Topics:  Morrison ministry; energy policy; Brexit; China-US trade tensions.

29 May 2019

Kieran Gilbert: Joining me this morning is the ongoing Trade Minister Simon Birmingham to be sworn in and obviously it is a big day isn’t it, particularly for new ministers, but for yourself as well to be back there at Government House and sworn in as part of the new Morrison team?


Simon Birmingham: It is a real privilege to be back to, of course, to be able to serve in the ministry for the Government of Australia and the message that Scott’s reinforced to every single member of the team is that we are here of course to work for the Australian people, that it’s their election victory and our job to work on their behalf as a result of that election victory, to deliver for them a stronger economy that we promised, to manage that well and to create the jobs that we promised. But also to make sure that dealing with government is as easy as possible for Australian people and Australian businesses, that the NDIS enjoys the type of success in terms of delivery and growth that we want it to, to help the most needy Australians, those who really deserve to have all the assistance that we can sensibly provide to them. To make sure that we help our farmers in drought, to deliver on the Prime Minister’s focus around mental health and youth suicide. So there are some big tasks, there are first homebuyers’ reforms and so on as well. We’ve seen some great initial economic indicators just these last couple of weeks following the election, with a boom in terms of applications for first homes with funding of the stock market. There’s very positive indications in the first instance that people have greeted our re-election well and that’s really lifting confidence.


Kieran Gilbert: The Prime Minister obviously wanting to be humble in victory and say that the focus is on the people, but there must be a great sense of a mood of, I guess, buoyance. You know the fact that you’ve pulled off what was an unlikely win.


Simon Birmingham: Look the Liberal and National parties have now won seven of the last nine Australian elections, and that’s a real demonstration that our values and our approach in terms of our connection with the Australian people are strong, are rich and deep in that sense that we do enjoy this now long record of success from the Australian electorate. But that’s only because the way in which we seek to govern and apply ourselves relates to the Australian people in terms of recognising that it’s about them and their aspirations, not Government saying we’ve got the solution to everybody’s problems, but backing in Australia, to be able to get ahead, to build a nest egg for their retirement, to be able to have confidence that their children or grandchildren will have jobs and these are the sorts of values and principles that we’ve spoken about for a long time, and you see in Scott Morrison our leader who wants to take that forward for the Liberal Party. Robert Menzies used to talk a lot about home ownership, now you’ve got Scott Morrison driving new reforms in terms of support for people to get their housing deposit, coming back to those core principles that have served our party and the Coalition so well for so long.


Kieran Gilbert: And one of the other principles is to not get in people’s way essentially isn’t it? To do what you need to do, but nothing more.


Simon Birmingham: For government to be as small as it needs to be, to do all that it has to do in that sense. So we want to keep taxes low and we really do hope that Mr Albanese and the Labor Party hear the message from the Australian electorate and support our tax relief plans so that we can deliver tax reform for Australians that work hard and work the extra shift and so on. Of course we invest in the government services that are essential, that’s why we grew funding for schools and hospitals by more than 60 per cent over the last six years. And it will keep growing into the future, and it’s why the PM has put that focus with a dedicated Minister around the NDIS to make sure we get delivery of that important reform right for Australians living with a disability and for their families.


Kieran Gilbert: And the Ministers met with the Prime Minister last night. It was a similar message no doubt at the Lodge about wanting to be humble in victory and get on with the job. There seems to be a bit of John Howard in terms of the Morrison approach, and not just in terms of the victory but his campaigning, his message to middle Australia so to speak.


Simon Birmingham: Well the quiet Australians as Scott Morrison has dubbed them and I think that is right, the many people who weren’t there shouting on social media during the election campaign, who don’t really want to follow…


Kieran Gilbert: Do you think he’s modelled himself on him… it looks like that.


Simon Birmingham: He takes advice and speaks closely to John Howard and I hold him, as we all do, in the highest regard. But Scott Morrison is also his own person and he has his own influences, Jenny and his girls are huge influences in terms of Scott and the approach that he brings. And of course his parents who he’s very proud of how hard they work to provide him with the opportunities that he has. He’s spoken of course about family members with a disability and how that shaped his thinking in terms of the need to make sure we do fund and deliver the NDIS, so lots of influences there. But he has clearly a very strong connection with everyday Australians and that’s what we want to make sure as the government we continue to do; deliver for those everyday Australians.


Kieran Gilbert: You’ve got some big challenges on energy still. The Minister says you’ve got a mandate, you’ll deliver on what you took to the election, but there are other constituencies that you need to manage aren’t there in terms of energy and emissions policy? Most notably the energy retailers themselves. Is it really the way forward to be just threatening this big stick legislation, that divestment legislation that Mr. Taylor is again, he’s told Simon Benson in The Australian today that you’ll be reintroducing that in July. Is that the way to go about being constructive?


Simon Birmingham: Well it’s about delivering the policies that we took to the election first and foremost, and we had released that legislation prior to the election. We said that we would bring it back after the election and bring it back we will. The divestment powers are just one part of that legislative package and it’s important to understand that overall it’s about ensuring that there isn’t price gouging in the market, that consumers can have confidence that energy retailers are offering the best deals possible in a fair and transparent way. They are gradiated steps or solutions for the ACCC, regulators and government to be able to take if those energy retailers betray those conditions, the trust that we put in them to give consumers the best deals. The divestment power is the last and final of those steps, now it would only ever be used, I imagine, in extreme circumstances, but it’s important to recognise that you want to have the full suite of options available as a government to make sure you can hold the energy retailers to account as we seek to get prices down for Australians.


Kieran Gilbert: Well they also say you’re not helping them though because in terms of a national framework for emissions reduction, they again have said in the last 24 hours they need some more guidance on that. Is this unfinished work for the government?


Simon Birmingham: No, we laid out very clearly our policies around emissions reduction and Angus Taylor now with the specific responsibilities in his portfolio title as a Minister for Emissions Reduction will be key to delivering those. But in terms of the energy market and certainty they can have around generation investment for the future. I’d point to a couple of things that are evident there. One is our investment in terms of pumped hydro, to really support and fuel new investment in the renewable sector. So Snowy 2.0, the battery of the nation project in Tasmania, and a range of other projects across the country. They’re key to making sure that we have stability, reliability but they will also fuel future investment from the renewable sector because you’ve got that stability and reliability as a result of having of having storage solutions.


Kieran Gilbert: So you want to have energy retailers just to follow your lead is that essentially the message because without a framework what else can they do?


Simon Birmingham: Look, there is huge already investment happening in terms of renewables at present and that’s going to, no doubt, continue and it will continue in a market driven sense underpinned by the knowledge that the storage we are providing as a government, that provides that stability to the grid will actually make renewables more viable into the future because you’ll be able to have that guarantee of dispatchable energy when it’s required. We’re also of course implementing ACCC recommendation, looking at underwriting new generation capability. And again, half a dozen of those projects are in the renewable space which will help the transition of our energy markets. Five of them relate to different gas projects and one of them is upgrading the lifespan of an existing coal facility to make it more efficient.


Kieran Gilbert: Your next priority I guess or one of your priorities as Trade Minister is the talks with the EU. I think the next round of talks are July in Brussels and the trade negotiator for the EU has said that climate is going to be a priority for them. Is it potentially something that you need to reassure them on, that you will meet those reduction targets and maybe provide some due diligence on that?


Simon Birmingham: I was in Brussels early this year and I made clear at that stage that we were confident that Australia was on track to meet and exceed our 2020 targets and that we would be outlining plans in terms of how we would meet and deliver upon the 2030 target that we’ve made. And of course since then our government has released a comprehensive plan about how we will meet those 2030 targets and I look forward to sharing that with the EU or any other interested parties and to give them the confidence that Australia will do as we have always done when it comes to emissions reduction, and that is meet and honour the commitments that we make.


Kieran Gilbert: So you feel satisfied, you feel comfortable enough that the government has got enough credibility on that front not to derail what is potentially a lucrative free trade agreement with the EU?


Simon Birmingham: On a per GDP basis, per capita basis, emissions intensity basis, Australia’s commitments under the Paris Accord to reduce our emissions by between 26 and 28 per cent are world leading. And I have confidence that those targets are acknowledged and that when we demonstrate as we have through our policies how we will meet them, that there will be few questions about that and we’ll be able to get on and focus on those very exciting trade negotiations. The EU is our largest trading partner in two way trade terms and so we really do want to land that because that’s part of again meeting our government’s ambition of increasing Australian exports. And we’ve already got Australian exports to record levels. We’ve got a trade surplus that’s been recorded for 27 of the last 29 months and we want to continue growing that by expanding market access in economies like the European Union.


Kieran Gilbert: And what are your other priorities as Trade Minister in terms of deals that have yet to be finalised? What do you want to achieve over the next 12 to 18 months? Because obviously that has been one of the success stories the government has trumpeted. But you’ve obviously got more to do on that front. Is the UK also coming on the radar or do you have to wait for Brexit to be finalised?


Simon Birmingham: The UK is a case of waiting for Brexit, but if Brexit is delivered and the UK were to leave the European Customs Union, then we will be able to move instantly and we have in place trade working groups with the UK. Now I’ve had many discussions with the UK trade secretary to strike a deal as quickly as possible which with our shared values, culture, history I would really hope that we could do. But more broadly we are looking at how we might potentially expand membership of the Trans-Pacific Partnership, finalise negotiations around RCEP, the Regional Comprehensive Economic Partnership Agreement, which brings both India and China along with the 10 ASEAN countries to the table and a number of other regional players. That’s a potentially huge trading bloc, if we can manage to conclude those negotiations with very exciting potential.


Kieran Gilbert: You spoke about the boost in the property market in terms of applications for loans and so on off the back of the government’s win, but domestic forces are only one element of this aren’t they? If you look internationally, the ongoing and worsening trade war between the US and China that is the huge concern right now isn’t it? Is there any prospect of that being resolved in your view? I know that President Trump and President Xi are meeting next in Japan but there’s a lot to be resolved between now and then.


Simon Birmingham: There are certainly deep tensions that exist there and having been reconfirmed back in the trade portfolio I’ve begun taking briefings again as to the situation between the US and China and its implications. We obviously are worried about the potential hit to global economic growth that could come from a prolonged trade war that saw an escalation of tariffs and other barriers on both sides. We continue to urge those parties to talk and engage. Of course there are always the potential as a third party and that there could be some short term benefits in terms of Australian businesses or farmers filling certain market access opportunities that come along. But our prime concern is to avoid that type of trade war, the world has gotten more prosperous over the last few decades as markets have gotten more open. The revolution that’s happened really in terms of South East Asia and China in particular by opening up markets and 800 million plus people lifted out of poverty and we don’t want to see an escalation of trade conflict that jeopardises that economic growth, which ultimately will end up hurting those who can least afford it.


Kieran Gilbert: And just finally, the contrast between this particular conflict and the tension between those two powers is different to you know the Cold War for example which there wasn’t that interconnection between the economies was there? Whereas these two are enmeshed in one other in terms of their economic engagement. So it’s in both interests surely to come up with some sort of deal?


Simon Birmingham: Well in the end higher tariffs are paid by the consumers in your own country. If the US escalates tariffs further in relation to Chinese goods, it will be American consumers and American businesses who pay that, just as if China retaliates in different ways with the Americans, it will be Chinese consumers and businesses who bear the brunt of that. That’s why we urge them to talk, to engage, to try to minimise trade tensions. Of course, there are some real underlying issues to be resolved and we encourage them to really focus on that, to make sure that technology transfer is not done in a forced way, to make sure that intellectual property is respected. These are genuine issues that the globe, that world economies aside from the US share concerns about. But we do want to see this resolved in as respectful a way as possible.


Kieran Gilbert: Trade Minister, thanks. Congratulations again on the swearing in today.