BENSON:
Wayne Swan, you appear to be giving not a red light to these investments, the government-owned foreign investments, but a bit of an amber light. Is that a fair description?
TREASURER:
Well, not really. We welcome foreign investment. I want to make that very clear. It's very important for our national economy. It's a big creator of jobs. It's very important in certain sectors. But what we've seen in recent years has been the rise of sovereign wealth funds in particular, and a whole set of discussions about those investments. What I wanted to do was to put out in the public a set of principles which will guide my consideration on a case by case basis on those investments by foreign governments and their entities. And what I'm doing is really putting in place out there in the open some of the principles that have been used in the past by the FIRB and the past governments to make these judgements. We thought it was very important in the environment we are in at the moment that we put these very clearly on the public record, and that's what I did yesterday.
BENSON:
What is the specific concern with these sovereign wealth funds, these foreign government-owned investments, rather than general foreign investments in Australia?
TREASURER:
Well, the judgement that I will make as a Treasurer on a case by case basis is whether they are operating commercially and whether they are, in particular, in the national interest. So we put down six principles - principles that we will use to judge these on a case by case basis.
The first one is whether the investors' operations are independent from the relevant foreign government. That's very important. And whether the investor observes common standards of business behaviour.
Other matters are matters like national security, impact on competition. So what we're concerned with when we make this judgement on a case by case basis is that these entities are operating commercially and competitively.
BENSON:
Well, the concern would be that they might be some sort of disguised attempt to carry out a government purpose other than an investment purpose, that the aim is not to be a commercial return but some other result?
TREASURER:
Well, the judgement we will make is whether they are operating commercially and competitively. That's a very important part of our national interest consideration. Investments from these funds have been made in the past and approved. So this should not be seen in the context of any particular proposed investment anywhere at the moment. What we're trying to do, because there has been heightened public interest in these matters, is to put our principles down very clearly. The principles that I will apply to an individual case in the national interest - to flesh that out, put it on the public record for the benefit of investors and the public.
BENSON:
So you're talking about quite big investments. The estimate is that it's more than $3 trillion involved in these government-owned funds at the moment, but within seven years the estimate was $13 trillion. So there's a lot of money coming specifically from governments in Asia and the Arab world that have huge surpluses.
TREASURER:
That's true. There's a huge amount of money around the world being put into these funds and, in effect, you could say that the Australian Government operates one of these funds as well, which is called the Future Fund. What we want to ensure is that we do attract foreign investment but when we make the judgement as to whether it's in the national interest (inaudible) that I will as Treasurer.
BENSON:
Now, the immediate background to this announcement was the Chinese Government-owned company Chinalco taking a stake in Rio Tinto here in Australia. Are you effectively firing a shot across the commercial bows of China when it looks at investing in Australia?
TREASURER:
Not at all and this wasn't the immediate outlook for this statement, it wasn't governed by one particular case. When we came to government we thought it was a good idea to have a good, hard look at this issue. We've done that and what I published yesterday is the outcome of that good, hard look by the Government, the new Government. A new government would always run its eye over matters as serious as this. We wanted to make it very clear that the principles that I published yesterday have got nothing to do with any particular case or any particular country.
BENSON:
Wayne Swan, thank you very much.
TREASURER:
Good to talk to you.