Doorstop, Hangzhou, China

05 Sep 2016
Hangzhou, China
Prime Minister

PRIME MINISTER: As the G20 progresses, you can see the key themes that Australia is advancing, and of course themes that are shared by the other leading economies of the world - innovation, trade, open markets. These are the keys to reinvigorating global growth. That's what we need to do to escape what's been described as the low growth trap. And it's the key to addressing the rising calls for protectionism. I made the point yesterday in the session at the G20 that protectionism is not a ladder to get us out of the low growth trap. It's a shovel to dig that hole deeper and make the problem much more intractable.

There is a real commitment to these objectives and a real recognition from all of the leaders with whom I have spoken, whether it's in the big session, where everyone's sitting around the table, whether it's in more informal encounters in the course of the events or whether it's in the bilaterals, including the ones like the bilateral with Prime Minister May just a moment ago. Everybody recognises that we need to do a better job of explaining the benefits of trade, of open markets, explaining why innovation, economic reform, reducing regulation, reducing barriers to business formation, to trade, are so critical to ensuring that we maintain strong economic growth and indeed, achieve stronger economic growth.

Australia of course, does have relative to the other countries almost all the other countries of the G20, very strong economic growth and certainly, stronger than any of the comparable developed countries. We are doing better than most but there is a lot more to be done.

We've had some very good bilaterals too, with the Indian Prime Minister, the German Chancellor, the British Prime Minister, you've seen those - very frank, candid discussions between friends and again focusing on the very big challenges that the global economy faces.

I will just make one observation about the meeting with Prime Minister Theresa May. Britain has made a momentous choice to leave the European Union. This is a historic choice. We say a lot of things are historic in politics and commentary, but this is a very historic choice. Britain has enormous challenges. Now, she's made it clear that they won't give their notice under Article 50 of the Treaty of Lisbon and before the end of the year, but the expected time line for Britain's exit to take effect is no later than the end of 2018 or early 2019. That's not a long time away. It's a couple of years away. So Britain has an enormous amount of work to do to put in place new free trade agreements, to replace in their own system all of that European legislation. This is going to create an enormous gap in their own system, so it's a huge challenge. They don't have any trade negotiators. They haven't had to negotiate a trade agreement for over 40 years because they've been part of the European system. So Theresa May is very grateful as she said for the assistance we're providing, both at a legislative level, in the sense of providing - making available our resources to help them, our resources to help them address the trade challenges they have and of course, from our point of view, getting in to deal with the British early, to ensure that we are able to negotiate a very strong, very open Free Trade Agreement with Britain once they are actually out of the European Union.

JOURNALIST: Prime Minister, you have a meeting later today with Francois Hollande and the submarine deal is of source crucial. There are grave security worries about the French supplier given what's happened in India with that supply. Are you going to raise that with Mr Hollande? Are you seeking any assurances from the French about the security of that contract?

PRIME MINISTER: Yes, we've already raised these issues with the French. And the President and I will, we've actually had a brief discussion about it already and we will be discussing it in, addressing it in more detail. The maintaining of absolute maximum security, total security on information of this kind is critical. The leaks of the material relating to the Scorpene submarine are very, very regrettable. There's a thorough investigation going on on the French side to see how that happened, but I can assure you - of course it's a different submarine to the one that we are going to build in collaboration with the French - but it is absolutely critical to continue to maintain the highest level of security.

JOURNALIST: You discussed submarines with Chancellor Merkel as well yesterday, according to the read-out. Was she seeking an explanation as to why the German bid was rejected or what was the context of that discussion?

PRIME MINISTER: Well, I thanked the Chancellor, with whom I have to say, we have a very warm and frank relationship. She is one of the great leaders of our times and she has an insight into global affairs that would be very hard to match. So I really appreciated that discussion. It was a discussion between friends and as you'd expect, very open. We're both very frank people. So I thanked her for the German bid, which was of a very high quality. And I explained to her, as we have done previously to her officials, that the advice we had was absolutely unequivocal that the French bid was the one that best met our very unique requirements. And of course, that did not reflect at all, in any way, on the quality of the other two bids.

JOURNALIST: Did you talk about Syria? Could I take you back to 12 months ago at the G20 in Turkey? You were talking a lot about a political solution being required in Syria. You talked about the need for pragmatism, for compromise. Is that still your view? Has there been any progress on a political solution over the last year?

PRIME MINISTER: It's fair to say David that the need for a political solution is greater than ever. That in fact is, ultimately, is the solution. The problem is that the various parties are well resourced. The Assad regime in particular of course has Russian support. Bringing them together has proved to be very, very challenging. But from our point of view, from Australia's point of view, we are committed to the destruction of ISIL or Daesh in the field. For the reasons I set out in the national security statement last week, it's critical that ISIL is defeated in the field and of course we are well on the way to doing that. But we will be unrelenting in our efforts and you've seen the way in which we will change our legislation to ensure that there is no legal risk to targeting Daesh or ISIL, targeting members of that organised armed group in accordance with international law.

JOURNALIST: You’ve been in China for a couple of days now - you've had the opportunity to speak to world leaders. Can you talk to us about Australia's foreign policy, about where Australia stands between China and the United States, which is a tense relationship? Can you give us a sense of whether or not you think Australia needs a more independent foreign policy as Paul Keating says? How will you prosecute those relationships?

PRIME MINISTER: Well, Australia does have a thoroughly independent foreign policy. We are a thoroughly independent nation. And we don't have to choose between China and the United States. You know, all of the countries of the region, all of the ASEAN countries for example, have close relations with China and close relations with the United States. Some extremely close. Some almost as close as ours. So it is - this is very well understood. You have a rising power in the case of China. Its rise is welcomed and embraced. China after all is our largest trading partner. Our ties get closer and closer. Friction between us is very modest, relative to the scale of the relationship. I know it gets given disproportionate attention sometimes. But it is - you know, the meeting with President Xi yesterday for example was very cordial. As I have said, many times, and I have been thoroughly consistent on all of these issues, one of the things the Chinese respect about my approach to these issues is that I'm very consistent. Always taking the same approach and the point about issues of sovereignty, investment, for example, is this - China expects other countries to respect its sovereignty. We expect all countries, including China to respect ours. So we decide who invests in Australia and the circumstances in which they invest. That is our right. That's our sovereign right, just as it is China's right. And the bottom line is it's a lot easier for an Australian company to invest in China than it is for - sorry, a lot harder for an Australian company to invest in China than it is for a Chinese company to invest in Australia.

JOURNALIST: On the steel industry - what language do you expect in the communique about the steel industry and its impact on…can you comment on its impact on Australian jobs? And generally speaking, what do you expect out of the communique?

PRIME MINISTER: Well, the communique will be - I won't foreshadow any more than I've said already, that the key focuses are innovation and trade, but clearly this transition that China is going through is very critical. I mean, we made the point yesterday with President Xi that both of our economies are transitioning. China's, is a massive transition from an economy that was fuelled up or dominated by heavy industry, infrastructure investment, investment as a share of their economy, a share of GDP, has been maintained at extraordinarily high levels for a very long time. Chinese Governments over many years have sought to rebalance their economy. If you go back three five-year plans ago you can see that was the objective. Now until recently they haven’t had a lot of success in that regard, I think the GFC derailed a lot of that agenda in practical terms. Of course Australia benefited from that because we sold them the makings of all of that infrastructure, the iron ore and the coal. Now, China's making that transition and that is why they are seeking to reduce their production of steel by 1.5 million tonnes per annum. So it's a very substantial reduction of their production. In fact the figure is actually, they're seeking to reduce it by 150 million tonnes in total. I discussed this issue about steel and the adjustments in their steel-making sector at some length with the Prime Minister Li Keqiang when I was here in April.

JOURNALIST: The draft communique I understand does recommend a global forum on excess steel capacity?


JOURNALIST: What would that do? Would it, what, make decisions on steel capacity?

PRIME MINISTER: Well again, it's important that there be collaboration and as countries scale back excess capacity, they have to do so in a way that they feel is fair. This is why it's important for people to be frank and to collaborate. You've made the point just a moment ago, that if China reduces its steel-making capacity, that would be a problem for us as sellers of iron ore. The fact is that Australian iron ore is of a higher quality and cheaper than a lot of the iron ore that is produced in China. So the market is a complex one. China has got – frankly - it's got excess capacity in coal production. It's got excess capacity in iron ore. It's got a lot of excess capacity in steel. It's got to make those adjustments. We've overlooked the fact that these adjustments have political consequences here, just as they do in other countries. China, its leadership, have got to manage this transition in a way that does not put millions of people out of work and create all of the social problems and injustices that that would entail. So it’s a very big, they're dealing with very big changes of a scale - again, you've heard me say it before - at a scale and a pace that's unprecedented in human history.

JOURNALIST: You’ve spoken at length about -

PRIME MINISTER: Here’s the advantage, he's right in my left ear.

Then we'll come to you.

JOURNALIST: Tough to get a question in here! You've spoken at length about cleaning up behind the border trade protections. Does that suggest that you are worried about Chinese trade retaliations for our stance on the South China Sea? For our stance on investment? Are you concerned about that?

PRIME MINISTER: I wouldn't characterise it in the way you did there. We are simply focused, we being all of the countries of the G20, are focused on ensuring that markets are genuinely open and trade is genuinely free. What that means is that you need to ensure that even if you bring down a tariff, there aren't licensing and regulatory provisions that in one way or another, provide perhaps as high or even a higher trade barrier. So that's a critical agenda. It's a WTO agenda. It's the Trade Facilitation Agreement of which I spoke yesterday at the B20, which I think you saw the address.

JOURNALIST: Will you be considering electoral reform to prevent or restrict foreign donations to Australian political parties or Australian politicians?

PRIME MINISTER: There are many areas of electoral reform, including campaign finance that will be considered in the normal way by the Joint Standing Committee on Electoral Matters. But the real question today is this - I'm here in China standing up for Australia. I'm standing up for Australia. Back home, Bill Shorten is standing up for Sam Dastyari's right to take cash from a company, associated with a foreign government and then express a view on foreign policy that undermines the Australian Government's foreign policy, which has had been supported by Mr Shorten himself.

Mr Shorten has got to decide whether he is going to continue standing up for Sam Dastyari's cash for comment.

Thank you very much.