Australia looks certain to buy extra military hardware from South Korea
11th Apr 2014
Australia looks certain to buy extra military hardware from South Korea as part of a broader Tony Abbott plan to woo billions of dollars from the growing economic power.
The Government wants to encourage Korean pension funds to pour money into Australian roads, ports, rail and commercial real estate.
But the Prime Minister, who was in Seoul to witness the signing of a free trade agreement with South Korea, first set out to soothe a particular tension with Australia's fourth biggest export market.
Mr Abbott said the South Koreans remained sore about the Gillard government's 2012 "capricious" decision to cancel a $225 million contract for self- propelled K-9 field howitzers.
"It has been quite a point of aggravation and it is very unfortunate that having entered into something as important and sensitive as defence procurement, the former government broke the arrangement," he said.
Ranking its diplomatic damage alongside the cancellation of the live cattle trade with Indonesia and the spat over uranium supply to India, Mr Abbott said he wanted his Government to be an "absolutely reliable, trustworthy partner whose word is our bond".
Mr Abbott said although Australia would not revisit the contract, "because our Defence have moved on", he had told President Park Geun Hye he would explore what other defence contracts were possible.
It is unusual for a travelling prime minister to be outwardly critical of a previous Australian government while overseas. But Mr Abbott's comments coincided with billionaire James Packer accusing former Labor prime minister Kevin Rudd of damaging Australia's relationship with China, Japan, India and Indonesia.
"When you go round and lecture people - I think you'd know who I'm talking about - some people don't take it that well," the Crown boss said. Mr Packer is part of Mr Abbott's delegation.
The Government is keen to use the FTA's relaxed foreign investment rules to entice Korean pension funds into higher-yield Australian projects.
Korea's rapidly ageing population is increasingly reliant on personal investments.
Its National Pension Service, the fourth biggest pension fund in the world, aims to invest more than 10 per cent of its $600 billion overseas.