Transcript
6 August, 2009
Speech to the Sydney Institute - Question and Answer Session
Subject: Australia's trading relationship with India and China; education exports; Mr Stern Hu, Doha, uranium mining; Copenhagen Climate Change conference; protectionism and tariff reduction and nuclear non-proliferation.
CONVENER: Many thanks to Corrs for the use of this facility this evening, and so we come to questions and discussion will finish no later than 7 o'clock.
You said you're off to India next month and you mentioned India in your speech. As you know, unfortunately, the Prime Minister cancelled his one scheduled visit to India and perhaps he's going again soon and there's been a lot - there's been a lot of emphasis on China, and rightfully so, but do you think there's much more the Government can do about our relationship with India? And is there more the Government should be saying about our relationship with India?
Because there's, as you pointed out, the Chinese growth, but Indian growth is not - projected growth is not that far behind the Chinese projected growth.
SIMON CREAN: Yeah, I do. I think that the relationship with India is one of the most underdone of our trading relationships. Interestingly enough it's been the fastest growing market, both in goods and services over the past 12 months, but off a very low base.
I think it was the other PM that actually effectively cancelled the trip because he had a heart bypass or something at the time and that meant that the PM who was planning to go there didn't go. He plans to go later this month.
But I really believe there is particularly strong opportunity in India because it's a much more diversified economy. It has a strong services sector. It is a democracy and it has a system of governance and language that is a lot better to connect with for Australians seeking to do business.
One of the areas of opportunity is in infrastructure, because even before the global financial crisis, Manmohan Singh had identified the infrastructure deficit in India and they had committed significant resources. They've been complemented by the fiscal stimulus packages.
The difficulty, it's still going to be a hard market to crack, because there are a lot of interests that they would classify as sensitive, and these have to be worked through. We've undertaken a study with the Indians to identify the potential for the relationship to go forward, and whilst I'm going to India essentially to try and make sure that this meeting of ministers can drive the Doha Round forward, we've also got scheduled an important bilateral meeting to see where that relationship might go.
I think though that when you look at what India is doing and where there are complementarities with Australia, the big problem with India is that there isn't a good enough appreciation, I don't think, by India as to what the diversity of Australia - what the diversity is that Australia has to offer.
So one of the things that we are trying to activate with China is a CEOs' engagement...
CONVENER: With India.
SIMON CREAN: ...with India. Oh sorry, yeah, with India. It's a bit easier with China, there are fewer of them.
[Laughter]
But no, with India, a CEOs' forum. And the reason this is important is that, whilst trade negotiations are very much government to government, the economic drive is really the business to business connection. So we can do all we can on the G to G front. We've got to encourage much more interaction on the B to B front, and then working together, I think we've got to try and join the dots.
That's how we will advance the relationship and that's what we're seeking to do with India.
QUESTION: [Inaudible question]
CONVENER: The question is, in the context of India does the Minister think that the controversy about Indian students in Australia is going to affect the relationship between the two countries?
SIMON CREAN: I'm confident it won't if we understand that it is very important for us to get on top of the bad examples. I've already had discussions with my counterpart and did immediately the time this issue blew up. The Prime Minister did, so did Stephen Smith. I've discussed it directly with Anand Sharma, the new Trade and Commerce Minister for India, and also Julia's going there later this month.
It is very important that we get on top of this, I think for two important reasons. One is parents who send their kids out want to be assured that they are going to be safe, not intimidated, and all of those sorts of things, and that's a natural thing.
And for a country like us, you know, we take it for granted; we would think that that'd be the last thing they'd cop here. So the fact that it's happened is all the more reason why we've got to try and protect the image.
The other thing I think is the brand, because one of the great Australian exports now is education. The challenge for us, and why we haven't made more inroads quite frankly, is that many countries protect the public dimension of education in terms of institutions. They don't easily allow the transplanting of the physical infrastructure in other countries.
We've been able to do it in Malaysia, some parts of Vietnam, but not in China for example, and it remains to be seen where we get with India.
But I really think that two things strike me when you look at the Asian region, the Commonwealth countries in particular. The significance of that Colombo plan, and the people to people links that that created and the commitment to this country because of the values - a combination of values and opportunity that was given.
This is a vital brand for us, and we have to protect it. We have to promote it, but we have to protect it.
So I think that it is really important, and I know Julia is paying a lot of attention to this issue, that we really need to ensure that if people are letting the brand down, that we move quickly to either ensure they shape up or they don't - or they ship out.
QUESTION: [Inaudible question]
SIMON CREAN: No I don't, and I wish I did, and we continue to ask. No charges have been laid. We understand from reports that it is having been in receipt of state secrets, not intelligence now. So it seems to be not in the field of espionage but state secrets. What are the state secrets? We don't know.
This is a important issue for us because any Australian citizen, no matter where they are, if they're arrested in a foreign country they're entitled to support and we have been making active representations. The problem is that under their legal system, they have acted in accordance with it. It's not our legal system, but then we wouldn't expect people coming here to operate as if the country from which they came should apply to them.
So I think it's a salutary lesson to all who work and live and operate in other countries, that they do have to have regard to the law. But that having been said, it would be a lot better in terms of the relationship if they proceeded expeditiously if charges are to be laid, that they were more forthcoming with the information such as the question that you've asked, and of course that there be afforded the appropriate consular access, but also family access and legal representation.
QUESTION: [Inaudible question]
SIMON CREAN: I think the big criticism of where we are with China is that the previous government gave away what China wanted most and didn't get anything in return. They conceded market economy status and practically ever since, until we sought to revive it last year, the negotiations haven't gone very far.
I think, I don't argue against the principle of going forward and having to ultimately concede that point, but I do think that you've got to be a bit more adept in the negotiating field and make sure that you've got, still got coinage.
As it turns out, I think that there is still important coinage with China, not the least of which is our resources and their requirement for those for a long time into the future. Not to try and secure any special treatment in terms of price because my point back to them is, well, if we've conceded you are a market economy then act like one. And let the market determine what the price is. But I think in terms of long-term supply and reliability, you know, that's important.
The other thing that I think is important with China, as it will be with India, is the fundamental significance now of services in two-way trade and the opportunity. I happen to believe it's a great opportunity.
Whatever our arguments about agriculture and manufactures are, the big opportunity is in services because services is 80 per cent of the Australian economy yet it's only about a third of our exports.
And the other big thing with China, of which there has been a lot of discussion, is investment. But the point I've sought to make to the Chinese is that investment, as much as you want to make investments in this country, and increasingly so over the last few years, investment is a two-way street. And our businesses want the opportunity to also make stronger and bigger investments in China.
So investment is a two-way street. We should get a framework and that should be part of the FTA too. So to answer your question I think that there is big opportunity if we're prepared to embrace it, big opportunity to secure and reinforce the growing interdependence between our two economies. And that's what I would like to achieve.
Now, as for I think the broader part of the question about that do we still support FTAs, we've never said we didn't. But what we have said is that, really, FTAs should fit into the framework as part of what I refer to as the cascade. By far the biggest opportunities for us and global economic recovery come from securing a multilateral outcome.
But multilateral outcomes will never be the perfect outcome. There will always be carve outs and limitations and timelines. So what you should be doing is trying to secure the best possible outcome at the multilateral level, then using the regional framework to enhance it and use the bilaterals to enhance it further, so that you've really got WTO plus-plus. That's what we've got to strive for and in that structure FTAs can and should play a very important role.
QUESTION: [Indistinct] and I'd like to find out from you what you're doing so that countries can continue to offer their exceptional services, especially when they're basically are cheaper resources in some of these countries that you're talking about being [indistinct].
SIMON CREAN: I must say I'm not too sure what the services assistance that we cancelled was, but I…
QUESTION: [Inaudible question]
SIMON CREAN: Research and development grants? The previous government did all of that. We're trying to pull it back.
I mean - and I think if you look at the most recent budget we put a lot of money back into innovation and research and development, and we've also put money in, importantly, into the Export Market Development Grant Scheme, which was seriously under-funded by the previous government.
So look, I think that government support is important but the challenge in terms of services is that most of what you try to get in isn't restricted by a tariff. It's the behind the border restrictions, the limitations, the regulatory framework. And so what we've got to do is to drill down into the importance of it.
The other thing that I think we've got to do far better in terms of our services sector is to demonstrate the significance of our comparative advantage through the services dimension. Take mining and take agriculture. It's not just the commodity that we are - we have comparative advantage in, it's the way in which we produce it, the way in which we extract it, the way in which we value-add it.
And in many cases that's a combination of technology, smart technology, and application, whether it's software or whether it's the innovation base.
I was out at a veterinary facility today, Parnell Pharmaceuticals. And they are a classic example of it, because what's the strength of our beef production and our dairy herd? It's the efficiency with which we produce it and the leading edge technology without any subsidies. How does that happen? It doesn't happen unless you've got a service base committed to experimenting, to continuing to punch out the new frontiers.
So I think that there is a huge opportunity in the services sector. It's something in trade terms that really hasn't been tackled in a way before.
But, interestingly in the Doha Round, services not only have got a run, there's been a very important what's referred to as a signalling conference to identify what countries are prepared to do as part of the conclusion, not just in terms of moving goods but how we can facilitate a greater flow of services.
QUESTION: Considering what you have described about the investment and economic expansion in the world, how would we ever satisfy the next 50 years, the energy requirements, especially petroleum?
SIMON CREAN: Well, I think you move away from petroleum, and I think gas is a good case in point. And Australia is hugely endowed with this and, interestingly enough, with Malaysia, the joint partnership between Santos and Petronas will see the largest shipment of coal seam gas in the world. That's already been contracted.
I think if you look at Australia now it's very interesting. You've got the North West Shelf with all of those huge developments of offshore gas, but in Queensland and down, if you follow that coal seam down into New South Wales, there's huge potential for coal seam.
In many senses if you leave the coal in the ground, it's probably the cleanest version of coal extraction of the lot, because it doesn't burn the coal but it takes a gas stream off it. The pipeline and the infrastructure is there, and it is forecast that that deposit in Queensland coming down into New South Wales is - if it realizes its potential will be bigger than what's on the North West Shelf.
Now, interestingly enough, I think that gas is one of those great commodities that will benefit most from an emission trading scheme. Because if the emission trading scheme is properly structured it should reward good behaviour in terms of the environment and at the same time punish bad behaviour.
So in relative terms gas versus fossil based options, gas is in a very strong position. And it's why you're seeing a lot of investment down here now, not just by Australian companies but foreign companies that don't just want the resource, they want to do the value-adding here.
And if you think of Europe and the difficulties that they've had in terms of the supply from Russia and the pipeline, they are actively looking at alternate sources of supply.
So I don't underestimate the capacity and the ingenuity of people to find more efficient and cleaner systems, but it will be enhanced and it will be expedited far more effectively if we get a market system that drives it. And that's why we are pushing so hard and taking the lead in terms of Copenhagen.
QUESTION: Yes, I just wondered what's going to happen about exporting uranium to India in view of their not - Non-Proliferation Treaty, and if we've got a right to exploit there - import it there, perhaps we should use it at home for nuclear power.
CONVENER: There's a question about exporting uranium to India and, secondly, the possibility of developing a uranium industry in Australia.
SIMON CREAN: On the second part of the question, I think there is a question as to whether we should develop it here, but we don't agree with it and we don't think we need it, because we have huge resources in terms of alternates and cleaner options.
As for the question of supply to India, our position also is quite clear on this, that we supply uranium for example, to China, to Russia, because they're signatories to the NPT. India isn't. And that's an issue that still has to be resolved.
The question of the uranium resource and the - and our - like a Labor government's preparedness to accept the expansion of that isn't in question now because that was resolved at an earlier ALP conference, and I think that what was a three mines policy is now probably - I think it's six already isn't it?
But - and with the change of government in West Australia one would assume there would be more interest over there.
So I think - and if I can just make this final point. Whilst I don't think we need to develop a nuclear industry, and whilst we are rigid in terms of not supplying to countries not signatory to the NPT, I think as the major supplier - one of the major suppliers of uranium in the world, we are in a very strong position to insist upon its use only for civil purposes and in accordance with the strictest safeguards.
So we're in a position to influence, importantly, that direction of a global response.
QUESTION: Mr Crean, if I could just take you back where you started. As you know, when you first became a public figure the trade union movement was protectionist, the Labor Party in opposition was protectionist, the Fraser government was protectionist.
What do you think changed all those attitudes, as someone who played an important part in some of those organisations?
SIMON CREAN: I think - I mean if you look at the history of this country and what's divided politics, it's been White Australia Policy and tariff. And I think that what taught us after the war to ultimately end the White Australia Policy was that increasingly we found that attracting migrants and bringing them here was the best thing in terms of the development of this country.
It not only enhanced our economic development and enriched us culturally, and it taught us to understand much better the importance of global engagement.
I think the trade front was the natural extension of that, but it took boldness of government to do it, and I think it needed a cooperative approach, given the protectionist tendency of the trade union movement, to convince them that there were benefits from engagement.
You think about '83, when Hawke came to office, the prevailing economic orthodoxy was supply-side economics. It was Thatcherism and it was Reaganism. It was only the Hawke government that stood out and argued a different approach, an inclusive approach, an approach that said we have to globalise, we have to engage because our future is dependent upon it.
But if we're going to do it we've got to take the mob with us. And if we're expecting to get them to make the individual sacrifices, we've got to find clever ways to strengthen the social safety net.
Now I think those things in politics are fundamental. It's the issue that China is going to have to grapple with. It's the challenge that China got confronted with, in terms of this latest economic challenge. How do you put stimulus in by giving money to people if their whole instinct, because there isn't a safety net, is to save it?
So they will only spend if there's confidence that the system will look after them. Fortunately, Australia has such a system. It has it because we embraced the aged pension a hundred years ago. But the biggest intergenerational policy of our time was no doubt the implementation of a national superannuation system.
How did that come about? Because it was a trade off for wage restraint. And what we delivered in terms of low inflation and low interest rates, laying all the basis for that, we traded off in terms of something that was not money wages now but security and income into the future.
I think it is the great legacy. The only question now, is nine per cent enough? I don't think it is so how do you do it? These are the new challenges, I my view, coming out of the recession. But I believe, even at the Labor conference now Gerrard, you talk about protectionism, everyone talks about it in the lead up to the conference. I think so far as protectionism is concerned, we've killed it off in the Labor Party. I hope we've killed it off globally.
But unless you take the boldness of decision and really say this is the way to go, there are going to be benefits, and then continue to sell the benefits, then I think you get away with it.
Our difficulty in '93, probably in the '90s, was to assume that people could see the benefits and when we lost office there was a lot of complaint. That people didn't think it flowed through. Well the lasting legacy is there, we're too small, you can't just produce for a domestic market anymore. Globalization came upon us and I think that this country was just lucky enough to have a government that saw the opportunity and went right after it.
CONVENER: Many thanks. Thanks a lot.
[Applause]
Well we're right on seven o'clock so I'll be very brief. Once again, thanks to the Corrs for this fine facility, it was significant to hear the Minister speak out strongly on the Stern Hu case and I'm very pleased he did so at the Sydney Institute.
And I'll just make one final comment. Following Simon Crean's career over a long time, both in the trade union movement and more recently in politics, and it is evident that what he has - he has many skills, but one of them is an enormous ability to grasp detail and you need that in the trade union movement if you're arguing about awards and you need it in trade if you've got the patience to argue about trade negotiations, which is a very special skill. But for a nation like Australia a very important skill, so it's great to have a trade minister who is so confident in this area.
So well done tonight, Minister, we hope to have you back some time in the future. Perhaps before five years. Thank you.
[ENDS]
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