FRAN KELLY: The debate over Chinese influence in the Pacific will be further fuelled today by a new report that shows the Beijing will soon overtake Australia as being the biggest donor to the region. China has showered more than $1 billion on Pacific nations since 2011 but has pledged almost $6 billion more. While Australia remains the number one donor by a long way, aid from Canberra has decreased over this same period. Foreign Minister Julie Bishop will release this report today at a meeting of the Pacific Islands Forum, she joins us from Samoa. Julie Bishop, welcome back to Breakfast.

JULIE BISHOP: Thank you Fran. Good to be with you.

FRAN KELLY: Before I come to the Pacific, the United States has determined that Russia did use chemical and biological weapons in violation of international law and will impose sanctions on Russia. You’ve previously said that the illegal deployment of chemical weapons like this could have “global security ramifications”. Here they are starting to flow. Will Australia follow suit when it comes to sanctions?

JULIE BISHOP: This is a very serious matter and we will need to assess the full consequences of it. But you are absolutely right, I believe the use of these weapons at any time, any where, under any circumstances is abhorrent. It cannot continue, it cannot continue with impunity. In response to the March nerve agent attack in Salisbury, we did expel two Russian undeclared intelligence officers. So did 28 other countries plus NATO, so about 153 Russian diplomats were expelled. We will certainly take on board the new US sanctions on Russia and consider our circumstances. We already have a range of sanctions on Russia in relation to its breaches of sovereignty in Ukraine and Crimea, and of course we have an ongoing issue with Russia over the role of Russia in the downing of Malaysia Airlines MH17, when 38 Australians citizens and residents were killed. So we will assess the implications of the United States decision and the sanctions that they’ve imposed on Russia.

FRAN KELLY: Let’s come to the Pacific and the Lowy Report that you’re releasing today. We have traditionally been the most significant donor in the Pacific, it is on our doorstep, we still are, but as our aid reduces, China’s has been increasing. Are we at risk of losing our influence in the region as that process unfolds?

JULIE BISHOP: It is not correct to say that our aid has decreased in the Pacific. In fact, it is now at record levels. While our aid budget elsewhere has been more focused, we have ensured that our funding to the Pacific has either remained the same, but now has increased. Over the period that I have been the Foreign Minister, I have ensured that aid to the Pacific has not decreased. In fact, this year our contribution will grow to $1.3 billion, the largest ever amount of funding from Australia to the Pacific, which reflects our commitment to increase our engagement with the region. Australia remains the largest donor to the Pacific. We provide 40 per cent of all aid to the region and together with New Zealand we are responsible for over half of all aid to the region. It also shows that-

FRAN KELLY: China is on the march though. As you, yourself, have commented in recent times, China we know has made $4 billion worth of commitments, major infrastructure projects like ports, roads, most of it loans which have to be paid back, and you have been concerned about that. I mean, you have warned that these nations don’t lose their sovereignty, don’t get trapped into unsustainable debt outcomes. These are your words. We are concerned the consequences of entering into these financing arrangements will be detrimental to their long term sovereignty. How worried are you about China entrenching and encroaching on the sovereignty of some of these South Pacific nations?

JULIE BISHOP:  My words are also that we welcome the role played by all donors, including China, to support development in the Pacific, and my words are also that no single country can meet the region’s significant long-term development challenges. According to Lowy, China was the fifth largest donor in 2016, which is a significant contribution. The challenge for all development partners is to ensure that investments support sustainable economic growth and that they don’t impose onerous debt burdens on regional governments.  That applies to all donors.

We welcome contributions from all partners to meet the Pacific’s significant development challenges. As the region’s major development partner, Australia encourages investments that ensure local communities are sustained, that local labour forces are used, and as I have said, do not impose onerous debt burdens on the local communities.

FRAN KELLY: It’s not just about money, is it? Well, money in terms of hard loans for infrastructure. This week the Prime Minister of Vanuatu has asked Australia to resume short wave radio broadcasting into the Pacific region, saying lives could be lost in natural disasters without the ABC service. Do you agree, because China is now moving into this sector as well?

JULIE BISHOP: Yes. We did not support the ABC closing its short wave radio transmissions to the Pacific, that was not a decision of the Australian Government. In fact, today in Samoa, I will be launching a new radio transmission here to support natural disaster management, humanitarian relief and other domestic issues here. Under the aid program, we are in fact funding a transmissions facility in Samoa through the Radio 2AP. It is an infrastructure redevelopment project and Australia is providing funding to support that.  I clearly see it as a matter of significance and we do have a media assistance scheme primarily in Fiji, Samoa, Solomon Islands, Tonga and Vanuatu to ensure that radio transmission can continue. But the ABC, I would certainly encourage the ABC to continue short wave transmission in the Pacific.

FRAN KELLY: Well, perhaps that funding should have gone to the ABC? I mean, that was a funding decision at the time?

JULIE BISHOP: The ABC determines its priorities. I don’t dictate the ABC’s priorities. That is not something available to me I’m afraid. We do provide funding for the ABC, the funding is delivered to the ABC International Development and so the announcement I am making today is in fact Australia’s assistance being delivered through the Australian Broadcasting Corporation.

FRAN KELLY: Can we move to the relationship more broadly with China. The Prime Minister gave a speech this week which has generally been characterised as a bid to re-set Australia’s fractious relationship with China. The PM has said that the rise of China should not be feared as a threat, basically. Beijing has welcomed the tone of the address as positive. Does this signal a softer line by Australia on China?

JULIE BISHOP: What it does is outline our actual engagement with China. It is deep, it is broad and something that both countries welcome as being in our interest. The Prime Minister emphasised the Government’s commitment to advancing our Comprehensive Strategic Partnership with China. The relationship is deep, it is characterised by great opportunity and potential. We have got a large and growing agenda of common interests on which to pursue collaboration and it is a partnership that benefits both sides, and that was something that Foreign Minister Wang Yi recognised in his meeting with me on Saturday in Singapore at the ASEAN related foreign ministers meetings. He said both sides have more to do. Of course, we have differences, but we have to manage them. It is a dynamic, complex relationship. It engages a range of national interests. I think the Prime Minister’s speech set out, very well, our current relationship with China and what more we can both do to ensure that this is a relationship that endures.

FRAN KELLY: Was it an effort though, to get the relationship back on track? As you say, the relationship is deep and broad but it has been fractious. The Prime Minister said, “It is understandable that China would seek a more confident and assertive voice. China need not be feared as long as the international rules-based order was preserved”. So, that is the caveat then? Last year Australia accused China of breaking some rules when it comes to its use of money and soft power in our political parties here, in our universities, when it comes to cyber security activity and hacking and in the South China Sea. Do you believe China is abiding by the rules?

JULIE BISHOP: The Prime Minister used the opportunity of the speech to make some important points about Australia’s relationship with China. He emphasised the Government’s commitment to the Comprehensive Strategic Partnership. He talked about the enduring strength of the relationship, its continuing potential. He specifically talked about the contribution of Australians of Chinese heritage to our nation, he talked about our commitment to working with regional partners including China to protect the security and advance the prosperity of the region.

FRAN KELLY: Was this an effort to amend relations, because relations have been, certainly seems to have been in the deep freeze of late?

JULIE BISHOP: That is not how I would describe it. That is certainly not how China describes it.

FRAN KELLY: Well, how long since you’ve had a visit to China?

JULIE BISHOP: I have met with Foreign Minister Wang Yi I think on 10 or 11 occasions and we are planning my next visit to China. My visits to China are every two years because as the foreign ministers meeting dictates, one year it is in Beijing, the next year it is in Canberra. It is my turn to go to Beijing this year and I had a very positive discussion with Foreign Minister Wang Yi about that. But Australia’s relationship with China is strong –trade, investment, education and engagement and two-way travel are all at record levels. The Government is building on the foundation we committed to do so in the Foreign Policy White Paper that we released last year. It was a good opportunity for the Prime Minister to talk about how we engage with China and how we continue to pursue a consistent approach to China. We do have differences of opinion from time to time but it is about how we manage them that counts. Both sides recognise that this is a partnership that benefits both our national interests.

FRAN KELLY: Foreign Minister, I know your time is tight, thank you for coming out of your meeting for this interview. Can I just ask you briefly about another sanctions story this week, the imposition of the US sanctions on Iran and his threat of “severe consequences for companies continuing to do business with Iran.” Now, there is a growing number of Australian companies doing business with Iran, will Australia try and protect them through some kind of legislation in a way the EU is trying to bring in laws to protect European countries?

FRAN KELLY: The Australian Government has been considering the sanctions that the United States has placed on Iran. They have restarted sanctions that were previously lifted as part of its agreement to the JCPOA. Other US sanctions are going to be reapplied we understand. What we are seeking to do is speak with businesses who may be affected by this. We are not considering new sanctions. We have also advised Australian exporters to seek legal advice on the effects of international sanctions on their trading activity, and we will certainly keep the matter under review depending upon what the United States seeks to do, but the point is that the Australian Government is not considering imposing new sanctions. While we certainly hold concerns about Iranian activity in the region, and I had a recent meeting with Iranian Foreign Minister Zarif – on Saturday in Singapore – and discussed Iran’s behaviour, I also indicated that we want to see Iran hold to this nuclear agreement and continue to abide by it.  

FRAN KELLY: Julie Bishop, thank you very much for joining us.

JULIE BISHOP: My pleasure.

FRAN KELLY: Julie Bishop is the Foreign Minister, joining us from Samoa.