Transcript

of

THE HON PETER COSTELLO MP

FEDERAL MEMBER FOR HIGGINS

Interview with David Speers

PM Agenda, Sky TV

4.15pm

E & OE

SUBJECTS:      Newspaper columns regarding Rio – Chinalco, Hu

DAVID SPEERS:

Well someone who has been concerned about this intertwining of State owned corporations and the State itself in China for some time is the former Treasurer Peter Costello.  He warned early on that Chinalco’s bid to increase its stake in Rio Tinto was against Australia’s national interests.  Mr Costello joins us now.  Peter Costello thank you for joining us.

MR COSTELLO:

Thanks very much.

DAVID SPEERS:

On Stern Hu do you think the arrest of this Australian is China’s way of seeking any payback against Rio Tinto or indeed against Australia?

MR COSTELLO:

Well the first point I would make is that there is no reason to be seeking any payback against Australia.  The Australian Government expressed no view on the Chinalco involvement with Rio.  It went to the Foreign Investment Review Board, the decision was not given by that Board and the Australian Government expressed no view.  There were people in the Parliament who expressed a view – I for one expressed a view that it was not in Australia’s interests and compared it to the Shell takeover of Woodside back in 2001.  The reason that transaction didn’t go ahead of course was that Rio Tinto pulled out of the transaction.  Instead of going with Chinalco which was after all one of its customers, one of its buyers, it went into an association with BHP another Australian company.  I think that was in Australia’s national interest.  But it is possible that the Chinese Government has taken a very dim view of Rio because it broke what was a proposed transaction with Chinalco.  It could well be that these events are a consequence of that.  But we will never know, we will never know because the Chinese political system is not a transparent system.  You will never get the opportunity to get a Chinese leader on a program like this and grill him in the way you can grill me.  We just don’t know.

 DAVID SPEERS:

So if China is angry at Rio Tinto in your experience is this sort of retribution common place?

MR COSTELLO:

Well let’s make this point first of all – Mr Hu has been held now for 10 days.  What would happen in a western legal system like our own legal system is that you would be charged, you would be brought before a court, you could apply for bail.  And in that court hearing you would be entitled to know what the charge was and what kind of evidence there was against you.  Most probably in a case like this if they thought you were going to run from the jurisdiction they would make you give your passport in and you would go free while you awaited trial.  Now there is no process like that in China.  Nobody has actually announced the charge, there has been no bail hearing.  Mr Hu is in detention and he has been there for 10 days.  That is the first thing that you have got to bear in mind.  The second thing is from what we can glean, and the Government apparently is gleaning as much from websites as from any other source, he is charged with stealing State secrets.  What are these State secrets?  Information that might be relevant, so we are led to believe, to the sale of iron ore to Chinese steel mills.  Now I can imagine that getting customer information could be of use to Rio like it would be of use to any seller in any market.

DAVID SPEERS:

Is that stealing State secrets?

MR COSTELLO:

But is that a State secret?  It can only become a State secret, this is the other point I make in my columns today, because the Government owns these corporations.  It might a secret of the steel mill, it might be a secret of Rio, it might a secret of BHP – we wouldn’t regard that as a State secret because business is done by private corporations in Australia.  This again illustrates how different the Chinese system is.

DAVID SPEERS:

Is it a wake up call do you think for people doing business with China?

MR COSTELLO:

Well the third point I would make is this.  Mr Hu is apparently a negotiator for Rio in China and someone presumably will have to fill his shoes.  How would you feel if you were filling Mr Hu’s shoes for those negotiations now?

DAVID SPEERS:

So do you think Rio and indeed other companies will take a different approach to doing business in China in the wake of this?

MR COSTELLO:

Look China is a very important economic partner for Australia but what I think this illustrates is when you are dealing with China, particularly with State owned corporations they are not corporations in the way we know them and the legal system is not the legal system in the way we know it.  And I think this has been an illustration of that process.  It’s a point I was trying to make when the Chinalco Rio deal was on that I think you have got to look very carefully at a State owned enterprise.  I don’t think it is a normal corporation like a western corporation and that should have been taken into account by the Foreign Investment Review Board.  Now as it turns out that Board never had to make a decision.  Mr Swan never had to make a decision.  The Australian Government never had to make a decision because Rio came to the decision that it wouldn’t proceed with that transaction.

DAVID SPEERS:

Does China need to reform, these issues that you talk about, the control and interest in State owned corporations and its legal system?

MR COSTELLO:

You have got to remember this, China is moving from a communist system towards a more market oriented system.  This is in everybody’s interest in my view.  It is in the world’s interests and it is in China’s interests – but it is moving, it is in transition.  It isn’t yet a society where you have private corporations that are free from Government control.  It isn’t yet in a situation where you can sue the Chinese Government in an independent court.  It isn’t yet in a situation where you have Opposition Political Parties.  It isn’t yet in a situation where you have a critical press.  I think there’s a lot of people that go into China and walk around and see a booming economy and think well this must be like Australia or the United States or something else.  It is moving and we ought to encourage it to move.

DAVID SPEERS:

Faster than it is?

MR COSTELLO:

But it is not what you would call a western democracy yet.

DAVID SPEERS:

Would you like to see that transition sped up?

MR COSTELLO:

Obviously I think as China privatises more of its economy, as it develops a legal system that will be good for China, but I think it will be good for Australia and I think it will be good for the world generally and I think it is in all of the world’s interests as China emerges as a global economic super power that it does move in that direction and we should encourage it.  And of course we should encourage it in the case of Mr Hu as well.

DAVID SPEERS:

How do you rate the Government’s handling of this particular case?

MR COSTELLO:

Well look the Government is being very cautious.  There is no doubt about that.  I think as time goes on the Government will get more directly involved in this.  It will have to get more directly involved in this.  It is starting off cautiously I think because once the individuals at a very senior level get involved they’re the big shots in the locker.

DAVID SPEERS:

They are the big shots in the locker but Malcolm Turnbull is suggesting they should be fired now.  Kevin Rudd should pick up the phone to the President.  Do you share that view?

MR COSTELLO:

Well I think if this goes on much longer the reality is that the Foreign Minister will first have to contact a counterpart and then the Prime Minister will.

DAVID SPEERS:

Not yet?

MR COSTELLO:

I am not getting into the argument about timing.  I am just making the point that if this goes on that will be the way in which it develops.

DAVID SPEERS:

Because there is the potential for backlash?

MR COSTELLO:

Well look the Australian Government has to stand up for Australian citizens.  That is the reality.  And Australia shouldn’t be afraid to stand up to any country in the interests of its own citizens.  Look the only Government Australian citizens have got is the Australian Government.  So the Australian Government will have to stand up for Australian citizens.  But at the same time other countries have got to know we will stand up for our citizens.  We will also look after our own economic interests and we understand when they do exactly the same thing they ought to understand when we do that thing.

DAVID SPEERS:

I can’t let you go without asking about your continued popularity in Newspoll.  According to Newspoll you’re seen by voters as twice as popular than Malcolm Turnbull.  Any second thoughts about your decision to leave Parliament?

MR COSTELLO:

Well I haven’t said I am leaving Parliament.  What I have said is I haven’t nominated for the next election. So…

DAVID SPEERS:

Isn’t that the same thing?

MR COSTELLO:

Well it means by the time of the next election I won’t be in the Parliament but I remain committed to my electors and I will continue to serve them.  They can be very assured of that.

DAVID SPEERS:

You feel good about the popularity contests though?  Does that give you a bit of a kick?

MR COSTELLO:

Let me tell you one thing I have learnt in politics – if someone says something nice about you, you never try and dissuade them.

DAVID SPEERS:

Will you wait until the next election or will you go in by-election?

MR COSTELLO:

Well we will see how all of that develops but I have announced that I wouldn’t be nominating for the next election.

DAVID SPEERS:

Peter Costello thank you very much for joining us.

MR COSTELLO:

Thanks very much David.