When: Today, Thursday, March 10th at 9:10am ET
Where: CNBC’s “Squawk on the Street”
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Julia Gillard, Prime Minister of Australia, on CNBC’s “Squawk on the Street” today.
All references must be sourced to CNBC.
PRIME MINISTER GILLARD: My pleasure. Thank you.
BURNETT:And get to see the to Stock Exchange. Hopefully-- you'll see it with some people on it too. (LAUGHTER) But over the past two days it's been incredibly busy for you. You've obviously spent time with President Obama, Ben Bernanke, Tim Geithner, Congress and a whole lot of other people. How's the visit been so far?
PRIME MINISTER GILLARD: It's been a fantastic visit and I couldn't have got a warmer welcome. It's-- been really-- enjoyable, interesting, stimulating. Having the opportunity to address Congress yesterday was a very special honor for Australia. And I-- enjoyed it a great deal. So it's a great way of reminding ourselves of the strong bonds between our two countries.
BURNETT: And we have a picture of you, which is a lovely picture, of you playing Australian football-- (LAUGHTER) yesterday at the White House with the President. How did that come about?
PRIME MINISTER GILLARD: Well, we'd had the formal meeting where we talked about a range of issues, but I'd brought one of our Australian footballs. So we were just mucking around with it in the Oval Office. President Obama kept, you know, going like that, like you would with an American football, but that's not how we do it. We hand-- ball, we kick and we did that around the Oval Office without breaking anything. (LAUGHTER)
BURNETT: Had to correct him and show him how to do it. Well, you mentioned the speech to the joint session of Congress, which-- I had a chance to hear. It was very moving. And-- and you were talking about how as a little girl-- you saw America put a man on the Moon and actually got the afternoon off to-- they sent everyone home from school to go home and watch it.
And you said that now-- and I'm quoting you, I believe that you can do anything still about America. Look, our country's had a tough few years. And-- I think a lot of people have questioned where America is headed. And I wanted to just ask you what it is about America that-- that you think makes our country special?
PRIME MINISTER GILLARD: I wanted to send that message when I was in Congress. A message of be bold to America. I am so optimistic about this country's future. And almost every decade people predicted the demise of America and they've always been wrong and they'll be wrong again.
And I think the special characteristics of Americans, their optimism, their belief in the future, their capacity for reinvention, for grabbing opportunities, innovating, changing, facing the future. And I know that's what we're going to see in this country again.
BURNETT: And it matters a lot to hear that from Australia because when we look at Australia-- your most important economic partner, by far, if you look at exports and trade, it's China now. Number one buyer of your iron. I think nearly half of their iron comes from-- from your country, from Australia. Is China more important to Australia's future now than the United States?
PRIME MINISTER GILLARD: The United States and China are both important to our future. Our alliance with America is rock solid and we are still huge economic partners. Our free trade agreement has brought tremendous benefits and we want to keep working together and increasing trade. And I'm very supportive of President Obama's trans-Pacific Partnership Trade Initiative.
If we've got a big economic relationship with China too-- and we believe it's important to constructively engage with China. We are frank when we need to be. But we want to see China take its proper place in the rules-based order in our world. And we were very passionate about making sure the U.S. sat down the able of the East Asia Summit. China is there. The major countries in the region are there. And we can work issues through.
BURNETT: Given, though, the reliance economically on China, I'm wondering what you think about how the terms some have thrown around about Australia that it's becoming an economic colony of China in some ways. Is that fair or totally insulting?
PRIME MINISTER GILLARD: (LAUGHS) Well, it's not-- not a fair analysis on the facts. We've got a highly diversified economy. We get a lot of inward investment from the United States. And they be-- inward investment we get from the United States is far greater than the inward investment we get from China.
So we have a diversified economy. We're making our way in the world on our resources, of course. Our commodities are strong. But we are also a strong services economy, a great agricultural trading nation. We've got a strong manufacturing sector. A great tourism sector. We want everybody to come and--
BURNETT: --that. Yeah. But if you look take the top—industries in Australia in terms of goods, all the top 10 are commodities. If you add in services, sure, tours and then education get in there, but are you worried that Australia is way too reliant on commodities?
PRIME MINISTER GILLARD: Look, we are making sure that we balance economic growth. The resources boom is a good thing. It's a great thing for our country.
PRIME MINISTER GILLARD: But we're also conscious that we need to use the wealth coming from the resources boom to invest in the things that will be the drivers of growth tomorrow. And the most important driver of growth tomorrow will be the skills and capacity of the Australian people. So I'm passionate about using this moment in time to invest in education, invest in skills and to increase the participation, right, of Australians in the workforce.
BURNETT: Would you be all right with a Chinese company buying one of your-- your benchmark-- marquee companies? And obviously China does have a stake-- in some of your big mining companies in Rio. But a BHP Billiton or-- a Rio Tinto. I mean it's a big issue in this country. Do you allow a Chinese company to come in and buy-- an American giant. Would you be open to that?
PRIME MINISTER GILLARD: Well, we have a foreign investment review board process to look at major investments with a national interest criteria. -- trade agreement, the U.S.-Australia free trade agreement, had increased the benchmarks, so-- it really has to be a huge investment from the United States--
BURNETT: To trigger--
PRIME MINISTER GILLARD: --bit of scrutiny. But for other investments, scrutiny happens. It happens for Chinese investments and any other investment. So we do keep a weathered eye on national interest concerns.
PRIME MINISTER GILLARD: But we're also an open trading economy and we accept the disciplines that come with that. We do want to see money move. We want to see investment move. We want to see trade in goods and services.
BURNETT: And then since we're talking about mining, obviously the mining tax-- in Australia has gotten a lot of discussion in markets around the world. I know that your version obviously is different than-- than your predecessor's. But with the coal industry in Australia so hit by floods and coal and iron being what-- what you would tax at up to 30 percent, are you still committed to pushing that mining tax through this year?
PRIME MINISTER GILLARD: Look, we are committed to pushing it through and it's a profit-based tax. So when you have problems like we had in Queensland with mines not able to operate because of floodwaters, then of course that affects their profitability. And under the Minerals Resources Rent Tax would take their tax burden down. But we think it's appropriate to be taxing on the upside when profits are strong.
BURNETT: So-- is it going to be at the 30 percent? Or are you open, as some are trying to push you to do, to increase that tax rate to 40 percent as-- as Mr. Rudd had originally proposed?
PRIME MINISTER GILLARD: We entered an agreement with the biggest miners in our country and we'll stick to it. So the new tax rate that I agreed with them will be the tax rate that we legislate.
BURNETT: When people think of Australia-- all right, in this country think they of-- they think of kangaroos. (LAUGHTER) They think of-- the Outback. They hopefully think of commodities. But they should be thinking about how-- you know, you really emerged from the financial crisis unscathed, relative to all the other developed-- economies.
So unscathed that when I looked at the numbers this week your housing prices are at record levels in Australia. And I'm wondering if you're worried about an eventual housing crash? I mean I thought housing prices almost six percent year on year, even now. That's a big jump.
PRIME MINISTER GILLARD: It is a big jump. And housing shortage is a big issue. We do need to make sure we are building enough houses and planning some more growth. But I'm very confident that the fundamentals of our economy are strong and we will be able to work our way through issues like housing supply shortage.
BURNETT: The floods obviously are-- are contributing to that. But I mean it was horrible. And we saw a lot of the images here with the loss of life and property-- and obviously affecting such a crucial industry for you. It-- for Americans I guess it-- I've seen it compared to Hurricane Katrina in terms of the-- the dramatic affect it's had on-- on Australia. Do you think that climate change was responsible for the floods?
PRIME MINISTER GILLARD: I don't think you can look at one weather event and say that equals climate change.
PRIME MINISTER GILLARD: But across the globe and into the future the scientists are telling us that there will be more extreme weather events with climate change. I believe we do have to act on climate change. I believe it's real. I think it's humans that are causing the carbon pollution-- that causes climate change. And so we've determined that we will price carbon. Put a price on it from the first of July 2012. We are a very emissions-intensive economy. Per head of population we generate more emissions than Americans do.
BURNETT: Right. And--
PRIME MINISTER GILLARD: And so-
BURNETT: --you rely on coal.
PRIME MINISTER GILLARD: We-- our-- industrialization has been based on relatively cheap coal. We've got to seize the opportunity for the clean energy future and pricing carbon will help us do that.
BURNETT: The carbon issue though is a big one and-- in your country. The-- but it was-- a quote from you when you took office saying you weren't going to do anything with carbon-- taxing. And that change in policy is part of the reason-- the support for your party is at a record low. And for the first time, your personal approval ratings fell below 50 percent. Why the change of heart? What do you say to people who say, "Well, she said she's going to do this and now she's doing that."
PRIME MINISTER GILLARD: Well, look, I-- I understand this is going to be a big debate. Before the election I did say we needed to price carbon and we've always supported as a political party a cap and trade scheme. We are in a minority government and we need to work with others to get legislation through. And in order to act we've agreed to have a scheme that is fixed price for a period, effectively like a tax, and then go into a full cap and trade scheme.
So, yes, that's different than what I said before the election. If I had every choice in the world we would be there going to a full cap and trade scheme. But I've seized the opportunities of this parliament to make sure we get carbon pricing done.
BURNETT: And you're willing to make this your signature issue? You're-- you're willing to my tenure, my career, to stand on this issue of-- of carbon?
PRIME MINISTER GILLARD: Well, I'd like-- my tenure, my career, to be remembered for creating an opportunity for society in Australia. For making sure that every Australian child gets the chance at a high quality education and has all of the opportunities that the future should bring that child. Part of those opportunities is going to be a clean energy future. I can't stand by and have our economy fall behind as the world moves to a cleaner energy future.
BURNETT: I know you obviously spent a lot of time with the President and many issues came up. I know among them Afghanistan. And you're visiting our country in the midst of-- of history. I mean it's an amazing moment, what we're seeing in the Middle East. And the President is considering right now a no fly zone over-- of Libya.
This is a tough issue. How much it's going to cost. What we're going to-- what we would get for it. Who's going to be a part of it. You're a crucial ally of the United States. Oil prices matter to Australia as much as anyone else. And I'm curious whether you'd be part of-- let's just call it a coalition of the willing if there were to be military involvement in Libya?
PRIME MINISTER GILLARD: Well, I think we are all absolutely revolted by the violence that we're seeing in Libya. And the message to Colonel Gaddafi from the U.S., from Australia, from the world is it's time to go. To stop this violence and to go.
A no fly zone is one of the options before the security council. We believe it's vital that any action has Security Council support. And we will-- write to-- from the Security Council. We acted autonomously on sanctions. The Security Council then backed sanctions then. Clearly further options can be looked at, including a no fly zone. But this be Security Council-authorized.
BURNETT: All right. So not going ahead without that. And-- and what about on Afghanistan. I mean in Afghanistan you've had more troops serving-- than any other non-NATO-- country. And withdraw is slated right now for about 2014, although this week-- Secretary Gates had indicated he might keep some troops in a little bit longer than that. Do you support an accelerated withdrawal from Afghanistan? Or are you going to say we're in it until the end, even if the U.S. moves that date?
PRIME MINISTER GILLARD: Well, we're in it to make sure that we are denying Afghanistan as safe haven for terrorists. And I've been very clear with the Australian people. We want to transition security leadership to local Afghan forces, but we've got to do that when they can provide security sustainably.
We can't transition out early only to have to transition back in later. It's got to be sustainable. And I said to the Australian people the timetable-- that President Karzai has announced is 2014, but we should expected to be engaged in Afghanistan in some form to the end of this decade at least.
BURNETT: And one final topic, one I personally am very curious about. And a lot of Americans don't know that Australia has more camels than (LAUGHTER) any other country in the world. Your predecessor Kevin Rudd-- had supported-- a lot of these camels obviously are wild and-- and seen as pests by many Australians.
He's supported killing them in aerial culls. And some of the pictures that came out from that were-- were rather disturbing. So I'm wondering whether you support aerial culls of camels or whether you believe this could be an industry for Australia? Some of the numbers we've seen are if you ranched camels the milk market alone could be $10 billion. The milk's good for autistic children or lactose intolerant people. I know you've got a lot of things to think about--
PRIME MINISTER GILLARD: To think about.
PRIME MINISTER GILLARD: Yes.
BURNETT: But I'm curious what you think about this issue?
PRIME MINISTER GILLARD: Look-- need to deal with these issues in the best way. I understand that when culling's necessary, people want to see that done humanely. But we are talking about huge amounts of terrain and sometimes a very sizeable problem-- so I'm not sure that it's practical to say that that could all be dealt with through farming methods. So we do have-- sometimes camels, sometimes wild horses. We have other pests that were introduced-- when people first came to Australia. Rabbits continue to be a great big problem--
BURNETT: Cane toads.
PRIME MINISTER GILLARD:--but-- cane toads. (LAUGHS) Yeah, you name it, we've got it. (LAUGHTER) But we've also got a lot of-- wonderful-- wildlife that people come from around the world to see.
BURNETT: All right. Well, thank you so much Prime Minister Gillard. Wonderful to see you.
PRIME MINISTER GILLARD: Thank you very much.
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