Julia Gillard faces controversy at home on two fronts – the planned introduction of a carbon tax and an agreement with Malaysia to swap refugees. Despite growing criticism, Australia’s first female prime minister, who came to power through an internal Labor Party coup, is standing her ground. On the economy, her administration is faring much better, as Australia has managed to weather the global financial crisis remarkably well with the help of a profitable mining sector. Here, she talks to Global about the threat of climate change, Australia’s record on immigration and the secret of the country’s current economic success.
Global: What do you expect will be the likely outcomes of the biennial Commonwealth Heads of Government Meeting (CHOGM) in Perth?
Prime Minister Julia Gillard: Australia will seek positive responses from leaders to the recommendations of the Commonwealth Eminent Persons Group and the Commonwealth Ministerial Action Group. These recommendations seek to strengthen the Commonwealth and its ability to support democracy, the rule of law and human rights. Leaders will also have the opportunity to discuss how the Commonwealth can best support the global economic recovery and the economic and development needs of the membership. Australia sees CHOGM as an opportunity to address global issues of importance to its membership, such as food security, climate change, natural resource management and sustainable development.
How highly does your government, and Australians in general, value Commonwealth membership? How relevant and important are continued ties with the Commonwealth for Australia?
Australia is an original member of the Commonwealth and highly values its membership. We are proud to be the first country to host CHOGM three times, first in Melbourne in 1981, Coolum in 2002 and Perth in 2011. The Commonwealth’s values continue to be relevant and underpin our shared aspirations for democratic reform.
The Commonwealth has a demonstrated capacity for promoting democracy, good governance, election observation, development and human rights. Australia’s ties to the Commonwealth remain not only relevant but important.
At the start of this year, Queensland and Victoria were hit by some of the biggest floods in decades. What were the major impacts of this disaster and how is recovery progressing in the region?
Australia endured a summer of natural disasters on a scale previously unseen in our country. Queensland was particularly hard hit by both the floods and Cyclone Yasi, and Australians will never forget the resilience and community spirit that shone through during these really tough times.
All up, the federal government will invest over A$4.7 billion in Queensland to help families, businesses and the community to get back on their feet after the flood – plus an extra A$950 million for the Yasi-affected region alone. This funding is already having an impact. For example, 8,482 km of the 9,170 km of damaged state roads in Queensland have been re-opened and 4,421 km of Queensland rail infrastructure has already been rebuilt or recovered.
Extreme weather events, like the recent floods, are likely to become more common as a result of global warming. How well prepared is Australia for the effects of climate change and what specifically is your government doing to protect against future disasters?
Advice from the Intergovernmental Panel on Climate Change and expert bodies in Australia tells us that with four degrees of warming, World Heritage-listed national treasures such as the Great Barrier Reef and Kakadu National Park would effectively be lost, billions of dollars of coastal infrastructure would be at risk, and there would be major declines in agricultural production across much of the country. No government acting in the national interest can ignore such advice. That is why we have a responsibility to take action to reduce carbon pollution, and to play a responsible role in the international efforts to tackle climate change. We will be introducing a price on carbon starting on 1 July 2012 to start cutting Australia’s carbon pollution.
You’ve been working hard to overcome widespread opposition – from the mining industry and from the public at large – to the carbon tax. Are your efforts in trying to convince the public of the merits of such a levy succeeding? Are more people beginning to accept the need for a carbon tax?
Most Australians now agree our climate is changing – this is caused by carbon pollution [and] has harmful effects on our environment and the economy – and [that] the government should act. Economists and experts agree that the best way is to make polluters pay by putting a price on carbon. From 1 July next year, big polluters will pay A$23 for every tonne of carbon they put into our atmosphere. By 2020, our carbon price will take 160 million tonnes of pollution out of the atmosphere every year.
The mining sector has contributed to Australia’s recent economic stability. Are you confident that your government’s proposal of a minerals resource rent tax for the mining sector will not scare away new investors but will deliver greater revenues to government?
The prospects for Australia’s mining sector are very strong. Investment has continued to boom since the mineral resource rent tax was announced. In fact, investment in mining has skyrocketed from A$35 billion in 2009-10, to an expected A$51 billion in 2010-11 and A$83 billion in 2011-12. The mining tax is a significant reform that will enable Australians to collect a fair return for their resources. We are consulting with industry on the implementation details of the mining tax so that we can collect a better return for the Australian community. The better return we get for our resources will be used to increase Australia’s competitiveness through business tax cuts, to increase investment in regional infrastructure, and to boost retirement incomes.
Although Australia was not untouched by the global financial crisis, it has fared better than most of the developed world it was the only wealthy country to avoid recession in the immediate aftermath. How would you explain the economy’s resilience throughout this period?
A number of factors have meant Australia’s economy has performed better than other advanced countries during the global financial crisis [GFC] and in the period following. Firstly, our tough financial regulatory frameworks helped Australia avoid the problems that other countries have faced. Secondly, our flexible exchange rate saw the value of the Australian dollar decline, which helped cushion the real economy. Finally, the government’s large-scale stimulus package which was described by the Nobel Laureate Joseph Stiglitz as the “best designed stimulus package in the world”, meant that Australia emerged from the GFC as virtually the only advanced economy to avoid recession. Our economy also benefited from the early recovery in several of our major trading partners, including China and India.
The Reserve Bank recently downgraded the economic growth forecast for 2011 from 3.25 percent to 2 percent. At the same time, the high value of the Australian dollar and declining consumer confidence further threaten growth at a time when financial markets across the world are in turmoil.
What are the prospects for the economy over the coming years and in which sectors do you expect to see economic growth in the future?
The fundamentals of the Australian economy remain strong. This was confirmed in our latest growth figures, which showed robust growth in the June quarter. We have strong public finances, low unemployment and a strong pipeline of investment – over A$430 billion on the way – a sign of the confidence investors place in us.
Looking ahead, the Australian economy is closely linked to the fast-growing Asian economies. Between 1995 and 2010, merchandise exports to China increased from A$3.1 billion to A$58 billion. At the current rate, China and India could take around half of Australia’s exports by 2015. The growth of Asia is a long-term trend, and Australia expects to benefit for decades to come.
The government also has the major building blocks of a productivity agenda in place, which includes investing in productive infrastructure, investing in our people, continuing micro-economic reform, tax reform to lift workforce participation, extending market reforms to health and education, carbon and water, and returning the budget to surplus in 2012-13, ahead of any major advanced economy. Advancing this policy agenda will improve the flexibility and responsiveness of the economy, helping to build a high-skill, high-tech, clean-energy economy that will succeed independently of our mineral wealth.
You’ve said that you see China becoming an increasingly important trade and investment partner in the coming years? What impact will this have upon Australia’s historically close relationship with the USA?
Australia’s top four export markets are now all in Asia, with China taking almost a quarter of our total exports, and Japan, South Korea and India together accounting for almost a further third. This strong economic relationship is no accident. For many years now, Australia has been committed to building a mature, balanced and sustainable relationship with China and the region. With China now contributing over 20 percent to global growth, demand for Australian exports is set to remain strong. Asia’s rapidly growing middle class represents a huge potential market for Australia’s goods and services, including our commodities, education, tourism, financial services and manufacturing.
The increasing strategic and economic weight of the Asia-Pacific region heralds a new and challenging period for the Australia-US alliance. I believe Australia’s future prosperity and security depends on maintaining the strategic stability in Asia, upholding its openness to trade and commerce. As in previous decades, the US presence in Asia will be the cornerstone of regional stability that creates the conditions for growth and prosperity. President Obama’s visit in November will provide an excellent opportunity to continue discussions on this agenda.
How does Australia see its relations evolving with near-neighbours like Indonesia and Malaysia?
Australia and Indonesia are close neighbours and good friends. We enjoy a highly productive relationship that ranges across political, security, commercial, environmental, cultural and people-to-people links. On a bilateral level, we have a healthy trade and economic relationship, with two-way goods and services trade worth A$12.9 billion in 2010. We are also working together on the world stage to tackle some of the most important global challenges, including securing the global economic recovery through the G20, helping to build and secure a prosperous region through the East Asia Summit and APEC [Asia-Pacific Economic Cooperation], and cooperating closely on people smuggling and climate change.
Australia’s relationship with Malaysia is also significant and growing. We are cooperating on a range of economic and security issues, including negotiations towards a free trade agreement and addressing regional security challenges such as people smuggling and counter-terrorism. Malaysia is also Australia’s third-largest trading partner in ASEAN [Association of Southeast Asian Nations] and our tenth-largest partner overall, with two-way goods and services trade valued at A$15.5 billion in 2010.
Australia recently concluded a deal with the Malaysian government in which Malaysia hosts asylum seekers who arrive illegally by boat in Australia and, in exchange, Australia accepts a smaller number of confirmed refugees from Malaysia. What is the rationale behind this deal and how well will it work? How are you going to address concerns raised by human rights groups that asylum seekers sent to Malaysia may be subject to ill treatment?
Irregular migration is a challenge with which countries around the world continue to grapple. The Australian government’s response is based on the fundamental belief that we need to do more in cooperation with our international partners. On 30 March this year, the Bali Process on People Smuggling, Trafficking in Persons and Related Transnational Crime established a Regional Cooperation Framework to enhance the region’s approach to asylum seekers and refugees. The arrangement between Australia and Malaysia is an initiative under that framework.
Under the arrangement, up to 800 people arriving irregularly by sea would be transferred from Australia to Malaysia for asylum processing. At the same time, Australia would resettle 4000 UNHCR-mandated refugees from Malaysia over the next four years. The arrangement is designed to stop people from risking their lives on dangerous boat journeys while increasing opportunities for orderly migration. We have witnessed a number of tragic incidents where people have lost their lives at sea in hazardous attempts to reach Australia. That is unacceptable.
The Australian and Malaysian governments, in consultation with the United Nations High Commissioner for Refugees, worked collaboratively to ensure that appropriate protection safeguards were incorporated into the arrangement. Foremost among these considerations was a clear understanding that transferees would be treated with dignity and respect and that the principle of non-refoulement – the key tenet of the Refugees Convention – would be upheld. People transferred to Malaysia would have any claims for protection assessed by the UNHCR and those found to be refugees would be provided with resettlement opportunities in accordance with normal UNHCR processes.
Australia has a proud history of resettling people in need. On a per capita basis, we resettle more people through our Humanitarian Program than any other country in the world. That is something that we are proud of.
