Sky News, Richo

Subjects: Huawei, foreign investment, Queensland state election, carbon price.

Transcript, E&OE

28 March 2012

GRAHAM RICHARDSON: Trade Minister Craig Emerson really has been thrown into the spotlight this week. He has to try and convince the Chinese that shutting down their biggest communications company for even trying to get any part of the massive expenditure on our National Broadband Network is not on – not an easy thing to do. And at the same time, you've got a whole lot of people saying we're giving them too much in the way of our minerals and our agricultural resources. Here's the Craig Emerson interview that I did just a couple of hours ago.

Craig Emerson, welcome to the program.

CRAIG EMERSON: Thanks Graham.

RICHARDSON: Now tell me, as Australia's Trade Minister what's the most important … the absolutely the most important relationship that you manage on our behalf?

EMERSON: It would be the relationship with the region, but specifically with China.

RICHARDSON: It would be, wouldn't it?

EMERSON: Yeah, 1.3 billion people.

RICHARDSON: And our biggest trade partner by far.

EMERSON: By far, and growing strongly.

RICHARDSON: And growing all the time. So why would we not back this communications company, Huawei? What are we doing; why wouldn't we do this? It just seems to be an extraordinary decision.

EMERSON: Well we certainly wouldn't do it for fun; we wouldn't do it on a whim. We would do it on the basis of advice that comes from the Government. And it's true that the previous Government would have done the same. And if Abbott formed a government they would have done the same, based on that advice.

RICHARDSON: But this advice …I'm intrigued. Now, I know that we always get this line – I used to use it myself occasionally, once upon a time – that obviously ASIO have given you advice, it's top secret and you can't pass it on. But the essence of all this, without me knowing exactly what advice that you're getting, is that really we're saying this company can actually hack in to the communications networks of Australia and do all sorts of harm. That's the risk, is it not?

EMERSON: Well, I'm not going to go into that, as much as you would want me to. And I understand why you would want me to, but I'm constrained in doing that. Huawei is welcome in Australia but there are some limitations.

RICHARDSON: This is a pretty big limitation. They're going for a big contract on the biggest show in town. The NBN is by far the biggest investment we're going to make, is it not?

EMERSON: It is. And it is the National Broadband Network and it's being rolled out around Australia. It's a very important reform, but we just are not in a position to make a decision to do what Huawei would like. We do need to take advice and that's what we're doing. And I notice, by the way, George Brandis when he was asked about this earlier on Sky backed in the Government's decision.

RICHARDSON: Well, I guess if they don't have the results of what ASIO's saying they've got no choice. I notice that Julie Bishop's asking for a briefing and I can understand there's all sorts of people …

EMERSON: I think you'll find that Senator Brandis has had that opportunity.

RICHARDSON: I'm very glad to hear that. I wish he'd give it to Andrew Robb. He seems to have definitely not …

EMERSON: That's right, he's…

RICHARDSON: … from what I saw from his statements.

EMERSON: He's not the Shadow Attorney-General and obviously Andrew was out of the blocks very quickly, shooting from the hip. Well, that's up to Andrew but it's not a position that's shared by the Shadow Attorney-General.

RICHARDSON: Or obviously the leader, because the leader hasn't come out and said anything yet. Mind you, he hasn't stopped Robb either. But if I can move on: how is it, then, that we can get this advice from our security experts and yet the Brits must get different advice, because the Brits let them in.

EMERSON: I'm aware of that, and I'm also aware that the United States has a somewhat different position to that of the UK and a closer position to that of Australia. So that's where we are. And, unfortunately, Graham I think you do understand I'm very constrained in what I can say about this.

RICHARDSON: No, I do understand that.

EMERSON: Commercially, Huawei is very, very welcome in Australia. And we wish them all the best, but there are some limitations.

RICHARDSON: Yeah, but it's like saying you're only able to eat the leg of the sheep; you can't eat the rest.

EMERSON: Well, I don't think it's quite the analogy … I think there's a bit more high-tech electronics involved in this than eating legs of lamb, mate. But …

RICHARDSON: It's obviously high-tech, but the principle remains the same. You're saying you can come into this country; you can go so far but no further.

EMERSON: And we say to all 350 applications for investment in Australia by Chinese businesses since this Government was formed, that they are all welcome; they are all approved, eight with conditions – 350 out of 350 is a pretty high mark.

RICHARDSON: It is a very high mark and I want to get to those as well, because they're creating some controversy as well, aren't they? I mean the idea that the Chinese can buy into mines or into farmland here is creating a lot of concern in a lot of quarters.

EMERSON: It is, and I think it's an obligation of the Government and also – if the Opposition were behaving in the national interest – of the Opposition not to seek to take advantage of anxieties but to explain the realities and dispose of some of the myths. For example, Graham, any and all applications for investment by state-owned enterprises or associated entities are screened by the Foreign Investment Review Board. Private acquisitions of land are not, but we've done some calculations that suggest since 1984 the grand total increase in the amount of land that's majority or minority foreign-owned has been 0.2 percentage points. That's not the sort of statistic you'll hear from Barnaby Joyce, because he wants to harvest votes in the bush. Different attitude from some of the Liberals like Jamie Briggs and Kelly O'Dwyer – good on them because they do have an eye to the national interest.

RICHARDSON: Yeah, but what I worry about is it's not simply a matter of saying there's this percentage or that percentage. Aren't we concerned here about … this is one example, the alienation of really good farmland, where it's the most arable. Are you telling me that the Foreign Investment Review Board take that into account in their decisions?

EMERSON: They can take, and do take, the national interest into account. But when you say "the alienation", there has not been – despite suggestions to the contrary – large-scale sell-off of Australian farming land. I think the total foreign-owned, that is majority or totally foreign-owned, is 5.8 per cent. Now I think if you listen to the Nationals, you'd think half of Australia's farming land had been sold off. Now, when I say 5.8 per cent Graham, I'm talking about all the countries on earth: 5.8 per cent, or about 1 per cent, of our farms. And that's why I say let's deal with the myths and explain to people the realities.

RICHARDSON: Well. I'm glad we are because I have to say if there's one thing your Government hasn't been all that flash at is communications. So if we can communicate that, that would be a good thing, wouldn't it?

EMERSON: Well, I think it is always good to be able to explain to people what's going on. But we started the interview with you being very concerned about us not accepting one investment. I've said that we've accepted 350 out of 350; so we're either for it or against it. Or we apply a national interest test and we are applying a national interest test.

RICHARDSON: I wish that were true, but the reality is far from different. You're managing a relationship, and within that relationship there are things that we're doing that they like, there are things that we're doing that they don't like.

EMERSON: That will always be the case.

RICHARDSON: And then you come back to the national interest and there are those who would say, and I think not without some justification, that allowing the Chinese – or indeed any nation, any nation – to buy into mining in particular is a big worry; that they're buying into agricultural is a worry, because these are our advantages. These are our competitive advantages; these are the things we have that we can sell to the world. Why would we want to let them slip into anybody else's hands?

EMERSON: Well, hold on. Are you suggesting seriously, Graham, that there should be no foreign investment – and that's what you just did – in mining or agriculture? That's exactly what you just suggested.

RICHARDSON: I want you to answer that question because …

EMERSON: Yeah, yeah, I'm quite happy to …

RICHARDSON: The problem you've got is …

EMERSON: I'm quite happy to answer the suggestion …

RICHARDSON: I'd like you to answer it.

EMERSON: Yeah, I'm quite happy to …

RICHARDSON: Good.

EMERSON: … answer the suggestion that there will be … should be, no foreign investment in Australian mining and no foreign investment in Australian agriculture. That is an absurd proposition. We have always had foreign investment in Australian agriculture, starting from the British Colonial days, the Colonial Sugar Refinery. Then there was a wave of American investment; then there was a wave of Japanese investment; and now there's investment from a range of countries. And this country would be much the poorer, because we don't have the savings pool to make these investments, to open the mines, to produce the food that we do in Australia and export 60 per cent of it. We don't have the domestic savings pool to do that. And that's the history of agriculture in Australia, and it sure is the history of mining in Australia. There is a very reasonable level of foreign investment in Australian mining. We would not be going through the biggest mining boom in 140 years if we had to rely exclusively on Australian savings in order to fund those massive investments.

RICHARDSON: And how about the other side of that coin? Are we buying mining and agriculture investments overseas; are Australians out there doing that?

EMERSON: There would be some, but essentially we have a savings deficit. Our investment needs exceed our capacity to fund them, and that has always been the case since the days of European settlement in this country. We have never had sufficient domestic savings to fund the sorts of investment that the Australian people, Graham, legitimately expect, because that is the basis of the wealth that we have in this country. That's why we are one of the wealthiest countries in the world. And without foreign investment we would be much impoverished; we wouldn't have the capacity to invest in new equipment, new plans, new ideas and we would literally, to use that term of Lee Kuan Yew, be the "white trash of Asia". We would be the white trash of the world, mate – the world.

RICHARDSON: I wouldn't want us to be that. Now, speaking of trash, which is a good word at the moment, the Labor Party got trashed pretty badly in your home state of Queensland, did it not?

EMERSON: Well, as I said just recently: thumped, belted, plus 10 per cent GST. A comprehensive beating, that's right.

RICHARDSON: It was indeed, but what does it mean federally? I know it was fought on state issues, but you've got to say after New South Wales and now Queensland, the Labor brand is pretty seriously damaged. Can you afford to stay the course? Because I heard Julia Gillard say in the press conference from Seoul on, I think it was Monday afternoon, 'I am going to continue to do what I've been doing'. Now, given that you're 27 per cent in the latest Newspoll, don't you think you've got to do something different?

EMERSON: Well there's policy and politics, if we could just divide my response into those two. We are implementing the right policies for the nation's future, including putting a price on carbon. In terms of politics or communication, we certainly can do better. And in particular in relation to Queensland, Graham, you'd remember the days of Bob Hawke, where Bob spent a lot of time up here. And when he did come to Queensland he came for three or sometimes four days, partly to get a sun tan in the middle of winter, but he loved coming up here and Queenslanders really value that – I suggest perhaps more than whether a Prime Minister is in Victoria or New South Wales. It kind of matters a little less to them compared with in Queensland. They notice when you come and they notice when you stay. And I think within the constraints of the Prime Minister's other duties, she does need to spend time here and stay a few days, get around the place. People really appreciate it. They appreciated it from Hawke; I think they did with Howard, too – he was the same. Abbott doesn't do much of it and I think we should do more of it.

RICHARDSON: One other thing we might do: what about this carbon tax of $23? The world is moving in a different direction, given the difficult economic circumstances of which the world has found itself in the last two years. In about 20 seconds, tell me why we can't just modify it a bit? Why do we stick it so high when the rest of the world is much lower?

EMERSON: Well, we've got to put in a price that is relevant not only today but for the future. And we'll probably be having a discussion around 2016-2017, in whatever capacities you and I have Graham, and I reckon you'll be saying 'well, that was a pretty good idea to stick with that', because in various different ways the cost of emitting carbon is going to rise. It'll either be through people putting a price on carbon or it'll be through regulations. And there are a lot of regulations going in around the world that makes it more difficult to emit carbon into the atmosphere. And that includes, by the way, China. So what I'm saying is: get it in now.

RICHARDSON: No, I know that – except they're not at our level.

EMERSON: Get it in now. Yeah, well that's all right. I'm just saying that $23 is the right price and we need to stick with it, stay the course. But I'm certainly happy to share a view with you that we need – once this thing is in on the first of July – to explain the benefits of it, which we're already doing. And I can tell you this, Graham: the sky will not fall in and Chicken Little over there in Abbott's-ville will not, will not be able to sustain the argument that this had laid waste to the Australian economy.

RICHARDSON: I have to go. All I can say to you is I hope I'm still alive in 2016-17 so we can have that discussion. It should be fascinating. Thanks for your time tonight.

EMERSON: And we'll have a beer. Thanks Graham.

RICHARDSON: Good on you, mate.

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