Australia tapping into Mongolia's resources boom
Australia's Foreign Minister Bob Carr is in Mongolia, where a massive resources boom is underway which could challenge Australia's dominance of the China trade.
Australian mining companies, lawyers and technical experts have joined the rush to develop Mongolia's resources and the Australian Government is offering its advice.
Presenter: Tony Jones
Speaker: Bob Carr, Australian Foreign Minister
TONY JONES: Now why is the Australian Government helping promote a mining boom in Mongolia, which is in direct competition with Australia's faltering mining boom?
BOB CARR: No, they've got a very strong mining sector. It owes nothing to our support, but we're able to give them sound advice on sustainability, on environmental management, on occupational health and safety. And it's a form of aid that's deeply appreciated and renders Australia very relevant in this relatively small, but potentially very rich landlocked country. It's - they're learning from how we've got mining so right.
TONY JONES: Yes, but isn't it likely that when Mongolia's massive, untapped resources of iron ore and coal actually come online and into the Chinese market, that the prices of these commodities will drop?
BOB CARR: No. They're going to have a mining boom, they're going to develop their resources here, Tony, whatever we do. But they might as well get it right. And they appreciate the fact that Australia can give advice.
I handed over to the Mining minister today a book in Mongolian produced as an Australian aid project on sustainability in mining. We've learnt a lot of lessons in Australia; we can share it. They're going to have a mining boom here whatever we do, but we can help them make sure it's an environmentally sustainable mining boom and that's a real Australian contribution.
TONY JONES: Yes, but doesn't their mining boom threaten Australia's mining boom?
BOB CARR: Tony, they're going to have a mining boom anyway. We can make sure they don't wreck a beautiful country in generating mineral wealth. And it's a way of Australia - and by the way, the biggest mine in the country, a mine that when it's operating fully is going to represent 60 per cent of the Mongolian economy, is an Australian mine. It's Rio's mine.
I met Australian business people here last night. There are over 50 Australian companies employing people here. It's Australia using its expertise gained during our mining boom to make more money and secure high-skilled Australian jobs by assisting in a mining boom in this country that's going to occur whatever we do.
TONY JONES: OK. But will there be enough revenue from all that Australian capital and expertise to replace the export dollars that are lost when commodity prices begin to fall?
BOB CARR: Commodity prices have fallen, but they're a long way above what they were five years ago. I mean, if we'd been told five years ago that commodity prices after their recent drop were going to be at the level they're at, we wouldn't have been able to believe our luck.
Now, no-one - I'm persuaded that no-one could make really reliable predictions about this, but we have anticipated a falling off in prices reflecting not only the cyclical downturn in China, but a cyclical downturn against a backdrop of a restructuring of the Chinese economy, that is, less emphasis on major traditional industrialisation and the working out of a different economic model.
No, we're not reliant on an endless Chinese boom of the type we've seen over the last few years. But nonetheless, the Chinese story of urbanisation is going to continue. They are a long way short of South Korean or Japanese levels of urbanisation. And while they're attracting another 400 million people to their cities they're going to be demanding the Australian raw materials that put up those residential towers and lay down those tollways and those rail systems.
TONY JONES: OK, but nonetheless we've heard some dire warnings from the economist Ross Garnaut about the consequences to the Australian economy of the slowing Chinese growth.
Now, the Reserve Bank seems to have the same concerns. In this environment, is it really a good idea for the Government to be pursuing at all costs a surplus when it may be that you'll need to reboost the Australian economy with stimulus?
BOB CARR: I - look, I agree that a country with the economic good fortune of Australia should be running a surplus. I think that's a legitimate goal of government policy.
TONY JONES: OK. The former prime minister John Howard last night weighed in on the subject of China. He says, among other things, he finds it difficult to accept that growing economic liberalism will continue to walk hand-in-hand with political authoritarianism. Do you agree with him?
BOB CARR: It's a very interesting observation. When Jiabao, the retiring premier of China, has spoken about the growth of democracy there, there is a body of work that tends to suggest democracy arrives with economic growth. With higher incomes, more of the population of the country will mount a demand for participating in the political system. And I think John Howard's remarks are entirely defensible as an observation about China.
And I remember Henry Kissinger saying to me it is hard to imagine the next leadership transition in China, that is in 10 years' time, occurring under the same rules that this leadership transition is occurring under. And I think one of the most fascinating stories in world politics is going to be the political evolution in China.
I thought the Howard speech, by the way, was a very sound analysis of the whole debate over Australia and its relations with the United States and its relations with China. In that section of the John Howard speech there's not much I would have said that would be different.
I just draw your attention to him saying, for example, quote, "The Chinese know the origins of the ANZUS Treaty." He said in his time as prime minister, "... he never felt it was a barrier to deepening relations with China or that the Chinese saw our American alliance as seen directed against them," unquote.
Now, I think there's a lot of wisdom in that and I'd say to the Chinese, "We don't object to your military modernisation. We see it as something reflecting your rise to economic superpower status, something that's going to happen inevitably. By the same token, Chinese can't object to Australia tending to its own security concerns by nurturing and developing our treaty relationship with the United States.
After all, support for that treaty goes back, goes back - and a desire for that treaty goes back about 100 years in Australian history.
TONY JONES: Yes, John Howard seemed to be suggesting that behind the scenes the Chinese leadership was saying that in a way they kind of admired Australia's relationship, continuing relationship with the United States. Do you actually get the same impression behind the scenes?
BOB CARR: I think the Chinese, the Chinese have a - I suppose a - I'll put it this way: I think the Chinese have got a yearning for predictability in international relations. And the predictability in Australian policy is very real.
Under governments from both sides of Australian politics we've had a strong security relationship with the United States. But at the same time, we've respected Chinese interests. We've respected Chinese interests as it concerns the existence of a single China. The Taiwan Straits issue is not something that's debated by either side of Australian politics. That was settled in 1973 when Gough Whitlam conferred diplomatic recognition on China, when we exchanged diplomatic recognition.
So I think the Chinese might from time to time have fun suggesting we've got to choose between them and their economic importance and the United States with the security interests - with our security interest and the treaty relationship with the United States, but I think Howard's right: deep down they respect the predictability of Australia's stance.
Senator Carr spoke from the Mongolian capital, Ulan Bator, to Tony Jones.
Australian mining companies, lawyers and technical experts have joined the rush to develop Mongolia's resources and the Australian Government is offering its advice.
Presenter: Tony Jones
Speaker: Bob Carr, Australian Foreign Minister
TONY JONES: Now why is the Australian Government helping promote a mining boom in Mongolia, which is in direct competition with Australia's faltering mining boom?
BOB CARR: No, they've got a very strong mining sector. It owes nothing to our support, but we're able to give them sound advice on sustainability, on environmental management, on occupational health and safety. And it's a form of aid that's deeply appreciated and renders Australia very relevant in this relatively small, but potentially very rich landlocked country. It's - they're learning from how we've got mining so right.
TONY JONES: Yes, but isn't it likely that when Mongolia's massive, untapped resources of iron ore and coal actually come online and into the Chinese market, that the prices of these commodities will drop?
BOB CARR: No. They're going to have a mining boom, they're going to develop their resources here, Tony, whatever we do. But they might as well get it right. And they appreciate the fact that Australia can give advice.
I handed over to the Mining minister today a book in Mongolian produced as an Australian aid project on sustainability in mining. We've learnt a lot of lessons in Australia; we can share it. They're going to have a mining boom here whatever we do, but we can help them make sure it's an environmentally sustainable mining boom and that's a real Australian contribution.
TONY JONES: Yes, but doesn't their mining boom threaten Australia's mining boom?
BOB CARR: Tony, they're going to have a mining boom anyway. We can make sure they don't wreck a beautiful country in generating mineral wealth. And it's a way of Australia - and by the way, the biggest mine in the country, a mine that when it's operating fully is going to represent 60 per cent of the Mongolian economy, is an Australian mine. It's Rio's mine.
I met Australian business people here last night. There are over 50 Australian companies employing people here. It's Australia using its expertise gained during our mining boom to make more money and secure high-skilled Australian jobs by assisting in a mining boom in this country that's going to occur whatever we do.
TONY JONES: OK. But will there be enough revenue from all that Australian capital and expertise to replace the export dollars that are lost when commodity prices begin to fall?
BOB CARR: Commodity prices have fallen, but they're a long way above what they were five years ago. I mean, if we'd been told five years ago that commodity prices after their recent drop were going to be at the level they're at, we wouldn't have been able to believe our luck.
Now, no-one - I'm persuaded that no-one could make really reliable predictions about this, but we have anticipated a falling off in prices reflecting not only the cyclical downturn in China, but a cyclical downturn against a backdrop of a restructuring of the Chinese economy, that is, less emphasis on major traditional industrialisation and the working out of a different economic model.
No, we're not reliant on an endless Chinese boom of the type we've seen over the last few years. But nonetheless, the Chinese story of urbanisation is going to continue. They are a long way short of South Korean or Japanese levels of urbanisation. And while they're attracting another 400 million people to their cities they're going to be demanding the Australian raw materials that put up those residential towers and lay down those tollways and those rail systems.
TONY JONES: OK, but nonetheless we've heard some dire warnings from the economist Ross Garnaut about the consequences to the Australian economy of the slowing Chinese growth.
Now, the Reserve Bank seems to have the same concerns. In this environment, is it really a good idea for the Government to be pursuing at all costs a surplus when it may be that you'll need to reboost the Australian economy with stimulus?
BOB CARR: I - look, I agree that a country with the economic good fortune of Australia should be running a surplus. I think that's a legitimate goal of government policy.
TONY JONES: OK. The former prime minister John Howard last night weighed in on the subject of China. He says, among other things, he finds it difficult to accept that growing economic liberalism will continue to walk hand-in-hand with political authoritarianism. Do you agree with him?
BOB CARR: It's a very interesting observation. When Jiabao, the retiring premier of China, has spoken about the growth of democracy there, there is a body of work that tends to suggest democracy arrives with economic growth. With higher incomes, more of the population of the country will mount a demand for participating in the political system. And I think John Howard's remarks are entirely defensible as an observation about China.
And I remember Henry Kissinger saying to me it is hard to imagine the next leadership transition in China, that is in 10 years' time, occurring under the same rules that this leadership transition is occurring under. And I think one of the most fascinating stories in world politics is going to be the political evolution in China.
I thought the Howard speech, by the way, was a very sound analysis of the whole debate over Australia and its relations with the United States and its relations with China. In that section of the John Howard speech there's not much I would have said that would be different.
I just draw your attention to him saying, for example, quote, "The Chinese know the origins of the ANZUS Treaty." He said in his time as prime minister, "... he never felt it was a barrier to deepening relations with China or that the Chinese saw our American alliance as seen directed against them," unquote.
Now, I think there's a lot of wisdom in that and I'd say to the Chinese, "We don't object to your military modernisation. We see it as something reflecting your rise to economic superpower status, something that's going to happen inevitably. By the same token, Chinese can't object to Australia tending to its own security concerns by nurturing and developing our treaty relationship with the United States.
After all, support for that treaty goes back, goes back - and a desire for that treaty goes back about 100 years in Australian history.
TONY JONES: Yes, John Howard seemed to be suggesting that behind the scenes the Chinese leadership was saying that in a way they kind of admired Australia's relationship, continuing relationship with the United States. Do you actually get the same impression behind the scenes?
BOB CARR: I think the Chinese, the Chinese have a - I suppose a - I'll put it this way: I think the Chinese have got a yearning for predictability in international relations. And the predictability in Australian policy is very real.
Under governments from both sides of Australian politics we've had a strong security relationship with the United States. But at the same time, we've respected Chinese interests. We've respected Chinese interests as it concerns the existence of a single China. The Taiwan Straits issue is not something that's debated by either side of Australian politics. That was settled in 1973 when Gough Whitlam conferred diplomatic recognition on China, when we exchanged diplomatic recognition.
So I think the Chinese might from time to time have fun suggesting we've got to choose between them and their economic importance and the United States with the security interests - with our security interest and the treaty relationship with the United States, but I think Howard's right: deep down they respect the predictability of Australia's stance.
Senator Carr spoke from the Mongolian capital, Ulan Bator, to Tony Jones.
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