Sky News, PM Agenda

  • Transcript, E&OE
Subjects: Ausgrid; Foreign Investment Review Board (FIRB); Foreign Investment; Trans-Pacific Partnership
19 September 2016

DAVID SPEERS: Steve Ciobo, thanks for your time. You're there in Hong Kong, you're delivering a speech later on today or tonight. What are you going to say to those in Hong Kong about the recent Australian decision to reject two bids for Ausgrid in New South Wales, one of which was from Hong Kong's Cheung Kong Infrastructure Group?

STEVEN CIOBO: I want to make it clear that Australia remains open to foreign investment and the reason we need to make sure that message is heard, and that that message does resonate, David, is because we need to make sure that Australia continues to attract foreign capital in the future. Foreign capital that comes into our country is a crucial driver of our economy. It's part of the reason why when compared to other developed economies around the world, our country, Australia, is growing at 3.3 per cent, because we've got capital that's flying into our country, helping to drive economic growth and helping to drive job prospects for Australians.

DAVID SPEERS: Now as you know, this Hong Kong privately listed company, CKI already supplies electricity to over a million customers in Victoria. It supplies gas to over a million customers in a number of states, it supplies water as well - what's the go with Ausgrid, what are you going to explain to them as to why this one was deemed, well deemed inappropriate to invest in?

STEVEN CIOBO: Well you make a very good point. It's not about the investor, or the potential investor in this case, it's actually about the nature of the asset itself. The issue with Ausgrid was that it does control some sensitive, critical infrastructure. Critical infrastructure that was deemed to be contrary to the national interest for that to be sold abroad and that's the reason why on this particular instance it was a different outcome to, for example, what CKI has encountered previously when they've gone before the Foreign Investment Review Board seeking approval.

DAVID SPEERS: So just to pick up on what you've said there, that Ausgrid includes critical infrastructure too sensitive to be sold abroad, are you saying it cannot be sold to a foreign buyer?

STEVEN CIOBO: Well, as the deal was structured by the New South Wales Government, there was a problem. Now we'll look at whether or not we can put in place mitigants. Mitigants that will mean that we're able to attract foreign or domestic capital toward the lease, in this particular case the lease hold of this asset. I mean, fundamentally Australians want to know that the Australian Government is taking decisions, David, that's consistent with our national interest. The deal as it was structured previously was found to be inconsistent with our national interest by the Treasurer. Obviously the New South Wales Government has a lot invested in terms of this asset and making sure that they can lease this asset out, it's going to be a key driver of reinvested capital back into important infrastructure in New South Wales. So we can certainly work our way through these matters, but sometimes it just takes a little time.

DAVID SPEERS: It can be structured in such a way, is what you're saying, that a foreign buyer can still purchase or take a majority stake in Ausgrid?

STEVEN CIOBO: Well that's what we've got to look at. So the Commonwealth Treasury together with the New South Wales Treasury are looking at these issues. They will make an informed decision about whether or not it is possible to structure a deal in a way that means that New South Wales can get access to, of course, the billions of dollars available from the lease of this asset. Money that they can then reinvest into the New South Wales economy. That reinvestment will drive economic growth, it will drive employment prospects, but ultimately, whether that deal can be done or not has got to be worked through in a calm and methodical way.

DAVID SPEERS: So we know the Chinese reacted pretty angrily to the decision to knock back these two bids from Cheung Kong and also from State Grid in mainland China. We saw the concerns expressed in state run media and so on, what are you going to be saying there about the approach to foreign investment from Australia and indeed, whether we do some updated or clearer guidelines, framework around our foreign investment rules?

STEVEN CIOBO: Well I consistently hear as Australia's Investment Minister, concerns that are raised about there being a lack of certainty with respect to assets that foreign investors can invest in into Australia and in many respects that's a product of the way that our Foreign Investment Review Board operates and the structure that applies to foreign investment. Now it's not an ideal outcome, David, it's one that we're very focused on improving. The Treasurer, myself and other cabinet ministers are looking at what can be done in terms of what you would call critical infrastructure. We want to make sure that those that are looking at investing can understand with a higher degree of certainty what the framework is and what are the circumstances in which they can invest in Australian assets. We also, of course, have an overriding principle that applies to all of this. And that overriding principle is simply that any investment in Australia cannot be contrary to our national interest. So it's a case of marrying up those two principles, providing as much certainty as possible, but safeguarding our national interests wherever possible, well at all times, and doing so in a way that does mean that foreign investors, and indeed Australian domestic investors, can have a higher degree of assurance about whether or not an approval would be forthcoming when they're looking at an acquisition or an investment.

DAVID SPEERS: So just to pick up on what you've said there, to improve that certainty around critical infrastructure, would you have, would you envisage some sort of list of what is critical infrastructure so that all bidders are aware this could be a sensitive asset that's going to, you know, have to pass a higher threshold?

STEVEN CIOBO: Well that's a proposal that's been put forward. Ultimately the Treasurer will provide a submission to Cabinet. That submission would embrace the various proposals that are put forward and suggest a course of action. Now you'd understand, David, I'm not going to speculate as to what that might be. That is one approach, it's not the only approach, there are other alternatives available. And as I said, it's a case of balancing out the need for greater investment certainty with the importance of safeguarding our national interest at all times.

DAVID SPEERS: All right, let me move to the Trans-Pacific Partnership. The Prime Minister, as you know, is in the United States this week. He's going to be using every opportunity where he can meet with policy makers there to push the case of the TPP. Now China, as we know, where you are, they're not part of the TPP and they're pretty strongly pushing their alternative, which is the Regional Comprehensive Economic Partnership. I see Malcolm Turnbull quoted as saying, 'the TPP is of very, very significant strategic importance as far as the US presence in the Asian Pacific'. Is that how you see it as well and is that perhaps why China is so concerned about this one?

STEVEN CIOBO: WellI think it's wrong to characterise them as competing claims. The fact is that Australia is well placed because not only are we one of the 12 member states that have signed the agreement around the Trans-Pacific Partnership, but we're also one of the member states as part of that Regional Comprehensive Economic Partnership that you spoke about, David. So Australia's well placed with respect to both the TPP and what's called RCEP, the Regional Comprehensive Economic Partnership. Obviously we are very invested in making sure that the TPP goes forward. It's good for Australia, it's good for, indeed, all 12 countries that signed the agreement. We hope that all 12 countries will ratify. Australia's moving through it's ratification process. We've got the Joint Standing Committee on Treaties that will look at that. They will report back to the Parliament in due course. Ultimately, having one set of rules that apply across the trading block, in this case of the 12 countries, is a big step forward because it means less red tape, a common application of rules, a common application of principles that all member states can agree with and are aligned with and that's ultimately good for trade which drives economic growth and drives employment.

DAVID SPEERS: But is the TPP of strategic interest as much as economic interest?

STEVEN CIOBO: Well, I'm not going to get involved in sort of a strategic analysis about what trade will do for the United States or for China, what I'm interested in is what's good for Australia. What I can advise completely with 100 per cent certainty is that the TPP is good for Australia, it's going to help to drive trade, it's going to help to drive investment. Those are two important precursors to economic health in Australia and of course we also, as I mentioned earlier, are also looking at what we can do in terms of the Regional Comprehensive Economic Partnership, pursuing our national interest in that respect as well.

DAVID SPEERS: Our Trade Minister Steve Ciobo joining us from Hong Kong pre-tea time. Thanks for that.

STEVEN CIOBO: Pleasure, thanks David.

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