TRANSCRIPT - PM Agenda, Wednesday, 26 November 2014

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Subject/s: Asian Infrastructure Investment Bank;David Johnston’s untenable position as Defence Minister.

DAVID SPEERS, PRESENTER: Tanya Plibersek joins me now to discuss this.


SPEERS: Labor is saying we should be part of this bank. What do you know that the Government doesn't?

PLIBERSEK:I would like to ask what the Government knows that they're not sharing with people. We have got a very strange situation in the Government. Apparently Julie Bishop is opposed to signing up, but both Andrew Robb and Joe Hockey are in favour of signing up. I think it would be a very good moment for the Prime Minister to show a bit of leadership and say let's get, obviously the transparency and governance right, but sign up.

SPEERS: We don't know a number of key things about this bank do we? China would control up to 50% of the share holdings and therefore would control where the money is spent, that's right, isn't it?

PLIBERSEK:What we do know is we have other international banks like the Asian Development Bank, like the IMF that we are part of. We have managed to have an influence in those international financial institutions. There are very clear rules for the governance of those. And we know...

SPEERS: But that's the point, they're transparent, we know the rules and know what is going on?

PLIBERSEK:Yeah, and that's why we should be in developing those rules and insisting on that transparency and governance in the Asian Infrastructure Investment Bank. There is absolutely no reason - the Chinese have made it very clear that they are open to those transparency arrangements, that they want good governance.

SPEERS: Why not wait for a commitment before we join then?

PLIBERSEK:Why not try to influence it from the inside? It is absurd to imagine that the rules can be set and then after the rules are set we can amend them afterwards.

SPEERS: But the rules... China’s approach seems to be they would still have a 50% holding, so they would still make the decision wouldn’t they?

PLIBERSEK:It's actually a good thing that China wants to put $50 billion into a multilateral institution, they already have a lot of bilateral lending, they can lend that money all on their own. There is nothing to say it has to go through a multilateral institution like this bank. They can do bilateral arrangements all over the place, they do them already. The fact that they want to have a multilateral institution shows that they want to have the participation of other countries in setting those priorities, in making sure that things like environmental, labour and social standards are good and making sure transparency is there. Of course we should be part of setting the rules.

SPEERS: You don't think this would be Australia underwriting soft diplomacy on the part of China?

PLIBERSEK: China can do soft diplomacy on its own, that’s already happening. The Chinese Government is making very substantial loans, and indeed investing in aid in our region in a very substantial way. This is different. This is an institution where they are asking Australia to participate including help set the rules, help establish, build this from the ground up.

SPEERS: How much do you think Australia should contribute to it?

PLIBERSEK:I think that is something to be discussed much further down the track. None of the countries that have - there are 21 countries, as you say that have signed up already - they're not pledging particular amounts now. What they want to do is be there on the ground floor and help set the rules, the institutional rules for this new bank.

SPEERS: The US treasury has said, I'm sure you have seen, it will "fail to meet environmental standards, procurement requirements and safeguards adopted by the World Bank and the Asian Development Bank including protection to prevent the forced removal of vulnerable populations from their lands." The US obviously has serious concerns.

PLIBERSEK: And that's why we should be in there right now, making sure that those protections, social protections, environmental protections and labour protections are strong. We can't do that from the outside.

SPEERS: Surely we can say when you're done that we will join?

PLIBERSEK: We should be in dialogue with the Chinese right now about those conditions, and we're not. We're standing aside in an extraordinarily self-defeating way. This is a $50 billion proposal from the Chinese themselves plus any additional money other countries put in. We know there is an $8 trillion infrastructure gap in our region. The Government says they want to see growth, the Prime Minister calls himself the infrastructure Prime Minister. And yet this opportunity to see $50 billion productively invested in our region is being passed up.

SPEERS: Well it will be invested regardless of what we do, won’t it?

PLIBERSEK:Well, it will be invested in better quality infrastructure if we have a say over how it is spent. We already have an infrastructure agreement with China, our Department of Transport and Infrastructure and their Department of Commerce signed an agreement, I think in 2012 that talked about how we could cooperate on infrastructure investment. That's a terrific opportunity for Australian companies to be involved with Chinese companies in building infrastructure. There is no reason that we would stand aside from this bank.

SPEERS: The suggestion, though this is somehow a point of tension between Australia and China, we have just signed what experts agree is the best Free Trade Agreement China has got from anyone.

PLIBERSEK: It would be good to know that from the actual text of the agreement. We haven’t seen that yet. We have seen a lot of pamphlets, we’ve seen a lot of press releases, I'm sure that we all welcome greater trade with China but it would be terrific to see the exact terms that we are signing up to. And I don't - my criticism is not that this is a point of tension with China, although indeed it is, I'm sure, a bizarre refusal in the eyes of the Chinese, my point is we’ve got an $8 trillion infrastructure gap in our region, the Government says they want to see growth and investment and opportunities for Australian companies, we have a chance of getting in at the ground floor - helping shape an institution that will spend $50 billion in our region in coming years and we are turning our noses up at it.

SPEERS: Labor today has been demanding the resignation of David Johnston the Defence Minister over the comments he made last night about our ship builders, the ASC. Do you accept though that ASC has been involved in cost over runs and delays and there are plenty of people frustrated with how they’ve performed?

PLIBERSEK: Well I think it’s interesting that David Johnston's own colleagues have put him back in the box on his comments about the ASC. He's had a number of both named and unnamed senior and junior Liberals tell him to pull his head in on the ASC. But more importantly-

SPEERS: He has expressed regret now, hasn’t he?

PLIBERSEK: Kind of. He gave one of those apologies: if you are offended at anything I have said then I’m sure I'm sorry. He should be apologising to the highly skilled engineering and manufacturing workers that work on incredibly complex, highly skilled work at ASC. But take a step back, before the election, this minister stood outside the gates of Australian Submarine Corporation and said we will build 12 new subs right here in South Australia. Since then there's been fierce back pedaling, there’s been a virtual announcement that the submarines will be built in Japan, a very strong public backlash that's caused the Government now to feign some process. They have not made clear what the process is, we are 18 months down the track and we're not - we don't have any clearer answer on what type of subs, where they'll be built-

SPEERS: Let me ask you this, because Labor obviously feels passionately about this and the need to build it in Australia, right? If this Government does sign a contract with Japan or anyone else to buy the new submarines there, would Labor in government be prepared to break that?

PLIBERSEK: Look, I think it would be ideal if these submarines were built in Australia, but at the very least, at the very worst, this Government should engage in a proper open tender process, and this is completely -

SPEERS: So you would do that?

PLIBERSEK: This is completely topsy turvy. We’ve got a Defence White Paper coming up. What you do is identify the defence need you're trying to fill and then you go out and find the best submarine to meet that need and then you negotiate with the potential suppliers. You have a tender process with the potential suppliers. This is a -

SPEERS: So if that tender process did find -

PLIBERSEK: This is a nonsense process.

SPEERS: But if that tender process did find that the best option is off shore, would you be prepared to do that?

PLIBERSEK: I think that's a matter for much further down the track. As I’ve said, we believe -

SPEERS: You would abide by a tender process presumably?

PLIBERSEK: We believe that the Australian Submarine Corporation has done a very good job. We heard from their head at an inquiry in parliament just recently, that they believe they could build the submarines cheaper than the prices that have been talked about from overseas. Let's have a look at the local industry at least. Let's not rule them out by doing a side deal with Japan pretending there is no deal.

SPEERS: Just to be clear on this, if there is a side deal with Japan done under this Government after the next election would you abide by any such contract?

PLIBERSEK: Well I think it is unreasonable to put a hypothetical like that to me. It is very difficult to know the state of any contract, how far advanced it might be, what penalties might accrue. This is a very substantial investment for Australia, not just in financial terms, we are talking about tens of billions of dollars, figures between $20 billion and $40 billion have been mentioned. It's not just a substantial outlay, there’s a substantial number of jobs that go into this picture, and you know, at the very heart of this is the question of how we defend our nation. That has to be the start of answering this question. And can I also say, David, it's not just about the Australian Submarine Corporation, this is a Defence Minister who wants to give defence personnel a below inflation pay increase of 1.5%, so he's happy to send people overseas to fight, you know, it is extraordinary to want to take away leave and pay our defence personnel less than inflation in terms of wage - an effective pay cut.

SPEERS: Deputy Opposition Leader Tanya Plibersek, we’ll have to leave it there, thanks for joining us this afternoon.

PLIBERSEK: Thank you, always a pleasure.


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