time to get serious.

Tony Seabrook: Tim, we’re putting chemical on our crop right now; it’s made in China. The tech comes down from China, it’s made in China. I import semi-trailers from China, it’s a very small scale operation. But the barley I cart to the bin in York is carted on a Chinese trailer, it’s loaded with a front end loader made in China. I’ve got one on the wharf right now, made in China. Come on guys, this can work for both of us. We don’t need this sort of foolishness, political intervention, because the Chinese people on the whole are mighty fine people. They’re enthusiastic, they’re keen, they work hard, and I’ve enjoyed the relationship. But this has just soured it.

Tim McMillan: Yep. Just before we go to a break, Minister, have you got any good news for us in the short term that might put minds at ease here and, particularly, in Western Australia, because we do send so much of our stuff to China?

Simon Birmingham: Look, we’ve continued to see, firstly, growth in our Chinese trade. So, despite all the difficulties this year, and I know the pain in particular that our barley producers are feeling; we’ve seen that growth. And secondly, there is good news on the way with the Indonesia Free Trade Agreement that our Government negotiated, coming into force on 5 July. But thirdly as well, our immediate support to WA seafood producers in particular is about to be expanded.

I’m delighted to reveal here, having just had it confirmed, that we’re going to support another nine flights from Perth to Hong Kong, weekly flights with Cathay Pacific. They’re going to get 20,000 tonnes each week of WA seafood back out into those export markets, continuing to overcome the difficulties caused by COVID-19 and to actually get those goods out to market. And that’s great news for so many hardworking fishermen across the West.

Tim McMillan: Forgive my ignorance here, Minister, but is that a decent chunk of the export produce that we send that way?

Simon Birmingham: So, this is significant. Now, I mean, we’ve been working hard already, having sent some 20-ish flights that we’ve committed to with the Geraldton Fishermen’s Co-operative over recent weeks, and it’s important just to keep building on this. Normally, passenger planes fly all of this freight out of the country, but of course, with passenger travel banned right now, Government’s had to step up, and so we have to fill a void there and to make sure that our exporters are still able to get those goods to market.

Tim McMillan: Well, I’m sure that’ll come as some comfort to people in that industry. And hey, if we can’t fly; at least the crayfish can.

Coming up next on Flashpoint, our Mandarin speaking former Prime Minister, Kevin Rudd weighs into the China trade war.


Tim McMillan: So how deep is China’s footprint in Western Australia? The iconic, Kailis brothers, sold 90 per cent of its seafood processing business to a Chinese conglomerate. Little Creatures, will soon be owned by a Chinese dairy company. Construction giant, John Holland, which built, the Perth Children’s Hospital, is Chinese owned. In our Wheatbelt, China’s Southern Air owns, the Merredin Airport and flying school and Chinese companies have substantial interests in miners, MG, Citic Pacific and Pilbara Minerals. As well as pastoral companies, which run the massive Yakka Munga and Mount Elizabeth cattle stations, in the Kimberley. Well, former prime minister, Kevin Rudd, believed China was so important to our nation, he learned to speak Mandarin when he was at university. He is worried about what is unfolding. I spoke to him earlier.

Kevin Rudd, you know China well; you’ve seen it flex its muscle before on the international stage, not really with Australia though. Are we in new territory now for Australia?

Kevin Rudd: For Australia, yes we are. During my period as prime minister; we had many disagreements with China. We really are in new terrain and of course, WA grain farmers are carrying a fair bit of the burden here.

Tim McMillan: You could argue that the WA economy, particularly, is more exposed to eruptions between US and China, than any other states in this country? Iron ore, LNG? Are they next on the list, do you think?

Kevin Rudd: I would think that iron ore sales would be relatively secure. LNG I’m more concerned about, for the simple reason is that there are other sources of supply on offer. Virtually, with depressed energy prices at present. When we start to get to the sale of education services, and I’m sure you, WA and Murdoch and Edith Cowan universities in WA, also sell a large number of education services to China. That’s an exposed sector. Tourism I think is particularly exposed, [indistinct], to be blunt.

Tim McMillan: One of those abattoirs that they also restricted imports from, is wholly Chinese owned? What’s that about?

Kevin Rudd: Look, China, is a huge political system and so when the message comes down from on high to punish Australia, quote unquote, then frankly, the decisions then become almost automatic, political and bureaucratic. Without any sort of sensibility to the commercial realities, which then unfold on the ground. It’s nature of this Marxist Leninist system; which is completely alien to the way in which our politics and frankly, our economy is conducted.

Tim McMillan: If Scott Morrison came to you and asked for your help to be a special envoy, if you will, between Australia and China to help smooth the tensions, how would you respond to that? Would you take up the offer?

Kevin Rudd: Well, I just noticed that I haven’t got any missed calls from, Scotty, from marketing in the last few months.

Kevin Rudd: Maybe I’ve changed phones or something. But look, the bottom line is after Mr Morrison won the last election, I went to see him at Kirribilli. I just rang him up and said: look to the extent that I can offer any insight on this, here are a few a few thoughts in terms of how to manage the China relationship. The impression I got is that all went in one ear and out the other.

Tim McMillan: Do you ever see getting to a point where there might be conflict in our region?

Kevin Rudd: I’m sad to say that the possibility of armed conflict is increasing. And the reason I say that is over two reasons explicitly – the sharper and sharper exchanges changes now, between the United States and its allies, in the South China Sea. But more importantly, the growing chasm between American and Chinese positions on the future of Taiwan. It’s the latter, in particular, which we need to maintain a razor sharp focus on for the future.

Tim McMillan: Thank you so much for your time.

Kevin Rudd: Okay. Happy to help guys. All the best over there.

Tim McMillan: Senator Birmingham, I’ll come to you first of our country first. So Kevin Rudd, there doesn’t mind a little bit of drama every now and then, it must be said. But he flagged there, potential for conflict in the region? Has there been any talk in the bunkers of government about that potential?

Simon Birmingham: Well, we work as hard as we possibly can to maintain a respectful relationship with China, across the region. We work to make sure that we stand for our values and that includes important values around freedom of navigation and freedom of flight. And they’re important principles that we respect, the sovereignty of all countries within the region. That includes our respect for China’s sovereignty. We don’t seek to change their system of government. We seek to work with it, to engage with it and to get the best possible outcomes, for the peace and prosperity of the region.


Tim McMillan: There you go, let’s get to our Flashpoint’s now; the single most important thing that our panelists would like you to take away from tonight’s discussion. Madeleine, to you first – what’s the single most important thing from your point of view tonight?

Madeleine King: It’s important for all Western Australians to remember that China will remain a very important trading partner for us for the foreseeable future, and that’s important. But the good news is that if we start project diversification right now and we enter into a national commitment to understand our neighbours in Indonesia and in India and in Vietnam, near neighbours that we have good relationships with; by the time they’re bigger economies, we will be there, Western Australians and Australia, as trusted trading partners and we will have a shared prosperity into the future.

Tim McMillan: Tony, your Flashpoint tonight?

Tony Seabrook: Tim, West Australian grain growers are the best in the world, we grow more grain for the rainfall we get; we can do no more, we are the absolute edge of what we can do. Unlike iron ore, there’s no margin there, I mean, we’ve got nowhere else to move. So, if we’re going to enter into these other markets we need to get our cost structures down off farm, and Government has a huge part to play in removing a lot of strictures in the way, a lot of things that cost us and our industry a huge amount of money. They are applied to a domestic economy, that’s fine. But as an exporter, we can’t wear that, we’ve got no way of recovering. So, we need Government to recognise they have a large part to play in lowering our costs.

Tim McMillan: It sounds like you guys need to talk?

Tony Seabrook: We need to talk.

Tim McMillan: Jeff, what’s your Flashpoint for us tonight?

Jeffrey Wilson: What we’re going to need is to have, you know, strategies for businesses, for government, for society that actually manages and manages in an era when the politics can get in the way frequently, because it has in the last couple of weeks for barley farmers and it’s going to again.

Tim McMillan: Minister, lastly to you. Great news tonight for our crayfishing operators here in Western Australia. What’s your Flashpoint?

Simon Birmingham: Look, we will always stand up for Australian values, and no government should ever compromise on them. But we’ve also got the back of Australia’s farmers and exporters. And we’ll work for our interests to continue to keep markets open in China and all of our existing markets and to keep growing those new ones. That’s why we’ve got the Indonesia deal coming into place in July, why we’re delivering our India export strategy, why we’re continuing new negotiations with the European Union. This is all about making sure that our record trade surpluses that we’ve been delivering month after month for the last 27 months continue ideally into the future with new market opportunities for our farmers, especially those barley growers who I know are going to go through a bit of a tough period, and we’re going to be looking hard for new markets for them to.

Tim McMillan: Alright, thank you.


Tim McMillan: So, tonight we’ve heard Kevin Rudd flag the potential for conflict with China. Unlikely, say our panel, though. Hopefully that is correct. In a Flashpoint exclusive tonight, help for our cray fishermen with new flights to Hong Kong to send our seafood off to Asian markets; that is good news. The trade tensions though will continue to play out over the coming weeks. We expect now, WA jobs become a priority as Government negotiators navigate through this tense time.

Thank you to all of our guests who’ve made time to be a part of this program tonight.