DAVID SPEERS:
Thank you very much for your time this afternoon Treasurer. Were you able to conform what impact China’s import restrictions are going to have on Australian coal exports?
TREASURER:
Well, right now we are not foreseeing any major problems here but there are some issues to be worked through, particularly Steven Ciobo who was with me there has been working those through with the Chinese Government. There are a couple of issue share. There is the testing of coal which for most other customer countries is done in Australia and in China they insist on it being done there. There are also issues with accessing minor ports for offloading coal into China with those imports. There are some actual genuine logistical issues around those matters as well as we discussed on the weekend. Look, there are some practical issues there but the overall story for our coal exports to China, as well as our iron ore exports and other metal exports to China, I still think remains a very positive one because our quality of product is very strong and that places Australian product in a very good position…
SPEERS:
So those issues you mention around…
TREASURER:
...so it can be frustrating, it can be irritating but…
SPEERS:
Yes, I was going to say those issues around China wanting to test the coal and some of the issues around the smaller import terminals and so on, is that slowing down our coal sales?
TREASURER:
I don’t think we are seeing any great material impact as yet. Remember the testing issue is not a new issue. It has been around for some time. Obviously that is something that we have wanted to see changed for quite a while now. To the extent that there are genuine issues about the small import terminals, well, I think those have to be addressed practically. What we are seeing is good prices and we are seeing strong demand. We are seeing restructuring in a lot of the domestic coal mining industry in China which at the same time opens up new opportunities for Australia. So, there is a lot of common interest here in seeing a continued flow of Australian coal into China.
SPEERS:
Ok, but bottom line this isn’t going to hurt Australian coal exporters?
TREASURER:
There are issues at the margin but they are being made up for by I think what we are seeing with our prices and the broader demand.
SPEERS:
More broadly, China is talking about taking stronger action to tackle emissions, to bring emissions down. Did you talk about that at all while you were there in Beijing and how might that affect Australia’s resources sector if China does continue to take steps to try and curb its emissions?
TREASURER:
First of all there are no restrictions on them investing in further coal fired power stations in China. They are doing that and they are doing that in a large number of places. They don’t have a system to prevent that from happening. They are also investing significantly in renewables at the same time. They are not choosing against coal or for renewables at the expense of coal. They are doing all of these things and so Australian resources, particularly coal, will continue to have a strong demand. You have got an economy up there which has got to find about 13 to 15 million new jobs every year and with industries to support that and that obviously has a massive demand on energy. So, they are looking everywhere for it and we are a big provider of it.
SPEERS:
Is China doing enough on tackling emissions? They are part of Paris but they don’t have anything like the onerous cuts to emissions that we have agreed to.
TREASURER:
I don’t take it upon myself to lecture other countries about what they are doing on this issue. We will focus on meeting our commitments and working with our customers to supply their needs. That has been very important for our economy and we need to ensure that we are meeting our own energy needs in this country and we need to adopt an all of the above approach to investment in new energy sources and new ways to boost our capacity of energy to meet our very real commercial needs here.
SPEERS:
I want to come back to that. Getting back to your visit to China, you also discussed Chinese investment in Australia and after your decision last year to block the Chinese consortium bid for Ausgrid which was on national security grounds, what did you have to say to China about that decisions and how the process now works?
TREASURER:
I think it was a good opportunity to clear the air on that and we did it in a number of meetings on the weekend. This was a fairly unusual transaction but it was good to be able to report on the work we have done to set up the Critical Infrastructure Centre. I think it was good to be able to reinforce the point that there were some rather specific and unique aspects of this particular asset which obviously on that occasion meant there was no way the Australian Government could agree to it and we certainly did not. But going forward there have been many other approvals for many other investments since then. I made the point pretty clearly that the Australian government always reserves the right to say no in our national interest and where I believe that is the case I will say no and have.
SPEERS:
And do you think that China understands that? That there are certain infrastructure assets in Australia that it simply cannot buy?
TREASURER:
The way the Critical Infrastructure Centre works I think was well received and that is seen as a very proactive way of managing these issues. It would have been certainly my preference to have been in a position to advise those buyers a lot sooner in the process but that information was not available to me earlier in the process. So I was not in the position to do that and that is something we have had to address and I have addressed that with the Attorney General to ensure we have this Critical Infrastructure Centre in place that can more proactively manage those issues and also then manage any difficulties that occur like we saw over that particular decision which can create some confusion. So, we have taken the opportunity right at the time of making that decision to as recently as the weekend to be up there in the market and to be explaining and clarifying it. I think that is well received. You can’t go and make those investments in China. You can’t do it. Australia does have a very liberal foreign investment regime. In fact the most, I would argue in this part of the world. But we always reserve the right to say no and that remains our sovereign right and on occasions, and importantly, you have to exercise that as I do.
SPEERS:
I was going to ask you. We have this free trade agreement in place now and that is meant to smooth out a lot of issues in the trading relationship and yet we have decisions like yours on Ausgrid that obviously upset China. When they do things like restricting coal imports, beef imports as well and a recent decision around investment in Australian hotels and so on – is the free trade agreement really delivering what we hoped it would?
TREASURER:
I think we are certainly starting to see that whether it is in the agricultural sector, the services sector, any number of sectors. We are just getting started on this in terms of the benefits. It is a massive opportunity as well as a dividend delivered already in a lot of these sectors and we expect to see that grow and increase into the future. It doesn’t give you a complete inoculation to the odd issue that will arise that you will need to work through; it doesn’t give you a leave pass on all that, but I tell you what, it gives you a much stronger footing on which to pursue and seek to resolve a lot of these issues. I mean this is an extraordinary agreement, an agreement frankly that our opponents had given up on in government and really hadn’t made any progress on. Through Andrew Robb and now through Steven Ciobo who is implementing the agreement, I think we are seeing those benefits. I’ve seen it in country towns and regional centres. We saw it in Tasmania. We are seeing it all around the country where the benefits of that agreement are flowing, and we need to continue to back it in.
SPEERS:
Now I notice Treasurer you didn’t raise North Korea during your talks there. You were there with Steve Ciobo talking trade primarily, but this is the great security challenge of the moment, as the Prime Minister says, things are closer to war than they have been since the end of the Korean War. China has the most influence over North Korea, why not raise this while you are there in China?
TREASURER:
This was an economic dialogue and those issues are fully canvassed and dealt with at leader-level and through the other channels. This is an important opportunity to pursue the economic side of the relationship, and that is what Steven and I were doing while we were there. It wasn’t raised with us and we didn’t raise it with them because it was neither of our jobs to do that. But I make this point - when you look all around the world at the moment, most of the risks to the global economy aren’t economic risks, they are actually strategic and political risks. That is true in Europe, it’s true in the United States, the UK. It is true throughout parts of South-East Asia. It is not the fundamental economics now that is driving a lot of the risks we see out there in the global economy, it’s these other issues. It is an unspoken statement of risk that it doesn’t bear spending half the day talking about [inaudible] and I are responsible for.
SPEERS:
When it comes to dealing with China, and we’ve seen this for various political parties over the years in Australia, it still is about trying to separate the two out, national security issues and our economic interests.
TREASURER:
Well these things come together at a leader level as you would expect them to. But as the Treasurer, and the Minister for Trade, Investment and Tourism in Steven Ciobo, our job was to get a very good understanding of where each of our economies were at. The synchronising of our economies as China moves from a producer to a consumer economy and our export base diversifies into more exports; they are punching in now at just under 7 per cent still on their real growth and our jobs growth last year was very, very strong, I mean we are not generating 15 million jobs a year like they have to. I mean, what we do [in a year] they do in a week up there in China. So there is a very big difference in scale. But I was heartened by their continued commitment to growth and the other thing they were raising that you’d be interested in David was they want to cut taxes on investment in China. They actually want to cut company taxes. So we had a previous Socialist Government in France that thought it was a good idea, now we have the Chinese Government and Bill Shorten is to the left of both of them when it comes to cutting company taxes. I mean, this guy is right out on the end of a stick with no-one when it comes to taxes on investment. He wants them up, the rest of the world wants them down, including the Turnbull Government.
SPEERS:
Well that brings us to some domestic matters, if I can. On the energy debate, Ross Garnaut today suggested two carbon reduction targets be legislated. One strong and one weak. If power prices don’t fall we go with the weaker target, if they do fall we can afford to adopt a stronger target. What do you think of that idea?
TREASURER:
Look there will be lots of ideas people put on this merry-go-round. What we are focussed on is what is going to deliver a durable investment framework to encourage investment in base-load reliable, affordable energy. Now we still have a distance to travel on this and what is concerning is that the Labor party is effectively putting a coal veto on being able to land that agreement in a bipartisan fashion. Now I don’t think that is very constructive or helpful. I think what we have to get to is a durable and agreed framework, but it’s got to have an all-of-the-above approach and Labor can’t insist on a coal veto to arrive at one. I don’t think that’s very constructive at all.
SPEERS:
Ok but just on this particular idea from Ross Garnaut, well it would be something you look at?
TREASURER:
I will let everybody else commentate on every issue that comes up. I am not going to do a running commentary on the latest idea to be put on the lazy susan [inaudible] it will spin round and round and plenty of people will have their commentary on it.
SPEERS:
Ok. AGL, the Australian reporting today that taxpayers are going to be paying AGL $500 million for its two solar farms in western NSW, nearly half that in direct grants and to set them up the rest in the renewable energy target certificates they will get. Do you reckon that is value for taxpayers’ money?
TREASURER:
Well that is the system that has been in place for some time now through the Renewable Energy Target and the previous grants. But it is important to remember that AGL does 85 per cent of its business in coal. That is where it largely generates and as you know we are pretty keen to ensure they do not forsake the use of those assets particularly when doing so would leave the Australian Energy Market undersupplied which would drive up prices. That is why in our discussions with them we are focusing on how that gap in 2021 can be met. They are coming back within that time period like they committed to. But I tell you what it’s got to do, it can’t just fill the gap in terms of the amount of energy that can be supplied, it’s got to do it in a way that is both affordable and reliable together with the other capacity commitments. So I think that is a pretty big question for them to come back to us on so we will wait with interest.
SPEERS:
Well you are obviously trying to pressure them into keeping Liddell going. Can you use any of that renewable energy money they get as leverage?
TREASURER:
Let’s see where we get to over the next few months with them coming back to this critical question. The arrangements for the RET are set. It was renewed where it was when Tony Abbott was Prime Minister and that was the arrangement that was put in place and you have to be careful that when you play around with these things you can run the great risk of further undermining investment going forward. That is not what we want to see happen. We might have many frustrations with it but that is the set of rules we have inherited and that is what we will have to continue with. I am not suggesting there was any opportunity for it not to be renewed in the way it was a few years back. The Parliament wasn’t going to countenance any other options so the Parliament has really been enforcing and driving those sorts of subsidies to remain in place and so that is what we have to live with. But what we can’t live with is allowing big gaps in the energy supply market to emerge both over this summer, where we have got a strategic reserve policy we are seeking to purse with the states, or one to open up in the future because a big energy company wants to shut down a plant and not have anything reliable to replace it and they are unable to then go on and continue to produce energy from our other coal fired power stations and get a higher price because there is less supply.
SPEERS:
What about a solar farm with a gas peaking plant or will that be too expensive?
TREASURER:
We would assess that on its merits and on the technicalities but let’s not forget when they all said it would be alright after Hazelwood went down, that was closed down, which was cheered on and in fact was deliberate policy of both the State Labor party and the federal opposition, when that happened those who were saying it would be alright were actually factoring in the closure of Portland aluminium smelter. Now you don’t go and keep affordable energy by shutting down industries’ and that is certainly not the Turnbull Government’s view. That is not a set of assumptions that we think is a justifiable one.
SPEERS:
Two quick ones Treasurer. The tussle for Channel Ten. Do you care? Does it matter to you whether it is CBS or the Lachlan Murdoch/Bruce Gordon bid?
TREASURER:
That issue has run its course today as I understand for the Lachlan Murdoch bid but in terms of any other things that might come before me David I am sure you would agree it is not really appropriate for me to run a commentary on that. I have to deal with that as part of a formal process so I will leave that to the papers and the other advice I have to take when making those decisions.
SPEERS:
A last one. Same sex marriage you are voting no but are you one of those worried about religious protections and demanding to see the legislation before everyone votes?
TREASURER:
Well I do believe it is ok to say no and I have said that to my own electorate and I have also encouraged my electorate, and Australians everywhere, to actually respond and make sure they have their say and we promised them they would and they are having it. For those who share my view, well don’t be intimidated out of it. We have seen I think some rather disturbing behaviour against those who have expressed a view, particularly on university campuses. I read the piece by Miranda Devine on the weekend and found it very troubling. So it is a confidential survey. You can fill it out in accordance to your own values and beliefs and I would encourage all Australians to do that. In terms of the religious freedoms, well the freedom of religion more generally is something I feel very strongly about and is one of the reasons I have been fairly active on this issue in the past and if the survey were to return a yes, well any bill that would then come forward, the Prime Minister has made this point, he would be working very hard to ensure religious freedoms were protected and I can assure Australians this would be at the top of my list for that particular bill and how it went through. But right now I am focused on the economy as I should be, people’s jobs, what they are earning…
SPEERS:
You don’t have to do all that detailed work on the legislation before the vote?
TREASURER:
Well that is the process David. That is the process. That was going to be the process under the previous compulsory attendance plebiscite. That was exactly what was put to the Parliament. So the only difference in method here is it is being done through a non-compulsory survey as opposed to a full attendance compulsory plebiscite and it was exactly the same process that was considered for that. What I believe though that is that if it were to return a yes then it would be absolutely necessary to ensure that religious freedoms were protected and as a member of the Parliament I would be very forward leaning to ensure that that occurred. I welcome the support of the Prime Minister to make sure that would occur.
SPEERS:
Treasurer Scott Morrison good to talk to you this afternoon, thanks very much for your time.