Transcript
Interview - Sky Business News
2 October 2009
Subjects: Indonesia, Samoa, Trade with China
BROOKE CORTE: Well, there's a lot on the plates of our government ministers at the moment who focus on international affairs.
At the top of the agenda is coordinating Australia's response to the tsunami tragedy in Samoa and the devastating earthquakes as well in Indonesia.
For an update, I'm joined now from Melbourne by Trade Minister Simon Crean.
Mr Crean, thanks very much for your time this morning. Could you please just update us on the latest information that you've got on these two events and the number of Australians that are potentially involved.
SIMON CREAN: If we go to Samoa first, Brooke, there are four Australians confirmed dead and another person who was a permanent resident of Australia but in fact a New Zealand citizen.
Of the six unaccounted for yesterday, they've all been located and as far as I'm aware, five of those six have been returned home. They're back in Australia. The other is in a hospital in Samoa.
We continue to lend very strong assistance to the Samoans in this hour of need. We've sent a medical team there, supplies, and we're continuing to assist with the clean-up and medical attention. We stand ready to shoulder the burden of this huge devastation with our Samoan neighbours.
So far as Indonesia is concerned, this is a very significant double earthquake in Sumatra. Official death toll for the region - for the island, Sumatra, is in excess of 500. The unofficial is almost double that. We just have to wait and see what the recovery effort produces in that regard.
So far as Australians are concerned, there are roughly two hundred and fifty Australians known to be in the vicinity. Around a hundred and fifty of those have been accounted for.
Now, the hundred that are unaccounted for, it's a combination of poor communications and the fact that not everyone who goes on these holidays into Indonesia registers. The lack of registration makes the contact difficult, but I can say that as at now, we have no indication of any fatality and/or injury impacting upon any Australian.
Again, we stand ready to support Indonesia in its hour of need. Any assistance that is sought of us, we will make available to them.
BROOKE CORTE: And as we said, so obviously that's keeping everyone very busy but - busy on so many fronts at the moment for ministers.
China celebrating 60 years of communist role this week. How did you view the celebrations? Did you think of it - it was kind of a bit of a party, or did you think it was a way of showing the world just what a powerhouse economy China has become?
SIMON CREAN: I think the world knows it's already a powerhouse economy, Brooke. It is the third largest economy in the world now and that is a huge amount of progress in 60 years. And in particular over the last 30 to 35 years when China opened up, it's posted an average nine per cent growth in each of those years.
This has been a massive development. It has lifted many of their people out of poverty. They've still got a long way to go. They have become a major exporter to the world, but significantly over the last decade or so they have become a significant domestic economy in their own right. They're now the largest automotive market in the world and they are undertaking significant housing developments. So in many stages, in many senses, it continues to be an economy in transition.
I think they have got a lot to celebrate, and Australia has been an important part of that development. China needs Australia as much as we need China. Last financial year, China was our largest trading partner, off the back of a huge boom in resource prices. But China is going to be our fastest - it is going to be the fastest growing country in the world for the foreseeable future, and the interdependency now between the Australian and Chinese economies is quite significant. And it's not just about trade in goods anymore; it's trade in services and it's in investment flows.
Now, we still have a long way to go. I think there is still enormous potential for development between our two economies. That's why we're seeking to finalise a free trade agreement with them. It's why we've been spending a lot of time in China, understanding where its economy is diversifying, what opportunities there are, but importantly, where the partnership can be strengthened.
BROOKE CORTE: Because one of the things of course Australia - as much as China is wanting to invest here in Australia, we would like expansion opportunities and investment opportunities into China as well, particularly access to insurance and the funds management there. What are we doing to try and accelerate this push and to work on this issue?
SIMON CREAN: Well, it's correct. Investment is a two-way street. We hear a lot of argument about Chinese investment into Australia. It is still small compared to investments from other parts of the world, for example, from Europe, the US, Japan. But it is growing, and so it should because investment is the new form of trade, particularly as economies evolve and become services driven.
I think it's very interesting you mentioned financial services, Brooke, when you look at where Shanghai is repositioning itself, getting away from manufacturing, wanting to become a financial services hub, wanting to become a shipping operation.
There is huge opportunity for Australia, not just in terms of banking, but in terms of other financial services. Funds management with a wealth development economy, and also insurance associated with the shipping operations.
Now, the Shanghai Expo next year, I think gives us an important opportunity to, if you like, put on display and brand more effectively the breadth of what Australia has to offer China. Not just in financial services, but education services, urban development, value-added activity, and of course the value added is important in terms of their challenge for food security and energy security.
So I think that China is going to have to look more to Australia for that sort of development, that sort of evolution. We're trying to facilitate that on two fronts. One, to conclude the free trade agreement, that's proven difficult because of the sensitive issues of agriculture, but we will persist with that. But we haven't been deterred by it. We've approached China on a second track approach: gone out into the regions and developed commercial relationships in areas that the regions themselves have identified as their key objectives, as their key strategy forward.
I think this second track, this second front approach, will bare significant fruit for us, but Australia has to keep going there, it has to be active in the region. It's a hard market to crack, they always are when economies are opening up. It's the combination of understanding that they need to open, they need to embrace liberalisation in trade, but at the same time dealing with the sensitivities within their own domestic economy.
BROOKE CORTE: How close are those talks to being resolved, is it the difficulty of negotiating with global powers that's holding up - what are the sticking points? You mentioned one there.
SIMON CREAN: Yeah well agriculture is, I think the major sticking point from China's perspective, but they've concluded a free trade agreement with New Zealand. We've made it clear that we can't settle for less than they've agreed with New Zealand.
But the aim is to try and convince them that we are able to manage the issues of sensitivity with agriculture. We've negotiated lots of free trade agreements. We've negotiated within the Doha Round, and understood the issue of economies that still have a lot of subsistence agriculture, and a lot of farmers within their population base.
We can deal with the sensitive issues. But beyond the sensitive issues, my point — and this is one that we have to keep hammering — there is much more opportunity on offer. There is a lot that China is opening up in. I went there recently with Kim Carr, the Industry Minister. There is huge opportunity for our auto sector to work in cooperation with the development of their auto sector.
They're, as I said, the biggest automotive market in the world, they're now the biggest automotive manufacturer in the world. But what they haven't got is the full range of capability in automotive manufacture. Australia has, but it's got a small market. China's got a huge market. Clearly an area for complementarity.
I think it's true in urban development too. They know that as the economy develops people are going to come into the cities. They have to house them, and it isn't just a question of building the actual facilities. But bear this figure in mind. I'm told that in China over the next two decades they are going to have to house 400 million people.
I mean, you think about it. This is the biggest urban development in our time, and Australia has great strengths in design, creative architecture, smart building material, smart lighting, wastewater management, environmentally sensitive building. This is what China is reaching out to. They've indicated that they want a quality product, a product that lasts, and that's what they're seeking support from Australia for.
Now, these are two big examples where Australia can be in the space. I've mentioned others. Value-added food processing, energy, the development of their own energy sector, their own resource base. Australia isn't just a great commodity supplier to China, it is the most effective and efficient commodity extractor in the world, and therefore the services side of our commodity base and our agriculture base, that is a huge opportunity into China. As is education, as is financial services, as is logistics, as is infrastructure build.
These are all areas in which Australia can play a huge role and in which Australia's industries that operate in those fields have to go further afield. I mean, we're a nation of 22 million people, we can't sustain our economic future just by producing for ourselves. Australia has understood the importance of trade liberalisation, trading with the rest of the world. So our strategy is to, on the one hand open markets, but on the other convince markets about the efficiency and the competitiveness of what we have on offer. That's a great story for Australia, and China is going to be a huge part of that story.
BROOKE CORTE: Mr Crean, we really thank you for your time this morning. Thank you very much.
SIMON CREAN: My pleasure, Brooke.
BROOKE CORTE: That's Trade Minister Simon Crean there, joining us from our Melbourne studio.
ENDS
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