Interview with the Squawk Box Asia, CNBC

  • Transcript, E&OE
Subjects: Telstra's investment into the Pacific, Negotiations with the European Union, International students returning and Australia's relationship with China.

Will Koulouris: I’m very pleased to be able to welcome our very own Trade, Tourism and Investment Minister Dan Tehan, and he’s joining us live now from Melbourne. Minister, thanks so much for being here. Just, firstly, I want to start really quickly with this Telstra deal that was announced yesterday. You know, the Australian Government is providing some financing for this – or the majority of the financing. It’s all, I suppose, part of the step-up package when it does come to the South Pacific but is this deal realistically intended so that China steps off when it does come to infrastructure in the South Pacific?

Dan Tehan: No, this is about us providing the means for Australian companies to be able to provide quality investment into the Pacific. We want to help the Pacific develop and grow, and to do that we need quality investment in the Pacific. This investment by Telstra, which is a commercial decision that they’ve taken, is very much the type of investment that we’re looking to see into the Pacific, and that’s why the Government was prepared to back it and support it.

Will Koulouris: Now, obviously, you’re in quarantine at the moment because you were incredibly busy over the course of the last month, travelling to a number of nations that we are seeking free trade agreements with, but there was, I suppose, a bit of a hiccup when it did come to the EU. Obviously, there’s this overhang when it comes to the submarine deal, but putting that aside, are you still confident that even with a delay of negotiations with the EU that we are likely to see a free trade agreement come through?

Dan Tehan: I am. We’ve done 11 rounds of negotiations with the European Union. We were all set for the twelfth round, first in October, then in November, now it will take place in February. This agreement is very much in the interests of the European Union and of Australia, and that’s why I think the deal will get done. Obviously, we’ve got to just work through this minor delay, but as you said there’s plenty else that we can get on with. For instance, on my trip, I went to India and India are very keen to pursue an agreement with Australia, a free trade agreement with Australia. The United Arab Emirates, the GCC, are very keen to try to push forward on an FTA with us, so there’s plenty for us to get on with.

But I do think that the EU FTA is in the European Union’s interests and Australia’s interests, and I think we will get the deal done, my hope is, by the end of next year still.

Will Koulouris: Okay, Minister, let’s go back to India then. Are you confident that there’s the political will there to get a full FTA with India and not just this initial stage agreement, because there’s obviously always a lot of issues when it comes to India really wanting to sign up to these fully fledged free trade agreements with other nations?

Dan Tehan: Negotiating FTAs is difficult, and it always requires some give and take from both parties. Definitely, when it comes to India, the political will is there. I had a three-hour one-on-one meeting with Minister Goyal when I was in New Delhi and we’re both committed to getting something done. Of course, we’ve got to turn that political will into an outcome, and that’s the difficult part when it comes to free trade agreements, but our officials are already talking. Minister Goyal has put more resources in on the Indian side. We’ve done the same. We’ve got a specific chief negotiator who will start in a matter of days to really focus solely on this India deal. So, we’re very determined to give everything we can to getting an outcome. Ultimately, it will depend on the give and take from both parties, but the political will is definitely there.

Martin Soong: Political will. Minister, this is Martin. I’ll quickly jump in with a question and we’ll get back to trade deals in just a bit, but I’m fascinated by this telco deal that we just started with. Telstra is teaming with the Aussie Government to buy Digicel in the South Pacific. Priced at $1.6 billion, Telstra kicked in $270 million, which is only about 16 per cent. The rest is being funded by the Government through your credit agency Export Finance Australia. So, ostensibly, the Government could have done this deal entirely on its own. It’s got the financial wherewithal to do that. A lot of critics take a look at this deal and go, “This is Australia being scared into finally committing and making this deal” because, obviously, China had a go at it and, well, in this case, wasn’t successful. Was Australia scared into doing this deal?

Dan Tehan: No, not at all. This was a deal which ultimately was a commercial decision that was made by Telstra. What the Australian Government has done is provide some of the risk with the deal. Obviously, investing into the Pacific, developing countries, companies want to make sure that they can get some sort of assistance in doing that and the Australian Government was more than prepared to help Telstra with some of that risk because we understand how important it is that we get quality investment into the Pacific region. That’s how we help the region to continue to grow and develop. But investing in the Pacific does carry some risks and that’s why the Commonwealth Government was prepared to help and support Telstra through the debt and equity deal that we were able to negotiate with them so that they could purchase Digicel Pacific.

Will Koulouris: Okay. It does make sense – stand alone commercially as well because Digicel is the number one provider in all markets in the South Pacific, bar Fiji where it’s number two, but talk to us more, Minister, about the strategic significance of this particular deal. I mean, when you take a look at what’s happened, or continues to happen, China’s influence and investment in places like, let’s say, Tonga, a lot of people, including in Canberra, have got to be watching things very, very closely.

Dan Tehan: Well, we want to make sure that all investment in the Pacific is about helping our Pacific friends develop and to help them develop and grow their economies. What we don’t want to see is investment that ultimately leads to debt traps, and that’s why we were happy to support Telstra with this deal because they’re investing into a quality telecommunications company that’s operated in the Pacific for some time now. They saw it as a commercial opportunity. We saw it as an ability for us to be able to help and support quality investment in the Pacific, and so that’s why we were able to reach an agreement.

And we think it’s very much in our interests and in the interests of the Pacific, and that’s the type of quality investment that we want to see continuing to go into the Pacific, because that’s how ultimately the region will continue to develop and grow.

Sri Jegarajah: Minister, good morning. What does the reopening in Australia mean for commercial relations with China?

Dan Tehan: The reopening of Australia means important things for the commercial relationship with China, as it does with all countries in our region and globally. In all my travels, every business that I’ve met with, every key investor that I’ve met with (who invest) in Australia, the first question they’ve asked is, “When can we travel back to Australia?” They want to come back here. They want to be able to check out their investments. They want to be able to look at new investments. We’ve seen FDI drop by over 50 per cent as a result of the pandemic, but there’s a real hunger and appetite out there from investors, from the commercial sector, to look at Australia and get back investing in big numbers in Australia again. So, the reopening of Australia is important for our economic relationship with China as it is with every country across the globe.

Sri Jegarajah: Minister, specifically Australia’s learning economy is crucial. What is the status then of Chinese students looking to enrol in Australian universities and schools?

Dan Tehan: Well, as part of our national road map in opening up our country, the first thing we put priority on was making sure that all those returning Australians can come home, and that’s what the focus is. Then the second stage is about making sure that international students, working holiday maker visa holders, agricultural visa holders will be able to come. So, they’re very much at the second stage of our national plan. All the planning is going into the return of international students. You’ve seen work taking place within the New South Wales State Government; the ACT State Government has made some announcements around the returning of international students and quarantining arrangements. So, they’re very much the next step of our reopening, and we’re looking forward to welcoming international students back from right across the region because it is a key sector for our economy, but also the diplomatic goodwill that we get from hosting international students here is something that cannot be underestimated.

Sri Jegarajah: Good to know, Minister. And with the rest of Asia, I’m just curious what conversations are you having with your counterparts here in Singapore about reinstating the green travel lane?

Dan Tehan: A lot. We’ve been very keen to get that green travel lane up and running. Obviously, our two Prime Ministers, Singaporean Prime Minister and our Prime Minister, spoke a few months ago in particular about getting a – making international student returns a priority. So, the Prime Minister made an announcement on Friday that in the coming days we’ll have more to say on getting that travel lane opening, and so there’s been a lot of discussions taking place. I was talking to Singaporean ministers last week about getting this travel lane up and running, and my hope is in the coming days we’ll get some concrete announcements on what exactly that will look like, which I have got to say will be very, very welcome news.

Will Koulouris: It’s going to be very welcome news for me as well, Minister, in terms of that GTL with Singapore, but I wanted to ask you as well, the submissions made to the WTO concerning China and I suppose their multilateral trading relationships with the rest of the world, we obviously do have those disputes in place when it comes to barley and the like.

Are you expecting for there to be, I suppose, any amelioration when it comes to those issues or is it going to have to be a matter of in your mind at the moment that long drawn out process that we are expecting in terms of getting some sort of resolution?

Will Koulouris: Minister, are you there? It seems to be that we’ve lost the Minister, Dan Tehan.

Martin Soong: Seeing as we’re having some communications problems with the Minister, we’ll try to sort them out, fix things and get back to him ASAP. As soon as we can. We were talking to Dan Tehan, Australia’s Trade and Tourism Minister and also my good colleague Wil Koulouris down Sydney side. We’ll try to pick up the conversation as and when technology allows.

Sri Jegarajah: We’ll continue talking about the investing environment in Australia. We will be speaking with global equities manager GQG Partners, which kicks off trade on the ASX today at 9.30 am Singapore time, the biggest IPO in Australia so far this year. CEO Tom – Tim Carver, pardon me, and chairman and CIO Rajiv Jain will join us in the final hour of the program. In the meantime, we’re going to squeeze in a quick break here on Squawk Box on a Tuesday morning. We’re back in two minutes.


Martin Soong: We’re back with Dan Tehan, Australia’s Trade, Tourism and Investment Minister, live out of Melbourne. Minister, just a couple of minutes left with you. Part of your portfolio is investment as well. I’d like to pick up on that in terms of countering China’s growing influence in the South Pacific. We talked about this Digicel deal. Broadly though, I’m wondering whether or not Government in Canberra is giving consideration to changing the way that it views investment in the South Pacific in this sense. And here’s a quote from a Tongan journalist who also is a strategist at the Royal Oceania Institute in Tonga and said: “The Chinese show up with money and they say, ‘Do you need a palace?’ When it comes to the Australians, or Kiwis, New Zealanders” – this is not me saying it; this journalist says – “they can be very condescending, borderline racist. They will push social changes in reforms and not address the practical challenges that Pacific Islanders face.” Is the Government thinking and approach to investing in the South Pacific changing, is what I want to know?

Dan Tehan: No, what we want to do is see those practical outcomes. I think it’s incredibly important that that is what we do focus on because enhancing the standard of living in the South Pacific is the way that we help the South Pacific grow and develop, and that’s what we want the focus on. That’s why we were prepared to help them support Telstra with the Digicel Pacific deal, and we’ll be looking for other opportunities with the Pacific that lead to really practical outcomes. I mean, when it comes to energy, for instance, the technology that we have and the know-how we have when it comes to solar is a really important way that we can help and promote good quality investment into the Pacific. There’s many other reasons. But no, we want our investment focus on leading to those outcomes which will see the standard of living of all our Pacific friends improve.

Sri Jegarajah: Right. Absolutely, and the message on solar loud and clear ahead of COP26. Minister, we’ll leave it there. Thank you very much indeed for joining us, Dan Tehan, Australian Trade and Tourism Minister and my thanks to Will Koulouris for setting that interview up. We’re going to squeeze in a quick break again.


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