SENATOR THE HON PENNY WONG

LABOR SENATOR FOR SOUTH AUSTRALIA

TRANSCRIPT

4 February 2015

BLOOMBERG TV, HONG KONG WITH YVONNE MAN

TOPICS: ECONOMY, INTEREST RATES, LEADERSHIP, LIBERAL DIVISION, QUEENSLAND ELECTION, TRADE

E&OE - PROOF ONLY

YVONNE MAN: Well joining me this morning is Penny Wong, Australia’s Shadow Minister for Trade and Investment. Penny thanks so much for joining us.

PENNY WONG,SHADOW MINISTER FOR TRADE AND INVESTMENT: Good morning, good to be with you.

MAN: Well thank you, welcome to Hong Kong. Overall, I got those stunning trade deficit numbers overall there, that kind of shocked a lot of us yesterday. First of all, can I ask about your take on these numbers so far?

WONG: Well look, obviously it’s always very pleasing to see Australia’s trade performance continue to improve and we’re an open economy, a trading economy, an economy that needs good trade performance in order to ensure jobs and growth into the future. Obviously the movement in the Australian dollar is a good thing for our exporters, that’s been weighing on our export performance for some time.

MAN: Yeah. Senator I know you’re here on a three, four day trip here in Hong Kong, you said overall to kind of scope out the economic trends and maybe look at some bilateral trade with Hong Kong and China. Overall, how is your trip, who have you met with and what have you achieved here in the last couple of days?

WONG: I hope what I have achieved is a deeper understanding of Hong Kong and where Hong Kong sits in global markets. Obviously it’s an extraordinarily important international financial centre, a very important trading centre. Hong Kong is important to the global economy, and Australia’s future is very much in this region and a deep understanding of both Hong Kong, mainland China and of course the other countries of Asia is very important to Australia’s economic future. So I’ve met with members of the administration as well as some others and obviously members of the business community. It’s a very interesting time in Hong Kong and a very important time.

MAN: Yeah. What opportunities have you found here in Asia so far then?

WONG: Well I think the great opportunity, as everybody knows, is China’s economic advancement and whatever, notwithstanding some moderation in the quarterly growth figures out of China, it is a market which will define in many ways the global economic trends over the next decade, certainly for Australia. It’s our largest trading partner. We see our economic prosperity in the decades to come as fundamentally tied up with China’s middle classes as well as the other countries of the region.

MAN: Yeah. We’re going to talk a little bit about in terms of the economic trends, we’ve seen the slowdown in China overall with very big implications for Australia obviously as you just mentioned there. You know being the biggest customer, you know, they’re not buying as much of your resources and prices are falling. Are you concerned overall with this fall in Government tax revenue?

WONG: Well, we do as a nation recognise the importance of diversifying our export capacity and you see that in terms of Australia doing more to value add, for example to its food exports, doing more to develop overseas markets and we need to continue to do that. We need to continue to find those products, those goods, those services that the consumers of this region want and that is the way we make sure our children have the best jobs that we can provide.

MAN: Senator your trip here kind of coincides just a couple of days after the Prime Minister Tony Abbott highlighted his policy on foreign investment and those changes there. He wants better scrutiny and reporting of foreign purchases of agricultural land and water. I think before he said that Australia is open for business, but you’re saying these claims are not very credible at this point.

WONG: I think there is an inconsistency in the Government’s position where it says it’s open for business but then puts more red tape in the way of foreign investment. I’ll make it clear: we don’t have any problem, in fact we support greater transparency mechanisms and some of those we implemented or gave effect to when we were in Government. But I don’t think putting red tape in the way of incoming investment is a good thing for Australian jobs. Investment into agribusiness, for example, creates jobs in our country. So I have said publicly on a number of occasions we shouldn’t be making it more difficult for foreign investment to come in and create jobs in Australia.

MAN: And it has been somewhat difficult in terms of there is some underlying tensions just locally within your community about this foreign investment, especially from China. Why do you think there is that kind of tension between you know Australia and China?

WONG: Well, I wouldn’t overplay it. I mean China is our largest trading partner, we see increasing levels of foreign investment – Chinese investment – into Australia and I think that is welcome. Like any country you have some issues that you have to manage and in terms of some quarters of the population who you have to explain things to, but that’s not new. I mean I can remember similar comments being made about Japanese investment in Australia decades ago and I think it’s very important that governments and political leaders set out the benefits of investment. I mean ultimately, we’re a capital hungry economy. We are never going to be able to fund all of our investment needs with domestic capital. That means we want foreign investment, we welcome foreign investment and foreign investment means more jobs for Australians.

MAN: Let’s talk about this RBA decision that shocked quite a lot of us here yesterday. Overall, cutting those rates to a record low. They’re saying that output growth will remain below trend for longer and unemployment will peak higher than previously forecast. Do you have concerns for the outlook for Australia right now in terms of its economy?

WONG: We’re facing some challenges but our fundamentals are good, our fundamentals are strong. The challenges we face are the ones that we anticipated for some time. We had a massive mining investment, a wave of investment in our resources sector. That was always going to tail off. We also have the terms of trade declining. So there is a transition in our economy and the challenge for Australia is to get drivers of growth outside of the mining sector moving and the Reserve Bank obviously has some room to move in terms of where the interest rates are. Also, frankly, I think having the Australian dollar moderate somewhat will benefit our exporters and that should add stimulus to growth. So our fundamentals are strong but like many economies we’re facing a transition. But you’d have to say looking at our fiscal position, looking at our outlook, we’re pretty well placed, particularly compared to some of the other economies, for example in the Eurozone.

MAN: Quite a bit of developments happening from Australia here, especially this election as well which we saw. People are calling this a wipe out in Queensland…

WONG: This is the Queensland election…

MAN: Yes, the Queensland one. Overall, you know, people say is the political outlook in Australia right now a little volatile?

WONG: Look, I think there might be differences between political parties but I think our political institutions are strong and our political framework remains robust and we remain a very stable economy and a stable destination for investment. But you’re right, it was – from my perspective – an outstanding result in Queensland, a very big turn around and the Labor Party has done very, very well there. The result is still unknown, it’s very close to call. But to have that many seats shift really demonstrates the people made a very strong decision that they wanted to see change.

MAN: Yeah, they said it was one of the fastest poll reversals I think in three decades.

WONG: That’s right.

MAN: Overall though how do you read the leadership speculation over Prime Minister Tony Abbott at the moment?

WONG: Well certainly I’ve been watching with interest while I’ve been away. It’s been very fast moving. There’s obviously some internal instability – that’s probably an understatement – there’s internal instability within the Liberal Party and you know it’s a matter for them to resolve that. But clearly there’s a great deal of division. But I would say, you know we are obviously very focused on this in our domestic politics but we still remain a very stable nation, an economy that has good prospects and will remain an attractive investment destination regardless of what happens in domestic politics. We have our differences and they’re differences around some of the issues that I’m sure you’ve heard on your program before. There’s a debate around the world about how you manage redressing fiscal issues and meeting fiscal challenges and how you do that with fairness. I mean that is an ongoing debate internationally. So whilst we have our differences with the Government on this I would say to you Australia is still an economy that is an attractive destination for investment.

MAN: Alright Senator that is all the time we have for you today but I really appreciate you stopping by here today before you head home to Australia. Senator Penny Wong thank you so much, Australian Senate Opposition Leader.

ENDS