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QUESTION: Well, can I start with asking you why - specifically, why you want Australia to be a hub for the region for Islamic finance?

SIMON CREAN: We want it to be a hub for financial services generally. It's that Islamic finance is the fastest growing financial grouping, if you like, in the world at the moment. And when you think about it, our connection with the region and the Muslim population in the region - whether it's in Asia, in India, in the Middle East, in Africa - this is a huge opportunity for us. Why haven't we been able to tap it? It's because the product that the Shariah requirements don't recognise, or don't allow the payment of interest. So the challenge is to develop a product that recognises that fact, that develops another interest that's based on a profit sharing arrangement.

Why is Australia particularly - also attractive to this type of drawing of funds? Because we do a lot of trade in commodities, and we have a big property asset class. So the two big asset classes that are here in the country, and which we export - commodities in the latter case, the property market here - these lend themselves to that underpinning in terms of the new innovative products. Now, what form do those products take? They will vary, but you've seen today launch the Westpac initiative. And we're very excited by the opportunity. The other thing is that in terms of Muslim population here in Australia, it's almost 400,000. So being, the institutions being able to offer a product that draws their investment is also particularly attractive.

QUESTION: So with the launch of this document today, what does that mean in terms of Australia getting closer to having an Islamic bank?

SIMON CREAN: It's about raising awareness because Islamic finance, and the issues with it, are very complicated to explain to a society and a culture that understands banking through interest payments, whether received if you're the investor, or paid if you're borrowing. That is not allowed under Shariah law. And yet you look at the sovereign wealth funds within the region - particularly in the Gulf - you look at the need to attract those levels of finance and to attract investment into this country to secure our future, or to finance arrangements that sell into those regions, we have to adapt to those circumstances. Not to replace our system, but to offer it as an alternative. This is about raising the awareness, it's about getting a better understanding out there but, at the same time as we've just had a report commissioned and reported to by the Government on how to make ourselves a financial services centre, which itself placed an important focus on this area of opportunity. So, ahead of the Government's response to that, we want active community input into the sorts of things that we need to be doing to attract Islamic financing options.

QUESTION: So would you imagine that overseas companies would come and set up Islamic banks here or that the local companies would start offering Islamic services?

SIMON CREAN: Both. But there are already institutions here already offering Shariah compliant products. So I think what we need to do is to draw on both aspects, but to also build our understanding and our expertise in what we can offer. I would like to see the superannuation funds, for example, offer a Shariah compliant product because it's a compulsory system. And if there are 400,000 Muslims in the country, they should be able to exercise an option in terms of that investment. That's just one dimension. You've seen the Westpac aspect today. I hope that we see a lot more opportunities. If you look at the big corporations that I mentioned in my speech - GE, Shell, Tesco - they're all offering Shariah compliant products. We need to be with the game and try and get ahead of it because there are big opportunities for us.

QUESTION: So you mentioned the issue of not being able to pay or receive interest.

SIMON CREAN: Yes.

QUESTION: What are the other things that make up an Islamic bank or Shariah-compliant financial services?

SIMON CREAN: Well, you'll have to ask the technical experts for that. But, look, the fact that they can't invest in a product that pays interest doesn't mean they're interest free. There's no free ride in this. The question is developing the instrument - and they're capable of being developed, as I've already explained the example - the Sukuks, which are bonds, Islamic bonds. The financial institutions are creative enough to develop those instruments. No free ride. There will be a return for the financial institution. It's just that it will be structured in a different way. What I want, what the Government wants, is for Australia to understand the opportunity off the back of its unique strength emerging from the global financial crisis. We've got the banks that are still AA rated. Only nine of them AA rated in the world, and we've got four of them. Why? Because we've not just got a strong banking sector, we've got one of the safest in the world.

And, secondly, it's not just a financial services sector based around banking. It's also innovative product in infrastructure development, which is the challenge to all of those countries that I talked about before. How do you finance that? How do you develop the instruments that recognise unique and the requirements of a different system, and also the funds management industry.This is where Australia has unique strengths; its innovation, the strength of its banking system, and the safety that we offer.So I think that we're in a particularly good place.The other advantage that Australia has is that point that I made before: strong commodity trade. So if you are financing resource development, commodity movements, the risk is less because the asset - the tangible asset exists and it's marketable because there's big demand for our resources.

QUESTION: Minister, just quickly, how fast can the taxation issues that you mentioned earlier be resolved?

SIMON CREAN: Well, that's a matter for the Treasurer and the Government ultimately in terms of the response to the Henry review, where this fits in relation to the Henry review. But that - and so I don't want to comment about the timetable for that.What today is about is trying to influence the direction of the response in a way that makes a constructive input, that recognises the opportunity, puts the information out there, and challenges regulators, governments, as well as those that will be developing the products to develop a constructive response.

QUESTION: So do the tax complications apply just to foreign owned Islamic banks or does Westpac have any tax issues with offering its…

SIMON CREAN: No. Again, it's very technical. But if you're not charging… if you're not paying on the basis of an interest, but it's essentially a leasing arrangement and a profit sharing arrangement, you end up with two transaction.One problem is that you end up with two transactions for the same thing rather than one. It's a different mechanism to achieve the same result, but there's two transactions.If you've got taxation on each of the transactions then you can end up with a double tax. So - and that's not the intention. It's the intention to tax, presumably, the equivalence, not to see everything in the same prism that is our structure.So we've got to have a tax system that's adaptable to recognising we have to be adaptable if we're to be attractive to this market.

QUESTION: So how long do you think it will be before we a fully fledged Muslim bank in Australia?

SIMON CREAN: That's not - that's for the commercial interests to determine. What's important for us is to get a framework in place that's conducive to attracting the range of products. Whether they're banks, whether they're joint ventures, whether they're investments in this country, whether they're our ability to access their finances for our continued resource development, all of those options are out there.

QUESTION: Okay, but how long do you think before you'll have that conducive framework?

SIMON CREAN: That's the question of the timetable as to when the Government responds to the Henry review. But they've indicated they have the review and they will be responding to it later in the year.

QUESTION: Okay. And would they be - would Islamic banks be offered any financial incentives to set up here?

SIMON CREAN: No, no, and this is the interesting thing, that the growth in the UK wasn't because they offered incentives to the banks. It's that they levelled the playing field. They didn't have a discriminatory playing field in either terms - in terms of either tax or the regulatory framework.So, at the moment, if you like, we've got a barrier. It's not about incentives. It's about reducing the barrier, barriers. What the Johnson report does is point to those barriers. It commissions further work in relation to them. We'll be pursuing that further work. This publication identifies the issues and the opportunities. It' a great challenge for us, it's a huge opportunity for us, and we're determined to pursue those opportunities.

QUESTION: Minister, if I can just ask very quickly if you have any update on the Stern Hu case. There's been a bit of speculation about when he may come to trial. Have you had any…

SIMON CREAN: Look, this is the problem with this case; there's always speculation. I can't comment except to say that we've been formally notified that the case has gone from the Procuratorate to the courts. That's gone in fairly quick time, as I understand it. But it's now a matter for the courts to schedule the hearing. Again, we're calling for that process to be expeditiously conducted and transparently conducted.

QUESTION: Sure. Did the Australian Government ever attempt to get China to drop those charges against…

SIMON CREAN: No, our consistent approach has been for an expeditious and transparent handling of the case. We recognise the Chinese legal system has to run its course. It's a different legal system to ours. And, as we constantly say, that's the circumstances in which people go in there to do business or travel in there. We have offered all consular support and assistance that we've been able. We've treated it as a consular case, not seeking to interfere with the course of justice, only to bring it to a conclusion expeditiously and transparently.

QUESTION: Okay. And also now that the employees have been indicted, is there any ramifications for Rio Tinto in Australia? Will the Government be launching any investigations into the company's practices in China?

SIMON CREAN: There's no allegations against the company. China, indeed, has not made that allegation. It's allegations against, and charges now, against the individuals.

QUESTION: They were acting for the company though.

SIMON CREAN: They were employed by the company.

QUESTION: Okay, so there's no plans to look into the case from a - at the government level?

SIMON CREAN: No.

QUESTION: Okay.

SIMON CREAN: We have no - there's no justification or reason on the evidence before us for such an investigation.

QUESTION: Okay. And also just very quickly on iron ore negotiations. A senior Chinese ministry official said last week that he contacted someone in the Australian embassy about pricing [indistinct], and had indicated that China was Australia's biggest iron ore customer and were paying the highest price. I mean, do you think that's appropriate conversation to have at a government level?

SIMON CREAN: Government to government level, all sorts of conversations take place, and sometimes people choose to publicise what the course of those conversations take place. But we've been consistent in this regard. Negotiations are for the market. We will not interfere in the market. John Howard interfered in the market when the first gas contract went to China, and the company has been paying the price ever since. But that's just an observation on the side.But the important point is we've made the point to China we have recognised you as a market economy, act as one, don't seek intervention from the government when it comes to market exchanges.

QUESTION: Sure. Is it something that is brought up regularly on a government to government level?

SIMON CREAN: No. In fact, that issues is not brought up regularly at government to government level. We are reminded of the size of their market but that's an important dimension of our trade relationship anyway.

[END]

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