Interview on Radio National, Breakfast with Fran Kelly
Fran Kelly: And in better news for bilateral ties, Indonesia has finally ratified a free trade agreement with Australia which is expected to draw the two countries into a closer economic and diplomatic partnership. Simon Birmingham is the Trade Minister. He’s in our Parliament House studio. Simon Birmingham, welcome back to Breakfast.
Simon Birmingham: Good morning, Fran. Great to be with you.
Fran Kelly: Just before we get to trade, can I ask you about the five members of the Bali Nine who are still serving life sentences in Bali. Will the Prime Minister heed Renae Lawrence’s plea there and urge the Indonesian President to show leniency?
Simon Birmingham: Well Fran, I’d make two points on that. One is firstly, that anytime a story like this comes up, it is a reminder to Australians that when you are travelling overseas, you do so under the laws of other nations, not Australia, and Australia doesn’t set the rules in terms of how you’ll be treated by those legal systems. In terms of the representations Australia makes, look, our strong history is that the best way to make those representations is to do so privately. That’s what we’ve always done in relation to these types of consular matters and that’s what we will continue to do rather than to play them out in a media context.
Fran Kelly: Well okay. I know you don’t want to sort of do it through a loudhailer but some of the Bali Nine were just in their teens when they were arrested back in 2005. Matthew Norman was only 18 years old, Scott Rush was 19. They’re now in their 30s. Has our Government been making any representations to try and even get them home to serve the rest of their sentences?
Simon Birmingham: Australia …
Fran Kelly: Is it on our agenda?
Simon Birmingham: In a general sense, Fran, Australia always continues to monitor the consular welfare and wellbeing of individuals even after their sentencing and [indistinct] cases through …
Fran Kelly: Well that’s a different thing. Are we making representations to change them?
Simon Birmingham: And as I said, in the best interests of individuals in these circumstances, our tried and tested method is that it works far better to engage quietly, privately with governments than to do so with a loudhailer across the airwaves.
Fran Kelly: Okay. Let's go to the trade deal with Indonesia. Given all the problems with China and coronavirus, Australian producers need some good news. How long will it be before this agreement is actually implemented and the benefits start to flow?
Simon Birmingham: I would hope now that this agreement will enter into force around April or May this year. The Indonesian Parliament, as you said in your introduction, did make the final- take the final steps in terms of allowing its ratification late last week; that follows the Australian Parliament having done so late last year and now, there's just some technical details of exchanges of notes and so on to go and a 60-day clock that is started and then we should see that entry into force. And that is great news for Australian farmers, businesses, investors and those in Indonesia as well who see enormous opportunities for this to be a pillar of growth in their economy which is also central to Australia's future.
Fran Kelly: Can you put it in terms that everyone will be able to relate to, what would it- what change will this bring about for our producers? What's the major change?
Simon Birmingham: So this sees elimination, vast reduction of around 99 per cent of tariffs in terms of goods that go into Indonesia. What that means is take rolled coiled steel, for example, there’s around five Sydney Opera House- sorry, Sydney Harbour Bridge worth’s of steel that will be able to enter Indonesia duty free; around 500,000 tonnes of grain. A huge boom particularly for our West Australian grain growers and big opportunities in terms of the cattle trade, the horticulture trade but also in the services space, enormous potential in terms of now new opportunities for Australian education providers, our universities and vocational education providers to operate in Indonesia. Opportunities …
Fran Kelly: Have you quantified it? Is there an independent assessment of the economic impact of this deal?
Simon Birmingham: There've been various assessments done by others not by Government, Fran, who find significant benefits and quite clearly, Indonesia is one of the world's most populous countries; it's forecast to have strong growth and it is right on our doorstep and it's an economic relationship that historically has been underdone. This comprehensive economic partnership agreement gives us the opportunity to really step it up that level in terms of trade volumes, investment flows. And from all of that, we strengthen not just the economics but also the people to people ties and other things that fall under the comprehensive strategic partnership such as our cooperation in national security and maritime security.
Fran Kelly: The trade relationship is anemic. I mean two-way trade is worth only about $18 billion a year. This is- Indonesia almost our closest neighbour compared to China which is $194 billion a year, two-way trade. Why has the economic relationship been so underwhelming?
Simon Birmingham: Well in part, because we have these significant trade barriers that have been in place and that's become especially more relevant as Australia has struck trade agreements especially during the life of our Government with countries like Japan, Korea, China, of course, the Trans-Pacific Partnership. And so in relative terms, Indonesia has looked like a less attractive place to do business. I hope though that in addition to what we’re going to do in terms of making market access to Indonesia better, make the terms of trade more encouraging for business, that also we will see a cultural shift where Australian business as a result of this agreement pays more attention to the opportunities of Indonesia. To its growth rates that are currently in excess of 5 per cent, and its plans to drive that even higher, its booming middle class population which means that the demand for consumer goods will only grow. And we know from-
Fran Kelly: Just again Minister, sorry to interrupt but given what you’ve just described there about this booming economy so close to us, again, why has our trade relationship been so anaemic. Is it more about politics and other diplomatic issues- tensions?
Simon Birmingham: Well no Fran, as I said, I think one factor is the relativities that higher trade barriers with Indonesia relative to other with whom we’ve already done free trade agreements because there’s been a barrier to trade-
Fran Kelly: Yes, but why has that all taken so long? Is that because of tensions in the relationship?
Simon Birmingham: Well, this agreement has been in negotiation for a little while but we've got it done.
Fran Kelly: A long time.
Simon Birmingham: We've got it done and that's what matters, and it now creates the opportunities for Australian businesses to have a new chance to diversify. Ultimately, trade agreements don't automatically mean more trade. They open doors for business and it will be up to Australian businesses as to whether they choose to walk through that door.
But we're already undertaking a range of actions through Austrade and the other agencies of government to make sure that when this agreement does enter into force there's plenty of support given to Australian businesses to understand the Indonesian market, to be able to take advantage of it. And also to make sure that Indonesian business opportunities for investment there. And one of the things I know that President Widodo is very passionate about is the growth of the Indonesian tourism industry and there are opportunities there for Australian investors, Australian tourism expertise to be able to help to facilitate that in training, in planning, and investment, in ownership – all of which can provide a win for Australia as well as a win for Indonesia in terms of meeting their job creation targets.
Fran Kelly: I want to come to tourism in a moment, but the government has been warning that the impact of the coronavirus on the Australian economy will be significant. Obviously a trade deal like this is presumably part of government strategies to try and reduce our very heavy reliance on China. As Trade Minister, how concerned are you that China could soon start cancelling or delaying shipments of iron ore and LNG? I mean they're already delaying copper shipments from Chile for instance.
Simon Birmingham: I'm very concerned about all aspects of the China slowdown, Fran. I don't want to single out one business sector who might suffer pain ahead of others. We know already our tourism sector, as you said, is facing pain, our seafood industry is facing pain. Orders for Australian wine are slipping and no doubt our meat and livestock sector will face impacts. And yes, in terms of a slowdown in the Chinese economy, in Chinese manufacturing industries our resources and energy sectors may well face impacts to come as well. So we don't underestimate the scale of the potential impact here. It's impossible at present to quantify because nobody knows how long this will go on for and how quickly the Chinese economy will rebound afterwards.
But first and foremost, we've put the safety and security of Australians first. Of course opportunities like the one we're striking today with Indonesia provide more choices for Australian businesses to diversify in the future as well.
Fran Kelly: You’re listening to RN Breakfast. Our guest is the Federal Trade Minister, Simon Birmingham.
Minister, Joko Widodo is demanding a better deal for Indonesians wanting to travel here to Australia. They’re currently hit with a $140 visa application fee. They have to fill out a 17-page lengthy questionnaire which has some pretty dramatic questions on it, for instance, have you ever committed an act of genocide? By contrast Australian tourists are allowed into Indonesia free of charge for up to a month. The President wants visas to be quote: reciprocal and fair. Will you give him that?
Simon Birmingham: Fran, I imagine this will unquestionably be a topic of discussion not only today but working forward.
Fran Kelly: Are we going to give ground on it?
Simon Birmingham: And what we've seen where we've done trade agreements with countries previously is that then there is a need for increased business to business flow of individuals and there are different ways that we can pursue that. And models of other countries have included the creation of a 10-year visa that can therefore provide for, essentially, 10 years’ worth of short term travel in and out of the country to enable business to be undertaken. So there are different solutions that I'm sure we will consider and work through with Indonesia.
Fran Kelly: But you’d, presumably, want to see more Indonesian tourists in Australia. Would that help offset the downturn in Chinese numbers due to the coronavirus?
Simon Birmingham: We would welcome more Indonesian tourists as we do from around the world and we want to see more business travel between Australia and Indonesia too. Yes, in terms of our tourism markets, first and foremost we're investing already in a big domestic tourism campaign and it’s part of the $76 million urgent response the government made to assist the tourism industry at the start of this year. And we're looking as to how we stimulate other international markets when it is right to do so. And noting of course that the coronavirus is having global impacts in terms of people's intentions to travel, not just impacts relative to their travel to Australia.
Fran Kelly: I’ll come back to the coronavirus in a second, but this 14-day ban on Chinese nationals entering Australia is up later this week. Will you be arguing it be lifted to try and get the tourist sector back on its feet?
Simon Birmingham: Fran, I'll be doing as all members of the government do and that is heeding the public health advice, so the safety of Australians comes first. We appreciate there are real impacts, as we just discussed, on the Australian tourism industry, other parts of Australian industry. But we should remember-
Fran Kelly: So, would you expect it to be extended then, beyond this week?
Simon Birmingham: Fran, I'm not going- I’m not the public health expert and I'm not going to pre-empt that advice as to whether there might be some circumstances where more people might be allowed to travel or not. They’re matters where we will hear that advice, we'll work through those issues.
I would remind you and listeners though that China had before we undertook these decisions, already made the decision to ban group travel tour out of China and to urge China's(*) to restrict unnecessary travel to other countries. So the impacts that we are feeling in Australia are in large part and would have occurred in any event. We just took the additional steps on the advice of public health officials to protect the safety of the Australians.
Fran Kelly: Okay. Can I just ask you, finally, on the coronavirus – there's been no confirmed cases detected in Indonesia yet. Is the Australian Government concerned about that? Concerned about the testing regime? Will this be raised in the talks?
Simon Birmingham: Our cooperation with Indonesia, and with all of our near neighbours in terms of public health support, is real and genuine. If there is a need for any assistance in Indonesia's testing regimes, then I have no doubt Australia would provide that. But in terms of discussions that would take place there, I'll leave that for the Health Minister.
Fran Kelly: Simon Birmingham, thank you very much for joining us.
Simon Birmingham: Thank you, Fran.
Fran Kelly: Simon Birmingham is the Minister for Trade, Tourism and Investment.
- Minister's office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555