Senator the Hon Mathias Cormann
Minister for Finance
GEORGE YANG: Nice to meet you Mister Cormann.
MATHIAS CORMANN: Good to be here.
GEORGE YANG: It is fantastic news isn’t it?
MATHIAS CORMANN: Very good news.
GEORGE YANG: Obviously. Why did Australia take so long to join the Asian Infrastructure Investment Bank?
MATHIAS CORMANN: This is a very significant, very important, historic initiative by China. All of us want to ensure that we get this right. So Australia went through its internal processes, working through the issues. We have been having extensive conversations with our friends in China and in other parts of the world about how we can ensure that this can be the best possible organisation with the best possible structure. We now have reached a point where we are satisfied that as part of the process from here, we can get to a great institution.
GEORGE YANG: Tell me how much the funding will be for the AIIB?
MATHIAS CORMANN: This is going to be a function of the size of the economy of the respective countries that ultimately will join. So I think it is too early to put a precise figure on it. But we are very keen now as part of the process with all prospective founding members, if we are accepted as part of the process over the next two weeks, to help make this a very good bank.
GEORGE YANG: It’s fantastic. What do you think about the Australia-China economic relationship and what Xi Jinping said it’s a new normal period? You have heard about that in this main conference. What does it mean for Australia?
MATHIAS CORMANN: Our economic relationship with China is very important. So, strong and sustainable economic growth in China is very good for Australia. The reform agenda designed to ensure that economic growth in China can be sustainable in the medium to long term is very good for Australia.
GEORGE YANG:In the future, there is Australia-China collaboration in the financial sectors. What is the future and how are we going to meet the challenge?
MATHIAS CORMANN: We have a very significant trade relationship. About a quarter of our two-way trade is with China. We do think that we can probably do more in terms of our investment relationship both ways. We are very interested in the reforms being pursued in China in terms of opening up its capital markets to foreign investment. So whatever we can do in the years ahead to facilitate efficient flows of investment in both directions will be a very good thing.
GEORGE YANG: What is the major financial collaboration sector going at the moment?
MATHIAS CORMANN: We have made some significant progress in recent times. The financial relationship between Australia and China from our point of view is in very good shape. We have recently been able to obtain the opportunity for a RMB clearing bank in Australia. We have also been given the opportunity to participate in the RQFII quota system. Only last week the first fund manager in Australia took advantage of participating in that opportunity. There is work being done in relation to the swap agreement issue. I think as part of the continuous process of reform and as China more and more opens up its capital markets to opportunities from other parts of the world, we believe there will be significant further opportunity. As a result of the free trade agreement that we have entered into with China which is due to come into effect sometime hopefully later this year there will be lots of opportunity for both our countries in a real win-win situation to add value to each other.
GEORGE YANG: Do you think the FTA will be started running by the end of this year?
MATHIAS CORMANN: Agreement was reached towards the end of last year. There is currently work being done to finalise the legal text. But it has to go through our respective processes in China and Australia. We believe we should be able to get it into practical effect by the end of this calendar year yes.
GEORGE YANG: Fantastic. I’m just a little bit curious the joint press release, with Prime Minister Tony Abbott and the Foreign Minister Julie Bishop and the Treasurer the Honorable Joe Hockey, three together to release this statement, is the significance, it’s kind of unusual isn’t it?
MATHIAS CORMANN: No. This is a very important initiative. We have warmly welcomed the Chinese initiative of putting forward this proposal for the Asian Infrastructure Investment Bank. It is something that we have carefully considered. There clearly is a need for increased infrastructure investment across the Asian region. We take this proposal very, very seriously. So it is a reflection of the priority and the importance that we attach to this initiative.
GEORGE YANG: Minister, I’ve heard about this Australia-China business leader dialogue, which is yesterday open and some of the discussion about China has been willing to, the Australian Government’s not interested, do you have any information?
MATHIAS CORMANN: I was part of a very interesting discussion yesterday. It was a business leaders to business leaders discussion. China has very significant capability when it comes to the development of high speed rail. There was an exploration of the opportunities and whether and to what extent we might be able to add value to each other in relation to projects of that nature. I think it is very early days. It is an idea that might be worth pursuing down the track. So it was a very good discussion.
GEORGE YANG: Fantastic. Thank you very much indeed Minister and welcome to our program and thank you very much for your time.
MATHIAS CORMANN: Looking forward to coming back.