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Reporter: Mr Crean, I was talking to a businessman who said that doing business here they have to go through a web of bureaucracy that can be a strain for them.

Mr Crean: Well, and it's obviously what Austrade's activities are designed to help overcome. Clearly there are bureaucracies in every country, and people trying to do business always get frustrated with them. But we are trying to facilitate that in a number of ways. One is to conclude a free trade agreement. The other is to go region-by-region and identify the areas of common objective, and to argue that facilitating the realisation of that common objective requires us addressing some of these non-tariff barriers. Trade agreements and trade negotiations can't just focus any more on the tariff barriers, there are lots of non-tariff barriers and we are always alert to A) identifying what the problems are, but B) then finding practical ways at which we can address them.

Reporter: Just on that, the American Commerce Secretary has been here and been addressing complaints from American business that they have been squeezed out by local businesses because of some of the laws here. Are you finding you're having to address some of those issues as well on behalf of Australian business?

Mr Crean: Well, I think that Australian business has been very active in a very diversified way in its trade relationships with China. China is now our…largest trading partner. This is not the only place to be, but there is huge opportunity in this place, and not just in the traditional areas. Yes, there continue to be difficulties that are raised, and I think that anyone who has had dealings with China understands it's important to put a fairly extensive lead time into the equation. But again we continue to work through this. We do it through the medium of the FTA, but we also do it through a regional focus and a sectoral focus. Now here today we have been talking with the green building industry, so to speak. This is a huge challenge for China. China is going to have to house 300 million people in the course of the next two decades. This is the biggest urban development in the history of the world. How can Australia assist in this regard? Through its expertise in smart buildings, in green buildings, in energy-efficient building, in creative, eye-catching design. China understands the importance of addressing energy reduction, emission reduction, but it also wants lasting quality. So there is a huge opportunity for us to be able to work with that sector in so many different regions. We don't need a free trade agreement to advance that agenda.

Reporter: Are you willing to take those sort of commitments on face value, though? There have been some notable disasters when it comes to building particularly sustainable eco-cities as they call them here in China, one of them just here in Shanghai.

Mr Crean: Well, I think it is not in China's interests that what it commits to isn't achieved. I have got no doubt, having spent a lot of time here recently, and particularly in this visit post-Copenhagen, that there is an absolute commitment on the part of the Chinese to reduce their greenhouse emissions. I am also apprised of this at every level that I visit. Municipal Mayors and Governors all have targets set for them, and they tell me that if they don't meet those targets their jobs are on the line. This does help focus the mind.

Reporter: It's pretty well known as well though, that their first priority, their biggest target if you like, is fast-paced growth that you mentioned in your speech as well.

Mr Crean: Well, I think it has been in our interests that they have been going for fast-paced growth. It's in not just Australia's interest, but the global interest. Where would the global economy be without China's growth? That is the first question you have got to ask yourself. But I think the second thing coming out of the global financial crisis is not just the importance of China's growth, but the understanding by China that that growth has to be sustainable, not just in economic terms but also in environmental terms. That's where I think the change is happening. That's where I'm picking it up, not just in Beijing but in the regions, in the cities. The cities are the ones that are going to be confronted with this huge challenge of people moving from rural communities into cities. It's not just a question of finding them jobs, it's a question of building the structures in which they operate and the services that enable those cities to be sustainable in the way we understand them. So, of course there are enormous challenges, when we are talking 300 million people, when we are talking massive scale, when we are understanding the size of this market, but also the late developer syndrome. China, if it's prepared to, can learn from past mistakes. Australia is in a good position to teach them solutions in relation to those past mistakes.

Reporter: Given China's determination to cut emissions and its commitment to targets despite Copenhagen, and the fact the US Government is still pushing a revamped energy bill, why is now a reasonable time for Australia to step away and say we have to wait and see what these countries are going to do before we push forward legislation?

Mr Crean: Well it's stepped away from the legislation because it's had a recalcitrant Senate. And it's said that it's not going to fight the election on it. It hasn't stepped away from its commitment, it hasn't stepped away from the pressure and advocacy in terms of achieving the global targets. So I think it has been pleasing post-Copenhagen that many countries have signed up to targets. In our discussions with China, in my discussions with China over the last few days, we obviously want to engage them at that level. But we also want to engage them more actively at the practical level, because while there might be disagreements about targets and how you measure them and all those sorts of things, there is absolutely no disagreement that all economies are going to have to be smarter at adapting technologies and introducing mitigation methods to reduce greenhouse emissions. It's that practical cooperation, that commercial engagement that delivers that practical outcome, that there is absolute agreement to pursue.

Reporter: Sure, but why wait until 2012 to see what China, and the US and other countries are doing, if they are moving forward, before we decide whether to reintroduce the legislation?

Mr Crean: We've made our commitment to press ahead, introduce the targets that we have set ourselves. The final outcome of what those targets are will depend upon what the rest of the world says. That has always been the case.

Reporter: With government-to-government and business-to-business, how important is continuity in that area, as far as the government goes? You're facing the polls this year.

Mr Crean: We do, and in Australia we face them every three years and that's a fact of life. In fact I think I'm coming up to my seventh or eighth election, so I'm quite used to it. But I think the continuity factor is something we've got to lay the foundations for regardless. I think the sort of work that has been done over the course of the last two years lays very solid foundations for us moving forward. But if we continue to pursue sound policies in Australia, then I think the people will reward us at the polls. You can't take that for granted but I tell you this. The one thing that is raised unsolicited in all my discussions here in China is the great strength of the Australian economy. Whatever the argument is back home, here there is recognition that Australia has performed incredibly well, and better than any other developed country, and they're interested to know why. In particular, they are specifically struck by the strength of our financial system. And that provides huge opportunity for Australia going forward, because China, particularly here in Shanghai, Shanghai wants to position itself strongly in the financial services space. Australia is in the unique position of having not just weathered the economic storm, but with a very strong financial regulatory system that is also open, creative and innovative. Australia is a model that China is increasingly looking to, and we want to take advantage of that, and that will be the subject of another group that I speak to tonight.

Reporter: Apart from the minerals that we've got that China wants that has helped the Australian economy obviously, what has Australia got that other countries don't have? Where is our advantage compared to other countries that are represented here?

Mr Crean: I think in the services space, in education, in financial services, logistics, the ones that I have talked about before, and urban design. But even in the mining sector, it's not just the resource that we have to offer, it's the services dimension of the resources sector. The ability to extract efficiently, distribute it efficiently, mine safely, rehabilitate mine sites, deal with indigenous communities. That equally applies in the agricultural space.

Reporter: But don't other countries have the same thing?

Mr Crean: Not as efficiently as Australia, and this is the unique brand that is Australia. And it's this diversity that Australia has that I think is what is attractive to economies like China.

Reporter: Just on the mining tax, negotiations about iron ore prices have broken down again. Isn't this the last thing those negotiations needed, the mining tax?

Mr Crean: Well let's get it clear, the mining tax is not going to affect the price of iron ore. It is not a tax on consumption, it's a tax on profits. And it's a tax that is seeking to come to grips with the inefficient method of collection of existing royalty regimes, because the current royalty regime taxes the resource before the project turns a profit. The new tax is designed to only apply once a profit is made, but more importantly, to allow deductions immediately before profits are made. Now that's a fundamental change in the way this is done. What this does, it opens up the opportunity for more marginal operations, it is a better outcome for companies that don't turn big profits, and according to all the economic analysis will in fact increase mining investment. Why is that good for China? Because the simple solution to China's problem in terms of price is to increase supply, and so investment that increases supply has to be in their long-term interest. That's the discussion that we've engaged the Chinese with, and it's also a position that they are increasingly coming to understand.

ENDS

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