EDITOR’S note:

PAUL Kelly is editor-at-large of The Australian newspaper and author of seven books. He has commented extensively on Australian politics, public policy and international affairs for four decades.

His latest book, “Triumph and Demise,” is about the Rudd-Gillard government from 2007 to 2013. It won the 2014 Walkely Award, Australia’s highest prize for journalism.

Shanghai Daily columnist Wan Lixin had an interview with Kelly on March 20.

Q: There have been reports of Australia interest to join the Asian Infrastructure Investment Bank as proposed by China. Could you say something about the rationale behind whatever decision Australia might make on this issue?

A: I do not know if the government has made the announcement yet or not, but I interviewed Prime Minister Tony Abbott last weekend, and he said that the government would be rethinking its position on the Asian Infrastructure Investment Bank and take the decision very soon.

I wrote a story last Monday saying that I believed the Abbott government will take the decision to sign up to the negotiating process leading to Australia’s involvement with the Bank, and this will be a reversal of the government’s position at the end of last year. I think this is a necessary and important step for Australia to take.

Q: In what ways is the decision so important and necessary? Would you please elaborate?

A: I think this is an important development for the region in terms of infrastructure, in a region badly in need of infrastructure.

I think the argument from the White House for non-participation doesn’t have much weight. It is clear that many countries in the region and in Europe have decided to participate in the negotiating process. This is encouraging and hopefully it means the Bank will have good governance in the region.

Q: China is one of Australia’s most important trading partners. Could you say something on this relationship? How could this relationship be deepened in order to further benefit both countries?

A: Well, China is Australia’s major trading partner. The relationship is of critical importance for Australia’s future in trade, economic and prosperity sense. Australia and China recently concluded a free trade agreement, which the Australia side values enormously.

It would give Australian products much greater access to the China market, particularly agricultural products. It would open the way for the Australian service sector, to get more into China.

Services make up 80 percent of Australia’s GDP and less than 18 percent of Australia’s exports.

Australia believes the emergence of the middle class of China will add a wholly new economic dimension to the opening up of the relationship beyond just mining and resources that are today very important.

Australia is optimistic about the future economic partnership and the relationship between the countries.

Every Australian prime minister looks at how to add value to the China relationship.

Q: Your latest book “Triumph and Demise” is about the Rudd-Gillard government from 2007 to 2013. Does the book also contain any message for a general Chinese readership?

A: Well, there are a number of messages economic and political. The economic message is that Australia faces a significant transition.

With commodities prices falling, we must adjust to more emphasis on the non-resource side of the economy, particularly services, and that is going to be a difficult transition.

After the global financial crisis, we have a significant budget deficit that needs to be addressed, and rectified, and that is proving to be very difficult.

What this means for the political system is the political leadership has got to respond to these economic challenges, and so far they haven’t done well.

We have seen an new era of instability in Australian politics.

We had four changes of prime ministers over the last seven or eight years, and the new prime minister Tony Abbott, elected at 2013 with a large majority, is now in trouble.

The message is that Australia has a problem in its political system that it must rectify in order to make the public policy changes it needs, and address the challenges facing the country.

Q: Climate change has become a very controversial issue in your government and you seem to believe that the previous government’s quest for climate-change action was unnecessary and politically bungled. How did this happen?

A: The book shows that Australia’s response to the climate change has become a very divisive issue, and did great damage to the former Labor government.

Prime Minister Gillard legislated a carbon pricing scheme. But this was very unpopular. It was contrary to a promise she made in the 2010 election campaign, and a large part of the business community was very critical.

Tony Abbott campaigned vigorously against this scheme, promising to repeal it, and this was an important issue during the election.

Abbott as prime minister has repealed the scheme, but Labor remains committed to reintroducing carbon pricing if it comes back into the office.

So there is no agreed bipartisan position on climate change. There cannot be a satisfactory Australian response until there is an agreed position.

So this has become a very damaging issue.

Q: Do you think it also divisive in terms of the perception of the issue by people in general as against that of big business?

A: Well, I think the lesson from the last several years in Australia is that the public is concerned about climate change, does feel that climate change is real, but is reluctant to make much of the sacrifice itself. We haven’t met an issue like this before.

We are asking one generation to make sacrifices for future generations without precision, without any sense of precision about the outcome.

Q: But the consequence of non-action can be fairly predictable if scientists have got it right?

A: Nobody suggests any position of non-action. Policy of non-action is just non-viable.

So a rational approach is to operate on the insurance principle and take action. But the debate is about what sort of action, and how much to take.

Q: You mentioned the Australian political system is in trouble. What’s the underlying cause for this kind of trouble?

A: Australia has a Westminster political system but is a federation. So we took Westminster from Britain, and took the federation model from the United States, when the Australian constitution was being written in the 1890s.

The system has worked reasonably well, but I argued it is now in trouble. No democratic system is ever perfect. It is always an art of imperfection. And I think Australia at the moment is in trouble getting the policies it needs out of its political system.

Q: You have been to China often. What do you think of the changes over the years?

A: China is such a complex country that I wouldn’t pretend to have any understanding. It would sound presumptuous. I made my first trip to China in April 1976. I came to Shanghai then, and it was a very different China, and a very different Shanghai.

China’s progress has been astonishing. It’s an epic event in world history.