MARIUS BENSON: Now let's have a closer look at a speech by Tony Abbott yesterday in Beijing, where he flagged a tougher approach to investment by China in Australia. Speaking on his first visit to China as Opposition Leader, Mr Abbott yesterday said a Coalition Government could restrict investments by state-owned Chinese enterprises. In a speech… in that speech Mr Abbott said those government-owned enterprises would be welcome to invest in new greenfield projects in Australia but not in established businesses. For a Government response to that position I'm joined by Craig Emerson, the Trade Minister. Craig Emerson, good morning.
CRAIG EMERSON: Good morning, Marius.
BENSON: Tony Abbott says investments by state-owned enterprises from China, it's effectively the Chinese government, they're different to private investments; they should be treated differently. Is he right?
EMERSON: Well Mr Abbott has been rampaging through China, reprimanding them and telling them that investment from state-owned enterprises from China is unwelcome in Australia, that it would rarely be approved. What he's saying is that notwithstanding the fact that the Foreign Investment Review Board screens and assesses every dollar of investment by state-owned enterprises from China and other countries, he would step in and override that and ensure that it was not approved. This is an extraordinary lift in sovereign risk perceptions of Australia by what would be, if he had his way, an Abbott-led Government. It is amazing that he would do this, and I would add this: that Mr Abbott in the same speech said that he would proceed with and accelerate negotiations to complete a Free Trade Agreement between Australia and China. That would not happen – I repeat – would not happen under an Abbott-led Government with this approach to foreign investment from China.
BENSON: There is criticism of the Foreign Investment Review Board simply being a rubber stamp. That criticism comes from some Opposition members, amongst others. Is it at all the case, is Mr Abbott making a valid point, saying state-owned enterprises are different to other investors, they should be treated differently?
EMERSON: They are treated differently, and that is, it's not particular to China, but investments by state-owned enterprises are fully screened by the Foreign Investment Review Board where, in general, private investments are screened if they are involved in investment of more than $244 million. Mr Abbott knows that, and notwithstanding that he's saying that even if the Foreign Investment Review Board goes through its process, applies a national interest test, he would step in and overrule it. Now this creates very high sovereign risk for Australia from the perspective of not only China, but other countries with sovereign wealth funds who are interested in investing in Australia – that's the Middle East, it's Singapore. Sovereign wealth funds are growing up all over the world, and what Tony Abbott is saying is that either Chinese sovereign wealth funds and state-owned enterprises are not welcome in Australia, or none of them are. And if none of them are, then this would be very damaging to Australia's economic future; it would be damaging to job creation. There's, for example, the Qenos factory that produces chemicals in both Altona in Victoria and in Brisbane. It was in fact taken over because it needed foreign investment by a Chinese state-owned enterprise – all those people would have lost their jobs. Tony Abbott says that he is the friend of manufacturing workers. He would have cut their throats, because he would have rejected that investment by his own criterion.
BENSON: Okay. Tony Abbott was also speaking more broadly on a political front, apart from just trade, and he was emphasising democratic values, saying in part 'as Prime Minister, I would hope for political reform to match China's economic liberalisation'. Are you with him there?
EMERSON: Well, this is a country of 1.3 billion people and Mr Abbott wants them to become a democracy and very quickly. Now, the Chinese will manage their internal affairs in relation to the way they organise their political system. I don't think it's helpful for Mr Abbott to say that they should now be given a reprimand, tell them off, and say 'look, you better become a democracy quickly because I would be the Prime Minister of Australia and I'm going to go around the world telling them how to run their systems'. Of course this Government would like to see further reforms – always keen on seeing further human rights reforms in China – but to go into China on his first visit and give them a kick in the bum and tell them 'look I don't like your system. I could be the Prime Minister of Australia. Better change it', it's just mindboggling. I mean, this is a country of 1.3 billion people and Tony Abbott thinks he's going to be the king of the world, running around telling people to reform their systems or else.
BENSON: Craig Emerson, thanks very much.
EMERSON: Righto. Thanks a lot.
- Minister Emerson's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555