Topics: Coal exports to China; Huawei; China tourism to Australia; direct flights to China; Brexit; energy policy.

15 March 2019


Ticky Fullerton: Well, in the meantime, there are a few questions around Australia’s relationship with China on the trade front, particularly this alleged deliberate slowing down of coal exports from Australia to China; and then at the background, of course, we’ve got Huawei as a running sore in the relationship.

Well, I spoke with Minister for Trade, Tourism and Investment Simon Birmingham a little earlier.

Ticky Fullerton: Simon Birmingham, thank you so much for joining me. I wanted to pick up on reports today about Chinese government protectionism hitting Australian coal exports. What do we know about this?

Simon Birmingham: Well, Ticky, we know there have been some delays that have been well reported in relation to Australian coal shipment processing through Chinese ports. Those delays, we are told are not discriminatory against Australia and certainly, we’re told that they don’t constitute a ban on Australian coal. But it’s not clear entirely what all of the reasons are. We are told there are some quarantine reasons attached for that. We do also understand from various industry sources that there may be a sense of support for elements of the Chinese coal industry attached to that. Now, they’re unconfirmed reports, but we hear that and we do continue to watch closely the situation, monitor whether or not we’re seeing those shipments clear the ports, and politely ask the Chinese Government for any further clarification around the policy settings that have caused these delays.

Ticky Fullerton: It does seem rather odd if there are environmental issues. I mean, the quality of Australian coal is widely acknowledged as being very high.

Simon Birmingham: That’s right. Now, China is, of course, a massive economy with many different entry points and we do see that sometimes different ports, different regions are applying policies in different ways, and that’s something that our major companies are used to dealing with and they’re very agile and adaptive to some of those pressures. But we want to provide as much certainty as we possibly can. We’ve seen some of these things in the past, where we’ve had a blow out in terms of processing times; only then for those shipments to be cleared relatively quickly and for overall numbers to actually be up on a given quarter or year, and that was certainly the case in the back end of last year. (Indistinct) very closely to see whether we can see that similar catch up occur and if not, then we will want to understand more clearly the reasons for it and how it is that businesses can most effectively work around any new or different policy settings that are there.

Ticky Fullerton: What do you make of the reports that this response from China might be to do with the Australian Government’s banning of Huawei’s operating 5G in Australia?

Simon Birmingham: China’s Ambassador to Australia as well as the Ministry of Foreign Affairs in Beijing have been very clear that these delays have got nothing to do with any ban on Australia or discrimination against Australia. They say they are consistently applied quarantine type checks, inspections and so forth, so we take that at face value. But of course, we are looking to see an improvement in those processing times and that will be the test as to whether, indeed, there is a problem or not and if there is a problem, then we’ll seek to try to unpack it as to what the reasons are for that. But we take the assurances at face value that this is not targeted at Australia but that there are other factors at play.

Ticky Fullerton: Minister, I was talking to Huawei Australia’s chair earlier in the week and there was a suggestion that the ban that Australia has put on Huawei is considerably tighter, stricter, than in other western countries. I was wondering whether there was going to be any review of it at all?

Simon Birmingham: The Government stands by our decision, which is not targeted at any one telecommunications company, but it is making clear that because of the heightened sensitivities around security as it relates to new 5G networks, we don’t want to see companies that can be under the direct control of a foreign government as significant players in those new 5G networks. That’s a clear position. It’s not, as I say, targeted at any one company or country. It’s a position that is about ensuring the integrity of our network and it’s the type of position that, of course, many other countries may consider and indeed, I think, reflect the type of national security considerations that even significant countries in our region take into account, too.

Ticky Fullerton: Yeah. Well, there were reports as well that as far as New Zealand was concerned, China was going slow in terms of China tourists going to New Zealand. Obviously, it’s a huge sector that would hit New Zealand where it hurts. I wonder whether we’ve seen any response like that on the China tourism front to Australia and what are you doing about encouraging China tourism?

Simon Birmingham: We certainly see tourist numbers continue to be very, very strong out of China. It’s been a huge growth market. It’s been a big driver in some of the turnaround in Tasmania in recent times, and we’re committed to continue to support the flow of Chinese for those enhanced people-to-people links, and not just critical economically in terms of what they do for tourism and hospitality industry, but they really do of course help to strengthen all other ties of the relationship and deepen the cultural understanding between our two countries. And just as we have record Chinese tourists and visitors coming to Australia; so too there are record Australians visiting China nowadays, too. So it is a true, two way exchange.

Ticky Fullerton: Yeah.

Simon Birmingham: As a government and as a tourism minister, we’ve been investing in a number of programs to make sure we sustain and ideally continue to grow Chinese tourism. Most recently …

Ticky Fullerton: Yes.

Simon Birmingham: ..an investment in the free and independent traveller market. We’ve seen a gradual shift in terms of the proportion of Chinese tourists who come as free and independent travellers versus those in tour groups. But this year, we’ve announced substantial investments in both of those categories to support the continuation of the Approved Destination Status program that facilitates tour group travel from China to Australia and provides benchmarks and qualities around those experiences, as well as a new marketing campaign to help to encourage more Chinese tourists to come to Australia as those free and independent travellers.

Ticky Fullerton: Are you concerned about China Southern Airlines’ announcement, I think it’s today, that they’re putting on pause – certainly their flights to Far North Queensland?

Simon Birmingham: We would wish, of course, to see as many direct flight connections into Australia as possible but there’s been a huge growth in the number of those connections between China and Australia in recent years. We’ve known for a little while that some of those routes have been under pressure in terms of their viability, that there have been loss-making routes, and so you would expect from time to time airlines will reconsider that. But in net terms, we are a long, long, long way ahead in terms of seats in and out of Australia today than we were a few years ago.

Ticky Fullerton: Minister, you’ve talked up a free trade agreement with Indonesia. What do you think the chances now are of Australia ever getting a free trade agreement (indistinct)?

Simon Birmingham: Well, that does depend in large part on where the Brexit scenario unfolds. If the UK does leave the EU and leaves the Customs Union as well, then Australia is absolutely well-poised to secure a comprehensive and an ambitious free trade agreement with the UK. We already have in place a trade working group that is working through, in the background, technical issues between our two countries. We aren’t in a position to start proper free trade agreement negotiations until the UK formally leaves the EU, but we are committed to doing that. We believe that’s a shared commitment from the UK as well. And so, if it happens on 29 March or 30 June or at some later point, Australia will absolutely swing straight into gear and we’re [indistinct] …

Ticky Fullerton: You’re optimistic, though, that they will be out of the Customs Union?

Simon Birmingham:     No, as I said, or at some later point, and I underline: or. I don’t seek to predict what will happen with Brexit. That’s probably as fraught a task as trying to guess who would win later this year; and in the end, it is between the UK and the EU as to what occurs in relation to the timing and terms of Brexit. But we’ve sought to make sure Australia is well positioned. Whatever happens, you know, if the UK were to stay within the EU Customs Union, well then our free trade agreement with the UK is our free trade agreement with the EU. We have those negotiations already underway, and so we really have taken, as I’ve previously said, a belt and braces approach, making sure that at every level we have free trade agreement discussions available with both EU 27 or EU 28 and/or with the UK separately, and that we also have replicated a number of technical trade transfer agreements with the UK so that if Brexit occurs without a deal, businesses can get on and continue to trade.

And we do see, in terms of some of the tariff lines that the UK released this week in the event of a no deal Brexit, that there would be increased opportunity for goods in areas like wine sugar and beef that would be an initial and good prelude to a successful FTA negotiations.

Ticky Fullerton: Alright. Minister, can I finish up where we started, which is on coal? You’ve got- you’re well into this election campaign now. We have the thoughts of Matt Canavan, of Barnaby Joyce, of Tony Abbott, being very vocal on the coal front. How on earth are you going to manage to present to the Australian public one voice that will give them confidence that you can govern come May?

Simon Birmingham: Well, I think the Australian people know- and indeed, one of the, I hope, appealing features of the Liberal and National parties is indeed that we do have individuals – passionate, committed – representing their regions. But the Government has one policy and one position and the Government’s position is very clearly that we are acting on the ACCC recommendations around the potential underwriting of new generation capability. We’ll do that within very clearly established guidelines. There’s got to be sufficient economic viability for any project that comes forward. And it sits alongside a firm and resolute commitment: to see Paris commitments, our Paris targets – 26 per cent reduction in emissions – met. Met and exceeded if they can be. That’s why we’ve outlined our $3.5 billion Climate Solutions package. It’s why we’re committed to the Snowy 2.0.

Ticky Fullerton: But there’s no difference between the Prime Minister and the Resources Minister on the building a new coal plant at all?

Simon Birmingham: The Government’s policy is one policy position and that is one that every member of the Cabinet has to accept and work within, and it is very clearly that we will meet and operate according to those policy principles – meet our emissions reduction targets, underwrite generation if and where required. But the two have to exist together and we have to make sure that we have reliable, cost effective energy, but not at the expense of meeting our emissions reductions targets. Equally, we must meet our emissions reductions targets and not at the expense of reliable, cost effective energy.

Ticky Fullerton: Minister Simon Birmingham, always great to talk to you. Thank you so much.

Simon Birmingham: Thank you, Ticky.