Sky AM Agenda

Subjects: Newspoll, foreign investment, China-US relations

Transcript, E&OE

7 August 2012

KIERAN GILBERT: My guests this morning now, the Deputy Liberal Leader and Shadow Foreign Minister Julie Bishop from the Sydney CBD studio, and from Brisbane the Trade Minister Craig Emerson. Good to see you both. Good morning.

JULIE BISHOP: Good morning.

CRAIG EMERSON: Hello. How are you going?

GILBERT: Minister, I'm well thanks. I'll start with you if I can. The Newspoll: has the distraction of the Olympics helped the Government?

EMERSON: I think these things can be over-analysed and there could be a dozen theories to what may explain a change in the poll in a fortnight. I don't get too excited about it. It does obviously indicate that Mr Abbott, with his ongoing destructive negativity, has got a real problem. But we need to work harder, too, and we are doing that. We've moved into now the great policy formulation work on a National Disability Insurance Scheme; on needs-based funding for schools, making sure that all kids from disadvantaged backgrounds have an opportunity to get to university; and, overall, the economy is very strong. So I think the positive side of politics is the Labor side and the negative side is Mr Abbott. I suppose the only other observation I make is that the Coalition's now at 45 per cent, I think: that's only one point above where they were at the last election. So we'll continue to do the right thing by the country.

GILBERT: Julie Bishop, the telling number when you look at the preferred prime minister rating is the 'undecided'- it's not far behind Mr Abbott and the Prime Minister. 'Undecided' was 26 per cent: one in four people couldn't say who they'd prefer as prime minister. Doesn't that reflect badly on both sides?

BISHOP: Well, Kieran, if an election were held tomorrow and the result was a reflection of these polls published today, I'd be very happy with that outcome. And if Craig Emerson and Labor can take some comfort in the poll results today, well that's a matter for them. Of course people have been distracted by the Olympics. We've all be focussing on the hopes, dreams, aspirations of our athletes in London. But reality will hit in a couple of weeks as people receive their electricity bills. This Government introduced a carbon tax designed to increase people's electricity bills. It will have that impact and we'll see the results of the carbon tax in the coming weeks as people receive their increased electricity bills. But, overall, I must say that the polls do bounce around. But over a period of time we've seen that a vast majority of Australians want to see a change of government, and we're in the process of rolling out our policies to show that we will be an alternative government that can win the trust and respect of the Australian people.

GILBERT: You did mention us following the Olympics and, thankfully, we did see the first individual gold medal overnight – so that was good news. Let's look at the Foreign Investment Review Board, Julie Bishop. They're suggesting that state-owned companies and sovereign wealth funds must not be driven by a political agenda – it's the front page of The Australian newspaper today. Doesn't this show that FIRB is actually already attuned to these issues relating to state-owned enterprises, and didn't need the input that the Coalition gave it last week?

BISHOP: Our discussion paper, which we released last week, is seeking submissions from across the community and from foreign governments, from those in charge of sovereign wealth funds, from state-owned enterprises, to see if we can put more transparency and oversight into our foreign investment review regime – and I don't think that's a bad thing. I was one of the authors of that paper and we put in place a number of issues that we think we need feedback on, and I'm sure Craig Emerson would agree with that. The more that we can consult on this issue the more confidence people will have in our foreign investment regime. We support foreign investment. Our economy is built on it. Our standard of living depends upon foreign investment in all sectors of the economy. Whether it's mining, agriculture, whether it's financial services, tourism, retail, wholesale services, we depend on foreign investment. We want to ensure that we have a robust system, and that's why we're seeking feedback.

GILBERT: Okay.

BISHOP: I think the article today is actually based on the fact that Australian business leaders felt it necessary to go to China to set up a dialogue with Chinese business leaders. I see that as a vote of no confidence in the Prime Minister and the Foreign Minister, that they feel that the relationship with China needs repair, is in desperate need of repair.

GILBERT: All right. I'll get Mr Emerson to … you can respond to that assertion at the end there … but also I want to ask you about the nature of the comments by the head of the Foreign Investment Review Board. Don't they actually articulate similar messages to what we heard from Mr Abbott recently about the need to ensure there isn't a foreign state-owned sovereign wealth fund or company have an influence over Australian business?

EMERSON: I'll come to that very quickly, but if I could just make one point: Julie raised the issue of electricity prices. The Prime Minister is raising that because they've gone up 50 per cent in the last few years – not related to a carbon price; not compensated as the carbon price effects are – and it's about time the states and the Federal Coalition started doing something about, or joined in doing something about, these very high electricity prices from which many of the states are actually benefitting financially, and that's what the Prime Minister is setting out today. On the FIRB issue, Kieran, what the head of the Foreign Investment Review Board is doing is restating the public interest test which the Labor Government articulated four years ago, reaffirmed about four months ago: and that is that businesses should operate on commercial grounds, so nothing remarkable about that. And in terms of investment and our relationship with China, we already have a services roundtable – it was set up by the Prime Minister – we already have me going to China, taking 100 service industry businesses; Wayne Swan returning quite recently from China with, again, a business delegation; and an Australia China Business Council. Now if other business people …

GILBERT: So why are these business leaders …

EMERSON: … want to do business-to-business, if they want to do business relationships, that's absolutely fine by the Government. Business-to-business means that they are talking with other businesses in China – good on them. But what I'm saying is there is no shortage of dialogues established by this Government allowing businesses to work with other businesses and the governments of each country.

GILBERT: Okay. Julie Bishop, Craig Emerson isn't the only one who's expressed concern about the tone of the discussion paper released by Mr Abbott. Others, critics of this … Judith Sloan in The Australian today pointing out that under the Foreign Takeover and Acquisition Act, the Treasurer already has the capacity to reject takeover proposals deemed against the national interest. We've seen that happen a number of times: your former colleague Peter Costello did it; Mr Swan did it with Chinalco, so there's already that mechanism there. Isn't this discussion paper more a sop to The Nationals?

BISHOP: No. What we're doing is putting out a discussion paper on a number of issues that have been raised, and certainly they have been raised with me as I travel around the country. We're not suggesting a change to the national interest test. We support foreign investment and we believe that the Australian Government, like other governments around the world, must reserve the right to judge foreign investment based on the national interest test. So we're not suggesting any change to that. We are suggesting that perhaps there should be a national register of landholdings so that there is a greater understanding of who holds what land in this country. And I think that that could work in favour of foreign investment, because there seems to be a lot of misinformation as to how much foreign investment there has been in land. The fact is nobody actually knows; the ABS statistics are out of date. I don't think Craig could tell us exactly how much land is held in foreign hands …

EMERSON: 6 per cent.

BISHOP: No, those figures are out of date.

EMERSON: They're not. It's 2010.

BISHOP: No. The Foreign Investment Review Board has said there's been a 10-fold increase in interest in foreign investment.

EMERSON: What, in two years?

BISHOP: That's right.

EMERSON: Oh, so it must be 60 per cent, Julie.

BISHOP: Craig …

EMERSON: If there's been a 10-fold increase … it was 6 per cent in 2010. If you're saying that between 2010 and 2012 there's been a 10-fold increase, then that means 60 per cent of Australian agricultural land is owned by foreigners, which is absurd quite frankly.

GILBERT: Let's hear Julie Bishop…

BISHOP: I'm sorry, I didn't say that. I said there's been a 10-fold increase in interest in investing in Australia, and I think that's a very good thing. Craig's own Government is working on a national register of land, so there's no political point to be scored here, Craig. You and I are on the same page on foreign investment …

EMERSON: We are indeed.

BISHOP: You know it, so let's not make a political point where there isn't one.

EMERSON: No, all power to you Julie. I absolutely agree with your position on it.

BISHOP: Can I … can I just finish here …

GILBERT: Okay, let's … Julie Bishop. Please, yes.

BISHOP: The point is, Kieran, that we're looking at the thresholds. There are already differential thresholds, and what might apply to the general commercial sector may not be appropriate for the agricultural sector, for example. So if you held a $244 million equity in a public company, that would be miniscule for some public companies. But if you held $244 million worth of agricultural land, that could be a substantial holding. So we're looking at these issues, and I think that this is a good idea to have consultation. I've had feedback already from foreign governments, from those who control sovereign wealth funds, and they are pleased that the Coalition is putting these matters out. They might not agree; they might agree. But at least we're having a discussion about it to build more confidence into our foreign investment review regime.

GILBERT: Okay. Craig Emerson, to you before we go to a break. Isn't transparency of that nature and consultation good to build confidence about foreign investment in our community?

EMERSON: And that's why we articulated very clearly the national interest test which Julie has confirmed rightly that the Coalition's not seeking to change. It's why we've said that we will look very seriously at the practicalities of the national land register, announced before the Coalition. We have a Foreign Investment Review Board screening threshold of zero for state-owned enterprises. Julie Bishop has actually been a good influence within that working group. But the trouble is Barnaby Joyce is hysterically trying to whip up some sort of xenophobia around this. The figures are an increase from 5.9 per cent to 6 per cent over 25 years, and only a small proportion of that is state-owned enterprise investment in Australian agriculture – a tiny negligible proportion. So the Coalition dog again has been wagged by Barnaby Joyce. He's the tail wagging the Coalition dog. And I think, Julie, all power to you in getting over the top of this xenophobic hysteria from Barnaby Joyce and The Nationals. I hope you succeed.

BISHOP: It's called consultation. It's called taking on board the different views across the country…

EMERSON: I don't have a problem with consultation…

BISHOP: …reflected by different sectors of the economy…

EMERSON: But if you drop those thresholds, Julie, there goes three free trade agreements -China, Korea, and Japan – and you know it. You know it.

BISHOP: Oh, Craig. Come on. There are already differential thresholds in place, and you haven't been able to conclude a free trade agreement with China …

GILBERT: We've got to wrap it up …

BISHOP: With South Korea…

EMERSON: And this is a key reason.

BISHOP: With India, with Indonesia, with the Gulf States. Come on, Craig. You've been a trenchant critic of free trade agreements.

GILBERT: We're going to go to a break. We'll be back. Julie Bishop, I'm sorry, we'll have to cut you off now to take a quick break, pay some bills with some advertisements and come back in a moment.

[commercial break]

GILBERT: This is AM Agenda. Thanks for your company this morning. With me, the Trade Minister Craig Emerson in Brisbane, and the Deputy Liberal Leader and Shadow Foreign Minister Julie Bishop in Sydney. Julie Bishop, I want to ask you about Hugh White's thesis "The China Choice", which is released this week, in fact yesterday, by Paul Keating. Mr Keating endorsed the view of Professor White, that the United States needs to share power with China; that that's the only way to manage the rising superpower. What do you make of it? Do you agree?

BISHOP: Hugh White has been saying this for some time, and I have been on the public record in the past as disagreeing with him. I just don't see it in that light. While of course the world welcomes the rise of China and the fact that they have lifted hundreds of millions of people out of poverty is nothing short of a miracle, and the transformation of China is something that we applaud, but I don't think it comes down to choice between the United States' influence and China's influence. The United States is currently the world's greatest economy; maybe over time China will overtake the United States on current predictions. But I don't think it's a question of who has to cede influence to whom. China's not shown any desire to focus on its rise beyond supporting its own people, and its holy grail is internal social stability. I believe that that will focus China's attention for some time, and the United States will remain a significant – the significant – military power in the world, so I don't think it's …

GILBERT: So don't you think this is … this is something the United States hasn't confronted before: basically a country which will be more powerful and in a few decades time, more wealthy. So it's going to shift the balance, isn't it?

BISHOP: That's actually quite interesting. If you look at China's age demographic, there are some who say that China will get old before it gets rich, and so we can't predict what's going to happen in the future. I think currently the United States and China have a very sensible approach to each other. The United States welcomes the rise of China economically, and they're obviously very dependent upon China continuing to buy their goods, they're obviously dependent on China in a number of economic ways. China likewise has shown no indication that it seeks to extend its power beyond its region. But as China's influence grows in the world, so will the need for it to take responsibility for some of the world's problems, and we see that in relation to Syria for example. China is currently blocking a UN Resolution to do more to stop the bloodshed in Syria. I think the challenge for China is as it grows in economic influence, so, too, will expectations of the world be that it will grow in other areas of influence, including solving some of the global problems. So I don't see it as a simple 'the US must cede to China, China must overtake the US'. I think the rise will be peaceful; it will be for the good of the world, and the United States will continue to be the dominant world power.

GILBERT: Trade Minister, Professor White says the two superpowers are already on a course of strategic rivalry and tension. What they do now, he argues, will set the course – whether it is going to be peaceful as Julie Bishop asserts or whether or not it ends in confrontation. Does the United States need to change its mindset somewhat about Asia?

EMERSON: The United States and China already have a strategic dialogue and the truth is as the global centre of economic activity shifts to the Asian region so there will be a strategic shift. But we see a future in this region, Kieran, of one based on co-operation, not on competition and not on conflict. I agree with Julie Bishop: there's no indication that China's in any way expansionist. So most of the world's problems and tensions can be solved by proper communication in my view, and that dialogue does exist. We want to strengthen our strategic dialogue with countries of the region. We have forums such as the East Asia Summit which are becoming important in understanding and responding to this shift in both economic and strategic power. I'm optimistic about the future of our region – and here we are, Australia in the Asian Region in the Asian Century, in the right place at the right time. Let's see this century as a century of opportunity, particularly for young people with a splendid diversity of career choices instead of spending too much time conjuring up worries about strategic confrontation. I think the dialogue is there and any role that Australia can play in ensuring that those communications, those discussions, are held with all the relevant powers in the region is all for the good and all for a peaceful future for our region.

GILBERT: A level of bipartisanship on that issue – that's good. Julie Bishop? Yep, just finally …

BISHOP: I was just going to say, Kieran, Craig and I have just returned from the Australia US Leadership Dialogue, and while I won't seek to speak on Craig's behalf, I think it's fair to say that the Australian contingent was impressed by the way the United States is approaching China. There was a maturity, a sophistication, about the discussion…

EMERSON: That's right.

BISHOP: The United States is focussing on the Asian region, as Craig says. Why wouldn't they? This is where the economic growth will be in the Indian Ocean-Asia Pacific region. The United States is focussed on it. I came away with the very strong sense that the United States will continue to support China; China will continue to support the United States through strategic dialogue; and I think that we should be looking with confidence to the future and not be talking about conflict where it doesn't exist.

EMERSON: And I couldn't agree more, Julie.

GILBERT: That's a nice way to finish the show, a rare way: on some bipartisanship.

EMERSON: Julie and I will probably agree on 70 per cent of what we have to say.

BISHOP: Well, Craig, you could do the song and I could do the dance.

EMERSON: Okay, I think it might need to be the other way around. I think your singing is a little bit better and you haven't seen me dance.

BISHOP: Well I have heard you sing; that's true.

EMERSON: That's why I suggested that I do the dancing.

GILBERT: Thank you both. We're out of time. We'll see you soon.

EMERSON: Okay, bye-bye now.

BISHOP: My pleasure, bye.

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